Insurance – house contents insurance – liability of owner builder – coverage – exclusion for liability arising out of breach of duty as owner or occupier – court found claim was for breach of duty arising out building the house and that duty was independent of whether builder the owner or occupier – insurer liable to indemnify the insured
This decision highlights the need to carefully construe exclusion clauses and assess how they apply on the given facts.
Between 1993 and 1996, the first defendant constructed a home as an owner builder and subcontracted the construction of the home's balcony to a carpenter. The balcony was not constructed in accordance with the plans approved by the local council and the defendant did not refer the change to the designer or certifying engineer for consideration. The first defendant transferred the property to new owners in 1996, and the property was subsequently transferred on two further occasions. In 2009, the owners held a party attended by the plaintiffs who were standing on the balcony when it collapsed and were injured. On the basis of agreed facts and admissions, the court entered judgment for the plaintiffs. The only contested issue was the liability of the insurer, who was joined to the proceedings, to indemnify the first defendant.
Wesfarmers Insurance did not insure the house at the time of the accident. However, it had issued a home and contents policy to the first defendant which included cover for him and his family against legal liability to pay compensation for personal injury and property damage directly caused by an occurrence during the period of insurance. There was no dispute that the plaintiffs' claim fell within the scope of this cover. However, Wesfarmer relied on an exclusion clause which provided that the policy did not insure the first defendant against any liability for personal injury directly or indirectly caused by or arising out of a "breach of your duty as the owner or occupier of a building or structure we did not insure at the time of the occurrence that caused the personal injury." Wesfarmers submitted that the duty arose out of the defendant's ownership of the building: the defendant was not a registered builder, was not qualified to be a registered builder, and was only issued a building licence on the basis that it related to a building he proposed to construct for himself.
Allanson J held that while at various times the defendant may have owed duties of care to others arising out of his ownership of the property, the issue in this case was the nature of his duty to the plaintiffs and ownership was not a necessary part of that duty. Rather, the duty arose out of the activity that the defendant undertook in building the house and was independent of whether the defendant was, at the time, the owner or occupier of the house.