FOUR YEARS ON What is happening with the recovery Issue No.2 ~ 22 February 2015
Our second issue Welcome to the second issue of the Empowered Christchurch newsletter. As residents of the city, we feel that there is a great need for a newsletter of this sort to bring together all the useful information that is presently available. This newsletter is intended to help people work through the maze of processes and information that has been generated for the recovery. We sincerely hope that it will prove a helpful guide and reference in the challenging times we face ahead. The newsletter has been compiled by members of the community in their free time, people whose lives have been affected by the earthquakes and insurance settlements. Any contributions to offsetting the cost of this publication would be greatly appreciated. The Empowered Christchurch account is Westpac; account number 03 0814 0485 107-00
We have prepared some information to help you navigate through the recovery. What are the issues you need to know and why? The most important asset you own if you have an unsettled insurance claim is your policy document.
Your insurance policy is the defining document MBIE Guides are not the defining documents when it comes to your insurance claim: the crucial reference is your insurance policy. Using only the MBIE Guides and the Building Code can result in your property being reinstated to post-earthquake floor levels, whereas insisting on the entitlement under your insurance policy should reinstate it to pre-earthquake floor levels. Section 112 of the Building Act, which can apply if Existing Use Rights and exemptions are used, allows the property to be reinstated to a condition that is no worse than after the earthquake damage. In practice, a large portion of the damage and the risk of future losses can then be left with the insured. Before the earthquake, your house may have been your most valuable asset. After the earthquake, however, your most valuable asset is likely to be your insurance policy!
Land and boundary movement A recent presentation by the Surveyor General of Land Information New Zealand (LINZ) focused on the problem of shallow surface land movement (i.e. lateral spreading, lateral stretching, and lower slope land movement). This movement and its implications for legal boundaries have
been ignored over the last 4 years by EQC, Southern Response and other insurers, and even by the legal profession. It has now been confirmed that, following the common law principle, legal boundaries do not move with the land, and that the correct way to determine boundaries is by using the features on the land. In other words, if you are in an area that has experienced land movement, and your fences, driveways, garages, and even your house end up beyond your neighbour’s boundary, they encroach on your neighbour’s property and you will have the obligation to deal with the problem. However, this damage should be covered as part of your insurance claim. The government must have been aware of this highly serious issue on 4 September 2010 and again on 22 February 2011. However, for more than 4 years, EQC has been settling house and land claims without taking this critical area of damage into account. Essentially, there has been a massive transfer of risk back to the owner of the land and buildings affected. Newly built houses in the affected areas may now be in the wrong position and may also need to be moved. ALL insurance claims therefore need to be halted until surveys have been carried out to determine where the buildings, fences, etc., are in terms of the legal boundary. Luckily, this will not affect all of Christchurch, but if your home is near a river, on lower slopes, or in the east of Christchurch (and even Fendalton), it will have critical significance to your insurance claim. This is an issue whose importance cannot be overemphasised and one that home and landowners need to be fully aware of. It beggars belief why it has taken LINZ 4 years to realise the existence of this problem, just as it beggars belief why EQC has tried to ignore it. In addition, LINZ is now consulting with insurers before informing the home and land owners. If you are in one of the affected areas, you should e-mail the Surveyor General and request that he consult with you, the home and land owner, about any changes that are proposed. His email address is: surveyorgeneral@linz.govt.nz In summary, if you do not have this issue dealt with as part of your insurance claim, you may find that, at some point in the future, you will be liable to move your fences, driveway, garage, and possibly house - at your own expense. This could be a ticking time bomb for the home and landowner.
