Livock v Suncorp Insurance & Finance

[1993] QCA 346

IN THE COURT OF APPEAL

[1993] QCA 346

SUPREME COURT OF QUEENSLAND

Appeal No. 49 of 1993

Before The President
Mr Justice Davies
Mr Justice Moynihan

[Suncorp v. Livock]

BETWEEN:

MICHAEL JOHN LIVOCK

(Plaintiff) Respondent

- and -

SUNCORP INSURANCE AND FINANCE

(Defendant) Appellant

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 20/09/93

The appellant was the insurer of a dwelling-house owned by the respondent which was destroyed by fire on the night of 20/21 February 1985. After the appellant refused to pay under the policy, it was sued by the respondent in the District Court at Townsville. The accident was tried before a jury, which answered the questions asked favourably to the respondent and, in consequence, judgment was entered against the appellant. This appeal concerns an issue raised by the appellant in its Defence which the trial judge ruled should not be considered by the jury because, in his Honour's opinion, there was no evidence upon which the jury could find for the appellant which bore the onus of proof on that issue.

The policy, which was a "Fire Insurance Policy (Dwelling and Residential Risk)" described the property insured as a dwelling, as did the respondent's pleading. Condition 2 of the policy provided:

"Alterations and Removals

2. This policy shall be avoided with respect to any item

thereof in regard to which there be any alteration after
the commencement of this insurance -

(a) ...

(b)	... whereby the nature of the occupation of ... the building insured ... be changed in such a way as to increase the risk of destruction or damage; or
(c)	whereby the building insured ... become unoccupied and so remain for a period of more than thirty days; or

(d) ...

unless such alteration be omitted by memorandum hereon or
attached hereto signed by or on behalf of the Office."

Paragraph 9 of the appellant's defence alleged that, in breach of condition 2(c), "... the said building was unoccupied at the time of the said fire and had been unoccupied for a period of more than thirty days prior to the Twenty-first day of February 1985".

On the view of the evidence most favourable to the appellant, the respondent had entered and remained for a time in the dwelling on a number of occasions during the material period but had not resided there.
Both parties argued this appeal on the basis that this Court should determine the meaning of "unoccupied" in condition 2(c) of the policy and, on that footing, determine whether, on the view of the evidence most favourable to the appellant, it had made out a case to go to the jury on the question whether condition 2(c) had been breached. The respondent accepted that the trial judge's decision to take the issue related to condition 2(c) of the policy from the jury could only be supported if, on that view, one or more of the occasions of "physical presence" in the dwelling during the relevant period, ie. visits to the premises by the respondent, was or were sufficient to constitute occupation, or some or all of the instances of physical presence (or visits) taken collectively amounted to occupation; that is, were sufficient to prevent the building becoming and remaining "unoccupied".

It is well established that the meaning of "occupy" and its derivatives varies "according to the occasion or the subject-matter": per Denman CJ. in R. v. St. Nicholas, Rochester 3 LJMC 45; cited in Daruk Local Aboriginal Land Council v. The Minister Administering the Crown Land Act (NSW Court of Appeal, unreported judgment delivered on 23 April

1993). In QBE Insurance Ltd. v. Tolomeo (1983) 3 NSWLR 274,

Priestley JA. said at p.280:

"Each of the words 'occupant', 'inhabitant' and 'resident' has a number of shades of meaning in different contexts and each may overlap either or both of the others in meaning, again dependent on context ... ."

See also per Glass JA. at p. 276. It has also been said that occupation is a question of fact and degree: see eg. Hampstead Way Ltd. v. Lewis-Weare (1985) 1 WLR 104, 171.

Not surprisingly, there are numerous judicial statements concerning what constitutes occupation for various purposes, including particular statutes, contracts, wills, etc. There is no single meaning of "occupy" or its derivatives which can simply be isolated from its context and routinely adopted for a different purpose. Further, acceptance that "occupation" has been established in particular circumstances does not automatically establish whether or not something less will suffice or when a property is "unoccupied". Conversely, statements concerning what is insufficient to constitute "occupation" in particular circumstances do not necessarily establish what more is sufficient for that purpose in a different situation.

