IAG New Zealand Ltd v Jackson - [2013] NZCA 302

IN THE COURT OF APPEAL OF NEW ZEALAND

CA274/2012
[2013] NZCA 302

BETWEEN	IAG NEW ZEALAND LIMITED Appellant
AND	JOHN F JACKSON Respondent

Hearing:	11 March 2013 and 14 June 2013
Court:	O'Regan P, Arnold and Miller JJ
Counsel:	GSA Macdonald and J M Hayes for Appellant (First Hearing) BRD Burke and M K Crimp for Respondent (First Hearing) M R Ring QC and J M Hayes for Appellant (Second Hearing) BRD Burke for Respondent (Second Hearing)
Judgment:	15 July 2013 at 10.00 am

JUDGMENT OF THE COURT

AThe appeal is allowed. IAG will have summary judgment on its ninth affirmative defence to Mr Jackson’s claim.
BCosts are reserved with a timetable for submissions as noted in paragraph [33].

____________________________________________________________________

REASONS OF THE COURT

(Given by Miller J)

Introduction

In May 2009 a Christchurch couple, Nicola and Jacques Marchand, engaged an insurance broker, John Jackson, to arrange insurance cover for their home and contents, their motor vehicles, and a medical practice.
Mr Jackson placed business interruption cover for the medical practice, but he arranged none of the other insurances. This was an oversight initially. But he assured the Marchands not once but several times that he had placed the cover with New Zealand Insurance, apparently intending on each occasion to do so immediately.
The truth was revealed after the earthquake of September 2010 badly damaged the Marchands’ home. They sued Mr Jackson for their uninsured loss. He joined IAG, his professional indemnity insurer, as a third party. It moved for summary judgment, citing a policy exclusion for liability in connection with dishonest conduct, but failed in the High Court, Associate Judge Matthews reasoning that dishonesty must be decided on the facts at trial.[1] IAG brings this appeal against that judgment.
[1]Marchand v Jackson HC Christchurch CIV-2011-409-810, 2 May 2012 [Marchand No 1].
Since the judgment under appeal the Marchands have succeeded at trial against Mr Jackson. IAG did not participate.[2] Kós J was not required to decide why Mr Jackson acted as he did. The Judge did find on the evidence before him that the reasons remained a mystery but it seemed that pressures of business, in combination with some reversals in health, overwhelmed Mr Jackson.[3]

What Mr Jackson did

[2]IAG was joined not long before trial. It was offered the opportunity to participate, but preferred to pursue summary judgment.

[3]Marchand v Jackson [2012] NZHC 2893 at [14] [Marchand No 2].

The central facts are not in dispute. The Marchands approached Mr Jackson because they had been declined cover by their existing insurer after Mr Marchand was convicted of offences of dishonesty relating to his medical practice.[4] Mr Jackson had them complete a High Value Homes questionnaire for NZI, and on 1 July 2009 he secured a quote. He did not bind cover or refer the quote to the Marchands. Nor did he invoice them for the premium.
[4]The principal issue before Kós J was whether the Marchands had failed to disclose the convictions to Mr…

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: [2013] NZCA 302
Decision Date: 15 July 2013 at 10.00 am

CaseChat Overview and Summary

In the case of IAG New Zealand Ltd v Jackson, the Court of Appeal of New Zealand addressed a dispute between IAG, an insurance company, and John Jackson, a professional insured under a professional indemnity policy. The central issue was whether Jackson's conduct, specifically his failure to provide insurance coverage for a couple's home, vehicles, and contents, was covered under the policy despite an exclusion for liability arising from dishonest acts or omissions. The couple, the Marchands, sued Jackson for their uninsured loss after an earthquake damaged their home. Jackson's professional indemnity insurer, IAG, sought summary judgment on the basis of the exclusion, arguing Jackson's repeated assurances that insurance had been secured were objectively dishonest.

The legal issues the Court of Appeal needed to resolve included the definition of "dishonest" in the context of the policy exclusion and whether there was a sufficient connection between Jackson's dishonest acts and his civil liability to the Marchands. The Court found that Jackson's conduct was objectively dishonest because he knew his assurances were false when he made them. The Court also determined that the phrase "in connection with" required a causal or consequential relationship between the dishonest act and the civil liability, which was present in this case as Jackson's dishonesty directly contributed to the Marchands remaining uninsured.

The Court allowed IAG's appeal, granting summary judgment on the exclusion clause, thus denying Jackson's claim for indemnity. The Court ordered that costs should follow the event but was inclined to allow IAG costs for the first hearing in this Court, with further submissions to be filed if counsel could not agree.

Orders