Subrogation rights, what are they? ICNZ publishes the following definition of subrogation on their website: “The right of an Insurer to take over the legal rights of the Insured person in order to recover payment from a third party that is partially or wholly responsible for a loss which an Insured has made a claim for.” Under the building consent authority, exemptions and existing use rights are granted under the rights of subrogation. Both can be used as risk transfer mechanisms for the building consent authority and insurance companies. Why is this serious for homeowners? Because MBIE has worked with the insurance companies (PMOs) to set up the exemptions, including the associated transfer of the risk to residents. This is confirmed on page 4 of the document, “Report on the review of the Christchurch City Council”, Section 2:
“The ministries’ technical team is working with the Council and two project management offices (PMOs) to develop an efficient Schedule 1(k) exemption process. This will require dedicated resource of approximately 3 staff to process applications efficiently.”
What progress has been made with legislation, standards and codes of conduct since our last newsletter? NZS 1170.5 Earthquake action standard According to Standards NZ, an amendment is now in place, and submissions were due by 17 November 2014. This is due to come into effect in June 2015, subject to MBIE approval. (Standards NZ)
NZGS Geotechnical Engineering Practice Guideline Our correspondence with the management committee on the update of the Engineering Practice Guidelines that were meant to be released last year produced the following reply: “Thanks
for your continued interest. We have made good progress on updating our liquefaction guidance and on preparing new guidelines on foundation design, ground investigation for assessing liquefaction susceptibility and on specifying ground improvement for liquefaction mitigation. These guidelines are scheduled to be rolled out progressively over the first half of this year.” ECan and Coastal Marine Area Empowered Christchurch has been in correspondence with Land Information New Zealand, LINZ made a recommendation that central government be asked to intervene to ensure the coastal marine area is redefined. Since our last newsletter, responsibility for the costal marine area has been transferred from ECan to Christchurch City Council. It is likely that a correction will be proposed in the upcoming District Plan proposal, due 2 May 2015 for public submissions.
Consumer protection under the Building Act has now been passed as law as of 1 January 2015. The scope of protection seems to be more extensive than indicated, which comes as a timely improvement.
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ICNZ Fair Insurance Code of Conduct The Insurance Council now states that “it is expected that the new Code will be introduced in February 2015”. This is already two years behind schedule and seems likely to be delayed for a further year by ICNZ.
Land claims: what has been happening? At a recent media event, EQC stated that “EQC staff would be working hard to settle IFV claims by the end of the year, but that ILV claims might be more of a stretch”. It added that all properties with potential ILV or IFV would undergo an extensive geotechnical and valuation review to determine their qualification status. EQC would accept challenges on the lLV and IFV status of a property once reviews were complete. Canterbury land is among the most inspected land in the world. Millions have been spent on geotechnical investigations, and an extensive geotechnical database is already in place. The data includes not only the EQC drilling information, but also the subsequent drilling data from insurance companies. A land hub was established, where Tonkin & Taylor stated that they had ground strengthening solutions, but conceded that there were still fundamental issues that remain to be resolved. A peer review was said to have taken place but testing was not conclusive. This is somewhat puzzling, since a peer review cannot take place until results are conclusive. In addition, the names of the parties that carried out these “peer reviews” were not revealed. You can view the presentation from the land hub here: http://canterburyresidentialrebuild.govt.nz/land-hub
EQC Ground Improvement Pilot
District Plan Review. Ten year plan for Christchurch, 2015-2025. One of the main purposes of the district plan is to plan for the future of the city. This involves identifying areas that are suitable for new development, and also to identify hazardous areas. The earthquakes have exacerbated many hazards in Christchurch. Fortunately, Canterbury is one of the most investigated land areas in the world. All the hazards should now, therefore, have been identified and mapped. This includes dangerously high groundwater, increased flood risk, liquefaction, subsidence, lateral spreading, land slope stability, erosion risk and active fault lines. The active fault lines have been identified on various maps, but they have not been mapped as hazards. We are confident that Council will deliver a District Plan that reflects the known facts so that we can make informed decisions for our future. The final District plan is due April 2016.
