11 Apr 2020

Lockdown stalls Southern Response appeal against class action

3:26 pm on 11 April 2020

A class action by Christchurch landowners against Southern Response has been delayed as the lockdown stalls the organisation's bid to have the case thrown out.

A house in Avonside, damaged in the 22 February Canterbury earthquake, 2011.

A house in Avonside, damaged in the 22 February Canterbury earthquake, 2011. Photo: 123RF

And the true rebuild costs for the earthquake damaged homes in Canterbury are "shocking", says the lawyer leading the class action against Southern Response, which he says could cost the firm hundreds of millions.

The class action alleges Southern Response misled customers by withholding the true cost of rebuilding their quake-damaged homes.

Grant Cameron, who is representing 3000 claimants, said data provided by state-owned Southern Response for the first 200 policyholders showed the average amount concealed was around $149,000.

"A couple of policyholders have suffered concealment of around $330,000, and one policyholder had $447,129.50 concealed from them."

He said the data received from the organisation is shocking. And if all 3000 policyholders are able to recover the concealed funds, Southern Response will face over $400m in compensation, damages and costs.

Southern Response was set up by the National government after insurer AMI, which held the majority of home insurance policies in Christchurch, collapsed following the 2010 and 2011 earthquakes.

The High Court ruled in August 2019 that Southern Response's practice of calculating two separate sets of costs for home repairs - and only offering the customer the cheaper one - was deceptive and misleading.

In September 2019 the Court of Appeal ruled a class action against Southern Response could go ahead on an opt-out basis, meaning it would cover a lot more people.

The Supreme Court was scheduled to hear Southern Response's appeal against that judgement on 23 and 24 May. But the hearing has been adjourned because of the Covid-19 crisis and the nationwide lockdown. The parties were now awaiting another hearing date.

Southern Response office

Photo: RNZ

Speaking to RNZ in January, Southern Response boss Casey Hurren offered an apology to anyone unhappy with their treatment during the claim settlement process.

He said in some cases the company had not communicated as well as it could have, causing people to feel they were treated unfairly.

However, claimants told RNZ Hurren's apology was "too little, too late".

The organisation settled 48,000 claims, and by the end of last year the remaining 200 left unsettled were handed over to the Earthquake Commission.

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