Walsh v Yang & Ors

Second Defendant/Second Cross-Claimant: Danny Xu Third Defendant/Cross-Defendant: Insurance Australia Limited Representation: Counsel: Plaintiff: Mr P Khandhar SC and Mr E Anderson First and Second Defendants/First and Second Cross-Claimants: Mr S J Walsh Third Defendant/Cross-Defendant: Mr K Horsley

Solicitors: Plaintiff: Brydens Lawyers First and Second Defendants/First and Second Cross-Claimants: James Tuite & Associates Lawyers Third Defendant/Cross-Defendant: Holman Webb Lawyers File Number(s): 2021/285081 Publication restriction: Nil

Judgment

1. On 24 March 2019 the plaintiff slipped and fell on tiled stairs at the rear of a residential property at Jamieson Avenue, Baulkham Hills, NSW (the "Property"). At the time the tiles were wet and slippery. The Property was owned by the first and second defendants/cross claimants, Ms Yang and Mr Xu (also referred to below as the "Insured").
2. The plaintiff seeks personal injury damages from the first and second defendants, alleging they were negligent as owners of the Property in failing to take any measure to render the tiles slip resistant when they knew, or ought to have known, that the tiles were slippery when wet. The first and second defendants deny they are liable to the plaintiff.
3. The plaintiff also maintains a claim against the third defendant (the "Insurer"), the home and contents insurer of the Property, pursuant to a policy of insurance issued to the first and second defendants (the "Policy"). That claim is brought under s 4(1) of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the "Third Party Claims Act"). Ms Yang and Mr Xu also bring a cross claim against the Insurer, who has denied indemnity under the Policy.
4. There was no dispute that Ms Yang and Mr Xu, as occupiers of the Property, owed the plaintiff a common law duty to take reasonable care to avoid a foreseeable risk of injury to him. There was only limited dispute as to the circumstances in which the plaintiff slipped and fell and no dispute that the tiles were slippery when wet.
5. The principal dispute between the plaintiff and Ms Yang and Mr Xu as to liability concerned whether the risk that eventuated was foreseeable, whether the duty had been breached and whether there was any causal connection between any breach of duty and any injury suffered by the plaintiff. Further, there was a significant dispute as to the extent of any injury suffered by the plaintiff from the 24 March 2019 accident and the extent of any loss suffered as a result thereof.
6. As between Ms Yang and Mr Xu (and the plaintiff) on the one hand and the Insurer on the other, there was a significant dispute as to whether the Insurer was entitled to decline indemnity pursuant to any exclusions in the Policy. This also raised a question whether s 35 of the Insurance Contracts Act 1984 (Cth) (the "ICA"), when read with reg 19 of the Insurance Contracts Regulations 2017 (Cth) (the "Regulations"), prevents the Insurer from relying on the exclusions and whether the Insurer is nevertheless able to rely on them if it clearly informed the Insured of their effect.

The plaintiff

1. The plaintiff was born in November 1962 and was 56 years old when the accident occurred. He left school in 1978 and undertook a mechanical engineering course at TAFE in Sydney whilst working as a motor mechanic at City Automobiles Sydney. He remained in that position until 1983, when he commenced employment with News Ltd as an editorial police roundsman. He remained in that role until 2006. At the same time, he worked as a casual taxi driver with ABC Taxis (from 1985 to 2006) and as chief of staff at TEN News on weekends (1995 to 2006).
2. In 2006, the plaintiff purchased a property at Grenfell, NSW, some 370 km west of Sydney, initially as an investment. He still owns that property, a three bedroom house on approximately 2,200 sqm, a reasonable proportion of which is landscaped and concreted. He lived there between about 2007 and sometime after 2015 and, after some years living in Sydney, moved back there with his now partner, Ms Christina Radovan.
3. In his role as a police roundsman for News Limited, the plaintiff was exposed to significant trauma. That work took its toll and by 2007 the plaintiff was diagnosed with post traumatic stress disorder (PTSD) and ceased work. He commenced receiving a disability support pension, which he still receives. In cross examination the plaintiff stated that the disabilities that precipitated his disability support pension were both his PTSD and injury to his lower back. The plaintiff's PTSD was one of the reasons he moved to Grenfell on the first occasion as he was experiencing difficulty in social interaction.
4. The plaintiff described his physical health in the period to 2008 as good. There was evidence, however, of the plaintiff having various health problems since about 2002. The extent to which those problems subsist and impact upon the damage he has suffered as a result of the 24 March 2019 accident were issues in the proceedings and are addressed below.
5. By 2009-2010, the plaintiff was obese, his weight reaching over 200 kg, and he suffered from Type II diabetes. The plaintiff said his obesity restricted his physical activity but that he did not experience any pain in connection with it. He lost a substantial amount of weight over the next few years and by about 2013 the plaintiff was sufficiently comfortable with social interaction to commence volunteering with three organisations: the State Emergency Service (SES), the Rural Fire Service (RFS) and the Salvation Army.

