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Articles by Nick Frith
Practical takeaways from Kaniere Family Trust v PGG Wrightson Real Estate Ltd for liability insurers
In a landmark decision, the Supreme Court has clarified the scope of a defendant’s liability for negligent misstatement. While that liability is limited to the foreseeable consequences of the breach, in some circumstances the decision will expand liability to include the cost of steps taken to improve the property subject to the misrepresentation to the condition it would have been in had the representation been true.
Cover to Cover: Issue 33
Welcome to our second issue of Cover to Cover for 2025. In this edition, we explore recent developments shaping the insurance sector, including one of the most significant is the impact of generative AI.
Shareholders lose their right of access to a company’s legal advice
Historically, the Courts recognised a principle known as the “shareholder rule”, which gave shareholders an entitlement to see their company’s legal advice, except where the advice related to hostile litigation against the shareholder. The rule was based in part on the idea that a company’s shareholders had paid, albeit indirectly, for its legal advice.
New Zealand: Avoid Greenwashing, Social Washing, and AI Washing
Environmental, social, and governance (ESG) washing penalties, including those related to “greenwashing” and “social washing,” continue to pose one of the greatest risks to private entities arising from ESG-related obligations in New Zealand. Being added to this growing laundry list of washing is an emerging risk around “AI washing.” “Washing” occurs when organizations make misleading claims about their goods, services, or organizational practices to appeal to consumers, investors, or workers.
Microsoft and CrowdStrike outages: Legal impacts on New Zealand businesses
Recent global outages affecting the ubiquitous Microsoft operating system have raised serious questions for New Zealand businesses about their exposure to risk. Wide-scale computer failures present multiple risks and challenges, including loss of business and revenue, and potential liabilities to customers and other counterparties. What happened? The most damaging recent event occurred on 19 July 2024, when a software update released by CrowdStrike caused a global computer outage for its customers.
The kōrero continues: Recognition of tikanga Māori by New Zealand courts
The momentum has continued in 2023, following the landmark Supreme Court decision in the Ellis case at the end of 2022 [1], for increasing recognition in litigation of tikanga Māori as part of New Zealand law. This recognition is occurring through application of Te Tiriti o Waitangi clauses in statutes [2], application of direct reference to tikanga and tikanga principles in statutes, and through evolution of the common law.
Litigation Forecast 2024
As each new year starts, it seems that life gets more complex, with new challenges and opportunities to navigate. New Zealand’s evolving litigation landscape is no different. Litigation reflects the biggest issues facing New Zealanders today, and into the future – highlighting the things we care about most. This year’s Litigation Forecast provides an update on the challenges of climate change litigation and greenwashing, sanctions litigation, and the changes in the workplace impacting on business.
Cyber risk and litigation: Some guidelines for directors and boards
Cyber risk is among the top risks facing businesses and other organisations today. New Zealand businesses reported $39.6m in losses from cyber crime in the two years leading up to 2023, and this figure includes only those which reported their losses [1]. Internationally, cyber crime is estimated to cost businesses $10.5 trillion annually by 2025 [2].
The transformative power of generative AI in the insurance industry: Opportunities and risks
In the rapidly evolving landscape of the insurance industry, technological advancements have played a pivotal role in reshaping its operations and customer interactions. One of the most promising developments in recent years is the emergence of generative artificial intelligence (AI).
Cover to Cover: Issue 28
Welcome to our mid-year edition of Cover to Cover for 2023. In this edition, we discuss the transformative power that generative AI is likely to have in the insurance industry and the role it could play. We’ve seen AI burst onto the scene in other areas, and insurance is the perfect candidate for AI given the benefits associated with precise wordings and ensuring that claims are dealt with fairly and consistently.
Supreme Court releases decision in Mainzeal
The Supreme Court has today released its decision in Yan v Mainzeal Property and Construction Limited (in liquidation) [1] (Mainzeal), upholding the Court of Appeal’s finding that Mainzeal’s directors were liable for insolvent trading and ordering Mainzeal’s directors to pay $39.8 million plus interest, with the liability of three of the four directors capped at $6.6 million plus interest. MinterEllisonRuddWatts acted for the liquidators in the Mainzeal litigation.
Supreme Court’s decision in ‘Napier City Council v Local Government Mutual Funds Limited’
Local Government Mutual Funds Trustee Limited v Napier City Council [2023] NZSC 97 The Supreme Court’s decision in Local Government Mutual Funds Trustee Limited v Napier City Council has dealt a decisive blow to attempts by the Local Government Mutual Funds Trustee (RiskPool) to avoid liability for claims against member councils for liability arising from both weathertightness and non-weathertightness defects.
