Government Payment Announced Ahead of Impending Southern Response Class Action Lawsuit

The Government has announced a cash package for Southern Response claimants whose homes were damaged in the Canterbury earthquakes, ahead of a class action court case that could have seen thousands of settled claims reopened.

Earthquake Commission Minister David Clark announced Monday that the proactive package would be offered to eligible policyholders who reached an agreement with Southern Response prior to October 2014.

A spokesperson said they will not reveal how much money has been set aside at this stage, in the interest of a “fair resolution,” but will reveal how much will be paid after the fact.

It comes after the precedent-setting Karl and Alison Dodds case in August.

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The Supreme Court found that state earthquake insurer Southern Response engaged in “misleading and deceptive” behavior when it defrauded the couple out of tens of thousands of dollars after their earthquake-damaged home was canceled.

Southern Response had a policy of producing two different Detailed Repair / Rebuild Assessments (DRAs), which described the costs of fixing a customer’s home.

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 settled with Southern Response in December 2013, based on the summary DRA they were given, which showed that rebuilding their home would cost about $ 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 an additional $ 178,894.

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

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 roughly 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.

Minister Clark said the proactive package offers an additional payment to clients in a similar situation to the Dodds.

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.”

Since the package will affect some policyholders who are potentially part of Ross’s current class action court case, Southern Response will ask the court to confirm that it can contact those policyholders about the package on Monday.

But for those who want to run, it is unlikely that a court decision will be made before the new year.

“I appreciate that the individual plaintiffs want this matter resolved as soon as possible. This package offers a way to solve the problem without lengthy and costly legal action, ”said Clark.

“The court cases to date have been helpful in gaining clarity on how to fairly apply the findings to policyholders in a similar situation and have informed the principles of this package.”

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 that not everyone will 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.