QBE Insurance v. MGM Plumbing
DMC Category Rating: Confirmed
Case note contributed by Matthew Everingham, lawyer at Ebsworth & Ebsworth Lawyers, Sydney. Ebsworth & Ebsworth Lawyers are International Contributors for Australia
The membranes were defective, causing water to escape to other areas of the houses, which Glenwood was called upon to rectify at a cost of more than A$77,000. Glenwood brought proceedings against MGM in the Supreme Court of Queensland seeking recovery of the repair costs on the basis that MGM had negligently installed the membranes. MGM claimed indemnity from its insurer under a broad form commercial package policy. The Insurer, QBE, applied to the court for a declaration as to whether MGM was obliged to bear the policy excess of $300 with respect to each of the installations in question or whether it was only obligated to bear only one excess in respect of all the installations alleged to be defective.
The policy defined "Occurrence" as "an event including continuous or repeated exposure to substantially the same general conditions, which results in... Property Damage and neither expected nor intended to happen by You". The policy also provided that "All... Property Damage arising out of continuous or repeated exposure to substantially the same conditions shall be construed as arising out of one Occurrence" and that the insured would be "liable to pay [the excess amount] for every Occurrence..." for which the insured lodged a claim under the policy.
Stephen J observed that there is a series of occurrences, rather than a single occurrence in respect of which, or arising out of which, compensation may become payable, only where the links in a chain of causes can be traced back far enough to identify an event common to each claimant. In Distillers the common event was deemed too remote to fall within the meaning of "occurrence". Consequently, the insurer had to rely on the section of the clause which extended its operation to several occurrences which formed a series having one source.
Significantly, Stephen J held that the meaning of "series" in the provision is "that of a number of events of a sufficiently similar kind following one another in temporal succession". It was therefore found that the occurrence or occurrences to which the provision referred were the precedents to the injury, each of which had the same original cause and formed with the other events a ‘series of occurrences’.In the Distillers case, it was found that each of the events (the mishaps) could be seen as part of a series with a common source. As such, they were treated as one claim for the purposes of the particular policy as they were events of a sufficiently similar kind following one another in temporal succession, all having one source.
Ambrose J also referred to Windsurf Pty Limited v HIH Casualty & General Insurance Limited (1995) 10 ANZ Ins Cas 61-447). His Honour regarded that decision as authority for the proposition that an event was "something that happened at a particular time, at a particular place, in a particular way... an occurrence or an incident". It was held that the use of the word "event" would "ordinarily invite one to focus on the proximate or immediate incident leading to the injury". The policy considered in Windsurf contained a definition of "occurrence" which was in similar terms to that contained in MGM’s broad form liability policy.
His Honour said that the "continuous or repeated exposure to substantially the same conditions" did not apply. He said that the clause was directed to cases where a building operation caused damage to several properties by such matters as vibrations or noxious substances.
Ambrose J held that it was the unworkmanlike application of the membrane on each of the occasions that it was installed which was the "event" or "occurrence" against liability for which MGM was entitled to be indemnified by the insurer, such that MGM would be obliged to pay an excess in relation to each occasion.
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