Prior to October 2014, Southern Response did not ordinarily pay professional fees and contingencies for ‘Buy Another House’ or other cash settlement options. Subsequent court decisions have said those costs should be included in the calculation of the total cost to rebuild or repair a property.

Dodds Court Decision

Mr and Mrs Dodds took Southern Response to Court to claim costs listed in the “Office Use Section” of an internal scope of works document known as a DRA (broadly, professional fees and contingency), which were not included in the original settlement of their insurance claim.

The Court ruled that by not including a contingency amount or an amount for professional fees in the DRA it provided to Mr and Mrs Dodds, it had misrepresented the total cost of rebuilding their house.

Southern Response was ordered to pay damages calculated as the difference between the true value of their rights under their policy (ie. including the professional fees, contingencies and administration costs in the Internal DRA document) and the sum they had previously settled with Mr and Mrs Dodds. Interest was also awarded on the final judgment sum from the date of the original Settlement and Discharge Agreement until the date of payment.

The Court did not require Southern Response to pay all costs listed in the “Office Use Section” of the Internal DRA demolition costs were not included as they had already been incurred by Southern Response, and “Arrow DRA” and “Arrow PMO” costs were not included as they were insurance claim handling costs for Southern Response for which the Dodds would not have received compensation under the insurance policy.

The Dodds Court of Appeal decision is available here.

The Pre-October 2014 Payment Package is informed by the findings of the Dodds Court case, so that people in a similar situation to Mr and Mrs Dodds do not have to go through the courts to get their payment.