RECREATIONAL TURF LIMITED V QBE INSURANCE (INTERNATIONAL) LIMITED CA CA244/05

RECREATIONAL TURF LIMITED V QBE INSURANCE (INTERNATIONAL) LIMITED CA CA244/05 23 February 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA244/05BETWEEN RECREATIONAL TURF LIMITED Applicant AND QBE INSURANCE (INTERNATIONAL) LIMITED Respondent Hearing: 13 February 2006 Court: Anderson P, Hammond and Ellen France JJ Counsel: P W David for Applicant P J Napier for Respondent Judgment: 23 February 2006JUDGMENT OF THE COURT A The application for special leave is dismissed. B Applicant to pay the respondent costs in the sum of $1,500, together with the usual disbursements.____________________________________________________________________REASONS(Given by Anderson P) [1] This is an application for special leave to appeal to this Court from a judgment of the High Court, given by Randerson J, dismissing an appeal from a judgment of the District Court.[2] The applicant sued the respondent, in the District Court, on a contract of insurance providing cover, generally, in the following terms:QBE will indemnify the Insured for all sums which the Insured shall become legally liable to pay by compensation in respect of Personal Injury or Property Damage happening during the Period of Insurance caused by an Occurrence in connection with the Business of the Insured.[3] One of the exclusions from cover provides that QBE shall not indemnify the insured for any liability in respect of:17 Faulty workmanshipThe cost of: 17.1 rectifying, repairing or replacing defective or faulty material; 17.2 remedying any failure or fault, defect, error or omission in any design, plan or specification; 17.3 remedying faulty workmanship; 17.4 correcting or improving any work undertaken by the Insured.[4] Part of the business of the applicant included the management of disease, weeds and insects on the greens at Maramarua Golf Club. Whilst carrying out this work an employee of the applicant made a mistake. Instead of applying fungicide to the greens he applied herbicide and all but two of the greens withered away. The applicant constructed temporary alternative greens in order to reduce the Club's loss of profits and the respondent covered the applicant for those costs of construction and such loss of profits as were incurred. But the respondent declined to indemnify the applicant for the costs, some $70,000, of reinstating the damaged greens. It declined in reliance on the Exclusions Provisions including Exclusion 17.3. [5] As indicated earlier in this judgment the applicant sued unsuccessfully in the District Court and appealed unsuccessfully to the High Court. Each of those courts held that the claim was excluded because it was for the costs of remedying faulty workmanship. [6] The principles informing applications for special leave are well established. Although the guiding principle must be the requirements of justice, this will generally require the appeal to raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal; Waller vHider [1998] 1 NZLR 412 at 413; Rutherfurd v Waite [1923] GLR 34; Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 at 346-347. [7] Counsel for the applicant submitted that the point in issue is a short point of construction concerning a considerable sum of money and is of broader general importance because it concerns the interpretation and application of an exclusion in a standard form insurance contract. And since this Court would not be inclined to grant leave, even in such a case, unless the appeal seemed seriously arguable, Mr David submitted that the High Court judgment was wrong. The extent of the particular exclusion clause was unclear, he submitted, and in such circumstances the matter should be decided against the respondent by a construction contra proferentem. [8] For the respondent, Mr Napier submitted that there is no interest, public or private, of sufficient importance to outweigh the cost and delay of further appeal. Even on a hypothesis of the applicant succeeding on a substantive appeal the extent of general benefit would be limited because the respondent would then simply clarify the relevant clause to achieve the desired result. In any event, counsel submitted, the Judges in the courts below got it right. Uncontentious and standard principles of the construction of insurance policies were applied and the findings are sustainable. Objectively the amount in dispute is not large and does not justify the expense of further litigation.Discussion[9] In our view the issue is not one of construction but of application. The expression "the cost of remedying faulty workmanship" is a simple phrase and tautology will add no enlightenment. In any particular case the issue will be whether the monies sought can be categorised as a cost of remedying faulty workmanship. That is essentially a question of fact. The question might be difficult to answer in some situations but in the present case the costs incurred were undoubtedly remedial, the remedy was required because of faulty workmanship, and the remedial works were in respect of the very things to which the workmanship related, namely, the greens.[10] The matters that would be raised on a further appeal would quite obviously be questions of fact involving an application of a simple phrase. The amount involved, while undoubtedly of some significance to the applicant, is not objectively large when assessed in the context of up to three separate, substantive court hearings. [11] The applicant's case is not very strong on the merits, there is no question of law involved, the issues of fact are idiosyncratic, and the amount involved is objectively not great. For these reasons we hold that special leave is not warranted and the application is dismissed. The applicant must pay the respondent costs in the sum of $1,500, together with the usual disbursements.Solicitors: Wilson Harle, Auckland for Applicant Keegan Alexander, Auckland for Respondent