PAUL GEOFFREY MYALL v TOWER INSURANCE LIMITED [2018] NZSC 35

PAUL GEOFFREY MYALL v TOWER INSURANCE LIMITED [2018] NZSC 35 [17 April 2018]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 5/2018[2018] NZSC 35BETWEEN PAUL GEOFFREY MYALLApplicantAND TOWER INSURANCE LIMITEDRespondentCourt: William Young, O'Regan and Ellen France JJCounsel: N R Campbell QC and K P Sullivan for ApplicantM C Harris and S S McMullan for RespondentJudgment: 17 April 2018JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant is to pay costs of $2,500.____________________________________________________________________REASONS[1] Paul Myall's house in Christchurch was damaged beyond repair in theearthquakes of 4 September 2010 and 22 February 2011. The house was insured withTower Insurance Ltd (Tower). The area of the house recorded in the certificate ofinsurance was 650m2 but its actual area was 799m2. Under the policy and in terms ofthe elections which the parties made, Tower was liable for what it would cost to rebuildthe house " to the same condition and extent as when new and up to the same areaas shown in the certificate of insurance".[2] A number of issues associated with the assessment of the rebuild cost were thesubject of dispute in the High Court and Court of Appeal.1 The proposed appeal relatesto only two of them; the amount which should be allowed for professional fees andthe adjustment to be made for the area discrepancy.[3] On the basis of the findings in the Courts below, the full rebuild cost of thehouse is at least $6.3m. This is before any adjustment is made for the area discrepancy.[4] On the first issue, Mr Myall's position at trial, advanced through his quantitysurveyor, Mr Harrison, was that professional fees should be allowed for on the basisthat they would amount to 15 per cent of the construction cost. Tower's position, asadvanced at trial though its expert witness, Mr Eggleton, was that a lower figureamounting to approximately 9.85 per cent of the construction cost was appropriate.Both the trial Judge and the Court of Appeal preferred the approach of Mr Eggleton.Unfortunately:(a) One of the reasons given by the trial Judge for her conclusion waswrong. This is because she attributed to Mr Harrison a concession thatMr Eggleton's figures were reasonable when the concession actuallymade related to architectural fees rather than the total fees for allprofessions.(b) Of the three reasons given by the Court of Appeal, two were wrong.This is because, in two respects, the Court mistakenly assumed thatevidence given in respect of a quite separate issue – the allowance forcontingencies – was referable to professional fees. That the Court ofAppeal reasons were, in these respects, erroneous is conceded byTower.[5] The third reason given by the Court of Appeal involved reliance onMr Harrison's concession in respect of the architectural fees. The architectural fees1 Myall v Tower Insurance Ltd [2017] NZHC 251 (Dunningham J) [Myall (HC)]; and Myall v TowerInsurance Ltd [2017] NZCA 561 (Harrison, Miller and Clifford JJ) [Myall (CA)].allowed for by Mr Eggleton represented approximately 75 per cent of his totalallowance for professional fees.[6] On the adjustment question, the approach taken by the Judge, and upheld bythe Court of Appeal, was that Mr Myall was to be paid out 650/799 of the estimatedcost of rebuilding his house. In doing so, they rejected the contention that what wasrequired was the costing of a house which, save for area, would have been the sameas the insured house, and thus a house which had the same number of bedrooms,bathrooms and reception rooms (and thus the same number of expensive fittings andfixtures) as the house which was insured. The cost of constructing such a house wouldhave been appreciably more than 650/799 of the cost of rebuilding the insured house.[7] On this aspect of the case, Mr Harrison's evidence was conclusory and he didnot provide his workings to demonstrate how he arrived at the figure which hecontended for. He did not, for instance, come up with a credibly designed house of650m2 which had all the features he allowed for and to which his cost calculationswere correlated. As well, Mr Myall's counsel did not cross-examine Mr Eggleton onthe issue.[8] On this point, the Judge concluded:2Mr Myall contracted to insure a large stately home with the generalcharacteristics of his home, but which was to be 20 per cent smaller than hishouse actually was. Realistically, such a home would have commensuratelyfewer bathrooms, bedrooms, and reception rooms and thereforeproportionately fewer structures fewer fittings, and less joinery, without itsfunction being compromised.The Court of Appeal adopted the same approach.3 Both Courts recognised that indifferent circumstances (particularly where the area discrepancy is less) a differentapproach would or might be appropriate.42 Myall (HC), above n 1, at [98].3 Myall (CA), above n 1, at [30].4 Myall (HC), above n 1, at [101]; and Myall (CA), above n 1, at [30].[9] We see both issues as being very particular to this dispute and heavily referableto the evidence which was led. They therefore do not give rise to any questions ofpublic or general importance.5[10] We have given anxious consideration to whether the mistakes made by theHigh Court Judge and Court of Appeal in respect of the professional fees allowanceengage the miscarriage ground, but nonetheless consider that the conclusion reachedwas open to both Courts and that leave should be declined in this respect as well.[11] Accordingly, the application for leave to appeal is dismissed. Costs of $2,500are awarded to the respondent.Solicitors:Succeed Legal, Wellington for ApplicantGilbert Walker, Auckland for Respondent5 Supreme Court Act 2003, s 13(2); and Senior Courts Act 2016, s 74(2).