Nand v Tower Insurance

JurisdictionNew Zealand
CourtHigh Court
JudgeR M Bell
Judgment Date29 Jun 2016
Neutral Citation[2016] NZHC 1455
Docket NumberCIV-2015-404-2111

[2016] NZHC 1455



Nitya Nand and Sunita Nand
Tower Insurance Limited

A M E Parlane for the Plaintiffs

A Sherriff for Defendant

Summary judgment application to decline the plaintiff's insurance claim — the plaintiffs owned a rental property which was tenanted to their son — the defendant alleged that the son let people use the property to manufacture methamphetamine which caused a fire started resulting in extensive damage — the son was prosecuted under the Misuse of Drugs Act 1975 — the policy excluded cover for any criminal act — the exclusion did not apply to deliberate damage by tenants or their guests — the conditions section of the policy included the continuing warranty: “You … must not cause or facilitate loss or damage” — “You” was defined in the policy as the person named in the certificate of insurance, as well as their spouse and children — whether “You” included the plaintiffs adult child.

The issue was whether “You” included N's son.

Held: A “you” with cover under the policy may have an interest in the same asset as that belonging to the named insured who have made a claim. In those cases, the current favoured approach was to have regard to the interpretation of the policy, rather than to the nature of the interest of the insured in the property.

Given that except in the arguable case of jointly-owned property, the deliberate actions of one insured in destroying property or triggering exclusions would not bar a claim by an innocent insured under the policy, the same must also apply when the person causing the loss was not insured under the policy at all. That answered Tower's argument that a non-insured may still be a “you”. The policy wording was not clear enough that the actions of a non-insured should deprived an innocent insured of cover. If Tower wanted to bar claims because of other non-insured members of a household, it was odd that it limited that exclusion to a spouse and children living in the house and had not extended it to short-term de facto partners and other family members. The “you” definition did no more than extend coverage to some defined members of the household, but its purpose was not to provide an exclusion of claims by innocent insured.

Under the definition of “you” the policy extended coverage to a spouse and children normally living at the place stated in the certificate of insurance. The definition only applied if those people had assets covered under the policy. Except in the case of jointly-owned property, it did not allow the insurer to decline a claim by the insured by reason of the conduct of others covered by the policy. The son was not a relevant “you” because he was not covered by the policy. The words, “your children normally residing at the situation” were redundant in the current case.

His parents owned the house and could claim for any damage to the house covered by the policy independently of him. The policy, as defined by the certificate of insurance, did not provide cover for a tenant of the property. But even if he had cover as a tenant, that interest was distinct from his parents.’ It was not a joint interest with his parents

As with the exclusion, “you” did not help Tower to use the son's conduct to decline the parents' claim. Additionally, there was not sufficient evidence to show to a summary judgment standard that he had caused or facilitated the fire by unreasonable, reckless or wilful acts or omissions. The words, “any person in charge of your property with your permission,” did not allow Tower to sidestep the limited “you”.

The terms of the policy did not allow Tower to rely on the son's actions to bar their claim.

The summary judgment application was dismissed



In 1999 Mr and Mrs Nand bought a rental property at Flatbush, Manukau and insured it. On 1 July 2012 there was a fire at the property and the house was extensively damaged. They made a claim under their insurance policy but the insurance company turned them down. At the time of the fire the Nands' son, Nicholas, was living in the house — they say, as a tenant. Tower, the insurer, says that he let other people onto the property and, with his knowledge, they began cooking methamphetamine. Something went wrong and a fire started. Their son was later prosecuted under the Misuse of Drugs Act. Tower does not suggest that Mr and Mrs Nand were in any way involved in manufacturing methamphetamine manufacture at the Flatbush property. They live elsewhere in Auckland and knew nothing about it. But Tower says that on these facts the terms of the insurance policy entitle it to decline the Nands' claim. It says that the matter is so clear-cut that it has applied for summary judgment.


Since the start of this proceeding, Mr Nand has died. He and his widow owned both the Flatbush property and the insurance policy jointly. Mrs Nand has taken his interest under the policy by survivorship.


