Doig v Tower Insurance Ltd
[2019] NZCA 107
•11 April 2019 at 3 pm
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| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA37/2018 [2019] NZCA 107 |
| BETWEEN | HAMISH PAUL DOIG AND KAREN RACHAEL DOIG |
| AND | TOWER INSURANCE LIMITED |
| Hearing: | 20 November 2018 |
Court: | Kós P, Brown and Clifford JJ |
Counsel: | S P Rennie and W A L Todd for Appellants |
Judgment: | 11 April 2019 at 3 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe respondent is entitled to costs for a standard appeal, on a band A basis, together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Kós P)
Mr and Mrs Doig purchased an earthquake-damaged house. The sale involved the vendors assigning their insurance claims to the Doigs. The vendors held a replacement insurance policy from Tower. The Doigs say an email sent by Tower to their solicitors represented that, post-settlement, the Doigs too would be able to claim on a replacement basis for repair or rebuild of the house. They say they relied on Tower’s email in confirming the agreement and that Tower is estopped from repudiating that representation.
Tower says the email did not have the effect asserted by the Doigs. And it says the email post-dated the Doigs’ contractual obligation to purchase. In accordance with the decision of this Court in Bryant v Primary Industries Insurance Co Ltd, the Doigs would be entitled only to indemnity value, rather than replacement value.[1]
[1]Bryant v Primary Industries Insurance Co Ltd [1990] 2 NZLR 142 (CA). We discuss this decision below at [28]–[29].
Mander J dismissed the Doigs’ claim.[2] They appeal to this Court.
Background
[2]Doig v Tower Insurance Ltd [2017] NZHC 2997, [2018] 2 NZLR 677 [HC judgment].
The damaged house the Doigs bought was in Redcliffs, a beachside suburb of Christchurch. The sale advertisement stated:
This is a waterfront investment, with my vendor’s firm intention to pass the baton and allow new purchasers to pursue and profit from a potential rebuild (Tower insurance). …
EQ damage will not affect your enjoyment now, vendors walking away and willing to let forward thinking purchasers reap the rewards and benefits of a full potential rebuild.
The Doigs signed the agreement for sale and purchase of the house, for $1.155 million, on 22 September 2012. They did so on the strength of that advertisement. The vendors were a couple called Mr and Mrs Bradbury. The Doigs did not speak to the Bradburys before signing the agreement. There were no other material representations by the Bradburys. Nothing said by the agent is relied on. Nor did the Doigs take legal advice before signing the agreement. Mr Doig is a real estate agent. He preferred to rely on his own knowledge of such things.
The contract was conditional on the Doigs being able to arrange satisfactory home and contents insurance, and a satisfactory building report, in each case within 40 working days. Nothing turns on those conditions, which were met. The agreement continued:
The vendor has lodged a claim with EQC and/or its insurer with respect to damage to the property following the recent earthquakes, and will assign the claim to the purchaser on settlement. If the claim is settled by EQC and/or its insurer prior to the settlement date, the vendor shall:
a. Provide the purchaser with all documentation in relation to the claim and the settlement of the claim; and
b. At settlement will credit the purchaser with the amount received from the claim.
The vendor will assign any claim(s) made to EQC or its insurer by the vendor relating to damage to the property from earthquakes or aftershocks, including 4 September 2010 and after, to the purchaser at settlement. ...
... The vendor will forthwith provide details of all insurance policies held in respect of the property and will keep such policies current pending settlement.
It may be observed that those conditions provide simply for the assignment of claims, made with EQC and the insurer, and the continued currency of policies down to settlement. That is as far as they go. There is no express condition as to entitlement to any particular form of insurance settlement.
At that stage, the Bradburys had lodged three claims with Tower. All related to landscape items: driveway, fences, swimming pool and paths — items that EQC did not cover. It was then unknown whether the distinct claims made of EQC relating to damage to the house would exceed EQC’s statutory obligation, and trigger Tower’s contractual obligation, or not.
