AMI INSURANCE LTD V LEGG

[2017] NZCA 321, New Zealand Court of Appeal, Justice Miller, Justice Cooper and Justice Clifford, 16 July 2017

Insurance (liability) - Causation - Exclusion for business use of land - Meaning of "arising out of or in connection with" - Concurrent causes

The assured owned a piece of land on which they carried out farming activities and also a landscaping and garden maintenance business under the name Evolving Landscapes Ltd (ELL), which was run from the office in their home. The assured kept a heap on their property to burn green waste and other rubbish. They set fire to the heap on 16 December 2012, and it was little more than ash by the evening. More rubbish was put onto the heap. On 10 January 2013 there was a serious fire, originating from the heap, spreading to neighbouring properties and causing significant damage to them. The judge found that the assured had not been negligent, and that the fire had reignited from hot embers not fully extinguished originally. The assured was strictly liable to the New Zealand Fire Service Commission, and the question was whether the assured could recover from their liability insurers. The policy covered legal liability "arising from or in connection with your farming operation, for accidental damage to other people's property occurring anywhere in New Zealand", but it excluded "legal liability arising out of or in connection with any retail shop".