GCA Lawyers New Zealand
Maurice Blackburn Lawyers
Claims Funding Australia

Southern Response Concealment

Class Action - New Zealand

Frequently Asked Questions about the Southern Response Class Action

 

About the Southern Response Class Action

 

Registering for the Southern Response Class Action

 

About GCA Lawyers

 

About Claims Funding Australia – the litigation funder

 

Legal and funding costs

 

How can I find out more?

 


 

About the Southern Response Concealment Class Action

 
What is a class action?

A "class action" or “representative action” is a court proceeding brought on behalf of a group of people who have the same or similar legal rights. One or more people in the group act as the representatives of the whole group. These representatives are called the “plaintiffs”. The people in the group are called “class members”.

Class actions can provide access to justice for people who may not effectively be able to bring their own individual claims, for example because of the time and cost involved. They can make litigation more efficient, fairer and more cost-effective, because the class members may share resources such as lawyers and the cost can be spread across the whole group.

back to top

 
What is the Southern Response Concealment Class Action about?

This class action is a claim for damages (i.e. compensation) from Southern Response for allegedly misleading its policyholders about the estimated cost of repairing or rebuilding their houses damaged in the Canterbury Earthquakes.

The claim alleges that because of Southern Response’s misleading behaviour, policyholders ended up settling their insurance claims for much less than they were entitled to.

Mr and Mrs Ross, who are the representative plaintiffs in the class action, have filed the claim against Southern Response for misrepresentation, breach of the Fair Trading Act (misleading and deceptive conduct), and breach of good faith. The claim is filed on Mr and Mrs Ross’ behalf and also on behalf of other policyholders who are in similar circumstances.

The Rosses seek (for themselves and for all class members) compensation for the difference between what Southern Response told policyholders was the estimated cost to repair / rebuild their home, and what the actual estimated cost was.

back to top

 

What have Southern Response done wrong?

The class action alleges that Southern Response has acted incorrectly in the following ways.

  • After the Christchurch Earthquakes, it engaged a quantity surveyor, Arrow International, to inspect policyholders’ homes and prepare estimates of the cost of repair known as Detailed Repair/Rebuild Assessments (DRAs).
  • Arrow produced two versions of the DRA: an internal version and a customer version.
  • The internal version included, in addition to labour and materials, estimates for contingencies, design fees and other costs. The customer version did not include these additional costs.
  • As a result, the total estimate shown on the customer version was usually significantly lower than the total estimate shown on the internal version.
  • When it advised its policyholders about their insurance claims and their options under the policy, Southern Response only sent the policyholder the customer version of the DRA (the disclosed DRA).
  • Southern Response did not tell its policyholders about the internal version (the undisclosed DRA) that contained the higher sum.
  • This misled many policyholders into believing that the lower estimate in the disclosed DRA was the correct basis for settling their insurance claim.
  • As a result, those policyholders settled their insurance claims with Southern Response for substantially less than they were entitled to.

In a 2015 court decision, the Supreme Court of New Zealand held that policyholders who chose the “Buy another house” option under the insurance policy were entitled to receive additional sums for contingencies and design fees.

After the Supreme Court of New Zealand decision, Southern Response decided that going forward, it would pay those additional sums to all policyholders who settled after 1 October 2014. However, it would not pay anything more to policyholders who settled before 1 October 2014, because it said those claims “were settled in good faith on a full and final basis”.

Relevantly, for those affected ‘pre-1 October 2014 settlement’ policy holders, the Christchurch High Court has more recently considered an individual claim brought by an insured couple against Southern Response, alleging that Southern Response had engaged in misleading and deceptive conduct and had misrepresented the extent of the entitlements available under the policy in the context of a pre-1 October 2014 settlement.  In that case Justice Gendall found that, by providing an abridged DRA that led the insureds to think this was the complete rebuild cost, Southern Response had engaged in misleading and deceptive conduct.  In delivering judgment his Honour stated that,

"Editing or redacting parts of such an important assessment document, and then suggesting it is the complete and only assessment of total rebuild cost as occurred here, is misleading and deceptive". 

