Government Payment and Rival Class Action for Southern Response Plaintiffs

Southern Response claimants who were underpaid for earthquake damage to their homes are suddenly faced with a host of options, including a government offer that could avoid a $ 300 million class action lawsuit before make it to court.

Earthquake Commission Minister David Clark announced on Monday a new cash package, which will be offered to eligible policyholders who reached an agreement with the state insurer before October 2014.

A second competing class action case, the Canterbury Homeowners Class Action Lawsuit, was also launched on Monday. It promises lower fees than the first, and is run by the Christchurch firm GCA Lawyers.

It has sparked a debate between lawyers on both sides, with GCA’s Grant Cameron accusing the newcomers of “a belated attempt to hang onto the slopes of what has already been done.”

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The announcements follow the precedent-setting Karl and Alison Dodds case in August.

The Superior Court found that Southern Response was engaging in “deceptive and deceptive” behavior when it defrauded the couple after their earthquake-damaged home was canceled.

Southern Response had a policy of producing two Detailed Repair / Reconstruction Assessments (DRAs).

The first, known as the abbreviated DRA, was delivered to the customer and showed lower costs than the office DRA, which was not provided.

The Dodds reached a settlement with Southern Response in December 2013, based on the abbreviated DRA, which showed that rebuilding their home would cost $ 895,000.

They weren’t aware of the office’s DRA at the time, which was around $ 200,000 more.

Supreme Court Justice David Gendall found that Southern Response misled the Dodds into believing this was the full rebuilding cost, and ordered Southern Response to pay them $ 178,894.

The Court of Appeal upheld the Superior Court’s decision and the Crown chose not to proceed.

Dodds attorney Peter Woods said others in a similar position should wait until Southern Response has received instructions from the court.

“There are more than 3,000 owners in the same position as the Dodds, and the payout is estimated to total more than $ 300 million.”

Another Christchurch couple, Brendan and Colleen Ross, sued Southern Response for similar reasons.

But they filed their case as a class action lawsuit, meaning they represent some 3,000 policyholders who may have been similarly misled.

While there is still time for a hearing on the Ross class action lawsuit, the Supreme Court recently ruled that the 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 actively choose not to participate.

Cameron, who represents the Ross class action lawsuit, said he finally forced Southern Response to do the right thing.

The Rosses said some aspects of Clark’s offer needed further consideration, but were pleased that justice finally sought several thousand plaintiffs after a “thorough” court process.

“The irony for us is that none of this expensive process was necessary if Southern Response had

performed correctly in 2014. “

Cameron said any settlement must be approved by the Superior Court, so the Rosses would carefully examine the package to make sure it fairly compensated all members of the class for their losses.

A spokeswoman for the second class action lawsuit said it was providing another option for policyholders.

It is led by attorney Davey Salmon, New Zealand’s largest litigation firm, Meredith Connell, and funded by litigation financier, LPF Group.

Both class actions will go to court, but LPF Group founder Phil Newland said Ross’s class action was “unnecessarily expensive.”

The Australia-based funder will collect up to 27.5 percent of any compensation and, in addition to paying GCA attorneys’ fees, if the claim is successful, claimants will also pay the legal team a success fee of up to $ 2000 per insured.

Clark said the government package offered an additional payment to clients in a similar situation to the Dodds.

A spokesperson said they would not reveal how much money had been set aside for the sake of a “fair resolution” but would reveal how much was paid after the fact.

It will be overseen by an independent committee, comprised of former Waimakariri District Mayor David Ayers, Attorney Nina Khouri, former Canterbury Police District Commander Sandra Manderson, and Chief Audit and Risk Officer Fiona Mules.

“The implementation of this package is intended to address the inequity of those who resolved their claims before October 2014, compared to those who settled later,” Clark said.

“I acknowledge the length of time the ongoing legal action has taken and the stress this causes on the plaintiffs.”

In general, policyholders who have settled a claim for earthquake damage to their home in cash with Southern Response or AMI between September 10, 2010 and October 1, 2014 will be eligible.

But a spokesperson said not everyone would qualify for the payment.

If Southern Response managed the reconstruction or repair of the home, if the policyholder had already negotiated contingencies and professional fees in the amount of its settlement, or if the policyholder had a policy insured for a sum and had already your full entitlement under your AMI policy, may not be eligible.