The principles on which the courts act on defendants' applications for summary judgment are well-established and do not need to be repeated. The Court of Appeal's decision in Westpac Banking Corporation v MM Kembla New Zealand Ltd remains authoritative. 1

Shortcomings in Tower's evidence

Some matters are not contentious: the Nands' ownership of the Flatbush property, that they insured the property with Tower, the terms of the certificate of insurance and the policy, the fire on 1 July 2012 and Tower's declinature. Other matters, especially those going to Tower's affirmative defences, are disputed. For those parts of the case, Tower relies largely on hearsay evidence.


The following evidence of Tower is inadmissible as hearsay that does not qualify under ss 16– 20 of the Evidence Act 2006:

  • (a) Paragraphs 8 and 9 of the affidavit of Mr Roe, Tower's claims manager, (reporting on fire cause investigations) passing on information given by others.

  • (b) Paragraph 8 of the first affidavit of Mr Iafeta, Tower's investigator, as to information given by the son.

  • (c) Paragraph 9.1 of the same affidavit as to Mr Iafeta's understanding of the cause of the fire. Mr Iafeta has not qualified himself as a fire cause expert.

  • (d) Paragraph 9.2 as to charges laid against the son.

  • (e) Exhibit A of Mr Iafeta's affidavit, his report to Tower, records statements made by Mr Nand under the heading “Interview of insured”. That is admissible, as is his description of the Flatbush premises. But most of the rest of the report records statements made to Mr Iafeta by others and is accordingly hearsay.


In so far as Tower might wish to rely on makers of statements being unavailable under ss 18(1)(b)(i) and 19(1)(a) of the Evidence Act, it has not adduced any evidence that they are unavailable under s 16(2). Nor do I consider under ss 18(1)(b)(ii) and 19(1)(c) that undue expense or delay would be caused if the makers of the statements were required to give affidavits. Tower has not made out any case to accept witnesses' statements of belief under r 7.30 of the High Court Rules.


Even if the evidence were admissible, I would not accept it as carrying sufficient weight for summary judgment purposes. That is because of the substance of the matters in issue. There are some matters that are generally unsuitable for determination on a summary judgment basis. They call for a fuller testing of evidence. Examples are allegations of oral representations and conduct alleged to fall below a required standard of care in negligence cases. In this case there are questions of fire cause, wilful and reckless misconduct and taking part in criminal activity. These matters are not the general stock-in-trade of summary judgment applications. Given that on a summary judgment application, a defendant needs to show that the plaintiff has no arguable case for any of the causes of action, Tower's reliance on hearsay evidence to prove matters of fire cause, reckless or wilful behaviour and criminal activity falls short of the standard.


Mr Nand's affidavit makes up for some of the shortcomings in Tower's evidence. Paragraphs 10 to 15 of his affidavit say:

10 We rented out the house to tenants over the years. Our adult son, Nicholas Nand, was the tenant who rented the property from us in 2010. Annexed marked “D” is a copy of the tenancy agreement. Nicholas lived there with his partner and young child.

11 On 1 July 2012, a fire occurred at the property. The Police and Fire Service attended the fire and ascertained that the fire was most likely started in the garage. Police and Fire Service determined the fire was accidental as opposed to deliberately set.

12 Further investigation determined that some persons who did not live at the property had been involved in the manufacture of methamphetamine in our garage. We also learned that the people at the property who were involved in this incident had been allowed on the premises by the tenant, Nicholas Nand. My wife and I only discovered this after we received a call from the Police advising that the house had suffered a fire.

13 The Police carried out investigations with the Fire Service. The Police stated to me the fire was accidental and accidentally started as a result of something going wrong in a drug manufacture.

14 I was very shocked and devastated that my house had been used for this purpose and was unaware that Nicholas Nand was in any way associated with this kind of incident. If I had known that Nicholas Nand was involved or likely to be involved in drugs I would never have allowed him to rent our house. After learning this we evicted him. My wife and I were horrified when we learned what had happened because we...

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1 cases
  • Little v Warwick
    • New Zealand
    • High Court
    • 15 April 2019
    ...21 However, the authorities appear to take a different approach where the unsuccessful application is a defendant's application. In Nand v Tower Insurance the Court noted that a defendant is better able to assess the strength of the case before making a summary judgment application, and in ......

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