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.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
This article examines common coverage issues and considerations for granting indemnity for criminal fines and penalties.
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