The first and second defendants and the Property

1. The first defendant, Ms Yang, moved to Australia from China in 2009 with her two daughters. During the relevant time her husband, the second defendant Mr Xu, spent a considerable part of his time in China but came to Australia once or twice per year and stayed at the Property for a few days each time. The plaintiff met and spoke with Mr Xu on occasion at the Property, which is owned by Ms Yang and Mr Xu jointly.
2. The Property comprises a free standing house with a separate structure comprising a storeroom and space occupied by the plaintiff and Ms Radovan at the rear (the "flat"). The flat and storeroom are separated from each other by a tiled staircase leading to an elevated outdoor area on the rear boundary where a clothesline and free standing clothes horse were located. The staircase was tiled at the time Ms Yang and Mr Xu bought the Property in 2009 and the same tiles had been laid in the storeroom. The first and second defendants did not change the tiles. There is no dispute as to the type of tiles on the stairs, nor is there any dispute as to the slip resistance value of the tiles.
3. The structure at the rear of the house was not always configured to include a flat. At one stage it was a garage and was later used as an office. In about October 2012 Mr Xu and Ms Yang had gas and water services installed to accommodate visiting family from China because the main house was not large enough to accommodate them all.
4. In August 2015 an officer from The Hills Shire Council ("Council") inspected the Property and determined that unauthorised building works, comprised in a carport and the conversion of the garage into an unauthorised secondary dwelling, may have been carried out. By letter dated 6 August 2015, Council notified Mr Xu and Ms Yang that the works appeared to be contrary to the development standards outlined in State Environmental Planning Policy (Exempt and Complying Code) 2008 and as a result development consent should have been obtained prior to the works being carried out.
5. Council records indicated that Council was concerned about light, ventilation and fire separation from the boundary with respect to the garage/secondary dwelling. Concerns were also raised about gaps between the brick wall and metal into the roof.
6. Council sought a response, inter alia, explaining why the works had been undertaken without consent. Ms Yang's response addressed the failure to obtain consent for the carport (the reason being the neighbours had consented) but did not address the conversion of the garage. She asked Council what she could do to remedy the situation. Council's further response directed Ms Yang to remove the unauthorised kitchen and cap all associated services within the wall cavity. This was clarified in an email on 8 September 2015 as requiring the removal of the kitchen cupboards and bench, disconnection of all cooking facilities, disconnection and removal of the sink and capping off of all services, such as water, gas and electricity associated with the kitchen, in the wall cavity.

Approach to evidence in areas of dispute

1. Four witnesses gave oral evidence: the plaintiff, Ms Radovan, Ms Yang and the plaintiff's nephew, Simeon Walsh. Mr Simeon Walsh, the manager of a café in Melbourne, gave evidence by AVL relevant to the plaintiff's claim for economic loss. Ms Yang had an interpreter in the witness box but was able to answer most questions unassisted. There were few factual matters in dispute between the witnesses. Submissions were made challenging the credit of each of the plaintiff, Ms Radovan and Ms Yang, although counsel did not advance a submission that any of them were giving dishonest evidence. In my view, each of the witnesses gave honest evidence and did his or her best to assist the Court. I accept each of them as a witness of truth.
2. While each of the lay witnesses gave honest evidence, I am mindful of the approach to assessing oral evidence in the authorities collected by Davies J in Coote v Kelly; Northram v Kelly [2016] NSWSC 1447 at [165] to which his Honour referred in The Nominal Defendant v Cordin [2017] NSWCA 6. In that judgment, his Honour referred to a number of authorities that provide assistance in dealing with credibility issues and the fallibility of human memory. In assessing the credit of each of the witnesses, I have taken into account not just their demeanour in the witness box but the corroborative effect of any contemporaneous documents or records and the extent to which witnesses' evidence accords with the probabilities. I also proceeded on the basis that human memory is inherently fallible, fades with time and can be distorted by self-interest and by the litigation process itself.
3. To their credit, each of the plaintiff and Ms Yang made admissions against interest. At times, however, each of the plaintiff, Ms Radovan and Ms Yang became combative and defensive when their recollection was challenged. I found that each of the plaintiff and Ms Radovan exaggerated aspects of their evidence, such as with respect to the time taken to perform domestic duties.
4. Mr Xu, the second defendant, travels to Australia once or twice per year and stays a few weeks each time. He did not attend the hearing and no application was made for him to give evidence by AVL. No explanation was given for his failure to do so.

