The High Court decision in Lee v IAG[1] provides clarification both on what measure of indemnity should be used, and how to calculate it.

 

An ‘indemnity’ policy is short hand for a policy that obliges an insurer to pay the insured  enough to put them back in the position they were in before the loss happened (old for old basis).  The occurrence of the peril (like a fire or earthquake) puts an obligation on the insurer. When do they have to pay? In an indemnity policy, the payment trigger is the happening of an insured event.  This is unlike ‘replacement’ policies.  In these policies, only once the insured has incurred the cost of repair must the insurer reimburse.

 

So, what does it mean to be indemnified?  What does it mean to be put back into the position you were in before the loss happened?

 

As with all contractual relationships, the starting point is the contract itself.  Some indemnity policies explain how the indemnity is to be calculated.

 

But what if the contract does not explain the measure and says “We will indemnify you for any insured loss”?

 

Fortunately, we have the benefit of centuries of common law authorities to guide us.  It is ancient law that where an indemnity policy is silent on the appropriate measure, the indemnity is a question of fact.  The question will be answered with particular regard to the nature and intentions of the insured party and the purpose served by the insured property.[2]

 

Lee v IAG concerned a three-story commercial building on Manchester Street.  IAG originally paid $672,750 being its estimate of the ‘market indemnity value’.[3]  By the time the proceeding came to Court, IAG had accepted that the appropriate measure of indemnity was actually the “estimated cost of restoring [the] business assets as nearly as possible to the same condition they were in immediately before the loss or damage happened using current materials and methods.”

  

The question before the Court was how that ‘estimated cost’ was to be calculated.  The Court was asked to give guidance about the extent to which betterment should apply.  The Court concluded that the estimated cost is found by allowing to restore “the property to the same condition as it was before the event that caused the damage or loss, and deducting for any betterment to the insured because the restored building in whole or in part be in new condition rather than old.”[4]

 

The critical point is that betterment should be deducted by reference to the extent which the restored building is in a better physical condition.

 

This requires a qualitative comparison between what was there at the time of loss and what will be put back.  For example, if a brick wall collapses, the replacement of it with a new brick wall, while ‘new’ may not necessarily be any better than the previous wall; in such a case, it may not be appropriate to make a deduction for betterment.

 

By contrast, if the same wall being replaced previously had old, decaying lime mortar that was now being replaced with new cement, the new mortar is better than the old and would justify a better deduction.

 

The case makes four key points:

  • Reduction in market value is not necessarily the correct measure of ‘indemnity’;
  • When the indemnity is to be calculated by reference to estimated building costs, betterment will only apply to parts of the repair that leave the building better off than it was;
  • Assessing whether a repair leaves the building ‘better’ is a qualitative exercise, made by evaluating the extent to which new parts of the building are any better than the parts of the building they are replacing.
  • It follows that allowing for secondhand materials may obviate the need for deducting for betterment.

 

Should you need any assistance with these, or with any other Dispute matters, please contact Paul Cowey at Parry Field Lawyers (+64 3 348 8480).

 

 

[1] Lee & Or v IAG New Zealand Limited [2018] Llyod’s Rep. IR 345

[2] Earthquake Commission v Insurance Council of New Zealand [2015] 2 NZLR 381 at [109];

Reynolds v Phoenix Insurance Co Limited [1978] 2 Llyod’s Rep 440 (QB) at 451.

[3] Lee & Or v IAG New Zealand Limited [2018] Llyod’s Rep. IR 345 at [4].

[4] At [54]

INSURERS EXPOSED TO PAYING INTEREST FOR DELAY

Lee v IAG[1] is the first Canterbury earthquakes decision to give substantial guidance on interest for payment delay.

 

Both the Judicature Act (for proceedings pre 1 January 2018) and the new Interest on Money Claims Act give the Court the power to decide when interest should apply to insurance monies owed to an insured party.

 

The starting point is to identify from when can the insurer be said to be default of its obligation to pay.

