Claims Manager

Jardine Lloyd Thompson

The current Membership's cost of claims has generally reduced against a background of an increasing Riskpool membership and we believe that that is due to the benefits of Riskpool's risk management initiatives which commenced in 1997. Typically with a claims profile such as ours, it can take some time for those benefits to emerge and it would seem that for most types of claim the impact took effect in about 2000-01 and the positive trends appear to have continued. We believe that the principal reasons for these trends are:.

  • Successfully defended cases against Councils run by Riskpool has deterred would-be Plaintiffs and also created greater certainty in the law
  • The effect of our risk management initiatives impacting on the incidence of negligence, particularly with the types of claims that have a relatively short time between the act of negligence and the claimants realising they might have a claim (unlike leaky building claims)
  • Ongoing upgrading of Council infrastructure, thereby reducing infrastructure failure that might cause third party property damage
  • Better Council documentation, which assists with evidence to dispose of claims of negligence

The following provides a commentary on our main claim categories and detail management strategies

Building Control
Building defect claims involve alleged negligence in the issuing of building consents, allegedly negligent inspections during the course of construction and the issuing of erroneous Code Compliance Certificates that might be relied upon by third parties. Riskpool combines the implementation of good risk management practice with an aggressive but strategic approach to litigation. The reason for the latter is that it can take some time for the benefits of good risk management practice to emerge due to the latency of some building defects. Notwithstanding that, good risk management practice and comprehensive Council documentation has enabled us to run successful litigation that better defines the duty of care or strengthening affirmative defences.

Examples of results achieved are:

  • No. Three Meade Street v Rotorua District Council - Councils owe no duty of care to commercial property owners
  • Te Mata Properties v Hastings District Council- Councils owe no duty of care to non-vulnerable plaintiffs who can otherwise protect their interests for example through the engagement of clerks of works, project managers or otherwise protect their interests through contractual warranties, but chose not to. This theme continued with successful strike-out applications for building defect claims involving:
    • Motels
    • Schools
    • A rest-home/aged care facility
    • A medical centre
  • Dicks v Waitakere City Council - directors of liquidated or wound up building companies (or others involved in the building process) can be found personally liable
  • Hartley v Waitakere City Council - plaintiffs can be found liable for failing to mitigate their losses, 33% in this case
  • Charterall Trustees v Queenstown Lakes District Council - affirms that Councils do not owe a duty to commercial property owners. The rationale being that commercial property owners should be managing their own risks
  • "Byron Avenue" and "Sunset Terraces" confirms that councils do owe a duty to residential property owners and Hamlin remains good law. This case also confirms that plaintiffs who are subsequent purchasers can be contributory negligent, typically for failing to make proper inquiries before purchasing

Planning Matters
Planning claims tend to more quickly follow an alleged negligent act as the activity the subject of a consent will generally become obvious to an affected party sooner rather than later. Thus consent applicants that bring claims tend to do so reasonably quickly. Our strategies for managing these claims include a rigorous application of the test for negligence and the measure of damages for negligence. We have developed standard evaluation checklists for resource consent processing staff to use to ensure that errors or omissions do not occur, or if they are challenged, we are in a favourable position with regard to documentation to robustly defend a claim. We have recently had the opportunity to develop case law in this area.

  • Bella Visa Limited v Western Bay of Plenty District Council - councils do not owe a duty of care to protect the economic interests of others when discharging their responsibilities under the Resource Management Act 1991.

Council Infrastructure Failure
This broad category of claim involves third party property damage arising from the failure of council infrastructure or assets. Generally claims are in nuisance or negligence, although the latter is rarely pursued. Typically claims arise from sewage discharges, flooding from water mains or stormwater mains, trees falling or flood protection works failing during storm events.Typically the failure is difficult to foresee but this very fact gives rise to defences that we have developed in litigation.
Councils by their nature have in place asset management plans and they also plan financially for upgrading infrastructure. This gives rise to good risk management practices which have been promoted by RiskPool. Drawing upon these opportunities we have run litigation with a view to achieving certainty for Councils.

  • Atlas properties & Ors v Kapiti Coast District Council- providing Councils have acted reasonably in the planning for repairs and maintenance or the upgrade of infrastructure they will not be liable in negligence or nuisance. Further, the court had quite some sympathy for Councils because they have competing demands upon their limited resources.
  • Tindall & Ors v Far North District Council- the harm arising from the nuisance created or adopted by a Council must be reasonably foreseeable. This is a shift from what was probably a strict liability approach in New Zealand historically. The damage caused by the failure of Council infrastructure, by its very nature, is rarely "reasonably foreseeable".

Land Information Memoranda
This is becoming one of the members greatest exposures. LIMs issued daily by each council need to be absolutely correct. These documents are relied upon by potential purchases and their lending providers, and it is for this reason accuracy of LIMs is forefront in Riskpool's risk management objectives. A cautionary case in point is;

  • Altimarlock Limited v Marlborough District Council- it was alleged that the Council omitted information (that arguably was not mandatory information) in a LIM. The court confirmed that Councils owe a duty of care when releasing information in a LIM.

Defamation
These claims usually involve allegations being made against Councillors. Our experience is that with early legal assistance the claims can be resolved by way of retraction, apology or modest settlement. We actively remind our members that these claims are probably the most avoidable.

Riskpool 2018 Annual Report now available
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Riskpool Trust Deed and Scheme Rules now available
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