Why is the Southern Response class action case important?

Sunday, 2 April 2017

Southern Response is the Crown company set up to deal with earthquake claims against failed insurer AMI.

The legal community is watching with interest as a Christchurch class action case unfolds in the High Court.

The court gave a group of homeowners, led by lawyer Grant Cameron, the go-ahead to proceed with a class action against Southern Response – the crown company set up to handle claims for the failed insurer AMI.

The lawyer representing the claimants, Grant Cameron, at the class action launch in 2015.

A class action is a legal proceeding where an individual acts on behalf of a group of people with similar cases.

Insurance lawyer Greg Jones and colleague Lorraine MacDonald aren't involved in the case, but spoke to Stuff about the novel aspects of the proceedings.

Southern Response chief executive Peter Jensen.

* Southern Response had plan to under-deliver, claimants say

* Class action against Southern Response in court again

* Home owners aghast at fee for Southern Response class action

* Southern Response class action hopes to return to High Court

* Group action against Southern Response heading back to court

* Southern Response group action thrown out**

New Zealand doesn't see a lot of Erin Brockovich-style class actions because ACC eliminates the need to sue for personal injury. Brockovich fought against a US energy company in the early 90s.

Kiwi class actions tend to be formal financial proceedings, such as the Fair Play on Fees action against the four major banks.

'Because we have a small amount of these cases, it is going to get a lot of scrutiny,' MacDonald said.

In a 2014 paper, Justice Forrest Miller, the first High Court judge in charge of the list of earthquake cases, encouraged claimants to attempt class actions.

MacDonald said the judiciary likely wanted to see if class actions could be a quicker way of dealing with multiple claimants in the courts.

Another thing to consider, she said, was that some people involved in the class action might not be able to afford to bring a case to the High Court on their own.

'Access to justice is a big issue.'

The outcome of the Southern Response case will help lawyers know how to advise their clients and prepare cases for future proceedings.

New Zealand does not have any legislation that deals with class actions, though it could arrive in coming years.

Jones said legislation wasn't necessary, because the court system was flexible and judges could glean the appropriate approach by considering decisions in other insurance cases.

'Legislation does provide good and sensible outlines, but judges have good mechanisms and great flexibility under the rules.'

The lack of legislation made the decisions in the Southern Response case even more important, as they would likely be closely examined when deciding similar class actions in the future, he said.

'I tell you what, you'll get some legislation out of it I'm sure too, when people actually see that the process can work and can produce outcomes that are really important for us.'

If the Government does pass class action legislation, any decision in the Southern Response case will likely help define it.

A class action case needs a unifying factor, or 'spine' that joins those involved together – in this case the plaintiffs.

'What there needs to be for any class action, is an aspect of your case that is the same as an aspect of someone else's case,' MacDonald said.

Both sides agree there is no material difference in the claimants' policies, but the nature of the claims themselves differ.

Justice Cameron Mander originally declined the plaintiffs' request to proceed as a class action because there was such a 'a wide range of different issues of fact and law'.

The group went back to the High Court, arguing that Southern Response had engaged in a deliberate strategy to deceive policyholders and delay claims, and Justice David Gendall allowed them to proceed.

A spokeswoman for Southern Response said the company was appealing the decision to proceed, saying the fairest, most effective and expedient way to settle the claims was on a case-by-case basis.

MacDonald said the Appeals Court would carefully consider whether to hear an appeal.

'It might be that what comes out of any appeal is a clearer set of guidelines for the future,' she said.

'When there's a public interest there's almost an extra reason, in a way, to hear a case.'

MacDonald said it might look like each claimant had very different issues to settle, but it was up to the court to decide if there were enough similarities.

'Although every house is unique, the sorts of damage can probably be grouped into types of damage.

'And once you start breaking it down it may not be as insurmountable as it first seems to actually deal with these things in a legal way.'