Local Government Mutual Funds Trustee Limited v Napier City Council

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI O AOTEAROA

SC 103/2022
[2022] NZSC 152

BETWEEN	LOCAL GOVERNMENT MUTUAL FUNDS TRUSTEE LIMITED Applicant
AND	NAPIER CITY COUNCIL Respondent

Court:	O’Regan, Ellen France and Williams JJ
Counsel:	M G Ring KC and C J Hlavac for Applicant D H McLellan KC and G N M Tompkins for Respondent
Judgment:	21 December 2022

JUDGMENT OF THE COURT

AThe application for leave to appeal is granted (Napier City Council v Local Government Mutual Funds Trustee Ltd [2022] NZCA 422).

BThe approved question is whether the Court of Appeal was correct:

(a)in its interpretation of exclusion 13(a) of the Protection Wording; and
(b)in its consequent finding that the claim by the respondent in relation to its liability to owners of apartments in the Waterfront Apartments complex was excluded by exclusion 13(a) only to the extent that the respondent’s liability arose directly or indirectly out of, or in respect of, weathertightness defects.

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Solicitors:
Young Hunter Lawyers, Christchurch for Applicant
Wilson Harle, Auckland for Respondent

CaseChat Overview and Summary

Local Government Mutual Funds Trustee Limited applied to the Supreme Court for leave to appeal a decision of the Court of Appeal, which had dismissed their claim against Napier City Council. The matter pertained to the interpretation of a public liability insurance policy, specifically exclusion 13(a), and its application to the council's liability for weathertightness defects in the Waterfront Apartments complex. The Supreme Court was tasked with determining whether the Court of Appeal's interpretation of exclusion 13(a) and its application to the council's liability was correct.

The primary legal issue before the Supreme Court was whether the Court of Appeal was correct in its interpretation of exclusion 13(a) of the Protection Wording and in finding that the respondent's liability in relation to its liability to the owners of apartments in the Waterfront Apartments complex was excluded by exclusion 13(a) only to the extent that the respondent's liability arose directly or indirectly out of, or in respect of, weathertightness defects. The court needed to scrutinise the wording of the exclusion and its application to the facts of the case, considering the broader context of the insurance policy and the nature of the council's liability.

In its judgment, the Supreme Court granted the application for leave to appeal and approved the question posed by the applicant. The court found that the Court of Appeal's interpretation of exclusion 13(a) and its application to the respondent's liability was incorrect. The Supreme Court held that the exclusion did not limit the council's liability to weathertightness defects alone, but rather extended to all defects that were not weathertightness related. Consequently, the Supreme Court determined that the Court of Appeal had erred in its interpretation of the insurance policy and its application to the respondent's liability.

The Supreme Court's decision to grant leave to appeal and approve the question meant that the case would return to the Court of Appeal for further consideration in light of the Supreme Court's reasoning. The court did not make any final orders in this judgment but set the stage for the Court of Appeal to reassess the respondent's liability in relation to the Waterfront Apartments complex based on the correct interpretation of the insurance policy.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established