Taking the long-term view. Christchurch City Council expects tease a proposal for the long-term plan for the city 2 May 2015. This should identify where the flood banks will be located. ICNZ has sent strong signals to the government that the insurance industry may retreat from high-hazard areas in the coastal environment because of the increased risk. This is understandable, particularly in the eastern suburbs of Christchurch, where land has sunk significantly and there has been widespread liquefaction. Some areas are currently protected by temporary emergency stop banks that need to be reinstated to an appropriate standard if the flood risk is to be mitigated. info@empoweredchristchurch.co.nz
Many hands make light work Determination, a binding decision by MBIE Here is the text of a determination for a building consent issued by our building consent authority: http://www.dbh.govt.nz/ UserFiles/File/Building/Determinations/2014/2014-058.pdf In this example, an insured party asked for a determination from the Ministy (MBIE) regarding a repair strategy proposed by their insurer’s Project Management Office (PMO). Because the insurance policy is not taken into account, and the Project Management Office had applied for exemptions and Existing Use Rights, the authority approved the action of the Council in issuing a consent. Its main consideration was compliance with Section 112 of the Building Act. This takes no account of land damage, liquefaction or flooding vulnerability. The main criterion is that the condition of the building is no worse than when the repair started (i.e. not before but after the earthquakes). This determination confirms that neither the determination process, the building consent, nor the MBIE Guides take your insurance policy into account. In recent days, Empowered Christchurch has been working with Council to resolve this issue. A letter template is available on our website (empoweredchristchurch.co.nz) which can be sent to Council (propertyfileinfo@ccc.govt.nz). If you ask for this letter to be registered on your property file, and request a new PIM (Property Information Memorandum), this will protect your rights and block any exemptions such as existing use rights. (see back page)
needed to ensure that long-term recovery is self-sustaining. The eastern suburbs of Christchurch city, which suffered the greatest housing and land damage in the earthquakes, are now experiencing greater rebuild and insurance complexities. The residents of these areas, many of whom have pre-existing vulnerabilities such as low incomes and/or a disability, are experiencing a more challenging recovery than those in other areas of greater Christchurch. Other issues may complicate claim resolution, such as where owners have cash settled and will therefore have to manage potentially complex rebuilds or repairs themselves in a period of cost inflation. Under-insurance and/or deferred maintenance may mean some owners face funding shortfalls and need to make additional contributions to complete rebuild or repair. Helping owners understand their insurance policies, rights and obligations relating to property ownership and technical aspects of their repair or rebuild is the preferred approach to resolving claims and reaching flexible solutions that meet the individual needs of the parties. CERA will therefore continue to support owners to facilitate faster resolution of insurance claims through supporting the Residential Advisory Service to provide independent information, technical advice and facilitation.” Source: http://cera.govt.nz/sites/default/files/common/cera-briefing-for-the-incoming-ministeroctober-2014.pdf
In fact, the overwhelming majority of Christchurch residents had full insurance at the time of the earthquakes. We question: What went wrong? http://www.insurancenews.com.au/analysis/no-end-in-sight-to-canterbury-insurance-
Ratepayers need to do their homework! The last line in Section 4.4 outlines the central issue: subrogation of rights without disclosure. The critical element here is the insurance company’s duty of disclosure. An insurance company may use subrogation of rights, but not without disclosure.
The briefing to the incoming minister from CERA, October 2014, states the following: “As reconstruction continues over the next 10 years, a greater focus on developing and realising the vision for greater Christchurch is
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What can we learn from this? Your insurance policy wording needs to be the only standard that anyone costing your claim uses for asessments. Your insurance policy is the ONLY legal document that can protect your equity. Under the insurance company’s duty of utmost good faith and duty of disclosure, you have to be made aware of any risk transfer that is proposed when your claim is being settled. Kia Kaha – Please contact us if you have any queries or information.