This recent High Court of New Zealand decision is encouraging and serves as a persuasive (but not binding) precedent for the Court to have regard to in determining the similar claims being made in this class action against Southern Response.

This class action is brought on behalf of policyholders who settled with Southern Response before 1 October 2014.

back to top

 

Who are the representatives and what role do they play?

Brendan and Colleen Ross have agreed to act as representatives of the class members affected by Southern Response’s actions.

Their home was located in the Christchurch residential Red Zone in and was damaged beyond repair during the Canterbury Earthquakes. Their house was insured by AMI Insurance prior to the earthquakes, and Southern Response took over their insurance claim afterward. The disclosed DRA that Southern Response sent to Mr and Mrs Ross showed an estimated rebuild cost of $362,354.

However, the undisclosed DRA included additional costs bringing the total estimate to $475,727. Southern Response never told Mr and Mrs Ross about the undisclosed DRA and did not send them a copy. Mr and Mrs Ross chose the “Buy another house” option under their policy and settled their claim with Southern Response for $362,354 (less EQC payments and excesses).

back to top

 

Who is the plaintiff and who is the defendant?

Brendan and Colleen Ross are the plaintiffs. They sue in their own capacity and as representatives of the class members.

The defendant is Southern Response Earthquake Services Ltd (Southern Response), a company now wholly owned by the New Zealand government.

back to top

 

How do I know if I am eligible to be part of the Southern Response Concealment Class Action?

To be eligible you must be within ‘the class’ approved by the Court in its Representative Order. Broadly speaking, you are eligible to participate in the class action if you:

  1. owned a residential dwelling that was:
    1. insured by AMI Insurance (now Southern Response) under a Premier House Cover Policy or Premier Rental Property Policy;
    2. damaged by the 2010-2012 Canterbury earthquakes;
  2. lodged a claim or claims under the Policy for that damage;
  3. received a DRA from Southern Response that did not include an Office Use Section and did not receive a DRA from Southern Response that did include an Office Use Section; and
  4. settled your insurance claim with Southern Response prior to October 2014 by some way other than having Southern Response manage the repair or rebuild of your house.

back to top

What is the Representative Order and what does it say?

The Representative Order is the order made by the Court to establish who is eligible to take part in the class action.  On 16 September 2019 the Court of Appeal expanded the representative order made in the High Court, setting out:

  • the criteria for eligibility to automatically take part in the class action;
  • the ability of class members to "opt out" of the class action if they wish to;
  • the requirement that the plaintiffs, Brendan and Colleen Ross, discontinue the proceedings only by leave of the Court; and
  • the date from which the order is deemed to take effect.  

The specific wording of the Order is:

  1. The plaintiffs are granted leave pursuant to High Court Rule 4.2(b) to bring this proceeding against the defendant on behalf of all persons who have the same interest in the subject matter of the proceeding, namely:
    1. They own or owned a residential dwelling in Canterbury that was insured with the defendant under a "Premier House Cover" or "Premier Rental Property Cover" policy (Policy);
    2. They lodged a claim or claims with the defendant under the Policy for damage suffered to their dwelling as a result of the 2010 - 2012 Canterbury earthquakes (Claim);
    3. [deleted];
    4. They received a DRA from the defendant that did not include the Office Use section;
    5. They did not receive a DRA from the defendant that included the Office Use section;
    6. They entered into a settlement agreement with the defendant prior to 1 October 2014 in settlement and discharge of their Claim; and
    7. They are not persons for whom the defendant managed the repair of their home, or rebuilt their home.
  2. A class member may elect to opt out of the proceeding by completing an opt out election form approved by the High Court for that purpose, and sending it to the Registrar of the High Court in Christchurch on or before a date to be fixed by the High Court.
  3. The plaintiffs may discontinue this proceeding only with the leave of the Court.
  4. This order is to take effect from 25 May 2018.  
back to top

 

What happens if I sell my property now or in the future?

This will not affect your ability to become or remain a class member.

back to top

 

Can I still be eligible if my property was in the residential red zone?

If your house was in the Christchurch red zone, the New Zealand Government gave you two options:

  1.  Sell your house and land to the Crown.  The Crown would then take over your insurance claim.
  2.  Sell the land only to the Crown, and continue to deal with your insurer about the house.

