Doig v Tower Insurance Ltd

• Jurisdiction: New Zealand
• Judge: Kós P
• Judgment Date: 11 April 2019
• Neutral Citation: [2019] NZCA 107
• Court: Court of Appeal
• Docket Number: CA37/2018
• Date: 11 April 2019

Between

Hamish Paul Doig and Karen Rachael Doig

Appellants

and

Andtower Insurance Limited

Respondent

[2019] NZCA 107

Court:

Kós P, Brown and Clifford JJ

CA37/2018

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

Insurance — purchase of earthquake damaged house — assignment of insurance claims — estoppel — interest on indemnity sum paid

Counsel:

S P Rennie and W A L Todd for Appellants

I J Thain and H L Hui for Respondent

• A The appeal is dismissed.

• B The respondent is entitled to costs for a standard appeal, on a band A basis, together with usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Kós P)

1 Mr and Mrs Doig purchased an earthquake-damaged house. The sale involved the vendors assigning their insurance claims to the Doigs. The vendors held a replacement insurance policy from Tower. The Doigs say an email sent by Tower to their solicitors represented that, post-settlement, the Doigs too would be able to claim on a replacement basis for repair or rebuild of the house. They say they relied on Tower's email in confirming the agreement and that Tower is estopped from repudiating that representation.

2 Tower says the email did not have the effect asserted by the Doigs. And it says the email post-dated the Doigs' contractual obligation to purchase. In accordance with the decision of this Court in Bryant v Primary Industries Insurance Co Ltd, the Doigs would be entitled only to indemnity value, rather than replacement value. 1

3 Mander J dismissed the Doigs' claim. 2 They appeal to this Court.

Background

4 The damaged house the Doigs bought was in Redcliffs, a beachside suburb of Christchurch. The sale advertisement stated:

This is a waterfront investment, with my vendor's firm intention to pass the baton and allow new purchasers to pursue and profit from a potential rebuild (Tower insurance). …

EQ damage will not affect your enjoyment now, vendors walking away and willing to let forward thinking purchasers reap the rewards and benefits of a full potential rebuild.

5 The Doigs signed the agreement for sale and purchase of the house, for $1.155 million, on 22 September 2012. They did so on the strength of that advertisement. The vendors were a couple called Mr and Mrs Bradbury. The Doigs did not speak to the Bradburys before signing the agreement. There were no other material representations by the Bradburys. Nothing said by the agent is relied on. Nor did the Doigs take legal advice before signing the agreement. Mr Doig is a real estate agent. He preferred to rely on his own knowledge of such things.

6 The contract was conditional on the Doigs being able to arrange satisfactory home and contents insurance, and a satisfactory building report, in each case within

40 working days. Nothing turns on those conditions, which were met. The agreement continued:

The vendor has lodged a claim with EQC and/or its insurer with respect to damage to the property following the recent earthquakes, and will assign the claim to the purchaser on settlement. If the claim is settled by EQC and/or its insurer prior to the settlement date, the vendor shall:

• a. Provide the purchaser with all documentation in relation to the claim and the settlement of the claim; and

• b. At settlement will credit the purchaser with the amount received from the claim.

The vendor will assign any claim(s) made to EQC or its insurer by the vendor relating to damage to the property from earthquakes or aftershocks, including 4 September 2010 and after, to the purchaser at settlement. …

… The vendor will forthwith provide details of all insurance policies held in respect of the property and will keep such policies current pending settlement.

7 It may be observed that those conditions provide simply for the assignment of claims, made with EQC and the insurer, and the continued currency of policies down to settlement. That is as far as they go. There is no express condition as to entitlement to any particular form of insurance settlement.

8 At that stage, the Bradburys had lodged three claims with Tower. All related to landscape items: driveway, fences, swimming pool and paths — items that EQC did not cover. It was then unknown whether the distinct claims made of EQC relating to damage to the house would exceed EQC's statutory obligation, and trigger Tower's contractual obligation, or not.