After the agreement was signed the Doigs’ solicitors made some enquiries of Tower, the Bradburys’ insurer. They were made by the legal executive handling the purchase. Her name was Ms O’Neill. This is her email to Tower dated 2 October 2012:
We act for the prospective purchaser of the above property. We have been advised that although Stream will deal with the actual completion of the work required under the claims, our queries in relation to any new insurance to be taken by our client and how these claims will be dealt with, is something you would deal with.
There are three claims lodged with Tower, as recorded above. All three claims have been lodged in relation to the driveway, fences, pool and paths.
On behalf of our client, could you please advise as follows:
1. If for any reason the EQC repairs to be completed on the actual dwelling, end up over cap, does Tower automatically pick up the claim or should a claim be lodged now by the vendor, to cover this scenario. We understand that presently, EQC are saying that the repair work will be covered under the three EQC claims which have been lodged.
2. If the above scenario were to occur, would Tower cover the damage under its existing full replacement cover, i.e. any repair work required over and above the EQC caps would be covered fully by Tower as per the current full replacement policy held by the vendor.
3. With regard to the three existing Tower Insurance claims:
a.Does Tower agree to the three claims being assigned to our client (providing the purchase is confirmed).
b.Upon assignment of the claims, will Tower agree to complete all required work under the claims on ‘full replacement terms’ as per the terms of the current policy with the vendors.
The email distinguishes between three Tower claims (for landscaping) and three EQC claims (relating to the house). With question 2, Ms O’Neill hit the bull’s‑eye.[3] In context, it is a reasonably clear enquiry whether the Doigs would take the benefit of replacement cover if the claim relating to the house went over EQC’s cap. So what was the answer?
[3]Question 3 on the other hand dealt with the Tower claims, which were for the landscape items: see [8] above.
The email was dealt with at Tower by a Ms James. She was the claims handler dealing with the landscape claims made by the Bradburys. She replied on 4 October 2012. These are the key parts of her reply:
… I can discuss generic claim process with you, but until we receive a deed of assignment which confirms the current owners have agreed to pass open claims over to the new owners, I am unable to confirm any specifics with you… Furthermore, any questions concerning the transfer of policy need to be discussed with our sales team – this is not my department, but they can be contacted on 0800 808 808 if you would like to discuss the transferring of the policy from the current owners to the new.
I can confirm that if the EQC repairs are deemed over cap, it is TOWER’s liability to repair the dwelling. The new owners would not be required to lodge an additional claim as the damages to the property were incurred under the previous owners policy and these claims will remain open until the damages in relation to those earthquake events are rectified. This is why we require a deed of assignment which confirms that the old owners agree to sign any right to the open claims over to the new. All settlement will be based on the previous owners policy including their policy cover and excess.
As stated above, I cannot agree to the claims being transferred to your client until we receive a deed of assignment. However, supposing we do receive the deed of assignment, all settlement is based on the previous owners policy details as this is the policy which was in place at the time of the earthquakes. If there is another earthquake event, those damages would be lodged under the new owners policy and progressed according to their policy type. …
It might be thought that this reply was both understandably guarded and, at the same time, somewhat revealing. The repeated references to assignment and claims then being settled “based on the previous owners’ policy including their policy cover and excess” suggest at least a partial answer to Ms O’Neill’s question 2. On the other hand, however, Ms James made it clear that Tower needed to see a deed of assignment before “confirm[ing] any specifics”. And, moreover, “I cannot agree to the claims being transferred to your client until we receive a deed of assignment”.
That same day Ms O’Neill sent a further email. It attached an authorisation from the Bradburys to release information to their client — though not a deed of assignment. The next day Ms James replied:
… At this stage the open claims for [the property] have fallen below the EQC cap totals across the three events. … If, as you suggested, it is discovered that the cost to repair the house is more than initially thought as a result of the verdict on the land, then TOWER will regain responsibility of the repair if the caps are breached.
Until that point we will be assessing the damages to the hard landscaping and settling claims based on the current owners policy. The current owner’s policy is a full replacement policy with an excess of $250 which is applicable for each claim lodged. Once a deed of assignment is received, any settlement decisions will be negotiated with the new owners.
If you have any further questions let me know.
