GCA Lawyers New Zealand
Maurice Blackburn Lawyers
Claims Funding Australia

Southern Response Concealment

Class Action - New Zealand

Action Update - 10 February 2021


As confirmed by the Supreme Court judgment in November 2020, all former Southern Response policyholders who settled their earthquake claims prior to 1 October 2014, are included in this class action (class member).

If you satisfy the definition of a “class member” there is nothing you need to do in order to be included in this class action.

In other words:

  • This class action is brought on behalf of all affected policy holders irrespective of whether they have retained GCA lawyers as their lawyers or Claims Funding Australia (CFA) as their funder;
  • Being a “class member” does not require you to have retained GCA lawyers (or any other lawyers) as your lawyers;
  • Being a “class member” does not require you to have signed a funding agreement with CFA (or any other funder);
  • The hundreds of Southern Response policy holders who have chosen to retain GCA lawyers as their lawyers and CFA as their funder, are also “class members”.


Common Fund Order - what does this mean?

Mr and Mrs Ross have asked the High Court to order that the costs of the class action be shared fairly across everyone who benefits from the settlement (Common Fund Order).

A Common Fund Order may be made by the Court to ensure that the cost of a proceeding is shared fairly and proportionately by everyone that benefits from a settlement or judgment.

If made, the Court decides the amount that is to be deducted from a settlement or judgment against Southern Response, by independently deciding what is fair and reasonable.  That would not mean that everyone has to pay the rates in the Claims Funding Australia (CFA) funding agreement.  The amount each class member would pay (from their share of a settlement or judgment) would likely be lower, and would only be such amount as the High Court determines is fair and reasonable, i.e. their “fair share”.

By sharing the cost of the proceeding among all class members, the amount you would have to pay individually is likely to go down under a Common Fund Order.

We are aware that another litigation funder is claiming all class members in this proceeding are now liable to pay certain commission rates, and that they can fund class members’ claims more cheaply.

We consider these allegations are incorrect and misleading.


“Class members” are not required to sign any retainer or funding agreement to be included in this class action.

There is a hearing on 11 February 2021 to deal with these allegations.


What if I have already signed a funding agreement?

If you have already signed a retainer with GCA lawyers and a funding agreement with CFA, these agreements still apply to you.  You will continue to have the benefits of individual legal representation and advice about your rights and entitlements.

As noted above, Mr and Mrs Ross have asked the Court to make a Common Fund Order so that any costs or commission deducted from amounts paid by Southern Response are shared fairly across all “class members” not just those who have signed a retainer and funding agreement.

By sharing the cost of the proceeding among all class members, the amount you would have to pay individually is likely to go down under a Common Fund Order.


What if I have not signed a funding agreement?

Class members who have not signed a funding agreement are not currently liable to pay anything.

You are not obliged to pay any money to any lawyers or litigation funder in order to participate in the class action.

If the court makes a Common Fund Order, the Court will determine the fair and reasonable amount to be deducted from amounts paid by Southern Response towards costs and commission.


Next Steps and Court Applications

Between now and the end of March, two court hearings are scheduled to determine the next steps in resolving the class action.

15 February hearing

During 2020, Southern Response lost two very important court battles relating to this class action:

  • In September, the Court of Appeal rejected Southern Response’s appeal in the Dodds case, a claim brought by Mr and Mrs Dodds concerning the same issues as this class action. Southern Response fought the Dodds case as a “test case” for the class action.  Southern Response lost in the High Court, and the Court of Appeal upheld the High Court’s judgment.
  • And in November, the Supreme Court unanimously rejected Southern Response’s attempt to stop Mr and Mrs Ross from bringing this case as an opt-out class action on behalf of all affected Southern Response policyholders.

Having lost those cases, Southern Response has now indicated that it wishes to make a settlement offer to policyholders.  Mr and Mrs Ross naturally welcome the news that Southern Response intends to settle with policyholders.  However, they have concerns about the way Southern Response says it wants to go about doing that.

The Supreme Court judgment made clear that class action settlements need to be supervised and approved by the High Court.  But Southern Response has said that instead of settling the class action on a global basis, it plans to negotiate individually with policyholders.  Southern Response says that if it does it that way, it can avoid the High Court’s scrutiny and will not need Court approval.

Mr & Mrs Ross are concerned there is a serious risk of injustice if Southern Response negotiates with class members without Court supervision or approval of the final terms of any settlement:

  • Courts scrutinise class action settlements for a good reason: to ensure the settlement is fair and in the best interest of class members. That Southern Response is going out of its way to avoid that scrutiny is concerning.  It suggests that Southern Response’s proposal may not be fair and in your best interests.
  • The claims in this class action are that prior to October 2014, Southern Response took advantage of policyholders and negotiated unfair settlements with them. It is concerning that Southern Response appears to want to repeat that dynamic by taking a “divide and conquer” approach to settling the class action.
  • The class action should be settled in a way that is fair and equitable to all class members. But Southern Response may be trying to pit class members against each other by making a few class members pay all the costs of the proceeding.

While everyone agrees that the Southern Response should settle this class action claim as soon as possible, it is vital that any settlement should be fair and equitable, with adequate representation for policyholders, and appropriate oversight by the Court.

Southern Response has applied to the Court for orders allowing it and its lawyers to negotiate directly with class members without any court supervision.  Because of the concerns expressed above, Mr and Mrs Ross oppose that application, and will be arguing that the settlement process should occur with appropriate Court supervision.  The matter will be heard by the Court on 15 February.

LPFs application

A local litigation funder has filed an application seeking to intervene in the 15 February 2021 hearing. Mr and Mrs Ross intend to oppose this application.

22 March hearing

The second hearing will also be in the Christchurch High Court.

It will deal with the orders for sending notices to all class members, informing them about the class action and their right to opt out.  This notice is an important document that concerns your legal rights to either remain in the class action or “opt out”.

One consequence of opting out of a class action is that you are not entitled to share in any money obtained in a settlement of the class action.

The consequences of “opting out” are serious and you should obtain independent legal advice before taking such a step.

As this notice informs class members about their rights, it is important that it is neutral, accurate and easy to understand, so that class members can make an informed decision about whether to stay in the class action or opt out.

Mr and Mrs Ross have sought orders to achieve this.

Southern Response opposes the orders and disagrees about what should go into the notice.  The March hearing will ask the Court to determine the appropriate form of notice and the manner of publication.