Christchurch High Court Earthquake Litigation List

Christchurch High Court Earthquake Litigation List 
As of 30 September 2016

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Figure 1: Breakdown of insurers, claims amounts and areas
 (Interactive version can be viewed by clicking on the image above)

Here is a graphical analysis of the Christchurch High Court earthquake list as at 30 September 2016. Mouse over the insurers in the left-hand section to see how many High Court cases each one is involved in. Clicking on each rectangle activates the pie chart and map information for one insurer.

If you move the mouse over the pie chart in the centre, you can see the total dollar values for residential and commercial claims against the particular insurer. The “highlighted” figure shown is for the area of the chart the mouse is currently in.

In the block diagram showing active and inactive cases at the bottom right, you can grey out either category by clicking on the circle beside the other category (e.g. click on “active” to highlight these cases only, or click on “inactive” to highlight inactive cases). You can see that almost no cases are inactive for the months of 2016.

The map shows the number of High Court cases by location by insurer. So you can immediately see where the main geographic concentrations for the respective insurers are. For example, claimants against Lloyd’s of London (which will be predominantly commercial claims) are almost exclusively in the city centre. For the large rectangles like EQC and IAG, with heavy concentrations throughout the city, if you mouse slowly over each suburb, you can see the number of people in each who have sued the insurer in question in the High Court.

cumulative-hc-sept-2016
Figure 2: Dollar value of High Court earthquake claims

This graph shows the gradual accumulation of High Court earthquake insurance claims expressed in dollars, starting from the first earthquake in September 2010. The blue columns represent High Court cases that are inactive (i.e. have been discontinued, cash settled, withdrawn, etc., or where a decision has been delivered by the court). The green columns represent active cases that are still to be heard. The red line shows the accumulation of costs for active cases, while the black line shows the accumulation of active and completed cases combined. Note the spikes in the number in July and December 2013, and in August/September 2016 (end of the period of limitation). 25% of claims do not specify a dollar value for the claim. This means that the combined total of $752,685,873 is well short of the full amount that is being claimed. In all probability, the complete figure is over $1,000,000,000. It should also be remembered that these are only claimants who have decided to sue their insurer or EQC. We should not forget low-income and vulnerable claimants, people with mental and physical health problems, the elderly, and those who accepted cash settlements. These are the real victims of the recovery.
While every care has been taken in compiling the statistics, Empowered Christchurch assumes no responsibility for the accuracy of the information.

 

The EQC leads the field with a total of 107 cases, while 79 of the Southern Response cases have been concluded. This means that government-controlled entities make up 186 (55%) of the total. Almost all of these will be under cap and “repair” cases – an unknown number of land cases are still to come.
Lumley is an IAG subsidiary, which means that the IAG Group accounts for close to one third (105) of the 336 concluded cases. Concluded cases do not actually go to court for one reason or another. They are frequently (cash) settled shortly before High Court proceedings commence, which is when serious legal costs accrue for the insurance companies.


Figure 3: Concluded cases by insurance company and solicitor/barrister – 30 September 2016

Here are the figures for the most proactive solicitors and barristers in High Court litigation. Grant Shand has the lion’s share in both categories, with no competitor in sight for concluded cases. In the active cases category, Jai Moss has a respectable 90, and Andrew Hooker, of Shine Lawyers, 38 cases. The former appears to be the only Christchurch lawyer* with any substantial number of cases, the other two being Auckland-based. It has been suggested that this is because local law firms rely heavily on banks and insurance companies for their bread-and-butter work. [*One Christchurch omission is S P Rennie, of Rhodes & Co., with 26 cases, but we will be updating the statistics as we receive more information.]


 

Figure 4:  Active cases by insurance company and solicitor/barrister – 30 September 2016

This figure shows the current High Court list of active cases.
Since our focus is on residential claims, companies writing mainly commercial business, such as QBE Insurance (13 cases), have been excluded. As with the statistics for concluded cases, the EQC is the clear leader, with 37% of the total of 402 active cases. The IAG Group (IAG + Lumley) account for 28%. IAG has still to settle approximately 60% of its total court cases (concluded and active), as does its subsidiary, Lumley. Vero, the number 2 in the private insurance market in New Zealand, has slightly more than 60% of its defence cases still to be heard (or cash settled). The EQC’s combined total of 310 High Court cases (to date) leaves it with roughly two thirds of the way to go. Most of the future claims for EQC land damage may be handled by the District Court (<$250,000) rather than the High Court. The smaller players (Tower and AA) have still to defend between 50% and 60% of their respective cases. Overall, therefore, the spread of remaining cases from best to worst is quite narrow, between 53% (Tower) and 66% (EQC).



Are you paying too much for your insurance premiums? This could be one reason.

The New Zealand insurance industry is dominated by two Australian groups, Sydney-based IAG (Insurance Australia Group) and Suncorp Group Limited, a Brisbane-based finance, banking and insurance corporation. IAG bought the AMI business in 2011 after the latter became insolvent, leaving the outstanding earthquake claims to be handled by the government through the new entity, Southern Response.

In December 2013, the IAG Group announced a A$1.845 billion deal to buy the underwriting businesses of Australia’s Wesfarmers, which included Lumley in New Zealand. At this point, IAG already owned NZI (its broker arm), State and AMI (non-quake related business), and was also behind cover provided by ASB, BNZ, and Cooperative Bank, and Warehouse Travel. The Lumley deal increased the group’s share of the overall New Zealand insurance market from 41.5% to around 50.5% and the new acquisition reportedly increased its share of the New Zealand home and motor insurance market from 60% to as much as 66%. In Germany and the USA, the market leader controls only around 10% of the overall market. In addition, since it owned three of the main four banking relationships, IAG was now in a position to ensure that price increases could occur across the majority of the bank channels.

market-sharesFigure 5: Market shares of IAG plus Suncorp

This section looks at the market share of the second-biggest player.

