A group of Christchurch homeowners have been given the thumbs up to proceed with a class action against their insurer, Southern Response.
The policyholders, whose homes were damaged in the Canterbury earthquakes, had their application approved in the High Court at Christchurch today.
Justice Warwick Gendall was satisfied that the strategy employed by Southern Response provided a common "spine" to all of the policyholders and, "if substantiated at trial ... might well constitute a breach of Southern Response's express obligations under each policy."
Gendall said he accepted the common interest pleaded by the plaintiffs was a proper one of a rule 4.24 representative action.
"Southern Response engaged in a deliberate 'strategy' designed to deceive policyholders and delay claims with a view to reducing their financial liability to its policyholders.
"A reasonable argument exists, as I see it that it is in everyone's interests, including the plaintiffs' Group, other parties, and indeed Southern Response, to have this matter properly ventilated and determined before the Court."
Grant Cameron, solicitor to the plaintiffs, said his clients are "thrilled" with today's outcome and are looking forward to early progress.
"They now have the way forward needed to achieve a fair and reasonable resolution."
The Court said it reached its decision to allow the group to proceed with a class action "by a rather fine margin", according to a Southern Response spokeswoman.
"Southern Response is disappointed with the proposed process. It is concerned that a representative action based on what the Court described as a "reasonably tenuous" claim will not efficiently and fairly resolve each customer's individual earthquake claim," said the spokeswoman.
The homeowners bid, which was lodged in 2015, suffered a setback when Justice Cameron Mander threw the case out of the High Court at Christchurch in February.
However, Justice Mander left the door open for the homeowners to make a modified application that would address concerns raised in his judgment - particularly around the claimants' commonality of interests.
Southern Response believe the amendments to the claim, made to allow a representative action, have no basis.
The spokeswoman said the Court indicated that the resolution of each Group members' insurance claims will likely be postponed until after the revised group claim is dealt with.
"As a result, Southern Response is considering its options, including an appeal," said the spokeswoman.
"Southern Response welcomes the Court's decision that Group members may have been misled about some aspects of the class action, and the Court's requirement that the Group's Australian funder and lawyers must take corrective action."
The Court has ordered the funder and lawyers to send an approved explanatory letter to Group members setting out the correct position.
Group members then have 21 days in which they can choose to withdraw from the Group and the funding agreement, at no cost.
A Court sanctioned opt-in order has also been granted, allowing other Southern Response policyholders until April 16, 2017 to join the class action if they so wish.
Southern Response said some members of the Group have settled their claims with the insurer and withdrawn from the class action since the initial application lodged last year.
"We will continue to offer customers the opportunity to seek two hours of free, expert, independent legal advice around the conditions of the class action to ensure they are well informed of the risks of being locked into this litigation.
"We are encouraging customers with disputes to use less costly, more efficient and probably faster methods of dispute resolution rather than litigation, including mediation, Residential Advisory Service, Breakthrough Services or the Insurance and Financial Services Ombudsman."