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

(2015) 1 LAW Quake Outcasts v. Minister for Canterbury Earthquake Recovery [NZ-SC: Eliyas CJ] F-183
acquisition was initiated in June 2011 for those
residential properties which were insured for land
damage under the Earthquake Commission Act
1993, through the levy imposed by that Act on
premiums for fire insurance.
[213] The offers for the insured residential
properties were pitched at 100 per cent of the
latest rating valuation of 2007 (subject to
adjustment in cases of underinsurance). 227
Government policy papers at the time made it
clear that it was expected that something in the
order of two-thirds of the purchase price paid if
offers were accepted would be recovered through
assignment of insurance claims. The owners of
insured properties were given two options:
receiving the full rating value and assigning all
insurance claims to the Crown; or receiving the
land component of the rating value and assigning
their statutory cover by the Earthquake
Commission for the land damage to the Crown
(leaving the owners able to deal with their
insurers for the improvements where they were
thought to exceed the 2007 rating valuations).
The uptake on these offers was overwhelming.
[214] The appellants’ properties were not insured
for land damage: either their properties comprised
bare land, for which there was no private
insurance available; or their homes did not have
statutory cover under the Earthquake
Commission Act because they were not insured
against fire, as is required under that Act for
cover. 228
[215] In September 2012 the owners without land
insurance received offers of purchase from the
chief executive of the Canterbury Earthquake
Recovery Authority on behalf of the Crown at 50
per cent of the 2007 rating value of the land
component only. (Those whose properties
contained uninsured dwellings could salvage
building materials or remove the buildings.)
227 Where properties were underinsured by more than 20
per cent against the 2007 rating valuation, the offer was
reduced by the percentage of underinsurance.
228 Earthquake Commission Act 1993, s 18.
[216] Quake Outcasts is an association of 46 residential
property owners whose homes were not insured at the
time of the earthquakes or who had not yet built on
residential lots. Fowler Developments Ltd is a
housing developer which owns 11 residential bare
lots originally in the orange zone, but brought
within the red zone in November 2011. Quake
Outcasts and Fowler Developments each brought
judicial review proceedings to challenge the
September 2012 offers by the chief executive.
They sought orders that the chief executive offer to
purchase their properties at 100 per cent of the 2007
rateable value for land and improvements, the basis of
the offers made in June 2011 to those who had
insurance.
[217] The applications for judicial review were
wide-ranging and were met by wide-ranging
defences. The questions raised included the legal
effect of the Government’s identification of the red zone
(which preceded all offers and on which they were
predicated) and whether the zone could lawfully have
been announced and acted on for the purposes of the
offers without first adopting a Recovery Strategy or
Recovery Plan under the Canterbury Earthquake
Recovery Act (a process which gave opportunities for
public participation). The litigation raised, too,
questions about the source of the power relied on by the
chief executive in making the offers of purchase and
whether its exercise was lawful. Some of the matters
of dispute which were raised in the High Court
and Court of Appeal are no longer in issue.
[218] In this Court, it is accepted that the offers
which are challenged were made by the chief
executive under s 53 of the Act, which authorises
the chief executive to purchase property on behalf
of the Crown. It is also accepted that the chief
executive did not observe the requirement of s 53
that he act in accordance with s 10 of the Act.
Section 10 requires the chief executive, in
exercising any of the powers conferred on him by
the Act, to ensure that he does so “in accordance
with the purposes of the Act” and on the basis
that “he or she reasonably considers it necessary”.
Since it is now not in dispute that the chief
executive failed to observe s 10 in arriving at the
offers, it is also no longer in dispute that the
offers must be quashed and the decision sent back
125
Law Animated World, 15-31 March 2015