The Suncorp Group owns Vero Insurance, (known until 2003 as Royal & SunAlliance), which is New Zealand’s second-largest insurer, as well as SIS Insurance, AMP General Insurance, Axiom Insurance and Asteron Life. Vero operates through a large stable of different companies, covering most classes of insurance (commercial, marine, liability, travel and motor, as well as specialist risks) and sells exclusively to the broker market. Vero also holds a 68% share in AA Insurance. After IAG’s purchase of Lumley, however, Suncorp’s total market share of 23.5% of the general insurance market paled into insignificance in comparison with its rival. When taken together, these two groups control just under 75% of the general insurance market in New Zealand. As pointed out earlier, this contrasts dramatically with other insurance markets such as Germany and the USA, where the market leader controls only around 10% of the overall market.

In a submission to the New Zealand Commerce Commission in 2014, Suncorp objected to IAG’s acquisition of Lumley on the grounds that it would seriously decrease competition, particularly in the home and contents market, and also in the motor insurance segment. It pointed out that, at the end of 2013, IAG had settled 51% of its earthquake claims, compared to Lumley’s 70%. Purchasing a better performing rival, it argued, would “decrease the competitive tension on IAG to improve its claims handling record”.

However, despite the virtual cartel situation that resulted, the Commerce Commission gave the OK for the Lumley purchase by IAG without demur. A press article on the subject led with a picture of a small dog representing the Commerce Commission, the presumed metaphor being the Commission as poodle, with the government’s firm hand on the leash.


market-share-hc-cases

Figure 6: IAG share of total

The EQC is, of course, the elephant in the room. With 203 cases before the High Court, and 10,492 remedial claims as at the end of June 2016, the Earthquake Commission, whose stated function when set up in 1993 was “to reduce distress, both in those immediately affected by the disaster, and in the New Zealand economy and society”, appears determined to reduce the distress to the New Zealand economy only. Adopting a similar strategy to IAG, the EQC has given homeowners until the end of October 2016 to decide to either take a cash settlement, or to remain in the organisation’s managed repair queue. The Commission’s series of 6 community information meetings on DoV (diminution of value) payments for “increased liquefaction vulnerability” was abruptly terminated without explanation in mid-October. There are indications that many homeowners will also be suing EQC for its volte face on land remediation, since it paid the full pre-earthquake land value to homeowners affected by the September 2010 earthquake and many homeowners now face much more serious land damage, for which they are scarcely being compensated.

Southern Response’s efforts to reduce its claims payments also seem likely to be the subject of litigation for quite some time. Southern Response is the defendant in roughly 88 active High Court cases, half of which are with EQC as its co-defendant. So far, it has received two Crown pledges of $500 million, with an additional $250 million dollars approved. Its figure for payouts and operating costs is $2.28bn, with the gross cost of claims estimated at $2.904bn. This contrasts sharply with the forecast Crown support figure of $1.132bn.

Of the smaller insurance companies involved in the High Court litigation, the most noteworthy is Tower, a New Zealand insurer that claimed to have 10.5% of the house insurance market at the end of 2013. However, the company had a disproportionately large share of over cap claims transferred to it by the EQC (11,070 claims or approx. 35%). And with 45 or so active High Court cases, it accounts for roughly 11% of the total. Tower’s share price has been falling for much of this year and according to press reports, it is expected to face a $75m bill, as its reinsurance cover for the February 2011 event has already run out.

 

Source and more information: https://www.lawsociety.org.nz/law-library/news-archive/high-court-earthquake-list-case-summaries


Disclaimer: This information here has been compiled to the best of our knowledge for informational purposes only from publicly available sources, including the lists published by the Courts. Empowered Christchurch assumes no responsibility for the use of, or the accuracy of, the information.

 

 

 

 

Empowered Christchurch Inc.

Incorporated

Incorporated

Empowered Christchurch has been extremely active since the protest rally on 21 February 2016. Following on from the submission made to the Local Government and Environment Committee on the Regenerate Christchurch Bill back in December 2015, further submissions were made on the Replacement Christchurch District Plan at the end of February this year. A hearing panel of judges listened to submissions from community groups and individuals. One of the chapters covered was on coastal environment and the other on natural hazards. On 3 March, based on the evidence provided, the independent hearings panel asked the council to provide supplementary information on 1) sea level rise, 2) flood ponding management areas, and 3) permitted activities in rural areas. Most of this was duly submitted on 21 March 2016. However, on 20 April 2016, Council requested an extension for providing evidence on further high flood hazard modeling to Friday, 20 May 2016. The extension was granted the next day.

At the Seismics in the City meeting on 18 March 2016, we asked the Mayor, Lianne Dalziel, why she had not followed up on her offer to meet with us after the protest rally. A meeting was subsequently arranged for the morning of 6 April 2016. Here, the discussions centred on existing use rights (EURs), flood protection, ground water and building in high risk flood management areas (HRFMAs). The Mayor stated that Council lacked a statutory legal basis to prevent EUR rebuilds at the low floor levels we described (and illustrated with pictures). On existing use rights (EURs), Council agreed to seek a legal opinion from its solicitor, Brent Pizzey, as to whether EURs ceased to exist after a building platform has settled or removed laterally following an earthquake (a query made by Adrian Cowie). Council also undertook to follow the example of the MBIE and post a statement on its website reminding residents that Council regulations were not necessarily the same as insurance policy entitlements. We were told a working group would be set up to define the problems and determine the areas where Council could do something. A written response was promised by 20 April 2016, while the public would be kept informed on the Council website. No update has been forthcoming, but we did have a further meeting with Council on 26 April and will report on that in the near future..