 

The Court set out some of the key factors, noting that “every case turns on the individual insurance contract and the facts.  Insurance practice will be relevant but not decisive.”[2]

 

Importantly, the Court confirmed that interest can be available from a date prior to the filing of proceedings.[3]

 

The Court observed that “there is a well arguable case that a reasonable time to assess the claim must be allowed before it can be said that the insured is wrongly without its money, and the insurer wrongly benefitting from that money.”[4]

 

However, noting the other side of the same coin, the Court also noted that interest may run from the date of the loss or damage.  The Court particularly referred to situations where the insured needs to quickly replace the loss.  The Court held “the loss or damage is immediate and although it may take time to investigate and assess, the economic effect of loss or damage is immediate. That may influence an award of interest from that date.”[5]

 

The starting point when considering from which date to award interest is the date of loss.  The Court recognised, however, that this may not be “necessarily the end point for assessing interest” because other factors may mitigate or justify delay in the running of interest.

 

Statutory interest is an issue that particularly arises in indemnity insurance policies which impose a payment obligation.  This is quite different from a reimbursement obligation which is more often a feature of replacement insurance policies.  However, the same principle applies to both: interest is a live issue once the obligation to pay arises – but the timing of that obligation will be quite different between indemnity insurance contracts and replacement insurance contracts.

 

When insureds are settling their claims they should be alert to the issue: have I been kept out of my money, and has the insurer wrongly been benefitting from it?

 

Should you need any assistance with these, or with any other Dispute matters, please contact Paul Cowey at Parry Field Lawyers (+64 3 348 8480).

 

 

[1] Lee & Or v IAG New Zealand Limited [2018] Llyod’s REP. IR 345

[2] At [86] (a)

[3] At [86] (d)

[4] At [86] (2)

[5] At [86] (f)

Can I get legal costs when I settle out of court?

Since the limitation period of 6 years became a live issue for insurance claims arising from the Canterbury earthquakes homeowners have had a difficult choice, begging for an extension of time or pay the extra cost of filing court proceedings.

The High Court, in Black Rock Administration Ltd v IAG New Zealand Limited[1], shows that an insurer’s decision to refuse a limitation extension will carry adverse consequences.

In Black Rock, proceedings were commenced after IAG wrote to Black Rock’s solicitors denying cover to a significant part of property claimed by Black Rock for earthquake damage, and after IAG expressly declined a Limitation extension.  Ultimately, IAG accepted cover, and paid Black Rock for its repair costs. The Court found that “the need for Black Rock to initiate proceedings was precipitated by IAG’s refusal to waive its rights under the limitation statutes.”[2] 

This led the High Court to conclude that “it is indisputable that Black Rock had to initiate the proceeding as a result of how matters stood between the parties prior to its commencement.”[3]  While the High Court accepted that IAG’s decision to reserve its limitation rights  was “a legitimate choice”, that choice “has ultimately carried with it, consequences.”[4]  In this case, costs against IAG.

Who is the successful party where the dispute settles out of Court? The relevant issue is “the position between the parties at the time the proceeding commenced, rather than the history of the matter to that point.”[5] 

The Court found that the amount Black Rock obtained after filing its claim was “significantly more than was on offer at the time the proceeding was commenced.”[6]

IAG’s decisions to both deny cover and not offer a limitation extension, were relevant factors in determining that costs should be awarded against IAG.

IAG had already agreed to pay the repair costs, plus $20,535.86 claims preparation costs.  In addition it was ordered to pay Black Rock’s legal Court costs of $26,495,.

 

Should you need any assistance with these, or with any other Dispute matters, please contact Paul Cowey at Parry Field Lawyers (+64 3 348 8480).

 

 

[1] [2018] NZHC 3450.

[2] At [17].

[3] At [21].

[4] At [23].[5] At [22].

[6] At [20]

Can it be fair for everyone?

Making sure everyone you care about gets a fair share of your property after you die is an issue most of us grapple with. This may also have additional complications when you have a blended family. It’s not always as easy as just writing your Will and specifying who gets what. There are several statutes that give family members and/or your new partner’s family, a right to contest your Will. The two main statutes are the Family Protection Act 1955 (FPA) and the Property (Relationships) Act 1976 (PRA).

Leaving it all to your partner?

