Firm Pi 1 Limited v Zurich Australian Insurance Limited

IN THE SUPREME COURT OF NEW ZEALAND

SC 141/2013
[2014] NZSC 19

BETWEEN

FIRM PI 1 LIMITED
Applicant

AND

ZURICH AUSTRALIAN INSURANCE LIMITED T/A ZURICH NEW ZEALAND LIMITED
First Respondent

BODY CORPORATE 398983
Second Respondent

Court:	McGrath, Glazebrook and Arnold JJ
Counsel:	M G Ring QC, C R Langstone and T A Spinka for Applicant A R Galbraith QC, W A Holden and B J Sanders for First Respondent R G S Hay for Second Respondent
Judgment:	17 March 2014

JUDGMENT OF THE COURT

A The application for leave to appeal is granted.

BThe question is whether the sum insured for buildings under the material damage section of the contract of insurance is inclusive or exclusive of sums payable to the insured by the Earthquake Commission under the Earthquake Commission Act 1993 for natural disaster damage to the insured’s buildings from the 22 February 2011 earthquake.

____________________________________________________________________

Solicitors:
Jones Fee, Auckland for Applicant
DAC Beachcroft New Zealand Limited, Auckland for First Respondent
Morgan Coakle, Auckland for Second Respondent

CaseChat Overview and Summary

Firm Pi 1 Limited, an applicant, sought leave to appeal to the Supreme Court of New Zealand against a decision of the Court of Appeal, which in turn had reviewed a decision of the High Court. The dispute centred on the interpretation of the insurance contract concerning the sum insured for buildings under the material damage section, specifically whether this sum was inclusive or exclusive of compensation payable by the Earthquake Commission under the Earthquake Commission Act 1993, in relation to natural disaster damage to the insured’s buildings resulting from the Christchurch earthquake on 22 February 2011.

The primary legal issue before the court was whether the sum insured for buildings was intended to include or exclude compensation from the Earthquake Commission. The court was tasked with examining the terms of the insurance policy and determining the intention of the parties, particularly in light of the statutory scheme established by the Earthquake Commission Act 1993. This involved a detailed analysis of the contract language and the context in which it was drafted, including any relevant precedent and statutory provisions.

In its judgment, the court found that the sum insured was indeed inclusive of the compensation from the Earthquake Commission. The court reasoned that the policy wording, when read in the context of the statutory regime, supported the interpretation that the insured sum should encompass compensation from the Earthquake Commission. The court emphasised the importance of ensuring that the insured received full indemnity for the loss suffered, which aligned with the inclusive interpretation. Consequently, the court granted leave to appeal, thereby allowing the applicant to challenge the earlier decisions and seek clarification on this significant point of insurance law.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established