Southern Response fights ‘opt out’
Southern Response is making a final attempt to avoid an ‘‘opt out’’ class action case over the allegation it underpaid when settling Canterbury earthquake insurance claims.
Some policy holders claim Southern Response did not disclose full repair and rebuild costs in settlement negotiations, so were not aware of entitlements they could have received.
It was estimated about 3000 policy holders may have settled claims based on incomplete information.
The class action is in the name of Brendan and Colleen Ross, against Southern Response, and everyone affected by the issue would be included unless they opted out of the case.
The Court of Appeal approved the ‘‘opt out’’ approach. Southern Response has appealed against the decision at a hearing in the Supreme Court in Wellington starting yesterday.
Its lawyer, Tom Weston, QC, said the Law Commission was looking at the issue and it should be left to finish its very broad review of class actions. Changes could be done by law reform, he said.
His submission that in the past people had to ‘‘opt in’’ to a class or representative action, was questioned by one of the five judges, Justice Joe Williams.
The judge said class action was the standard approach in Maori cases with the chief being plaintiff for everyone.
Courts didn’t bat an eyelid when it was the chief of the tribe running the case, he said.
Weston said in the aftermath of the Canterbury earthquakes contact details for people were lost. There was a distinct possibility that not everyone affected even knew about the case, Weston said.
A decision or settlement of the case would remove the rights of people to take their own claims unless they had opted out of the class action claim.
People would be swept up without their knowledge so they would be no longer able to chart their own course, Weston said.
It might also expose some claimants to counter claims from Southern Response, he said.
Also, in New Zealand so far, if people opt in to a class action they sign up to arrangements to fund the class action but the funding of opt out cases was not clear.
A litigation funder has agreed to pay the costs of the class action against Southern Response in return for a share of any award.
If Southern Response, set up by the Government when AMI failed, loses the class action it could cost the Government millions of dollars.
The Supreme Court appeal hearing is expected to end today.