4 Nov 2015

Earthquake Commission accused of waiting on court threat

6:44 am on 4 November 2015

The Earthquake Commission is being accused of waiting until it has been threatened with legal action before it settles earthquake claims in Christchurch.

Rubble in a Lyttelton street a few days after the magnitude 6.3 earthquake hit Canterbury on 22 February 2011.

Rubble in a Lyttelton street a few days after the magnitude 6.3 earthquake hit Canterbury on 22 February 2011. Photo: AFP

Figures given to RNZ News reveal the commission has spent $23.5 million on lawyers since the September 2010 earthquake.

Of the 279 cases EQC has been involved in in the past five years, more than half have involved claims taken against it by lawyer Grant Shand.

Mr Shand said in all but one case the commission had settled before the matter went to court.

"Once sued, I find EQC can resolve them within six weeks to two months of commencing the proceeding.

"If there are truly disputes about the damage then naturally it will stay in the fight a lot longer."

Homeowners needed to threaten court action to be taken seriously by EQC, he said.

"We're now so many years down the track that the issues are known and certain damage leads to a certain outcome, so it shouldn't be this way.

"Really a lot of stuff should be resolved without having to go through a court process."

And he said the $23.5m legal bill could be the tip of the iceberg.

"My understanding is the figures here don't include what EQC has paid so far in legal costs to homeowners, because if it ought to have paid without having to be sued then it becomes liable for a homeowners' legal costs. A payment of $20,000 to $25,000 isn't unusual."

Craig Edwards is a home-owner involved with more than 100 others in taking a group action against EQC over the way it goes about settling claims.

Craig Edwards is a home-owner involved with more than 100 others in taking a group action against EQC over the way it goes about settling claims. Photo: RNZ/Conan Young

Craig Edwards is a homeowner involved with more than 100 others in taking a group action against EQC over the way it goes about settling claims.

He said the fact that in most cases EQC was deciding not to defend itself when claimants threatened legal action showed it was deliberately dragging the chain.

"They have had every opportunity to resolve these issues years ago and they seem to have taken every opportunity to deny home owners their full entitlement... and to delay settling these claims, it's staggering."

The amount the commission had spent on lawyers was immensely distressing, he said.

"Our members are going to be horrified to discover that $23m has been spent on lawyers, essentially to make life a living hell for Christchurch home-owners who have been battling through a process just to get a fair deal to get their homes repaired - $23m that could have been spent repairing homes."

Nobody from EQC was willing to be interviewed but chief executive Ian Simpson issued a statement.

"This figure needs to be seen in the context of EQC's total liability for the Canterbury quakes, currently estimated at $11.5 billion," the statement said.

"Where uncertainty or dispute arises over our liability, we have to consider not just the single case in isolation, but the effect of any precedent created by a change in interpretation of EQC cover.

"I am satisfied that EQC has achieved value for money in our legal spending on litigation since September 2010."

Part of the legal bill involved two declaratory judgements it sought over whether it was liable for the damage caused by all of the earthquakes and what it needed to pay for land damage, the statement said.