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Tribunal Opens for Canterbury Earthquake Claimants

June 19, 2019

Contacts

Partners Helen Smith

Insurance

On 10 June 2019, roughly two weeks after the Canterbury Earthquakes Insurance Tribunal Act 2019 received royal assent, Christopher Somerville was sworn in as Chairman of the Canterbury Earthquake Insurance Tribunal.

This marks the opening of the Tribunal and another option for Canterbury Earthquake claimants who want an independent decision maker to resolve their insurance claim(s).

How does it differ from the existing options?

There are two main existing options for earthquake claimants - the Courts (District Court or High Court depending on the value of the claim) and the Greater Christchurch Claims Resolution Service (GCCRS) determination process.

The Courts offer a final and binding decision with precedent value, but there are a number of drawbacks common to all civil disputes such as time, cost and appeal risk.

The GCCRS offers a determination service that involves respected decision makers and a quick, inquisitorial and cost effective service. It also has the added risk/benefit of being nearly impossible to appeal. Despite its appeal, some caution should be exercised with the GCCRS as, while its decisions will be based on relevant case law, they are confidential and therefore difficult to evaluate.

The Tribunal should be a relatively quick, robust and cheap option that will lead to published decisions. It takes a unique place below the High Court, and almost next to the District Court, except that it has no limit on the financial value of the claim. Like the GCCRS Determination process, the Tribunal takes an inquisitorial approach to claims. [1] This means that the Tribunal Members will have the flexibility to seek their own evidence and make inquiries.

One significant critique of the Tribunal is that parties can apply to the High Court for leave to appeal on questions of fact and law with further appeals to higher Courts possible on issues of law. [2] This could add significant time and cost for homeowners who happen to have a novel or complex case.

Which process is best for my claim?

We recommend taking legal advice on what process is best for you. However, we anticipate some trends in the type of cases that will go to each dispute resolution forum. 

If the parties can potentially resolve the issues without involving a third party, or more information is needed to enable discussions to take place, the first step is normally an alternative dispute resolution process. In an earthquake context, this could mean:

  • Negotiation between the parties
  • Mediation with a third party mediator
  • Mediation with a Tribunal-appointed mediator[3]

  • GCCRS facilitation
  • GCCRS engineering facilitation with members of the Engineering New Zealand Earthquake Engineers Panel

If a homeowner needs a third party to resolve the claim, the decision is more difficult. As a rule of thumb:

  • The GCCRS Determination process is probably still the best option if time, cost and finality are major considerations. The costs regime in which homeowners cannot normally be liable for the insurer’s costs is a major drawcard.
  • The Tribunal may be a good option where the homeowner seeks an alternative to Court with a published decision. 
  • The High Court remains the best choice for highly complicated matters or matters with potentially precedent-setting issues of law.

In terms of which option is best for unrepresented homeowners, this will be a difficult decision between the Tribunal and the GCCRS Determination process. The Tribunal has a wide-ranging ability to investigate claims that may exceed the flexibility of even the GCCRS Determination Process. However, the costs regime in the Tribunal may be considerably less advantageous and the appeal process presents its own additional set of risks.

For parties who are already involved, but not too far advanced in Court proceedings, the Tribunal may be the best option. An insured person is able to apply for an order to transfer proceedings to the Tribunal.

By contrast, transferring proceedings to the GCCRS will normally require the consent of the other party and the Court, which will mean negotiating on how to deal with Court costs that have already been incurred as well as the costs associated with the GCCRS process.

The new Tribunal will allow homeowners an attempt to resolve the dispute in a more economical forum than the High Court even if the insurer does not agree. One important word of caution is that the appeal process to the High Court (and then Court of Appeal/ Supreme Court) could end up thwarting this approach so it is not recommended for homeowners who are already advanced in their litigation.

 

[1] See Canterbury Earthquakes Tribunal Act 2019, s 40.

[2] Canterbury Earthquakes Tribunal Act 2019, s 56.

[3] Canterbury Earthquakes Tribunal Act 2019, s 30.

Contributors sam.hider@simpsongrierson.com, miranda.gray@simpsongrierson.com, matthew.prendergast@simpsongrierson.com