The High Court approved a class action for potentially two thousand Christchurch AMI Insurance policyholders claiming to be misled by Southern Response in its treatment of earthquake claims. It is claimed some individual policyholders were underpaid up to $100,000. A class action reduces legal costs for individual claimants and prevents a multiplicity of similar claims.
AMI Insurance had spread its risk poorly. The insurer was insolvent after the 2010-2012 Christchurch earthquake series. It had insured nearly one-third of residential homes in the city. AMI’s losses were socialised with liabilities hived off into Southern Response Earthquake Services, set up as a crown entity with taxpayers’ money poured in to settle AMI’s Christchurch earthquake claims. Since that date, homeowners have criticised the manner in which Southern Response co-ordinated repairs and paid out claims. It is alleged policyholders were offered up to $100,000 less than their contractual requirement where homes were written off as beyond economic repair. Policyholders point to the difference between Southern Response’s internal paperwork itemising potential payout amounts and the payouts in fact offered.
Policyholders Brendan and Colleen Ross fronted as representative litigants. They allege Southern Response breached the Fair Trading Act, breached a duty of good faith implied in AMI Insurance policies and misrepresented costs when making offers to settle.
Associate judge Mathews ruled all similar potential claimants be joined to participate at a future court hearing. This class action is limited to AMI policyholders where their home was damaged beyond reasonable repair.
A keen issue was whether it should be an ‘opt-in’ or ‘opt-out’ class action. The vast majority of jurisdictions around the world allowing class actions use an ‘opt-out’ procedure: all potential litigants are presumed to be in unless they expressly choose to ‘opt-out’. New Zealand is an exception. Class actions are new to this country. The initial class action cases plumped for “opt-in’; only those who expressly sign up get the benefit of the class action. All others have to go the long way; separately pay for and prove their own case. The common legal view is that a change to ‘opt-out’ in this country will require legislation.
AMI policyholders planning to join the class action against Southern Response need to ‘opt-in’. No deadline has yet been set.
Ross v. Southern Response Earthquake Services Ltd – High Court (13.12.18)
19.023