Southern Response’s ‘strategy to minimise its liability for earthquake claims’ is back in court
In early 2014 GCA Lawyers was approached by a group of AMI policyholders concerned that their insurer was guilty of unjustifiable delays in progressing claims and that it was misleading them as to their policy entitlements. Concerns were developing that the insurer was using tactics that might get a better financial outcome for the insurer, and that the policyholder’s interests were only of secondary concern.
The common complaint was that none of the policyholders could afford to sue a massive insurer to assert their legal rights. GCA was asked to advise the group on class action options.
In August 2105 a Statement of Claim was lodged in the Christchurch High Court for The Southern Response Unresolved Claims Group (the Group). The defendant was Southern Response Earthquake Services Ltd, the former AMI but now a company wholly owned by the Crown. [See the Statement of Claim elsewhere on the SRCA website].
The Group was only able to assemble its evidence and bring the claim because it had litigation funding support from Litigation Lending Services, a Sydney based company that specialises in helping litigants overcome the enormous cost barriers to gaining access to the courts.
The Statement of Claim alleged breach of contract because of SR’s failure to meet its substantive obligations in the policy, its delays and its general conduct. A Judgment was delivered in February 2016 rejecting the Group’s application for an order allowing the case to proceed as a ‘representative action’ (class action).
The Group felt the wrong legal test had been applied by the court to the question of whether the case could be managed as a class action and so an Amended Statement of Claim was filed with the High Court in mid-2016. This Statement of Claim now set out plainly, how all policyholders have the same interest in bringing a class action:
‘…Southern Response adopted a strategy which was designed to systematically reduce the cost of meeting the claims arising out of the Canterbury earthquakes below its true liability’.
In its Judgment of December 2016 the court granted the Group’s application for the action to proceed as a representative action.
Although the way now seemed clear for the action to proceed as a class action, SR decided to appeal to the Court of Appeal, suggesting among other things, that the High Court was wrong to allow the case to proceed as a representative action. Group members see the delay arising from the appeal as a further cynical attempt to apply pressure on them to settle for less than what their claims are properly worth.
The case will be heard on Wednesday 5 July in Wellington before the Court of Appeal where the central issue will be whether the Group’s allegations about SR maintaining a deliberate strategy to minimise its financial exposure for member's claims, will be back on the public stage.Tags Southern Response Southern Response Class Action GCA Lawyers Grant Cameron Earthquake Insurance Christchurch