AMI
Insurance and Lumley Insurance were ordered to pay $217,000 incurred fighting a
January 2013 fire across farmland just outside Christchurch in a test case to
determine recovery of rural fire fighting costs. The fire spread after embers reignited three
weeks after a rubbish burnoff on a lifestyle property.
The Forest and Rural Fires Act imposes
strict liability for any damage caused when fire escapes. The Fire Service is using the Act to recover
costs of fighting rural fires. After a
serious fire in Selwyn County spread from the Legg family lifestyle block on 10
January 2013, the Fire Service sued Mr and Mrs Legg. They in turn sued their
insurance companies for fire fighting costs incurred. The Leggs held insurance cover with AMI
Insurance for their lifestyle farming operations and with Lumley Insurance for
their landscaping business: Evolving Landscaping. Both insurers denied they were liable.
Expert evidence before the High Court
indicated the January fire was caused by embers underneath tree stumps partly
burnt in a December burn off being reignited three weeks later by high winds. The original burn off included both farm and
household waste together with waste from Evolving Landscape. The Leggs and Evolving Landscape both
admitted they were liable under the strict liability rules in the Rural Fires
Act. The two insurers refused to pay.
AMI Insurance said it was insuring
farming operations. The original burn
off was a fire containing waste from both the Leggs farming operations and a
separate landscaping business. AMI excluded cover for loss “arising in
connection with” any other business.
Justice Nation ruled the exclusion did not apply. Burning waste from landscaping only was not
the effective cause of the subsequent spread of fire. Both farming waste and landscaping waste was
burnt in the fire. An exclusion clause
could not be used to deny cover when burning farming waste itself contributed
to the subsequent fire and burning this waste was a concurrent event covered by
AMI insurance.
Lumley said it was not liable because
there was a failure to take reasonable precautions in burning off waste from
Evolving Landscapes. Justice Nation
ruled lack of reasonable care requires evidence of recklessness or gross
irresponsibility. The Leggs had acted
reasonably. They had no reason to think
embers were still smouldering. Waste
stacked on or around the fire site after the December burn-off did not cause
the subsequent ignition. It was not
reasonable for the Leggs to have doused the embers with water after the
December burn off; the Fire Service itself did not do that after the January
fire.
NZ
Fire Service v. Legg – High Court (1.07.16)
16.104