13.12.2013

IAG New Zealand Ltd v Jackson [2013] NZCA 302

In May 2009 a Christchurch couple, Mr and Mrs Marchand, engaged Mr Jackson (a broker) to arrange insurance, which he failed to do.  This was discovered after the September 2010 earthquake, when the Marchands attempted to make a claim for damage to their home.  Mr Jackson’s failure to place cover was initially a negligent oversight.  However, evidence emerged that he later became aware of this and deliberately failed to remedy the mistake:

  • Mr Jackson received the premium from the Marchands but did not pass this on to the insurer or lodge the insurance application.
  • Mr Jackson gave assurances to the Marchands that cover was in place when he knew this was not correct.
  • When the Marchands made a claim for a pair of spectacles, Mr Jackson had them complete a claim form (which was never lodged) and paid the claim himself.

The Marchands sued Mr Jackson for their uninsured losses.  Mr Jackson sought to join his professional indemnity insurer, IAG NZ as a third party.  IAG NZ applied for summary judgment on the basis that liability for dishonest conduct was excluded.

The Court of Appeal overturned the High Court’s decision by granting IAG NZ summary judgment.

Mr Jackson’s PI policy contained an exclusion “… for civil liability in connection with any dishonest, fraudulent, criminal or malicious acts or omissions by [Mr Jackson]…”.  Mr Jackson argued that his apparent dishonesty was not “in connection with” his civil liability to the Marchands since the dishonesty came after he incurred a liability to them by negligently failing to place cover in the first place.

The Court of Appeal was having none of it.  It accepted that “in connection with” requires some causal or consequential relationship.  However, the dishonest act did not need to be the direct or proximate cause of the civil liability, nor did it need to precede the liability in time.  The Marchands would have secured cover before the earthquake if Mr Jackson had not hidden the truth from them.  This was enough to establish the necessary nexus so that the exclusion clause applied.

This interpretation should have a wider application – beyond insurance – since “in connection with” appears in many other forms of contracts.  We respectfully agree with the Court of Appeal’s analysis, which reflects the commonly understood meaning of this phrase.  A narrower interpretation (for example, that there must be a direct causal relationship or that the connection must be “material”) might potentially have had widespread and unintended consequences for other contracts.

Back to Summary Table

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

iStock
Parker v Magnum Hire: A new era of personal grievance remedies awarded in the Employment Relations Authority?
If you heard a sudden loud noise last week – no it wasn’t a jet plane flying overhead, it was the gasp of employment lawyers across New Zealand when the Employment Relations Authority published it...
26.02.2024 Posted in Employment
employment dictionary website
Banding together: the Court’s new approach to awards for injury to feelings
One of the key remedies available to an employee who has successfully established a personal grievance in the Employment Relations Authority (Authority) or the Employment Court (Court) is compensation...
23.02.2024 Posted in Employment
Trust liability under the Health and Safety at Work Act
WorkSafe New Zealand v RH & JY Trust & ors
21.02.2024 Posted in Health & Safety & Private Wealth
New year, new government, new policies: what’s on the cards for employment law in 2024?
As we have been known to say once or twice (okay, maybe every year!) employment law never stands still. New governments can also spell major change, and this time is no exception. As you will likely h...
14.02.2024 Posted in Business Advice & Employment
Family Hands Paper Dolls Wide BW
Variations of Trust: Court’s Position Confirmed
Last year we published an article titled Variations of Trust: Obtaining the Court’s Blessing on the High Court decision in Re Jury Family Trusts [2022] NZHC 568 (Re Jury). In Re Jury, the High C...
05.02.2024 Posted in Private Wealth
Employment Law Wide
Trials and tribulations of trial periods – what an employer needs to know
If, like us, you were doing last minute Christmas shopping, you might have missed that the Employment Relations (Trial Periods) Amendment Act 2023 (Act) received Royal Assent and came into effect shor...
19.01.2024 Posted in Employment
iStock  Warning Speech Bubble Colour
A warning about warnings
It can be tempting for an employer to think that it is only a dismissal that requires a disciplinary process, and that a warning or a final warning can be issued simply by notifying the employee.  Be...
13.12.2023 Posted in Employment
SEND AN ENQUIRY
Send us an enquiry

For expert legal advice, please complete the form below or call us on (09) 375 8700.