Nand v Tower Insurance
| Jurisdiction | New Zealand |
| Judge | R M Bell |
| Judgment Date | 29 June 2016 |
| Neutral Citation | [2016] NZHC 1455 |
| Docket Number | CIV-2015-404-2111 |
| Court | High Court |
| Date | 29 June 2016 |
[2016] NZHC 1455
CIV-2015-404-2111
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
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.
A M E Parlane for the Plaintiffs
A Sherriff for Defendant
JUDGMENT OF ASSOCIATE JUDGE R M Bell
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
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 are law abiding citizens. We were very upset and disappointed that this had happened and it brought great disappointment on our family.
15 Nicholas Nand was also interviewed and he was charged by Police and prosecuted. I understand that the persons who were physically manufacturing the methamphetamine were also prosecuted and sentenced.
Mr Nand's evidence is also hearsay in relying on statements made by the Police and Fire Service. Notwithstanding that, he accepts those statements and Tower may rely on them as admissions. They provide facts on which to decide the summary judgment application. Insofar as Tower's case relies on matters not admitted by Mr Nand, I find that it has not proved its case to the summary judgment standard.
The Nands' evidence includes an affidavit by a Fire Service investigator. He also relies in part on information given by the Police. He was able to establish the area of origin, but not the point of origin. He considered that the most likely cause of the fire was accidental. By that he meant that the fire was not lit deliberately. He did not ascribe responsibility to anyone. Tower's evidence did not challenge that.
I also note the following:
-
(a) While the Nands' son was prosecuted, there is no admissible evidence as to the outcome of any prosecution.
-
(b) While Mr Nand has attached a copy of a tenancy agreement with his son, Tower contests that there was a written agreement. 2 Whether there was or was not a written tenancy agreement cannot be resolved on the evidence in this proceeding. It remains arguable for the Nands that they had a written tenancy agreement with their son.
The policy is called a “Kiwibank house, contents and vehicle insurance policy” and provides cover under three sections: house, contents and vehicles. The policy defines the cover available under each section and also includes optional extensions. The insuring clause for the house section covers sudden and unforeseen accidental physical loss or damage unless excluded by the policy.
The exclusions include the following:
You are not insured for:
• any unreasonable, criminal and reckless or wilful act or omission or any disregard for, or failure to comply with any provision in or notice or order under any Act of Parliament by you;
…
• theft or deliberate damage caused directly or indirectly by you, or anyone who normally lives at the situation or is lawfully at the situation. This exclusion does not apply to deliberate damage by fire, by tenants or their guests.
The conditions section of the policy includes this continuing warranty:
You and any person in charge of your property with your permission must:
…
Not cause or facilitate loss or damage to any property covered by this...
To continue reading
Request your trial
-
Little v Warwick
...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 ......