Kilduff v Tower Insurance Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgeGendall J
Judgment Date17 April 2018
Neutral Citation[2018] NZHC 704
Docket NumberCIV-2016-409-000344
Date17 April 2018
Elizabeth Mary Kilduff and Veritas (2012) Limited
Tower Insurance Limited

[2018] NZHC 704




Insurance — claim by the plaintiffs that an insurance policy entitled them to be indemnified by the defendant for the reasonable cost of repairing the insured damage — property damaged in the Canterbury earthquakes in 2010/2011 — where the burden of proof lay when establishing what sum was required to meet the policy standard


C R Johnstone and H Bowering-Scott for Plaintiffs

M C Smith and S S McMullan for Defendants


Table of Contents

Para No



Factual background and history of the claim


The Tower insurance policy


Preliminary issue of admissibility issues




A. Scope of works required


Extent of foundation remediation


B. Cost of repairs


Cost of underpinning


Costing of agreed foundations/subfloor work


Electrical and heating


Plumbing and drainage


Preliminary and general (P & G) allowance


Professional fees estimate


Other minor items


Conclusion on quantum


C. General damages


An implied duty of good faith


Alleged breach through inadequate offers


Alleged breach through delay of election


Relief sought







The plaintiffs are trustees of the Emosh Family Trust, a family trust established in 2004 by the first named plaintiff (Ms Kilduff). The plaintiffs own a residential property at 101 Clifton Terrace, Sumner, the property having previously been owned by Ms Kilduff since 1990. The house on the property is occupied by Ms Kilduff and her partner as their home. The house stands on a steep slope on the eastern side of the ridge leading up to Clifton Hill. It has dramatic views overlooking Sumner beach and township and out to Pegasus Bay. The house was damaged during the Christchurch earthquake sequence in 2010/2011 and, in particular, by the 22 February 2011 earthquake. This was exacerbated by a further earthquake on 13 June 2011.


The plaintiffs hold insurance cover over the house and adjacent garage with the defendant, Tower Insurance Limited (Tower). It is common ground now that the house is practically and economically repairable. The plaintiffs have stated they intend to carry out repairs to the house and garage. Under its terms, their insurance policy entitles them to be indemnified by Tower for the reasonable cost of repairing the insured damage. Disputes arose between the parties relating to the plaintiffs' insurance policy and later as to what their entitlement entailed. In the meantime, these proceedings were filed in May 2016.


The issues between the parties have narrowed since these proceedings were initiated. The issues still in dispute are:

  • (a) the scope of works required, in particular, what is needed to sufficiently support two internal walls of the house;

  • (b) whether Tower's costing of the necessary repairs is reasonable; and

  • (c) whether general damages should be awarded for an alleged breach of the insurance contract by Tower.


There is also a question over where the burden of proof lies when establishing what sum is required to meet the policy standard.


Although the parties' experts still disagree on the costing of various aspects of the repair, the overall disparity has also narrowed. The final adjusted costings 1 presented by the parties' respective quantity surveyors are:

  • (a) Mr Eggleton (for Tower) “A” costing: 2 $770,698

  • (b) Mr Eggleton “B” costing: $800,524

  • (c) Mr Major (for the plaintiffs): $980,703

Factual background and history of the claim

The plaintiffs' house, as I have noted, is built on a steep sloping site so access to and on the site is difficult. The loess-dominant soil structure of the site dictated a specifically engineered foundation and architectural design for the house. Built in the early 1980s, the house is an architect-designed multi-storied dwelling, tiered because of the slope. It was designed by Stewart Ross and has many unique architectural features. Above the house is the driveway and garage. Ms Kilduff says she has enjoyed living at the property as her home for over 20 years. Her stated emotional attachment to the house has made the earthquake damage and subsequent insurance issues particularly difficult for her to deal with.


The house and garage were significantly damaged by the 22 February 2011 Christchurch earthquake. Ms Kilduff, who was alone in the house at the time, says she was thrown to the ground by the earthquake forces. It seems to be accepted that the house moved downhill and twisted, putting the floors and foundations out of level. There was visible cracking throughout the interior, and gaps formed around the skylights and windows. On 13 June 2011, the house and garage were further damaged and some of the temporary repairs to the house undertaken previously were undone.


