Southern Response Concealment

Class Action

Frequently Asked Questions

 

About the Class Action

 

Registration

 

About GCA Lawyers

 

About Claims Funding Australia – the litigation funder

 

Legal and funding costs

 

How can I find out more?

 


 

About the Class Action

 
What is a class action?

A "class action" or “representative action” is a court proceeding brought on behalf of a group of people who have the same or similar legal rights. One or more people in the group act as the representatives of the whole group. These representatives are called the “plaintiffs”. The people in the group are called “class members”.

Class actions can provide access to justice for people who may not effectively be able to bring their own individual claims, for example because of the time and cost involved. They can make litigation more efficient, fairer and more cost-effective, because the class members may share resources such as lawyers and the cost can be spread across the whole group.

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What is the Southern Response Concealment Class Action about?

This class action is a claim for damages (i.e. compensation) from Southern Response for allegedly misleading its policyholders about the estimated cost of repairing or rebuilding their houses damaged in the Canterbury Earthquakes.

The claim alleges that because of Southern Response’s misleading behaviour, policyholders ended up settling their insurance claims for much less than they were entitled to.

Mr and Mrs Ross, who are the plaintiffs in the class action, have filed the claim against Southern Response for misrepresentation, breach of the Fair Trading Act (misleading and deceptive conduct), and breach of good faith. The claim is filed on Mr and Mrs Ross’ behalf and also on behalf of other policyholders who are in similar circumstances.

The Rosses seek (for themselves and for all class members) compensation for the difference between what Southern Response told policyholders was the estimated cost to repair / rebuild their home, and what the actual estimated cost was.

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What have Southern Response done wrong?

The class action alleges that Southern Response has acted incorrectly in the following ways.

  • After the Christchurch Earthquakes, it engaged a quantity surveyor, Arrow International, to inspect policyholders’ homes and prepare estimates of the cost of repair known as Detailed Repair/Rebuild Assessments (DRAs).
  • Arrow produced two versions of the DRA: an internal version and a customer version.
  • The internal version included, in addition to labour and materials, estimates for contingencies, design fees and other costs. The customer version did not include these additional costs.
  • As a result, the total estimate shown on the customer version was usually significantly lower than the total estimate shown on the internal version.
  • When it advised its policyholders about their insurance claims and their options under the policy, Southern Response only sent the policyholder the customer version of the DRA (the disclosed DRA).
  • Southern Response did not tell its policyholders about the internal version (the undisclosed DRA) that contained the higher sum.
  • This misled many policyholders into believing that the lower estimate in the disclosed DRA was the correct basis for settling their insurance claim.
  • As a result, those policyholders settled their insurance claims with Southern Response for substantially less than they were entitled to.

In a 2015 court decision, the Supreme Court held that policyholders who chose the “Buy another house” option under the insurance policy were entitled to receive additional sums for contingencies and design fees.

After the Supreme Court decision, Southern Response decided that going forward, it would pay those additional sums to all policyholders who settled after 1 October 2014. However, it would not pay anything more to policyholders who settled before 1 October 2014, because it said those claims “were settled in good faith on a full and final basis”.

This class action is therefore brought only on behalf of policyholders who settled with Southern Response before 1 October 2014.

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Who are the representatives and what role do they play?

Brendan and Colleen Ross have agreed to act as representatives of the class members affected by Southern Response’s actions.

Their home was located in the residential Red Zone and was damaged beyond repair during the Earthquakes. Their house was insured by AMI Insurance prior to the earthquakes, and Southern Response took over their insurance claim afterward. The disclosed DRA that Southern Response sent to Mr and Mrs Ross showed an estimated rebuild cost of $362,354.

However, the undisclosed DRA included additional costs bringing the total estimate to $475,727. Southern Response never told Mr and Mrs Ross about the undisclosed DRA and did not send them a copy. Mr and Mrs Ross chose the “Buy another house” option under their policy and settled their claim with Southern Response for $362,354 (less EQC payments and excesses).

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Who is the plaintiff and who is the defendant?

Brendan and Colleen Ross are the plaintiffs. They sue in their own capacity and as representatives of the class members.

The defendant is Southern Response Earthquake Services Ltd (Southern Response), a company now wholly owned by the New Zealand government.