There were no further questions. Although privilege was not waived, Mr Doig said he did not seek any legal advice on the emails either. Instead, Mr Doig’s evidence was:
I understood Tower was confirming it would continue the replacement cover for the damage caused by the earthquakes. I subsequently instructed [my solicitors] to confirm the Agreement on 20 November 2012 in reliance on Tower’s confirmation in the email.
The Doigs confirmed the contract in November 2012, and settled the purchase in March 2013.
At this point we may note the terms of the policy the Bradburys held. It is common ground it was a full replacement policy, up to 250 m2. It was a term of that policy that:
We are not bound to:
Pay more than the present day value if you have full replacement value until the cost of replacement or repair is actually incurred. If you choose not to rebuild or repair your house we will only pay the present day value.
“Present day value” was, in effect, indemnity value. It followed that only indemnity value would be payable until rebuild or repair was in fact elected and effected. “You” was the person(s) named in the policy. That is, the Bradburys.
In March 2014, Tower advised the Doigs that, because they were assignees only of the vendors’ claims, its liability was limited to the pre-loss indemnity value of the house, rather than the cost to replace or rebuild. At that stage it was still believed the repair costs might fall within EQC’s statutory cap.
In July 2016, EQC finally accepted the cost to repair was over that cap. In October 2016, Tower acknowledged that it was not possible to economically repair the damaged house. Tower also confirmed its stance that, as assignees only, the Doigs were entitled to indemnity cover only. Tower paid the Doigs $583,090 in November 2016.[4] The Doigs then issued these proceedings.
Claim
[4]This was based on indemnity value less the EQC payments totalling $191,659 and the $750 excess.
The claim is based on Tower’s email of 4 October 2012, quoted at [11]. The Doigs rely in particular on the words:
… if the EQC repairs are deemed over cap, it is TOWER’s liability to repair the dwelling. The new owners would not be required to lodge an additional claim as the damages to the property were incurred under the previous owners policy and these claims will remain open until the damages in relation to those earthquake events are rectified. … All settlement will be based on the previous owners policy including their policy cover and excess.
The Doigs claim that Tower’s email created and encouraged the belief or expectation that (1) Tower would pay for repairs in excess of the EQC entitlement; (2) settlement would be based on the vendors’ policy; (3) the Doigs did not need to make a claim for the existing damage to the property; and (4) they “could claim the full replacement cost for repairs or replacement”. They plead that they relied upon Tower’s email in confirming the agreement and proceeding to settlement and, invoking equitable estoppel, that it would be unconscionable for Tower to depart from the above belief or expectation.
The Doigs seek a declaration that Tower must pay them the full replacement value of the Property including reasonable architects’, engineers’ and surveyors’ fees in respect of rebuilding and the costs of demolition and removal of debris. By way of an alternative claim, they seek compound interest on the indemnity sum, if that is the extent of their entitlement, from 1 January 2014 — on the basis that it should have been paid to them earlier in time.
Judgment appealed
Applying the decision of this Court in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, Mander J directed himself thus:[5]
The elements required to establish an estoppel are clear and not in dispute:
(a)a belief or expectation by [A] has been created or encouraged by words or conduct by [B];
(b) to the extent an express representation is relied upon, it is clearly and unequivocally expressed;
(c) [A] reasonably relied to its detriment on the representation; and
(d) it would be unconscionable for [B] to depart from the belief or expectation.
[5]HC judgment, above n 2, at [15], citing Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [44].
The Judge found the Doigs held a pre-existing belief from the way the property was advertised that they could pursue a “potential rebuild” and achieve a “full replacement potential rebuild”.[6] They had signed the sale and purchase agreement in that expectation. The Judge accepted that that belief was, as a matter of fact, encouraged by Tower inasmuch as Mr Doig understood Tower to be confirming in its email his original belief of the position.[7]
[6]At [21].
[7]At [22].
But the Judge expressed reservations as to whether the representation contended for by the Doigs was clearly and unequivocally expressed. Tower’s email, “while open to misinterpretation, particularly by a person with a preconceived understanding of the effect of an assignment of the vendor’s claims”, was strictly consistent with Tower’s maintained position.[8] It did not exclude the application of Bryant.[9] The Judge considered that Tower’s email was to a “sophisticated recipient” of information, being the Doigs’ professional legal advisers. Ultimately, however, the Judge did not reach a final conclusion on whether the representation was unequivocal, because of his conclusions on other issues.[10]
[8]At [24].
