Nicola Jayne Marchand, Jacques Renard Marchand and Patrick Gregory Costello v John F Jackson Hc Chch
| Jurisdiction | New Zealand |
| Judge | Matthews |
| Judgment Date | 02 May 2012 |
| Neutral Citation | [2012] NZHC 944 |
| Docket Number | CIV-2011-409-000810 |
| Court | High Court |
| Date | 02 May 2012 |
and
[2012] NZHC 944
Associate Judge Matthews
CIV-2011-409-000810
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
Application by third party for summary judgment on defendant's indemnity claim against it — plaintiffs' home was substantially damaged in Christchurch earthquakes — plaintiffs had engaged defendant to arrange insurance cover for their home, contents, motor vehicles and assets in their medical practice — defendant assured them this had been arranged but actually was not — plaintiffs discovered the true situation after the September 2010 earthquake — third party was defendant's professional liability indemnifier — defendant had indicated on indemnifier's policy renewal that he did not know of circumstances which might give rise to a claim against him — whether defendant's actions in assuring plaintiffs of cover and paying for a claim himself amounted to dishonesty — whether defendant's failure to notify third party of plaintiffs' claim disentitled him to cover under policy.
G A Hair for Plaintiffs
B R D Burke and K Hill-Dunne for Defendant
G S A Macdonald for Third Party
JUDGMENT OF ASSOCIATE JUDGE Matthews
In September 2010 and February 2011 the plaintiffs' home, and a substantial part of its contents, along with the land on which the home stands and other improvements, were substantially damaged in two earthquakes.
In May 2009 they had engaged the defendant to arrange insurance cover for them on their home and contents, their motor vehicles and the assets in the first-named plaintiffs' medical practice. Although the defendant assured the plaintiffs that cover had been arranged with New Zealand Insurance (NZI), that was not the case. This came to light after the earthquake in September 2010. The plaintiffs brought this proceeding alleging breach of contract, breach of a duty of care owed in tort and breach of certain provisions of the Fair Trading Act.
At material times the third party was the indemnifier of the defendant for professional liability. The defendant alleges that the third party should indemnify him for any loss on the part of the plaintiffs for which he might be found liable. The third party denies liability. It has brought an application for summary judgment in its favour on the defendant's third party claim, relying on one or other of two exclusion provisions in the policy. The issue on this application is whether either of these exclusions applies.
Rules 4.7(2) and 12.2 of the High Court Rules provide that the Court may give judgment against a defendant if a third party satisfies the Court that none of the causes of action in the defendant's claim can succeed. The onus is on the third party to establish this position to the satisfaction of the Court: see, for example, Garnett v Tower Insurance Ltd. 1
In this case, as will be seen, it is necessary to have regard to two principles in relation to the evidence before the Court, first that the Court need not accept uncritically evidence which is inherently lacking in credibility (for example where it is inconsistent with undisputed contemporary documents or is inherently improbable): Eng Mee Yong v Letchumanan, 2 and secondly, that evidence must be considered in a robust and realistic manner: Bilbie Dymock Corporation v Patel. 3
As will also emerge, it is alleged by the third party that in certain respects the actions of the defendant which are relevant to this case were dishonest. Bearing in mind that an application for summary judgment is determined on evidence by way of affidavit, without witnesses appearing in person and thus being able to respond orally to such allegations and to be assessed for credibility, it is necessary to proceed with circumspection. The onus of proving dishonesty remains the civil standard of
On engagement by the plaintiffs to arrange insurance cover for their assets the defendant contacted a number of insurers, and on receipt of their responses recommended to the plaintiffs that the best prospect for appropriate cover lay with NZI. At the defendant's request the plaintiffs completed a High Value Homes questionnaire for NZI which the defendant emailed to the company together with photographs of the property, and a request to quote terms and a premium for cover on the house, contents and vehicles. NZI emailed a quote and an offer of cover, on 1 July 2009. The defendant did not refer this to the plaintiffs.
Late in July or early in August 2009 Mrs Marchand telephoned the defendant to check that they had insurance cover for their house, contents and vehicles. The defendant informed her that they did have cover, but this was not true.