A common way of structuring your affairs is to leave everything to your partner or spouse, knowing they will provide for your children as well as their own in their Will. These are often called ‘mirror Wills’. Unfortunately, this structure doesn’t always satisfy all the children involved, as we have seen in several recent court cases. You also run the risk of your partner or spouse changing their Will at a later date after you have died.

• Claims from the children: The FPA allows family members to make a claim against your estate if they believe they have not been properly provided for. This can happen even if your spouse has a ‘mirror Will’ which will leave the whole estate to your children as well as their own when they die. An example of this blended family situation is the Chambers case, which has recently received media attention. Lady Deborah Chambers QC was left everything by her husband, Sir Robert Chambers, on the understanding that when she died, her estate would be split into four parts, going equally to Sir Robert’s two sons and to Lady Deborah’s two daughters. One of Sir Robert’s sons successfully brought a claim against his father’s estate under the FPA, despite having his own lucrative income and not being in any financial need.

• Your spouse could change their Will: If your partner or spouse outlives you by some time, there is the possibility that they may change their Will as their circumstances change. They may remarry, have a new relationship, or more children may be brought into the family. This could mean that the portion of your estate that you envisioned being left to your biological children is now eroded by your partner leaving more to new partners or children than you had never anticipated.

Leaving it all to your children?

In light of these two options, it may be tempting to consider leaving your estate entirely to your children. Unfortunately, doing this can bring similar problems. Your partner could bring the same claim that your children could under the FPA or they could make an application under the PRA.

Property (Relationships) Act 1976

The PRA allows your partner to make an application to have your estate divided as relationship property, rather than in accordance with your Will. Under current law, you have a duty to provide for the partner you leave behind. If an application is made under the PRA, any relationship property is divided accordingly and the balance of the estate is distributed according to your wishes. Again, this may leave your loved ones with a different portion than you envisaged. You also need to know that jointly-owned property is automatically transferred to the survivor and does not form part of your estate.

Possible solutions

To find a solution that works best for your family and fits your wishes, do discuss this with us as one size definitely doesn’t fit all. Some options are:

• Contracting out agreements: you come to an agreement with your partner which overrides the PRA;

• Setting up trusts in your Will or before you die: if established correctly, trusts can be effective in defeating claims through the FPA and the PRA; and

• Life interest Wills: leaving your spouse an interest in your property during their lifetime, but that interest will expire on their death and the property will be distributed to your children. The above points merely brush over some issues in what is an incredibly murky and complex area of law. If you are in a blended family situation, let’s discuss the options in order to structure your affairs in a way that works best for you and your family.

How can we help?

We have dedicated teams based in our Riccarton, Hokitika and Rolleston offices who give advice on a variety of different asset protection, succession planning, family and relationship property matters. If you have any questions arising out of the issues raised in this article, please feel free to contact Lois Flanaganloisflanagan@parryfield.com or Nicole Murphynicolemurphy@parryfield.com or give us a call on (03) 348 8480.

Used by permission, Copyright of NZ Law Limited, 2018

How might this impact you?

As much as we like to think we are living in the modern day, there are still a large number of relationships that follow the more ‘traditional’ practice of having one party act as the ‘homemaker’, while the other acts as the ‘breadwinner’. If the relationship breaks up, economic disparity is likely to be an issue. With the divorce rate in New Zealand sitting at around 50%, chances are you have friends and family members who have structured their relationship in this more traditional sense and have now separated. The result is often that the ‘homemaker’ is left in a worse position financially because they have been out of the workforce for a long time and will struggle to get back into their career. The breadwinner, meanwhile, who could focus on their career during the relationship, is now earning at their full potential. This is economic disparity – one party is advantaged over the other. One of the principles of the Property (Relationships) Act 1976 (PRA) is that a de facto relationship, civil union or marriage is a partnership of equals and that financial and non-financial contributions to that relationship are equal; the homemaker’s contributions are equal to the breadwinner’s. There is also a presumption of equal sharing of relationship property; but what about the earning potential of one party over the other? If that earning potential has increased during the relationship, should that be considered an asset of the relationship or relationship property?

