Owners of a rental property in New Zealand were ordered by the High Court to pay Tower Insurance $72,400 following an unsuccessful claim.
The owners, Saijad Ali Maqbool and Jalal Khan Maqbool, filed a claim with Tower for $350,000 after their rental property suffered significant fire damage in October 2013. However, Tower found that the tenants altered their property by dividing it into two self-contained units, each with their own kitchen. Additionally, the alteration was carried out without the required building and resource consents.
According to the NZ Herald, Tower voided the policy in March of 2014 because the Maqbools failed to disclose the property’s alterations. The insurer said that it would not have agreed to insure the property due to the increased risks of liability had it known the material change of circumstances.
The High Court has since ruled in favour of Tower, entitling the insurer to void the policy due to non-disclosure of material facts. However, the parties have been unable to reach an agreement regarding costs, and as such the case was brought before the High Court again.
Court documents revealed Tower had incurred costs amounting to $306,055.70, including disbursements, and was seeking a costs award of $250,000. High Court Judge Graham Lang said that based on a trial lasting three-and-a-half days and costs calculated on a Category 2B basis, Tower is entitled to $54,970. In addition, the plaintiffs were also required to pay Tower the disbursements, including expert witnesses’ expenses, all amounting to $17,453.79.
“The plaintiffs ought to have been aware that their claim faced considerable difficulties because they had altered the dwelling that was destroyed by fire without advising the defendant that they had carried out the alterations,” Lang said. “As I found in the judgment, this was a material factor that would have influenced the insurer in its decision to cover the property.”
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