The Government has approved a package to be offered to eligible policyholders who settled with Southern Response prior to October 2014, Minister Responsible for the Earthquake Commission David Clark announced today.
"The proactive package offers a top-up payment to customers in a situation similar to Mr and Mrs Dodds, who recently won their case for further payments. Payments may include certain professional fees, a contribution to legal fees, unpaid contingencies, and interest. The package's implementation will be overseen by an independent oversight committee.
"The roll out of this package is intended to address the inequity of those who settled their claims prior to October 2014 compared to those who settled later.
"I acknowledge the lengthy time the ongoing court action is taking and the stress this causes claimants."
As the package will affect some policyholders that are potentially part of a current court case known as the Ross Class Action, Southern Response is today applying to the court for confirmation that it can communicate with those policyholders about the package.
"I appreciate that individual claimants will want to get this matter sorted as promptly as possible. This package offers a way of resolving the issue without lengthy and costly legal action.
"The court cases to date have been helpful to gain clarity on how to fairly apply the findings to policy holders in a similar situation and have informed the principles of this package," David Clark said.
The members of the Independent Oversight Committee will be:
- David Ayers (Chair)
- Fiona Mules
- Nina Khouri
- Sandra Manderson
"I want to thank the members for agreeing to be part of the committee who will help ensure it's a fair and transparent process that everyone can trust," David Clark said.
Background Information:
Dodds decision
Karl and Alison Dodds sued Southern Response in the High Court for costs that were listed in the "Office Use Section" of an internal scope of works document (administration costs, professional fees, and contingency), which were not included in the original settlement of their insurance claim.
Justice Gendall in the High Court ruled that by not providing the Dodds with a build costing that included these costs, Southern Response made misrepresentations to the Dodds in breach of section 35 of the Contract and Commercial Law Act 2017. The High Court also held that Southern Response's misrepresentations amounted to misleading and deceptive conduct under the Fair Trading Act 1986.
The Crown, via Southern Response, appealed the High Court decision in order to seek greater clarity that would enable Southern Response to respond to other affected claimants in a position similar to the Dodds.
The Court of Appeal largely upheld the High Court's 2019 decision and awarded damages to Mr and Mrs Dodds based on the difference between the true value of their rights under their policy and the sum that they previously settled with Southern Response. The Court also held that the true cost of rebuilding the Dodds' house would include contingencies and professional fees, as well as certain Arrow costs, which were excluded from the costings document that was provided to the Dodds.
The Crown and Southern Response said it would not further appeal this decision as it had gained the clarity it needed to be able to prepare a response to other policyholders in a similar situation to Mr and Mrs Dodds.
Ross class action
Mr and Mrs Ross began proceedings against Southern Response on similar grounds to Mr and Mrs Dodds. However, Mr and Mrs Ross have brought their case as a 'class action' and, are acting as representatives of a class of policyholders who they believe settled with Southern Response in similar circumstances.
While any hearing on those substantive issues in the Ross Class Action is still some time away, the Supreme Court recently released its decision that this case should proceed on an 'opt-out' basis, meaning that any member of the "class" as defined by the Court is automatically in the class action unless they take active steps to opt out.
Independent Oversight Committee
To provide for policyholder and public confidence in Southern Response's implementation of the process, Ministers are establishing an Independent Oversight Committee (IOC) to oversee the implementation of the settlement package.
The purpose of the IOC is to provide independent oversight, make recommendations to the board of directors of Southern Response, and report significant issues to the Crown. In particular, the IOC will:
- provide independent oversight of Southern Response's decision-making in respect of the implementation and delivery of the package
- seek independent advice or peer review on key issues
- conduct an independent periodic review of Southern Response's processes and decision-making in respect of the implementation and delivery of the package
- provide advice and recommendations to the Southern Response board and the Crown on matters relating to the interests of Southern Response policyholders relevant to the implementation and delivery of the package report directly to the Southern Response board and the Crown.
The four members are David Ayers (chair), Nina Khouri, Sandra Manderson, and Fiona Mules.
David Ayers served as Mayor of Waimakariri from 2010-19, taking office shortly after the September 2010 earthquake. He held various roles in the earthquake recovery effort and is currently Chair of the Canterbury Museum Trust Board, and a member of the Christ Church Cathedral Reinstatement Review Panel.
Nina Khouri is a lawyer with international mediation experience and teaches at the University of Auckland. She has spent considerable time in Christchurch during the last six years helping resolve earthquake insurance disputes. She was involved in the design of the Greater Christchurch Claims Resolution Service and has served as a facilitator on its panel.
Sandra Manderson was New Zealand Police District Commander for Canterbury in 2002-07. In 2007, Sandra was appointed International Liaison Officer to the Americas covering the United States, Canada and South and Central America. Following the February 2011 Canterbury earthquakes she returned to Christchurch to assist with police work in the aftermath of the disaster, then returned to Washington to complete her posting. She has served as elected member of the University of Canterbury Council and more recently she has run investigations as the Anti-Corruption Manager for the International Cricket Council.
Fiona Mules is an experienced audit and risk director and currently serves on the boards of the Reserve Bank, KiwiRail, Lyttelton Port Company, and Development Christchurch. She has undertaken consultancy work for the Christchurch City Council and Ōtākaro on earthquake recovery anchor projects.
