WFI Insurance Ltd v Verini - [2016] WASCA 143

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: WFI INSURANCE LTD -v- VERINI [2016] WASCA 143

CORAM: MARTIN CJ
BUSS P
MURPHY JA

HEARD: 4 MAY 2016

DELIVERED : 12 AUGUST 2016

FILE NO/S: CACV 117 of 2015

BETWEEN: WFI INSURANCE LTD
Appellant
AND
CLAUDIO VERINI
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :ALLANSON J
Citation  :AUSTIN -v- VERINI [2015] WASC 258
File No  :CIV 2721 of 2011

Catchwords:

Insurance contract - Claim by owner/builder for indemnity against liability for personal injury - Exclusion clause - Cover excluded liability for personal injury directly or indirectly caused by or arising out of breach of duty as 'owner or occupier' - Whether breach of duty as 'owner' - Personal injury resulting from collapse of defective balcony in residential home - Injury occurring many years after the balcony constructed - Original owner/builder responsible for carrying out building works - Owner/builder subsequently sold property and title to property transferred on two further occasions prior to balcony collapse - Whether exclusion clause applied to claim for indemnity by original owner/builder - 'Ownership' not a relevant ingredient of the liability in question - Any duty that existed arose from original owner's conduct in construction of balcony

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr G J Pynt
Respondent: Mr G R Hancy

Solicitors:

Appellant: Greenland Legal Pty Ltd
Respondent: Camm & Associates

Case(s) referred to in judgment(s):

Anns v Merton London Borough Council [1978] AC 728
Austin v Verini [2015] WASC 258
Bottomley v Bannister [1932] 1 KB 458
Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 254 CLR 185
Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609
Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649
Cavalier v Pope [1906] AC 428
Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500
Donoghue v Stevenson [1932] AC 562
Dutton v Bognor Regis Urban District Council [1972] 1 QB 373
Franich v Swannell (1993) 10 WAR 459
Guiney v Australand Holdings Ltd [2008] NSWCA 44
Harm v Winter [2004] QSC 10
Indermaur v Dames (1865 ‑ 66) LR 1 CP 274
Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166
Kadissi v Jankovic [1987] VR 255
Lipman v Clendinnen [1932] HCA 24; (1932) 46 CLR 550
Loose Fit Pty Limited v Marshbaum [2011] NSWCA 372
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
Mitchell v Valherie [2005] SASC 350; (2005) 93 SASR 76
Murphy v Brentwood District Council [1991] 1 AC 398
Nissho Iwai Australia Ltd v Malaysian International Shipping Corp Berhad [1989] HCA 32; (1989) 167 CLR 219
Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313
Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541
Rimmer v Liverpool City Council [1985] QB 1
Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; (2012) 43 WAR 91
Swannell v Franich [1993] ANZ ConvR 178
Tweed Shire Council v Hancomatic Music Pty Ltd [2007] NSWCA 350
Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74
Wilson v Finch Hatton (1877) 2 Ex D 336
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515

MARTIN CJ: This appeal should be dismissed for the reasons given by Murphy JA, with which I agree. However, I wish to add a few short observations of my own.
As Murphy JA notes, the case below, and the appeal, were conducted on the basis that the critical question to be resolved was whether the source of the legal duty breached by Mr Verini was his status as owner or occupier of the Ballajura property, in which case the exclusion clause in the policy would apply to exclude WFI's obligation to indemnify Mr Verini against his liability to those who were injured when the balcony on the Ballajura property collapsed. In the course of oral argument, counsel for the appellant was asked to identify the particular facts or circumstances which were said to support the proposition that Mr Verini's duty of care arose from his status as owner or occupier of the property. Counsel identified the following matters:[1]
(a)Mr Verini had no building or engineering qualifications or experience and did not engage a builder or engineer to check the balcony for structural integrity;
(b)the relevant local government issued the licence to build the house to Mr Verini;
(c)the terms of the building licence obliged Mr Verini to cause the house to be constructed in accordance with the provisions of the building code;
(d)in the building licence, the relevant local government disclaimed any liability to ensure that the construction complied with all relevant regulations, provisions and requirements; and
(e)Mr Verini failed to engage a registered builder to undertake the construction.
[1] ts 1 ‑ 5, 7.
It is clear that if and to the extent that each or any of these facts or circumstances gave rise to the duty of care imposed upon Mr Verini, each and every one of those facts or circumstances could only have that consequence because Mr Verini undertook the responsibility of constructing the house himself, and not because of his status as owner or occupier of the property. That status provided him with the capacity to undertake responsibility for the construction, but is not the source of the duty of care which he breached.

