Class action promoters promising ‘no win, no fee’ on insurance claims are always on to a winner; any increased payouts over insurers’ typical low-ball opening offers will count as a win ensuring they get paid.
Legal argument over ‘no win, no fee’ contracts was fought out in Lucia Pfisterer’s claim against Christchurch-based Claims Resolution Service Ltd when she challenged its work on a claim for her earthquake damaged Opawa property.
Like many insured Canterbury homeowners, she struggled in dealings with Earthquake Commission and Southern Response over insurance entitlements. An initial 2013 assessment offered $117,000, later increased to $321,800. A supposedly negotiated settlement two days before a scheduled 2016 court hearing saw Southern Response offer to pay $642,000 plus an extra $303,000 for enhanced foundations if a decision was made to rebuild. After apparently agreeing to this offer, Ms Pfisterer backed out, saying she had been pressured into the pre-trial settlement. Southern Response left the file open. After hiring new lawyers, she later reached a final settlement with Southern Response on much the same terms as the aborted pre-trial agreement.
Ms Pfisterer refused to pay the $93,700 legal bill incurred by Claims Resolution for lawyers Grant Shand preparing for the cancelled High Court hearing and negotiating the aborted settlement. She alleged Claims Resolution had misrepresented details of the ‘no win, no fee’ deal, had a sweetheart deal with lawyers Grant Shand which worked to her disadvantage and that she had never agreed to her insurance dispute going to court.
When signing up, Ms Pfisterer was aware Claims Resolution was offering a ‘one-stop shop’ from damage assessment through to claim settlement with the possibility of litigation, Justice Hinton said. She paid, when asked, the court filing fee for her claim against Southern Response and received without complaint a copy of the claim filed in court.
Ms Pfisterer was not prejudiced by the close working relationship between Claims Resolution and Grant Shand, Justice Hinton ruled. In return for the steady flow of work, Grant Shand agreed to reduce legal fees charged. Claims Resolution clients were free to engage their own lawyers; some did.
Grant Shand did breach professional obligations owed Ms Pfisterer as client when it continued dealing with Southern Response after suggesting her change of mind over the aborted settlement meant she should get new lawyers. Grant Shand was not liable to pay damages, Justice Hinton ruled. Grant Shand’s actions in wrongly continuing to negotiate did not cost Ms Pfisterer; her new lawyers finalised negotiations.
Ms Pfisterer was ordered to pay the $93,750 legal fees billed Claims Resolution by Grant Shand. She did not challenge Claims Resolution’s entitlement to an eight per cent commission on her insurance recovery as being a ‘win.’
Claims Resolution Service Ltd v. Pfisterer – High Court (21.05.21)
21.086