Note Arrow International Ltd v QBE Insurance (International) Ltd

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NOTE
Arrow International Ltd v QBE Insurance (International) Ltd

Supreme Court of New Zealand SC99/2010; [2010] NZSC 154
15 December 2010
Elias CJ, Blanchard and Tipping JJ

Insurance – Liability of insurer – Policy construction – Cover for damage

occurring “during period of insurance” – Whether deterioration by water ingress into building occurred “during period of insurance” – Whether policy to be construed contra proferentem.

Contract – Interpretation – Whether insurance policy to be construed contra proferentem.

Application for leave to appeal
Arrow International applied to the Supreme Court for leave to appeal from the
judgment of the Court of Appeal [2010] NZCA 408, [2010] 3 NZLR 857 and the application was dismissed.

CaseChat Overview and Summary

Note Arrow International Ltd sought to appeal against a decision of the Court of Appeal which had dismissed its claim for indemnity from QBE Insurance (International) Ltd. The issue before the Supreme Court was whether the appeal should be allowed. The dispute arose from water ingress into a building during the currency of an insurance policy. The policy provided indemnity for damage by water, but only if the damage occurred "during the period of insurance". The Court of Appeal had ruled that the water ingress had not occurred "during the period of insurance" and therefore QBE was not liable. The legal issues before the Supreme Court were whether the policy was to be construed contra proferentem and whether the water ingress had occurred "during the period of insurance".

The Supreme Court held that the appeal should be dismissed. It found that the policy was not to be construed contra proferentem, as that principle did not apply to the construction of insurance policies. The Court held that the water ingress had not occurred "during the period of insurance" because it was a gradual process which began before the policy period and continued afterwards. The Court found that the water ingress constituted a series of separate events, rather than a single continuous event, and therefore the damage did not occur "during the period of insurance" as required by the policy. The Supreme Court dismissed the appeal.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established