Also in the course of oral argument, counsel for the appellant was asked whether Mr Verini would have been liable to the plaintiffs who were injured when the balcony collapsed if he had engaged an apparently competent registered builder to undertake the construction. Counsel responded in terms to the effect that, in such a circumstance, the builder who had undertaken liability for the construction would have been liable to the plaintiffs, and not Mr Verini.[2] It is implicit in that response that Mr Verini's duty of care arose from the fact that he had undertaken responsibility for the construction of the house, and not from his status as owner or occupier of the property on which the house was constructed. It follows that the judge at first instance was correct to conclude that the exclusion clause had no application and WFI was liable to indemnify Mr Verini.
[2] ts 8.
BUSS P: I would dismiss the appeal. I agree with Murphy JA's reasons and Martin CJ's additional observations.
MURPHY JA:

Introduction

This is an appeal against a decision of Allanson J in Austin v Verini[3] (primary reasons) concerning the proper construction and application of an insurance contract. The appellant insurer (WFI) contends, in effect, that his Honour erred in concluding that an exclusion clause did not apply to exclude liability under a policy of insurance. For the reasons which follow, I would dismiss the appeal.
[3] Austin v Verini [2015] WASC 258.

Background

On 15 April 1993, the first respondent (Mr Verini) and his wife purchased a property in Ballajura (the Ballajura property). On 17 June 1993, Mr Verini lodged an application for a building license to construct a residential building on the property, and plans for the proposed building, which were subsequently approved by the relevant council on 30 June 1993. The plans included the construction of a timber balcony.
The proposed building, including the balcony, was constructed between 30 June 1993 and 30 June 1994. A carpenter who was engaged by Mr Verini to construct the balcony put skew nails in to secure the eastern end of a support beam for the balcony to a perimeter beam.

Mr Verini assisted the carpenter, supplied the materials that were used, and relied on the carpenter's expertise. Mr Verini did not engage a structural engineer or any other person to supervise the building of the house.

The balcony, as constructed, did not conform to the diagram of the balcony in the plans approved by the council.
On 25 March 1996, Mr Verini transferred the Ballajura property to another owner. Title was subsequently transferred on two further occasions and the present owners acquired title in November 2002.
On 31 October 2009, the balcony constructed on the Ballajura property collapsed when a number of people were standing on it. A cause of the collapse was that the main support beam had no vertical support and at its eastern end was secured to the perimeter beam only by skew nails. The fixing of the end of the main support beam to the perimeter beam was therefore inadequate to support the load it was carrying. Each of the second to fifteenth respondents (the claimants) suffered personal injury as a result of the collapse of the balcony.
The claimants sued Mr Verini and Mr Verini claimed indemnity under his insurance policy with WFI.

Mr Verini's insurance policy

The insurance and the insuring clause

On 5 December 2007, Mr Verini completed a proposal for WFI's Private Plan Insurance Cover (WFI's Private Plan).[4] WFI's Private Plan consisted of eight different policies from which a proposed insured could choose.[5] Pursuant to the proposal and accompanying questionnaire, Mr Verini applied for 'Home Insurance' for his property in Dianella (the Dianella property).[6]
[4] GB 59 - 60.
[5] GB 70.
[6] GB 63.
Mr Verini obtained cover under WFI's 'Classic Home Policy'. Cover under the Classic Home Policy automatically attached cover under WFI's 'Personal Legal Liability Policy' (Liability Policy).[7]
[7] WB 14, GB 60, 68.
The Liability Policy provides, relevantly, as follows:[8]
This policy insures You and the members of Your Family against legal liability to pay compensation for Personal Injury … directly caused by an Occurrence that happens during the Period of Insurance.
This policy insures You and Your Family:
-as the owner of Your Home if You have insured Your Home with Us
-in any capacity other than as the owner of Your Home, if You have insured Contents, but not Your Home with Us
-in any capacity, if You have insured both Your Home and Contents with Us. (emphasis added)
[8] GB 96.
Mr Verini's Classic Home Policy covered both his home and contents at the Dianella property.[9]
[9] WB 14.
The 'Period of Insurance' means the 'Period of Insurance' shown on the certificate of insurance,[10] being, relevantly, 26 July 2009 - 26 July 2010.[11]
[10] GB 79.
[11] Original reasons [7]; see also WB 14, GB 124.
An Occurrence is defined to mean:[12]
an event including continuous or repeated exposure to substantially the same general conditions which:
-You did not intend or expect; and
-a reasonable person in Your position and with Your Knowledge and experience would not have expected.
[12] GB 79.
'Personal Injury' means bodily injury (including death or illness), disability, shock, mental anguish, mental injury or loss of consortium.[13]
[13] GB 79.
The collapse of the balcony occurred on 31 October 2009. It was common ground that WFI had not insured the Ballajura property in 2009 when the balcony collapsed.[14]
[14] Primary reasons [10].
WFI accepted at trial that the collapse of the balcony at the Ballajura property fell within the scope of the Liability Policy insuring clause.[15]

The exclusion clause

[15] Primary reasons [10], [37].

