Class action on land damage could cost EQC $1.5 billion

Friday, 15 December 2023

In what could be one of New Zealand’s biggest class actions yet, property owners with liquefaction damage from the Canterbury earthquakes have won the right to sue the Earthquake Commission (EQC).

The cost to Crown-owned EQC if it loses the class action has been estimated at $1.5 billion, with thousands of homeowners potentially affected.

A High Court decision released this week allows those with land damaged by liquefaction, who were paid out based on diminished land value rather than the cost of repairs, to sue.

Shirley couple Lucinda McEvedy and Andrew Freer, who took the original court action, will be the representative plaintiffs in the upcoming class action.

Part of their case was that under the law, EQC must settle claims for damage to residential land based on repair cost, not on an indemnity basis.

EQC opposed their claim.

McEvedy and Freer’s lawyer, Grant Shand, said they and other affected homeowners had been hugely underpaid.

The judge ruled the action could go ahead on an opt-out basis, meaning those qualifying will automatically be included unless they choose not to be.

To qualify, owners must have made a claim for liquefaction damage to their land which would cost more to repair than their EQC settlement for loss of value.

Shand said he expected many thousands of owners would be affected.

“Our clients believed it was wrong for EQC to settle land claims the way it did and continues to do so,” he said.

He said EQC paid his clients $22,000 for land damage, when they should have received at least $160,000.

Almost all the owners of 13,000 properties with liquefaction damage had been underpaid, Shand said.

“EQC settled over 99.5% of all ILV (increased liquefaction vulnerablity) claims the same way it settle our clients’ land claim. As this is an opt-out class action, it’s likely the numbers involved will be significant.”

The EQC’s method of settling the claims had saved it about $1.5b, he said.