Editor: I. Mallikarjuna Sharma Volume 11: 15-31 March 2015 No. 5-6

F-158 Quake Outcasts v. Minister for Canterbury Earthquake Recovery [NZ-SC: Court Opinion] (2015) 1 LAW
reasonably well. 76 However, it was considered
that, “without a full area-wide land remediation
solution, the largely undamaged properties may
be at risk from the works involved” in the land
remediation for neighbouring properties. 77
[54] In addition, it was considered that the social
impacts of widespread remediation options had to
be considered. It was estimated that large-scale
remediation programmes were likely to take from
three to five years (if not longer). 78 This would
require all of the residents of the affected areas to
be relocated while remediation took place. It was
also uncertain whether private insurers would
offer insurance to properties on land that required
such a high level of remediation. 79 These
considerations added further weight to any
decision not to commit to remediation where it
appeared not to be cost-effective. 80
[55] The Brownlee paper recorded that the “the
government could allow the various insurance
schemes and policies in place in the Red Zones to
play out without any intervention”. 81 However, it
was considered that this could result “in
protracted individual settlements for the affected
occupants given the great uncertainty regarding
when, or if, or on what terms, repairs or rebuilds
could take place in these areas given the ongoing
uncertainty of and risk management with respect
to the underlying geotechnical state of the
land”. 82
[56] However, that approach was not adopted as
the paper stated it would not meet the objectives
of certainty, confidence for landowners or a
simplified process. 83 Therefore the making of
offers to purchase insured residential properties
on the terms set out above at [4] was
76 At [38].
77 At [38].
78 At [39] and [40].
79 At [39].
80 At [40].
81 At [50].
82 At [50].
83 At [50].
recommended. It was noted that these offers
would ensure that insured residential landowners’
equity in their homes would be preserved. 84
[57] The paper recorded the financial
implications of these purchase decisions. The
gross cost of purchases of insured properties in the red
zones would be up to $1.7 billion, although insurance
recoveries would mean that the net costs would be
between $485 and $635 million. 85 It was proposed
that the properties purchased be expensed
immediately as they “currently have a minimal
value”. 86
[58] The paper made the following comments
about the implications of the purchase offers on
infrastructure and services in the red zones: 87
As a result of these offers there is unlikely to be
any justification in the near to medium term for
the infrastructure and services in these areas to
receive any more than temporary repairs. The
relevant Councils will be asked to discuss any
proposed maintenance and repair plans, for the
infrastructure in these areas, or any proposed
regulatory interventions for the areas.
[59] As to uninsured residential properties and
vacant lots, the paper said that “consideration will
need to be given over time to the position of these
people”. 88 It said: 89
Neither uninsured residential properties nor
vacant lots are covered by EQC land or
improvements insurance. For residential owners,
the risks of not having insurance were risks that
ought to have been considered when making the
decision to invest in the property. Residential
84 At [58].
85 At [87]. There was no indication how these figures was
calculated by the Treasury. As the Crown submitted, the
figures show that insurance recoveries were anticipated
to exceed 50 per cent of the gross cost of purchase.
However, it was still anticipated that insurance
recoveries would not cover the whole of the purchase
cost and that there would be a net cost, at least of $485
million.
86 At [89].
87 At [52].
88 At [63].
89 At [62].
Law Animated World, 15-31 March 2015 100