Submission on the Draft Transition Recovery Plan: Greater Christchurch Earthquake Recovery: Transition to Regeneration

Submission

Submission

The earthquakes and their aftermath have hit the eastern suburbs hardest, so we feel that it is essential to have relevant community representatives’ involvement in the transition process to “Regenerate Christchurch”. Many members of our community face serious day-to-day challenges, such as substandard living conditions and uncertainty about the future of their homes. Many of the services and infrastructure in the area have disappeared or been withdrawn, and for “Regenerate Christchurch” to be successful, resident input is vital. We therefore hope that the Empowered Christchurch can look forward to productive cooperation between central and local authority bodies, on the one hand, and tax- and ratepayers on the other, over the coming years.

The Christchurch recovery is now at a crossroads, where we need to look for a way forward and reach some difficult decisions. We also need to look back, since although the past cannot be changed we can all learn from it. In hindsight, it is clear that some decisions taken over the last five years could have been better. We need to make sustainable decisions at this juncture, so that generations to come can learn from our mistakes. Let us remember that our city of the future will be their city of the present.

Context and background
It is important to look in detail at how the recovery has been handled.

We have been dissatisfied with the manner in which communication has been handled by the recovery authorities and also with the provision of and access to information.

We feel that genuine community representation is lacking to a large extent: agencies are dependent for funding on local bodies, territorial authorities and even in some cases insurance companies. As a community group, we have frequently been stonewalled when asking questions or raising concerns.

The missing stakeholder
A series of decisions have been made over the recovery up to now where “all the stakeholders” are consulted but one. The stakeholder excluded from almost every decision has been the homeowner.

If political planning is prepared to sacrifice sustainability in the interest of short-term cost savings, the consequences can be devastating for the people affected. Our main concern is that people who were fully insured may end up homeless, facing a lifetime of poverty after 2-3 political cycles.

CERA made zoning decisions based on the assumption that individual solutions were available. In fact, individual solutions are not available in some coastal areas. The temporary stop banks in along the coastal areas are rapidly eroding. Some properties have been left below high tide mark on land that has a limited future life. The New Zealand Insurance Council has stated that they would like hazard notices attached to all properties with risks, so that people know exactly what they are buying. Certain coastal areas of land have been identified as high hazard and may disappear as the result of erosion within the next 50 years. The likelihood is that properties on such land will quickly become uninsurable in the years to come, and will not be accepted as security for a mortgage.

Unlike insurance companies, banks are not risk takers and will foreclose on any mortgaged property that loses its insurance cover once hazards have been identified.
The potential scenario residents face was highlighted recently on Radio NZ, when Westpac gave farmers in Northland 30 days’ notice to refinance, with the alternative of foreclosure on their farms.

The 6.2 earthquake under the eastern suburbs on 23 December 2011, after which Lianne Dalziel, Bob Parker, John Key and Roger Sutton all indicated that new zoning decisions might be made, now appears to have been a mysterious event, since the ground shaking measurements for this earthquake have disappeared.

This is one example of the lack of open and accurate communication from the authorities referred to above. There is also a reason to point out the New Brighton Earthquake that struck in 1869.

Seismic risk
One thing we can learn from the past is that seismic risk in Canterbury had been underestimated before the earthquakes struck. This is confirmed in a report for EQC in 1991. It is also the conclusion of the Royal Commission in the CTV report. A number of recommendations have been made but not followed. For example, neither the AS/NZS 1170.5 standard nor the New Zealand Geotechnical Society guidelines have been updated. Yet another recovery instrument is the Earthquake Prone Building Act, which is still to be passed by Parliament. As the emergency response part of the recovery is now behind us, we need to ensure sustainability for what lies ahead.

Risk acceptance
It is the role of insurance companies, the EQC included, to accept the risks covered under their terms of reference/policies and compensate policyholders when such risks eventuate. However, many policyholders in Christchurch have not been compensated for the damage to their homes and lives. These responsibilities need to be faced by the entities responsible. An equitable solution needs to be found for properties with hazards such as flooding that are a direct result of the earthquakes. In tandem with this, every effort must be made to protect residents from the risks posed by climate change.

Future insurability
Recommendations to the Department of the Prime Minister and Cabinet (DPMC) from ICNZ include taking a long-view – and requiring local authorities to deny consent applications where a long-term perspective risks from natural hazards will increase. It also recommended the issue of hazard notices for all properties affected.
We welcome the long-view but we are concerned that due to the increased risk caused by the earthquakes, future insurance cover will not be available. When the District Plan is made operative the hazards will finally be mapped. Despite the fact that hazards have still not been mapped, we have examples of insurance cover being withdrawn, offered on a monthly basis, and fire insurance being refused.

In an article in the New Zealand Herald of 5 November 2014, the CEO of IAG refers to cooperation with the NZ Government on a strategic intent in 2011 to avoid depopulation of Christchurch. Now that the ICNZ has signalled its intention to withdraw from high-risk areas and the CCC also plans to redefine the boundaries of the city so as to exclude properties below the Mean High Water Springs. We ask whether a “recovery” involves abandoning people once the insurance and bank sectors have managed a retreat.
The EQC does not cover flooding events, which will represent the largest uninsured risk exposure for those Christchurch residents in the future.

Homeowners have not had a fair representation in this recovery.

