The ticking limitation clock in Canterbury

19 October 2015

Commentary

It has now been over 5 years since the first of a series of large earthquakes shook the Canterbury region. The first of the earthquakes struck on 4 September 2010.

5 years on the Christchurch rebuild is well-underway. Most buildings have been assessed, insurance claims made, and the majority of claims have been settled. However, impending limitation dates could cause problems for those claims that have not yet been resolved, as in certain circumstances limitation provides a complete defence to a claim.

To add to the complexity already facing the parties involved in earthquake litigation a new limitation regime came into force during the earthquakes. From 1 January 2011 the Limitation Act 2010 replaced the Limitation Act 1950.

Insurance claims relating to the September 2010 earthquake are governed by the Limitation Act 1950. It is well established in case law that insurance claims under the 1950 Act have a 6 year limitation period that runs from the date of the event that causes the insured loss. Therefore any proceedings in respect of that earthquake will have to be filed before September 2016.

Any claims for the earthquakes occurring after 1 January 2011, including 22 February 2011, will be governed by the Limitation Act 2010. The Limitation Act 2010 is not yet 6 years old, and therefore there is limited judicial direction on how it is to be interpreted. One interpretation treats the start date as the point where an insurer declines a claim made under a policy. The alternative interpretation favours the start date as the time of the event that caused the insured loss. The result is uncertainty over when a party will be able to rely on a limitation date defence. Given that limitation is a complete defence to a claim, it is very important that owners with outstanding claims file proceedings within 6 years of the date of the earthquake causing the insured loss.

If you are dealing with any property owners with outstanding insurance claims we recommend you advise them to seek legal advice on how limitation may affect their claim.

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