EQC not chasing 'big green tick'

The EQC sought a declaratory judgment hearing to get clarity on 'difficult' questions around its coverage of land more vulnerable to flood damage. Photo / Geoff Sloan

The Earthquake Commission says it's not chasing "a big green tick" from High Court judges on its land settlement policy for more than 13,000 Canterbury post-quake properties, but rather a ruling on whether it is legal and proper, the court heard today.

The Earthquake Commission (EQC) sought a declaratory judgment hearing to get clarity on "difficult" questions around its coverage of land now at greater vulnerability to flood damage due to the Canterbury earthquakes.

The landmark hearing began at the High Court in Christchurch this morning with 16 lawyers filling the courtroom.

Both EQC and Canterbury homeowners hope the judges' ruling will clarify the "complex" legal questions surrounding pay-outs on the basis of long-term loss of land value.

It is seen as a possible global test case.

The hearing also involves the Insurance Council of New Zealand, Southern Response and the Flockton Cluster Group, affected residents represented by an amicus curiae - friend of the court.

Another amicus will argue any other positions not taken by other parties during the proceedings.

Christchurch City Council has withdrawn from proceedings but is supportive of the EQC application and has a lawyer in court with a "watching brief".

The main matters for the court are to confirm that increased flooding vulnerability (IFV) is a form of land damage covered by the Earthquake Commission Act (EQC Act); and to decide whether (IFV) settlements based on diminution of value are permitted under the EQC Act in appropriate cases.

The court will also confirm whether EQC's approach to assessing IFV damage is appropriate and does not unreasonably exclude properties or lead to under-compensation.

EQC's lawyer, Jack Hodder QC said it was a "difficult case", not just because "we can't see what we're talking about", but more to do with having to deal with a wide range of issues.

The issue of IFV was unique, he said, as land itself is rarely insured around the world and attempts to deal with it are only relatively recent.

Attempts to tackle the issues are also compounded by "imperfect information".

EQC believes there are around 13,5000 properties in Christchurch where IFV might be a factor and it wants its policy to be designed so those potential claims can be dealt with quickly, and legally.

Mr Hodder accepted that the homeowners involved have been subjected to "great distress" but added that it was a "difficult" situation and it has taken time to get to this point.

"That is why we are here, that is why we are taking up the court's time," he said.

Justice Kos asked Mr Hodder if EQC was seeking a "big green tick" from the court to essentially sign off its policy.

But Mr Hodder said it was not, rather it wanted to be sure that its policy was lawful and proper and not flawed.

The trial, before Justice Heath, Justice Gilbert, and Justice Kos, is set down for four days. Their decision will be reserved.

EQC says it cannot give a time-frame for increased flooding vulnerability settlements as it will "depend on the outcome and timing" of the declaratory judgment.