Ginivan v Southern Response Earthquake Services Ltd - [2018] NZHC 2403

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-409-000116

[2018] NZHC 2403

BETWEEN
WILLIAM FRANCIS GINIVAN AND

CAMERON DAVID BAILEY IN THEIR

CAPACITY AS TRUSTEES OF THE GIFT TRUST

First Plaintiffs

WILLIAM FRANCIS GINIVAN AND DIANE SHIRLEY CARSON

Second Plaintiffs

AND

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED

Defendant

Hearing:
6 August 2018

Memorandum of Counsel for Plaintiffs – 10 August 2018 Memorandum of Counsel for Defendant – 15 August 2018

Appearances:

G A Cooper for First and Second Plaintiffs M A Powell for Defendant

Judgment:

12 September 2018

JUDGMENT OF GENDALL J

Introduction

[1] This is an interlocutory application relating to proceedings brought essentially by the first plaintiffs, the trustees of the Gift Trust (the trustees) against the defendant (Southern Response). The application seeks orders in relation to the operation of an AMI Premier House Cover Policy (the policy) which the trustees hold over a residential property they own at 24 Thorrington Road, Cashmere, Christchurch (the property).

GINIVAN v SOUTHERN RESPONSE EARTHQUAKE SERVICES LTD [2018] NZHC 2403 [12 September 2018]

[2] The rights and obligations under the policy previously owed by AMI Insurance Ltd (AMI) have been assumed by the defendant (Southern Response).

[3] At the material times, the second plaintiffs resided at the house on the property as their family home. The house sustained substantial earthquake damage in the Christchurch earthquake sequence beginning in 2010. The property it appears is situated on TC3 land and is in a designated flood zone. The parties have agreed the house is not economic to repair. The trustees, however, have elected to rebuild the house on the property.

[4] In the present application, the trustees seek orders from the Court requiring Southern Response to approve and provide funding for expert engagement expenses for the rebuild of the house in accordance with the terms of the policy. In the alternative, the trustees seek an order for an interim payment by Southern Response of a global figure to be held in trust on account of invoices rendered by experts engaged by the trustees. The trustees complain that this has arisen because Southern Response’s mechanisms for approving the expenses to be incurred with their chosen experts are cumbersome and slow. The trustees say they are not working. They are unhappy with the position Southern Response has taken, which they say is a refusal to approve and pay for the experts that the trustees have put forward.

[5] Southern Response disputes this and maintains it is complying with its obligation under the policy. It says this obligation is simply one to reasonably consider a request from the trustees to approve and pay for nominated experts and, having done this, to either approve or decline the request in full or in part. Southern Response says that if the trustees do not agree with the position it takes as insurer, the onus is on the trustees to show that this position is in breach of the policy. Southern Response takes the…

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: [2018] NZHC 2403
Decision Date: 12 September 2018

CaseChat Overview and Summary

The plaintiffs, who are the trustees of the Gift Trust and owners of a residential property in Christchurch, sought an order requiring the defendant, Southern Response Earthquake Services Limited, to approve and pay for expert engagement expenses for the rebuild of the house. The plaintiffs also sought an order for an interim payment by the defendant of a global figure to be held in trust on account of invoices rendered by experts engaged by the trustees. The plaintiffs complained that the defendant's mechanisms for approving the expenses to be incurred with their chosen experts were cumbersome and slow. The defendant, however, disputed this and maintained it was complying with its obligations under the policy. The High Court of New Zealand considered the dispute and determined that the defendant was required to pay "the reasonable cost" of professional fees to repair or rebuild the house. The Court found that what were reasonable costs were determined by what was objectively fair, considering the general market rates for equivalent charges, bearing in mind all the circumstances prevailing in the Christchurch building industry at the time. The Court held that the defendant was required to review and respond to any request by the plaintiffs for the approval of the "reasonable" fees of an expert within 10 working days of the date that request was made. The Court also made orders relating to the process to be adopted by the parties henceforth for engagement of experts and approval of their fees for the house rebuild.

Orders