28 Apr 2016

EQC defends approach after 'milestone' deal

8:23 pm on 28 April 2016

A 'milestone' legal settlement means the Earthquake Commission must now repair quake-damaged houses to a 'when new', and not a pre-earthquake, condition.

EQC

EQC must to repair houses damaged in Canterbury earthquakes to a 'when new' condition following a legal settlement. Photo: RNZ

A group of 98 Canterbury homeowners, known as the EQC Action Group, agreed to the settlement with the Earthquake Commission (EQC) following a bid for a declaratory judgement in the High Court.

The settlement, released today, clarified the commission's obligations under the EQC Act, and removed its reliance on government guidelines.

The commission said it agreed it must repair the damaged homes to a 'when new' condition, not a pre-earthquake condition, and it had corrected how its cash payments were calculated.

EQC acting chief executive Bryan Dunne told Checkpoint with John Campbell there had always been differences about what was considered quake damage and how to repair it, but essentially nothing needed to change.

"What we know now is the approach EQC has taken from day one is the right approach and the principles that have guided that approach in terms of ensuring our customers get their full entitlement, no more, no less under the act, are the right principles as well."

The EQC Action Group, however, is calling it a landmark settlement that clarifies the standard required of quake repairs for everyone, including other cities.

The group's lawyer, Peter Woods, told Checkpoint its 98 homeowners now had a contractual agreement with EQC, but the decision set a precedent for other claimants.

"Everyone else will be able to point to it and say 'well EQC, you've now agreed to the group that this is the standard you've got to meet and you haven't done that at my place. Please explain, please do it properly or please pay me more'."

EQC Action Group founder and committee chair Warwick Schaffer said it was a milestone settlement which would have far-reaching consequences for all claimants.

"Anyone who's had to pay for something such as upgrading their wiring or redoing their cladding that had earthquake cracks is going to be potentially thinking, 'did I get enough?'"

The group was ecstatic, he said, and the settlement cleared up how the standards applied to other cities.

"Wellington obviously, and all up through the North Island, there's lots of earthquake-prone areas, [and they] can take some comfort about what the standard should be."

The group had spent at least $300,000 on legal costs, and should never have been put in the position of having to take legal action, Mr Schaffer said.

EQC Action Group had offered to settle with EQC in September 2015 but that was rejected by the commission and the group took then its claims to the High Court.

Craig Edward, one of the homeowners in the action group, said he felt vindicated by the settlement but believed the whole process had been needless.

"The real tragedy in this, I think, is that EQC resisted this programme for so long, they didn't want to engage with us and sit down and address these issues of interpretation.

"If they had done, this could have been sorted out last year, and we're only in a situation now where this has been clarified."

Mr Edwards said many homes had been repaired to an unsatisfactory standard and would have to be redone, which would cost the commission more money.

No changes to procedures

Labour MP Megan Woods during caucas run April 2015.

Labour's Megan Woods Photo: RNZ / Alexander Robertson

In a statement, a spokesperson for the Minister Supporting Greater Christchurch Regeneration, Gerry Brownlee, said the settlement would not prompt any changes to EQC's policies and practices.

The spokesperson said there had always been several avenues for review and appeal of the standard and scope of earthquake-damaged building repairs.

The Labour Party said the government should clarify whether the settlement applied to more than just the 98 Canterbury homeowners in the claim.

Labour's Canterbury spokesperson, Megan Woods, said the case raised concerns that homes that were deemed a repair job under Ministry of Business, Innovation and Employment (MBIE) guidelines could have been rebuilds under the EQC Act.

"We all know that EQC has been repairing to the guidelines, that those Ministry of Business and Innovation guidelines have been hugely influential in decisions that have been made about the standard of repairs on peoples' homes.

"To say that nothing needs to be changed is burying their heads in the sand."

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