EQC loses major insurance case

Earthquake Commission fails in its attempt to deny insurance to owners of six boarding houses in Christchurch.

The Earthquake Commission has failed in its attempt to deny insurance to owners of six boarding houses in Christchurch.

EQC tried to argue that boarding houses were not residential dwellings.

The owners of the adjacent houses – the Harris and Morley families – were forced to take EQC to court.

Justice John Priestley rejected the EQC proposition.

“New Zealanders, along with the inhabitants of other highly developed countries, live in homes. Ownership of the structures in which they reside, and the type of people residing with them, vary enormously.

“A person may live with a spouse or partner, with other family members who are older or younger, or alone. A person may live in a property which he or she owns; the property may be rented; the home may be shared with other people (such as the house being used to flat).

“A home may be occupied by people who have a familial connection or by people who know one another well. A home may be occupied by people who were initially strangers. The inhabitants of a home may come and go, for instance when adult children leave the nest and subsequently flop back into it.

“Some people may rent a home for a short term, waiting out the time between selling one home and buying another or orienting themselves in a new city or town until they find a home of greater permanence which they want to buy or rent. A new flatmate arrives to replace a departing one.

“Affluent people may own more than one home. Many people own holiday homes or rent them. Some people, instead of living in a house which they own, or renting an apartment, or being an occupant of a shared rented flat, live in boarding houses.

“These examples are not necessarily exhaustive but they illustrate the diversity of residential situations and homes which are commonplace.”

Justice Priestley concludes that each boarding house was an entire self-contained building and as such was self-contained premises being shared as a home by a number of individuals and therefore covered by EQC.

The judge also noted advice in an EQC publication that states that boarding houses, serviced apartments and time-shares, are not covered by EQC unless they are the manager’s flat, or the owner/manager’s part of the accommodation exceeds 50%.

Justice Priestley says that the EQC documents set out EQC’s perception of the legislation, but they do not determine the legal interpretation of the EQC Act.