LWR Durham Properties Ltd (in rec) v Vero Insurance New Zealand Ltd & IAG New Zealand Ltd [2016] NZHC 826.

The plaintiff, LWR Durham Properties Ltd, is pursuing a claim under an insurance policy with Vero and IAG in relation to damage its buildings sustained in the Canterbury earthquakes. The principal issue concerns the appropriate scope of reinstatement works and apportionment across earthquake events. In this case, LWR applied for an order that Vero, the first defendant, include in their discovery evidence of “all reserves set by the insurers.”

LWR argued that the insurer’s register of reserves would be relevant as “evidence of the liability for which it perceived itself responsible,” and that this would go to the credibility of their position at trial. Counsel for Vero argued it would be improper to require discovery of reserves for the purpose of possibly impugning the credibility of witnesses through cross-examination. All this evidence would show, they said, is inexact estimates of possible costs as viewed at the time they were set. They said discovery of reserves would serve no purpose in answering the case’s central question of what the plaintiff was entitled to under Vero’s policy.

In his Judgment, Associate Judge Matthews agreed with the defendants that the register of reserves had no relevance to the issues LWR pleaded. He reasoned that these estimates were only relevant to showing how they saw their exposure based on the information they had at the time, and that they were entitled to form a different view at trial with different evidence. The only basis on which such material would be relevant, he said, is in relation to the defendants’ own argument that LWR notified its claim for reinstatement too late. The judge thought it possible that evidence of reserves might show whether Vero was in fact unaware of the plaintiff’s claim, although on the facts this was not a reason to order discovery in this case.

Cecily Brick and James Dymock are acting for the Defendants in this case