Early in 2010 Mrs Marchand once more inquired with the defendant about cover on their assets and was once more informed that the property was insured.
Although the defendant received the NZI quote at the beginning of July 2009, he did not take any further steps to implement the cover until after September 2010. On 4 September the plaintiffs' house and contents, and other improvements on their property, sustained serious damage in a major earthquake. Endeavours by the defendant to arrange cover with NZI after that were unsuccessful. As a consequence the plaintiffs were uninsured, with a further consequence that they were without access to compensation from the Earthquake Commission.
The plaintiffs' property suffered further damage in another major earthquake on 22 February 2011. On 21 April 2011 their solicitors advised the defendant they would claim against him.
Early in August 2009 the defendant learnt that Dr Jacques Marchand had earlier been convicted of making false medical claims to the Accident Compensation Corporation. The consequence of this had been the cancellation of the plaintiffs' existing insurance cover by their former insurer, Medical Assurance Society. He was not aware of this at the time he had approached NZI to arrange insurance on their behalf, in June that year.
In May 2010 Mrs Marchand contacted the defendant to advise that she wished to claim on their insurance policy for a pair of spectacles. A claim was completed by the defendant but not forwarded to NZI. Instead the defendant paid the amount claimed to Mrs Marchand himself.
From 12 May 2009 to 12 May 2010 the defendant was insured against certain professional risks under a policy with the third party. In February 2010 he completed a proposal for a renewal of this insurance for a 12 month period from 12 May 2010 to 12 May 2011. The document required him to advise whether he had received any claims, or knew of any circumstances that may give rise to a claim. He completed the form on 22 February 2010 and ticked the available box for response to this question, “yes”. He did not complete any details by way of elaboration, in the space below. He received an inquiry from the third party about the circumstances to which he was referring with this response. His reply was that he had ticked the “yes” box in error; as far as can be ascertained from the photocopies produced on this application, he took the same form, twinked out the tick in the “yes” box, ticked the “no” box, initialled the alteration, redated the form 3rd March 2010 and sent it to NZI. The policy was duly renewed for a 12 month period from 12 May 2010 to 12 May 2011.
Although the third party raises a greater number of defences to the third party claim, it isolates two of those defences as grounds for this application for summary judgment. To place those grounds in context, I refer to the following key provisions of the policy document:
(a) First, the defendant is insured for civil liability arising from an error occurring in the conduct of professional services provided he first knew or ought to have known of a claim in relation to that error during the period of insurance, and he has advised the third party of that claim as soon as possible but no later than 30 days after the period of insurance ends.
(b) The policy extends (automatic extension B) to insuring the defendant for any claim or circumstance that may give rise to a claim that he first knew of or ought to have known of and that should have been advised to the third party during any previous period of insurance. However, this extended cover only applies if certain tests are met, the first being that the failure to disclose the claim, or the circumstances that may give rise to a claim, at each subsequent renewal was not deliberate, and another being that advice is given to the third party of the claim or circumstances that may give rise to a claim no later than the end of the subsequent period of insurance or 30 days thereafter. Any such claim is subject to the terms of the policy in existence when the claim, or circumstances that may give rise to a claim, were first known, or the terms of the then current policy, whichever provides lesser cover (at the sole discretion of the third party). Further, exclusion part Q, to which I refer to below, does not apply to that extension.
(c) Exclusion part E, dishonesty or fraud, provides that the third party is “not insured for civil liability in connection with any dishonest, fraudulent, criminal or malicious acts or omissions by [him], employees, principals, or officers or directors of [his] or the business”.
(d) Exclusion part Q, known claims and circumstances, provides that the defendant is “not insured for civil liability in connection with any...
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Nicola Jayne Marchand, Jacques Renard Marchand and Patrick Gregory Costello v John F Jackson HC Chch
...HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY CIV-2011-409-000810 [2012] NZHC 944 Hearing: BETWEEN NICOLA JAYNE MARCHAND, JACQUES RENARD MARCHAND AND PATRICK GREGORY COSTELLO First Plaintiffs AND NICOLA JAYNE MARCHAND AND JACQUES RENARD MARCHAND Second Plaintiffs AND JOHN F JACKSON Defend......