Costs award to Vero for Britten building
The High Court in Christchurch has awarded insurance company Vero court costs of $745,245 over an earthquake claim from a company owned by Christchurch-based former international model Kirsteen Britten.
Britten is a director along with Tim Corcoran of Prattley Enterprises, which owned Worcester Towers, a 1920s three-story commercial building near Cathedral Square that was damaged in the 2011 earthquakes and demolished.
The shareholder of Prattley Enterprises is the estate of her late husband John Britten. He designed the V-1000 motorcycle, which is now exhibited at Te Papa and the Guggenheim Museum.
Prattley had unsuccessfully sued for a higher payout than the $1 million agreed to in August 2011. Its lawyers then appealed unsuccessfully to the High Court and Supreme Court, resulting in the costs award to insurer Vero.
‘‘Prattley’s loss was in the order of $520,000. It was paid out more than double its entitlement and it has no legitimate grounds for complaint,’’ the Supreme Court concluded in a judgment issued in October 2016.
Prattley’s court cases were funded by a company called Risk Worldwide, which acts for claimants based on payment of a proportion of any proceeds if the litigation is successful.
Worcester Towers had been insured with Vero on an indemnity basis for $1.605 million.
Prattley had agreed in 2011 to ‘‘full and final payment’’ of $1.05m, which reflected the market value of the building, according to the Supreme Court ruling.
When Prattley later challenged the settlement, its lawyers argued the payout should have reflected the cumulative costs of repairs following the first two quakes (September 2010 and February 2011), and the costs of reinstatement following the third (June 2011).
Prattley’s lawyers said the payout should have come to $3.38m.
But the Supreme Court rejected arguments from Prattley’s lawyers and noted the insurance policy contained an extension for reinstatement cover, which Prattley had not taken out.
The court accepted Vero’s arguments that Prattley could not recover more than it had lost and that it would have been left in a better position than before the earthquake damage, and possibly in a better position than if it had purchased reinstatement cover.
The Supreme Court ruled that Prattley was not entitled to be paid repair costs it would never incur, meaning rebuilding costs were the wrong starting point for measuring indemnity value. Among the evidence considered by the Supreme Court were two property valuations of $520,000 and $750,000, which allowed for depreciation.
‘‘Prattley was at no disadvantage in dealing with Vero,’’ the Supreme Court had ruled. ‘‘Indeed, when it came to settlement, Vero was at a distinct informational disadvantage as to the rental assumptions upon which Worcester Towers had been valued. Nor do we see Vero’s policy or conduct as breaching the provisions of the Fair Insurance Code.’’
Vero sought permission of the High Court in the latest costs case to pursue Risk Worldwide directly in case Prattley could not pay the costs. The court gave Vero 12 months to apply to seek costs directly from Risk Worldwide.
Brittco Management general manager Raymond Minehan declined to comment on the case.
Vero said it believed the full and final settlement reached with Prattley in 2011 was fair and reasonable.
‘‘We’re pleased that the High Court, Court of Appeal and Supreme Court have unanimously agreed with us and recognised this outcome with an award that will go some way towards covering our costs.’’