A class action lawsuit is being taken against Southern Response, backed by an Australian litigation funding firm, seeking redress for Canterbury earthquake claimants.
A Christchurch family is attempting to sue the EQC and their insurer, Southern Response. Photo: RNZ / Diego Opatowski
Southern Response is the government-owned insurance company responsible for settling claims by AMI policy holders for Canterbury earthquake damage.
Lawyer for the claimants, Grant Cameron, said they have got financial backing from a specialist Australian firm which funds such law suits.
"Claims Funding Australia is a major litigation funder and so we can now see this through to completion, no matter how long it might take."
The claimants have alleged the government owned Southern Response, which picked up quake claims after private insurer AMI failed, paid policyholders less than they were entitled to.
Mr Cameron said the funding deal and pending legal action meant that those who settled before 1 October 2014 could come forward and join the class action.
"The issue has already been considered by the Supreme Court in another case and the Supreme Court indicated that Southern Response's practice was wrong.
"Southern Response then changed its practice as regards all settlements after 1 October 2014 but what it didn't do was go back and correct the settlements before 1 October 2014."
He said there could be as many as 3000 affected policyholders left short about $300 million.
The claimants allege Southern Response did not disclose the full costs of rebuilding and repairs but provided only abridged reports, which were used to settle claims.
The original claimants, Brendan and Colleen Ross, said the funding deal and class action would ensure Southern Response had to answer for its conduct.
They have said they were short changed by $100,000 when they settled on the basis of the shortened report.
"We think that the many hundreds of policyholders who didn't receive the settlements that they were entitled to can now get access to justice, something they would never have obtained on their own," they said in a statement.
The lawsuit seeks the difference between the abridged and full reports, along with $25,000 in general damages, interest and costs, and also an admission from Southern Response that it breached the Fair Trading Act.
Class actions allow large numbers of people to join together to take a case to court. They are unusual in New Zealand, but common overseas where specialist firms fund the cases and take a percentage of any settlement.
Southern Response chairman Ross Butler resigned in December last year after a report that found a private security firm acting on the crown agency's behalf made potentially illegal recordings of quake claimants.