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Sunday, July 7, 2013

Tauranga, Bay of Plenty ..... Tsunami ... and duty of disclosure

The Bay of Plenty is a large indentation in the northern coast of New Zealand's North Island stretching from the Coromandel Peninsula. The Bay of Plenty was the first part of New Zealand to be settled, by the Māori the name originated with James Cook during his 1769–70 exploration of New Zealand, who noted the abundant resources in the area.  Tauranga is the most populous city in the Bay of Plenty region.   This fast growing fashion city has a booming harbour. Earlier I had posted something about this as it was here MV Reena got struck….

On that black Sunday next to Boxing day – 26th Dec 2004, Chennai and other parts learnt a new word, albeit painfully – it was the day when there was an undersea megathrust earthquake in Indian Ocean with its  epicentre off the west coast of Sumatra, Indonesia. It resulted in ‘tsunami’ – the tidal wave of mammoth proportions killing thousands of people and causing loss to property.  Globally, it  was one of the deadliest natural disasters in recorded history. Indonesia was the hardest-hit country, followed by Sri Lanka, India, and Thailand. A tsunami [harbout wave / tidal wave]  is a series of water waves caused by the displacement of a large volume of a body of water, generally an ocean or a large lake.
Marina beach after tsunami - evening.. [photo taken from web - origin not known]
Insurance is a contract between Insurers and Insured with offer and acceptance being the fundamental traits.  Proposal is the basis of the contract and hence all the information sought must be compulsorily fully provided for. A tick or dash will not suffice as Questions will have to be answered fully.  Insurers need information from consumers to decide whether they would undertake to cover the risk proposed for, and if so, at what rates and the terms and conditions…… i.e., called Underwriting. 

It does not get restricted to the Qs in a proposal form.  The law imposes a duty of disclosure on policyholders when they seek to take out new insurance cover or to renew existing insurance cover. Insurers may be able to refuse to pay a claim or part of a claim under an insurance policy if the policyholder has not complied with their duty of disclosure. The duty of good faith includes the requirement that both the insured and the insurer disclose all material facts relating to the insurance contract to be entered into. The insured knowing more about the specific risk than would the insurer, has a duty to disclose all material information about the risk to be insured. The remedy for a breach of the duty of disclosure is that the insurance policy is voidable at the instance of the insurance company.

Now here is something that connects Tauranga / Bay of Plenty with the duty of disclosure…………. [news courtesy : Nzherald.co.nz].  Here is the report as it appeared in the webpaper of date [5th July 13]

Tauranga residents whose homes are vulnerable to a major tsunami will be forced to disclose the risk on their property files if regional leaders follow legal advice on the issue. Mayor Stuart Crosby has revealed a formerly confidential legal opinion that showed the Bay's coastal councils had no option except to record the risk of inundation from a tsunami. The issue has emerged through a review of the Western Bay's urban growth masterplan SmartGrowth, prompting fears that it could impact on property prices and sales.

SmartGrowth is proposing to put tsunami alerts on land information and property information reports that were used to help people decide whether to buy a house or section. Tauranga property developers opposed the move, arguing the proposal had implications for thousands of developed low-lying coastal properties in Mount Maunganui and Papamoa, and would flow on to big subdivisions planned for Papamoa East. The issue was expected to be decided at yesterday's SmartGrowth review meeting but instead debate was postponed pending further work by the councils involved in the growth strategy.

Mr Crosby then revealed his intention to go public with the legal opinion, saying it put a lot more clarity around the obligations of councils. The legal opinion stated if there was a valid risk from a tsunami, then people had to be made aware of the risk through a note on property files. But the risk had to be site specific. Individual properties could not be deemed as being at risk just because they were located in a general tsunami risk area. Mr Crosby said large numbers of people in Papamoa would not end up getting risk notes on their property files even though they were in a theoretical risk area. "We should not alarm people and alarm the market." He said there was still a lot of work to be done, including inundation maps.
The maps would assist in determining the risk, property by property, because there were some high points in the area.

Developers highlighted how earthquake modelling on the Kermadec Trench acknowledged there was uncertainty about the magnitude of earthquakes that would trigger a tsunami. The trench, which runs from the tip of East Cape to near Samoa, was acknowledged to be the biggest threat to life and property in the Bay because of its 50-minute arrival time.

The newsitem above is only partially reproduced ~ one needs to understand here that what is being discussed is the probability of ‘a one-in-2500-year-return tsunami’ – a risk assessment which puts  the city's death toll at 340 from 4.5m wave - not high enough to top the city's sand dunes. New Zealand's leading scientific agency for earthquakes and tsunami played down fears that putting tsunami alerts on property files would scare away potential buyers and reduce values. GNS Science's communications manager John Callan said the fears had not been borne out by overseas evidence.

With regards – S. Sampathkumar

5th July 2013.

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