The government could be liable for hundreds of millions of dollars in quake insurance payments following a potentially precedent-setting Court of Appeal decision out today.
The court upheld an earlier ruling that found state-owned insurer Southern Response was guilty of misleading and deceptive behaviour when it short-changed Karl and Alison Dodds tens of thousands of dollars after their quake damaged house was written off.
The Dodds say they were tricked into accepting a lower offer from Southern Response only to later discover the insurer had kept secret from them a second higher estimate to rebuild their damaged house.
The High Court ordered Southern Response to pay the Dodds almost $180,000 in damages, plus costs. But the government supported the appeal saying it needed clarity around similar cases.
Lawyer for the Dodds, Peter Woods, said the decision delivered "clarity" in spades.
"The Court of Appeal was absolutely clear Southern Response had made representations that were false, that the Dodds had relied on those, they were induced to enter into an agreement based on those misrepresentations, that the misrepresentations were also misleading and deceptive, and the Dodds were entitled to almost their full claim, so it totals up to about $250,000."
Woods said the government should now have "perfect clarity", which could apply to thousands of other cases.
"In the High Court, Southern Response's evidence was there was at least 1600 other claims in a similar position. If they are all valued at $250,000 then you do the maths on that ... the government's probably exposed to in excess of $500 million as a result of this."
Woods said the other claimants should be paid out "without a doubt", and Southern Response had already estimated how much it might cost.
Appeal decision 'cathartic'
The Dodds say it is sobering the decision went their way, one decade on from the harrowing earthquakes.
Speaking to Checkpoint shortly after receiving the news, Karl said he felt "cathartic" and a "whole bundle of emotions".
"Having the outcome in the middle of what is effectively the 10th anniversary of the earthquakes is poignant and sobering and I think what we and the others in Christchurch have gone through, has been harrowing to say the least, and the post-traumatic effects of having to deal with Southern Response have added to the trauma of the earthquakes, and to bring it all to conclusion is brilliant from our point of view and tremendous for the other 3000 people."
Karl said his wife Allison had been traumatised by the whole experience - from being shaken around the top of her work building in the 22 February, 2011 earthquake, watching the CTV building collapse, and then having to deal with Southern Response in the aftermath.
He said decisions were made by the "highest level of the organisation" and renewed his call for an inquiry into Southern Response, by the likes of Dame Silvia Cartwright.
It would need to be similar to the inquiry into EQC, but with one difference.
"EQC made a lot of mistakes but they were really caught off guard. Nobody expected the magnitude of the disaster. They were understaffed, ill-equipped and perhaps one could say they did their best, but with that said we spent the first two years battling EQC, with letters flying backwards and forwards and getting more and more fiery as we went.
"But with Southern Response they don't have the same excuse. They came into existence after the disaster and therefore were well-equipped to behave professionally and competently and this they failed to do.
"When an independent person digs deep enough they will be able to find all sorts of additional dubious practices of which we are well aware but we are not going to disclose at this point in time, which will really push the whole case, as to their behaviour, beyond another level."
Karl said Southern Response had a right to appeal and take the case to the Supreme Court but he hoped it wouldn't come to that.
Both the minister responsible, Grant Robertson, and Southern Response declined to be interviewed. Neither have ruled out appealing the decision in the Supreme Court
Karl wished others in a similar position all the very best with their battle against the insurer.