Date
Geographical Area
Pacific
Countries
New Zealand
Keywords
Case Name
Quake Outcasts v Minister for Canterbury Earthquake Recovery & Anor
Case Reference
[2015] NZSC 27
Name of Court
Supreme Court of New Zealand
Key Facts
Following the 7.1 magnitude earthquake which stuck Canterbury on 4 September 2010, a devastating 6.3 magnitude aftershock struck close to the city of Christchurch on the 22 February 2011. This aftershock caused widespread damage to property and the deaths of 185 people.
As a result of the initial earthquake and subsequent aftershocks, the Cabinet categorised Christchurch into four zones based on the extent of damage to land and prospect of remediation. Owners of insured properties in the red zone – where rebuilding may not occur in the short-to-medium term – were made two offers: i) The Crown would buy the entire property at 100% of its 2007 valuation, with the insurance claim to be assigned to the Crown; ii) The Crown would buy the land at 100% of its 2007 valuation, with the insurance claim to remain with the owner.
For uninsured property owners (including those unable to insure), the Crown only offered to buy the land at 50% of its 2007 valuation, with no compensation offered for improvements. The appellants bought proceedings for judicial review of this decision, they challenged the lawfulness of the 50% offer and alleged that it was oppressive, disproportionate, and in breach of human rights. The intervener, the Human Rights Commission, submitted that the reasons for a lower offer did not amount to a rational justification for differential treatment. On appeal to the Supreme Court, the Court was asked to consider whether the 50% offers were lawful.
As a result of the initial earthquake and subsequent aftershocks, the Cabinet categorised Christchurch into four zones based on the extent of damage to land and prospect of remediation. Owners of insured properties in the red zone – where rebuilding may not occur in the short-to-medium term – were made two offers: i) The Crown would buy the entire property at 100% of its 2007 valuation, with the insurance claim to be assigned to the Crown; ii) The Crown would buy the land at 100% of its 2007 valuation, with the insurance claim to remain with the owner.
For uninsured property owners (including those unable to insure), the Crown only offered to buy the land at 50% of its 2007 valuation, with no compensation offered for improvements. The appellants bought proceedings for judicial review of this decision, they challenged the lawfulness of the 50% offer and alleged that it was oppressive, disproportionate, and in breach of human rights. The intervener, the Human Rights Commission, submitted that the reasons for a lower offer did not amount to a rational justification for differential treatment. On appeal to the Supreme Court, the Court was asked to consider whether the 50% offers were lawful.
Decision and Reasoning
The court stated that the offers should have been made under the Canterbury Earthquake Recovery Act 2011, which permitted voluntary or compulsory acquisition of land under s.53, not through common law powers as the Crown claimed. Although the Court noted that the mechanisms under the Act may not be entirely suitable or convenient, they stated that this is not a reason to bypass statutory procedure. As the offers were made outside of the Act, the Court held that they undermined safeguards and community participation.
The court also held that insurance status should not be treated as determinative of differential treatment. In reaching this decision the court considered that: there was no cost comparisons between offering uninsured owners 100% and 50%; no inquiry into uninsured against uninsurable; it was unfair to not take into account that the lack of insurance may not have been a conscious choice; the 100% offers were also made to uninsured/uninsurable properties in construction and those owned by not-for-profit organisations; there was no test of whether insured owners would have considered it unfair for the uninsured to not be assisted on similar terms; and offering 100% was not a moral hazard to the incentive of insurance. However, they also noted that some of these reasons may have justified differential treatment if carried out properly.
The court also held that insurance status should not be treated as determinative of differential treatment. In reaching this decision the court considered that: there was no cost comparisons between offering uninsured owners 100% and 50%; no inquiry into uninsured against uninsurable; it was unfair to not take into account that the lack of insurance may not have been a conscious choice; the 100% offers were also made to uninsured/uninsurable properties in construction and those owned by not-for-profit organisations; there was no test of whether insured owners would have considered it unfair for the uninsured to not be assisted on similar terms; and offering 100% was not a moral hazard to the incentive of insurance. However, they also noted that some of these reasons may have justified differential treatment if carried out properly.
Outcome
The court issued a declaration stating that the September 2012 decisions relating to uninsured improved residential property owners in the red zones were not lawfully made. They also directed the respondents to reconsider their decision.
Following this judgment, the Crown made another offer to uninsured red zone property owners in August 2015. In this offer, those who could have been insured were offered less than their full value. The court found this offer to be unreasonable and unlawful: Quake Outcasts v The Minister of Canterbury Earthquake Recovery & Anor [2017] NZCA 332.
On 21 August 2018, the Crown announced it would make offers to uninsured property owners on the same terms as it had for insured properties, i.e. 100% of the 2007 valuation for both land and improvements.
Following this judgment, the Crown made another offer to uninsured red zone property owners in August 2015. In this offer, those who could have been insured were offered less than their full value. The court found this offer to be unreasonable and unlawful: Quake Outcasts v The Minister of Canterbury Earthquake Recovery & Anor [2017] NZCA 332.
On 21 August 2018, the Crown announced it would make offers to uninsured property owners on the same terms as it had for insured properties, i.e. 100% of the 2007 valuation for both land and improvements.
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Disclaimer
This case law summary was developed as part of the Disaster Law Database (DISLAW) project, and is not an official record of the case.
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