The Liability Policy contained the following exclusion clause:[16]
[16] GB 96.
This policy does not insure You or Your Family against any liability:
…
6. for Personal Injury … directly or indirectly caused by or arising out of:
…
•a breach of Your duty as the owner or occupier of a building or structure We did not insure at the time of the Occurrence that caused the Personal Injury. (emphasis added)

The primary proceedings and the primary judge's findings

The claimants commenced proceedings against Mr Verini for damages for personal injury. Mr Verini issued a third party notice against WFI, claiming indemnity under the Liability Policy. WFI asserted that the exclusion clause applied, and that it was, accordingly, not liable to indemnify Mr Verini.
The claimants pleaded, amongst other things, that:[17]
(a)as the builder of the home on the Ballajura property, Mr Verini 'was under a duty to exercise reasonable care in the construction of the balcony and in the supervision of the construction to guard against any reasonably foreseeable risk that it may collapse or otherwise cause injury to persons such as the [claimants] who may have been on the balcony after its construction'; and
(b)'[i]n the exercise of reasonable care a builder in 1993 would have ensured that the join of the end of the main beam to the perimeter beam was vertically supported and secured by bolted brackets or spikes and not merely attached by skew nails'.
[17] Plaintiffs' fourth amended statement of claim, par 9(1) and (2); BB 24.
Mr Verini admitted that 'as the builder of the house [on the Ballajura property] he owed to future visitors to the house a duty to exercise reasonable care to avoid conduct that he could reasonably foresee might cause injury to a visitor'.[18] Mr Verini also admitted that, 'in [t]he exercise of reasonable care a builder in 1993 would have ensured that the support beam was secured by a means of vertical support that was additional to support provided by skew nails, such as additional support by a secured beam, corbel or bracket', but said that 'as an unqualified builder at the time he did not then know this was required'.[19]
[18] Respondent's re‑amended defence to plaintiffs' fourth amended statement of claim, par 7; BB 31.
[19] Respondent's re‑amended defence to plaintiffs' fourth amended statement of claim, par 11.6; BB 32 ‑ 33.
As noted earlier, Mr Verini issued a third party notice against WFI. In its defence to Mr Verini's third party claim, WFI pleaded the plans submitted and approved by the council. It alleged that at all material times Mr Verini knew that the balcony was constructed without engineering design or construction advice, and that the balcony had not been constructed in accordance with the approved plans.[20]
[20] Appellant's substituted defence, par 10; BB 37.
WFI pleaded that Mr Verini 'owed a duty to anyone who might go onto the Balcony, to take reasonable care to ensure the Balcony was constructed so that it would not suddenly and unexpectedly collapse'. This duty was described in WFI's pleading as the 'Construction duty of care'.[21]
[21] Appellant's substituted defence, par 11; BB 37.
WFI alleged that Mr Verini breached the 'Construction duty of care' by arranging for the construction of the balcony without obtaining engineering design or construction advice, and that this breach caused the personal injuries suffered by the claimants.[22]
[22] Appellant's substituted defence, pars 12 - 13; BB 38.
WFI also pleaded that Mr Verini owed 'a duty to anyone who might go onto the Balcony, to take reasonable care to inform, advise or warn … a subsequent purchaser or occupier of the Home'. This was described in the pleading as the 'Warning duty of care'.[23]
[23] Appellant's substituted defence, par 14; BB 38.
The 'Warning duty of care' was allegedly breached by Mr Verini not advising or informing subsequent owners that the balcony was built whilst he was the proprietor, that the balcony was not constructed in accordance with the plans, and that he had not obtained engineering or construction advice as to the construction of the balcony.[24]
[24] Appellant's substituted defence, par 15; BB 39.
WFI did not pursue the 'Warning duty of care' at trial.[25]
[25] Primary reasons [32].
The primary judge found that where a policy refers to liability for an insured's breach as an 'owner or occupier', those words are not merely descriptive of the identity of the insured at the time the liability was incurred, but rather import occupation or ownership as an essential ingredient of the liability in question.[26]
[26] Primary reasons [40], [43]. Reference was made to Tannous v Mercantile Mutual Insurance Co Ltd (1978) 2 NSWLR 331; Sturge v Hackett [1962] 1 WLR 1257; Hartman v GIO Australia Ltd (1996) 9 ANZ Ins Cas 61-310; Harm v Winter [2004] QSC 10.
The primary judge held[27] that the claim against Mr Verini was not a claim in respect of his breach of his duty 'as … owner' within the meaning of the exclusion clause. Rather, if Mr Verini owed a duty of care to the claimants, it was a duty that arose out of the activity that he undertook in building the house on the Ballajura property, including the balcony. The duty was independent of his ownership of the property. His Honour concluded that WFI had not established that the exclusion clause applied.
[27] Primary reasons [49] ‑ [52].