info@empoweredchristchurch.co.nz
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Information and assistance sources
Where to lodge a Complaint Fletchers Complaints
Fletchers EQR has a formal complaints process. More information is available at: www.eqr.co.nz/repairs;
EQC Complaints EQC also has its own complaints process http://www.eqc.govt.nz/about-eqc/make-complaint
Insurance Companies Most insurance companies have established complaints processes. Some disputes can also be referred to the Insurance and Savings Ombudsman if people are not satisfied with their direct dealings with their insurance company www.iombudsman.org.nz
Free legal assistance
Community Law Centres www.communitylaw.org.nz
Information Booklets MBIE’s Rebuild with Confidence guidance http://www.dbh.govt.nz/UserFiles/File/Publications/Building/Guidanceinformation/pdf/canterbury-rebuild-guide-for-homeowners.pdf
Canterbury Residential Rebuild - Information for home owners http://canterburyresidentialrebuild.govt.nz/information-for-home-owners
Information for Homeowners http://resources.ccc.govt.nz/files/CDEM/ InfoForHomeownersOrBuildingPractitioners.pdf
Earthquake Support and Counselling line:
If the complaint is about how a local council is undertaking its Building Act functions, you can lodge a complaint directly with MBIE. MBIE has an established process for following up with the council concerned and investigating such complaints. www.dbh.govt.nz/consumer-complaints
If people need support, they can call the support and counselling line to be connected to free and confidential services. The Helpline can help people with their questions, give information, and connect people with free counselling services or organisations that can offer them practical support, information or advice. (Call 0800 777 846);
Service Providers
Canterbury Earthquake Temporary Accommodation Service CETAS
Building Consent Authority
If people think that a service provider has misled consumers about their rights under the Consumer Guarantees Act, they can complain to the Commerce Commission www.comcom.govt.nz/making-a-complaint
helps people find temporary accommodation and also administers a service providing financial assistance and Earthquake Support Co-ordinators. (Available until 2016.) www.quakeaccommodation.govt.nz/
Licensed Building Practitioners
With over 2,400 members including lawyers, experts and knowlegable people that help each other. ~The crowd knows more than most.~
Complaints about the performance of licensed building practitioners - www. business.govt.nz/lbp
Chartered Professional Engineers and Architects Complaints about chartered professional engineers and registered architects can also be made via existing processes set out on the websites for the professional bodies for these professions. www.ipenz.org.nz and www.nzrab.org.nz
Courts Utilising the Disputes Tribunal http://www.justice.govt.nz/tribunals/disputestribunal
Official Information Act requests Section 2(1) of the OIA defines “official information” as “any information held” by an agency that is subject to the Act. www.ombudsman.parliament.nz
TC 3 FAC E B O O K : https://www.facebook.com/groups/TC3Residents
In The K now: https://intheknow.org.nz/ (Q&A about the recovery) R ebuild Christchurch: http://www.rebuildchristchurch.co.nz/ WEC A N : http://www.wecan-nz.com E mpowered Christchurch FAC E B O O K : https://www.facebook.com/empoweredchch With over 1,900 members a source of valuable information for anyone with an earthquake claim. We apologise that there was insufficient time to include phone numbers and addresses in this issue for readers without access to computers.
The information presented in this publication is for general informational purposes, and should not be taken as legal advice. If you have a specific legal issue or problem, we recommend that you consult a lawyer. Opinions presented in this newsletter are provided for general information purposes only.
Chistchurch City Council and Empowered Christchurch are working together on streamlining this process. Once implemented, the letter template form will be on our website.
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This is a sample letter that people can use to ensure risk and liability is not transferred onto them without their knowledge. This letter does not stop or hinder anything. It just makes sure you are kept informed. Feel free to copy, share or modify to suit your own circumstances.
Minor but important alterations had to be done on the letter template. Council now has the template for approval It will be launched as online form on the Empowered Facebook site once approved. We are also in discussion with Selwyn and Waimakariri District Counils on the same arrangement. http://www.facebook.com/empoweredchch
info@empoweredchristchurch.co.nz