Southern Response Payout – Chris Lynch interviews with Peter Woods

Chris Lynch: In August 2019, you established in the High Court that Southern Response misrepresented the earthquake insurance entitlements for a Christchurch couple.

How did it change the landscape of insurance in Christchurch?

Peter Woods: What changed as a result of that was Southern Response put its hands up and said well there are three thousand other homeowners in the same position and it's going to cost 300 million dollars to pay out the compensation.

So that claim for Karl Ali Dodds had that consequence.

Chris Lynch: Insurance claimants misled by the government-owned Southern Response.

They've been urged to seek legal advice about how to access some of this $300 million.

Why has this only been brought to light now?

Peter Woods: Well firstly the government appealed the judgment in the High Court to the Court of Appeal that caused about a year's delay.

And then after we were successful in the Court of Appeal, the Southern Response wanted to settle with everyone individually.

But the Ross Class Action said that as they had a class action going, Southern Response couldn't do that.

And that issue's just been resolved so that Southern Response can now go directly to homeowners.

Chris Lynch: I'm glad you mentioned that, because I was going to ask specifically, what is the Ross Class Action and how's it relate to this?

Peter Woods: Well, that's been running in tandem with the Dodds claim that we took; it's nearly identical for the claim.

It's actually now quite unique for a class action because liability has been determined. It’s actually got nothing to do.

And that's why the government or Southern Response has said we want to go direct to the homeowners and just pay up.

Chris Lynch: How will people know if they are eligible to get some of this money?

Peter Woods: Anyone who had a house that had earthquake damage where their insurance was with AMI who became Southern Response, where they cash settled before 1st October 2014, and they are highly likely to be eligible.

Chris Lynch: Can people still be eligible if they didn't opt in or get notified of the class action though?

Peter Woods: Yes. So there's about 3,000 homeowners who are eligible. 

There's only about 250 registered for the class action. The rest (of the 3000 homeowners) are in it.

They don't know they're in it and they're entitled to opt out of it as long as they do that before 20 December.

That's not too far away. It's really close.

So it's very urgent that people need to get independent legal advice.

They need to get advice about their eligibility, whether they should opt out of the class action and get their compensation from Southern Response.

Chris Lynch: How is the compensation calculated?

Peter Woods: Well, in the High Court and the Court of Appeal, the court sort of set a formula in the Dodds case as to what the homeowner was entitled to and Southern Response is just adopting that formula and calculating what people are due.

Chris Lynch: Do you think Southern Response is being honest at the moment with what people can claim and the amounts they're saying?

Peter Woods: Well, we've had over a hundred homeowners come to us with these claims, and we've settled just under 30 I think so far.

We check all the calculations that Southern Response is doing. And they can be quite complicated from case to case. And they've been correct in all of them so far. So, you know, that's good news; because each case can be quite different from the other.

Chris Lynch: I guess what people also want to know is how long would this process take? If somebody engages with a lawyer, then how long is it going to take? Because as you would know, people are sick of waiting.

Peter Woods: And that's fair enough. So it's actually quite quick now, certainly that the deadline is the opt out by the 20th of December. People need to get advice about doing that. Otherwise, if they don't opt out, they stay in the class action.

We're finding that Southern Response is dealing with most of the claims we're putting in within sort of four to six weeks. So that's pretty quick.

Chris Lynch: If people opt out of the Ross class action, will this mean that those choosing to stay opt in will pay a higher percentage, though?

Peter Woods: I should say we support the use of class actions as they're really important to get access to justice. But as I said before, this is quite a unique case now where liability has been determined. So the class action actually hasn't got much to do. So the justification for charging people a success fee isn't really there anymore.

So in this case, I think Southern Response should pay the class action’s fees, but there shouldn't

be a success fee on top of that.

So if that's how that works out, then people in the class action will just pay their proportion of the legal fee and may not be exposed to the success fee.

But if the funders are successful in the class action and are entitled to a success fee, then they are saying at the moment they want they would take 27 per cent, but that will be of the homeowner’s compensation and it won't be a bigger percentage because there’s less people in the class.

Chris Lynch: Can the compensation payments be challenged? What if somebody thinks they deserve more than what's being offered?

Peter Woods: We have had several home owners who've said they want more than just the amount

calculated on the Dodds basis, but that's quite a separate issue. And they may be entitled to do that. But they starting again really. And it is more than 10 years on. If they waited this long, it's hard to imagine they really want to pursue their own claim for a bit extra.

Chris Lynch: Can I opt out of an already signed with the likes of GCA?

Peter Woods: Well, I think GCA is running two systems. A number of people who've actually signed their agreements. And I think if you've actually signed the GCA agreement and the funding agreement, you need to talk to GCA and say, if I stop now, what's my position? What do I owe you?

But there's also a number of people who've registered interest with GCA. Now, they haven't signed the agreement and they would be able to opt out provided they haven't signed.

Chris Lynch: Why engage with a lawyer if this is kind of something that people will be able to get in the first place?

Peter Woods: We are urging people to get independent legal advice. The class action is actually quite a complicated structure, particularly those who've signed up, but it's quite complex to figure out what's going on there. And then you'll need to have someone check the calculation that Southern Response is doing of what you're entitled to.

You also need some advice on the settlement documentation that Southern Response will require you to sign again. They want to make sure that this time it is full and final and forever. And they're encouraging people to get advice on that.

Chris Lynch: Here's a question for you. Can you give me some sort of ballpark figure as to how much it might cost to engage with the lawyer?

Peter Woods: The legal fees will range. If you go to your family lawyer, ask them, what will they charge you for this?

We're actually offering a fixed fee of $2,500 plus gst and Southern Response will contribute $2,000 towards the legal fee. So that's a net fee of $875. And on average, the compensation is about $100,000.

Chris Lynch: So if people stay in the class action, will they get more money than, say, opting out?

Peter Woods: It's highly unlikely the compensation paid to people in the class action will be any more than for those who are opting out. And it's highly likely that the costs of staying in the class action are much greater than if you opt out.

Chris Lynch: Peter, this is quite a short time frame. People should not really be mucking around

too long, should they?

Peter Woods: No, it's actually really tight. We don't generally advise about opting out until we've seen the offer from Southern Response, and that could be four to six weeks.

So by the time people register, we can go to Southern Response pretty quickly and get the initial information. But then to get the offer four to six weeks, we have to advise homeowners about opting out and about the terms of the offer. It's all got to be done before the 20th of December.

So it's getting really tight. People really need to move and get independent legal advice as soon as they can.