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How do I know if I am eligible to be part of the Southern Response Concealment Class Action?

To be eligible you must be within ‘the class’. The precise definition of the class of persons eligible for this class action has not yet been finalised by the courts. Broadly speaking, you are eligible to participate in the class action if you:

  1. owned a house that was insured by AMI Insurance (now Southern Response) under a Premier House Cover Policy or Premier Rental Property Policy;
  2. your house was damaged in the Canterbury earthquakes; and
  3. you settled your insurance claim with Southern Response prior to October 2014.

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What happens if I sell my property now or in the future?

This will not affect your ability to become or remain a class member.

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Can I still be eligible if my property was in the residential red zone?

If your house was red zoned, the Government gave you two options:

  1.  Sell your house and land to the Crown.  The Crown would then take over your insurance claim.
  2.  Sell the land only to the Crown, and continue to deal with your insurer about the house.

If you took the land only option and entered a settlement agreement with Southern Response prior to 1 October 2014, you may be eligible for the class action.

If you took the house and land option, you cannot join the class action.  This is because the government took over your insurance claim and so you would not have entered a settlement with Southern Response.

If you are not sure which applies to you, contact GCA Lawyers for assistance. 

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What documents/information do I need to keep to be part of the class action?

You do not need any documents to become a class member.  If you become a client of GCA Lawyers you can ask us to file a Privacy Act request on your behalf to obtain the necessary documents from your Southern Response file.

That said, if you are considering becoming a member of the class action now or in the future you must keep all documents that you have been given by Southern Response and all communications you have had with that company.  The most important documents are the DRA that Southern Response sent you, any accompanying correspondence, and your settlement agreement with Southern Response.

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Can I speak to a lawyer about the progress of the claim?

As the case progresses GCA Lawyers will keep registered clients updated about developments through our online client portal.  GCA Lawyers clients (who have accepted our Client Agreement) receive email notification when a new update is available.

Of course, should clients of GCA Lawyers have any questions that are not answered by GCA Lawyers updates or FAQs, you can speak to a lawyer about the claim by emailing enquiry@gcalawyers.com or by ringing GCA Lawyers on 03 365-1347 during business hours.  

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How much compensation might I be entitled to?

In this class action, the claim is for the difference between the cost estimate in the disclosed DRA, and the higher estimate in the undisclosed DRA. Our information suggests the average difference may be about $100,000. However, we cannot advise you about the total size of your claim, or how much of that might be payable, without reviewing the documents from your Southern Response file and speaking to you in person.

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What if I want to seek more than the difference in the DRAs?

In this class action, you will not be able to seek compensation over and above the difference between the estimates in the two DRAs. If you want to pursue such compensation, you need to seek independent legal advice and consider bringing your own separate claim.

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When is the class action going to be heard in court?

There has already been a preliminary hearing in the Christchurch High Court, in November 2018. That hearing concerned Mr and Mrs Ross’ application for leave to bring the claim as representatives of other class members. In December 2018, the High Court issued a judgment granting Mr and Mrs Ross leave to bring the claim against Southern Response on behalf of all persons within the class definition.

An appeal has been filed regarding some of the details of the High Court decision. That appeal is expected to be heard by the Court of Appeal later this year. We will provide more information about the next steps in the case after the Court of Appeal hearing.

A copy of the judgment can be found here.

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Registrations

 

Why should I register my details?

Registering means that GCA Lawyers can contact you and inform you about any developments in the class action. To do that, we need your email address and/or phone number so that we can get in touch.

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What information do I need to register?

You will need:

  1. your name and contact details;
  2. the address of the insured property; and
  3. the date you settled with Southern Response.

The date you settled will usually be recorded on the Settlement and Discharge Agreement which you entered into with Southern Response at the time your claim was resolved. 

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What do I do if I can't find my settlement agreement and other documents?

Because you are only registering your interest, the information needs to be as accurate as possible, but completed to the best of your abilities. Use whatever material you have and what you can recall to fill in the information as best you can. 

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Can I get this information from Southern Response?

If you choose to become a client of GCA Lawyers we can assist you to obtain this information by making a Privacy Act request on your behalf. Alternatively you may wish to make your own Privacy Act request with Southern Response.  If you do so please make sure you keep this information separate from any documents you already hold. 

