On 16 December 2015 the High Court heard an application by Southern Response policy owners seeking an order that they could jointly bring a ‘representative action’ to the court.About 45 policyholders were concerned to seek court assistance in the resolution of their insurance claims because their insurer was failing to action the claims in a proper manner.

Arguing that the damage in each case was different, the insurer resisted the application and in his judgment of 24 February 2016 Judge Mander rejected the group’s application, suggesting more evidence of a commonality of interest needed to be demonstrated before the case could proceed as a class.Nevertheless, the judge expressly reserved the right for the group to reapply with a reformulated application.

A reformulated application was soon filed in which the group now expressly stated its belief that Southern Response had 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. Such strategy was applied to all claimants and involved:

  • misrepresenting the nature of Southern Response’s obligations and the claimants’ rights;
  • understating the extent of the work required, and the cost of undertaking that work;
  • asserting that the claimants’ rights to receive a cash settlement of their claims were for amounts significantly below the assessed cost of undertaking the work in question;
  • assuming control of the rebuilding and repair work, so that Southern Response could minimise the cost to it of the required work;
  • unreasonably delaying in responding to and meeting the claims of the claimants;
  • adopting various other stances designed to reduce its liabilities;
  • inducing “settlements” of the claims made against it for significantly reduced amounts;
  • undertaking sub‑standard repair work.

The group has strong expectations that the court will now grant their application and the class action might then proceed in 2017.The case has very significant implications for all unsettled policyholders and for the New Zealand government, which as the sole owner of Southern Response, has full liability to meet the companies obligations as the court may soon determine.

Tags Southern Response Class Action EQC Court High Court Insurance Class Action