Brinsdon v Beazley and Another

• Jurisdiction: New Zealand
• Judge: P J Andrew
• Judgment Date: 12 April 2019
• Neutral Citation: [2019] NZHC 808
• Court: High Court
• Docket Number: CIV-2017-409-000691
• Date: 12 April 2019

Between

J R Brinsdon

Plaintiff

and

Andg H Beazley

First Defendant

Vero Insurance New Zealand Limited

Second Defendant

[2019] NZHC 808

CIV-2017-409-000691

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA

ŌTAUTAHI ROHE

Insurance, Tort — insurance broker — negligence — limitation — postponement — insurer's ongoing duty of care — equitable fraud

Appearances:

M J Borcoski and S J Deavoll for the Plaintiff

W J Hamilton for the First Defendant

A J Wakeman for the Second Defendant

JUDGMENT OF ASSOCIATE JUDGE P J Andrew

Contents

	Paragraph Number
Introduction	[1]
Relevant legal principles	[6]
Factual background	[10]
The pleaded causes of action	[20]
Analysis and decision	[21]
Issue: Duty of care post-renewal of policy	[28]
Issue – postponement of limitation period 1950 on grounds of equitable fraud	[36]
Issue – late knowledge under s 14 of the Limitation Act 2010	[66]
Issue – fresh cause of action	[73]
Conclusion	[80]
Result	[82]

Introduction

1 The plaintiff, Ms Brinsdon, is the owner of a house at Rutland Street, Christchurch that was damaged in both the September 2010 and February 2011 Canterbury earthquakes.

2 The first defendant, Mr Beazley, was the insurance broker who placed total sum insurance cover for the house with the second defendant, Vero Insurance New Zealand Ltd (Vero).

3 The plaintiff contends that she was under-insured as a result of defective advice from Mr Beazley on inception and renewal of the policies. The damage to the plaintiff's house as a result of the earthquakes well exceeds the total sum cover. She sues Mr Beazley in contract and tort and for breach of the Consumer Guarantees Act 1993. Vero is said to be vicariously liable for Mr Beazley's failures.

4 The pleadings were not filed until September 2017. Both defendants have brought applications to strike out all three causes of action on the grounds that each claim is limitation barred. The plaintiff accepts that the proceedings have been brought outside the primary six year limitation period. However, she contends there is arguable case:

• (a) for the postponement of the limitation period under s 28(b) of the Limitation Act 1950 on the grounds of equitable fraud; and

• (b) that she had late knowledge of the claim pursuant to s 14 of the Limitation Act 2010 and that her claims were filed within three years of that knowledge date (s 11(2)).

5 In response, the defendants say there is no “air of reality” to the claim for postponement under s 28(b), the plaintiff having failed to discharge the persuasive burden that she carries. They further contend that the grounds for late knowledge have not been made out, that the proposed amended pleading does not disclose a reasonably arguable cause of action, and that the claims in the amended pleading would in any event constitute a fresh cause of action that is now limitation barred.

Relevant legal principles

6 The Court may strike out all or part of a pleading if, among other things, it discloses no reasonably arguable cause of action or otherwise an abuse of the process of the Court. 1

7 The general principles applicable are summarised in the Court of Appeal's decision in Attorney General v Prince 2, as endorsed by the Supreme Court in Couch v Attorney General. 3 These include:

• (a) pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation;

• (b) the cause of action or defence must be clearly untenable; and

• (c) the jurisdiction is not excluded by the need to decide difficult question of law, requiring extensive argument.

8 In respect of applications to strike out on the grounds of limitation, the Supreme Court in Murray v Morel & Co Ltd held: 4

… the proper approach, based essentially on Matai, is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the court that the plaintiff's cause of action is so clearly stature-barred that the plaintiff's claim can properly be regarded as frivolous, vexatious or an abuse of process. If the defendant demonstrates that the plaintiff's proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable cause for an extension or postponement which would bring the claim back within time.