Grounds of appeal

In the first ground of appeal, WFI alleged that the judge erred in law, or alternatively in mixed law and fact, in respect of the content and breach of the duty of care owed by Mr Verini to the claimants. WFI alleged, in effect, that:
1.The primary judge should have concluded that the duty Mr Verini owed to the claimants was a duty to:
(a)take reasonable care to ensure that the balcony as constructed did not pose an unreasonable risk of injury to anyone who stood on, under or in the vicinity of the balcony during or after Mr Verini's ownership of the house; or
(b)inform or warn a subsequent purchaser or occupier of the house of any aspect of the balcony as constructed that he knew or ought to have known might pose an unreasonable risk of injury to anyone who stood on, under or in the vicinity of the balcony during or after Mr Verini's ownership of the house, if such subsequent purchaser or occupier might not otherwise be aware of such risk.
2.The primary judge should have concluded that:
(a)Mr Verini breached the duty of care described in subparagraph 1(a) or (b) herein; and
(b)such breach caused the injuries suffered by each of the claimants.
The duty alleged in ground 1(a) was said to arise by reason of Mr Verini's ownership of the Ballajura property, and the following authorities were cited in support: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288;[28] Caltex Refineries (Qld) Pty Ltd v Stavar;[29] Loose Fit Pty Limited v Marshbaum[30] and Tweed Shire Council v Hancomatic Music Pty Ltd.[31]
[28] Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 254 CLR 185 [22].
[29] Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649 [102] ‑ [103].
[30] Loose Fit Pty Limited v Marshbaum [2011] NSWCA 372 [94], [97] ‑ [101].
[31] Tweed Shire Council v Hancomatic Music Pty Ltd [2007] NSWCA 350 [213].
There was a second ground of appeal to the effect that the trial judge erred in concluding that Mr Verini's legal liability to each of the claimants for personal injury was not directly or indirectly caused by or did not arise out of a breach of Mr Verini's duty as the owner of the house.
Counsel for WFI accepted that ground 2 would not arise for determination unless it succeeded on ground 1.[32]
[32] Appeal ts 21.
In relation to ground 1, counsel for WFI withdrew any reliance on ground 1(b) which had, in effect, asserted error by the judge in not finding the 'Warning duty of care'. As noted earlier, that claim had not been pressed by WFI at the hearing at first instance.[33]
[33] Appeal ts 6.
Also, counsel for WFI suggested a new duty of care in the course of oral argument. He said, in effect, that there was a duty to the effect that an owner of property must exercise reasonable care to keep the property free from any dangers which any subsequent owners of the property or their invitees may encounter in the future after he or she has ceased to own the property.[34] Counsel said that he could not point to any authority in direct support of that alleged duty, and that the closest case was Loose Fit Pty Limited v Marshbaum.[35] There was no application to amend the grounds of appeal in this regard.
[34] Appeal ts 20.
[35] Loose Fit Pty Limited v Marshbaum [2011] NSWCA 372.

The substantive issue in the appeal

It was not suggested in the appeal that the effect of the exclusion clause was to exclude cover in respect of any liability that Mr Verini had as owner/occupier at the time of the Occurrence in 2009 of a building which was not then the subject of home or contents insurance with WFI.[36] In general terms, the parties approached the appeal on the basis that the question was whether Mr Verini's liability to the claimants for personal injury in 2009 was directly or indirectly caused by, or arose out of, a breach by Mr Verini of his duty as 'the owner or occupier' of the house on the Ballajura property in 1993/1994.
[36] cf primary reasons [54].
More specifically, it was not the focus of WFI's case that in 1993/1994 Mr Verini, as occupier of the house being constructed on the Ballajura property, owed and breached a duty to the claimants. Rather, the focus of WFI's case, and the substantive issue in the appeal, was whether, for the purposes of the exclusion clause, Mr Verini as owner in 1993/1994 of the house being constructed on the Ballajura property, owed and breached a duty of care to the claimants as alleged in the grounds of appeal.

