Mathias v The Earthquake Commission - [2022] NZHC 2097

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-009-2441

[2022] NZHC 2097

BETWEEN
CAROL ANN MATHIAS

Plaintiff

AND

THE EARTHQUAKE COMMISSION

Defendant

Hearing: 1 August 2022

Appearances:

G D R Shand for Plaintiff (via VMR)

N L Walker and C J Curran for Defendant (via VMR)

Judgment:

23 August 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

MATHIAS v THE EARTHQUAKE COMMISSION [2022] NZHC 2097 [23 August 2022]

[1] The plaintiff, Ms Mathias, applies for an order that she sue as a representative plaintiff.

[2] While the application is not opposed by The Earthquake Commission (EQC), it is clear that the final form of the application represents significant input from EQC resulting in Ms Mathias amending her application to address EQC’s concerns.

The nature of Ms Mathias’ claim

[3] Ms Mathias’ property at Fir Tree Lane, Aranui, Christchurch (the property) was damaged in the Canterbury Earthquakes in 2010 and 2011. Ms Mathias did not own the property at that time.

[4] Ms Mathias agreed to purchase the property in September 2015 and took possession in October 2015. The vendor’s rights, interest and title in respect of EQC claims were assigned to her.

[5] EQC assessed the damage caused by the Canterbury Earthquakes and produced a Scope of Works to rectify the damage. EQC determined the cost of repairing the damage fell below the statutory cap under the Earthquake Commission Act 1993 (the Act) and elected to undertake repairs of the property which were completed by about August 2014.

[6] Ms Mathias says that after she purchased the property she discovered the EQC repairs did not remediate the property to the standard required by the Act. The parties agree the value of the additional repairs required to bring the work up to standard under the Act, exceeds the statutory cap.

[7] In November 2021, EQC paid Ms Mathias EQC’s assessment of what was due to her under the statutory cap.

The representative action

[8] Mr Shand, counsel for Ms Mathias, submits that many on-sold home owners are in a similar position to Ms Mathias in that after purchasing their property they have found further repairs are required, the costs of which exceeds the EQC statutory cap.

[9] Ms Mathias is faced with an uninsured gap, that is, the difference between her statutory entitlements under the Act and the actual cost to remediate the property to the required standard under the Act. Mr Shand submits that for many on-sold properties EQC, by itself or by its agents, did not:

(i)correctly determine the relevant natural disaster damage; and/or

(ii)complete the work to remedy the natural disaster damage to meet the standard required under the Act.

[10] In this proceeding, Ms Mathias pleads EQC was negligent in relation to the assessment of the property.

[11] The pleading is that EQC had obligations to exercise reasonable skill and care to:
(1)Identify all earthquake damage;

(2)Produce a scope of work that:
(a)Accurately stated…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 2097
Decision Date: 23 August 2022

CaseChat Overview and Summary

In the High Court of New Zealand, Carol Ann Mathias sought leave to sue as a representative plaintiff on behalf of others in a case against The Earthquake Commission (EQC). Mathias' property was damaged during the Canterbury Earthquakes of 2010 and 2011, and while EQC had assessed the damage and completed repairs, Mathias alleged that these repairs did not meet the standards required by law and that the cost to bring the property up to standard now exceeded the statutory cap. EQC had paid Mathias up to the statutory cap, leaving her with an uninsured gap.

The primary legal issue before the court was whether EQC owed a duty of care to subsequent homeowners, such as Mathias, to exercise reasonable skill and care in assessing and repairing earthquake damage. The court approved a common issue that EQC potentially owed such a duty of care. The court also determined that the proceeding should be on an opt-in basis, considering the potential disadvantages for class members, including the risk of losing government on-sold policy payments, uncertainty in the proceeding's funding, and the need for class members to make an informed choice to participate.

Ultimately, the court granted Mathias leave to proceed on behalf of all persons who met the class definition and opted-in to the proceeding. The class was defined to include owners of residential buildings damaged in the Canterbury Earthquake Sequence who purchased their property after EQC had settled a claim for under-cap natural disaster damage, and where the cost to repair the damage now exceeded the statutory cap. The common issue to be determined at the first stage of the proceedings was whether EQC owed a duty of care to future homeowners.

Orders