Section 128, Evidence Act certificate

1. In the course of the hearing, Ms Yang by her counsel sought a certificate under s 128, Evidence Act 1995 (NSW). The application related to evidence on the installation of fixtures and the connection of services in the flat and her lack of any communication with Council seeking or obtaining approval for such works or the occupation of the flat. The Insurer alleges in these proceedings that Ms Yang and Mr Xu have committed an offence under s 4.2 of the EPAA by carrying out a specified development without consent.
2. Objection was taken to cross examination of Ms Yang by counsel for the Insurer on the basis that her answers may tend to prove she had committed such an offence. I was satisfied that there were reasonable grounds for such an objection.
3. Given the alleged illegality of such conduct was a central allegation in the Insurer's defence to the cross claim and to the plaintiff's direct claim against it, I was also satisfied that it was in the interests of justice to require Ms Yang to answer the questions proposed to be asked in cross examination on this topic.
4. Accordingly in my view, the conditions for issue of a s 128 certificate were established, and I caused a certificate to be issued on 24 November 2022 in respect of her evidence at Transcript pages 136-139.

The domestic arrangements of the plaintiff and Ms Radovan prior to the accident

1. According to the plaintiff, prior to the 24 March 2019 accident he and Ms Radovan often did not cook at the Property as they could either eat at TAFE or bring home food they had prepared at TAFE. They generally shopped for groceries at nearby shops. Ms Radovan said that she nevertheless cooked almost every day (at least six times per week). While some preparation at home may have been required, I do not accept that cooking a full meal for two people was required almost every day during this time.
2. The plaintiff gave evidence that he and Ms Radovan each spent about three hours per day engaged in domestic chores such as cleaning, cooking and washing. The plaintiff said that he personally was involved in cooking, cleaning and doing laundry. He stated that Ms Radovan was solely responsible for vacuuming, washing floors, doing her own laundry, preparing food and shopping. It appears most likely that Ms Radovan was primarily responsible for these chores but that the plaintiff assisted from time to time.
3. Ms Radovan estimated that between them they performed about 2 to 4 hours of housework each day.
4. I find the estimates of each of the plaintiff and Ms Radovan to be unreliable and a substantial overstatement of the hours that would be required to maintain their household, being a small flat occupied by two people. To the extent this estimate informs their estimates of the amount of time required to perform domestic chores after the accident, I regard those estimates as consequently exaggerated.

The incident of November 2018

1. On 7 November 2018, the plaintiff suffered the first of two falls at the Property.
2. Shortly after the plaintiff and Ms Radovan moved to the Property, the plaintiff was in the process of moving some of Ms Yang's furniture from the flat to the storeroom. It had started to rain and was windy. The plaintiff's account is that he was moving a small fridge into the storeroom using a small trolley. The floor was wet and he slipped backwards, falling onto cabinets in the storeroom. The surface on which he was walking, just inside the storeroom, was comprised of the same tiles as those on the stairs.
3. Ms Yang's account of the incident was only slightly different. According to Ms Yang, the fridge was between 1.4 and 1.5 metres in height and, when he fell backwards, the fridge fell on top of him. She accepted that it had started to rain at the time but denied that the tiles in the storeroom were wet because there was an awning over the storeroom door. The awning, it should be noted, was not large and on the basis of the photographic evidence, I find that if it had been raining (as was accepted) the tiles just inside the entrance of the storeroom would likely have been wet.
4. According to Ms Yang, she and Ms Radovan both then came to the storeroom. In her evidence she said "… we tell him don't do anything when it's raining. Don't do any outdoor work when raining". Ms Yang associated the rain with the plaintiff's fall. Given that the plaintiff slipped on the storeroom tiles when it was raining, I find that Ms Yang understood from that incident that the plaintiff slipped on tiles which were made more slippery and therefore dangerous because of the rain that day. This is so even though she was not aware of anyone having slipped on the stairs previously.
5. The plaintiff says he was injured and had difficulty breathing. He believes he blacked out momentarily. He experienced pain at the top of his back and shoulders. The plaintiff called an ambulance, which took him to Westmead Hospital, where scans and tests were conducted and he was admitted overnight and discharged the following day. He then resumed his weekend yard business, TAFE course and volunteer work.
6. According to the plaintiff, sometime after he returned from hospital he said to Ms Yang "Emily, the tiles are very slippery when they're wet." The plaintiff could not recall any response from Ms Yang but, it is not disputed, no steps were taken between November 2018 and March 2019 to manage the slipperiness of the tiles.