Owner and occupier liability - preliminary observations on the development of the law

A number of preliminary observations may be made about the law's development in relation to the liability of occupiers and owners of property.
The old common law rule, confirmed in Cavalier v Pope,[37] was, in general terms, that an owner who leased his or her property was not liable to the lessee for defects in the condition of the premises, save to the extent that the lease itself conferred rights on the lessee in that regard. Further, the rule was that the owner who had leased premises had no liability to the lessee's customers or guests for injuries sustained as a result of the defective premises, as they had no contractual relationship with the owner. In the case of the lessee's customers or guests, the rule was justified, generally speaking, on the basis that the owner who grants a tenancy of the property ordinarily ceases to be the occupier of it, and the tenant's customers or guests would be protected by the law relating to occupier's liability: Northern Sandblasting Pty Ltd v Harris;[38] Jones v Bartlett;[39] Voli v Inglewood Shire Council.[40]
[37] Cavalier v Pope [1906] AC 428.
[38] Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313, 364 ‑ 365.
[39] Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 [161] ‑ [163].
[40] Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74, 89 ‑ 90.
So far as an occupier's liability was concerned, the common law rules included the duty to a licensee to safeguard against 'concealed traps' of which the occupier was aware,[41] and the duty to invitees to use reasonable care to prevent damage from unusual dangers of which the occupier knew or ought to have known.[42]
[41] Lipman v Clendinnen [1932] HCA 24; (1932) 46 CLR 550, 556.
[42] Indermaur v Dames (1865 ‑ 66) LR 1 CP 274, 288.
The general rule confirmed in Cavalier had its exceptions, including that it did not apply, for example, to owners who let furnished houses in a defective condition.[43]
[43] Wilson v Finch Hatton (1877) 2 Ex D 336; Rimmer v Liverpool City Council [1985] QB 1, 9.
The general rule at common law was also applied by analogy to a vendor of land: Bottomley v Bannister.[44] In that case, Scrutton LJ said:[45]
Now it is at present well established English law that, in the absence of express contract, a landlord of an unfurnished house is not liable to his tenant, or a vendor of real estate to his purchaser, for defects in the house or land rendering it dangerous or unfit for occupation, even if he has constructed the defects himself or is aware of their existence. (emphasis added)
[44] Bottomley v Bannister [1932] 1 KB 458.
[45] Bottomley (468). See also (477) (Greer LJ) and (484) (Romer LJ).
As regards landlords, the common law rule is no longer that a landlord never owes any duty in negligence to occupants in respect of the condition of residential premises.[46] Moreover in this State, s 9 of the Occupiers Liability Act 1985 (WA) provides, in effect, that where premises are occupied under a tenancy in which the landlord is responsible for the maintenance and repair of the premises, the landlord has a duty to show, towards any persons who may from time to time be on the premises, the same care in respect of dangers arising from any failure on his part in carrying out his responsibilities of maintenance and repair, as is required to be shown by an occupier of the premises under the Act.
[46] Jones [21], [56] - [58], [84], [165] - [166], [230].
As regards vendors, the common law developed so that the immunity ceased to apply where the owner carried out building works which gave rise to a foreseeable risk in respect of, relevantly, personal injury. The principal English cases which first explored a shift in the law in this regard, discussed below, concerned damages for economic loss. Whilst those cases subsequently became the subject of disapproval in relation to liability for economic loss, the observations in those cases critical of the scope of the common law immunity outlined in Bottomley v Bannister proved significant in England in the development of the law in relation to owner/builders.
In Dutton v Bognor Regis Urban District Council,[47] Lord Denning MR said:[48]
In Gallagher v N McDowell Ltd [1961] NI 26, Lord MacDermott CJ and his colleagues in the Northern Ireland Court of Appeal held that a contractor who built a house negligently was liable to a person injured by his negligence. This was followed by Nield J in Sharpe v E T Sweeting & Son Ltd [1963] 1 WLR 665. But the judges in those cases confined themselves to cases in which the builder was only a contractor and was not the owner of the house itself. When the builder is himself the owner, they assumed that Bottomley v Bannister … was still authority for exempting him from liability for negligence.
There is no sense in maintaining this distinction. It would mean that a contractor who builds a house on another's land is liable for negligence in constructing it, but that a speculative builder, who buys land and himself builds houses on it for sale, and is just as negligent as the contractor, is not liable. That cannot be right. Each must be under the same duty of care and to the same persons. If a visitor is injured by the negligent construction, the injured person is entitled to sue the builder, alleging that he built the house negligently. The builder cannot defend himself by saying: 'True I was the builder; but I was the owner as well. So I am not liable.' The injured person can reply: 'I do not care whether you were the owner or not, I am suing you in your capacity as builder and that is enough to make you liable.' (emphasis added)
[47] Dutton v Bognor Regis Urban District Council [1972] 1 QB 373.
[48] Dutton (393 - 394).
In the same case, Sachs LJ said:[49]
