There have been several recent decisions of note:Body Corporate 74246 v QBE Insurance (International) Ltd & Allianz Australia Insurance Ltd [2017] NZHC 1473:This decision involved a dispute between insurers QBE and Allianz regarding whether, as a matter of contractual interpretation, double insurance existed. This depended on when the time of day a particular policy was intended to have incepted. The decision includes interesting evidence about market practice in respect of the time of day insurance incepts. As a result of the Court's conclusions about contractual interpretation there was no double insurance.AMI Insurance Ltd v Legg and Ors [2017] NZCA 321:This case is notable for being New Zealand appellate authority that the so-called Wayne Tank principle represents the law of New Zealand.In this case the Court of Appeal allowed an appeal from a High Court decision. The Court of Appeal found for the insurer, concluding that it was not liable to cover the policyholder for damage "arising out of or in connection with" a business of the policyholders other than their farming business. The damage caused by a fire which had spread from a deliberately constructed "fire heap" on their property consisting of material from their farming activities (prima facie covered) and materials from another business.The Court of Appeal reviewed the authorities and confirmed that the expression "in connection with" requires a causal connection of some kind. It applied the so-called Wayne Tank principle, an equivalent of which can also be found in s. 55(1) of the New Zealand Marine Insurance Act 1908. Where a loss has two effective and interdependent causes, one within the policy and one excluded by it, the exclusion prevails. This was apt to describe the present case, in which there were two interdependent causes, neither of which could be isolated from each other: material from the (covered) farming operations and material from the "other" business (not covered).Notably the Court of Appeal declined to follow a decision of the Supreme Court of Canada; Derksen v 539938 Ontario Ltd [2001] 3 SCR 398 which read down the the presumption that where there are concurrent causes, all coverage is ousted if one of the concurrent causes is an excluded peril. So Wayne Tank continues to represent the law of New Zealand.*I briefly mention the delivery of a decision which will be of interest to insurers and brokers in terms of the interrelationship between PI and D&O cover: Fund Managers Canterbury Ltd v McBeath & Ors and AIG [2017] NZCA 325.
Steve KeallBarrister28 August 2017