[9]Bryant, above n 1.
[10]HC judgment, above n 2, at [26].
The Judge turned to whether the Doigs had reasonably relied to their detriment on the representation. A difficulty for the Doigs was that the sale and purchase agreement was not conditional on confirmation of their understanding as to assignment.[11] The Judge was not persuaded that detriment, at least of the type necessary to found an estoppel, had been established.[12] The detriment asserted went no further than a departure from, or non-fulfilment of, the belief or expectation encouraged by the email.[13] There was no evidence of the Doigs having wasted money on unnecessary inquiries, or having lost other investment opportunities.[14]
[11]At [36].
[12]At [65].
[13]At [42].
[14]At [43].
The purchase price of the property was $1.155 million. But the net cost to the Doigs was just $380,251.[15] An “as is where is” valuation as at 1 March 2013 by a registered valuer called by Tower was $735,000.[16] This evidence was not materially contested. Even if the house had to be demolished, the cost of that would be about $59,000.[17] Assessed as at March 2013, the land value of $600,000 would substantially have exceeded the net cost to purchase and demolish. The Judge concluded:[18]
Importantly, the onus is on the Doigs to demonstrate their detriment. They relied simply on an unfulfilled promise as proof of that element. That is insufficient, and in the absence of having adduced evidence to demonstrate the detriment they have or will incur as a result of their “deserted expectation”, their claim must fail.
[15]After crediting the $191,659 paid to them by EQC and the $583,090 paid by Tower.
[16]HC judgment, above n 2, at [61].
[17]At [63].
[18]At [65].
The estoppel claim was therefore dismissed. As to the interest claim, the Judge held that it was not until EQC formally gave notice that it had assessed the damage to the house as exceeding its statutory cap that Tower’s liability to pay was triggered.[19] Tower made its payment of $583,090 within four months of that notification. The Judge did not consider that delay unreasonable or unlawful.[20] Accordingly he dismissed the Doigs’ second cause of action for interest.[21]
The Bryant decision
[19]At [73].
[20]At [74].
[21]At [75].
The Judge applied this Court’s decision in Bryant.[22]The effect was that the Doigs, as assignees of extant claims, were entitled to indemnity (rather than replacement) value only. We take a moment to explain why that is the case. In Bryant a farmhouse was insured for an indemnity value of $14,060 and an excess of indemnity sum (i.e. replacement benefit) of $48,101. The policy provided that if the insured was unable or unwilling to effect reinstatement or replacement of the house then the insurer would be under no liability to pay the replacement benefit. The farm went to auction. Early on the morning of the auction the house was destroyed by fire. Bidders were advised of the loss and in due course the farm sold at the auction. Subsequently the purchaser took an assignment of the insured’s rights under the policy.[23] This Court held that the right to reinstate and claim the replacement benefit was personal to the insured. It could not be assigned. Cooke P said:[24]
The assignment after the fire could not make the purchasers retrospectively the insured at the time of the fire. They could acquire no more than whatever assignable rights had accrued to the insured before the assignment. But the right to replace under the excess of indemnity clause was personal to the insured. As stipulated in special condition (ii), if the insured was unable or unwilling to effect reinstatement or replacement of the property, the insurer was under no liability in respect of this item of insurance.
[22]At [11]–[14], [24] and [26].
[23]It seems the purchaser paid a separate sum for the assignment: Bryant, above n 1, at 143.
[24]At 145.
There are three interlinked aspects to the conclusion reached in Bryant. The first is that the right to indemnity is personal to the insured.[25] Personal attributes and claims history of an insured are relevant to an underwriter’s decision to accept the proposed risk on the given terms.[26] An insured cannot simply assign that right to a third party whose moral risk the insurer has not first approved. The second is that an insured may nonetheless assign the right to receive payment of an amount to which the insured is entitled under the policy, without the insurer’s consent. That is, the assignment of an accrued or contingent debt.[27] The third is that replacement cover is conditional on the insured in fact exercising a right to reinstate. In Bryant the insureds had not done so.[28] Moreover, by selling the insured property they had lost the right to reinstate.