Can we ‘fix’ the disparity?

Section 15 of the PRA allows for one party to be compensated if the income and living standards of the other party are likely to be significantly higher due to the ‘division of functions’ within the relationship – the role of breadwinner and homemaker.
Parliament acknowledged that an equal division of relationship property doesn’t always achieve fairness if one party is able to walk away with not only half the assets, but also a considerable income-earning ability, while the other has foregone theirs and supported the breadwinner in the process. While statistically the party left worse off after separation is almost always female, as the Prime Minister, Jacinda Ardern and her partner, Clarke Gayford have recently shown us, women can be breadwinners too and economic disparity can affect men. Same-sex couples can also be vulnerable to economic disparity, which can arise in any relationship where one party has been able to progress their career while the other looks after the home. The Law Commission recently reported that s15 has had limited success in achieving its objective. It found that sharing property equally doesn’t always result in an equal outcome. Following a separation, on average, mothers who are caring for children have their household income reduced by 19% while men in employment increase their household income by 16%. Economic disparity and how to address the issues arising from the more ‘traditional’ relationship roles is a significant focus of the Law Commission in its current review of the PRA.

Recent boost to claims

Economic disparity claims have been given a boost by the recent Supreme Court decision of Scott v Williams. This case involved a couple who structured their relationship in the ‘traditional sense’. Ms Scott, who had accounting and law degrees, put her career on hold to look after the couple’s children while Mr Williams built up a successful legal practice.
When they separated after more than 25 years of marriage their incomes were vastly different. The court ultimately found (after eight years of court battles) that in a long-term relationship, where there is the traditional split of roles between homemaker and breadwinner, and a significant disparity in income, an economic disparity claim can be presumed and compensation should be paid. The amount of compensation is determined on a case-by-case basis. There is no set method for determining the compensation, which does make it difficult for parties to agree. Since s15 made its way into law in 2001, there have been about 100 cases go through the courts on this point, with only around 40% having been successful. Economic disparity remains a difficult, complicated and emotional topic for separating couples to discuss and on which to agree.

If you have separated and believe economic disparity is an issue, please talk with us to discuss whether this is a claim that may affect you, and how you either negotiate or defend such a claim. A contracting out agreement (colloquially known as a ‘pre-nup’) may assist, if prepared properly from the outset. Please feel free to contact Lois Flanaganloisflanagan@parryfield.com or Nicole Murphy nicolemurphy@parryfield.com or give us a call on (03) 348 8480.

Used by permission, Copyright of NZ Law Limited, 2018

Consequential loss is a loss that arises as a result of a breach of contract. In contracts, parties often exclude liability for consequential loss which is provided for in an exclusion clause.

If you are entering into negotiations for a contract, it is important that you understand what consequential loss is, when damages can be claimed for consequential loss, and how to effectively exclude liability.

 

A question that arises when dealing with consequential loss is how far you can actually go in claiming damages for a consequential loss? Where do you draw the line?

Say, for example, that Mrs Smith has purchased a freezer for her catering business from Mr Jones, which she has filled with ice cream.  This ice cream is for a stall that she has been running at the local fair for a few years now, and is a favourite for many fair-goers. Unfortunately, the freezer broke the day before the fair causing all of the ice cream to melt and meaning that Mrs Smith cannot serve ice cream at her ice cream stall and would therefore not make any profit. The lack of ice cream at the stall meant that there were a lot of grumpy children, and grumpy children meant grumpy parents which resulted in a lot of backlash on the fair.

The following year, the fair suffered a 50% reduction in attendance as a direct result of the grumpy children and the lack of ice cream, and the organisers then had to cancel the fair in subsequent years and claimed the amounts they lost from poor Mrs Smith.

Mrs Smith now wants to sue Mr Jones in damages for the loss of profit and the amounts claimed by the fair organisers, which were losses resulting from the breaking of the freezer.  But how far can Mrs Jones actually go in claiming these damages?  Let’s look at some cases and see what they say.

