Southern Response victims back in court

Members of the class action suit against Southern Response are calling on Earthquake Commission Minister David Clark to step-in to help claimants get what they are owed as they wrangle with the Crownowned company.

The claimants are about to return to court over a dispute about how the company will compensate them for their underpaid earthquake insurance claims.

Details of the case have already been settled in the courts thanks to a class action lawsuit. The courts ruled that about 3000 policyholders were potentially underpaid by Southern Response after they settled based on incomplete information. Some are affected by sums of at least $100,000.

Southern Response must now pay policyholders what they’re owed.

The dispute has moved to looking at how the company will pay the money policyholders are owed.

The rub is that a small number of people – about 250– who brought the class action need to pay the costs of taking the case through the courts. The remaining policyholders, about 2700, have been automatically opted-in, meaning they’re eligible for a payout, despite the fact they haven’t committed to contributing to the costs of the litigation.

Southern Response has proposed that policyholders could settle with the company directly, but first, they would have to opt-out of the class action.

That would mean those policyholders would have to deal with the company on their own, and they possibly wouldn’t contribute to the costs of taking the case through the courts, despite the fact that they had benefited from the case.

Peter Glassford, who was underpaid $328,000 because the insurer hid the amount he was entitled to be paid, said the proposal from Southern Response put an unfair burden on the people who brought the class action.

‘‘If you dared to take them on by actively pursuing them through the class action with legal representation, their proposal targets and discriminates against you, by lumping you with an unfair portion of the costs of the class action.

‘‘Alternatively, if you didn’t actively pursue any claim against Southern Response then you are rewarded by avoiding any responsibility for costs. This seems to be about deterring future class actions, so that big companies can get away with dodgy practices,’’ Glassford said.

Grant Cameron, the lawyer running the class action, planned to return to the High Court next week to seek assurances the funding order set by the court would be followed.

Cameron said Southern Response’s strategy flies against the principles of class action cases overseas, which treated claimants equally.

He said lumping the costs on a small number of litigants, rather than all the beneficiaries, would act as a disincentive to future class actions.

Cameron called on Clark to rein in the insurer to ensure the claimants were paidout quickly and equitably, rather than following the process through the courts again.

A spokesperson for Clark was approached for comment but said it would be inappropriate to comment until the outcome of the court hearing was known.