The declaratory judgment was a one-sided decision, and in the middle of the proceedings CCC took the side of the EQC. The concerns of the community were not addressed in that judgement. EQC stated that it had not paid for subsidence of land before. In fact, EQC made compensation payments for subsidence after the Waihi ground subsidence in 2001.
EQC and CCC reached an agreement to evaluate area-wide solutions for the Avon Estuary, knowing that the current solutions (temporary stop banks) would not suffice. The solution, which is currently being evaluated, is tidal barriers. This solution was previously rejected by the Ministry of the Environment in 2007, and identified as posing the risk of an ecological disaster. This has been done without consultation with the affected people. Meanwhile insurance companies have been settling insurance claims when it is known that the land has a very limited future. The EQC has still not communicated the known land damage to homeowners.

NZCPS (New Zealand Coastal Policy Statement)
CERA did not consider the NZCPS when they conducted their planning/zoning.
Likewise, the statutory obligations of planning for coastal risk were not considered.

Access to information
Homeowners have been denied access to land information on the basis that the information is commercially sensitive. In fact, they have been presented with out-dated information that excludes over 100 earthquakes. These facts have been brought to the attention of CanCERN, EQC, MBIE and Council. There is still no explanation for why these documents have not been updated and are still being presented as current. The EQC stage 3 land report dates the last earthquake as occurring in June 2011. Yet we experienced over 100 earthquakes of magnitude 4-6.2 after that, most of which struck under the eastern suburbs.

 

CERA, Briefing to the incoming minister
The CERA Briefing to the incoming Minister, October 2014, states the following:

“As reconstruction continues over the next 10 years, a greater focus on developing and realising the vision for greater Christchurch is needed to ensure that long-term recovery is self-sustaining.”

“The eastern suburbs of Christchurch city, which suffered the greatest housing and land damage in the earthquakes, are now experiencing greater rebuild and insurance complexities. The residents of these areas, many of whom have pre-existing vulnerabilities such as low incomes and/or a disability, are experiencing a more challenging recovery than those in other areas of greater Christchurch.

Other issues may complicate claim resolution, such as where owners have cash settled and will therefore have to manage potentially complex rebuilds or repairs themselves in a period of cost inflation. Under-insurance and/or deferred maintenance may mean some owners face funding shortfalls and need to make additional contributions to complete rebuild or repair. Helping owners understand their insurance policies, rights and obligations relating to property ownership and technical aspects of their repair or rebuild is the preferred approach to resolving claims and reaching flexible solutions that meet the individual needs of the parties. CERA will therefore continue to support owners to facilitate faster resolution of insurance claims through supporting the Residential Advisory Service to provide independent information, technical advice and facilitation.”

The residents in the Eastern suburbs were no less insured than anyone else in the city. In fact it has been identified that there was more underinsurance in the western part of the city.

Indemnity/accountability
Indemnity insurance is a priority for the recovery authorities. The only problem is that with full indemnity cover there is no accountability.

Without accountability unsustainable practices can take place.

CERA Community Forum
The CERA community forum is one of the administrative structures whereby the Minister is expected to receive input from the community.
However, our experience is that when serious matters are brought to the table of this organization, they are brushed aside or deferred. The minutes from the forum were not published until an OIA request was lodged six months later. The issues brought up were written off as a misunderstanding. The concerns pointed out to the forum are reflected in the results of a recent MBIE inspection of 14 properties, where 13 of them failed.
The root of this problem was presented to the CERA forum in June 2013.
Large sections of the minutes of the forum have been blanked out, which does not instil confidence. In short, we do not see that the forum is serving its intended purpose.

 

Written Comments

  1. Do you have any views on the powers and provisions that will be needed in the new legislation to support regeneration?

Future insurance is a crucial element for the residents of Christchurch. As current legislation stands, large parts of the coastal areas in Christchurch face a future without any insurance cover or mortgages. The legislation powers should be used to enforce minimal low-cost insurance availability. If that cannot be achieved, rezoning needs to be considered.
The EQC does not provide cover for flooding unless it is caused by another disaster. It may also decline cover for a hazard that already attaches to a property (Section 72 notification). In turn, insurance companies may reject a claim for hazard damage that has already been rejected by the EQC. This leaves property owners totally exposed to natural hazard risks.
A recovery that leaves fully insured people in this position cannot be considered a successful recovery. Legislative powers need to focus on sustainability and consider that people’s lives are being planned for. Planning and decision-making that only takes the perspective of a political cycle can be very damaging for the city.
The community will always elect representatives for long-term planning. However, politicians focus on 3-year planning cycles, since they cannot be sure they will be in office after the next election, Council, on the other hand, can take both approaches. The more consultation there is between the Council and community leaders the better the balance will be between short- and long-term approaches to issues.
Legislation should not be allowed to delay sustainability simply in order to reduce costs. Christchurch hazards have been mapped by both ECan and CCC. According to the RMA 86(B) (3)(a), any notified hazard relating to water in coastal areas must be implemented upon notification, including the increase in the finished floor level (FFL) to 12.3 m above the Christchurch City datum.
Council has informed homeowners that the hazard maps have not become operative because the district plan was passed by an Order in Council. As a result of this, residents have been denied sustainable planning and left at risk. It appears in this case that the legislation is obstructing sustainability, and any future legislation needs to consider this danger.
We suggest that homeowners be provided with financial subsidies, including legal assistance. We propose the independent election of 5 individuals by the communities who would have the role of assisting with negotiations, submissions on laws, bylaws, plans and other instruments of the recovery.
We agree with the CCC that any powers retained under section 27 should be exercised only at the request, and for the benefit, of affected local authorities, for a purpose that complies with the new Act.