[25]Xu v IAG New Zealand Ltd [2018] NZCA 149 at [15], [19].
[26]At [15].
[27]At [21].
[28]At [23].
These principles were reaffirmed by this Court in Xu v IAG New Zealand Ltd.[29] That decision has been appealed to the Supreme Court. The essential question there is whether a third party assignee may take the replacement benefit by exercising the right to reinstate in place of the original insured assignor. The appeal before us here proceeds however upon the basis that the law is as presently stated in Bryant and Xu.
Issues on appeal
[29]Above n 25.
Three issues arise on appeal:
(a)Issue 1: Was a clear and unequivocal representation made by Tower?
(b)Issue 2: Had the Doigs changed their position adversely in reliance on the representation?
(c)Issue 3: Did the Judge err in his conclusion on interest?
The first two issues concern distinct elements of equitable estoppel identified in the Wilson Parking decision.[30] The last issue arises from the second cause of action, in the event indemnity value only is payable.
Issue 1: Was a clear and unequivocal representation made by Tower?
[30]Wilson Parking, above n 5, at [44].
For the Doigs, Mr Rennie submitted that the Court should have held there was a clear and unequivocal representation that the damage would be covered for full replacement. That was the question which Ms O’Neill had asked. The reply was that “all settlement will be based on the previous owner’s policy including their policy cover”. Their policy was a full replacement one. The reply did not suggest that the Bryant principle was to be applied or that the personality of the insured was important to the insurer. As Mr Rennie put it, “Tower was taking the position that, on an assignment of the policy, it was entirely indifferent to “who” made the “choice” under the policy concerning reinstatement.”
Analysis
We do not find on the evidence that Tower had made a clear and unequivocal representation as to entitlement to assignment of replacement cover for prior insured events. We make four points.
First, we would not find, in the context of this contract, that the content of Ms James’ email of 4 October constituted a representation that the Doigs “could claim the full replacement cost for repairs or replacement”, post-purchase. Rather, there were enough fish hooks expressed in the letter to place a reasonable recipient in real doubt as to what Tower’s ultimate position would be. Ms James made it clear that, as a claims handler, the issue of assignment was not her department. She could discuss the generic claims process only. Tower would need a deed of assignment before it could “confirm any specifics with you”. Most significantly, Ms James had said, “I cannot agree to the claims being transferred to your client until we receive a deed of assignment”.
Read in combination, these two statements offered anything but an assurance of assignment of full replacement cover. Very considerable caution was needed before inferring any sort of obligation from the discussion in the email. Read in context, the email is no more than a generic and indicative discussion of the insurer’s responsibility to its insured, and (potentially) the insured’s assignee once a deed of assignment was exchanged and the “specifics” were discussed. When Ms James said, “I cannot agree to the claims being transferred to your client until we receive a deed of assignment”, that meant what it said. Assignment was by law in the gift of the insurer, and for the time being that gift was withheld. A deed, and a discussion, were needed.
Secondly, the “reasonable recipient” here was Ms O’Neill, a senior legal executive. She had asked the question, and it is her likely understanding of the reply that matters.[31] As an experienced conveyancer, it may be taken that she would have appreciated the reservations embedded in the reply from Tower. Earlier we described question 2 in Ms O’Neill’s email of 2 October as hitting the bull’s-eye. It was clear and unequivocal. Yet the answer it engendered was not. A clear question was asked, and a cloudy answer was given. A reader in Ms O’Neill’s position must have appreciated that. She did not give evidence. Given that fact, this judgment is not to be taken as criticising Ms O’Neill. It is clear she passed the emails on to Mr Doig. But it is not known what advice (if any) she gave Mr Doig.
[31]The Judge also took that view: HC judgment, above n 2, at [25].