If you took the land only option and entered a settlement agreement with Southern Response prior to 1 October 2014, you may be eligible for the class action.

If you took the house and land option, you cannot join the class action.  This is because the New Zealand Government took over your insurance claim and so you would not have entered a settlement with Southern Response.

If you are not sure which applies to you, contact GCA Lawyers for assistance. 

back to top

 

What documents/information do I need to keep to be part of the class action?

You do not need any documents to become a class member.  If you become a client of GCA Lawyers you can ask us to file a Privacy Act request on your behalf to obtain the necessary documents from your Southern Response file.

That said, if you think you may be a member of the class action you must keep all documents that you have been given by Southern Response and all communications you have had with that company.  The most important documents are the DRA that Southern Response sent you, any accompanying correspondence, and your settlement agreement with Southern Response.

back to top

 

Can I speak to a lawyer about the progress of the claim?

As the case progresses GCA Lawyers will keep registered clients updated about developments through our online client portal.  GCA Lawyers clients (who have accepted our Client Agreement) receive email notification when a new update is available.

Of course, should clients of GCA Lawyers have any questions that are not answered by GCA Lawyers updates or FAQs, you can speak to a lawyer about the claim by emailing [email protected] or by ringing GCA Lawyers on 03 365-1347 during business hours.  

back to top

 

How much compensation might I be entitled to?

In this class action, the claim is for the difference between the cost estimate in the disclosed DRA, and the higher estimate in the undisclosed DRA payable under the policy of insurance. Our information suggests the average difference may be about $100,000. However, we cannot advise you about the total size of your claim, or how much of that might be payable, without reviewing the documents from your Southern Response file and speaking to you in person.

back to top

 
What if I want to seek more than the difference in the DRAs?

In this class action, you will not be able to seek compensation over and above the difference between the estimates in the two DRAs. If you want to pursue such compensation, you need to seek independent legal advice and consider bringing your own separate claim.

back to top

   

When is the class action going to be heard in court?

There has already been a preliminary hearing in the Christchurch High Court, in November 2018. That hearing concerned Mr and Mrs Ross’ application for leave to bring the claim as representatives of other class members. In December 2018, the Christchurch High Court issued a judgment granting Mr and Mrs Ross leave to bring the claim against Southern Response on behalf of all persons within the class definition.

A copy of the judgment can be found here here.

An appeal was filed regarding some of the details of the Christchurch High Court decision and was heard in August 2019.  In a judgment dated 16 September 2019 the Court of Appeal expanded the definition of the class so that everyone who qualifies to take part in the class action is automatically represented by Mr and Mrs Ross, unless they close to opt out of the class action.  The Court of Appeal also confirmed that people who settled their insurance claims on the basis of a repair are eligible to take part in the action too alongside those who settled their insurance claim on the basis of a rebuild.

A copy of the judgment can be found here.

back to top

   

 

Registering for the Southern Response Class Action

 

Why should I register my details?

Registering means that GCA Lawyers can contact you and inform you about any developments in the class action. To do that, we need your email address and/or phone number so that we can get in touch.

back to top

 

What information do I need to register?

You will need:

  1. your name and contact details;
  2. the address of the insured property; and
  3. the date you settled with Southern Response.

The date you settled will usually be recorded on the Settlement and Discharge Agreement which you entered into with Southern Response at the time your claim was resolved. 

back to top

 

What do I do if I can't find my settlement agreement and other documents?

Because you are registering your interest, the information should be as accurate as possible and completed to the best of your abilities. Use whatever material you have and what you can recall to fill in the information as best you can. 

back to top

 

Can I get this information from Southern Response?

If you choose to become a client of GCA Lawyers we can assist you to obtain this information by making a Privacy Act request on your behalf. Alternatively you may wish to make your own Privacy Act request with Southern Response.  If you do so please make sure you keep this information separate from any documents you already hold. 

back to top

 

Does it cost anything to register?

No, it costs nothing to register.

back to top

 

Will registering mean I become a client of GCA Lawyers?