Hadley v Baxendale

 

In an 1854 English Court of Exchequer decision Hadley v Baxendale, Alderson B famously established the remoteness test, which is a two-limb approach where the losses must be:

  1. Considered to have arisen naturally (according to the usual course of things); or
  2. Reasonably considered to have been in the contemplation of the parties at the time when they made the contract as a probable result of the breach of it.

Alderson B said that in order for a party to successfully claim damages on the grounds of consequential loss, the loss must fall into either of those two categories.

McElroy Milne v Commercial Electronics

 

In 1992 in New Zealand, Cooke P said this test no longer applied in modern law, and he established a multi-factorial discretionary approach in which a range of factors are to be taken into consideration, including foreseeability.

Transfield Shipping v Mercator Shipping (The Achilleas)

 

This is more recent English House of Lords decision concerning the late return of a ship. In this case, the judges established that while Hadley v Baxendale is generally a good approach, there are certain circumstances where it may not necessarily apply.

These judgments create confusion in determining what actually constitutes a consequential loss and where to draw the line.  Generally speaking, however, the loss must have been in the contemplation of the parties for it to amount to a consequential loss.

A way forward: What should the clause say?

 

In our view there are three ways forward:

  1. No exclusion of consequential loss – this means that the parties are leaving it up to the interpretation of the Courts;
  2. Include a general consequential loss clause; or
  3. Incorporate a bespoke clause for the specific contract.

Where possible, we recommend a general exclusion of consequential loss with some examples of specific situations (essentially a bit of both 2 and 3 above).

Other options available:

Remember that a contract is ultimately a give and take from each side and another way that a party can limit liability in a contract is by putting a total cap on their liability.

Another option is that a party could limit liability by stating a time period in which the other party can bring a claim. A small company negotiating with a large multinational will have less scope and a template agreement is much more difficult to get changes made to it.

Ultimately, whichever route is taken depends on the preference of the parties, and their negotiations will also play a role in determining what liability is excluded.

Every situation is unique and how much Mrs Smith could claim for will depend on what the contract said and the circumstances of the situation.  Whatever your scenario, we have a dedicated commercial team at Parry Field Lawyers who can give you personalised advice on all aspects of your business ventures.  This article is also based on a more detailed analysis of the cases mentioned above – contact us if you would like a free copy of that.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Kris Morrison or Steven Moe at Parry Field Lawyers (348-8480).

What is a De Facto Relationship?

 

If you are in a de facto relationship, there could be significant financial implications for you if you separate, or if your partner (or you) dies. The principal piece of legislation which deals with the division of property belonging to couples or married couples is the Property (Relationships) Act 1976 (the PRA). Substantial reforms in 2001 extended the scope of the PRA to cover de facto relationships. But what exactly constitutes a de facto relationship in the eyes of the law?

The PRA states that the basic criteria for a de facto relationship are:

  • There must be a relationship between two people
  • The relationship maybe heterosexual or homosexual
  • Both parties must be aged 18 years or over
  • They must not be married to each other, although they may be married to someone else, and
  • The parties must ‘live together as a couple’.

Living together as a couple

The PRA sets out a list of matters to be taken into account in considering whether two people ‘live together as a couple’. These matters are:

  • The duration of the relationship: the longer that two people have been associated together, the more likely it is they will be found to be living together as a couple
  • The nature and extent of common residence: two people may live together (in terms of the PRA) even if they do not reside at the same address. But the more time they spend together at the same place, the easier it will be to regard them as a couple
  • Whether a sexual relationship exists
  • The degree of financial dependence or interdependence, and any arrangements for financial support between them
  • The ownership, use and acquisition of property: coownership, particularly of the common residence, is a sign of living together as a couple. The same can be said of using property in common, such as a car, and buying items together
  • The degree of mutual commitment to a shared life: commitment is an important test of whether there is a de facto relationship. Certain objective criteria such as a common address is important, but there must also be a subjective element of their commitment to a shared life
  • The care and support of children: where two people have a child it does not follow that they are necessarily de facto partners. However, children of a relationship will often be relevant in identifying a further level of commitment by the couple
  • The performance of household duties; for example, the sharing of domestic duties may indicate a commitment to a shared life, and
  • The reputation and public aspects of the relationship; if two people appear together in public and attend events together as a couple this can provide evidence they are a couple.

