Domenico Trustee Ltd v Tower Insurance Ltd - [2015] NZHC 981

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-000839 [2015] NZHC 981

BETWEEN
DOMENICO TRUSTEE LIMITED

Plaintiff

AND

TOWER INSURANCE LIMITED Defendant

Hearing: 2 - 3 March 2015

Appearances:

AME Parlane and N Hamid for Plaintiff
M C Harris and MHA Ho for Defendant

Judgment:

8 May 2015

JUDGMENT OF GENDALL J

Table of Contents

The claim [1]

The issues [7]

Background facts [10]

The terms of the policy [33]

Issue 1 – Does Tower have the right to reinstate instead of paying

cash?
[34]

Issue 2 – Has Tower made an election to settle by payment of the

claim by cash, at replacement value?
[37]

(a) What is an election? [37]

(b) Did Tower make an election? [76]

(c) Election through delay? [79]

Quantum [89]

Outcome [96]

Costs [98]

DOMENICO TRUSTEE LIMITED v TOWER INSURANCE LIMITED [2015] NZHC 981 [8 May 2015]

The claim

[1] Domenico Trustees Ltd (Domenico) owned a house which was substantially damaged in the Christchurch earthquakes. The 100 m2 house was insured for replacement value by Tower Insurance Limited (Tower) under a “Provider House Policy Maxi Protection” policy. Following the damage inflicted by the earthquakes, Tower admitted liability for the damage. The house is a total loss. Domenico has received payment of $132,783.41 from the Earthquake Commission (EQC), by way
of settlement.

[2] Tower suggests that it stands, and has always stood, ready and willing to meet its obligations under the policy by rebuilding the house. Tower says it has also offered to pay Domenico the present-day costs of rebuilding, plus further amounts that Domenico actually and reasonably incurs in rebuilding.

[3] Domenico, however, desires a cash settlement. In particular, it wants to be paid in cash the value of a rebuild, without actually incurring rebuild costs. During the course of discussions with Tower, Domenico claimed that Tower had agreed to this proposal. In other words, Domenico’s present claim is that Tower has made an irrevocable election and it now seeks to hold Tower to the alleged election. This led Domenico to issue these proceedings alleging breach of contract.

[4] Domenico’s position is that Tower has failed to settle in accordance with that election. It therefore seeks judgment against Tower for those rebuild costs, along with interest and costs. Net of the payments received by the Earthquake Commission, that sum, it says, would be $271,260.79.

[5] The quantum of the rebuild costs has been the subject of considerable movement as this claim has progressed. In Domenico’s first statement of claim, rebuild costs were said to total $842,392.45. Since that date, Domenico has slowly retreated on its position as to quantum. The first movement was to a figure of
$655,401, then to $581,787.42 (amended statement of claim), then to $445,882, before finally reaching a figure of $370,000 for the purposes of trial. Tower accepts the final figure, which it states to be “for the sake of compromise”, as at March 2015.

[6] By way of observation I note that without proper explanation, it must be…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 981
Decision Date: 8 May 2015

CaseChat Overview and Summary

Domenico Trustee Limited brought proceedings against Tower Insurance Limited in relation to a property which was insured by Tower. The property was substantially damaged in the Christchurch earthquakes. Tower admitted liability for the damage. The property is a total loss. Domenico has received payment of $132,783.41 from the Earthquake Commission by way of settlement. Domenico wants to be paid in cash the value of a rebuild, without actually incurring rebuild costs. Tower suggests that it stands, and has always stood, ready and willing to meet its obligations under the policy by rebuilding the house. Tower says it has also offered to pay Domenico the present-day costs of rebuilding, plus further amounts that Domenico actually and reasonably incurs in rebuilding. Tower has identified two substantive issues that fall for determination: (a) does Tower have the right to reinstate instead of paying cash? and (b) did Tower by its email of 18 April 2013 (and other correspondence) make a binding election to pay the rebuild costs in cash without requiring the plaintiff actually to incur replacement costs. Tower’s position is that these two questions can be answered “yes” and “no” respectively. The court found that the insurer has the right to reinstate instead of paying cash. Tower did not make an election to settle by payment of the claim by cash, at replacement value. The court found that Tower made an election through delay. Tower is liable to make immediate payment to Domenico of indemnity value. If, however, Domenico chooses to rebuild (either on the situation or elsewhere) or to buy another house, Tower’s liability will likely increase. Costs are reserved.

Orders