EQC ACTION GROUPSettlement and Joint Statement

What does it mean for you?

Structure of the Action Group Settlement

• Settlement Agreement• Joint Statement• EQC policy applicable to all homeowners

Application of Joint Statement1. “When new” and applicable laws2. Undamaged parts of the house3. MBIE floor dislevelment4. EQC pays rather than repairs5. What do you do?

1 “When new” and applicable laws• “EQC reinstated a property to where it was at the time of

the quake, taking into account any new requirements of the building code … Homeowners should not end up with a lower standard than what they had before the earthquake”

Ian Simpson, CEO, EQC - 31 July 2012

• EQR and the contractor will decide “the best repair strategies to return your home to its pre-earthquake state”

Canterbury Home Repair Programme November 2014

“When new” and applicable laws• Not “pre-earthquake state”• Not “like for like”• Not “no betterment”

Joint Statement “when new” and applicable laws

• EQC confirms that houses are covered for replacement value, which includes the cost to reinstate a house to substantially the same as (but not better or more extensive than) its condition “when new” and the cost of complying with any applicable laws.

(EQC says that this has always been its position)

2 Undamaged parts of the house• “When pre-existing conditions arise that would expose the

Commission to risk of being liable to repair of non-valid damage, it will cash settle the claim, thus allowing the owner to determine the best use of those funds to repair the home”

EQC 18 February 2014• “Our policy is to cash settle the claim where it is evident a

repair to non-code compliant wiring is required as part of the earthquake repair … if the owner is prepared to make the property’s wiring compliant before the repair begins, we will be happy to repair rather than cash settle.”

Reid Stiven, CHRP Manager, EQC - 12 August 2013

• “ … settlement of ‘properties with weathertightness issues’ differs from the regular settlement process. This is due to the fact that there could be substantially more work to complete in order to bring the building up to [DBH] standards, and the pre-existing damage could compromise the repair if not addressed.”

EQC 8 February 2013• “EQR contractors will be unable to effectively repair the

earthquake related damage without carrying out considerable amounts of extra non-earthquake related repairs … I will be recommending that EQC URGENTLY cash settle this claim …”

EQC Hub file note 31 January 2014

Joint Statement: undamaged partsEQC’s liability includes the cost of:• work on undamaged parts• reinstating the undamaged part if damaged in

the course of repairs• work on undamaged part if required for

compliance(EQC does not say that this has always been its position)

3 MBIE floor dislevelment• Vertical differential settlement less than

50mm and floor slope less than 1 in 200 between any two points greater than 2m apart

• Trigger and target

• “EQC would repair to the standard required by the Department of Building and Housing”

Ian Simpson, CEO, EQC - 31 July 2012• “Most of our work involves standard solutions which follow the

principles of the MBIE Guidelines – these standards are intended to ensure all repair work complies with the Building Code and that your home is no less compliant that it was prior to the earthquakes “

Customer Guide to the CHRP November 2014• “EQC Assessors and estimators rely upon MBIE Guidance and

Building Code requirements for determining repair strategies”EQC to Anthony Harper 16 January 2015

• “Given the floor levels variation and floor slope gradients across the floor plan are within the acceptable MBIE Guidance floor tolerances we do not believe the floor will require relevelling …”

Fletcher EQR 17 November 2015

Joint Statement: MBIE floor dislevelment• Earthquake damage should be

repaired even if dislevelment is less than MBIE Guidance

• The target is “when new” and applicable laws

(EQC does not say that this has always been its position)

4 EQC pays rather than repairs• “EQC scope of works includes all works

necessary … including Clause 9(1)(a) of Schedule 3. EQC does not formulate the scope of works on any different basis whether it is settling the insurance claim by payment, replacement or reinstatement”

EQC to Anthony Harper 26 May 2015

Joint Statement• If EQC pays rather than repairs, the

payment must be the replacement value (i.e. “as when new”) and applicable laws

(EQC says that this has always been its position.)

5 What do you do?• Prove it

– from EQC/EQR documents– expert evidence

• Ask for EQC review – template letter www.eqcfix.nz• EQC complaints process• Legal advice (Residential Advisory Service “RAS”)• Survey for EQC repairs to “rubble” foundations

EQC’s response – business as usual“The EQC’s catalogue of mismanagement, miscommunication and missed opportunity for redemption continues to grow.”

The Press, Editorial, Friday 29 April 2016

Presented by

Peter WoodsPartnerAnthony Harper