EQC Declaratory Judgment


EQC asked the High Court to make various declarations in relation to whether a property’s increased vulnerability to flooding after the earthquake(s) was land damage and, if so, approval to settle the claim by paying the diminution in value of the property rather than the cost to remediate the damage.  The declarations changed over time and by the end of the Court hearing on 31 October 2014 there were also declarations sought that a property’s increased vulnerability to liquefaction was land damage; that the vertical movement of a house was land damage and not building damage and that the only method of claiming against EQC was by judicial review.  EQC originally chose only to involve the Insurance Council as a defendant.  The Christchurch City Council and Southern Response Earthquake Services Ltd were later added as defendants and two intervenors became involved to represent the interests of actual Christchurch homeowners affected by EQC’s proposals.  These were the Flockton Cluster Group represented by Lane Neave (Duncan Webb) and Donna Culf, a red zone property owner represented by Grant Shand.     By the judgment released 10 December 2014 in EQC v Insurance Council of NZ Incorporated [2014] NZHC 3138 a full Court of the High Court (Heath, Kos & Gilbert JJ) decided that EQC could have policies on IFV and ILV, but the Court would not endorse any particular policy.  It decided that IFV and ILV was land damage under the EQC Act.  It also decided that a property’s increased vulnerability to flooding by vertical land movement was not building damage and that EQC could settle land claims by paying diminution in value where reinstatement cost was not the appropriate measure.  Most importantly for the many claimants currently with claims against EQC in the Court system it decided that homeowners could sue EQC as a normal claim to enforce the rights under the EQC Act.  It is currently unknown whether any party will appeal.