EQC gag clause ‘bullying’

Homeowners are being ordered not to publicly criticise or complain about the Earthquake Commission (EQC) in order to receive agreed payouts.

In a move described by prominent insurance lawyers as ‘‘bullying’’, ‘‘totally inappropriate’’ and perhaps not legally enforceable, EQC has included secrecy clauses in settlements made through the EQC Mediation Service.

To obtain their payout, homeowners must agree in a nine-page document to ‘‘not to make any public comment critical of EQC’’ or its staff or agents. They cannot complain to ‘‘any professional, governmental or other body about the conduct of EQC’’.

The EQC Mediation Service handles claims with disagreements over repair costs, matters of opinion, and damage assessments. It is funded by EQC and run by the Arbitrators’ and Mediators’ Institute of NZ, with mediators assisting negotiations but not making the decisions.

EQC chief executive Sid Miller has said the clause was a standard term and was ‘‘by no means there to prevent customers from speaking about EQC publicly’’.

But Andrew Hooker, managing director of Shine Lawyers which handles many earthquake cases, said no government organisation should have such gagging clauses. ‘‘It’s totally inappropriate. There’s no justification for a confidentiality clause like this,’’ he said. ‘‘EQC are using the negotiation process to try and silence people.’’

Hooker said while it might be reasonable for some aspects of the settlement to be confidential, there was no reason for EQC to ‘‘try and stop people saying mean things about them’’.

Many claimants would have an interest in knowing how EQC was handling other cases, he said. ‘‘They are trying to stop people who might want to warn others how they have been treated.’’

‘‘It’s bullying. They are not a private insurance party – why are they trying to silence people? They have statutory obligations.’’

Deborah Hart, executive director of the institute, said EQC claimants could dispute settlement clauses but EQC may not accept their objection. About 80 claims have been through the service.

WCM Legal’s John Goddard, a former supervising solicitor at earthquake legal service Residential Advisory Service, said insurers usually used gagging clauses ‘‘when they have something to hide’’. ‘‘What EQC is recognising is that the negotiations could be embarrassing to them.’’

Goddard said the playing field was ‘‘certainly not even’’ for homeowners dealing with EQC, and he urged those using the mediation service to get legal advice. He doubted that EQC could legally stop people making an official complaint, such as to the Ombudsman’s office.

‘‘That’s a fundamental right enshrined in the Ombudsman’s Act. In some ways it’s just as wrong as Southern Response having people investigated. It’s not the sort of thing Government organisations should be doing.’’

EQC chief executive Sid Miller said any settlement was ‘‘intended to be the final resolution of their dispute’’ and the clause related only to the confidential issues that were part of their dispute.

Customers could obtain legal advice before signing, and could raise queries with EQC then, Miller said.

However, he acknowledged the wording was ‘‘more legalistic than customer friendly’’ and said they would consider improving it.

As of March, around 2600 Canterbury EQC claims remained unresolved.