Thirdly, Tower said its decision on any “specifics”, and its approval of transfer of the Bradburys’ rights, would depend on production of a deed of assignment. No such deed was furnished before the Doigs went unconditional on 20 November 2012. No discussion of “specifics” occurred before the Doigs were irrevocably committed. The deed of assignment in evidence is dated 1 March 2013 — long after that commitment accrued.
Finally, we observe that care is needed in commercial relations before enquiries made of third parties should be permitted to shift risk to them from the immediate contracting parties. It appears no clear and unequivocal representation was made by the vendors as to the existence of an assignable right to reinstate. They are not being sued, and Mr Doig took the view they had done no wrong. In our view, no clear and unequivocal representation was made by the insurer either.
Conclusion
We conclude Tower did not make a clear and unequivocal representation as to the Doigs’ entitlement to assignment of replacement cover for prior insured events.
Issue 2: Had the Doigs changed their position adversely in reliance on the representation by Tower?
This issue is rendered moot given the answer reached on Issue 1. But we will address it for completeness.
Mr Rennie submitted that the detriment to the Doigs was the fundamental change in bargain. They had proceeded to confirm the contract in the belief that the damage was covered for full replacement. The Doigs would not have done so if they thought the cover was limited to indemnity. They now had to bear the risk and uncertainty associated with reinstatement, including foundation issues. They would have no cover for escalation in building costs, depreciation and professional fees associated with rebuild, including the cost of demolition and removal of debris. The cost of replacement ranged in evidence between approximately $923,000 and $1.49 million. A minimum detriment might therefore be quantified at approximately $150,000, and up to $730,000 if the higher replacement costs applied.
Analysis
This argument, which turns on how the alleged representation caused the Doigs to alter their position, seems to us to confront at least two insuperable obstacles.
The first is the underlying premise of the submission that the Doigs would not have confirmed the contract if they thought the cover was limited to indemnity. We can accept the proposition that they confirmed the contract in the belief that full replacement cover was to be assigned to them. It is the right to cancel that is controversial. The contract had been entered before the enquiry was made of Tower. It was not conditional on the assignment of replacement cover. But Mr Doig said in evidence that:
If the confirmation had not been given by Tower, then we would not have settled with the vendors simply because they would not have been providing the assignment of the claims we intended to receive under the agreement and as promoted by the vendors.
The difficulty with that claim is the lack of evidential or legal support for the asserted right to cancel. As noted earlier, the only pre-contractual communication from the vendors was the advertisement quoted at [4]. It does not appear to amount to an actionable representation as to assignability of replacement cover. At most it amounts to a statement of belief as to a matter of law. It is insufficient that the belief is wrong; so long as the belief is honestly held, it is not actionable.[32] The Doigs did not sue the Bradburys, and Mr Doig did not think they could do so.[33] There was no evidence from the Bradburys that they would, in the circumstances, have conceded a right to cancel the contract. The assertion that the Doigs could have refused to settle, and have thereby changed their position, is unsustainable on the evidence.
[32]See Tompkins v Wensley Developments The Marina Ltd (in liq) [2012] NZHC 1863; and Jeremy Finn, Stephen Todd and Matthew Barber Burrows Finn & Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 375.
[33]See [39] above.
The second obstacle is that, as the Judge noted, any other detriment went no further than a departure from, or non-fulfilment of, the belief or expectation encouraged by the email. There was no evidence of the Doigs having wasted money on unnecessary inquiries, or having lost other investment opportunities.[34] Instead the detriment asserted is based on the difference in their position with and without assignment of replacement cover. As Mr Thain submitted, that was simply the value of the expectation. It was not detriment in the sense of a change of position by the Doigs in reliance on the email.
[34]See [25] above.
The prejudice justifying equitable intervention is not merely the denial of the representation itself. It relates instead to something done by the plaintiff in reliance on the representation.[35] It is not the fact of the unmet expectation that creates unconscionability and provokes the intervention of equity, but the conduct of the plaintiff in acting upon the representation.[36] If that were not so, then as Neuberger LJ (as he then was) observed in Steria Ltd v Hutchison:[37]
… If it were correct [that denial of the benefit represented amounted to detriment], the requirement for detriment in a claim for estoppel would be nugatory, because in every case where a claimant advances a claim based on estoppel, he will, virtually by definition, be better off if the estoppel is established than if it is not: otherwise he would not be raising an estoppel.