Case study: Court of Appeal rules on exclusion for losses caused by “pollution or contamination”
Brian Leighton (Garages) Ltd (BLG) operated a workshop and 24-hour petrol station in East Yorkshire. In June 2014, a sharp object pierced a section of pipe which connected an underground fuel tank to six of BLG’s forecourt fuel pumps. The resulting fuel leak caused such extensive damage to BLG’s premises that it was at risk of catching fire or exploding and the business had to be closed. Allianz insured BLG under a Motor Trade policy.
Increasing access to justice and streamlined civil litigation: Considerations for insurers
The Rules Committee (Te Komiti mō ngā Tikanga) released its Improving Access to Civil Justice report in November 2022. If implemented, the report’s recommendations will create widespread changes in litigation procedure in the High Court, District Court, and Disputes Tribunal for most civil cases. In this article, we consider some of the anticipated impacts of the report on insurance disputes in Aotearoa New Zealand.
Cover to Cover - Issue 27
The unprecedented Auckland Anniversary weekend floods, and further damage caused almost immediately afterwards by Cyclone Gabrielle, have had a significant effect on the insurance market. The Minister of Finance, Grant Robertson, told reporters that, in terms of insurance, the floods alone would be the biggest non-earthquake event that New Zealand had ever experienced.
Preparing for the CoFI regime: Fair conduct programmes
Retail insurers and banks are busy preparing for the incoming Financial Markets (Conduct of Institutions) Amendment Act 2022 (CoFI Act) regime. This article outlines the principal requirement of the upcoming conduct regime – the fair conduct programme (FCP) – and what financial institutions should be doing now to prepare for the regime coming into full force in early 2025. In short, there is an enormous amount to do before then.
Case study: High Court of Australia provides guidance on insurer election and duty of good faith
Delor Vue Apartments in North Queensland suffered substantial damage during Tropical Cyclone Debbie in 2017. When its public liability and property policy was placed, it knew its apartment buildings had serious non-structural defects, but had failed to disclose their existence to its insurer, Allianz. The facts In March 2017, Tropical Cyclone Debbie made landfall in Queensland, Australia and caused approximately AUD2.5 billion in damage across areas in the south east of the state.
Floods, landslips, cyclones and locusts
When asked about the magnitude 6.3 earthquake that rocked the central North Island on 15 February this year, the Prime Minister, Chris Hipkins, said that he was looking out the window for a plague of locusts. Hipkins’ reaction was understandable.
Access to (speedier, cheaper) justice?
The Rules Committee | Te Komiti mō ngā Tikanga Kooti released its ‘Improving Access to Civil Justice’ report in late November 2022. The report’s recommendations will, if implemented, create a sea change in litigation procedure in the High Court for most civil cases. Implementing the Committee’s recommendations will likely result in a period of flux and a paradigm shift in litigation culture.
Case study - A flood and a dishonest insured
In the wake of the severe flooding event in Auckland on 27 January 2023, an insured dubbed "Mikey" by the Insurance and Financial Services Ombudsman (IFSO) (not his real name), made a fraudulent claim. Mikey’s car needed repair to remedy the effects of wear and tear. After the flood, he made a claim upon his insurer for his mechanic’s quoted costs, claiming — falsely — that the repairs were required to remedy flood damage. Unfortunately for Mikey, he was found out.
Cover to Cover - Issue 22 | Lexology
United Kingdom March 25 2021 In an increasingly digitalised work environment, the risk of cyber-attacks has never been more prevalent. Given the complex nature of cyber loss, policies described as providing cyber insurance may not provide cover as broad as their names might suggest. Organisations should consider, with their insurance brokers or legal advisers, how their policy suites will respond to cyber risks and whether there are any material gaps in cover.
Why take the chance, why not just do it? - When is a broker obliged to clarify terms with the underwriter? | Lexology
The English High Court repeated the question “Why take the chance, why not just do it?” when assessing whether an insurance broker (Edge) was obliged to clarify unusual policy terms with underwriters in order to protect its client (Bank) from a coverage dispute. The judgment runs to over 1,000 paragraphs and the evidence and submissions were extensive, even though they were largely conducted via Zoom because of COVID-19.
D&O insurance - the market continues to harden | Lexology
Many companies have been astonished at the difficulty and cost of renewing their Directors and Officers insurance in the past year. This is a trend that we view as likely to continue, particularly at the top end of the market, as insurers face an uncertain and increasingly risky claims environment – while at the same time, capacity in the London insurance market continues to tighten (as Lloyd’s imposes solvency controls upon syndicates).
Changes to class actions and litigation funding: Good news for insurers? | Lexology
New Zealand March 25 2021 Class actions (which under our current rules, are representative actions) are now firmly part of the New Zealand legal landscape. They are also of significant interest to insurers, both in terms of their own potential exposure (e.g. Ross v Southern Response) and perhaps more importantly, from a liability insurance perspective (e.g. D&O and product liability claims).
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