BODY CORPORATE NO.205963 AND ANOR V LEUSCHKE GROUP ARCHITECTS LIMITED (IN LIQUIDATION) AND ANOR HC AK CIV 2006-404-5572

BODY CORPORATE NO.205963 AND ANOR V LEUSCHKE GROUP ARCHITECTS LIMITED (IN LIQUIDATION) AND ANOR HC AK CIV 2006-404-5572

Clause 2.04 is ambiguous as to whether 'system' and the bracketed phrase apply to 'exterior cladding'. Applying ordinary meaning and industry usage, 'exterior cladding' is not to be read as 'exterior cladding system' and the bracketed phrase 'and any associated waterproofing treatment and flashings' modifies...

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Citation
openlaw-91d4a924_8cff_4819_887c_f48410b9e9c1.pdf
Parties
First Plaintiff: Body Corporate No.205963; Second Plaintiffs: Juliet Becker & Ors; First Defendant: Leuschke Group Architects Limited (in liquidation); Second Defendant: Lumley General Insurance (NZ) Limited; Second Defendant: Ace Insurance Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
9 December 2008
Procedural Posture
Professional Indemnity / Insurance Coverage (declaratory Question) / Separate Trial Under R 418 High Court Rules to Determine Interpretation of Policy Exclusion Clause 2.04
Outcome
Questions answered in favour of the plaintiffs/insured: exclusion clause 2.04 does not apply to the four categories of described defects; insurers' exclusion fails in respect of those matters
Legal Topics
Policy Exclusion Interpretation, Moisture/water Ingress Exclusion, Contra Proferentem Rule, Joinder of Insurers, Professional Indemnity Insurance
Insurance Law Contract Law Construction Law Civil Procedure Policy Exclusion Interpretation Moisture/water Ingress Exclusion Contra Proferentem Rule Joinder of Insurers +1 more

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Parties

Body Corporate No.205963

First Plaintiff

Juliet Becker & Ors

Second Plaintiffs

Leuschke Group Architects Limited (in liquidation)

First Defendant

Lumley General Insurance (NZ) Limited

Second Defendant

Ace Insurance Limited

Second Defendant

Procedural Posture

Professional Indemnity / Insurance Coverage (declaratory Question) / Separate Trial Under R 418 High Court Rules to Determine Interpretation of Policy Exclusion Clause 2.04

Legal Issues

  1. 1 What is the natural and ordinary meaning of exclusion clause 2.04?
  2. 2 Whether water ingress arose through an 'exterior cladding' or 'roofing system' within the exclusion wording
  3. 3 Whether the bracketed phrase 'and any associated waterproofing treatment and flashings' applies to exterior cladding as well as roofing

Ratio Decidendi

Clause 2.04 is ambiguous as to whether 'system' and the bracketed phrase apply to 'exterior cladding'. Applying ordinary meaning and industry usage, 'exterior cladding' is not to be read as 'exterior cladding system' and the bracketed phrase 'and any associated waterproofing treatment and flashings' modifies 'roofing system' only. Because of the genuine ambiguity the clause is construed for the insured. Accordingly clause 2.04 does not exclude liability for the four specified categories of water ingress and the insurer must indemnify Leuschke in respect of those matters.

Court Disposition

Questions answered in favour of the plaintiffs/insured: exclusion clause 2.04 does not apply to the four categories of described defects; insurers' exclusion fails in respect of those matters

Orders

  • The Court answers each of the posed r 418 questions 'no' — clause 2.04 does not exclude liability for: (a) metal balustrades fixed through deck surfaces causing puncturing of butyl membrane; (b) metal cappings fixed through top vertical surfaces of balconies with timber framed balustrades; (c) metal cappings on tops...
  • Costs: plaintiffs entitled to costs; parties to agree; if not agreed file memoranda on costs