Little and Coutts in their Respective Capacities as the Trustees of the Barley Station Trust v IAG New Zealand Limited (T/A NZI) HC Auckland CIV 2010-404-729
[2010] NZHC 1701
•26 August 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-000729
UNDER the Declaratory Judgments Act 1908
BETWEEN PETER CLINCE LITTLE AND GRANT COUTTS IN THEIR RESPECTIVE CAPACITIES AS THE TRUSTEES OF THE BARLEY STATION TRUST Plaintiffs
ANDIAG NEW ZEALAND LIMITED (TRADING AS NZI)
Defendant
Hearing: 7 July 2010
Appearances: N Till QC and A Ferguson for Plaintiffs
C Hlavac for Defendant
Judgment: 26 August 2010 at 3:00pm
(RESERVED) JUDGMENT OF ANDREWS J [Plaintiffs’ application for summary judgment]
This judgment is delivered by me on 26 August 2010 at 3:00pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Solicitors: Wilson Harle, DX CP20507, Auckland (A Ferguson) for Plaintiffs
Young Hunter, DX WP21513, Christchurch (C Hlavac) for Defendant
Counsel: N Till QC, 61 Armagh Street, Christchurch 8013
LITTLE & ANOR V IAG NZ LTD HC AK CIV 2010-404-000729 26 August 2010
Introduction
[1] The plaintiffs, the trustees of the Barley Station Trust (“the trustees”) seek summary judgment in respect of liability, only, in their proceeding against the defendant, IAG New Zealand Limited (trading as NZI) (“NZI”). The trustees seek a declaration as to cover under an insurance contract between the trustees and NZI.
[2] The sole issue for determination is the proper interpretation of an exclusion clause in the insurance contract.
Background
[3] The background facts are not in dispute.
[4] The trustees own a residential property in Queenstown (“the home”). Since February 2007 the home has been insured by NZI under a “NZI Echelon Home Policy” (“the policy”). The policy has been renewed each year through an insurance broker.
[5] In late 2008 the trustees tendered a contract for the construction of an additional wing to the home. Rilean Construction Limited (“Rilean”) was the successful tenderer. Rilean took possession of the site and commenced construction in early March 2009.
[6] Rilean contracted another company to waterproof the exterior walls of a cellar being constructed at the home. This involved applying a bitumen-based membrane to the concrete block walls of the cellar, using an LPG torch. On 27 April
2009, in the course of this work, workers noticed smoke coming from a timber wall plate. Water was applied to the area, and work continued. Later that evening a fire developed (most likely caused by an unextinguished ember) and spread through the home causing substantial damage.
[7] On 7 May 2009 the trustees’ solicitors advised NZI that they intended to make a claim under the policy, for loss and damage resulting from the fire. On 20
May 2009 NZI’s solicitors advised that cover was declined, on the grounds that
cover was excluded under the first exclusion under the heading “causes of Loss Not Covered” in the policy (“Exclusion I”). There was further correspondence between the solicitors, ending with confirmation by NZI’s solicitors, in a letter dated 4
December 2009, that NZI maintained its position that Exclusion 1 applied and cover would be declined.
Application for summary judgment
[8] The trustees filed their proceeding, including the application for summary judgment as to liability, on 10 February 2010. The principles relating to a grant of summary judgment are well-established. Summary judgment will be granted if the plaintiff can establish that the defendant has no reasonably arguable defence to the claim, or that there is no real question to be tried.[1] In the present case, the trustees must establish that NZI cannot reasonably argue that Exclusion 1 applies and precludes cover for the loss and damage to the home resulting from the fire.
The insurance policy and Exclusion 1
[1] See Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
[9] The provisions of the policy referred to at the hearing are set out below as they appear in the policy. As mentioned, Exclusion 1 is the first exclusion under the heading “Causes of Loss Not Covered”:
OUR AGREEMENT You agree to pay us the premium. In exchange, we promise to cover you as set out in this policy document.
...
WHAT YOU ARE COVERED FOR:
You are covered for sudden accidental loss to the
home during the period of cover.
WHAT YOU ARE NOT COVERED FOR:
CAUSES OF LOSS NOT COVERED
You are not covered for loss caused by:
1. structural additions or structural alterations to the home, unless:
(a) we have been notified of the additions or alterations beforehand and we have agreed in writing to cover this, or
...