It is obvious that a builder who by his negligence creates a hidden defect is liable to anyone suffering damage from it just as a manufacturer is liable when a hidden defect in the goods he makes injures a workman using it and as a producer of consumable goods is liable when a hidden defect injures a consumer. I can find nothing in principle which absolves from liability a builder who creates a hidden defect because he happens to be or to become the owner of the premises built. On the contrary, as Lord MacDermott himself said in Gallagher's case [(41)]: '… the doctrine of Donoghue v Stevenson can apply to defective houses as well as defective chattels, …': and in my judgment there is no exception behind which landowners as such can shelter. Thus the Bottomley v Bannister point fails. (emphasis added)
[49] Dutton (402).
In Anns v Merton London Borough Council,[50] Lord Wilberforce said:[51]
If there was at one time a supposed rule that the doctrine of Donoghue v Stevenson [1932] AC 562 did not apply to realty, there is no doubt under modern authority that a builder of defective premises may be liable in negligence to persons who thereby suffer injury: see Gallagher … per Lord MacDermott CJ - a case of personal injury. Similar decisions have been given in regard to architects - (Clayton v Woodman & Son (Builders) Ltd [1962] 2 QB 533 and Clay v A J Crump & Sons Ltd [1964] 1 QB 533). Gallagher's case expressly leaves open the question whether the immunity against action of builder owners, established by older authorities (eg, Bottomley v Bannister …) still survives.
That immunity, as I understand it, rests partly upon a distinction being made between chattels and real property, partly upon the principle of 'caveat emptor' or, in the case where the owner leases the property, on the proposition 'for, fraud apart, there is no law against letting a tumbledown house': see Robbins v Jones (1863) 15 CBNS 221, 240 per Erle CJ. But leaving aside such cases as arise between contracting parties, when the terms of the contract have to be considered (see Voli v Inglewood Shire Council … [(85)], per Windeyer J), I am unable to understand why this principle or proposition should prevent recovery in a suitable case by a person, who has subsequently acquired the house, upon the principle of Donoghue v Stevenson: the same rules should apply to all careless acts of a builder: whether he happens also to own the land or not. I agree generally with the conclusions of Lord Denning MR on this point in Dutton v Bognor Regis Urban District Council … [(392 - 394)]. (emphasis added)
[50] Anns v Merton London Borough Council [1978] AC 728.
[51] Anns (758 - 759).
In the same case, Lord Salmon referred to the observations of Scrutton LJ in Bottomley v Bannister and said:
I certainly do not agree with the words in that passage 'even if he has constructed the defects himself'. The immunity of a landlord who sells or lets his house which is dangerous or unfit for habitation is deeply entrenched in our law. I cannot, however, accept the proposition that a contractor who has negligently built a dangerous house can escape liability to pay damages for negligence to anyone who, eg, fall[s] through a shoddily constructed floor and is seriously injured, just because the contractor happens to have been the owner of the land upon which the house stands. If a similar accident had happened next door in a house which the contractor had also negligently built on someone else's land, he would not be immune from liability. This does not make any sense. In each case the contractor would be sued for his negligence as a contractor and not in his capacity as a land‑owner: the fact that he had owned one plot of land and not the other would be wholly irrelevant. I would hold that in each case he would be liable to pay damages for negligence. To the extent that Bottomley v Bannister … differs from this proposition it should, in my view, be overruled. Cavalier v Pope … is so far away from the present case that I express no opinion about it. (emphasis added)
In England, the House of Lords in Murphy v Brentwood District Council,[52] in dealing with the question of liability for economic loss, overruled Dutton and departed from Anns. Nevertheless, the court accepted that the principle in Donoghue v Stevenson[53] applied to impose a duty on the builder of a house to take reasonable care to avoid injury or damage, through defects in its construction, to the persons or property of those whom the builder ought to have in contemplation as likely to suffer such injury or damage with respect to latent defects.
[52] Murphy v Brentwood District Council [1991] 1 AC 398.
[53] Donoghue v Stevenson [1932] AC 562.
In Australia, the High Court has accepted that prima facie a builder of a house has a duty to take reasonable care in constructing a home to those who are lawfully in the house or its vicinity and might sustain personal injury as a result of faulty construction, including to a subsequent purchaser of the property: Bryan v Maloney.[54] Brennan J observed in Bryan, citing the words of Windeyer J in Voli, that the duty 'is cast upon a builder "not because he made a contract, but because he entered upon the work"'.[55] Also, in Jones, Gummow and Hayne JJ said that '[t]hose responsible for negligent design or building will ordinarily be liable as primary tortfeasors'.[56]
[54] Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609, 623 ‑ 626, 633 - 634, 640.
[55] Bryan (640).
[56] Jones [177].
In Guiney v Australand Holdings Ltd,[57] Mason P (Giles JA agreeing) said:[58]
It is well established that a person who negligently … builds a structure is liable for the tort of negligence if a … user in reasonable contemplation suffers reasonably foreseeable personal injury in consequence (Voli v Inglewood Shire Council … at 85; Bryan v Maloney … at 622-3, 625-6; Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16, (2004) 216 CLR 515 at 532-3[28]-[29], 539[51], 544[66]). Voli shows that it matters not that the building is taken over on completion without anyone being aware of the defect (see 110 CLR 74 at 83). In my view, the appellant as a member of the immediate family of the first occupiers of the newly built home was within the scope of such a duty of care.
[57] Guiney v Australand Holdings Ltd [2008] NSWCA 44.
[58] Guiney [16].