Opinion has differed in different contexts concerning whether residence is necessary to establish occupation of a dwelling. Contrast R. v. West Riding Justices (1842) 2 QB 505; 114 ER 198, 201 and R. v. Lon Hay Hung (1946) 85 CCC 308, 313, with R. v. Ditcheat (Inhabitants) (1829) 9 B & C 176, 183, 184; 109 ER 66 and Martin Estates Co. Ltd. v. Watt and Hunter (1925) NI 79, 85. It has been more generally accepted that a person entitled to possession of a building does not occupy it during any period while it is vacant; that is, while the person entitled to possession is not in actual possession; see, for example, R. v. St. Pancras Assessment Committee (1877) 2 QBD 581, 588; Wolfe v. Clerk of Surrey County Council (1905) 1 KB 439, 450; Poowong Shire v. Gillen (1907) VR 37, 40; Lambert v. Wawanesa Mutual Fire Insurance Co. (1945) 1 DLR 694, 695; Foley v. Sonoma County Farmers' Mut. Fire Ins. Co. 18 Cal. 2d 232, 115 P. 2d 1, 2, 3. The weight of authority confirms the need for physical presence but is less certain concerning what more is required.

In Newcastle City Council v. Royal Newcastle Hospital (1956) 96 CLR 493 (affirmed (1959) AC 248), a question arose concerning whether a substantial area of land was used or occupied by a hospital. Both Williams J., with whom Webb J. agreed and who was in the majority, and Kitto J., with whom Fullagar agreed, who dissented, referred to the judgment of Lush J. in Reg. v. St. Pancras Assessment Committee. At the same time, both emphasised that what was said in that case arose in the special context of the meaning of rateable occupation under an Imperial statute: see per Williams J. at p.501 and per Kitto J. at p.508. Neither Williams J., nor the other member of the majority, Taylor J., attempted to define what was meant by occupation in the New South Wales statute which was there under consideration but Kitto J. said (at pp. 507-508) that, in contrast to use, which involves no more than physical acts by which land is made to serve some purpose, occupation involves three elements, "legal possession, conduct amounting to actual possession, and some degree of permanence ... ".

When the case went on appeal to the Privy Council, Lord Denning, speaking for the Board, said at p.255 (1959) AC:

"... it is unnecessary for their Lordships to consider whether the 291 acres were 'occupied' by the hospital: but in view of the argument submitted to them, their Lordships would say a few words on it. The hospital was undoubtedly in legal possession of the 291 acres; for the simple reason that, where no-one else is in possession, possession follows title. But legal possession is not the same as occupation. Occupation is matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering ... . There must be something actually done on the land, not necessarily on the whole, but on part in respect of the whole. No one would describe a bombed site or an empty unlocked house as 'occupied' by anyone; but every one would say that a farmer 'occupies' the whole of his farm even though he does not set foot on the woodlands within it from one year's end to another."

See also the somewhat similar approach adopted in Wheat v. E. Lacon and Co. (1966) AC 552, a case involving the tortious liability of an occupier to a person injured on his land, and Redevelopment Authority of Allegheny County v. Stepanik 25 Pa. Cmwlth. 180, 360 A 2d. 300, 302.

In Commissioner of Land Tax v. Christie (1973) 2 NSWLR 526, Bowen JA., with whom Jacobs P. agreed, relied at p. 533 upon the judgment of Williams J. and the judgment of the Privy Council in Newcastle City Council v. Royal Newcastle Hospital and said:

"'Occupation' is not synonymous with legal possession. It includes possession, but it also includes something more ... . It involves an element of control, of preventing or being in a position to prevent the intrusion of strangers. It is for this reason that physical presence on the land and fencing are evidence of occupation. But continuous physical presence or physical presence on every part of the land does not have to be shown in order to establish occupation."