  1. Do you think that the proposed new arrangements for the central city will create the ‘step-change’ needed to drive business confidence and investment in the central city?

We fully support the idea of a Christchurch City Council-led recovery approach, with the Crown in a role of close cooperation. With the active engagement of community leaders, we believe this is the best solution, and the only way to restore the trust required to re-unite the city and move it forward. We cannot change the past but we can plan for a better future. Community engagement, sustainability and transparency are key components for success. Without these, there is the potential for the city to fragment and for serious conflicts to develop.
The “too-hard basket” is overflowing and needs to be dealt with to avoid public unrest.

We believe many aspects, such as a one-stop shop for resource consents and building consents, would help simplify processes.

The long-running disputes over insurance claims must be resolved, and homeowners’ rights honoured. After nearly five years, a duty of care is owed to those affected and still suffering.

One-sided arguments at the expense of the homeowner must stop.

We are extremely concerned about the potential for “regulatory capture”. This concern also extends to the well-funded central and local government training of selected “leaders in the community”, and to other agencies such as RAS, which are mainly funded by the insurance industry. In far too many cases, there has been an absence of open and transparent communication. Independent and unbiased actions in the interests of the communities affected are required from all such bodies and entities.
Neither South Brighton Residents’ Association nor Empowered Christchurch has a representative in this selected leaders group.

5.5
We are in favour of CCC endeavouring to attract private investors with the support of central government. We suggest that successful businesses in Christchurch should also be given an opportunity for input here, or encouraged to open up their networks. Investment by supporting industries could strengthen local successes. The business connections are already in place.

 

  1. Are there any other changes needed to build confidence and encourage investment in the central city rebuild?

If the intention is to attract foreign investment to the city, added facilities are needed. For example, there is a serious lack of swimming pools and saunas in Christchurch. This is a fundamental facility in most cultures, Christchurch can excel in this field and utilise the unique greenery and natural attraction of the red zones. We fully support tourist and visitor attractions such as the Eden Project. “Christchurch – unique – green and clean”.

  1. What are your views on the proposal for regular monitoring and public reporting on priority areas in order to hold agencies accountable for addressing recovery issues?

Independence on the part of recovery agencies and the honouring of the provisions and specifications in insurance contracts is a vital part of the recovery (cf. regulatory capture risk mentioned above). The briefing to the incoming minister illustrates how these aspects have failed.

In December 2012, CERA published the TC3 Residential Rebuild Booklet.
This is an extract from page17:

Home owners should note the fact that most insurance policies in place at the time of the earthquakes will cover the cost of building consent requirements to raise finished floor levels to meet standards set in the Building Act.

Insurers will continue to work productively with the Council, EQC and other agencies to provide best outcomes for policyholders.

EQC and Insurers are working to prioritise the claims of vulnerable groups in the community.”

Considering the number of properties still sitting below high tide after the earthquakes, this indicates that something has gone wrong in the recovery and that original principles have been abandoned.

Empowered Christchurch has reached an agreement with Council on a letter that protects the rights of vulnerable people. We suggest that issue of this letter is made mandatory for anyone seeking assistance from the RAS service. http://empoweredchristchurch.co.nz/ccc-notification-email/ 

  1. In your opinion, is there a better way to report on these recovery issues?

We believe that, as regards residential recovery, monitoring should extend to code compliance certificates.
According to figures published in 2014, only fractions of repairs/rebuilds are completed with the issue of a code compliance certificate. To conclude the work to the required standard, someone must pay for the code compliance.

Leaving things as they are could have serious negative consequences for the recovery and for the city as a whole. We suggest an investigation of number of outstanding code compliance certificates and that responsible parties are made to address this outstanding work.
We recommend that following this process structural EQC repairs are to be listed on LIM reports and form a final part of the insurance claim settlement with consultation with the homeowner.

 

Looking at the recovery from the perspective of the eastern suburbs, it is impossible to avoid thinking of a phenomenon referred to as “disaster capitalism” and considering the aspects that have already become evident in the recovery process. Loss of equity and quality of life, risk transfer and other substantial shifts are taking place. We suggest that a regular mini-census should be conducted throughout the remainder of the recovery at intervals of 6-12 months to monitor deprivation, insurance cover (or lack of it), mortgage, home equity, and rental status. If unexpected changes identified, investigation and correction measures should be implemented.

 

Any other comments: (Also see “context and background”.)
At the beginning of the recovery, the city’s residents trusted blindly in the authorities. People had learned to expect government and the authorities to do the right thing for them and treat them with care and consideration.

 

Some people of Christchurch have now lost this blind trust, and frustration is building up; it will take significant efforts to reverse this erosion of confidence and stem the build-up of anger. To achieve this, there needs to be access to complete and accurate information, transparency, engagement, sustainability, fairness and care.

Let us remember the much-quoted assurance from the Prime Minister in 2011: “On behalf of the Government, let me be clear that no one will be left to walk this journey alone.
New Zealand will walk this journey with you. We will be there every step of the way.
Christchurch; this is not your test; this is New Zealand’s test.
I promise we will meet this test
.”

Empowered Christchurch calls on the authorities to live up to this promise.

After nearly five years of “Emergency Response”, where sustainability has been sacrificed in the interests of speed, we can assume that this phase is now behind us. We see no reason why this period should be extended until April 2016. Lessons must be learned from the past.

It is time to move into the “Restoration Phase”. Once seismic and building standards are corrected, and risks are notified, mapped and accepted, sustainability will be ensured.

We need a city that is driven by the people that live in it, and enabled by a bureaucracy that accepts and mitigates risks, rather than transferring them to the most vulnerable of its residents.

