Peter Woods covered some key learning from court cases. He gave some good advice on issues with EQC.

1. Case Law Update
Peter Woods
Thursday, 13 August 2015

2. • Southern Response Earthquake Services
Ltd v Avonside Holdings Ltd [2015]
NZSC 110.
• Parkin v Vero Insurance New Zealand Ltd
[2015] NZHC 1675.
• C&S Kelly Properties Ltd v Earthquake
Commission [2015] NZHC 1690.
• Prattley Enterprises Ltd v Vero Insurance
New Zealand Ltd [2015] NZHC 1444.

3. Southern Response Earthquake Services Ltd v
Avonside Holdings Ltd [2015] NZSC 110
• Residential rental property in red zone
• Damaged in September 2010 and
February 2011 earthquakes
• Uneconomic to repair
• Avonside elected to buy another
house

4. Southern Response Earthquake Services Ltd v
Avonside Holdings Ltd [2015] NZSC 110
High Court
• No contingencies – sum calculated on notional rebuild therefore no
unexpected events
• Professional fees – appropriate for items necessarily incurred –
architects fees treated as additional costs, not part of basic cover
Court of Appeal
• Limit of entitlement = full replacement cost + additional costs
• Rejected distinction between notional and actual rebuild
• Reasonable estimate of professional fees and contingencies included

5. Southern Response Earthquake Services Ltd v
Avonside Holdings Ltd [2015] NZSC 110
• Exercise required is to estimate the actual
cost of rebuilding the house on the site
• CA correct to include contingencies - 10%
reasonable and not unusual
• CA correct to include professional fees
• Relationship between cl 1 and cl 4 not at
issue as fees in issue not “additional costs”

6. Parkin v Vero Insurance New Zealand Ltd
[2015] NZHC 1675
• Three level townhouse in Lyttleton
completed in March 2009
• Damaged in the September 2010 and
more significantly February 2011
• Property red stickered in March 2011
• Evolution of claim finally devolving into a
dispute over remedial strategies

7. Parkin v Vero Insurance New Zealand Ltd
[2015] NZHC 1675
• Parkin claimed Vero breached the
insurance contract
• Vero rejected that it elected to pay
the indemnity cost of reinstatement

8. Parkin v Vero Insurance New Zealand Ltd
[2015] NZHC 1675
• Vero not in breach of its policy
obligations
• Post-commencement obligation to
settle
• Standard of repair
• Damage and remedial solution

9. C&S Kelly Properties Ltd v Earthquake
Commission [2015] NZHC 1690
• 100 year old house
• family home of C & S Kelly Ltd’s
shareholders and directors
• suffered damage in the September 2010
and February 2011 earthquakes
• Southern Response to cover loss not
covered by EQC

10. C&S Kelly Properties Ltd v Earthquake
Commission [2015] NZHC 1690
• Can the Kelly’s monetary claim succeed in the
absence of challenge to EQC’s election to repair?
• Is EQC in breach of its obligation to settle the
Kelly’s claim within a reasonable time?
• Does floor dislevelment constitute earthquake
damage? This includes whether the Kellys have
proved that a Type 2A foundation is required.
• What relief, if any, results from the findings of
the questions posed?

11. C&S Kelly Properties Ltd v Earthquake
Commission [2015] NZHC 1690
• Implications for homeowners still
waiting for EQC to make its election
• Onus on homeowner

12. Prattley Enterprises Ltd v Vero Insurance
New Zealand Ltd [2015] NZHC 1444
• Worcester Towers insured on indemnity value – limit at
$1,605,000
• Valuations:
– Prattley - $1,050,000
– Vero – $370,000 (pre-loss market-based)
– Vero – $1.4 million (depreciated replacement cost)
• Full and final settlement of claim - $1,050,000 plus
GST, less excess

13. Prattley Enterprises Ltd v Vero Insurance
New Zealand Ltd [2015] NZHC 1444
• Issues
–Prattley claimed Vero failed to
comply with its contractual
obligations
–Vero relied on the settlement
agreement as valid and binding

14. Prattley Enterprises Ltd v Vero Insurance
New Zealand Ltd [2015] NZHC 1444
• Computer modelling to apportion
damage
• Meaning of destroyed
• Owners intention
• Setting aside settlement agreement

15. Presented by
Peter Woods
Partner
Anthony Harper