MPI Ordered to Release Details of Insurance Cover in Kiwifruit Case
/Strathboss Kiwifruit Ltd v Attorney-General HC Wellington CIV-2014-485-011493, 11 October 2017
Background
A group of kiwifruit growers are suing the Ministry for Primary Industries (MPI), claiming that it breached its duty of care towards them when carrying out its biosecurity functions. The growers are seeking damages of over $376 million for losses suffered due to the 2010 Psa outbreak, which had devastating effects on the New Zealand kiwifruit industry.
The 12 week trial, which will have just come to a close when this article is published, took an interesting turn when the growers requested discovery of MPI’s insurance arrangements.
In the early stages of the proceedings, MPI asked the kiwifruit growers to disclose any insurance policies they had. The kiwifruit growers agreed, but it turned out that they held no relevant insurance - none being available for this kind of loss. At the time, the growers did not request that MPI discover its own insurance arrangements.
The issue of insurance cropped up again during the trial. When questioned as to whether MPI had insurance for liabilities arising from errors in its biosecurity role, witnesses either said they did not think MPI had any, or were unclear if any existed.
Request for Discovery
The growers subsequently requested that MPI disclose the details of its insurance cover. They argued that MPI’s insurance arrangements would be evidence that insurance is available for a border agency’s liability; MPI being the only potential insured in such a market.
MPI replied to the request acknowledging that it had limited liability insurance cover relating to the claim; “limited” meaning that the cover was a modest fraction of the sums claimed by the plaintiffs. However, it opposed discovery of its insurance policies, saying that the actual insurance arrangements were not relevant.
The Ruling
The trial judge found that several New Zealand cases have accepted that the capacity of a defendant to insure against a liability can be a relevant policy factor when assessing whether a duty of care should be imposed against them.[1] The rationale behind this is that insurance is a mechanism for managing and spreading risk. The ability of a defendant to get insurance for the type of liability in question, and thereby manage and spread its risk, should be taken into account
The trial judge decided that the availability of insurance to MPI may be relevant to “whether policy considerations make it just, fair or reasonable to impose a duty of care.” She made an order for discovery saying its purpose was, as a matter of fairness to the growers, to ensure the information MPI had given about its insurance position had been accurately conveyed. However, the relevance of the actual insurance held, or the availability of insurance to MPI, would be an issue for a later date.
Comment
Cecily Brick, Partner at Fee Langstone, says that the actual insurance cover that a defendant has for a claim against it is not normally relevant and a defendant is usually on good ground opposing a request that they disclose their insurance arrangements. Where a Court needs to determine whether a duty of care is owed in a novel situation, evidence of ability to insure can be relevant. The Court will consider how the particular risk can be fairly allocated, and ability to insure is part of that. Usually this would be based on expert evidence about insurance available in the market, not on the actual insurance that the defendant happened to have obtained
[1] For example, see North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341; Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] NZLR 297; and, Gartside v Sheffield, Young and Ellis [1983] NZLR 37 and 51.
