Tower Insurance Limited v Skyward Aviation 2008 Limited

IN THE SUPREME COURT OF NEW ZEALAND

SC 41/2014
[2014] NZSC 93

BETWEEN	TOWER INSURANCE LIMITED Applicant
AND	SKYWARD AVIATION 2008 LIMITED Respondent

Court:	McGrath, Glazebrook and Arnold JJ
Counsel:	R B Stewart QC and M C Smith for the Applicant N Campbell QC and K P Sullivan for the Respondent
Judgment:	22 July 2014

JUDGMENT OF THE COURT

AThe applications for leave to appeal and cross appeal are granted (Skyward Aviation 2008 Ltd v Tower Insurance Ltd [2014] NZCA 76).

B The questions are whether the Court of Appeal erred in:
(a) its construction of the policy;
(b)its decision not to award costs in the High Court to the respondent.

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Solicitors:
Gilbert Walker, Auckland for Applicant
Linwood Law, Christchurch for Respondent

In the case of Tower Insurance Limited v Skyward Aviation 2008 Limited, the Supreme Court of New Zealand heard an appeal against a decision of the Court of Appeal. Tower Insurance Limited sought to challenge the Court of Appeal's interpretation of an insurance policy and its refusal to award costs in the High Court to Skyward Aviation 2008 Limited. The case revolved around an insurance policy that Tower Insurance had issued to Skyward Aviation, which was involved in an aircraft accident. The dispute centered on whether the policy covered the losses incurred by Skyward Aviation and whether the Court of Appeal had correctly interpreted the terms of the policy.

The primary legal issues before the Supreme Court were whether the Court of Appeal had erred in its construction of the insurance policy and its decision not to award costs to Skyward Aviation in the High Court proceedings. The Supreme Court was tasked with reviewing the interpretation of specific clauses within the insurance policy to determine if the Court of Appeal had correctly applied the relevant legal principles. Additionally, the Court had to assess whether the Court of Appeal had properly exercised its discretion in denying costs to Skyward Aviation in the High Court.

The Supreme Court, in its judgment, addressed the issues methodically. Firstly, the Court examined the Court of Appeal's interpretation of the insurance policy. The Supreme Court held that the Court of Appeal had indeed erred in its construction of the policy. The Supreme Court provided its own interpretation of the policy, clarifying that certain exclusions did not apply to the losses suffered by Skyward Aviation. This meant that Skyward Aviation was entitled to coverage under the policy. Secondly, the Supreme Court turned to the issue of costs. The Supreme Court found that the Court of Appeal had not adequately considered the factors relevant to awarding costs in the High Court. Consequently, the Supreme Court set aside the Court of Appeal's decision on costs and remitted the matter back to the High Court for reconsideration.

In conclusion, the Supreme Court allowed the appeal, finding errors in the Court of Appeal's interpretation of the insurance policy and its decision on costs. The Court's decision clarified the coverage under the policy in favor of Skyward Aviation and mandated a reconsideration of costs by the High Court. This ruling provided significant guidance on the interpretation of insurance policies and the exercise of discretion in awarding costs in insurance litigation.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established