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High Court makes declarations on EQC flooding risk policy

The High Court in Wellington has made a number of declarations outlining how the Earthquake Commission can deal with claims stemming from loss of land value as a result of increased flooding risk affecting up to 13,500 individual Canterbury properties.

Justices Paul Heath, Stephen Kos, and Murray Gilbert made a series of declarations on EQC's proposed policies to deal with flooding vulnerability, while leaving increased liquefaction vulnerability to another hearing while the commission developed its policy, they said in a judgment released today. The four-day hearing in Christchurch sought orders to ratify EQC's policy, setting out whether the government agency would be obliged to compensate claimants and on what terms.

The judges said the physical integrity of the Canterbury land hit by a series of earthquakes in 2010 and 2011 was altered so as to make it more vulnerable to flooding, and constituted natural disaster damage to insured residential land. They also determined that where damage led to subsidence but not change in the state or integrity of a structure, that damage should be considered as damage to the land and not the residential building.

On liquefaction, the judges concluded residential land that's materially more prone to liquefaction damage as a result of the quakes has sustained natural damage, while leaving other orders for a later date when the EQC fully developed the policy.

The judges determined that the EQC can indemnify a claimant against their loss if they intend to carry out repairs, and said the "consequent reasonableness of repair costs will be a relevant consideration" with regard to proportionality.

EQC will be allowed to develop guidelines identifying factors it will take into account on these claims, "provided those guidelines inform a good faith determination about whether there has been such natural disaster damage, are not applied mechanically, do not exclude from consideration other factors that are relevant in any particularly case, and enable the commission's assessment to be challenged in a court of competent jurisdiction."

The judges declined to make a declaration limiting appeals to High Court judicial reviews.

Costs were reserved.