NEWS

Earthquake Claim Win By Elderly ChCh Couple Soured By Insurer IAG Appealing Costs

Thursday 29 April 2021, 12:35PM
By RedPR
463 views


CHRISTCHURCH

The family of an elderly couple has been left wondering how much longer their parents will have to wait to get their lives back after insurer IAG said they would be appealing a court decision.

After the win last October, Alan and Joan Sleight, who are aged 87 and 81 respectively, and their family, felt relief and vindication after years of stress and fighting for what they believed was right.

The costs judgement was delivered in February this year, four months after the initial judgement against IAG, which unequivocally established IAG’s liability for the defective repairs made under their Managed Repair scheme. 

The Sleight’s son-in-law, Nigel Maxey, who has been assisting the couple, says that even after the clear win, IAG dragged the process of settling costs out.  Judge David Gendall made a judgement on costs in the Sleights favour; the Sleights were awarded costs of $388,780, along with an award of interest to be paid as “a matter of principle and fairness…” IAG has signalled its intention to appeal the interest element of costs.

Mr Maxey says what the insurer keeps putting his parents in law though is akin to death by a thousand cuts.

“The ongoing delays and poor faith behaviour from IAG continue to take their toll on Alan and Joan. Given the huge amount of money IAG has spent unsuccessfully defending their conduct, one would have thought they might have promptly paid all of Alan and Joan’s costs and interest, as a belated gesture of goodwill,” says Nigel Maxey.

The other active defendant, QBE, settled their portion of costs earlier and did not contest the cost arguments of Alan and Joan’s lawyers. The combined costs of IAG and QBE on this case are believed to be nearly $2.5M.

“Like a significant number of other families whose homes were repaired under the IAG Managed Repair scheme, the family has had a very painful path to getting their issues resolved, making IAG’s earlier statements that they are “doing everything we can to bring this matter to its conclusion” look a bit questionable,” says Mr Maxey.

Alan and Joan are deeply grateful for the excellent representation they received from Melissa Borcoski of Saunders Robinson Brown, who along with David Cooper of Shortland Chambers fought long and hard to get justice for Alan and Joan.

Nigel Maxey adds that the family remains extremely disappointed that so little has been done to meaningfully reform insurance legislation, and investigate the full extent of IAG’s conduct around their managed repair scheme.

-Ends-

 

 

Background:

The Sleights took their insurer IAG, project managers Hawkins Management Ltd, and builders Farrell Residential Ltd to court more than three years ago after IAG refused to accept liability for defective repairs and scoping shortfalls in the work carried out by Farrell Residential Ltd.

The trial finished on the 22nd July 2020, with the decision delivered on 30th October 2020.  The High Court found all defendants liable for $389,848 to repair the defective work.  It then took another seven months after the trial finished, to resolve costs.

In April 2021, IAG signalled it would be appealing the interest component of the court’s decision regarding costs.

 

SLEIGHT V IAG AND HAWKINS/QBE

KEY FINDINGS IN COSTS JUDGMENT OF 10 MARCH 2021

The costs judgment is 9 pages long and follows the earlier trial judgment from 30 October 2020, resulting from the four weeks High Court trial that took place in June and July 2020.


Alan and Joan Sleight’s house was insured by IAG and was repaired under IAG’s “Managed Repair Programme”.  This was a programme under which IAG appointed builders to undertake earthquake repairs and hired Hawkins to manage the repair process.  The repairs were carried out defectively by a builder known as Farrells, which has since gone into liquidation.


The Sleights sued IAG and Hawkins for the cost of remedying the defective repairs.  Hawkins was also in liquidation, but it was insured by QBE and so the claim against Hawkins became in effect a claim against QBE.


The High Court found in favour of Alan and Joan Sleight against both IAG and Hawkins/QBE and has required both insurers to meet the costs of remedying the defective repairs.


This was treated by IAG as a test case because the same issue arises in claims against it by many other homeowners whose homes were repaired defectively under IAG’s Managed Repair Programme.


The costs judgement awards the Sleights the full sum their council argued for, that being $388,779.70.


The judgement also awarded the Sleights interest as “…a matter of fairness and principle…” (Para 24)


The judgment further noted “the Sleights have been deprived of the money to which they were entitled since 2015. This has meant they have not been able to repair their house over that period and have practically been unable to sell their house for its true value. Those are real and further losses caused, in my view, by IAG’s delayed payment for which they should be compensated in order to achieve what I see as a just result.” Para 27(c).

 

 

 

 

 

SLEIGHT V IAG AND HAWKINS/QBE

KEY FINDINGS IN JUDGMENT OF 30 OCTOBER 2020 – PREVIOUSLY ISSUED

The judgment is 199 pages long and follows a trial over four weeks in June and July this year.
Alan and Joan Sleight’s house was insured by IAG and was repaired under IAG’s “Managed Repair Programme”.  This was a programme under which IAG appointed builders to undertake earthquake repairs and hired Hawkins to manage the repair process.  The repairs were carried out defectively by a builder known as Farrells, which has since gone into liquidation.
The Sleights sued IAG and Hawkins for the cost of remedying the defective repairs.  Hawkins was also in liquidation, but it was insured by QBE and so the claim against Hawkins became in effect a claim against QBE.
The High Court found in favour of Alan and Joan Sleight against both IAG and Hawkins/QBE and has required both insurers to meet the costs of remedying the defective repairs.
This was treated by IAG as a test case because the same issue arises in claims against it by many other homeowners whose homes were repaired defectively under IAG’s Managed Repair Programme.

See judgment at para 19

Against IAG, the key findings are:

IAG’s obligation under the insurance policy was to pay the costs required to repair the house to a “when new” standard.  IAG has failed to meet that obligation because the Sleights’ house has not been repaired to that standard.  This follows from the natural and ordinary meaning of the words of IAG’s insurance policy and IAG’s various arguments to avoid that outcome are wrong.

See judgment at paras 170; 176-184; 188-189; 193-195

IAG also represented that it would carry out the repairs properly under its Managed Repair Programme and was obliged to exercise reasonable care in doing so.

See judgment at paras 259-260

There was however “a real flaw at the heart of” IAG’s Managed Repair Programme which, as IAG’s main witness accepted, created a “recipe for disaster”.  The flaw was that IAG told the Sleights (and its other customers) that Hawkins would actively supervise the repairs, but Hawkins did not believe that was its role.  The consequence was that the builders were “effectively unsupervised, the repair defects were not identified, and Farrells were significantly overpaid for defective work”.

See judgment at paras 261, 262 and 275

“That overall situation was an unsatisfactory one.  Clearly it demanded a high level of attention, scrutiny and management from IAG.  But, from the evidence it is apparent little, if anything, was done to address the position until, so far as the Sleights’ contract was concerned, it was too late.”

See judgment at para 275, 276, 280-282, 288

Against Hawkins/QBE, the key findings are:

Hawkins was required to act as a project manager to protect the interests of the Sleights and other homeowners.

See judgment at para 338 and 342

Hawkins failed to perform that role properly.  It failed to ensure that the scope of repair works was adequate and it failed to monitor the quality of Farrells’ work.

See judgment at para 351 and 380

The overall result is that IAG and Hawkins/QBE are jointly liable to Alan and Joan Sleight for the cost of repairs, which the Court found to be $389,848.[1]

See judgment at 716

Issues of interest and costs still need to be determined.

 

 

 

[1] QBE’s liability is for $339,848, because there was a $50,000 excess in its insurance policy with Hawkins.