(footnotes omitted)

9 The Court of Appeal in Wrightson Ltd v Blackmount Forest Ltd & Anor referred to the issue of the burden in the following way: 5

The ultimate burden, therefore, remains on the defendant: it is the defendant who must satisfy the Court that the plaintiff's cause of action is so clearly statute-barred that the plaintiff's claim can properly be regarded as frivolous, vexatious or an abuse of process. But there is a shifting evidential burden. Once a defendant has demonstrated that the plaintiff's proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the persuasive burden shifts to the plaintiff to show that he or she has an arguable case for an extension or postponement which would bring the claim back within time.

One other consideration needs to be borne in mind, although it did not arise on the pleadings or facts in Murray. That is the Court's traditional reluctance to strike out a claim which might, by suitable repleading, be saved. 6 That principle might be applicable here if the crucial particular could legitimately be answered differently.

Factual background

10 Ms Brinsdon first arranged home insurance cover with Vero through Mr Beazley for the Rutland Street house in December 2001. The property was insured on a sum insured basis for the initial period of insurance and subsequent periods of insurance. Prior to that, Ms Brinsdon had full replacement cover through another insurance company. A sum insured basis means that the sum specified in the policy is the maximum amount that the insurer will pay out under the policy. By contrast, a full replacement cover has no specified financial limit.

11 Vero sent Ms Brinsdon renewal/expiry notices setting out key policy details, including the expiry date, applicable policy wording, and the sum insured premium. Each renewal included an automatic increase in the sum insured. The last renewal was on 12 December 2010. That renewal followed the first Canterbury earthquake of 4 September 2010 but took place before the second and more destructive earthquake of 22 February 2011.

12 The renewal notice for the period 12 December 2010 to 12 December 2011 read:

DETAILS OF RISK

Insured: J R BRINSDON

Vero BasicPlan Replacement Wording Applies

Situation: 149 RUTLAND STREET SAINT ALBANS CHRISTCHURCH 8052

SUMS INSURED

Replacement $194,038

Govt EQC Natural Disaster Insurance $100,000 (plus GST)

Additional Benefits – “Natural Disaster Insurance)

Included

EXCESS

Voluntary $200

The above excesses are cumulative $100

13 Following the Canterbury earthquakes, Ms Brinsdon submitted a claim under her policy for earthquake damage to the property caused by both earthquakes. She also submitted a similar claim for a property at Bishop Street (the cover also having been arranged through Mr Beazley on a sum insured basis).

14 Vero was advised by EQC in August 2013 that the claim for the property had been assessed as over the EQC cap. Vero then set about obtaining a scope of works and costing for the repairs to the property and engaging experts.

15 During 2014 Vero corresponded with Ms Brinsdon regarding the repairs to be carried out to the property through the Vero/MWH managed repair programme.

16 Vero subsequently made Ms Brinsdon a formal offer to cash settle the claim being the sum insured figure, less the EQC contributions in policy excess. This was based on a total sum insured of $223,143.70 (GST inclusive). The estimated repair costs for the property are said to be $350,741 (GST inclusive). The formal offer was contained in an email dated 26 March 2015.

1. Your policy type is a Basic Vero plan and the basis of this Insurance is a Sum Insured of $223,143.70 (GST inclusive). This applied to your February claim as the September claim is undercap with EQC. However what we can do in this instance is allocate a % of damage based on the overall reinstatement figure to the Sept event. We would use the EQC allocation of damage as the basis for the calculation (which was 15% of the overall scope cost). This means that Vero would pay the following (on a without prejudice basis):

$49,369.50 15% allocated to September 2010 event

$223,143.70 Sum insured for February event – GST inclusive (maximum liability for this event)

-$35,939.35 EQC Contribution for the September 2010 event (incl excess)

-$115,000.00 EQC Contribution for the February 2011 event (incl excess)

-$450.00 Policy excess for September 2010 event

-$450.00 Policy excess for February 2011 event

$120,673.86 Total settlement to reinstate on existing site

We would generally deduct fees such as geo technical investigations and engineering however as these helped us scope your property, we will not be doing so in this instance.

2. You originally did have a Maxi Plan replacement policy (which is a m2 replacement policy) which I understand was revised to a basic plan replacement policy (Sum Insured replacement policy). This was amended when you moved to the UK I 2004 as a result of the property being tenanted. Your subsequent policy renewals have been done on the basis of sum insured replacement.

17 On 2 November 2015 Ms...