A Christchurch couple are not entitled to a "windfall payment" over their red zoned house, according to a judgement released today.

Brooklands couple Paul John Rout and Georgina Anne Knox Rout launched court proceedings against the insurer of their house, but their amended claim of $1.2 million was "entirely misguided" and was "quickly dismissed", Justice David Gendall said.

The judgement from the High Court at Christchurch detailed how the Christchurch earthquakes on September 4, 2010 and February 22, 2011 damaged the Routs' house and property, but not to an extent they could no longer continue living there.

Their property was "red zoned" in July 2011 and in response to an offer under the scheme, the Routs chose to sell the land on which their house was built to the Crown for $396,000.


To date, the Routs have received a maximum payout from the Earthquake Commission (EQC) for damage to their house of $113,850.

The Routs brought the proceedings against Southern Response Earthquake Services Limited (previously AMI Insurance).

Under their policy with AMI, the Routs' house was insured for the full replacement cost for the floor area of their home, but not their land.

Southern Response accepted the policy, but disputed the extent of the damage.

Until February this year, Southern Response consistently said the property was not economically repairable and constituted a demolish and rebuild plan. However, the company later contended it was a simple repair.

Lengthy negotiations between the couple and Southern Response continued and varied, until the Routs indicated at the High Court hearing that total rebuild costs were in excess of $1.29 million.

Justice Gendall said since March this year, Southern Response elected to offer the Routs a cash settlement on a repair basis rather than on the basis of a rebuild or the purchase of another property. It attempted to settle by making a payment, rather than having any actual work done.

Justice Gendall found the house was uneconomic to repair and said the Routs succeeded and failed in part with their claim.

He ruled that when they rebuilt their house on another site or bought another house, they would be entitled to incur costs of doing so up to a maximum figure of $673,330, less the $113,850 already received from EQC.

However, their alternative claim for relief by way of a cash payment of rebuild costs of $760,327 or their amended figure of approximately $1.2 million was dismissed.