Myall v Tower Insurance Ltd - [2017] NZHC 251

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000230 [2017] NZHC 251

BETWEEN
PAUL GEOFFREY MYALL

Plaintiff

AND

TOWER INSURANCE LIMITED Defendant

Hearing: 5-7 December 2016

Appearances:

S P Rennie and A G M Whalan for Plaintiff
M C Harris and S S McMullan for Defendant

Judgment:

23 February 2017

JUDGMENT OF DUNNINGHAM J

[1] Residential homes do not come much grander than “Riverlaw”. The original wood and sod house built in 1852 was subsumed within an imposing three storey triple brick mansion which was built in stages between 1885 and 1905. The homestead continued to be enlarged and developed by subsequent owners and, in
1984, was registered with the Historic Places Trust as a historic place.

[2] Mr Myall, a successful businessman, bought Riverlaw in 2003. On purchasing the historic eight bedroom six bathroom home, he embarked on an extensive programme to renovate and refurbish it. In late 2004, he telephoned Tower Insurance Limited, the defendant, and arranged for Tower to insure his newly refurbished home. Mr Myall’s home was duly covered by Tower’s “Super Maxi Cover” policy, which is a full replacement policy.

[3] There is now no dispute that cover under the policy was engaged when the homestead was damaged beyond repair in the 2010-2011 Canterbury earthquake
sequence. However, the parties are not agreed on the amount which constitutes full

MYALL v TOWER INSURANCE LIMITED [2017] NZHC 251 [23 February 2017]

replacement value under the policy and are still around $2,000,000 apart. Mr Myall has brought these proceedings seeking a declaration that Tower is obligated to pay him the balance that he says is still owing under the policy.

[4] The key issues to resolve are either disputes over the interpretation of the policy, or disputes of fact or opinion regarding the quantification of costs. These disputes fall into three main areas:

(a) Do Tower’s choices of building materials and construction methods comply with its obligations under the policy, particularly given the heritage qualities of this home?

(b)Are Tower’s cost allowances for matters such as preliminary and general costs, contractor’s margins, professional fees, and contingencies appropriate? and

(c) Was Tower was wrong to simply pro rata the costs of replacing the house to reflect the fact that it insured on the basis of a
650 square metre house when, in fact, Riverlaw was

799 square metres in area?

Background

[5] On 31 December 2004, Mr Myall telephoned Tower to arrange insurance for Riverlaw. Tower retained a record of the discussion which took place prior to the insurance cover being offered. In the call Mr Myall explained that the property was a “stately home” with eight bedrooms and six bathrooms, situated on just under two acres of “beautiful parklands”. He said he had spent $600,000 renovating the heritage property and the work included employing a tradesman for 12 months just to restore all the woodwork. The property had been rewired, re-plumbed, and relined in areas which were not wood panelled. Mr Myall had spent $100,000 on 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: [2017] NZHC 251
Decision Date: 23 February 2017

CaseChat Overview and Summary

The case of Myall v Tower Insurance Ltd was heard in the High Court of New Zealand. The plaintiff, Mr Myall, sought a declaration that the defendant, Tower Insurance Ltd, was obligated to pay him the balance still owing under his insurance policy. The parties were in dispute as to the amount that constituted full replacement value under the policy. The key issues to resolve were disputes over the interpretation of the policy and the quantification of costs. The court found that Tower was entitled to substitute modern construction methods and materials where the original was no longer available, was no longer permitted, or was unreasonably expensive. The court held that the only item which Tower should price on the basis of Mr Myall’s proposed materials was the pressed zinc ceilings. The court dismissed all Mr Myall’s claims that Tower was in breach of its obligation under the insurance policy except for the allowance for scaffolding, the allowance for a contingency sum, and the calculation of insurance costs. The court also held that Tower was entitled to adjust the calculated full replacement value of the house on a pro rata basis, to reflect the insured floor area. The parties were given leave to seek any further relief required as a consequence of the judgment and costs were reserved.

Orders