No, registration will not make you a client of GCA Lawyers. It just gives GCA a way to initially inform you more about the class action.

back to top

 
Can I change my mind after registering?

Yes, if you change your mind you can deregister by emailing “I would like to deregister” to [email protected] . If you deregister you will no longer receive emails about the class action. 

back to top

 
What is the insured property?

The insured property is the house that was covered by an AMI insurance policy, damaged in the Cantebury earthquakes and in respect of which your insurance claim was settled.

back to top

 

If the property is owned by a trust, who can register?

Any of the trustees can register to be informed about the class action.

back to top

 
How do I register an additional property?

You can register an additional property by clicking on the “Add Additional Property” tab in the Insured Property Information stage.

back to top

 


About GCA Lawyers

 

Who are GCA Lawyers?

GCA Lawyers are a Christchurch, New Zealand law firm founded in 1986. We specialise in complex litigation and dispute resolution, with a particular focus on class actions.

Over the last 28 years we have successfully brought a large number of group or class actions. These include a 1992 claim on behalf of clients of collapsed Wellington law firm Renshaw Edwards, as they sought to recover funds lost through fraud from the Solicitor Guarantee Scheme operated by the New Zealand Law Society, claims in 1996 against the Crown following the Cave Creek disaster, and claims against the Crown in 2000 relating to historical abuse of patients at Lake Alice Hospital. Each of these claims was successfully settled on behalf of group members.

GCA’s most recent class action was also a claim against Southern Response, brought on behalf of policyholders whose insurance claims Southern Response had refused to settle. That action was settled with the Crown in mid-2018.

For more information about our firm, go to www.gcalawyers.com.

back to top

 
Why should I become a client of GCA Lawyers in the class action?

GCA Lawyers have the track record and expertise to bring this class action to a successful conclusion.

The plaintiffs, Mr and Mrs Ross, have engaged GCA Lawyers as their solicitors to bring the class action.

By becoming a client of GCA Lawyers, you too would be engaging the firm that is bringing this action. We will then make sure you are able to participate in the class action and give you advice about your rights, including in relation to any settlement.

If you do not become a client of GCA Lawyers, we will not be able to give you advice about the class action or otherwise assist you with your individual claim.

back to top

  

Can I participate in the class action if I don’t become a client of GCA Lawyers?

To participate in the class action it is not mandatory to become a client of GCA Lawyers although you may wish to do so for the reasons set out above. 

back to top

   

Does it cost me anything to become a client of GCA Lawyers?

It doesn’t cost anything upfront to become a client of GCA Lawyers.

However, GCA Lawyers is charging legal costs for bringing the class action. Those costs are being paid upfront by CFA, the litigation funder that is funding the class action. If the class action is unsuccessful, you will not have to pay anything.

If the class action is successful and you receive a share of a payment made by Southern Response under a settlement or a court judgment, then your share of GCA Lawyers’ legal costs and the litigation funder’s commission will be deducted from your share of the payment, under GCA’s Terms of Engagement and CFA’s Funding Agreement.  In other words, if you choose to become a client of GCA Lawyers, there are no circumstances in which you will ever have to pay any legal costs/commission out of your own pocket. Any such legal costs/commission payable on a successful outcome are paid only from recovery of damages and costs obtained from Southern Response.

back to top

 

Do I have to accept the CFA Funding Agreement in order to become a client of GCA Lawyers?

Yes, as CFA is funding all the costs of the action (including all the legal costs) you will need to accept the CFA Funding Agreement before becoming a client of GCA Lawyers.

back to top

 
Did Mr & Mrs Ross, the representative plaintiffs, obtain independent legal advice about the Terms of Engagement and the Funding Agreement?

Yes, Mr and Mrs Ross obtained independent legal advice about GCA Lawyers’ Terms of Engagement, and CFA’s funding terms, from a separate Queens Counsel who has expertise in class actions.

back to top

   

Should I obtain independent legal advice about the Terms of Engagement and the Funding Agreement too?

You have the right to seek advice about the Terms of Engagement and the Funding Agreement from lawyers other than GCA before agreeing to these. This is not a requirement however we would encourage you to do so if you have any unresolved questions or concerns.

back to top

   

 

About CFA – the litigation funder

 

Who is CFA?