(b) cover is provided under ‘New Building
Works Additional Benefit’, or
TYPES OF LOSS NOT COVERED
…
You are not covered for:
…
3. fault, defect, error or omission in design, workmanship, or construction. …
NEW BUILDING WORK WHAT IS COVERED
This Home Policy is extended to cover:
1. any new structure being built within the residential boundaries of the home, if you own it (or if you are responsible for it while it is being built), provided that it will be covered by this Home Policy when complete, and
2. any materials within the residential boundaries of the home that are to be included in the new structure.
We cover sudden accidental loss during the
period of cover caused by any of the following:
a) fire, explosion or lightning,
...
WHAT IS NOT COVERED
We do not cover any structure:
1. where the expected value of the completed work, or the price of the contract including materials, is more than $10,000, or
2. that involves alteration or addition to any part of the existing home, or
3. that involves excavation more than 1 metre deep, or
4. that has not been granted a Building Consent or similar if one is required.
WHAT WE WILL PAY
...
DEFINITIONS
…
The most we will pay during an annual period is
$10,000.
homethe private dwelling or flat(s) including any of the following:
…
It does not include any of the following:
…
• any part of the home that is partly constructed and not suitable for permanent residential use or occupation, other than the cover provided under the ‘Automatic Additional Benefit – New Building Work’,
…
Interpretation principles
[10] As noted earlier, the issue for determination is the proper interpretation of
Exclusion 1 of the policy:
You are not covered for loss caused by:
1. structural additions or structural alterations to the home, unless ...
There was no dispute that provisos (a) and (b) of Exclusion 1 do not apply.
General principles
[11] The parties were agreed as to the general principles of contractual interpretation, and that insurance contracts are subject to the same principles of interpretation as any other contract.[2] The starting point in approaching contractual interpretation are the five principles set out in the judgment of Lord Hoffmann in
[2] See, for example, Molyneux Holdings Ltd v IAG New Zealand Ltd [2007] NZCA 254 at [22].
Investors Compensation Scheme Limited v West Bromwich Building Society:[3] These can be summarised as follows
[3] Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912–913, adopted in New Zealand in Boat Park Limited v Hutchinson [1999] 2 NZLR 74 (CA) at 81–82.
a) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would have been reasonably available to the parties at the time of the contract.
b)The background “matrix of fact” includes anything reasonably available to the parties which would have affected the way in which the language of the document would have been understood by a reasonable person.
c) Prior negotiations of the parties and declarations of subjective intent are excluded from the admissible background.
d)The meaning a document would convey to a reasonable person is not the same thing as the meaning of its words. The meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.
e) The “rule” that words should be given their “natural and ordinary meaning” is not absolute. If one would conclude from the background that something must have gone wrong with the language, judges will not attribute to the parties an intention which they plainly could not have had.
[12] In Pyne Gould Guinness Ltd v Montgomery Watson (NZ) Ltd,[4] a useful
[4] Pyne Gould Guinness Ltd v Montgomery Watson (NZ) Ltd [2001] NZAR 789 (CA) at [29].
“cross-check” approach was set out:
The best start to understanding a document is to read the words used, and to ascertain their natural and ordinary meaning in the context of the document as a whole. One then looks to the background – to “surrounding
circumstances” – to cross-check whether some other or modified meaning was intended. Apart from matters of previous negotiation, and matters of purely subjective intention as to meaning, both excluded on policy grounds, one looks at everything logically relevant. At some extremes, background can be compelling. If background shows natural and ordinary meaning flouts commonsense, natural and ordinary meaning very probably must give way. ...
[13] The approach set out above was confirmed by the Supreme Court in Vector
Gas Ltd v Bay of Plenty Energy Ltd.[5]
Exclusion clauses
[5] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 (SC) at [19]–[32] (per Tipping J) and [57]–[79] (per McGrath J) .
[14] The general approach to the interpretation of an exclusion clause in an insurance policy has been summarised recently by Ronald Young J in Trustees Executors Ltd v QBE Insurance (International) Ltd:[6]
[6] Trustees Executors Ltd v QBE Insurance (International) Ltd HC Auckland CIV-409–404-1165, 9 October 2009 at [29]–[31].
[29] The starting point is, as always, the words themselves. The words of a contract should, unless the context clearly requires otherwise, have their ordinary meaning. Assistance can be gained from the context in which the disputed words occur, including the phrase, the paragraph, and the whole of the contract itself. The relevant factual matrix can also assist.
