In Myall v Tower Insurance Ltd [2019] NZHC 528 the High Court (Dunningham J) considered whether an insured should account for interest to the insurer on a partial claim payment; whether Tower must pay the full replacement value in cash now and any interest payable on the full replacement value fixed by the Court. Myall insured his house at 81 Ainsley Terrace, Christchurch for a floor area of 650m2. The house was damaged beyond repair in the earthquakes. It turned out the house was actually 799m2. After hearings in the High Court and Court of Appeal the full replacement value was fixed/agreed to be $5,273,021.71. Tower made interim payments of $1,359,000 in January 2012 and $1,612,644.12 in April 2013. It asked the Court to order Myall to account for interest of $431,138.71 on the part payments when/if Tower ultimately paid full replacement value. The Court declined to order interest as the policy did not provide for it and Tower did not specify it before it made the payments. Mr Myall said that because Tower had elected to cash settle it was liable to pay now even though Mr Myall has not replaced the house. The Court disagreed and said that the election was made under the policy which required the insured to reinstate, or replace, the house before payment. The Court did not consider the argument that any replacement house had to be in NZ. It did not award interest on the full replacement value. The judgment also records that Mr Myall is to pay Tower $32,000 for costs on the first High Court hearing.
In Richmond Hill Holdings Ltd v IAG New Zealand Ltd [2019] NZHC 380 the High Court (Lester AJ) refused to enter summary judgment against IAG for cash settlements on 2 properties where the owners claimed that IAG was estopped from resiling from its promises in letters September 2013 that IAG would cash settle based on rebuild costings by a named quantity surveyor. IAG later said that it would cash settle, but exclude from the cash sum amounts for retaining walls, demolition and professional fees until they were incurred. The Court decided that IAG had represented that the cash settlement figure would be the rebuild cost without exclusions, however, it was uncertain of reliance on the representation(s) by the owners and decided that it was not shown that would be unconscionable for IAG to change its position. So the claim continues.
In the puzzling decision of Hood v EQC & anor [2019] NZHC 349 the High Court (Dunningham J) decided that Ms Hood who had been entirely successful with her claim by moving EQC from a repair cost of $10,729 to one of $438,292.63 through Court proceedings could only recover 50% of her costs because theoretically the insurer, IAG, was also around and Ms Hood should have recovered the balance of the costs from it. This was in circumstances where once EQC paid the cap the insurer immediately agreed to pay the rebuild cost claimed and IAG had for months said that wanted to settle out based on a rebuild. I do not understand how a person can be entirely successful, but not recover 100% of the recoverable costs. No rights of appeal of the judgment as it was review of a decision of Matthews AJ who also thought that 50% was appropriate.
The application of the 6 year limitation period under the Limitation Act(s) to claims arising out of the Canterbury earthquakes has resulted in differing positions by insurers and EQC as to how they will respond to claims. Some take the view that the 6 year period starts on the date of the property damage; whereas others say that it is not until there is a denial of liability or purported settlement. In Globe Church Incorporated v Allianz Australia Insurance Ltd & anor [2019] NSWCA 27 the New South Wales Court of Appeal by a 3:2 margin said that the cause of action accrued on the damage to the property. This was supposedly consistent with the UK position. The Court expressly identified that there could be circumstances where liability had a pre-condition. It is arguable that in relation to an insurer it is a pre-condition that EQC meet its liability.
The High Court (Davidson J) decision in Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd & anor [2019] NZHC 277 considered whether cracks to a concrete slab were “damage” under a material damage policy; what was required to remediate the cracks, and what the insurers were liable for when repairing insured earthquake damage also affected undamaged property. The buildings at issue were Rydges and the adjoining carpark. Each was damaged, but not destroyed in the February 2011 earthquake. The policy required restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than, its condition when new. There was agreement that there were pre-earthquake slab cracks and slab sagging. The insurers accepted that exterior cracks of .3mm and interior cracks of .4mm were damage. Insurers said that the insured had to prove damage crack by crack. This required proof that the earthquake caused the crack and the crack involved physical change to the extent that it impaired capacity with engineering consequences compared with its pre-earthquake condition. The Court decided that the policy required assessment of portions of the property- not crack by crack. So experts had to look at portions of the property ie. there may be parts with multiple cracks of lesser width. This required engineering judgment. The Court said that repair of each crack in the top horizontal concrete element required epoxy injection over the full length of the crack. Standard industry practice is to repair cracks of widths .2mm and above. Pre-existing cracks suffered loss of strength as a result of being worked during cyclic loading. A degree of loss of aggregate interlock was probable and the cumulative effect may constitute impairment so as to be damage.
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