In Marzouca v. Atlantic and British Commonwealth Insurance Co. Ltd. (1971) 1 Lloyd's Rep. 449, a hotel was insured under a fire insurance policy which contained a condition, 8(b), which was materially identical to condition 2(c) of the policy in this case. Further, condition 8(a) of the policy in that case materially corresponded to condition 2(b) of the present policy. The hotel was used as a nurses' home until September 30, 1963, when the nurses moved out. The appellant-owner intended to convert the building into residential flats and the building was empty until November 20 when the work of conversion began. Some of the work of conversion involved the use and storage in the hotel of inflammable material. A night watchman was employed from the time that the nurses left, but never entered the building in the period from September 30 to November 20. The building was destroyed by fire during the currency of the policy on May 19/20 1964. The Privy Council, on appeal from the Court of Appeal of Jamaica, held that condition 8(b) had been broken for, on the evidence, the hotel "became unoccupied and so remained for a period of more than 30 days" between September 30 and November 20 1963.

The judgment of the Board, Lord Hodson, Lord Donovan and Lord Diplock, was delivered by Lord Hodson who, at p.451 second column, said:

"If upon these facts the building became unoccupied and so remained for a period of more than thirty days, the appellant was in breach of condition 8(b). Before the work of conversion began there is no doubt but that the building was unoccupied in the sense that there was no-one in it for some fifty-one days. If this is sufficient to constitute a breach of condition 8(b), it will be unnecessary to consider what conclusion as to occupancy should be reached during the period after the work of reconstruction had begun and workmen were regularly engaged upon the premises."

At p.452, his Lordship summarised the owner's argument as being "... that so long as the period during which there is no one in the building, though it exceeds thirty days, can be regarded as temporary because of the assured's intention to put the building again to residential use and to provide adequate protection to it in the meantime, the building does not become `unoccupied' within the meaning of condition 8(b). "In support of that argument the owner relied on the decision of the Supreme Court of Jamaica in Swaby v. Prudential Assurance Company Ltd. (1964) 6 WIR 246. However, the owner's contention and the passages in Swaby upon which it was founded were rejected. In the Privy Council's view, absence from the property for the requisite period, irrespective of the owner's intention or the adequacy of the protection afforded to the property, made the property "unoccupied" during that period. Compare Associated Cinema Properties Ltd. v. Hampstead Borough Council (1944) KB 412, in which the English Court of Appeal said at p.416 "... that no case could be cited in which occupation has been held to be established without proof of some overt act amounting to evidence of user." See also Bexley Congregational Church Treasurer v. Bexley London Borough Council (1972) 2 QB 222.

It was unnecessary for the Privy Council in Marzouca to go further than the conclusion mentioned above, but there are further dicta which are potentially relevant for present purposes.

At p.453 second column, Lord Hodson said:
"Their Lordships are not called upon to decide what form
of occupancy other than residence would be sufficient to
protect the assured. Occupation does not necessarily
involve use as a dwelling house."

The last statement was specifically related to the condition (8(a)) of the policy there in question which was equivalent to condition 2(b) of the policy in this matter. It is unnecessary to pursue that point any further. As stated at the outset, this proceeding has been conducted on the footing pleaded by the respondent, namely, the occupation of the property as a dwelling house.

Lord Hodson continued:

"... on the admitted facts in this case ... the appellant was by Oct.31, 1963 already in breach of condition 8(b). ... the words `become unoccupied' must relate to the absence of physical presence in the building as distinct from physical presence outside the building. This does not mean that a mere temporary absence necessarily involves a cesser of occupation. In the nature of things one does not spend 24 hours under the same roof for 365 days in the year ... . ... the occupation to be effectual must however be actual not constructive. It must at least involve the regular daily presence of someone in the building. If there is no one present for a continuous period of more than thirty days, there is a breach of condition 8(b), and the insurance of the building and its contents comes to an end. In the instant case it had come to an end some three weeks before the contractor's men came into the building."

It was contended for the respondent that this passage is authority for the proposition that presence in a building constitutes occupation of the building for that length of time, which interrupts any period during which the building had been unoccupied because of an absence of physical presence. That seems to have been the approach which commended itself to the trial judge in this matter.