[30] The key is to ascertain objectively the common intention of the parties using the above factors. If there is ambiguity or other interpretative difficulties then an assessment of the commercial realities, common sense and a consideration of whether a particular result might lead to an unreasonable outcome are relevant.
[31] In particular in relation to exclusion clauses:
a)the onus of establishing that an exclusion clause applies is on the insurer;
b) exclusion clauses should be narrowly construed;
c) ambiguities are generally to be construed against the insurer if they have drafted the Policy.
[15] In Molyneux Holdings Ltd v IAG New Zealand Ltd,[7] the Court of Appeal confirmed that exclusion clauses are normally construed narrowly, and that contracts
are construed contra proferentem in the event of ambiguity or there being two meanings of equal cogency.
[7] Molyneux Holdings Ltd v IAG New Zealand Ltd [2007] NZCA 254 at [22].
[16] In the present case, Mr Till on behalf of the trustees submitted that the contra proferentem principle is especially applicable in “standard form contracts” (such as the insurance policy in the present case). Citing BP Oil New Zealand Ltd v BA Motors (NZ) Ltd,[8] Mr Till submitted that where there are two reasonably plausible meanings for the exclusion clause, then the one less favourable to the drafter should be preferred. On behalf of NZI, Mr Hlavac submitted that the contra proferentem
rule is only to be used as a rule of last resort and should not be invoked where there is no ambiguity.
Extrinsic evidence
[8] BP Oil New Zealand Ltd v BA Motors (NZ) Ltd [1996] 1 NZLR 425 (HC).
[17] It is appropriate to record at this point that in this proceeding NZI has filed three affidavits in support of its opposition to the trustees’ application for summary judgment. These are from:
a) Mr O’Hara (employed by IAG) as to the New Zealand insurance market, and the risks intended to be covered by “domestic home policies”. Mr O’Hara expressed his opinion as to the construction work being undertaken at the property, and the appropriate insurance cover for such work;
b)Mr Godman (not employed by IAG or NZI) as to the events intended to be covered by “home insurance policies”; and
c) Mr Parker (employed by NZI), the claims officer who handled the trustees’ insurance claim. Mr Parker annexed emails between the trustees’ solicitors and the broker, the broker and the caretaker at the property, and the solicitors and the architect.
[18] The trustees applied for an order that specified parts of these affidavits not be read, on the grounds that those parts are either inadmissible as “ultimate issue” evidence, irrelevant as evidence of NZI’s subjective intention, inadmissible as expert evidence for not being impartial, or simply not relevant. Without prejudice to that application, the trustees filed two further affidavits: one from a solicitor, Ms Watson, referring to the correspondence discussed by Mr Parker; and one from an insurance broker, Mr Mahony, annexing an earlier NZI home insurance policy.
[19] The application was heard by Associate Judge Christiansen on 14 June 2010. His judgment was released on 18 June 2010,[9] and the trustees’ application was dismissed. The trustees have filed an application for judicial review of the judgment.
[9] Little & Anor v IAG New Zealand Ltd HC Auckland CIV-2010-404-729, 18 June 2010.
[20] The application before Associate Judge Christiansen raised the issue of what extrinsic evidence is admissible in relation to a question of contractual interpretation.
a) The evidence of Messrs O’Hara and Godman
[21] Associate Judge Christiansen held that the evidence of Mr O’Hara and Mr Godman may be of substantial assistance to the Court in two ways: in understanding the commercial purpose of a domestic home policy, and as a cross-check of the plain meaning of the words used.[10] He also referred to the judgment of the Supreme Court in Vector Gas Ltd v Bay of Plenty Energy Ltd,[11] to demonstrate the importance of the
commercial context of the policy. At [33], Associate Judge Christiansen rejected the argument that the evidence concerned the subjective views of NZI.
b) The evidence of Mr Parker
[10] At [32]–[34].
[11] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 (SC) at [19], [23], [27]–[28] per Tipping J.
