Court decision ‘warning’ that insurance companies can be held liable for homeowners’ legal costs

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Christchurch-based Kate Dewes is a peace negotiator of international standing.

As a long-standing disarmament activist, she has successfully lobbied for New Zealand’s Nuclear-Free Zone Disarmament and Arms Control Act, the world’s first national nuclear-weapon-free law.

It played a major role in the International Court of Justice’s ruling that the use of nuclear weapons “would generally be contrary to the rules of international law.” A former peace adviser to two United Nations secretaries-general, she and her husband, Rob Greene, co-founded the Center for Disarmament and Security from their home in Riccarton.

But this house, a large 1924 house known as Te Whare Maukaroko (House of Peace), taxed the ability of these more experienced activists. As she told Frank Film, it took many reports, letters and emails, a High Court case and now, finally, a two-year-old claim to the Canterbury Earthquake Insurance, to finally open the way for earthquake repair. Damaged house.

Read more: * Would EQC and insurers do better, if a natural catastrophe the size of earthquakes occurred in Canterbury tomorrow? Launches to resolve long-standing earthquake insurance disputes IAG raises a hornet’s nest with restricting custom claims Time is running out for earthquake claimants to litigate insurance companies: advisory service

“What made me strong was that all these other people were waiting for a test case to happen – we were one of those test cases. He almost finished me in the process.

“And we still lived in a cold, moldy, damp, damp house with fallen baseboards and crooked windows that wouldn’t close.”

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Rob Green and Kate Dewes continued to fight IAG in hopes that their test case would help other homeowners.

T-Ware Mokaroko was badly damaged in the earthquake on September 4, 2010. One chimney fell and we had to remove two more; The house fell 8.4 cm on one side.

The February 22, 2011 earthquake caused further damage. “And the earthquakes kept coming – you were trying to sleep in a room where you were getting dust and water running through the ceiling.”

The comprehensive replacement policy under state insurance, which was later put under the umbrella of IAG, gave the couple some guarantees and in 2014 the repairs were presented to a building team under the IAG reform programme.

The repairs took five months. But when the couple returned home, they found big problems. The steel windows were not fixed, the panels kept falling off the roof, floor levels kept skewed and the shower was leaking.

They had worked for two years with IAG to properly fix their house, but when a report showed the damage was still under the house, Dewes said they decided “we have to hire lawyers”.

They filed a civil suit in the Supreme Court. For homeowners, she says, it’s an expensive and “very tough” process.

Insurance companies have highly paid lawyers. They have power in a way that we don’t — companies can liquidate, families can’t. We have to stay in a damp house and keep fighting.”

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Kate Dewes’ home in Riccarton was known as the House of Peace (Tware Maukaruku) due to the success of its owners’ battle to obtain nuclear weapons declared to be inconsistent with international law.

Then they heard about the Canterbury Earthquakes Insurance Tribunal, which was set up in 2019 to resolve disputes between homeowners and insurance companies.

“This has become a lifesaver. The Court was set up to try to balance powerful big insurers on one side and ordinary homeowners on the other. It’s not supposed to be as aggressive as the Supreme Court – it’s supposed to be cost-effective, fair and flexible.”

However, she says, it wasn’t easy—two determined homeowners encountered a “large group of lawyers standing behind us.”

I am not a lawyer, and Rob is not a lawyer, but we had to learn how to become a lawyer. We had to learn to conduct interrogations and write submissions.”

As the presiding judge, former U.S. District Judge Chris Somerville, wrote in his decision in May of this year, “It is disappointing that the process has remained hostile, slow and costly.”

But their resilience paid off.

The court did not agree with all the arguments raised by the homeowners. However, the judge agreed with their claim that many of the pending cases were the result of the earthquake and that the insurance company must keep its promise to repair the damage to a case “as similar as possible to what was new.”

Basically, Dewes says, the court said the house was damaged by the earthquake and most of it had to be repaired. “Yes!”

It is not over yet. The reforms have yet to be made, and the IAG is now appealing to the Supreme Court to overturn the decision on court costs.