However, the passage last quoted from Marzouca does not go as far as the respondent asserts. It is more a statement of what is insufficient to constitute occupation than of what is sufficient to do so. A dwelling-house is unoccupied for any period during which there is not even a physical presence in the building unless the absence is only temporary. It does not necessarily follow that a building is occupied on any day on which there is a physical presence in the building. In Marzouca, the Privy Council said that occupation "... must at least involve the regular daily presence of some one in the building. If there is no one present for a continuous period of more than thirty days, there is a breach of condition ... ". (Underlining added). These statements leave unanswered the question whether a period involving only irregular physical presence in a building is a period of intermittent occupation or a period in which the building is unoccupied.

Nor is there much assistance to be gained from the context of the policy. The object of the policy is to indemnify the respondent, as insured, against destruction of or damage to his dwelling house in the specified circumstances and subject to the limitations which are expressed. The immediate object of condition 2(c) is to impose a limitation upon the liability of the appellant as the insurer. Its intent is to protect the appellant from increased risk of destruction or damage in circumstances which differ from those which existed when the policy was entered. Conditions 2(b) and 2(c) are complementary. Condition 2(b) is concerned with a change in the nature of the occupation of the property which adds to the risk, while condition 2(c) is directed to the increased risk of destruction or damage if the property remains vacant (to use a neutral word) for a specified period. However, it does not follow that an interpretation of "unoccupied" in condition 2(c) favourable to the appellant should be preferred. Firstly, the policy is the appellant's document and accordingly should not be construed in its favour. Secondly, the language of condition 2(c) plainly indicates that some risk associated with "vacancy" is accepted by the appellant, so that the purpose of the condition, to protect the insurer, provides little guide to the extent of the risk which it is prepared to accept.

"Occupation" does not seem to require either residence or permanent physical presence broken only by temporary absences. On the other hand, it is unlikely that even the most fleeting single visit involving entry into a dwelling would be sufficient for it to be considered to be occupied. A right to possession and physical presence coupled with a sufficient degree of control are needed. These are patently questions of fact and degree, to be determined by the tribunal of fact, in this case the jury, having regard to all the circumstances, including the nature of the property and the activities engaged in on the property by the person by whom it is said to be occupied.

No doubt, there may be cases in which the preponderance of evidence is such that it may properly be determined that there is no issue fit to go before the jury. However, in our opinion, this was not such a case. There was a wide range of evidence available for the jury's consideration, which, regarded as it must be from the view-point most favourable to the appellant, did not necessarily lead only to one conclusion. It is not an automatic consequence of the evidence that the respondent made a number of visits to the dwelling house during the material period that it was occupied for any or all of that time.

Accordingly, we would allow the appeal, with costs to be taxed, set aside the judgment in favour of the respondent and remit the matter to the District Court for the trial and determination of the issue raised by paragraph 9 in the appellant's defence. The costs of the first trial are reserved to the judge who hears the matter remitted.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 49 of 1993

Brisbane
[Suncorp v. Livock]

BETWEEN:

MICHAEL JOHN LIVOCK

(Plaintiff) Respondent

- and -

SUNCORP INSURANCE AND FINANCE

(Defendant) Appellant

The President
Mr Justice Davies

Mr Justice Moynihan

Judgment delivered 20/09/93
Judgment of the Court

APPEAL ALLOWED WITH COSTS TO BE TAXED. SET ASIDE THE JUDGMENT IN FAVOUR OF THE RESPONDENT. REMIT THE MATTER TO THE DISTRICT COURT FOR THE TRIAL AND DETERMINATION OF THE ISSUE RAISED BY PARAGRAPH 9 IN THE APPELLANT'S DEFENCE. THE COSTS OF THE FIRST TRIAL ARE RESERVED TO THE JUDGE WHO HEARS THE MATTER REMITTED.

CATCHWORDS:	INSURANCE - Construction of Policy - Exclusion clause - meaning of "unoccupied" in fire insurance policy (dwelling and residential risk)
WORDS AND PHRASES - "unoccupied" - fire insurance policy (dwelling and residential risk)
Counsel:	Mr. R. Myers for the appellant Mr. F. J. Toy for the respondent
Solicitors:	Messrs. Robert Leu and North for the appellant Messrs. Nehmer Davenport Dean McKee for the respondent

Hearing Date: 29/07/93