The Supreme Court has now considered an insurer's liability for multiple events occurring in the same policy period, addressing policy interpretation, the doctrine of merger, and the indemnity principle: Ridgecrest NZ Limited v IAG New Zealand Limited  NZSC 117, on appeal from the decision of the Court of Appeal in July 2013.
Ridgecrest owned a commercial building in central Christchurch, which was insured with IAG under a State "Businesspack" policy. As a result of the Canterbury earthquake sequence, Ridgecrest lodged four claims for earthquake damage, following earthquakes on 4 September 2010, 26 December 2010, 22 February 2011 and 13 June 2011. Each of those "happenings" occurred in the same policy period, and each claim was accepted by IAG.
The concerns we raised in our article "Does Tower really hold all of the cards?" have been confirmed in the Court of Appeal's decision, with Tower clearly not holding all of the cards when it comes to choosing the basis for, and measure of, settlement under their Provider House (Maxi Protection) Policy. Skyward Aviation 2008 Ltd v Tower Insurance Limited  NZCA 76
Hot on the tail of the recent decision in Wild South Holdings the High Court has had another post-quake opportunity to analyse a commercial material damage insurance policy, this time one of Vero's. In Marriott v Vero Justice Dobson was asked to answer a number of questions:
Skyward Aviation's house and sleepout at 108 Kingsford Street, Burwood were damaged in the 2010/2011 Canterbury earthquakes. It was insured by Tower under a "Provider House (Maxi Protection) Policy." The property is within CERA's residential red zone and the land has been sold to the Crown for $291,000, so it is no longer an option for the house to be repaired or rebuilt on site.
Six days after the 4 September 2010 earthquake, the Christchurch City Council adopted its Earthquake-Prone, Dangerous and Insanitary Buildings Policy 2010 (the Policy). The High Court has recently found it is unenforceable in terms of the level of strengthening required for earthquake-prone buildings.
The High Court is currently operating a special 'earthquake list' to fast-track earthquake-related insurance disputes. One of the first decisions from that list, Ridgecrest NZ Limited v IAG New Zealand Limited1, deals with the extent of an insurer's liability for a commercial building in central Christchurch that suffered damage from four earthquakes during the same period of insurance.
In Spencer on Byron the Supreme Court held that local authorities owe a duty of care in their inspection role to all building owners. This is a huge development, as previously such a duty only recognised residential building owners.
The Insurance Council of New Zealand's most recent statistics show that just 45% of all commercial claims arising from the Canterbury earthquakes have been settled (despite more than two years having passed since the first earthquake of 4 September 2010). There are, therefore, still a number of commercial claims to be resolved.
If and when litigation privilege attaches to reports obtained by insurers is a hotly debated issue. The general principles can be easily stated and are well accepted: the document in question must have been prepared for the dominant purpose of providing advice in respect of reasonably anticipated litigation.
When going into bat for commercial clients to help maximise their earthquake insurance claims, two things are vital: information and tenacity.
With the anniversary of the 22 February earthquake fast approaching, business interruption insurance is poised to re-enter the spotlight. The end of the month (February 2012) could bring a fatal blow to some businesses.
Late last month the first High Court decision on a defended claim for financial adviser liability was issued.
Perhaps surprisingly, there have been few claims against financial advisers that have progressed to trial and judgment since the global financial crisis and finance company crash in New Zealand. This may be because most professional indemnity insurers have declined to indemnify financial advisers for losses in connection with diminution or depreciation in value of investments. The absence of insurance cover may be dissuading would be plaintiffs.
This is a beginner's guide to the hot topic (in Canterbury anyway) of business interruption. In addition to a general overview of loss of gross profits cover, it touches on issues to be mindful of, common disputes and underwriting pitfalls. Each policy and every business have their own unique issues. If you need to make a claim, take some professional advice.
Emily Walton, associate, and Edward Burrell, former solicitor, with Wynn Williams & Co, look at this from the points of view of both a creditor and a debtor.