The plaintiff's fall on 24 March 2019

1. According to the plaintiff, on Sunday 24 March 2019 he was watching television in the flat while Ms Radovan had gone to the rear of the property to bring their washing off the clothesline. It had started to rain. The plaintiff was wearing flat, rubber soled training shoes. Ms Radovan called out "It's starting to rain. Can you come up and help me get the clothes off the line?". The plaintiff grabbed an empty washing basket and walked up to the top of the stairs at the rear of the Property. The stairs were wet.
2. When the plaintiff reached the top of the stairs, carrying an empty washing basket, he saw that Ms Radovan already had a basket and had started folding the clothes into it. She told him she no longer needed his help and he could go. He left the second basket with her, in case she needed it, turned around and started to descend the stairs to return to the flat.
3. The plaintiff had descended two stairs when his left foot slipped from under him, his right foot following. He slid downwards and sideways to the left. His left shoulder and arm first collided with the wall to his left, then he fell to his right and his right arm collided with the opposite wall. He fell, hitting his left arm on the edge of the stairs, and his lower back hit the stairs as he continued to slide downwards. The fall caused a laceration to his left forearm which he says bled profusely.
4. Ms Radovan's account is similar. After the plaintiff came to assist her to bring in the washing and she told him he was not needed, she heard a loud thump and saw the plaintiff sprawled down the stairs. The tiles were wet and it was still raining. His left arm was bleeding.
5. Ms Yang was cooking dinner at the time. Her kitchen window looked out towards the rear of the main house. She heard yelling and saw the plaintiff standing in the back yard, about two metres from the stairs. She recalls seeing a full washing basket on the ground and Mr Radovan coming out of the flat. The plaintiff was walking back to the flat. She does not recall seeing any blood on the stairs.
6. Ms Yang's account, while differing in some detail from that of the plaintiff and Ms Radovan, was not irreconcilable with their version of events. Significantly, Ms Yang was alerted to the incident by shouting and could necessarily only have seen the immediate aftermath of the fall. Her account that she saw a full washing basket on the ground and that the plaintiff was walking back towards the flat does not contradict the plaintiff's account, which I find generally to be reliable. To the extent that Ms Yang recalls that there was no blood on the tiles and that Ms Radovan came out of the flat after the plaintiff's fall, I prefer the evidence of the plaintiff and Ms Radovan.

Lay evidence as to the impact of the fall on the plaintiff

The near term impact of the fall on the plaintiff

1. Following his return from hospital, the plaintiff wore a sling for his left arm until the end of his TAFE course. He says that he was in severe pain, which he rated "ten out of ten", for at least two weeks. On his evidence he took two weeks off from TAFE, which was a five day per week course. On his return to TAFE he had only limited capacity to perform the course requirements because his left arm was in a sling for the remainder of the course. Pain in his shoulders and arms prevented him from lifting pots of water and caused difficulty in chopping and preparing ingredients. He confined his activities to assembling ingredients for his classmates.
2. Although it was of only minor import, Ms Yang recalled that the plaintiff was only away from TAFE for one week and she described the sling as a "dressing". While I consider the difference to be immaterial, I nevertheless prefer the evidence of the plaintiff on this point.
3. In the weeks following the accident, the plaintiff relied on Ms Radovan to assist him with personal care, such as dressing, and carrying a greater share of the load of domestic chores than she had carried previously. Indeed, the amount of domestic work performed by Ms Radovan, relative to that performed by the plaintiff, has increased significantly since the accident.
4. The plaintiff nevertheless completed his Certificate III commercial cookery course in about June 2019. He was able to do so by performing part of the final assessment at home in a team with Ms Radovan. He subsequently completed a short espresso coffee course, qualifying with a Certificate of Attainment in about October 2019.

