Court case between EQC and Insurance Council to be held sometime in August, but those affected won't have to wait for money

Court case between EQC and Insurance Council to be held sometime in August, but those affected won't have to wait for money

By Alex Tarrrant

A court case between the Earthquake Commission and the Insurance Council to determine who pays how much to a select group of Christchurch homeowners will be held in August at the High Court in Wellington.

The case was brought to the High Court by the parties over payments to homeowners who had not recieved an EQC payout for the September 4 quake by the time the February 22 quake hit the city. It is disputed whether EQC is liable for two payouts of NZ$100,000 plus GST for the two separate events - ie that homeowner cover was reinstated because the February quake was classified as a seperate event for insurance purposes - or whether EQC was only liable for one payment, meaning respective insurers would be liable to cover costs arising from the February quake.

The Insurance Council is representing a group on insurance companies except Tower, which is taking its own case against EQC to be held at the same time in August.

Despite the delay in getting the case heard, interest.co.nz understands this does not mean affected homeowners will be in limbo with no payments until a decision is reached. We understand EQC and insurance companies have indicated they would pay out homeowners in the meantime, with the court case determining which of the two parties would need to compensate the other for overpaying their legal payout claim.

Interest.co.nz understands the High Court sought to hear the case as early as possible. A High Court spokeswoman said the case would be heard "sometime in August," although a particular date had not yet been set.

A spokesman for Earthquake Recovery Minister Gerry Brownlee was not immediately available for comment.

An Insurance Council spokesman said the Council could not comment on the case as it was now before the courts, but that it would: "try and get a decision as soon as possible, and do whatever we possibly can to ensure people are not out of pocket".

A spokesman for EQC said the Commission wanted to EQC wanted to resolve the issue as quickly as possible but any court dates were set by the courts and outside of its control.

"EQC and the Insurance Council are working closely together to minimise the effect on homeowners," the spokesman said.

How to apply the law?

EQC and the Insurance Council announced the High Court case two weeks ago.

In a joint press release announcing the legal action, the parties said High Court involvement was the best way for the EQC and the industry to get certainty on how to apply the Earthquake Commission Act of 1993, given the ''unusual circumstances generated by two major earthquakes in the same location over a matter of months.''

“EQC and the insurers want to get certainty on this difficult issue as soon as possible to ensure the smooth running of the claims settlement process,” said EQC's chief executive Ian Simpson at the time.

Last week in an interview to The Listener, Simpson said the two parties had not let the situation turn into an argument.

"This is about how you read the EQC legislation. So we can sit there and try argue and compromise, which actually doesn’t particularly work well for either of our reinsurers if we start compromising. Or we can go collaboratively to the High Court and get a declaratory judgment on how the New Zealand legislation should be interpreted," Simpson told The Listener.

(Updates with EQC comment, link to Act.)

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Updated with EQC comment, link to legislation