Partial win for farmer over costly forest fire

A Glenhope lifestyle farmer being sued for more than $1 million following a forest fire has had a partial win in an Appeal Court case over public liability insurance cover.

However, the judgment that Tower Insurance must pay up to $200,000 won't be enough to cover the claims.

Nelson Forest Ltd is suing Stephen Garnett and Three Tuis Ltd (TTL) in a High Court action for $484,853 for losses caused by the fire.

The New Zealand Fire Service Commission and the Waimea Rural Fire Committee are also suing for $602,861 for the cost of extinguishing the fire.

Both claims are based on liability, including under the Forest and Rural Fires Act. Mr Garnett and TTL deny liability for each.

Nelson Forest alleges that TTL or Mr Garnett caused the fire in November 2009 by negligently depositing ash and embers on TTL's property without ensuring they were first extinguished.

Two tourists had lit a fire in a fireplace in a cabin on the property. Mr Garnett later cleared the fire grate, disposing of the debris at the edge of a paddock. Later that day, a fire damaged neighbouring forests owned by Nelson Forest. The Dry Weather Rd home of Kevin and Caroline Wade was also destroyed in the blaze.

Mr Garnett has appealed a High Court judgment on the issue of his public liability insurance in favour of Tower Insurance in the Nelson Forest action.

He and his partner Tracy Lynch insured their 20-hectare lifestyle block with Tower in 2003. They advised Tower in 2005 that the property was also being run as a tourism venture, but Tower said it was unable to offer cover for that type of commercial use.

After obtaining a quote from another insurer, the couple decided not to insure the cabins and continued their existing policy with Tower.

At the time of the fire, the insured business was defined as a lifestyle farming operation from which they earned less than $10,000, and the policy noted that it was owner-occupied, with no reference to the separate tourist cabins or business.

Mr Garnett's lawyer, Steven Zindel, argued that the accident was connected with the farming business, but the appeal court judges rejected that.

Mr Zindel argued successfully that the extension of cover provisions in the insurance policy gave public liability cover for the claims under the Forest and Rural Fires Act. The three judges, however, said the indemnity was limited to $200,000, on their reading of the policy, rather than the $2 million maximum which had been sought.

This sum will be insufficient to meet all the claims arising from the fire.

The issue of whether Mr Garnett caused the fire still has to go to a civil court trial, although it is expected to first go to a settlement conference.

Mr Garnett declined to comment.

- © Fairfax NZ News