Insurers have attacked Christchurch's main earthquake litigator, saying his clients' million-dollar claims for average houses are spurious.
Auckland-based lawyer Grant Shand, who is acting in 101 of the 211 cases on the Christchurch High Court quake list, is offside with insurers angered by what they say are excessive and unfounded claims.
He has also been criticised by the court for not providing enough support for the claims in his court filings.
At a preliminary hearing in a recent case, a High Court judge issued a minute, saying: "The process which has been adopted in this case, and in others, of making a claim where there is little or no evidential support for the amount claimed, is unsatisfactory."
Insurers say Shand's approach in quake cases creates unrealistic expectations for homeowners and lands them with legal costs and delays rather than helping to resolve disputes.
However, the Auckland-based lawyer calls the insurers' criticism unjustified and just the usual "whining and moaning".
He says court action is the only way to contest offers from insurers like Southern Response, who he describes as inflexible and unwilling to negotiate.
A company representing homeowners in their battles with Earthquake Commission (EQC) and insurers says it has full confidence in Shand.
Southern Response, a Crown-owned company set up to handle AMI claims, is the defendant in 37 proceedings now lodged by Shand and says it has launched an investigation into advisers it believes are exploiting vulnerable home owners.
Southern Response chief executive Peter Rose said Shand was part of a developing industry where customers sought advice and were then persuaded to seek three times more than their entitlement.
Shand accuses insurers of deliberately "lowballing" homeowners.
Examples provided by Southern Response and Tower included:
A three-bedroom Aranui home. Southern Response says it can be rebuilt for $268,225. Shand's statement of claim seeks just over $1 million.
A four-bedroom New Brighton home. Southern Response says it can be repaired for $199,407. Shand filed a claim for $1.8m to rebuild.
A three-bedroom Queenspark home. Southern Response says it can be repaired for $98, 535. Shand filed a claim for $1.5m.
A four-bedroom Linwood home. Tower says it can be rebuilt for $426,300. Shand filed a claim for $1.15m.
A three-bedroom Aranui home. Tower says it can be rebuilt for $239,000. Shand filed a claim for $840,000.
Rose said court action took up a huge amount of time and ultimately delayed the return of clients to their homes.
Insurers were forced to commission reports to counter inflated and "spurious" claims and defend their positions which added costs and caused delays, he said.
Due to the number of unrealistic court claims against Southern Response, it would now seek costs if claimants were unsuccessful.
Tower manager of earthquake
recovery David Ashe said court proceedings should be the last port of call rather than the first.
"We have one recent example of court proceedings having been issued when we had yet to receive any claim from the customer . . . if customers issue proceedings which are not of precedent-setting value or are for excessive or unsubstantiated claims, then Tower will look to recover costs."
John Archer, general manager of the Commercial Rebuild Programme for IAG, said one or two lawyers operating in Christchurch simply issued proceedings in the High Court without ever trying to communicate with the insurer to settle the claim.
"In some of these cases IAG does not even have a claim registered by the customer because the damage has been assessed as under cap by EQC.
"The customers' expectations are then built up but the numbers they have been given are quickly refuted when their case gets to court. A judge will not accept, for example, that two professional quantity surveyors can differ by over $500,000 on an estimate on the same three-bedroom property.
"I would encourage people to speak to their insurer. In most instances a settlement can be reached without needing to incur extra expense."
Insurers claimed Shand had spread himself too thinly across more than 100 cases and that he "doesn't have the resources to do these cases justice".
Shand has called the insurers' complaints predictable - "they are always moaning and whining" - and said he could list a raft of cases where insurer offers had been "resolved for multipliers of that number".
"I can provide many examples of their lies, bullying, claims mishandling and low-ball offers. I can give you a long list of people that would be happy to talk about the actions of Tower and Southern Response."
He acknowledged that he did not produce engineers' reports or geotech assessments when he filed claims but said those expenses did not need to be incurred until later.
Shand said when he lodged claims in court, his obligation was only to ensure the claim had a factual and evidential basis. The figures in his claims had been costed by a "variety" of quantity surveyors or experts in that field, he said.
He had developed a feel through acting in many cases of what was legitimate.
It was up to the court to decide costs and as yet, "the numbers haven't really been tested in a courtroom".
"The main discrepancy is TC3 land. It's still very early days about what foundations are going to be required by council and what they are going to cost. A quantity surveyor not knowing the state of the land would be very conservative.
"It may be priced on screw piles. I would get in trouble with the client if it turns out it cost $1m to build their house and I claimed $500,000."
Shand said he knew what was happening in each of the 100 claims he had filed and insurers who said he was stretched were talking nonsense.
"It's not just me. I have people who work with and for me."
He did not use court action as a negotiation tool, he said.
"Southern Response don't negotiate. They don't engage. The benefits of the court process is you get action and certainty of outcome and that is what people want because people have sat around for three years and have got nowhere."
Last week, in a case unrelated to the earthquakes, Shand was censured and fined $2000 by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal for negligence relating to a High Court claim against a financial broker. He was accused of settling a case when the client had given other instructions.
Shand said the charges did not involve moral wrongdoing or dishonesty and were more about communication.
Bryan Staples, whose company, Earthquake Services, represents homeowners in their dealings with EQC and insurers, said Shand did most of the firm's legal work and had his confidence.
"We have found insurance companies will not negotiate unless they think you're serious. Some of our clients are helpless and bewildered and now it's three years since the earthquake. How much do they have to put up with?"
- Fairfax Media