[22] In Gibbons Holdings Ltd v Wholesale Distributors Ltd[12] the Supreme Court held that all cogent evidence, including evidence of the subsequent conduct of the parties, should be taken into account when determining the parties’ objective
[12] Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277 (SC).
intentions. In the present case, Associate Judge Christiansen held that Mr Parker’s evidence was arguably evidence of the parties’ subsequent conduct and was, accordingly, admissible if it was capable of shedding light on the meaning of the terms to be interpreted. He found that the evidence was relevant to the understanding of the trustees and NZI as to the scope of cover at the time the policy was renewed, and was likely to provide substantial help to the Court.
Discussion
[23] The issue to be determined is whether the trustees are entitled to summary judgment on the interpretation of Exclusion 1. They contend that the meaning of:
You are not covered for loss caused by:
1. structural additions or structural alterations to the home, ...
is that the exclusion only applies to exclude from cover loss which is caused by the structural addition or alteration itself (that is, the completed addition or alteration) so that loss caused by the process of structurally adding to or altering the home (that is, the work involved) is not excluded from cover. In the alternative, the trustees say that Exclusion 1 is ambiguous and must, therefore, be interpreted in accordance with the contra proferentum principle, in favour of the insured.
Natural and ordinary meaning
[24] The first step is to look at the natural and ordinary meaning of the words. The particular words in contention are “structural additions” and “structural alterations”. These must be examined in the context of the policy as a whole.
[25] The terms “structural additions” and “structural alterations” are not defined or referred to elsewhere in the policy. The trustees submit that a reasonable person would assume that they mean completed additions or alterations, rather than the process of adding or altering.
[26] Both Mr Till and Mr Hlavac referred to dictionary definitions of “addition”
and “alteration”. In both the Oxford English Dictionary and the Merriam-Webster
Dictionary two meanings are given for each of “addition” and “alteration”. They both refer to the act or process of adding (or altering) and the result of the process (that is, the thing added or altered). In Blacks Law Dictionary, the definitions given for each of “addition” and “alteration” referred only to the completed addition or alteration.
[27] Mr Till submitted that in order to interpret “structural additions” and “structural alterations” as meaning the process, it is necessary to read the words “work or process involved in” into the exclusion. Accordingly, he submitted, the natural and ordinary meaning can only be the completed additions or alterations. This is because the terms could only be used in one sense or the other: either completed additions or alterations, or the process of adding or altering. On the other hand, Mr Hlavac submitted that the words “to the home” which follow “additions” and “alterations” suggest that the words are used in the sense of the process of adding or altering. He noted that, similarly, the trustees would have to read the word “completed” into Exclusion 1 to support their contended meaning of the words.
[28] I have concluded that the natural and ordinary meanings of the terms “structural additions” and “structural alterations” can refer either to the completed structure, or to the process of addition or alteration. I therefore turn to consider the parties’ submissions that the context of Exclusion 1 supports their respective interpretations.
Context
[29] Counsel referred to the following:
a) the principal insuring clause and the definition of “home” in the policy;
b) provisos (a) and (b) to Exclusion 1;
c) the third exclusion under the section headed “Types of Loss Not
Covered” of the policy (“Exclusion 3”); and
d)an exclusion clause in the earlier NZI home insurance policy referred to by Mr Mahony.
a) The principal insuring clause and definition of “home”
[30] As noted earlier, the policy provides:
WHAT YOU ARE COVERED FOR:
You are covered for sudden accidental loss to the home during the period of cover.
[31] “Home” is defined in the policy. The primary definition is “the private dwelling or flat(s)”. The definition also provides a number of exclusions from the definition of “home”. Among these are:
any part of the home that is partly constructed and not suitable for permanent residential use or occupation, other than the cover provided under the
‘Automatic Additional Benefit – New Building Work’. …
[32] Mr Hlavac submitted that the effect of this exclusion is that when the part added or altered is fully constructed and suitable for permanent residential use or occupation, it is covered by the principal insuring clause. He submitted that this shows that Exclusion 1 cannot have been intended to apply to the completed addition or alteration, but rather applies to the process of adding or altering.
[33] Mr Till submitted that the use of the word “and” (“partly constructed and not suitable ...”) shows that the exclusion to the definition of “home” will only apply if both terms are satisfied. He submitted that any part of the home that is partially constructed but nonetheless “suitable for permanent residential use” will come within the ambit of cover.
