Ministry of Justice

Admissibility of evidence / litigant in person included submissions in affidavit / Tribunal prepared to make allowances for litigants in person who do not appreciate difference between submissions & evidence / counsel not expected to cross-examine arguments / homeowners not expected to incur unnecessary expense in calling expert witnesses / Tribunal has discretion to admit evidence that might otherwise be inadmissible, including hearsay evidence / Canterbury Earthquakes Insurance Tribunal Act 2019, s 37 / evidence not relevant to present stage of proceedings but still relevant & necessary to proceedings / Tribunal not prepared to strike out submissions / reports of expert witnesses admissible but Tribunal not willing to rule how much weight should be given to them / parties wishing to rely on documents expected to make submissions on weight given to them.

Case stated / application for referral of question of law to High Court / whether insurer’s obligation to pay repair cost of house to policy standard includes obligation to pay reasonable cost required to remedy defective repair work / insured’s claim for earthquake damage to house accepted / repair work completed & insurer paid full contract price / repair work defective / insured claims insurer should pay for cost of bringing house up to policy standard by repairing damage & rectifying defective repairs / Canterbury Earthquakes Insurance Tribunal Act 2019, s 53 / question one of contractual interpretation & so a question of law / question addresses primary cause of action raised against insured & requires urgent determination in High Court / positive or negative answer would lead to speedier & more cost effective outcome for insured / case stated likely to be provide important benefits, not only for insured, but for many other homeowners / application granted.

Proper calculation of EQC cap / Earthquake Commission Act 1993, s 18 / HELD / s 18(1)’s purpose is to limit EQC’s exposure in event of major natural disaster / method to calculate cap is two-part process / examine which sub-paragraphs in s18(1) apply / then, if necessary, calculate the entitlements to identify which is the lowest / insurance policies were for “full replacement value” and did not specify a sum, therefore s 18(1)(a) cannot apply / s 18(1)(b) only applies if the policy does not specify a replacement sum but does specify an amount for which the building is to be insured under the EQC Act / s 18(2) cannot be used to quantify the s 18(1)(b) sum / s 18(2)’s purpose is to prevent homeowners from nominating an unrealistically low figure for natural disaster cover under s 18(1)(b) / on the facts, only s 18(a)(c) applies because the other two could not

Negligence / breach of contract / claim insurer breached insurance policy contract or was negligent in repairing spouting and downpipe, causing landslip / whether overspill occurred / whether drainage system earthquake damaged / evidence demonstrates water spilling from spouting after initial repairs and damage caused by earthquake / insurer was obliged to repair damage to the policy standard, and is liable for defective repairs / insurer owes duty of care to repair damage in proper manner / functionality test applied, repairs not fully functional / causation / overspill a material and substantial cause of landslip / applicants able to recover losses of constructing retaining wall / interest awarded / costs and general damages not awarded

Process of insurance contract / insurer elected to pay cash equivalent of cost of repairs / applicant claims insurer’s experts did not properly identify earthquake damage and insurer’s repair methodology not reasonable / Ginivan v Southern Response [2018] NZHC 2403 / HELD / applicants entitled to select experts and builders, choose repair methodology, develop scope of works, and enter into building contract for price they consider to be reasonable / insurer entitled to undertake its own assessments, at its expense / if insurer’s cash equivalent of cost of repairs is less than applicant’s own scope, applicants will need to meet the additional cost unless they satisfy insurer or the Tribunal the insurer’s figure is unreasonable / insufficient evidence to determine / all complaints to be addressed together  

Slip rule / application for correction to judgment / independent expert described as surveyor in substantive judgment / CV provided to Tribunal refers to additional roles not stated in judgment / Canterbury Earthquakes Insurance Tribunal Act 2019, s 47(2) / non-party expert has no standing / no omission in judgment / application declined 

Hearing on three issues after case stated to High Court / first, uplift from the policy cap to the market value cap / policy cap is an overall cap on claims within one policy period, not per earthquake event / market value cap operates as an overall cap, not per earthquake event / insurer not permitted to now raise evidential issues as to scope of works, costs, and depreciation / insurer had sufficient time to commission own evidence in rebuttal / evidence before Tribunal sufficient to dispose issue / second, insurer’s entitlement to EQC payment credits when policy does not respond to that event due to policy cap / insured not permitted to be more than fully indemnified / retaining EQC payment would enable insured to recover in excess of maximum sum payable / third, liability for costs incurred by insured displacing insurer’s denial of liability / insured did not seek approval prior to engaging experts / policy required prior authorisation / insured unable to recover costs under policy...

