INSURANCE CLAIM.

New Zealand Herald, Volume LXIV, Issue 19736, 8 September 1927, Page 15

INSURANCE CLAIM.

DRAINAGE WORKS ACCIDENT. a VERDICT* AGAINST COMPANY. QUESTION OF RANGE OF COVER. A judgment of importance to insurance companies Was delivered by Mr. Justice Stringer in the Supreme Court yesterday in the claim by Roy Ernest Eastman, building and sewerage contractor, of Auckland (Mr. Finlay), to recover £IOOO from the New Zealand Insurance Company, Limited, and the Eagle, Star and Dominions Insurance Company, Limited (Mr. Northcroft). In reviewing the circumstances, His Honor said plaintiff took out a policy with defendants for insurance of indemnity aaginst liabilities incurred by him under the Workers' Compensation Act, in the course of his business. Plaintiff stated in the proposal form that he carried on business in "Auckland city and suburbs." At that time he had his office in the city and was working on a job at Mount Roskill, so that the statement was strictly true. Later, he entered into a contract for' construction of certain drainage works at Hamilton. On March 15, 1926, while engaged on these works, one of his employees was severely injured by the subsidence of the side of a dram. As a result he secured £1267 damages from plaintiff, who then claimed to be idemnified in terms of his policy. Defendants repudiated liability on the ground that the accident occurred outside "Auckland city and suburbs," as stated in the policy, to be the area in which plaintiff carried on his business. " No Local Habitation." "Where the proposed insurance is in connection with factories or shops . the question as to the situation of premises where the trade or business is carried on is quite appropriate and may be'important in determining the nature of the risk," His Honor said. "But the question appears to me to be quite inappropriate where a proposal is made in connection with a building and sewerage contractor's business, which, as the parties must have known; has no local habitation. From its very nature it is always changing its scene of operations, which from time to time may be in the city, suburbs, or country.

".Nor is the locality of such operations of any importance as to the nature of the risk, for building and sewerage operations are for all practical purposes much the same from an insurance point' of view wherever carried out. It is well known that the premiums for such insurance are * uniform and do not vary with the locality except perhaps, as suggested, in such exceptional places as Rotorua or White Island, as to which, however, it would be easy for the insurance company to exempt itself from liability in express terms or to charge a special rate of premium for any increased risk Limit of Protection. Construing the contract as it stands, without the aid of decided cases, or canons of construction, 1 should have arrived at the conclusion that it was not in the contemplation of the parties that the protection to the plaintiff should be limited in the way contended for on behalf of the defendants, which in my opinion would render the- insurance largely illusory, and would not give a reasonable business efficacy to the contract. Such a construction might easily lead to the most absurd - results."

His Honor said he could not define what was included in the term suburbs, it was difficult to know whether boroughs adjoining the city could be called suburbs,' or whether there were areas outside the city which could be included. In his opinion the words "Auckland city and suburbs" did not form, nor were they intended to form, any part of the description of the risk covered by the policy. This was in accordance with good sense. It also gave reasonable business efficiency to the contract, and effectuated what he felt sure was the mtention of the parties when the contract was made. Judgment would be for plaintiff for £IOOO with costs.