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Does it cost anything to register?

No, it costs nothing to register.

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Will registering mean I become a client of GCA Lawyers?

No, registration will not make you a client of GCA Lawyers. It just gives GCA a way to initially inform you more about the class action.

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Can I change my mind after registering?

Yes, if you change your mind you can deregister by emailing “I would like to deregister” to Saskia@gcalawyers.com . If you deregister you will no longer receive emails about the class action. 

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What is the insured property?

The insured property is the house that was covered by an AMI insurance policy, damaged in the earthquakes and in respect of which your insurance claim was settled.

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If the property is owned by a trust, who can register?

Any of the trustees can register to be informed about the class action.

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How do I register an additional property?

You can register an additional property by clicking on the “Add Additional Property” tab in the Insured Property Information stage.

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About GCA Lawyers

 

Who are GCA Lawyers?

GCA Lawyers are a Christchurch law firm founded in 1986. We specialise in complex litigation and dispute resolution, with a particular focus on class actions.

Over the last 28 years we have successfully brought a large number of group or class actions. These include a 1992 claim on behalf of clients of collapsed law firm Renshaw Edwards, as they sought to recover funds lost through fraud from the Solicitor Guarantee Scheme operated by the New Zealand Law Society, claims in 1996 against the Crown following the Cave Creek disaster, and claims against the Crown in 2000 relating to historical abuse of patients at Lake Alice Hospital. Each of these claims was successfully settled on behalf of group members.

GCA’s most recent class action was also a claim against Southern Response, brought on behalf of policyholders whose insurance claims Southern Response had refused to settle. That action was settled with the Crown in mid-2018.

For more information about our firm, go to www.gcalawyers.com.

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Why should I become a client of GCA Lawyers in the class action?

GCA Lawyers have the track record and expertise to bring this class action to a successful conclusion.

The plaintiffs, Mr and Mrs Ross, have engaged GCA Lawyers as their solicitors to bring the class action.

By becoming a client of GCA Lawyers, you too would be engaging the firm that is bringing this action. We will then make sure you are able to participate in the class action, keep you informed about the progress of the action and give you advice about your rights, including in relation to any settlement.

If you do not become a client of GCA Lawyers, we will not be able to give you advice about the class action or otherwise assist you with your claim.

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Can I participate in the class action if I don’t become a client of GCA Lawyers?

At this time it is not clear if the Court will permit people to participate in the class action if they are not also clients of GCA Lawyers.

Presently the Court of Appeal is being asked to determine the precise criteria for those that will be eligible to participate as class members in the class action.

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Does it cost me anything to become a client of GCA Lawyers?

It doesn’t cost anything upfront to become a client of GCA Lawyers.

However, GCA Lawyers is charging legal costs for bringing the class action. Those costs are being paid upfront by Claims Funding Australia, the litigation funder that is funding the class action.
If the class action is unsuccessful, you will not have to pay anything.

If the class action is successful and you receive a share of a payment made by Southern Response under a settlement or a court judgment, then your share of GCA Lawyers’ legal costs and the litigation funder’s commission will be deducted from your share of the payment, under GCA’s Terms of Engagement and Claims Funding Australia’s Funding Agreement.  In other words, there are no circumstances in which you will have to pay any legal costs/commission out of your own pocket. Any such legal costs/commission payable on a successful outcome are paid only from recovery of damages and costs obtained from Southern Response.

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Do I have to accept the CFA Funding Agreement in order to become a client of GCA Lawyers?

Yes, as CFA is funding all the costs of the action (including all the legal costs) you will need to accept the CFA Funding Agreement before becoming a client of GCA Lawyers.

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Did the plaintiffs obtain independent legal advice about the Terms of Engagement and the Funding Agreement?

Yes, Mr and Mrs Ross obtained independent legal advice about GCA Lawyers’ Terms of Engagement, and Claims Funding Australia’s funding terms, from a Queens Counsel who has expertise in class actions.

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Should I obtain independent legal advice about the Terms of Engagement and the Funding Agreement too?

