Couple's log-cabin dream up in smoke
John Herbert thought he was buying a secluded log cabin in the woods but ended up with what looks like a house in a burnt desert.
An insurance oversight, which could affect hundreds of Cantabrians, means he believes he is thousands of dollars out of pocket after a raging inferno ripped through rural properties in Selwyn in January.
His home was largely untouched, but he is struggling to find the money to remove charred shelter belts on the property and replant dozens of new trees.
A fortnight before the fire, Herbert went unconditional on the Shands Rd block believing the vendor - Richard Duncan and his partner Wendy Ruscoe - was fully insured.
He never saw or asked for documents showing the extent of their cover.
It was only after flames swept through the property that he discovered the buildings were covered but not the shelter belts, pasture and a dressage arena.
Neither party could agree on terms because of the uninsured damage, which Herbert had quoted at more than $250,000.
The vendor thought that figure was unrealistic and disputed some of the damage to the property.
A battle for compensation ended in May when both parties eventually settled.
By that stage, Herbert had spent about $34,000 on legal fees and recovered $87,500 - a figure set aside in a ruling by property lawyer Lindsay Lloyd. He still feels he was short changed, but does not have the money to continue to fight it through the courts.
Now, he is calling for changes that would make disclosure of a vendor's insurance details compulsory before any contract is signed so that no-one else has to go through the ordeal he has.
His fight for compensation has also exposed potential issues with a recent technical change to the standard sale and purchase agreement.
"We feel victimised by the very law that was written to offer protection to a consumer," he said.
Lawyers and the real estate industry are looking at the case with interest.
Simpson Grierson senior litigation partner William Akel, who provided advice to Herbert, believed Lloyd should have approached changes to the agreement differently. Herbert could have been awarded more in compensation, Akel said.
High Court judge Justice Fogarty believes legal arguments surrounding the case should be heard.
"I think there is still a serious issue to be tried as to whether [the change] has been correctly interpreted."
New Zealand Law Society property law section chairman Andrew Logan believed the case was a wake-up call to people buying property. They can, and should, include a special condition in any agreement, which would allow them to see the vendor's insurance policy, he said.
"If you're buying property . . . get advice first.
"We [as lawyers] can't wave a wand over a contract once it's been signed."
Herbert wants the standard agreement changed so the vendor is forced to disclose the nature of their insurance.
"I need people to know that this can happen and it needs to become standard procedure not just a special condition," he said.
Real Estate Institute chief executive Helen O'Sullivan said the case would be looked at closely by the industry.
"Thankfully cases like this don't come up very often. This is an exceptional case."
Logan's suggestion was a good idea and would likely be circulated among real estate agents, she said. Changing the agreement was complex, but would also be discussed.
Duncan, who has since moved to Australia with his partner, acknowledged the couple failed to note a change to their insurance policy, which capped insurance on the property's shelter belts at $2500.
"The issue is that he [Herbert] has taken advantage of this unfortunate situation to try and claim unrealistic amounts of money as perceived compensation," Duncan said.
"I agree that people should request full insurance details before buying a property if it would help to avoid unfortunate situations like this."
Herbert said the debacle was more stressful than the earthquakes. The house was smoke-logged after the fire and initially uninhabitable.
They had sold their home to pay for the property so they had to take refuge at a camp ground - living in a bus for more than six weeks. Because the property was uninsured, arguments began around how much compensation Herbert and his partner were entitled to.
The parties couldn't agree so Lloyd was appointed to make a decision.
December 24: John Herbert and partner Louise Clem go unconditional on a property at 950 Shands Rd.
January 10: A fire, which starts at 32 Selwyn Rd, rages across rural farmland, destroying buildings and dozens of trees at the property.
January 28: The couple are meant to settle, but damage to the property mean the parties can't agree on terms. They cannot agree on the amount of compensation they are owed for damage to uninsured aspects of the property.
February 1: Herbert and his partner move out of their home in Checketts Ave and move into a campground.
February 25: Experienced property lawyer Lindsay Lloyd, appointed by both parties to determine an interim amount to be deducted from the settlement amount, sets aside $87,500. The money could not be accessed until both parties agree on how much should be paid out in compensation.
Prior to March 11: Unhappy with the amount of money set aside by Lloyd and his interpretation of changes to the standard agreement, they seek legal advice from leading lawyer William Akel. He advises the couple to apply for an injunction, to avoid being forced to settle, and to write a letter to Lloyd asking him to reconsider.
March 20: At the High Court in Christchurch, Justice Fogarty declines an application for an interim injunction, because it would inconvenience the vendor. He suggests legal arguments around changes to the law be heard at a separate hearing. The court action costs Herbert and his partner about $34,000.
May 3: Lloyd declines to reconsider his decision.
May 20: Herbert threatens further legal action, but after negotiation both parties agree he should receive all of the stakeholder fund. Herbert and his partner finally settle on the property, albeit with far less money than they hoped for.
- © Fairfax NZ News
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