Disposition

As noted earlier, WFI's substantive contention, and the issue in the appeal, was whether, for the purposes of the exclusion clause, Mr Verini as owner in 1993/1994 of the house being constructed on the Ballajura property, owed and breached a duty of care to the claimants.
There was no material dispute about the approach to the construction of the insurance contract. An insurance contract should be given a businesslike interpretation. Attention must be given to the language used by the parties, the commercial circumstances addressed by the policy, and the objects it is intended to secure.[59] With respect to an exclusion clause, the court must give effect to 'its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity'.[60]
[59] McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 [22].
[60] Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500, 510; Nissho Iwai Australia Ltd v Malaysian International Shipping Corp Berhad [1989] HCA 32; (1989) 167 CLR 219, 227; Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541, 554.
Further, in this appeal the parties did not dispute his Honour's finding that where a policy refers to liability for an insured's breach as an 'owner or occupier', those words are not merely descriptive of the identity of the insured at the time liability was incurred, but rather import occupation or ownership as a relevant ingredient of the liability in question.[61]
[61] Primary reasons [40]; appeal ts 12; respondent's written submissions, pars 5, 7 and 22.
WFI fought the case below on its pleaded 'Construction duty of care'. As the name given by WFI to the characterisation of that duty suggests, and as the pleaded breach indicates, on WFI's case, the relevant ingredient of Mr Verini's liability to the claimants was his conduct in connection with the execution of the building work. Although his ownership of the property provided him with the opportunity to have the work carried out, it was his carriage of and involvement in the execution of the work, and not his ownership of the property, which, on WFI's case properly analysed, gave rise to the liability to the claimants.
Further, the authorities to which WFI referred do not assist it. Brookfield was a case concerning economic loss. The builder of a development was held not to owe a duty of care to the owner's corporation in whom was vested certain common property following the stratification and sale of lots in the development. Loose Fit is discussed later in these reasons. Tweed was a case in which a child was killed from lacerations caused by running into a glass door of commercial premises. His parents suffered psychiatric injury as a result. The landlord/owner of the premises at the time of the accident had had the premises built some 27 years earlier by a professional builder. The trial judge had found that the landlord/owner owed and breached a duty of care to conduct a safety audit of the commercial premises. The Court of Appeal found that no such duty was owed to the plaintiffs or breached,[62] and rejected a notice of contention by the plaintiffs to the effect that the owner was liable, in the alternative, for the builder's work.[63] The court's observations, relied upon by WFI, that 'any' duty of care resting on the owner ought to have been expressed in the form of a duty to exercise reasonable care in the circumstances,[64] rather than a duty to conduct a safety audit, were made in the context that the owner was the owner of the premises at the time when it was said the safety audit should have been done, as well as being the owner/landlord at the time of the accident.
[62] Tweed [211] ‑ [236].
[63] Tweed [174] - [180].
[64] Tweed [213].
In relation to the decision in Caltex, WFI referred to the observations of Allsop P (as his Honour then was),[65] to the effect that where a posited duty is a 'novel one', the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and putative tortfeasor by reference to 'salient features' or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury. WFI contended that Mr Verini's ownership of the Ballajura property was a 'salient feature' giving rise to a duty of care to the claimants.[66]
[65] Caltex [102] ‑ [103].
[66] Appellant's written submissions, pars 24 and 37.
Three points may be made about this. First, it is implicit in the submission that the duty being postulated by WFI is a 'novel one'. However, for the reasons given earlier, WFI's case at trial, properly analysed, depended upon a recognised duty of care in the execution of building works which may be owed by an owner/builder. Secondly, to the extent that a 'novel' duty is now being asserted, that would raise an issue, not addressed by WFI, as to whether, on the proper construction of the insurance policy, the reference to 'breach of … duty as … owner' in the exclusion clause applies to a duty of care, the existence of which the law had not recognised at the time the policy was incepted. Thirdly, home ownership was not one of the 'salient features' to which Allsop P referred, and there were no findings of fact by the primary judge which could assist WFI in relation to a number of the features to which Allsop P referred. These include matters such as the degree of reliance by the claimants upon Mr Verini as a former owner of the Ballajura property; any assumption of responsibility by Mr Verini as a former owner of the Ballajura property; the proximity or nearness in a physical, temporal or relational sense of the claimants to Mr Verini; any category of relationship between Mr Verini and the claimants; and any potential indeterminacy of liability.
Accordingly, the judge was correct to find, essentially for the reasons he gave, that WFI had not established that the exclusion clause applied to exclude cover under the policy.
Although the alleged duty in ground 1(a) is expressed in somewhat different terms from the pleaded duty at trial, WFI in effect contended that the duty alleged in ground 1(a) was not materially different from the pleaded 'Construction duty of care'. Accordingly, ground 1(a) should be dismissed.
Ground 1(b) was not pursued. These conclusions are sufficient to dismiss the appeal.