The plaintiffs lodged their initial claim with Tower in September 2011. An initial report in October 2011 put the house repair costs then at around $188,000.


The Earthquake Commission (EQC) made various payments in 2012. This was after it had determined that the building claims were over cap and that there had been land damage. Those payments for the various earthquake events came to $242,526.13 for the house and $74,400 for the land.


Meanwhile, Tower arranged for various assessments and received quotes as to the cost to repair. After some dispute over whether damage to carpets was covered, the house contents policy claim was settled in September 2012.


Tower then sent Ms Kilduff a proposed scope of works for discussion in October 2012. A meeting was arranged between the parties for May 2013. After that, Ms Kilduff was sent an updated scope of works. A further update was sent in September 2013. Tower comments that the preparation of these scopes of work took longer than expected because of the level of input required from external specialists.


In December 2013, Ms Kilduff advised Tower that she had feedback on the scope of works and wished to meet to present it. This meeting occurred in March 2014. Tower then sent Ms Kilduff an updated scope of works in May 2014. After reviewing this, Ms Kilduff emailed Tower on 2 June 2014 asking to meet again “to discuss the process from here, in particular to gain a better understanding of the ‘cash settlement’ process”. Tower responded on 3 June 2014 explaining the three basic settlement options available to the plaintiffs. These were: 1) a Tower managed repair; 2) a customer managed repair; and 3) a full and final cash settlement. The email quantified the cash settlement, based on the current scope of works, as $317,600.47, less EQC payments, plus temporary accommodation costs.


Ms Kilduff replied on 10 June 2014 seeking further information about the different options and asking whether Tower had a detailed structural solution. Tower explained that it did not but would obtain one if it managed the repair. Alternatively, the cost of obtaining one would be included in a cash settlement.


At this point, the plaintiffs claim to have lost faith in Tower's investigation and felt compelled to obtain their own reports. However, it seems they did not inform Tower of this at the time. On 15 July 2014, Ms Kilduff asked Tower to give her some “breathing space” to deal with a recent illness her aging mother was suffering. Tower offered to proceed with obtaining further engineering reports but seems received no reply.


On 14 October 2014, Tower sent an email informing Ms Kilduff that it was winding down its managed repair programme. She was advised that if the plaintiffs wanted Tower to manage the repairs, Tower would need to be informed soon. Ms Kilduff replied saying that her mother was unwell and she required a further month. Tower said it was happy to wait, but reiterated its concerns about her being disadvantaged by delaying.


On 17 December 2014, Ms Kilduff advised Tower she was now able to discuss settlement options. A meeting was organised for 23 February 2015. At the meeting, the plaintiffs disclosed that they had obtained their own reports. They supplied these to Tower on 10 March 2015.


Tower reviewed the reports. On 31 March 2015, it emailed Ms Kilduff advising that the engineering documentation seemed consistent with its own. However, the one page repair estimate summary from Honeybone Builders was not detailed enough for Tower to use. It suggested that it have an engineer and architect complete final designs and consent documentation. Ms Kilduff replied on 17 April 2015 that “it is perhaps a little early for this” and requested a meeting. Tower agreed to a meeting but noted it needed to get back out to the site to update its scope. Until then its ability to negotiate a settlement would be limited.


The meeting took place on 9 June 2015. Tower emailed Ms Kilduff confirming that it wanted to engage Stream accredited experts to finalise plans. Tower wished to consult with the plaintiffs over the appointments. A list was provided in June 2015 and Ms Kilduff was followed up in July 2015.


In the meantime, the plaintiffs instructed Wynn Williams solicitors in Christchurch on the matter. Wynn Williams notified Tower on 24 July 2015 that the plaintiffs did not agree with Tower's approach and were appointing their own experts. In light of the letter, Tower appointed experts and asked the plaintiffs to co-operate with them. The Tower experts conducted an initial site visit in October 2015. Although they required further access, Wynn Williams informed...

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