[34] With respect to that submission, although counsel advised that the background facts were not in dispute, those facts did not disclose whether any part of the property was suitable for permanent residential use. It would appear that the cellar area to which the waterproofing was being applied was not “suitable for permanent residential use”.
b) Provisos (a) and (b) to Exclusion 1
[35] Exclusion 1 provides that the insured is not covered for loss covered by structural additions or structural alterations to the home, subject to two provisos. These are expressed as follows:
… unless:
(a)we have been notified of the additions or alterations beforehand and we have agreed in writing to cover this, or
(b)cover is provided under ‘New Building Works Additional Benefit’, or ...
[36] Mr Hlavac submitted that the word “beforehand” in proviso (a) can only mean “before the construction process commences”, indicating that “structural additions” and “structural alterations” in Exclusion 1 refer to the process, not the completed structure. He submitted that this was the only reasonable interpretation, because once construction work is completed, the additions or alterations become part of the “home”. Mr Till submitted that “beforehand” referred to “before the loss occurred”, indicating that “structural additions” and “structural alterations” refer to the completed structure.
[37] Proviso (b) refers to the ‘New Building Work Additional Benefit’. This is in the section headed “Automatic Additional Benefits”. Under the heading “New Building Work”, cover is extended to:
1.any new structure being built within the residential boundaries of the home, ... and
2.any materials within the residential boundaries of the home that are to be included in the new structure.
...
[38] The following are excluded from the “New Building Work” policy extension:
We do not cover any structure:
1.where the expected value of the completed work, or the price of the contract including materials, is more than $10,000, or
2.that involves alteration or addition to any part of the existing home, or
...
[39] Mr Till submitted that the “New Building Work” additional benefit refers to new structures, not the process of constructing them, which indicates that Exclusion
1 also refers to loss caused by the completed addition or alteration, not the process of adding or altering. Mr Hlavac submitted that proviso (b) covers “minor additions and alterations” during the construction process. As with proviso (a), he submitted that the “process” interpretation was reasonable because, once completed, these additions and alterations will become part of the home and be covered by the principal insurance clause.
c) Types of loss not covered: Exclusion 3
[40] The dispute between the parties is as to the interpretation of Exclusion 1, which appears in the policy under the heading “Causes of Loss Not Covered”. As part of their submissions as to the contractual context of Exclusion 1, counsel referred to the third exclusion under the heading “Types of Loss Not Covered”, which reads:
You are not covered for:
…
3.fault, defect, error or omission in design, workmanship, or construction. ...
[41] Mr Till submitted that, had it been intended that Exclusion 1 apply to the process of adding or altering, then there would have been a reference to “design, workmanship, or construction” in Exclusion 1. He submitted that the absence of a reference to “construction” indicated that Exclusion 1 is intended to refer only to loss caused by completed additions or alterations. Mr Hlavac submitted that Exclusion 3 related to the types of loss not covered, while Exclusion 1 related to the causes of loss not covered. He submitted that the fact that Exclusion 1 excluded causes of loss indicated that the terms were to be read as verbs, supporting NZI’s interpretation.
d) NZI’s Supersurance House policy
[42] In Mr Mahony’s affidavit filed on behalf of the trustees (in reply to the affidavits filed on behalf of NZI) he refers to an NZI Supersurance House insurance policy dated April 2002. He annexed a copy of that policy to his affidavit.
[43] Mr Till referred to the exclusions to cover for the house, and in particular to the following:
What is not covered:
1. Loss which is caused by any of these:
…
b)raising or shifting of the house, or alteration or repair involving the removal of any structural support.
...
Mr Till submitted that this exclusion was clearly directed at the work involved (the process of alteration), and that NZI deliberately decided to change the wording, from a clear reference to the process to a clear reference to the completed structure.
[44] Mr Hlavac submitted that the earlier policy wording does not assist in interpreting Exclusion 1. He submitted first, the Court cannot speculate as to the reason for the different wording in the two policies; and secondly the Court does not have before it any evidence as to what other insurance policies were able at the time of the earlier policy, or are available now.
e) Conclusion as to context
[45] I have concluded that the context supports NZI’s interpretation of Exclusion 1 – in particular the definition of “home” and the exclusion from that definition of “any part of the home that is partly constructed and not suitable for permanent residential use of occupation”. Accordingly I have concluded that, when considered in the context of the policy as a whole, the natural and ordinary meaning of Exclusion 1 is that it excludes cover for loss caused by the process of structurally
adding to or altering the home, unless the work is minor (as specified in the New
Building Work Extension) or notified to and agreed by the insurer in advance.
