Judgment summary - Crystal Imports Ltd v Certain Underwriters at Lloyds of London and Sirius International Insurance Group Ltd

[2013] NZHC 3513, (2013) 18 ANZ Insurance Cases 61-997

The plaintiff, Crystal Imports Ltd, was the owner of five commercial properties in Christchurch. These properties were all insured by the defendants. The properties suffered damage in both the September earthquake and the February earthquake; three have already been demolished.

Small amounts (totalling $68,421.97) have been paid by the defendants for the cost of investigation and repair of the properties to date.

The parties agreed that the issues to be determined were:

"what is the extent of the defendants' liability to indemnify the plaintiff for the separate damage caused to the plaintiff's insured properties by the September earthquake?" and "does the Average clause in the Policy limit the defendants' obligation to pay the plaintiff the full sum insured for the damage caused by the February earthquake to the plaintiff's New Brighton Mall property?" Automatic Reinstatement

The plaintiff's insurance policy had a "reinstatement of sum insured" clause, which provided that:

"In the event of loss for which a claim is payable under this Certificate, and in the absence of written notice by the Company or the insured to the contrary, the amount of insurance cancelled by loss will be automatically reinstated from the date of loss. The Insured undertakes to pay such pro rata premium at the rate applicable to the item or items concerned as may be required for the reinstatement." The judgment did not refer to the recent decision of Wild South Holdings Ltd v QBE Insurance (International) Ltd; Maxims Fashions Ltd v QBE Insurance (International) Ltd [2013] NZHC 2781, but came to a similar conclusion. Justice Cooper said:

"The fact that reinstatement occurs automatically does not in my view mean that the "notice to the contrary" provided for by the clause needs to be given prior to the automatic reinstatement. I consider the notice can still be effective if given after the reinstatement, and once given would mean that the reinstatement would not be effective. In such circumstances there would have been notice to the contrary at the time of any subsequent covered loss. However, if there were to be a second event for which cover was available prior to notice being given, that would have occurred in the absence of written notice to the contrary, and a subsequent notice would then be too late to prevent the availability of cover up to the full amount of the sum insured. The two prerequisites to...