Submission

Submission

 

Contact:
Empowered Christchurch
Hugo Kristinsson,

+64 (0) 3 3535 640

hugo@absolute-proof.com

About Empowered Christchurch.
Empowered Christchurch is an apolitical community group with over 2000 members set up to support victims of the Canterbury earthquakes, to find answers to their questions and to help achieve fair settlements for homeowners.
www.empoweredchristchurch.co.nz

 

Empowered Christchurch asks Labour MP’s to take concerns to Parliament. Part1

 

Christchurch, 16 November 2014.

 

Subject: Concerns of residents in the Eastern suburbs.

Briefing for a meeting with Poto Williams MP. on Monday, 17 November 2014.

Empowered Christchurch is concerned about recently published documents and the media coverage of the land damage in the Eastern suburbs.


 

On the 5 November an article with the title, How Christchurch avoided depopulation”, was published in the NZ Herald.

The statements in the article included the following by Jacki Johnson, CEO of IAG.

“But she also told of moves by her sector to curtail any exodus: “We worked with Government and asked what it would take for us to avoid depopulation and Canterbury didn’t have that as much as we saw with Hurricane Katrina in the US. It was a strategic intent in 2011.”


 

 

On the 4 November ICNZ published the following recommendation to decision-makers in NZ:

The first statement came from Tim Grafton, CEO of ICNZ.

“Without risk reduction measures, the cost from natural disasters will increase.”

Recommendations from ICNZ include amongst others, to:

  • “take the long-view – require local authorities to deny consent applications where taking the long view shows risks from natural hazards will increase.
  • high-quality data – establish a high quality, national natural hazard database to inform decision-making such as the cost-benefit trade-offs around risk reduction.
  • a hazard risk on every property – ensure there is publicly accessible information on the natural hazard risks every property in New Zealand faces.”

 

An editorial with the following headline was published in The Press on 11 November 2014:

“Shortcuts on plan a mistake”.

This included such statements as:

“Southern Response, the Government-owned entity that took over AMI’s earthquake liabilities, and Tower Insurance have both complained about council proposals aimed at reducing the risk of flooding in low-lying areas.”….

“Worse than that, some of the greatest damage in the eastern suburbs occurred where a hazard was known but was underestimated and not adequately prepared for. The companies’ idea that they should be allowed to go ahead and rebuild and repair where there may be greater risks suggests they have learnt none of the lessons of the earthquakes.”


 

In a document published by the Central Otago District Council the following is confirmed by the Earthquake Commission and ICNZ.

“The Earthquake Commission Act 1993 gives the Earthquake Commission discretion to decline, or meet part only of a claim, where the certificate of title for the affected property contains such an entry. Whether the Earthquake Commission will actually decline part or all of a claim on this ground depends in part on the nature of the natural disaster that may occur.

If it is determined by EQC that a claim for natural disaster damage will not be met due to the presence of a Section 73 covenant, then your general insurer will not be able to pay a claim under the top-up cover.”

No such document has been published for Christchurch.


 

The Briefing to the incoming Minister, October 2014, states the following:

“As reconstruction continues over the next 10 years, a greater focus on developing and realising the vision for greater Christchurch is needed to ensure that long-term recovery is self-sustaining.”

“The eastern suburbs of Christchurch city, which suffered the greatest housing and land damage in the earthquakes, are now experiencing greater rebuild and insurance complexities. The residents of these areas, many of whom have pre-existing vulnerabilities such as low incomes and/or a disability, are experiencing a more challenging recovery than those in other areas of greater Christchurch.

Other issues may complicate claim resolution, such as where owners have cash settled and will therefore have to manage potentially complex rebuilds or repairs themselves in a period of cost inflation. Under-insurance and/or deferred maintenance may mean some owners face funding shortfalls and need to make additional contributions to complete rebuild or repair. Helping owners understand their insurance policies, rights and obligations relating to property ownership and technical aspects of their repair or rebuild is the preferred approach to resolving claims and reaching flexible solutions that meet the individual needs of the parties. CERA will therefore continue to support owners to facilitate faster resolution of insurance claims through supporting the Residential Advisory Service to provide independent information, technical advice and facilitation.”

 


 

Further supplementary material provided:

Map generated from information from the Orbit Geotechnical Database.
This shows that South Brighton had some of the most significant lateral spreading in Christchurch.

Elevation map of the lowest lying areas of South Brighton that face the highest risk.
Source: University of Canterbury.

Erosion Risk Map of Christchurch: Map B –C10 Christchurch Map Series.
Source: Environment Canterbury.

Several photographs showing the actual land damage, subsidence caused by lateral spreading. Comparison before and after the earthquakes.
Images show actual subsidence and give estimation of increased relative rise of groundwater and consequential loss of ground bearing.

In conclusion, it appears that recognising the high risks in some of the Eastern suburbs following the earthquakes has been delayed for the purpose of avoiding depopulation.
As identified in the briefing to the incoming minister, the area’s residents frequently have pre-existing vulnerabilities such as low incomes and/or disabilities. Their homes represent their life savings.
It is also clear that many residents have cash settled.

Because of this approach to managing the recovery, vulnerable people have been severely disadvantaged, and according to statements from EQC and ICNZ, are unlikely to be covered by insurance if a natural disaster occurs in the future.
The residents affected were not underinsured.

The risks that have been identified for South Brighton for example are extensive and could all be added on the LIM reports for the affected properties when the district plan is updated.

They include erosion, subsidence, liquefaction, flash flooding, tsunami and flooding.

All these hazards may be excluded from insurance cover for the residents affected in the future.

