Decided on the 7th of June in the WA Court of Appeal was the case of WFI INSURANCE LTD -v- MANITOWOQ PLATINUM PTY LTD. In summary of the matter, plumbing works were performed negligently and caused water damage in part of the restaurant owned by the respondent (Manitowoq).
They were insured by WFI Insurance, with the policy covering liabilities incurred in the performance of the business.
The plumber responsible for the negligent works disappeared.
WFI Insurance denied liability because of the plumber?s failure to comply with legislation and Australian Standards.
At first, the court said that only reckless conduct could remove insurers liability, and the insurer had a narrow scope to deny liability.
However, in this appeal, it was held that a business (and their tradespeople) failing to comply with Australian standards is a breach of the policy, and that the insurer was entitled to refuse indemnity by reason of that breach.
An important lesson for business when engaging services, even if they are well insured.