Extrinsic evidence: the factual matrix
[46] As noted earlier, affidavit evidence was filed on behalf of NZI to support its interpretation of Exclusion 1. This covered two areas: the commercial purpose of the policy, and the parties’ understanding as to the scope of cover from their subsequent conduct (after the policy was in existence). Associate Judge Christiansen held that the evidence as to commercial purpose is admissible as it might be of substantial assistance to the Court in understanding the commercial purpose of the policy. He held that the evidence of subsequent conduct is admissible, as it may be capable of shedding light as to the extent of insurance cover required during the period of construction works.
[47] Mr Hlavac submitted that the evidence is of substantial assistance in the present case, both in respect of the commercial purpose and context of the policy, and in respect of the parties’ subsequent conduct. Mr Till submitted that all three affidavits filed on behalf of NZI are inadmissible because they contain irrelevant evidence either as to NZI’s subjective intention in including Exclusion 1, or as to the trustees’ subjective understanding of the scope of Exclusion 1.
[48] In the light of the conclusion I have reached as to the natural and ordinary meaning of Exclusion 1 in the context of the policy as a whole, I have regard to the affidavit evidence filed on behalf of NZI, and on behalf of the trustees in response, only as a cross-check.[13]
a) Commercial purpose
[13] See Pyne Gould Guinness Ltd v Montgomery Watson (NZ) Ltd ([2001] NZAR 789 (CA) at [29].
[49] Mr O’Hara and Mr Godman stated that a home insurance policy in New Zealand is intended to insure against foreseeable risks, and that structural work done on a home presents an increased risk to an insurer. Both also referred to insurance cover that is available to cover construction works.
[50] Mr Till accepted as “obvious” both that a home insurance policy is intended to insure against foreseeable risks, and that structural work done on a home presents an increased risk, but submitted that the fact that an activity presents a greater risk does not alter the meaning of an exclusion clause. Nor, he submitted, does the fact that there are other policies available in the market provide any assistance in resolving the interpretation.
[51] The object in referring to extrinsic evidence is, as the Court of Appeal said in Pyne Gould Guinness, as a cross-check, to check that the natural and ordinary meaning does not flout common sense. The trustees’ acceptance that it is obvious that home insurance policies are intended to insure against foreseeable risks, and that structural work on a home presents an increased risk shows, in my view, that my conclusion as to that the natural and ordinary meaning of Exclusion 1 does not flout common sense.
b) Subsequent conduct
[52] The email correspondence annexed to Mr Parker’s affidavit is adduced to support NZI’s submission that the trustees intended to obtain separate insurance for the construction work, and for the home during the period of construction. Mr Hlavac submitted that the Court could infer from the correspondence that the trustees knew that the policy would not cover loss or damage caused by the construction work, and that they needed separate insurance cover while construction was in progress.
[53] Mr Till submitted that, if the correspondence is admissible (and he submitted it is not) it shows that the trustees considered that the home was covered by the policy during the construction period, regardless of whether separate insurance was taken out either by the contractor or by the trustees.
[54] I am not required (or able) to resolve the conflict of evidence between Mr Parker on behalf of NZI and Ms Watson on behalf of the trustees. Nor am I required to make a finding as to whether the evidence is admissible in this case. I am satisfied that, if it is admissible, neither affidavit shows that the natural and ordinary meaning
of Exclusion 1, as I have concluded, flouts common sense. If the evidence is not admissible, that conclusion is not altered.
Result
[55] I have concluded that the natural and ordinary meaning of Exclusion 1, in the context of the policy as a whole, is that it excludes cover for loss caused by the process of structurally adding to or altering the home, unless the work is minor (as specified in the “New Building Work” policy extension) or notified to and agreed by the insurer in advance.
[56] Accordingly, the trustees’ application for summary judgment on its claim for a declaration that Exclusion 1 of the policy is limited to loss caused by the structural addition or structural alteration itself, and does not apply where the loss is caused by construction work, is dismissed.
[57] Counsel did not address me on the question of costs. If the parties are unable to reach agreement as to costs, then memoranda may be filed: that on behalf of the defendant within 14 days of the date of this judgment, and that on behalf of the plaintiffs within a further 14 days. Counsel should indicate in their memoranda whether a hearing is required, or whether the matter may be determined on the
papers.
Andrews J
0
2
1