New Zealand’s Earthquake Commission (EQC) and insurers could face some judicial pain ahead as unrest mounts over unpaid claims for repair and reconstruction work in Christchurch.

In the first of three possible cases, the EQC is facing court action over unpaid contractor and builder invoices, with claims of up to $NZ3 million ($2.3 million) in unpaid bills.

Amalgamated Workers Union Secretary Calvin Fisher says contractors have been arguing with the EQC for several months over payment for completed work.

He says some unpaid repair invoices go back as far as the September earthquake, but files have been lost and invoices misplaced.

“These contractors are out of pocket a lot of money and are struggling to pay their staff and suppliers,” he told insuranceNEWS.com.au.

“Last year when this occurred some people lost their jobs because they couldn’t be paid. We can’t let this continue to happen.”

But an EQC spokesman says the delays are due to invoices not being filed correctly by contractors.

“These can vary from the simple oversight of not putting a GST number or a claim number on the invoice, or the contractor sending the invoice to the claimant, who then forgets to send it to us,” he told insuranceNEWS.com.au.

The EQC says other reasons include failure to list labour and materials used or invoicing for emergency works that fall just under the $2000 limit which need to be checked before payment can be made.

Meanwhile, new threats of legal action are emerging as residents discover a loophole in their full replacement policies.

Those who have repairable homes situated in the Government’s red zone say insurers are refusing to pay for the full replacement of the home. A group of affected residents is now seeking legal advice.

The Insurance Council of New Zealand (ICNZ) is advising people living in the red zone to talk directly to their insurer or broker when making a claim.

Spokesman Brett Solvander says some people are not sure about the response from their insurer on payments for their properties. He says there is no industry position, but suggests affected policyholders should contact their insurer to discuss their individual policies.

August 22 and 23 have been set as the dates for the joint ICNZ-EQC High Court action to clarify who is responsibly for paying damage claims.