In Newbery v AA Insurance Ltd [2015] NZHC 2457 the High Court was required to determine whether the insured's damaged Lladro was a work of art, as that expression was to be understood in the context of the relevant insurance policy. Cover for any works of art was subject to a relatively low monetary cap unless they had been listed separately in a schedule at the inception of the policy. In this case, the items had not listed separately. If they were regarded as works of art, therefore, insurance cover for them would be subject to the cap. In the litigation the plaintiff-insured contended that Lladro was not a work of art, as defined (and he was therefore entitled to the cover that would have applied but for the cap), and the insurer defendant contended that it was a work of art so that the cap applied.
Given the way the case was framed, it is worth examining the definition of "work of art" which was as follows in the policy:
Work of art - pictures, paintings, prints, sculptures, ornaments, tapestries, antiques (other than furniture), hand woven mats or rugs.
In terms of the way the Court approached the case, it considered it needed to decide whether the Lladro was an ornament or a sculpture.
In the definition of work of art, different items are listed after a hyphen, in the form of a list. This wording is problematic. It is not stated whether this is an inclusive list, or an exhaustive one. The use of the word "or" is ambiguous. This may be taken to refer to a rug in itself (if read disjunctively, which is the meaning I will use in this article) or a hand woven rug (if read conjunctively with the previous item). Further, it is also not clear whether it is sufficient for an item to simply be listed in order to be a work of art, or whether something else is needed. This possibility is raised due to the inclusive of a rug, if understood disjunctively. Intuitively, a rug is not automatically a work of art, although it may be in some circumstances.
This last issue creates a difficult issue of classification. The inclusion of the word ornament is problematic because most people would agree that some ornaments may be works of art, and some will not be. There may be some ornaments which are decorative items whose sole function is aesthetic; to be displayed, and have no other utility or function, but are not, artistic, or "works of art" in any accepted sense. Equally there may be works of art which are ornamental in nature.
As noted above, the approach adopted by the learned judge was to consider whether not the Lladro could be classified as a sculpture (and it determined that it should not be; an issue which is not considered in this article) or an ornament. Either the Lladro was an ornament, or it was not. Having determined that it was an ornament, on the basis of the evidence put before the Court, including expert evidence, the Court found for the insurer and dismissed the plaintiff's claim.
In my submission the Court adopted the wrong starting point. The correct question was not to ask whether the Lladro was an ornament, but to ask whether it was an ornamental work of art. I suggest that that the words listed after the hyphen did not stand in isolation. Instead, there is a requirement in each case for the item to be a work of art.
Informing this view is the Court's conclusion, which I agree with, that the economic value of the item should not be taken into account. This must be right because a work of art may have little or no value, or a very high value. Further, value can change over time. Value is relevant to the application of the cap, but it is not a factor in considering whether the definition is applicable to a particular item.
The approach taken meant that the Court did not consider the correct question, which is: can Lladro be classified ornamental work of art? Reframing the issue this way requires the Court to make an assessment of what a work of art actually is. In this case, it was not correct to let the rather skimpily worded definition do all of the lifting. My respectful suggestion would be that a work of art may be defined as the output of original artistic endeavour. A more nuanced analysis would probably take into account whether anything that is mass-produced can ever be a work of art. Viewed this way, and without wanting to cast aspersions on the Newberys' tastes, I have serious doubts about whether Lladro should be classified as a work of art.
A quick google search throws up a pdf of an equivalent ASB policy (where the underwriter is IAG). The relevant equivalent capping provision in this policy is expressed to apply to:
any ornament, picture, painting or work of art.
The application of this cap is clear. No issue arises as to whether an ornament is a work of art. The cap simply applies to ornaments. This would have created a clearer path for the Newbery Court because it could have found for the insurer without classifying Lladro as a work of art.
In any event, in my opinion, a satisfactory definition of a work of art would be as follows:
"Work of art" means a picture, painting, print, or sculpture.
If an insurer wishes ornaments to be covered by the relevant cap, then the cap should stated to apply to ornaments. Defining work of art to include ornaments is problematic because not all ornaments are works of art. This is reflected in the ASB wording.
A conclusion that the Lladro is not a work of art would sit with the overall equity of the case. There was no evidence before the Court that if the insurer has received a separate schedule it would have done anything any differently. There was no evidence that the values of the Lladro were in excess of the cover available. So, there is no reason to suppose that there would have been any adjustment to the premium. The preparation of the separate schedule was, essentially, a box ticking exercise, of sorts. It is a shame the insurer did not pay the claim in full where there was genuine doubt about the meaning of the definition.
Steve KeallBarrister17 October 2015
Amended on 19 October 2015 to correct a typo and to add the last sentence.
