Christchurch Rebuild - Crossley Gates: An innovative response

Aerial view of liquefaction and earthquake damaged houses in Christchurch. Photo / The Star Christchurch

New Zealand's Courts have responded with innovation and determination to the number of cases arising out of the Christchurch earthquakes.

Aware of the likelihood of litigation arising from insurance claims, the Chief High Court Judge decided to create a special 'earthquake list' through the High Court in 2012.

The idea behind this was to accelerate and smooth the passage of insurance litigation through the Court system. The 'earthquake list' is presently overseen by Justice Wylie, and is a register of all insurance litigation filed at the High Court arising out of the earthquakes. Priority is given to urgent cases or those cases which affect many people.

The earthquake list is designed to be cooperative and productive. Each case is 'managed' through the High Court system, mostly via case management conferences. During these conferences, at which both the lawyers and their clients must attend in person, the Court identifies issues that can potentially be agreed upon, and also sets aside issues that need to be disputed. A trial date is fixed.

In a demonstration of just how effective this concept has been, the District Court of Christchurch, Justice Forrest Miller of the High Court and Chief High Court Judge Helen Winkelmann were jointly awarded the Australasian Institute of Judicial Administration Incorporated 2013 Award for Excellence in Judicial Administration. The award recognised the special list established, as well as the continued work of the Court system in the aftermath of the earthquakes and was the first time a New Zealand nomination had won.

There is no doubt the 'earthquake list' has been worthwhile. It has served ordinary people, business people and insurers alike - and much faster than they would otherwise have seen results.

The many judgments handed down as a result of the 'earthquake list' cases have illuminated insurance law in New Zealand. Indeed, overseas, some jurisdictions now consider New Zealand to be leading the way in developing insurance law and the interpretation of insurance contracts. For example, a "novel" insurance law issue arose out of the earthquakes after an insured building suffered repairable damage in the September 2010 earthquake, but was then destroyed in the February 2011 earthquake. It is worth observing that in many cases, the repairs from the September 2010 earthquake had not begun when the February earthquake hit.

A key insurance question was: where both events happened during the same period of insurance, could the insured party receive the cost of repairs that were never undertaken from the first earthquake, as well as the total loss payment for the second earthquake?

No other country had faced a similar issue in a common law jurisdiction.

The case that has ensued looked to the Marine Insurance Act 1908 for guidance, and found a principle called "merger of damage". In a similar marine situation, the damage of one earthquake is merged into the damage of the other, producing only one payment for the total loss.

However, it remains unclear as to whether this principle applies to general insurance or solely to marine insurance. There are no cases in common law jurisdictions that address the issue.

As a result of the "earthquake list" fast track procedures, this issue has now quickly reached New Zealand's highest court - the Supreme Court of New Zealand. It was argued before the court in early to mid March. The decision of that Court will be ground breaking internationally.

Thus, no matter what the outcome, the passage of this case clearly demonstrates the New Zealand Court's willingness to quickly engage with gnarly insurance issues arising from the earthquakes.

The "earthquakes list" was a very suitable response to the largest natural disaster of our times in this country.

• Crossley Gates is a partner with DLA Phillips Fox.