Meanwhile, the couple still live in their “damp house full of twisted windows that don’t close.”

Frank movie / things

The battle over repairing Riccarton’s house did not end with IAG’s appeal of the court ruling to the Supreme Court.

Earthquake court warning for insurance companies

The court said the Canterbury Earthquake Court’s decision ordering an insurance company to pay a portion of the homeowner’s court costs “should serve as a warning” to others.

In its recent decision, the Canterbury Earthquakes Insurance Court ordered IAG to pay $13,160 in arbitration costs to DG Family Trust after finding the insurer “acted in bad faith” by making unsubstantiated claims.

Max Contracts Limited, a subcontractor used by IAG to make repairs to the home, was ordered to pay $500.

The case has a long and complex history as homeowners struggled for more than a decade to resolve their earthquake claims.

The Christchurch homeowners’ home was built by famous Christchurch merchant and city councilor Thomas Kinkade in 1925. Since then the house has been updated, renovated and added on several occasions.

Homes built in the 1920s were not designed to withstand seismic forces, and as such, the building sustained damage during earthquakes in September 2010 and again in February and June 2011.

Severe damage was sustained in 2010 when one of the three chimneys collapsed and fell through the ceiling in one of the bedrooms upstairs. Shortly after emergency repairs were made to ensure residents could continue safely at home.

At the time of the earthquakes, the house was insured by the state insurance company, a business division of IAG.

Once the EQC recognized that the cost of repairing earthquake damage would exceed the legal maximum, it was agreed that the earthquake damage would be repaired by IAG. Geotechnical and structural engineering reports were obtained and used to prepare a full range of works.

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An aerial view of the Christchurch home owned by the DG Trust that was damaged in the Canterbury earthquake. The image was included in the decision of the Insurance Court of Canterbury Earthquakes.

Home repairs started in July 2014 as Max Contracts was subcontracted to do the work.

By the time the repairs were completed in March 2015, homeowners were openly critical of the repair standards and said the original scope of works was not adequate to properly repair the damage.

According to the experts shared by homeowners, the cost to rectify poorly executed repairs, unimplemented repairs, and unspecified earthquake damage was just over $1 million.

The case ended up in the Supreme Court and was later transferred to the court when the parties were unable to reach a settlement.

In December 2020, the court issued a decision outlining the defects in the house and their causes. The decision effectively determined that there was not much previous damage to the house and most of the damage was earthquake related and had to be repaired.

After the decision was made, the homeowners filed an application claiming that IAG and Max Contracts be liable for their court costs.

Homeowners spent more than $50,000 getting experts to challenge and refute arguments made by IAG and other participants. This was on top of the $370,000 they had already spent when the litigation was still before the Supreme Court.

Under Canterbury Earthquakes Insurance Court Act, a court may award costs against a party if it considers that the party has caused unnecessary expenses by acting in bad faith, making claims or objections without substantial merit, or causing unreasonable delay.

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Homeowners were highly critical of repairs to their earthquake-damaged homes, including repairs to damaged slate tiles. This image was included in the Canterbury Earthquakes Insurance Court’s decision.

In its application, the homeowners said IAG acted in bad faith by submitting unfounded claims to the court.

The court found that the IAG had already made arguments without any substantial basis, such as that the uneven floors were due to pre-earthquake settlement, or that some of the steel windows were not damaged in the earthquakes.

The court further said that the IAG acted in bad faith by challenging the admissibility of the homeowners’ evidence, bypassing experts’ attempts to find common ground, and failing to narrow down the real issues remaining in the dispute regarding the bathroom.

The court also found that Max Contracts made an unsubstantiated argument by claiming that the use of black adhesive to repair damaged slate tiles met the standard of a repair policy.

The court calculated that IAG was liable for $13,110 in homeowner costs and Max contracts for $500.

An IAG spokeswoman said the insurer did not agree with the court’s findings and appealed the decision to the Supreme Court. “Since the matter is now before the Supreme Court, we cannot comment further.”

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