Christchurch earthquake litigation specialist Claims Resolution Service together with lawyers Grant Shand are facing a class action from disgruntled clients alleging failure to properly disclose hidden fees.
Some 170 former clients of Claims Resolution Service Ltd are disgruntled with the service provided. It promised to co-ordinate earthquake insurance claims in return for an eight per cent commission on earthquake payouts. Fewer than two per cent of claims went to litigation it said; nearly all were settled out of court. Debt collection action by Claims Resolution for fees allegedly unpaid led to a backlash; clients banded together attacking its business model.
Customers looking to use Claims Resolution services had signed standard-form contracts requiring an upfront payment of $2500 with an obligation to pay ongoing expenses like engineers’ reports and any court filing fees. Lawyers’ fees and Claims Resolution’s payoff were deferred until claims were settled. Disgruntled clients complain interests associated with both Claims Resolution and Grant Shand picked up hidden fees along the way doing work for Claims Resolution clients as supposedly independent entities. The supposedly independent property damage assessments and costings used as part of negotiations with insurers were far from independent, clients complain. Compensation is demanded.
The Court of Appeal confirmed legal action can continue as a class action. Claims Resolution was ordered to post on its Facebook page notice of the intended litigation together with an advertisement for former clients to ‘opt-in’ to class action litigation. Evidence was given that Claims Resolution had been using Facebook posts to campaign against the threatened class action, stating ‘class actions may not be all they are promised to be’ and warning class action litigants risked ‘incurring enormous costs.’
Claims Resolution Service Ltd & Grant Shand v. Smith – Court of Appeal (18.12.20)
21.020