NEW ZEALAND Trends and Developments Contributed by: Kiri Harkess, McElroys
public access for recreational activities (following the High Court’s overturning of Whakaari Manage- ment Ltd’s conviction under the HSWA in respect of the Whakaari ǀ White Island disaster) and clarify governance/operational responsibilities.
In Pearce , the insurer relied on the “hold harmless” principle established in The Fanti to say that for limi - tation purposes time had started running against it in 2011 when the insured peril occurred, and the pro- ceedings were therefore out of time under the Limita- tion Act 2010. However, the court rejected the “hold harmless” principle in The Fanti as a “legal fiction which has no place in New Zealand”. The court held that where a private insurer provides “top up” cover for natural disaster damage, the insur- er’s liability is contingent until the EQC (now NHC) exhausts its liability. That meant that the relevant act or omission under the Limitation Act which started time running against the insurer was the insurer’s breach of its obligation to pay the amount due at the proper time. The timing of the insured peril is relevant, but not itself the act or omission. In Pearce , time start - ed running when the EQC advised that the claim was overcap, in November 2022. The reasoning in Pearce is likely to be more widely applied. Mathias v Toka Tū Ake Natural Hazards Commission is also of interest. It is a funded representative action on behalf of “on-sold” residential property owners seek- ing determination of whether the EQC owed them a duty of care in how it identified damage, scoped and costed repairs and settled claims, and the standard of repair of such earthquake damage. In May 2025, the High Court ordered the funder to pay the NHC secu- rity for costs of almost NZD630,000. Applications for leave to appeal the security for costs judgment were dismissed. The proceeding is set for trial in April 2027. Contract Works – Faulty Workmanship Insurance disputes in New Zealand are often heard and determined by approved dispute resolution schemes under the Financial Service Providers (Reg- istration and Dispute Resolution) Act 2008, run by the four providers noted above. The schemes have monetary jurisdiction of NZD2,798 plus GST per week where the policy provides for regular payments and NZD500,000 plus GST for other claims. While scheme awards are binding, insurers have lim- ited ability to seek declaratory judgments under the High Court’s inherent jurisdiction (IAG New Zealand Ltd v Forde [2020] NZHC 3233) or through scheme
Case Law Developments Natural disaster damage
2025 saw continued litigation arising from the Can- terbury Earthquake Sequence, with proceedings concerning on-sold properties, inadequate damage assessment, scoping and repairs and/or delayed claims before the courts. The most notable development in this area is Pearce v Toka Tū Ake Natural Hazards Commission [2025] NZHC 623. The judgment confirmed New Zealand’s departure from the “hold harmless” principle in Firma C-Trade SA v Newcastle Protection and Indemnity Association (The Fanti) [1991] 2 AC 1s that an insur- er’s liability to indemnify arises immediately when the insured peril occurs. Pearce concerned a limitation defence to a property insurance claim by a private insurer that provided “top up” insurance for natural disaster damage exceed- ing the statutory cap in Section 18 of the Earthquake Commission Act 1993 (now replaced by the Natural Hazards Insurance Act 2023 establishing the Natu- ral Hazards Commission (NHC) as successor to the Earthquake Commission (EQC)). At the time of the Canterbury Earthquake Sequence, the EQC provided statutory cover up to NZD100,000 for natural disaster damage to residential dwellings for policyholders of private residential property insurance. While many earthquake claims were originally assessed by the EQC as undercap and were dealt with by the EQC, later reassessment of earthquake damage and repair scopes has meant that the EQC is reassessing claims as overcap many years after the insured event(s). The difficulty this has presented for private insurers is illustrated in Pearce , where the EQC reassessed the claim as overcap in November 2022 for earthquake damage that had occurred in 2011.
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