You have the right to seek advice about the Terms of Engagement and the Funding Agreement from lawyers other than GCA before agreeing to these. This is not a requirement however we would encourage you to do so if you have any unresolved questions or concerns.

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About Claims Funding Australia – the litigation funder

 

Who is Claims Funding Australia?

Claims Funding Australia is a litigation funding company with operations based in Australia.
Established in 2009, it offers in-depth knowledge and understanding of the litigation funding industry, and provides practical and cost effective solutions for managing and funding litigation that would otherwise be too expensive for individual claimants.

Claims Funding Australia is wholly owned by Maurice Blackburn, Australia’s leading class action law firm.

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What is litigation funding?

Where someone has a legal claim, but either can’t afford to bring the claim, or doesn’t want to take the financial risk, a litigation funder may agree to support the claim. This typically means the funder meets all costs of bringing the claim (including legal fees), and agrees to pay any costs that might be incurred if the claim is unsuccessful (including paying the other side’s legal fees).

This means the litigation funder takes all the financial risk. If the claim is unsuccessful, the claimant will not have to pay anything at all. However, in exchange for taking that risk, the funder is usually entitled to be paid back what it has spent, plus a share of the proceeds of the claim, if the claim is successful.

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What are the benefits of litigation funding?

The principal benefit of litigation funding is that it can provide access to justice for claims that would not otherwise have come before the courts because individual litigants could not afford to do so. By engaging with a litigation funder, the financial risks and burdens of litigation are removed and the claim can then be progressed and determined on its merits before the courts.

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Why should I choose Claims Funding Australia?

First, CFA has an impressive track record of funding successful litigation. Second, as a wholly owned subsidiary of Maurice Blackburn, Claims Funding Australia has the benefit of highly experienced class action litigators. Having agreed to support this class action, Claims Funding Australia has the resources and commitment to help see the case through to a successful conclusion.

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Legal and funding costs

 

Will I need to pay any costs along the way?

No, you will not need to pay anything to join the class action or pay any costs, along the way. All costs of the action (including the legal fees) will be met at first instance by Claims Funding Australia.

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Will I need to pay any costs of the class action is successful?

Yes. Under the Funding Agreement, if the action is successful you will have to pay Claims Funding Australia your share of the costs it has paid to support the class action, plus a commission (i.e. a percentage of the monies recovered). However any costs that you are required to pay to Claims Funding Australia will be deducted from the money (if any) that you receive from Southern Response if the claim is successful and will not exceed that sum. For details, see the Funding Agreement at clause 11.1. In other words, there are no circumstances in which you will have to pay any legal costs/commission out of your own pocket. Any such legal costs/commission payable on a successful outcome are paid only from recovery of damages and costs obtained from Southern Response.

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Will I need to pay any costs of the class action if it is unsuccessful?

No, you will not have to pay any costs if the class action is unsuccessful.

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What do the lawyers get paid?

GCA Lawyers have engaged Philip Skelton QC and Kelly Quinn as Counsel for the plaintiffs. Counsel are the lawyers who argue the case in court. The lawyers (GCA Lawyers and Counsel) are paid fees on an hourly rate basis by Claims Funding Australia.

If the action is successful, in addition to their hourly rates the lawyers will also be paid Deferred Costs and a Success Fee.

Deferred Costs include part of the lawyers’ hourly rates that are not paid each month, but are only paid at the end of the proceeding if the class action is successful. The Deferred Costs may also include payment for some of the work that the lawyers did on the class action before Claims Funding Australia became involved, when the lawyers were working without being paid.

The Success Fee is a variable bonus payment that depends on how much money is recovered from Southern Response, and the number of Class Members that get to share in that recovery. In simple terms, the more Class Members are successful, the larger the Success Fee will be. The Success Fee will be shared between the lawyers as provided in their terms of engagement.

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What does Claims Funding Australia get paid if the class action is successful?

Upon success, Claims Funding Australia will recover the expenditure it has incurred in supporting the action (the Project Costs), plus a percentage of the money recovered from Southern Response. For details, see the Funding Agreement at clause 11.1.

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How can I find out more?

 

How can I find out more?

If the Frequently Asked Questions have not addressed your query you can find out more information by ringing 03 365-1347 during business hours or by contacting GCA Lawyers at enquiry@gcalawyers.com.

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