However, one final matter should be noted. As indicated earlier, during the hearing of the appeal, counsel for WFI postulated a new, and extremely broad and prescriptive, duty of care of apparent indefinite duration owed by an owner of real property to all subsequent purchasers and their invitees. No application was made to amend the grounds of appeal to allege the new duty of care.
The circumstances in which a party will be allowed to raise a new point on appeal are very exceptional. It will only be permitted if two requirements are met. First, the interests of justice must require the determination of the new point. Secondly, there must be no prejudice to the party against whom the new point is taken. The authorities indicate that exceptional circumstances would not exist where the point, if taken below, might have resulted in additional or different evidence being led: Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd.[67]
[67] Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; (2012) 43 WAR 91 [52] ‑ [53].
It could not be said that new or additional evidence, at least in relation to the terms of the successive contracts of sale governing the transfer of the property from its disposition by Mr Verini in 1996 up to the acquisition by the owners of the property in 2002, who had presumably invited the claimants onto the balcony in 2009, might not have been led by Mr Verini had WFI run a case based on this new duty at trial. Further, even if it be assumed that no additional evidence might have been led by Mr Verini, WFI has not demonstrated that the newly postulated duty is reasonably arguable.
Counsel said that there was no case law in direct support of it. No attempt was made by counsel to explain the basis for the existence of such a duty in the context of the historical development of the law of negligence with respect to owners and occupiers, or within the context of the common law rule of caveat emptor, ie, generally speaking, absent fraudulent concealment, misrepresentation, or an express term of the agreement, a vendor of real estate is not liable to a purchaser for defects in a building or land rendering it dangerous or unfit for occupation, even if the vendor has created the defects or is aware of their existence.[68] Counsel did not point to any statutory regime in aid of the postulated duty. Loose Fit, to which counsel referred, was not a case involving a vendor of property. That was a case in which both the existing landlord and tenant of certain commercial premises were, in the particular circumstances of the case, both found liable to a customer of the tenant who had been injured as a result of the premises being unsafe.
[68] Kadissi v Jankovic [1987] VR 255, 257 - 258; Mitchell v Valherie [2005] SASC 350; (2005) 93 SASR 76 [91]; Swannell v Franich [1993] ANZ ConvR 178, 181 (Anderson J) (Anderson J's decision was affirmed on appeal: Franich v Swannell (1993) 10 WAR 459); see also Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515, 592 ‑ 593 [227] (Callinan J).
In all the circumstances, even if WFI had applied to amend its grounds to run this new point on appeal, which it did not, it would not have been in the interests of justice to allow WFI to do so.

Conclusion

The appeal should be dismissed.