Mobis Parts Australia Pty Ltd v XL Insurance Company SE

Judgment

1. The plaintiff, Mobis Parts Australia Pty Ltd, is the owner of a warehouse at Eastern Creek in Sydney that was severely damaged in a storm on 25 April 2015. A large amount of hail accumulated on the warehouse roof and it collapsed. The plaintiff made a claim under a Property Damage & Business Interruption Policy issued by the defendant, XL Insurance Company SE, on 8 August 2014 (the Policy).
2. On 28 April 2015 a senior account manager with XL wrote to XL's Loss Adjusters in relation to the Australian Standards in particular AS/NZS 1170.0: 2002 Structural Design Actions - General Principles. That email included the following: The construction of the building was in 2008, so it should have considered these loads. I noticed from the photo the ridge steel beams look smaller in size to I (sic) what I would have expected or normally used to (as a Civil Engineer without having practiced in this field for 25years (sic)). I think there is merit in obtaining the structural drawings for this warehouse to verify its adequacy.
3. Costin Roe, a consulting engineering firm, was retained to undertake a structural engineering review of the warehouse, the objective of which was to assess compliance with the relevant Australian Standards for buildings of this type.
4. On 26 May 2015 the plaintiff's solicitors, Ashurst, wrote to XL requesting a response to the plaintiff's claim under the Policy. That letter included a reminder that XL owed the plaintiff a duty of utmost good faith and an assertion that the delay in responding to the claim was causing prejudice to the plaintiff. Ashurst advised that since the maximum indemnity period for business interruption cover was 12 months, the plaintiff needed to progress the reconstruction of its warehouse urgently.
5. On 2 June 2015 Costin Roe provided a report of that date to XL. Although Costin Roe had access to structural drawings for the purpose of its review it did not have access to the architectural drawings. It advised XL that its report was "preliminary" until it had the opportunity to review the architectural drawings to allow the firm "to verify all dimensions used in our analysis and issue our finalised report". There is no evidence that such a "finalised report" was produced. The preliminary report included the following: The load cases above were combined using appropriate load factors as defined in AS/NZS 1170.0 to produce stress and displacement diagrams which were compared to member capacities and displacement limits in accordance with the ultimately and serviceability limit state requirements. Application of the various loading conditions listed above is defined in the following Australian Standards: ● AS/NZS 1170.0: 2002 Structural design actions - General Principles ● AS/NZS 1170.1: 2002 Structural design actions - Permanent, imposed and other actions ● AS/NZS 1170.2:2011 Structural design actions - Wind actions ● AS/NZS 1170.4 Structural design actions - Earthquake actions in Australia It should be noted that 'AS/NZS1170.3 Structural design actions Part 3: Snow and ice actions' provides values for snow and ice actions for use in limit states design of structures subject to these actions. This standard applies to structures located in alpine and sub-alpine regions of Australia and New Zealand. As Eastern Creek is not located in either of these regions, this standard is not applicable to the structure being considered. Reference is made to loading due to hail in Clause C3.5.1 of AS1170.1 Supplement 1:2002 which is the commentary to AS/NZS 1170.1. This clause expands on the live load allowance Q listed above as follows; "The limit of 0.25kPa in table 3.2 is intended to cover situations not covered elsewhere in the loading Standards, such as stacking of materials for maintenance or for local accumulations of hail." C) EVALUATION Based on the information we have available and our review of the warehouse and office structural design, it is our opinion that the original structural design as documented on the drawings provided, complies with the requirements of the relevant Australian Standards. Based on our observations made while inspecting various buildings in the Eastern Creek and Huntingwood areas on the days following the hail storm event, we estimate the amount of hail which accumulated on some roofs to be approximately 200mm - 300mm in depth. A maximum of 500mm depth was reported in some areas. The weight of this hail is estimated to range from approximately 1kPa, which is significantly greater than the required design allowance of 0.25kPa. It is our opinion that the collapse of the warehouse building was a direct result of the hail storm event which occurred on 25 April 2015. During this storm, the superimposed loading due to hail stones, water and ice on the roof greatly exceeded the design loads required in accordance with the Australian Standards. We thank you for your instructions. If you would like to discuss this matter in further detail please contact us at your convenience.