This is not an exclusive list; any other circumstances can be considered. There will be situations where some circumstances are more relevant than others. Also, no one specific factor is a necessary condition to determine whether or not there is a de facto relationship.

There have been cases where the court has found there to be a de facto relationship even though the two people are not residing together. That said, whilst cohabitation isn’t absolutely necessary for a de facto relationship to exist, it is a very persuasive factor.

What is not a de facto relationship?

Various relationships can easily be identified as falling outside the definition of a de facto relationship. For example, a boyfriend/ girlfriend relationship where both people have independent lives and do not cohabit does not have the hallmarks of a de facto relationship, even if it is a close, personal and sexual one.

If two people’s relationship is not a de facto relationship (or they’re not married or not in a civil union) they fall outside the scope of the PRA. If these people have issues relating to property, they must therefore use some other legal remedy to try to resolve their property-related dispute.

The question that often arises in these cases is just when a relationship shifts from being a more casual type of relationship to a qualifying de facto relationship to which the PRA applies. In each case, that will involve a detailed consideration of the above factors, and possibly others.

How we can help

If you need further advice about how the PRA could apply to you, and possible steps you may be able to take to contract out of it, please be in touch.

 

Used by permission, Copyright of NZ Law Limited, 2017

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance please contact Lois Flanagan at Parry Field Lawyers loisflanagan@parryfield.com (348-8480).

 

Following the Kaikoura earthquake in 2016, EQC and private insurers advised that private insurers would act on behalf of EQC in receiving, assessing and settling home and contents claims arising from the earthquake, even those claims that were under the EQC cap.  Customers were reassured however that this approach would not change their entitlements under their insurance policy or the Earthquake Commission Act (‘the Act’) and that insurers would receive training to ensure compliance with the Act.

Homeowners affected by the Kaikoura earthquake may well be wondering what exactly is the extent of their entitlement under the Act.  This article considers that issue.  For homeowners dealing with EQC in respect of the Canterbury earthquakes, please see our earlier article “EQC is repairing my home – what am I entitled to?”

 

What is the extent of EQC’s obligations?

If you have fire insurance, your home is secured against damage caused by natural disaster for its “replacement value” (generally up to a maximum of $100,000 plus GST).

Under the Act, this means that you are entitled to receive the costs “reasonably incurred” to replace or repair the damaged part or parts of your home to a condition which is “substantially the same as but not better or more extensive” than its condition “when new”.

In other words, you are not automatically entitled to repairs (or the cost of repairs) which give you a home which is better than what you would have had when it (or any part of it) was originally built.  However, you are entitled (subject to certain conditions) to receive repaired property which is largely the same in appearance, quality and working order as it was “when new”.

Consequently, you are not limited to receiving what is known as an “indemnity” payment, whereby an insurer is only responsible for paying for the cost of repairing your home to the condition it was in before the damage (which in most cases will be less than new).

Does EQC have to cover the cost of ensuring the repairs comply with current building regulations?

Yes, as a general principle.

The EQC Act provides that:

·         EQC’s obligation to pay to replace/repair a person’s home to a largely new condition (but not better or more extensive than what the home was like when new) is modified “as necessary to comply with any applicable laws” (which would include current building regulations).

·         The cost of such compliance is EQC’s responsibility – EQC is responsible for paying any costs “reasonably incurred” to comply with any applicable laws in relation to the replacement or reinstatement of your home.

In other words, while in general EQC is not obliged to pay to repair your home to a condition which is better or more extensive than what it was like originally when new, this limitation is modified where it is necessary for the repairs to comply with any applicable laws.

Consequently, this means that you may end up with something which is better than what you had before. This is because, although your home (or part of it) may have complied with building regulations at the time it was built, this may not be the case now.  Therefore EQC may have to pay for additional work to be done to ensure that any repair to the relevant part of your home complies with current regulations.

This may include paying the cost of upgrading non-earthquake damaged aspects if those aspects need to be upgraded as part of completing the repair of your earthquake damage. In other words, if your earthquake damage cannot legally be repaired without also upgrading non-earthquake damaged parts, EQC may be responsible to meet those costs too.

