The fourth document in the process is the Settlement Agreement. Before we get to it some context is needed, as there are important factors to be taken into account. The first is, when reading this, please remember it is an area in which you need to get professional advice before making a decision.
The correct view to take of EQC's Mediation Service is a dismissive one. The Service is aimed at creating the impression EQC is being proactive and helpful, part of the on-going public relations campaign of boosting EQC's profile while marginalising claimants. It is interesting that, in promoting the Service, neither EQC nor AMINZ suggest that mediation could be anything other than a walk in the park. Yet, at it’s core, the Service is potentially a mechanism for getting rid of difficult cases and unsuspecting claimants down a dark alleyway.
This may seem harsh, yet there is no cause to think otherwise. The experience of many is EQC has no sympathy for claimants who challenge them. It has a well established track record of obstructive or abusive relationships with claimants who question or push for results. Why would EQC change now? The answer is there will be no substantive change with this Service in place.
By creating the Service EQC are able to put dispute resolution in a place outside their organisation, and on favourable terms, without the accountability (such as it is) of external scrutiny (Audit Office, Ombudsman, Privacy Commissioner, Treasury).
The mediation process is free, but this applies only to the actual process itself and the mediator who will run it. EQC looks after the costs of putting it's side of the issue while you pay your costs. If you will be presenting expert reports, and/or have experts attend mediation, that is your cost. The legal advice and preparatory work will also be your cost. In some cases your insurer may need to be involved (e.g. contents claims over $20,000 or claims close to the cap.) Will they expect you to pay their expenses?
Somewhere in this process it would be helpful to keep an eye on the balance between what you might gain and the cost of achieving that. Will it be worthwhile? If not, is there an alternative? Maybe - see at the end.
There are also very personal costs to consider, costs that don't involve money. Mediation can be a rough process where negotiators use tactics and behaviours that would be considered offensive in other circumstances. How would you fare under these circumstances? More on this below.
The first risk you face is being overwhelmed by the process. EQC will enter into mediation with the sole intent of defeating your claims and pushing you into agreeing to their position. EQC will be represented by experienced negotiators who know all the tricks of the trade. The mediator isn't a referee and there is nothing to stop EQC's negotiator from being what you see as hard-nosed, deceitful, confusing, bullying, and wilful in failing to understand your point of view. These are just some of the tactics used in mediation. Auckland lawyer and mediator Nigel Dunlop has written about these tactics, and how they are used in mediation, on his website here. It is daunting reading.
The second significant risk is that of cost. EQC is funded by the government and us, as policy holders. They can spend as much as they like on negotiators plus expert reports and advisors. You have to fund your own team. If the process becomes drawn out your costs will increase. Can you afford it?
The third risk is that you will enter into mediation inadequately prepared and suffer as a result.
Preparing for mediation
Nigel Dunlop, mentioned above, has a web page on how to prepare for mediation (here). Reading this is essential to ensure you have a clear understanding of what is involved. The topics he covers are:
- what do you want to achieve?
- what might you realistically achieve?
- how will you go about persuading the other party
youto agree with you?
- what would you be prepared to settle for?
Throughout the list is a link to detailed preparatory questions. AIMNZ have a small checklist here, but with a great deal less attention to detail.
Those who are not properly prepared are likely to lose badly.
Settlement Agreement (download a copy here)
This is the fourth document, the one you sign when settlement has been reached. Most of its contents are similar to what is found in the commercial world, but can cause shock to those unfamiliar with the amorality of that world. It is important to note that the wording of the Agreement can be negotiated, although possibly a the cost of more time, effort, expense, and EQC resistance.
Clauses of most interest or risk are:
Parties: is your insurer going to be bound by this settlement?
Section 3 - What do the customer, and any additional party, agree to: As far as the Settled Matters (an issue discussed in Sunday's blog) are concerned, you must stop all legal proceedings, not commence proceedings in the future, and not make a complaint against anyone relating to the settled matters (e.g. for professional misconduct). You can see how important it is to ensure the matters you are mediating are very carefully described, to avoid a generalisation that doesn't solve all issues, but prohibits you from getting everything sorted.
Para 3.4 takes away your right to speak out about any of the issues involved with the settled matters.
Section 5 - Full and final settlement: This settlement is it. If you left something out, but it relates to the settlement, you cannot take it further. Again, it is important to clearly and concisely state what the matters are.
Section 13 - Confidentiality: These sections add to the confidentiality obligations in the Mediation Protocol (see Sunday’s post). They exist to further restrict what can be disclosed. Note that these clauses (12-15) can be negotiated, however the benefit(s) of change would have to be weighed against the increased cost.
Section 16 - Payments when there is a mortgage. If there is a mortgage on the property your bank may have an interest in the money paid out. This bit needs to be sorted with your lawyer.
What alternatives are there?
If you don’t want to use EQC’s Mediation Service, can’t afford it, or pull out if it gets out of hand, the traditional approach would be to take court action. This could have a better chance of success if the stakes were high enough because EQC, like the insurers, might give up rather than create a legally binding precedent. An expensive topic to discuss with a lawyer.
A free, and less daunting, process might be CERA’s Residential Advisory Service (RAS). The CERA web page for this is here. The RAS does not require you to pay for expert witnesses, or reports, and should be a less aggressive environment to air your issues and have them tested.