Election under insurance policy / insured stated they did not intend to complete certain repairs / telephone conversation recorded in file note / file note is hearsay contained in business record / Evidence Act 2006, s 19 provides file note is admissible; questionable whether staff member would have useful recollection of events / whether an election under insurance policy / communication of election choice must be unequivocal / insured needs to make an informed election choice, having a reasonable appreciation of scope of damage, the work required to remediate, and the likely indemnity otherwise available / insured was not aware of difference in outcome between the two options / alternatively, election was not unequivocal as it was directed towards particular repair strategy.   

Transfer from High Court / Canterbury earthquake sequence / State insurance - IAG / defective repairs / contract of insurance with third parties / whether IAG liable for works of third parties / 1920’s house / repair standard / policy standard “when new” / scope of works / building code / contractual breaches under the building contract / functionality / aesthetics / cause of deficiencies / damages – not within scope of hearing / submissions for costs 

Procedure / dismissal / without prejudice rule / costs for bad faith / dispute over whether driveway needed to be repaired or re-laid in order to replace drains damaged by earthquake / EQC agreed to pay for cost of relaying driveway but offer rejected because it did not cover cost of bringing application / EQC sought costs for bad faith & dismissal of claim as offer resolved dispute / Canterbury Earthquakes Insurance Tribunal Act 2019, s 46, s 47 / without prejudice rule waived in terms of settlement agreement but agreement on its own not enough evidence to dismiss claim / Tribunal unable to consider merits of costs application or reasonableness of offer due to without prejudice rule / EQC entitled to make settlements full & final / EQC did not act in bad faith in raising defence that applicants’ advocate agreed to repair / application dismissed.

Contractual interpretation / preliminary question / whether parties entered an enforceable agreement regarding repair method during joint engineering report process / without prejudice statements / claimed contract involved experts’ conferral described as a “meeting” / agenda document produced only signed by experts in parts / claimed contract lacks normal clauses expected / not an enforceable agreement / estoppel / insurer did not represent it was willing to be bound / whether Southern Response unreasonable in failing to ratify agreement / insurer must not act unreasonably if deciding not to ratify an agreement reached by engineers / engineers did not finalise agreement about repair methodology / agreement a record of negotiations.

Disagreement over scope of works /  Southern Response Insurance policy / interpretation of insurance contract / interpretation of ‘as new’ / application of ‘as new’ / ‘as new’ and ‘when new’ create the same outcome / repairs must meet the current building code / what repairs are required to meet the policy standard / whether to relevel or rebuild foundations under the insurance contract / Southern Response’s repair methodology to relevel is not unreasonable / whether Southern Response elected to cash settle / law on damages / Southern Response breached its duty of good faith / damages of $5,000 awarded to the insured for mental distress/ Tribunal’s power to award costs.

Procedural order / second respondent seeking further particulars of claim / response filing deadline extension / first case management conference deferral / Canterbury Earthquakes Insurance Tribunal Act 2019, s 15 / written response and support documents to be filed within 15 working days of service, as per s 15 / extension may be directed by Tribunal / extensions to be sought by memorandum and will be determined as without notice application, as per amended Practise Notes / respondents unable to file detailed response due to lack of application clarity / should file pro forma response and orally request further particulars at first case management conference / second respondent not involved in EQC Protocol 1 repairs as expected costs under EQC cap / claim requires commission and consideration of expert reports and other document before claim response possible / however, Tribunal not a pleadings based process / imperative to be fair, speedy, flexible and cost-effective process / discov...