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John Campbell exclusive: Major Australian law firm backing around 3000 Canterbury homeowners in class action against Southern Response

Australia’s leading class action law firm will today announce it’s going to fund what may be the biggest class action in New Zealand legal history.

It is alleging the Southern Response (SR) insurance company has underpaid the people of Canterbury by roughly $300 million.

What makes this of interest to everyone in New Zealand, is that SR is owned by the Government, and therefore by the taxpayer.

SR is the government-owned company responsible for settling claims by AMI policy holders for Canterbury earthquake damage which occurred before April 5 2012.

It hasn't been plain sailing since its formation, however, with protests taking place against protracted settlements, covert spying on claimants, and now a fully-funded class action allegeing around 3000 SR policy holders have been underpaid. 

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An Australian law firm will fund action against insurer Southern Response for claims worth $300 million. Source: 1 NEWS

Christchurch lawyer Grant Cameron says the average allegation of underpayment is around $100,000 per policy holder.

Mr Cameron crossed the Tasman to engage firm Maurice Blackburn (MB) , which specialises in funding class actions on behalf of those who can't.

After exhaustively studying the allegations, MB principal lawyer Martin Hyde said the company was taking the case on.

"Because we looked at what went out to the people that were insured, and we thought that what they were sent was not fair, we thought it was misleading, we thought it was deceptive, we think it’s a strong case, and we’re happy to provide the substantial resources of Australia’s biggest class action firm to make sure that it succeeds," he told Breakfast.

Maurice Blackburn are taking the case on commission, and only if successful, there are no upfront fees, and no charges at all if they lose.

What’s broadly being alleged is that AMI, and then Southern Response, prepared two detailed repair or rebuild analysis costings for each property - one for the client, one for itself - and the one it gave to its clients did not contain costs like demolition, professional fees and contingency.

"We’re saying that every person received a letter that omitted key information about the cost of rebuilding their houses," Mr Hyde said.

In 2015, the Supreme Court ruled against that. Southern Response stopped the practice, but refused to alter settlements that had already happened.

We have serious reservations about what sort of directions may have come from the previous Government - Grant Cameron

"The unfairness is the fact that Southern Response reacted in accord with the case and changed its behaviour. But only for settlements after a certain date. It did nothing for the people who’d settled prior to that date," Mr Cameron said.

He was concerned about what direction SR had received from the previous Government.

"From our experiences with some other litigation, we have serious reservations about what sort of directions may have come from the previous Government to the leadership of this particular organisation. We don’t believe the present Government has had any part in directing what has taken place here."

Mr Cameron says he is "appalled" at the alleged underpayments.

"As I said before, mistakes happen, but once the decision makers in the organisation concerned are made aware of their mistake then you expect quick remedial action. And you expect that even more so, where the owner is, in fact, the New Zealand Government."

UNDER SURVEILLANCE: Spying on Southern Response Customers. Following today's revelations, John Campbell looked again in detail at last year's spying inquiry.

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It's alleged the insurance company underpaid the claimants by roughly $300 million, reports John Campbell. Source: Breakfast