CFA is a litigation funding company with operations based in Australia. Established in 2009, it offers in-depth knowledge and understanding of the litigation funding industry, and provides practical and cost effective solutions for managing and funding litigation that would otherwise be too expensive for individual claimants.

CFA is wholly owned by Maurice Blackburn, Australia’s leading class action law firm.

back to top

   

What is litigation funding?

Where someone has a legal claim, but either can’t afford to bring the claim, or doesn’t want to take the financial risk, a litigation funder may agree to support the claim. This typically means the funder meets all costs of bringing the claim (including legal fees), and agrees to pay any costs that might be incurred if the claim is unsuccessful (including paying the other side’s legal fees).

This means the litigation funder takes all the financial risk. If the claim is unsuccessful, the claimant will not have to pay anything at all. However, in exchange for taking that risk, the funder is usually entitled to be paid back what it has spent, plus a share of the proceeds of the claim, if the claim is successful.

back to top

 

What are the benefits of litigation funding?

The principal benefit of litigation funding is that it can provide access to justice for claims that would not otherwise have come before the courts because individual litigants could not afford to do so. By engaging with a litigation funder, the financial risks and burdens of litigation are removed and the claim can then be progressed and determined on its merits before the courts.

back to top

   

Why should I choose CFA?

First, CFA has an impressive track record of funding successful litigation. Second, as a wholly owned subsidiary of Maurice Blackburn, CFA has the benefit of highly experienced class action litigators. Having agreed to support this class action, CFA has the resources and commitment to help see the case through to a successful conclusion.

back to top

   

 

Legal and funding costs

 

Will I need to pay any costs along the way?

No, you will not need to pay anything to join the class action or pay any costs, along the way. All costs of the action (including the legal fees) will be met at first instance by CFA.

back to top

   

Will I need to pay any costs of the class action is successful?

Yes, but not out of your own pocket. Under the Funding Agreement, if the action is successful you will have to repay CFA your share of the costs it has paid to support the class action, plus a commission (i.e. a percentage of the monies recovered). However any costs that you are required to pay to CFA will be deducted out of the money Southern Response agrees to pay, or is ordered to pay if the claim is successful.  In other words, you will not be required to pay anything other than from the amounts paid by Southern Response.  For details, see the Funding Agreement at clause 11.1. In other words, there are no circumstances in which you will have to pay any legal costs/commission out of your own pocket. Any such legal costs/commission payable on a successful outcome are paid only from recovery of damages and costs obtained from Southern Response.

back to top

 

Will I need to pay any costs of the class action if it is unsuccessful?

No, you will not have to pay any costs if the class action is unsuccessful. These are covered by CFA. 

back to top

 
What do the lawyers get paid?

GCA Lawyers have engaged Philip Skelton QC and Kelly Quinn as Counsel for the plaintiffs. Counsel are the lawyers who argue the case in court. The lawyers (GCA Lawyers and Counsel) are paid fees on an hourly rate basis by CFA.

If the action is successful, in addition to their hourly rates the lawyers will also be paid Deferred Costs and a Success Fee.

Deferred Costs include part of the lawyers’ hourly rates that are not paid each month, but are only paid at the end of the proceeding if the class action is successful. The Deferred Costs may also include payment for some of the work that the lawyers did on the class action before CFA became involved, when the lawyers were working without being paid.

The Success Fee is a variable bonus payment that depends on how much money is recovered from Southern Response, and the number of Class Members that get to share in that recovery. In simple terms, the more Class Members are successful, the larger the Success Fee will be. The Success Fee will be shared between the lawyers as provided in their terms of engagement.

back to top

   

What does CFA get paid if the class action is successful?

Upon success, CFA will recover the expenditure it has incurred in supporting the action (the Project Costs), plus a percentage of the money recovered from Southern Response. For details, see the Funding Agreement at clause 11.1.

back to top

   

 

How can I find out more about the Southern Response Class Action?

If the Frequently Asked Questions have not addressed your query you can find out more information by ringing 03 365-1347 during business hours or by contacting GCA Lawyers at [email protected].

back to top

 

 

Confirmation Content