As a matter of policy, such an approach would grossly enlarge equitable estoppel and subsume the proper role of contract in constraining actionable obligation. All extra‑contractual assurances would become actionable, regardless either of consideration or a true change of position justifying equitable intervention.
[35]Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (HCA) at 429 per Brennan J; and Andrew Butler (ed) Equity & Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 616.
[36]Riches v Hogben [1985] 2 Qd R 292 (QSC); approved in Giumelli v Giumelli [1999] HCA 10, (1999) 196 CLR 101 at [35]; and in Wilson Parking, above n 5, at [92].
[37]Steria Ltd v Hutchison [2006] EWCA Civ 1551, [2007] ICR 445 at [125].
The claim accordingly fails on both legs. It is therefore unnecessary for us to evaluate the further point made by the Judge — summarised at [26] above — as to the economic benefits to the Doigs of the transaction regardless of assignment of replacement cover rights.
Conclusion
We conclude the Doigs have not established that they changed their position adversely in reliance on the alleged representations by Tower.
Issue 3: Did the Judge err in his conclusion on interest?
Mr Rennie submitted that the Judge was wrong to hold that Tower’s liability to pay the indemnity value did not arise until EQC formally gave notice of damage. Tower’s obligation was to pay on the happening of the insured event. Interest should therefore accrue from 22 February 2011, being the earthquake regarded by Tower as causing the total loss. Tower had had use of money. The existence of a need to investigate was not a reason to postpone payment. Mr Rennie accepted that a short period might be permitted for Tower to determine indemnity value. And he accepted that interest payable under s 87 of the Judicature Act 1908, rather than the original claim for compound interest, was appropriate.
Analysis
We do not accept this argument.
First, Tower’s obligation in the event of earthquake damage was:
We will pay the difference between the amount paid under EQCover and the sum insured shown in the certificate of insurance… We will extend your policy to cover those parts of the house [not covered by the Earthquake Commission Act 1993].
It was what is commonly called “top-up cover”, over and above the EQC statutory obligation. Tower’s obligation to pay is triggered by EQC making payment. Some policies state that expressly, but in this case it is plainly implicit in these policy terms.[38] Until that point, Tower’s obligation was contingent only. By no means could the delay between EQC’s July 2016 notification to payment being tendered in November 2016 be said to be unlawful and in breach of the insurer’s obligation. Tower was not in breach of obligation in making payment in November 2016.
[38]Firm PI 1 Ltd v Zurich Australian Insurance Ltd T/A Zurich New Zealand [2014] NZSC 147, [2015] 1 NZLR 432 at [14] per Elias CJ (but accepted implicitly by the majority also); and Jarden v Lumley General Insurance (NZ) Ltd [2016] NZCA 193, (2016) 19 ANZ Insurance Cases ¶62‑077 at [22]. Compare also Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427, (2015) 18 ANZ Insurance Cases ¶62-077 at [14] and [18]; and C & S Kelly Properties Ltd v Earthquake Commission [2015] NZHC 1690 at [9] and [11], where the policy expressly stated that cover would only engage after EQC making payment.
Secondly, the policy did not provide for payment of interest on later payment by the insurer. While the pleading here might, just, have been sufficient to constitute a claim for interest as damages, the Doigs did not advance the interest claim that way. In any case, such a claim would be dependent on breach and there was no breach by Tower here to attach to.[39] Any claim to interest must therefore be confined to one under s 87(1) of the Judicature Act 1908. But the prerequisite for interest being payable under s 87(1) is a money judgment, and there is no such judgment here.[40]
Conclusion
[39]Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590, [2008] 3 NZLR 31.
[40]Van Limberg v Earthquake Commission [2014] NZHC 502 at [10].
We are not persuaded the Judge erred in dismissing the second cause of action.
Result
The appeal is dismissed.
The respondent is entitled to costs for a standard appeal, on a band A basis, together with usual disbursements.
Solicitors:
Rhodes & Co, Christchurch for Appellants
DLA Piper, Auckland for Respondent
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