Tower Insurance has failed in a quick-fire attempt to beat a claim over damage from a blaze at an Auckland rental property where methamphetamine was allegedly being cooked.

Sunita and Nitya Nand's Flatbush rental was badly damaged by fire in 2012. Their son was living at the house at the time as a tenant, they say.

Tower, with which the Nands had an insurance policy, claims the son let other people onto the property and with his knowledge they allegedly started cooking

While Tower did not suggest Sunita and Nitya Nand were involved in methamphetamine manufacture, they declined the couple's insurance claim.


The pair then filed legal action against the insurer, although Nitya Nand has since passed away.

NZX-listed Tower believed the matter was so clear-cut, it applied for summary judgment - a legal move that contends there is no case to answer.

Part of Tower's argument was over the meaning of "you" in the Nands' insurance policy and whether their son could be captured by exclusion clauses in it.

"A large part of its defence relies on bringing their son within 'you' under the policy. Under its case, if their [the Nands'] son is a 'you', any actions by the son which amounted to courting the risk or triggered an exclusion or breached a continuing warranty disqualify Mr and Mrs Nand from claiming under the policy," Associate Judge Roger Bell said in a recent decision on the dispute.

However, the judge said that Tower had not shown the Nands' action could not succeed.

"Tower's defence relies on being able to decline their claim for fire damage to the Flatbush house because of misconduct by their son alleged to have caused the fire. It does not suggest that the Nands were in any way implicated in causing the fire. The terms of the policy do not allow Tower to rely on the son's actions to bar their claim. Moreover, the admissible evidence does not allow findings on a summary judgment basis as to the son's role in causing the fire. Accordingly, summary judgement must be declined,"
Associate Judge Bell said.

Tower was ordered to pay legal costs.