Insurance cover in spotlight amid possible Northland class action

Local businesses took financial hit from power outage

Insurance cover in spotlight amid possible Northland class action


By Roxanne Libatique

Businesses in Northland are evaluating their options for insurance claims and considering a class action lawsuit against Transpower after a recent power outage caused significant disruptions.

The outage, which occurred on June 20 due to a maintenance-related incident involving a fallen pylon, led to considerable financial impacts on local businesses.

Compensation discussions on Northland power outage

According to RNZ’s report, the Northland Chamber of Commerce has accused Transpower of backtracking on its initial compensation discussions.

Meanwhile, Transpower claimed that it engaged in good faith discussions regarding potential compensation with the affected businesses.

David Knight, executive general manager for strategy regulation and governance at Transpower, advised businesses to file claims with their insurance providers, citing the complexity of the company’s liability in such cases.

Northland Chamber of Commerce CEO Darryn Fisher highlighted the challenges businesses face when navigating insurance claims, noting that fine print in policies might exclude coverage for such incidents.

“We were definitely having a good faith conversation about, you know, the pain that they had caused from the negligent actions of that tower falling over,” he said, as reported by RNZ. “I think they realised the damage that they had done to Northland businesses and Northland as a brand.”

Northland businesses considering a class action lawsuit against Transpower

MWIS Lawyers is currently assessing interest in a potential class action lawsuit.

Partner Juliet Golightly said that while both Transpower and the contractor appear liable due to negligence, individual claims might not be cost-effective.

“The issue is this – it’s very, very clear that both Transpower and the contractor are liable because the act of removing all the bolts from the pylon footings… obviously was negligent, and it was foreseeable that the pylon might fall over and that if it did, that would take the power out for the whole of Northland,” she said, as reported by RNZ. “But the difficulty here is the power imbalance. So, any one individual business can't really take Transpower on, and they know that a class action is one way that businesses can get around that power imbalance, although it’s not without its problems as well.

“In terms of the time it would take to do a class action, all court proceedings take a long time. There are very long systemic delays in the High Court, which is where this would be, and a class action is not immune from those. There’s another step which would be required, which is to get the High Court to approve the class action.”

In response, Knight said that Transpower would compensate retailers where appropriate evidence is provided, through electricity retailers. He said that businesses generally do not fall under the Consumer Guarantees Act.

Financial impact of Northland power outage

Tim Robinson, president of business association NorthChamber, estimated that the financial impact on businesses ranges between $40 million and $60 million. He pointed out that for small businesses, filing claims for minor losses may not be economical.

“When I sort of look at it for small businesses, if you’re talking anywhere between $1,000 and, say, $5,000 of direct loss, by the time you’ve submitted a claim, and as I say, you’ve used your excess and then you’re facing a probable policy cost increase in the next two to three years,” he said. “It’s a zero-sum game. It’s actually not worth lodging the claim.”

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!