7/29/2019 2013-01-07 RT HON KEY Red Zone Issues

1/2

07 January 2013

Rt Hon John KeyPrime MinisterExecutive Wing 9.030Parliament BuildingsWELLINGTON

Dear Prime Minister

I wrote to you on the 24 th April 2012 about the difficulties confronted by many peoplein land that has been red-zoned by the government. I enclosed a legal opinion thatargued that all such properties were constructive total losses, regardless of theextent of the actual damage that occurred to any particular home. I asked that yourgovernment intervene by funding a case on the same basis that EQC sought astatutory declaration with the insurers on the reinstatement issue. I made the pointthat the opinion said the issue was not black and white, but that there was a case toanswer and that it would come down to the wording of each policy.

You responded on the 23rd May 2013 by saying that the offer was made aftercareful negotiations with insurers to ensure that government actions would notinvalidate claims against insurers and ultimately their reinsurers.

You stated that a legal action which suggests that the Crown is seeking to overturnprivate contract law could have disastrous consequences. Of course my requestmade no such suggestion. It was merely a question of interpreting the terms of acontract in light of the governments actions in red-zoning the land.

I pointed out that the government was on three sides of that question and thereforehad a valid stake in the answer. In fact I now believe you have a legal obligation topursue this question because you have an absolute duty to claim back from theinsurers as much as you legally can for the red zone properties you now own.

I will be referring this to the Auditor-General when Parliament resumes.

Todays Press newspaper contains the shameful result of your inaction on behalf ofthe people who have been unable to settle with their insurers within the red zone andwho are now forced to take them to court.

7/29/2019 2013-01-07 RT HON KEY Red Zone Issues

2/2

My constituent, Olly Ohlson, says he is humiliated at having to crowd-source fundingfor the legal fees to take on his insurer. He has 58 days to raise over $28,000. Matt &Valerie OLoughlin, who are mentioned in the story, are also constituents and arefacing the same legal battle. They too are asking for financial support from thecommunity. They shouldnt have to do this.

There are rumours throughout Brooklands that some insurers have already settledonce proceedings are filed, I assume, because they dont want a court to rule on thismatter. I suspect that any such settlements will be bound by conditions ofconfidentiality. I am worried that constituents without the financial resources to evenget to that stage will be the ones who will miss out. That cannot be right.

The government is going to have to settle with a range of insurance companies withrespect to the red-zoned properties it now owns, so I am asking again that thegovernment agrees to obtain a statutory declaration based on the different terms itnow has with the different policies it holds. If the government were to do so then my

constituents could rely on that statutory declaration as it pertains to their policies.Despite your advice on the number of different policies, there are not many variablesthat relate to the application of the constructive total loss principle.

If the government has entered into an agreement as part of its negotiations with theinsurers then it should not be my constituents who pay the price. You should comeclean and make up the difference so that people can truly move on.

Despite your continued statement that the government offer is generous and fair, youknow that some people would face losing six-figure sums if they were to accept therating valuation for their homes. Thats why they are taking the insurers to court andthats why they feel let down by the government that promised to walk alongsidethem every step of the way..I urge you to reconsider and look forward to your response.

Yours faithfully

Hon Lianne DalzielMember of Parliament for Christchurch East