Tower Insurance Limited v Skyward Aviation 2008 Limited - SC 41/2014

A The applications for leave to appeal and cross appeal are granted (Skyward Aviation 2008 Ltd v Tower Insurance Ltd [2014] NZCA 76).
B The questions are whether the Court of Appeal erred in:
its construction of the policy;
its decision not to award costs in the High Court to the respondent.
22 July 2014
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A    The appeal is dismissed.  We answer the questions posed as follows:
(a)    Under the terms of the insurance policy, on what basis is the amount payable by Tower to be calculated if [an insured party’s] claim is to be settled by Tower paying the cost of buying another house?
Answer
Tower’s liability is the lower of the cost of rebuilding the insured house at its present site or the cost of the other house.  There is no requirement that the other house be “comparable” to the insured house.
(b)    Under the terms of the insurance policy, is it Tower’s choice:
(i)     whether the claim is to be settled by paying the cost of buying another house?
Answer
No.
(ii)    if settlement by Tower making payment is chosen, whether the payment is to be made based on the cost of rebuilding the insured house, replacing the insured house or repairing the insured house?
Answer
If Skyward buys another house, Tower must pay the lesser of the cost of the house or the cost of rebuilding the insured house on its present site.

B    We allow the cross-appeal.  Tower is to pay Skyward costs and disbursements in respect of the High Court proceedings to be fixed by that Court.

C    In respect of the appeal and cross-appeal, Tower is to pay Skyward costs of $25,000 and reasonable disbursements to be fixed by the Registrar.
15 December 2014