This is a judgment which was given in peculiar circumstances. The insurer belatedly and out of time submitted its heads of argument and its counsel, due to an oversight, did not appear to argue the matter.
The parties in respect of a dispute under the insured’s Comprehensive Buildings Cover had pre-agreed a stated case.
The insured claimed for damage to its property when a wall above the ceiling of the insured property collapsed and fell through the ceiling. The parties agreed that the incident occurred due to defective and / or poor workmanship during alterations done before the insured had bought the property and of which the insured was unaware. The insured’s expert opinion recorded that it would have been impossible for the insured to have been aware that a wall had been removed which made the relevant firewall brickwork unstable and that the insured would have had no knowledge of the impending collapse.
The court articulated the insurer’s contention as being primarily that the insured could and should have foreseen the poor workmanship and for that reason the claim was rejected.
The relevant exclusion relied upon by the insurer read:
“WHAT IS NOT COVERED under Comprehensive Buildings cover…
…Where any of the following cause or contribute to damage …
• defects in the design or construction of the building, or where the structure would not have been approved by the relevant local authority at the time of construction
• construction, alteration or repairs, defective workmanship or materials…”
The court said that the exclusion had to be read in the context of the stated case which “raises pertinently the prior knowledge, or foreseeability, of the poor workmanship by the plaintiff”. The stated case is not quoted.
The court held that the exclusions were only applicable to defective workmanship where the insured was “aware” thereof prior to entering into the policy. The court found that that was the consequence of the stated case and there were no other facts, or documents which disputed the issue of a lack of knowledge.
Because it was clear that the insured, on the stated case, could not have known or foreseen that there was poor workmanship which he failed to disclose, the insurer was not entitled to reject the claim and the court found for the insured.
The judgment is the consequence of what appears to be a jumbled pleading and stated case and the absence of submissions and argument by the insurer. The exclusion relied upon by the insurer in rejecting the claim does not in its terms require knowledge by the insured in any form. On the terms, at least in part, of the stated case it is clear that the damage was contributed to by defective workmanship in the alterations.
Parties proceeding on the basis of a stated case must do so with caution.