GROUP: Fire and General Insurance
Complaint No : 109157
Casebook Index: Expert/Specialist opinion, Market value, Ownership of insured
property, Quantum, Valuations - (Also refer Market Value).
C’s house was burgled. Among the items stolen were a number of Chinese scroll
paintings, which had been given to C by his father. C made a claim to P for the stolen
items. P met the claim for most of the items, but valued the paintings at $50 each. C
did not accept this valuation and obtained an alternative valuation from an
experienced art auctioneer who valued the paintings at $1500 each. The art auctioneer
then wrote to P giving 3 alternative values for the paintings: realisable value (if sold
immediately at auction); open market value (with proper marketing); and current
replacement cost (on the international market).
P stated that, because replacement of the paintings was not possible, they would be
covered for indemnity value, which consisted of the New Zealand market value. P
offered C the realisable value, as it believed there was no market in New Zealand for
the paintings. P also argued that C did not own the paintings, but held them on trust,
as they were his expected inheritance.
The measure of the value of the paintings is the market value in New Zealand.
However, in this instance, it was difficult to determine what this value was as very
few paintings of the same quality come onto the market here. This did not mean there
was no market for the paintings in New Zealand, but it did mean it was difficult to
determine their value.
After discussing the value of the paintings with a number of experienced people, the
Case Manager concluded that the paintings were of value and a New Zealand market
value could be determined. The Case Manager relied on the values given by the art
auctioneer to P to determine what the market value for the paintings were.
The Case Manager adopted the approach outlined by McMullin J in Young & Anor v
Commercial Union General Insurance Co.Ltd. (1988) 5 ANZ Insurance Cases ¶60-
875 at 75,516, where he stated that when considering the value of unusual items
“something other than a market approach may have to be adopted”.
The Case Manager believed that the market value must also include some
consideration of marketing costs. Therefore, the Case Manager concluded the open
market valuation given by the art auctioneer was the correct value of the paintings.
It is difficult to find parallels in situations where cultural practices are not analogous.
The Case Manager believed that, although the paintings had been given with
conditions placed on them, these conditions could not have been legally enforceable
and, in the absence of a trust document, C owned the paintings.
Result Complaint upheld