An insurance contract is a transfer of risk. You purchase an insurance policy, and the insurance company assumes the risk. Policyholders should not be left disadvantaged after a government-managed recovery that involves excluding the main stakeholders and jeopardises their life savings. The decisions taken to avoid depopulation mean that people have been incorrectly led to believe that their land is safe when it is not.


On behalf of Empowered Christchurch we ask that you take our concerns and present our case to parliament.
Contact:
Empowered Christchurch
Hugo Kristinsson,

About Empowered Christchurch.
Empowered Christchurch is an apolitical community group set up to support victims of the Canterbury earthquakes, to find answers to their questions and to help achieve fair settlements for homeowners.
www.empoweredchristchurch.co.nz

 

Empowered Christchurch Newsletter

Here find our first Newsletter. This is a very useful resource for all insurance claimants. The forces we are up against are incredible. It is a challenge to sort out an insurance claim that involves your life savings. When you also have to face new legislation, outdated standards, MBIE Guides, inappropriate code of conduct the task becomes monstrous. We hope that this Newsletter helps people understand how this recovery is constructed and the pitfalls to be aware of.

http://issuu.com/brightsidepublishing/docs/empowered_christchurch_issue_1/1

Post quake flooding in Christchurch

The situation in Christchurch has now become very clear.
Constant flooding with the suffering of affected people. Insurance companies running for shelter by not providing insurance for flooding.

The insurance sector has a plan for these areas to increase the cost of insurance or not to provide insurance cover on the long run.  http://www.nzila.org/documents/130905-lucas.pdf
People that have suffered the hardship of the earthquakes, still living in damaged houses through the fourth winter suffering constant flooding and further loss of property due to high insurance excesses or no insurance cover. Most of these people do not have any certainty about their future, not able to make any decisions and it is fair to say that they are in captivity by the recovery authorities.

We are having one serious rain event today, we may have relief on Wednesday but there is another large rain event on the horizon in the following days.

The advisors to the government and to EQC come from the insurance sector. I believe how the recovery is handled reflects that quite clearly.
One of the most significant tools of the insurance industry is risk transfer. The insurance sector trades with risk and they are fully aware of the cost of risk.

They way the Risk Transfer works is that the risk that we insured for is not mitigated. Residents are left with the risk.
The risk is varying, land damage, rock fall, risk of flooding, risk of subsidence, risk of foundation failure, risk of illegal or substandard repairs and house failure.

Due to building regulation changes Geotechnical, Structural engineers, quantity surveyors and architects have no liability when it comes to building contracts. The public is not aware of this fact and the blind trust of the public is a known factor.

It is interesting that this statement was made by Hon Maurice Williamson before changes to the building act were proposed.
“Residential consumers are vulnerable -they rarely commission building work, and they have limited knowledge of the associated risks and the options for managing these.”
This was followed by the changes of the building act and the publication of the MBIE guidelines.

I ask who’s interest is at heart?

Another issue is that while stated that houses should be raised to pre earthquake levels or to the district plan requirements, the fact is that the building regulations have been bent so much that insurance companies are getting away with transferring this flood risk over to the residents. This is due to the actions of the government. Just from looking around the eastern suburbs hardly any houses have had their floor levels raised despite many properties having subsided below high tide. (MHWS)

The land claims settlement is another can of worms, the government has used legislation to instruct devaluation of properties in Christchurch.

Interestingly the worst affected areas of land damage have suffered the most significant devaluation.
It is specifically stated by Quotable Value that this updated rating value is not earthquake related damage and is only based on recent sales.

EQC desires to use this devaluation to determine their cap payment to the worst affected people. This is like devaluing a car after a loss and settle the insurance claim based on the value of the damaged car. While nothing has been released so far on how the land claims will be settled this is how this looks to me.

In my opinion EQC has failed their obligations to deal with the natural disaster. They have left people in un acceptable risk caused by the natural disaster. The organization seems to be driven as a hard core profit making business while it is is set up as a recovery organization. That has become obvious. EQC and the Government are responsible for this situation but sadly not even the opposition stands up and points this out to media. Colossal failure and mismanagement.
This is not a local Christchurch problem but reflects how the recovery authorities have taken the transfer of risk to far.

Enough is Enough!

The media and the public in New Zealand seems to be blind to the precedent that is being set for handling of natural disasters for the future of New Zealand. This is not our last disaster.

A request to Council.

Empowered-Chch-Web-Email
Thank you for the Hazard Forum on the weekend.
A very much needed discussion and vital for the future of our city.
The communities certainly appreciate the increased transparency.
My concerns as mentioned are the following.
Residents have no access to information about the actual damage of their own land that was fully insured.
The critical informations that are missing are the following.
  1. Subsidence, Elevation before and after the earthquakes. In centimeters.
  2. Lateral spreading quantified in direction and centimeters
  3. Changes in Groundwater. Due to changes in groundwater some land has lost the bearing capacity. Original foundations are designed for a particular land strength and wet sand versus dry sand can loose up to 50% of bearing capacity. This generates subsidence risk and increased Liquefaction vulnerability that has to be recognized and communicated.
  4. Liquefaction vulnerability. This is what caused most of the damage in canterbury. Information about vulnerability before and after the earthquake should be made available to the public.
  5. Flood risk before and after the earthquakes.
  6. 1/100 year Mike Flood map produced by DHI for EQC and Council should be made available to the public. (This is not private information for EQC)
I have extensively tried to get information about who determines the Land Categories. EQC points at Council and CERA.
CERA point at Council, Council points at MBIE. MBIE does not answer. I am referring to category 8 and 9. Liquefaction and Flooding.
I have also asked what impact do hazards identified of the LIM of a property have on land claim settlement, to no avail.
I do not find it excusable that the stakeholder that has the most at stake is denied access to these information.
The residents are slammed with up to 30% reduction in land value without any explanation.
For example TC3 in my street has dropped about 30% and that excludes devaluation from the 2007 value.
While TC1 in the same street maintains its 2007 value.
It is stated by Quotable Value that this  devaluation is not earthquake related.
That simply does not add up as the most affected land value is in the worst affected land damage area.
Worst affected sections are now rated  at less than 100k. No section is available at that price.
The worst affected get the worst treatment and their equity drastically removed while all had full insurance.
I have had correspondence with CERA on some of the land information issues and have had professional input from Adrian Cowie Professional Surveyor on this.
I attach the correspondence FYI.
I think this is a perfect opportunity to work together and display the “duty of care” that the public is entitled to.
Where there is a will there is a way.
Recommendations from the Royal Commission
“Section 4: Soils and foundations