However, that doesn’t mean that your entire home has to be fully upgraded to comply with the performance requirements of the Building Code.  In general, only the relevant repairs have to comply with the scope of the Building Code that applies to that particular type of repair. With the exception of such things as fire safety, the balance of your home only needs to comply with the Building Code to the same extent as it did before the earthquake.

Be aware however that, if your home (or part of it) did not comply with building regulations at the time it was built or no building consent was obtained when required, you may have to contribute to the cost of any additional work required to ensure that your repairs comply with current building regulations. This is particularly if the failure to obtain a building consent/comply with the relevant regulations caused or increased the earthquake damage to your property.

Is EQC responsible for paying any other costs?

Yes. Under the Act, EQC is also responsible for paying any costs “reasonably incurred”:

·         To demolish your home (or any part of it) and remove debris but only to the extent that such was required to enable your property to be repaired/replaced;and

·         To pay architects’ fees, surveyors’ fees and council fees.

Are there repairs/damage EQC may not have to cover the cost of?

Possibly. EQC is only responsible under the Act for covering damage to your home which occurred “as a direct result of a natural disaster”. Consequently, if you have damage to your home which was not caused by the Kaikoura earthquake (e.g. pre-existing damage) but which is also being repaired as part of your earthquake repairs, you may have to meet the cost of that.

However, this is not always the case. If your earthquake damage cannot be repaired without the non-earthquake damage aspects also being addressed, EQC may still be responsible to pay (see point 2 above for example).  Likewise, if pre-existing damage has been made worse by the earthquakes.

Correspondingly, if your home (or part of it) did not comply with building regulations at the time it was built or no building consent was obtained, you may have to contribute to the cost of any additional work required to ensure that your repairs comply with current building regulations (again see point 2 above).

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Contact Paul Cowey at Parry Field Lawyers, paulcowey@parryfield.com (03 348 8480)

This article discusses the Family Court system in New Zealand and in particular focuses on contact rights for children after a separation. Thanks to Kim for suggesting this topic on our Facebook page.

 

No family situation is the same as another so this short article can only offer general guidance. If you have a specific question we recommend talking to a lawyer as there is often no set answer and the right solution will depend on your special facts.

However, as a starting point, the Family Court will not need to be involved where the parents of a child can agree on how the child will be cared for after the parents separate. The Family Court usually only gets involved if there is no agreement.

If there is a dispute over care of a child, an application can be made to the Family Court. However, before this, the Court will generally require the parents to complete a “Parenting through Separation” course and that a Family Dispute Resolution process involving mediation has been done, which is where the two sides come to an agreement using an independent mediator.

Generally after those processes have been followed then an application can be made to the Family Court for a Court Order about the care of the children. This will cover day to day care of the child as well as times for contact for the other parent. Contact rights can be set for particular days and times if one parent has care of the child for most of the time. If the parents cannot agree on the care of the child, then a Family Court judge will need to make the decision about care and contact after hearing from all parties.

If you have a specific situation we would be happy to discuss that further with you.

We would also comment:

– if there is a risk of violence, or has been violence, then this will impact on the form that contact takes eg contact may be supervised;
– if a Parenting Order is not being followed then an application may be made for it to be enforced;
– a Parenting Order can later be varied but usually not within 2 years of the making of the original Order.

It is worth noting that there are other terms which are specific to the Court process which can be confusing such as “directions conference”, “pre-hearing conference”, “in-chambers” etc – if you have a specific question then it is best to ask someone at the Court or your lawyer to explain what they mean.

We hope this article has helped to shed some light on the Family Court System in New Zealand and the steps where there is disagreement over the care of a child after the parents separate.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance, please contact Lois Flanagan at Parry Field Lawyers (348-8480) loisflanagan@parryfield.com

The Christchurch earthquakes changed the landscape in many areas of life. One such area is insurance. Prior to September 2010 the words “EQC claim” were never muttered by a Christchurch property lawyer. Nowadays, if a Christchurch property lawyer goes a day without mentioning those words, they have done extremely well.

