Kilduff v Tower Insurance Ltd

[2018] NZHC 704

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

CIV-2016-409-000344

[2018] NZHC 704

BETWEEN

ELIZABETH MARY KILDUFF AND VERITAS (2012) LIMITED

Plaintiffs

AND

TOWER INSURANCE LIMITED

Defendant

Hearing:

6 – 10 November 2017

Further Submissions: 28 November 2017 and 8 December 2017

Appearances:

C R Johnstone and H Bowering-Scott for Plaintiffs M C Smith and S S McMullan for Defendants

Judgment:

17 April 2018

JUDGMENT OF GENDALL J

KILDUFF v TOWER INSURANCE LIMITED [2018] NZHC 704 [17 April 2018]

Table of Contents

Para No

Introduction	[1]
Factual background and history of the claim	[6]
The Tower insurance policy	[22]
Preliminary issue of admissibility issues	[30]
Issues	[31]
A. Scope of works required	[33]
Extent of foundation remediation	[37]
B. Cost of repairs	[48]
Cost of underpinning	[54]
Costing of agreed foundations/subfloor work	[56]
Electrical and heating	[62]
Plumbing and drainage	[69]
Preliminary and general (P & G) allowance	[76]
Professional fees estimate	[83]
Other minor items	[96]
Conclusion on quantum	[100]
C. General damages	[102]
An implied duty of good faith	[107]
Alleged breach through inadequate offers	[109]
Alleged breach through delay of election	[117]
Relief sought	[126]
Orders	[132]
Costs	[135]

Introduction

[1]                  The plaintiffs are trustees of the Emosh Family Trust, a family trust established in 2004 by the first named plaintiff (Ms Kilduff). The plaintiffs own a residential property at 101 Clifton Terrace, Sumner, the property having previously been owned by Ms Kilduff since 1990. The house on the property is occupied by Ms Kilduff and her partner as their home. The house stands on a steep slope on the eastern side of the ridge leading up to Clifton Hill. It has dramatic views overlooking Sumner beach and township and out to Pegasus Bay. The house was damaged during the Christchurch earthquake sequence in 2010/2011 and, in particular, by the 22 February 2011 earthquake. This was exacerbated by a further earthquake on 13 June 2011.

[2]                  The plaintiffs hold insurance cover over the house and adjacent garage with the defendant, Tower Insurance Limited (Tower). It is common ground now that the house is practically and economically repairable. The plaintiffs have stated they intend to carry out repairs to the house and garage. Under its terms, their insurance policy entitles them to be indemnified by Tower for the reasonable cost of repairing the insured damage. Disputes arose between the parties relating to the plaintiffs’ insurance policy and later as to what their entitlement entailed. In the meantime, these proceedings were filed in May 2016.

[3]                  The issues between the parties have narrowed since these proceedings were initiated. The issues still in dispute are:

(a)the scope of works required, in particular, what is needed to sufficiently support two internal walls of the house;

(b)whether Tower’s costing of the necessary repairs is reasonable; and

(c)whether general damages should be awarded for an alleged breach of the insurance contract by Tower.

[4]                  There is also a question over where the burden of proof lies when establishing what sum is required to…