The soils in the Christchurch CBD, being highly variable both horizontally and vertically across short distances, pose challenges for the design of structures and their foundations to withstand the potential impact of future large earthquakes. The Royal Commission considers that there must be greater focus on geotechnical investigations to reduce the risk of unsatisfactory foundation performance.

Tonkin and Taylor, for the Christchurch City Council (CCC), evaluated the nature and variability of subsurface conditions in the Christchurch CBD and adjacent commercial areas to the south and north-east. This will be held in a database available to the public. This information will be of assistance in assessing the potential need for land improvement, in the selection of appropriate foundation types, and in the planning of detailed investigation of foundation soils.

We make detailed recommendations in respect of site investigations, ground improvement and foundations design. Some recommendations are of particular relevance in the Christchurch CBD but many are of wider application.

– See more at: http://canterbury.royalcommission.govt.nz/Final-Report—Summary-and-Recommendations#sthash.43x9gQIi.dpuf


I trust this email explains some of the vital issues that are key components for the recovery progress.
Residents do not like to be kept in the dark for years, that contributes to social unrest.
I look forward to hearing back from you.
Best regards,
Hugo Kristinsson
Empowered Christchurch
Www.empoweredchristchurch.co.nz

 

Questions and answers from CERA

 Questions asked 17 February via email to CERA.

  1. Who is liable for the land damage underneath the property.
  2. Who is liable for the land remediation required for foundations up to the standard of the Building Code. AS/NZS 1170.5
  3. Why are residents denied access to the Orbit Database which contains all the details of their land damage? 
  4. Where can residents look up information about their land damage including land settlement?
  5. CERA published this statement. Undersigned by the Government “Home owners should note the fact that most insurance policies in place at the time of the earthquakes will cover the cost of building consent requirements to raise finished floor levels to meet standards set in the Building Act.
    Insurers will continue to work productively with the Council, EQC and other agencies to provide best outcomes for policy holders.

    Pg 17
    http://cera.govt.nz/sites/cera.govt.nz/files/common/tc3-residential-rebuild-booklet-A4-20121204.pdf
    It is the groundwater that is the main problem in the Eastern Suburbs. If Houses are not raised they are at total loss.
    See attached photos.
    What is CERA and other agencies doing to ensure the best outcome for these policy holders as stated?
  6. Where no and remediation is possible such as for Category 8 and Category 9 land, why is the land and property not categorized as total loss.
    It is known that subsidence/settlement takes place down to 20 m despite what is on the surface (Eastern suburbs). Many properties have groundwater at less than a meter.
    No remediation can address this where there is lateral spreading.

Answers received 14 March.

  1. Who is liable for the land damage underneath the property.
    Information is available at: http://www.eqc.govt.nz/what-we-do/land. Please refer to EQC for more information.
  2. Who is liable for the land remediation required for foundations up to the standard of the Building Code. AS/NZS 1170.5
    Information is available at: http://www.eqc.govt.nz/what-we-do/land. Please refer to EQC for more information.
  3. Why are residents denied access to the Orbit Database which contains all the details of their land damage? 
    The Orbit Database does not contain details of land damage. It is a settlement database that has legal documents and insurance information related to red zoned properties. Residents are not denied access to this information. They can request a copy of what is on the database in relation to their own property.
  4. Where can residents look up information about their land damage including land settlement?
    Information is available at: http://www.eqc.govt.nz/canterbury-earthquakes/progress-updates/canterbury-faqs Please refer to EQC for more information.
  5. What is CERA and other agencies doing to ensure the best outcome for these policy holders as stated?
    EQC has agreed a joint approach to talk to flood prone communities which will include CERA and other agencies. Information is available at:http://www.eqc.govt.nz/canterbury-earthquakes/land-claims/flat-land/increased-risk-of-flooding. Please refer to EQC for more information
  6. Where no and remediation is possible such as for Category 8 and Category 9 land, why is the land and property not categorized as total loss.
    Information is available at: http://www.eqc.govt.nz/canterbury-earthquakes/progress-updates/canterbury-faqs Please refer to EQC for more information.These answers resulted in further questions regarding answer no 3.
    Who do residents call to get the detailed land damage, settlement information for their property from the Orbit database?
    Answer received.
    My apologies, I should have been clearer … Orbit contains “settlement” information in relation to settlement of an Agreement for Sale and Purchase of properties in the Residential Red Zone between the owner (or former owner once they have settled) and the Crown.

    It does not include settlement information in relation to land damage (i.e. how much the land has settled vertically). 

Conclusion:
I have seen land displacement information on the Orbit Geotechnical database.
There is no intention to give residents information about their own land damage, nor land settlement information.
To settle a land claim without claimant having information about the subsidence is unjust in my opinion.

We are looking at options for the residents to get access to these vital information.
Watch this space.