This is my last update for the year – one day past the 9 month mark since the February earthquake and 15 months since the 4.35am ‘wake-up call’ we had in September last year. I am choosing to remember this year for the incredible community response to the February earthquake and the good friends I have made in the electorate and beyond. However I am, like most people I talk to, tired and ready for a break. I have really appreciated the feedback from these updates and will be starting them again when I return. Heather will monitor the phone for urgent messages over the holidays and she will re-open the office from the 9 of January.
This update identifies some of the issues that I am pursing on your behalf. I apologise if I haven’t responded to any individual inquiries – many that remain outstanding relate to generic issues that need government, council or even judicial intervention. I read my last update for 2010 and was amazed to find out how many issues are still around or have re-emerged, like Council rates remission policies for unsafe houses that have had to be abandoned! Hopefully I will have more to say on all of these in the New Year. On that note, I wish you the best possible Christmas and let us look forward positively to 2012 – as they say: things can only get better!
Land Status: There are still pockets of orange in Wainoni and Dallington and a strip of orange on the estuary side of Southshore. I am sorry that the uncertainty continues for those affected, but I will be following up on my return on the 16 January. It would be easier for people if we understood what the decision-making involves.
Red Zone: The Cabinet papers relating to the Brooklands’ decisions still haven’t been lodged on the CERA website, so I have lodged an Official Information Act request for them and all the relevant information.
Red Zone Businesses & Uninsured properties: The Minister has advised that these“are not being given priority at this time as [the government continues] to prioritise the rezoning of orange and white zones”.
Red Zone Offer: As I mentioned in my last newsletter I am getting a legal opinion on a number of issues that revolve around the questions I highlighted in my last update, regarding insurers’ obligations with respect to buildings that would have been repairable, but for the red zone decision; the EQC formula for paying out on red zoned land; and the market value of property subject to a compulsory acquisition by CERA under the Canterbury Earthquake Recovery Act 2011. These raise a number of issues for people given the response I received, however they will take time to resolve, so please see your own lawyer if you are making a decision. Community Law Canterbury has a lawyer based at the Earthquake Assistance Centre at the Avondale Golf Course, corner Breezes Road and Wainoni Road, which is open Monday - Friday 10am - 6.30pm. Call on 0508 CANLAW (226 529) for more information.
Properties Bordering the Red Zones in Dallington, Avondale, New Brighton & Burwood: I finally received a response to my July 8 & Sept 9 letters to the Minister on the 8 December – I have attached it to the emails, so if you are receiving this by post and would like a copy, let the office know. The government is not looking at these borders until all the other areas are zoned. I am disappointed with the response and will raise it again with him in the New Year. At least he has finally acknowledged after 5 months that “there may be a benefit in identifying those people with properties bordering on the red zone, and providing them with information relevant to their situation”. He has asked CERA to consider my proposal, but that “the priority is to communicate on a wider scale with residents in the red and green zones”. Communication has been poor, but if I am allowed to organise more meetings like the one in South Brighton last wee,k (thanks to CERA & the Council staff for coming), then I can help the government with this role. I felt I understood the new TC1, TC2 & TC3 foundation requirements so much better after listening to Jan Kupec, a geotechnical engineer from CERA – TC1 covers the current foundation rules; TC2 requires slabs to be thicker and reinforced in certain areas; and TC3 simply means that you need an individual geotechnical assessment to see what foundation your land requires. These individual geotechnical assessments are required in many parts of cities and towns around New Zealand.
Rates Remission: I have written to the Christchurch City Council about their decision to limit the 100% rates remission decision to the properties that they have required people to leave under s124 of the Building Act. How can a piece of paper make a difference to the fact that people have been forced out of their homes by a disaster? The truth is that the decision to remit rates can only be about the habitability of the property, whether that arises from safety concerns about the structural damage to the property or the risk of rockfall in a subsequent event. By saying that the latter is covered but not the former, makes nonsense of the Council telling us that the 40% remission was because non-residential related services were still being provided to those people. If you cannot live in your house, you shouldn’t have to pay rates – it really is as simple as that. I will let you know what they say.
Earthquake Commission (EQC) vs Insurance Industry – Declaratory Judgement - Reinstatement
“We have no information about the way claims are being assessed, or the myriad of practical difficulties that we are sure must attend a claims settlement process of this magnitude and complexity.”
I have taken this quote from the judgment, not to criticise the court, but to highlight the difficulty that this case has created. I have really only become aware of its full implications since constituents have started to contact me about the contact that they have had with EQC since the decision came out. Here is a summary of the decision:
Between 4 September 2010 and the end of June 2011 the EQC had received 368,000 claims. Approximately 110,000 properties have multiple claims. The parties sought declarations under the Declaratory Judgments Act 1908 to resolve an issue about the extent of cover available to homeowners. All residential buildings and household contents which are insured under a contract of fire insurance enjoy cover under the Earthquake Commission Act 1993. This cover is $100,000 +gst for residential buildings & $20,000 +gst for their contents. The question arose as to how EQC cover responds to homeowners who have made more than one claim for damage suffered in more than one earthquake where that damage, in aggregate, exceeds $100,000. The Court considered the question as an issue of cover between EQC and homeowners rather than an issue between EQC and other insurers; the Court was not asked to consider examples of insurance policies between insurers and homeowners, nor was it asked to consider the way in which EQC is administering the claims.
The issue was described as follows: when multiple events cause natural disaster damage to the same property during the term of a fire insurance contract and EQC has not, at the time of later natural disaster damage, made a payment in respect of the earlier natural disaster damage is EQC liable to pay either (1) up to $100,000/$20,000 for each occurrence of natural disaster damage, or (2) up to $100,000/$20,000 in total for the aggregate of all natural disaster damage caused by multiple events? It was accepted that if the contract of fire insurance renewed between the two events causing natural disaster damage, or if EQC made a payment in respect of the earlier natural disaster damage prior to the event causing the later natural disaster damage, that the full $100,000/$20,000 would be available as cover for the later damage.
The court’s decision accepted the option presented by the insurance industry that the correct interpretation of the legislation was for “continuing cover” or “immediate reinstatement of cover” –meaning that the Act provides cover, which continues at the $100,000 level so as to provide continuing cover, so long as the contract of fire insurance is in force, for each event of natural disaster damage. Neither the occurrence of, nor the making of a claim for, an event of natural disaster damage reduces the amount of cover available for a subsequent event of natural disaster damage, at any time either prior to or on payment of a claim for the first event of natural disaster damage.
Although this is couched as a positive statement about the amount of EQC cover available to the homeowner, the practical implication is that if the amount of the damage caused by an individual event does not take you over the cap, then EQC does not pay you out and hand it over to your insurer to repair/rebuild your house. It means that EQC’s Project Management Office (Fletchers) will be responsible for managing the repair/rebuild. This is causing considerable distress as people are being reassessed to identify the allocation of damage between events. This is very difficult when EQC didn’t assess the property until after a later event. People who were expecting EQC payments to help with their mortgages are suddenly finding that a single event did not put them over the cap. I have written to the Minister to ask for a personalised statement to be provided to each person who has been affected by this decision. It is a layer of complexity I didn’t anticipate, so hopefully I will have an update in the New Year.
For those who are interested the full text of the judgment and reasons can be found at Judicial Decisions of Public Interest www.courtsofnz.govt.nz.