Sparks fly in dispute over class action compensation

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The Supreme Court of New South Wales delivered its judgment in Ritchie v Advanced Plumbing and Drains Pty Ltda class action lawsuit brought by Maddens Lawyers on behalf of the victims of the Carwoola bushfire, which occurred on February 17, 2017.

The bushfire happened on a day of a total fire ban, when an electric cutter used by Advanced Plumbing to cut steel rebar for use in slab footings caused sparks which ignited fire. dry grass in an adjacent paddock.

Advanced Plumbing went into liquidation and the lawsuit continued against its liability insurer, CGU Insurance, which refused compensation on several grounds and was joined under Article 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW).

Judge Davies rejected CGU’s argument that building footings for a concrete slab did not fall within the definition of the business of Advanced Plumbing, which was described as ‘Mainly plumbing and all other related activities. The relevant activities, which were incidental to the plumbing business, were held to fall within this broad business description.

The Court also rejected CGU’s argument that Advanced Plumbing violated the condition of the reasonable care policy by recklessly performing hot work on a day of a total fire ban. Under a liability policy, it was held that CGU was required to establish that Advanced Plumbing workers acted recklessly and subjectively courted the risk of a known hazard. Although the evidence clearly establishes negligence on the part of the workers, there is no evidence that they had a real and subjective awareness of a risk of a bushfire because of the sparks, which they did not take into account. .

CGU has also relied on a welding approval which excludes cover in the event that the relevant Australian standard for hot work is not strictly adhered to. The plaintiff argued that the endorsement was not incurred because the power cutter did not fall within its definition of “power cutting” or “sparking equipment”. However, the consensus between the two welding experts was that the cutter emitted sparks when used on metal and the Court therefore concluded that the welding endorsement was engaged.

Noting the expert consensus that Advanced Plumbing did not comply with AS 1674, Part 1 – 1997 “Safety in Welding and Allied Processes – Fire Precautions”, Judge Davies had no hesitation in concluding that CGU was entitled to rely on the exclusion to deny coverage.

The result, subject to any appeal, is that the Carwoola bushfire class action lawsuit has failed.

Interestingly, the judgment contained no analysis of whether the welding approval requiring strict compliance with AS1674 should be read as a condition of “reasonable care”, so CGU would have to establish recklessness. In a somewhat analogous case decided last year by the Supreme Court of Victoria[1] it was held that a policy condition requiring compliance with the Australian Standard for scaffolding work had to be read in such a way that the insurer had to prove recklessness.

It remains to be seen whether the class action will appeal the judgment.

Ritchie v Advanced Plumbing and Drains Pty Ltd [2022] NSWSC 330

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