Since at least Prenn v Simmonds,1 the notion of commercial “common sense” has had a recognised role in the construction of contracts, although its scope has not been without controversy. In general, the English courts have been willing to apply a common sense construction where the plain and ordinary meaning would result in manifest absurdity. In a decision at the end of last year, Firm PI 1 Ltd v Zurich Australian Insurance Ltd,2 the Supreme Court of New Zealand adopted a similar, although more restrictive, approach to the role of common sense in construction. The majority judgment3 is also noteworthy for reinstating a more prominent role for ordinary and natural meaning as a starting point for construction, detracting somewhat from the primacy given to context on the orthodox modern approach.

These construction issues arose in the context of an insurance dispute. On 22 February 2011, a major earthquake in Christchurch caused damage to a 68-unit apartment complex,