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Insurance assignment problems for lawyers


The High Court judgment in Doig v Tower Insurance Ltd [2017] NZHC 2997, delivered 5 December 2017 by Mander J, highlights that lawyers that handled the purchases of earthquake damaged properties with assignment documents may have liability issues if they did not advise the purchaser(s) that based on the current law in Bryant v Primary Industries Co Ltd [1990] 2 NZLR 142 the purchaser(s) would not acquire the right to reinstatement and would only be entitled to indemnity value.  The Doigs argued that Tower had represented to them by an email on 2 October 2012  that the Doigs would get replacement value and that they relied on the representation to their detriment.  The claim had serious problems because any representation was after the Doigs had agreed to purchase the property, the Doigs took legal advice and any competent lawyer would have known of the law from Bryant, any representation was not equivocal, there was no detriment because the evidence was that the Doigs had still profited from the purchase once you added together insurance and EQC payments with the current property value.  The Doigs also claimed interest from January 2014 on the Tower indemnity payment.  The problem was that the claim was under cap until July 2016 so Tower had no liability before then.  Tower paid indemnity in November 2016 which the Court held was within a reasonable time.  A total failure for the Doigs who will now have a costs liability to Tower and may want to look at recovery from lawyers involved.