9 After the agreement was signed the Doigs' solicitors made some enquiries of

Tower, the Bradburys' insurer. They were made by the legal executive handling the purchase. Her name was Ms O'Neill. This is her email to Tower dated 2 October 2012:

We act for the prospective purchaser of the above property. We have been advised that although Stream will deal with the actual completion of the work required under the claims, our queries in relation to any new insurance to be taken by our client and how these claims will be dealt with, is something you would deal with.

There are three claims lodged with Tower, as recorded above. All three claims have been lodged in relation to the driveway, fences, pool and paths.

On behalf of our client, could you please advise as follows:

• 1. If for any reason the EQC repairs to be completed on the actual dwelling, end up over cap, does Tower automatically pick up the claim or should a claim be lodged now by the vendor, to cover this scenario. We understand that presently, EQC are saying that the repair work will be covered under the three EQC claims which have been lodged.

• 2. If the above scenario were to occur, would Tower cover the damage under its existing full replacement cover, i.e. any repair work required over and above the EQC caps would be covered fully by Tower as per the current full replacement policy held by the vendor.

• 3. With regard to the three existing Tower Insurance claims:

  • a. Does Tower agree to the three claims being assigned to our client (providing the purchase is confirmed).

  • b. Upon assignment of the claims, will Tower agree to complete all required work under the claims on ‘full replacement terms’ as per the terms of the current policy with the vendors.

10 The email distinguishes between three Tower claims (for landscaping) and three EQC claims (relating to the house). With question 2, Ms O'Neill hit the bull's-eye. 3 In context, it is a reasonably clear enquiry whether the Doigs would take the benefit of replacement cover if the claim relating to the house went over EQC's cap. So what was the answer?

11 The email was dealt with at Tower by a Ms James. She was the claims handler dealing with the landscape claims made by the Bradburys. She replied on 4 October 2012. These are the key parts of her reply:

… I can discuss generic claim process with you, but until we receive a deed of assignment which confirms the current owners have agreed to pass open claims over to the new owners, I am unable to confirm any specifics with you… Furthermore, any questions concerning the transfer of policy need to be discussed with our sales team – this is not my department, but they can be contacted on 0800 808 808 if you would like to discuss the transferring of the policy from the current owners to the new.

I can confirm that if the EQC repairs are deemed over cap, it is TOWER's liability to repair the dwelling. The new owners would not be required to lodge an additional claim as the damages to the property were incurred under the previous owners policy and these claims will remain open until the damages in relation to those earthquake events are rectified. This is why we require a deed of assignment which confirms that the old owners agree to sign any right to the open claims over to the new. All settlement will be based on the previous owners policy including their policy cover and excess.

As stated above, I cannot agree to the claims being transferred to your client until we receive a deed of assignment. However, supposing we do receive the deed of assignment, all settlement is based on the previous owners policy details as this is the policy which was in place at the time of the earthquakes. If there is another earthquake event, those damages would be lodged under the new owners policy and progressed according to their policy type. …

12 It might be thought that this reply was both understandably guarded and, at the same time, somewhat revealing. The repeated references to assignment and claims then being settled “based on the previous owners' policy including their policy cover and excess” suggest at least a partial answer to Ms O'Neill's question 2. On the other hand, however, Ms James made it clear that Tower needed to see a deed of assignment before “confirm[ing] any specifics”. And, moreover, “I cannot agree to the claims being transferred to your client until we receive a deed of assignment”.

13 That same day Ms O'Neill sent a further email. It attached an authorisation from the Bradburys to release information to their client — though not a deed of assignment. The next day Ms James replied:

… At this stage the open claims for [the property] have fallen below the EQC cap totals across the three events. … If, as you suggested, it is discovered that the cost to repair the house is more than initially thought as a result of the verdict on the land, then TOWER will regain responsibility of the repair if the caps are breached.

Until that point we will be assessing the damages to the hard landscaping and settling claims based on the current owners policy. The current owner's policy is a full replacement policy with an excess of $250 which is applicable for each claim lodged. Once a deed of assignment is received, any settlement decisions will be negotiated with the new owners.

If you have any further questions let me know.

14 There were no further questions. Although privilege was not waived, Mr Doig said he did not seek any legal advice on the emails either. Instead, Mr Doig's...