 

Recently and with the recent events in Kaikoura in the forefront of our minds, we brought you an article that looked at some lessons learnt from the Christchurch earthquakes from a home owners perspective which you can find here. We thought that it would be also useful to also look at this issue from the purchaser’s perspective.

The area of EQC and private insurance claims has evolved significantly since September 2010 and in many situations the 2016 position is more complicated  than the position immediately after the earthquakes. This is mainly because many home owners have had pay outs for various aspects of damage to their properties, some of which has been completed and some of which has not. Almost all contracts for the sale and purchase of property contain provisions in relation to the claims that have been made on the property and the assignment or otherwise of those claims to the purchaser. Purchasers need to be on guard. The effect of getting these clauses wrong should not be understated. We offer the following tips to ensure that your interests are protected and no surprises occur on settlement.

Know your terminology

Be aware that there is a difference between an EQC claim and a private insurance claim. Unless there has been more than $115,000.00 damage to the property, an EQC claim will relate to damage to the dwelling and a private insurance claim will relate to aspects outside of the dwelling like the paths and the driveways.

Obtain information early on

In your discussions with the real estate agent, discuss with them the EQC and private insurance position of the property. In particular, what damage has occurred and obtaining scopes of work, did the vendor receive a cash settlement or did they have the repairs carried out by way of a managed repair process. This helps to inform you as to how much work has been completed on the property and the mode of repair.

Beware the cash settlement

If a cash settlement has occurred and the work has not been carried out, is the vendor agreeing to pay over the cash amount on settlement and if so, will the cash settlement be sufficient to complete the required work? If the cash settlement has been used to complete the work, can the vendor provide evidence (photographs, receipts and invoices) of the work having been completed? Often times, vendors who are cash settled for cosmetic work complete the work themselves. Therefore be wary of work that while technically “completed” has not been completed to a tradesman like standard. Your building report or other professional reports can be of use to determine the quality of work completed.

Obtain sign offs

If the work to the property has been carried out by way of a managed repair, ensure that you obtain all sign offs as well as any Council building consents and code compliance certificates in relation to the work. As you have probably seen in the media in recent times, even signed off work has had quality issues and therefore even with work that has been signed off, we would still encourage you to obtain independent professional reports to ensure the work has been completed to a good standard.

Feed back to your lawyer

The above information can then be fed back to your lawyer who can draft an appropriate clause in relation to the assignment of the EQC and private insurance claims. Your lawyer may want to confirm the information obtained with the vendor’s solicitor as well.

Make it a condition

You should consider making your approval of the EQC and private insurance information in relation to the property and the assignment of these claims a condition of the contract. This means that should any aspect of the EQC or private insurance position of the property that becomes clear through your due diligence process not be favourable to you, you have the ability to cancel the contract.

Beware of precedent clauses

We would caution you about relying on a standard EQC and private insurance provision that has not be tailored to the particular circumstances of the property. At Parry Field, we have more than 20 different clauses we use in relation to the assignment of EQC and private insurance claims so you can see that the variance is large.

Reliance on professional reports not commissioned by you

Be aware that professional reports (for example building and engineer’s reports) that are not commissioned by you (i.e. that you don’t pay for) can not be replied upon by you legally. Such reports must be commissioned and paid for by you if you wish to able to legally rely on them. Therefore, in a situation where a property has had significant damage, we would strongly encourage you to obtain your own structural engineer’s  report in relation to the property.

Honesty is the best policy

if there is work still to be completed on the property, you should disclose this to your insurer and bank as early as possible. In relation to your insurance, this will likely result in your insurer excluding the damaged areas of the property from your policy coverage until the work has been completed. However, this is certainly the lesser of two evils given that if your insurers find out that you did not disclose damage when you are making an insurance claim for further damage to your property (a fire for example), this could void your policy and you be left with some hefty clean up costs.

Don’t rush

This is likely to be the biggest investment of you life so take your time, speak to your lawyer early to ensure the contract is right for you. This could save you thousands of dollars down the track.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance with this, or with any other Property matters, please contact Paul Owens at Parry Field Lawyers (348-8480).