The longer term

1. After the 24 March 2019 accident, the plaintiff ceased his volunteer work with the SES, RFS and Salvation Army. He has also sold all of his gardening equipment and no longer operates his Mr Clip business. The plaintiff says he cannot engage in any of those activities because of limitations with his arms and shoulders suffered since the fall.
2. The plaintiff gave evidence that he has always been looking for work as a chef or a cook. He searched job search websites Indeed and SEEK and wrote to several prospective employers. While work in the restaurants of his TAFE instructors was often available to graduating students, he was unable to apply because of the physical limitations on his arms and shoulders caused by the accident. It was not put to the plaintiff that he did not genuinely seek work as a chef or cook.
3. In early 2020 the plaintiff and Ms Radovan moved out of the flat, first to a two bedroom unit in Hornsby and eventually to Grenfell. Ms Radovan continues to perform the bulk of the domestic chores, now including lawn mowing. The plaintiff estimated she spent three hours per day on domestic chores at Hornsby and continues to do so at Grenfell. The plaintiff attends to light domestic duties. For the same reasons as set out above, I regard these estimates as an exaggeration and unreliable. The plaintiff and Ms Radovan do not have any dependants and the time estimated to maintain a household of two adults does not appear to me to be realistic or to accord with common experience.
4. The plaintiff still has difficulty and experiences pain in performing tasks associated with cooking, such as lifting heavy objects such as pots full of water and chopping vegetables and ingredients. Nevertheless, he accepted in cross examination that he can prepare meals for himself as well as clear the table and stack the dishwasher afterwards. He also accepted he can dress himself but experiences pain in doing so. He can perform maintenance tasks around his current home as well as mop a floor and wipe down surfaces, although Ms Radovan mainly performs those tasks. I find that the plaintiff is capable of attending to his own personal care himself, albeit while experiencing some pain.
5. In cross examination, counsel for the first and second defendants took the plaintiff through a number of the tasks that he has undertaken since the fall. The plaintiff accepted he performed handyman and maintenance jobs for Ms Yang or her daughter, including weeding and garden spraying (using a 1½ litre bottle which he attached to a garden hose), fixing a toilet cistern and replacing a number of ceiling fans and an exhaust fan. He was able to use a small step ladder and drive to the Central Coast of NSW to perform these jobs on a property there. Although there was some debate about what was involved, the plaintiff repaired a hail damaged pergola either by replacing the sheeting or by applying tape to cover holes in it. He mixed cement and used it to replace some loose pavers. He trimmed some trees using a chainsaw.

The plaintiff's relevant medical history

1. The plaintiff said he was in good physical health until about 2006-2007 but had experienced the effects of trauma, resulting in his diagnosis of PTSD from about 2005 or 2006. His obesity, which appears to have reached its peak in about 2009-10, also restricted his mobility and ability to perform domestic chores. He denied suffering any pain associated with it. The plaintiff has also suffered from Type II diabetes since 2004.
2. As set out above, the plaintiff has been on a disability support pension since 2007 due to his PTSD and lower back pain. He accepted in cross examination by Mr Horsley for the Insurer that he has not been able to work at any time since 2007. A report by Dr David Wu, anaesthetist, in 2009 disclosed a severe level of functional disability due to the plaintiff's lower back pain. The plaintiff made an unsuccessful claim for total and permanent disability on a policy of insurance with AXA Insurance in 2009. A report by Dr Tim Anderson, occupational physician, in 2009 describes several physical and psychological conditions and that lower back pain caused the plaintiff to use walking sticks to ambulate at that time. This report is referred to again below.
3. The plaintiff says that he ceased suffering that lower back pain by about 2013 after his considerable weight loss. However, the evidence shows he still suffered from lower back pain in February 2016 when he presented to his general practitioner, Dr Morris Aziz, complaining, amongst other things, of chronic lower back pain, as was recorded in Dr Aziz's notes of 11 February 2016.
4. I do not accept that the plaintiff's lower back pain ceased prior to 2016. On the basis of the contemporaneous notes of Dr Aziz of a consultation with the plaintiff in February 2016, I find that the plaintiff continued to suffer chronic lower back pain at least until that time.
5. Further, from at least October 2016, the plaintiff had significant ongoing problems with his shoulders that prompted him to seek treatment from Dr Aziz on many occasions.
6. On 27 October 2016 the plaintiff suffered a fall on a public footpath across the road form Dr Aziz's surgery. The plaintiff says that he suffered abrasions (which he described as a "sort of gravel rash") to his right hand and was traumatised by the fall and suffered a lot of pain in his hand and right arm. As a result of that fall, he suffered some upper back and shoulder pain but denied that the pain persisted. Dr Aziz saw the plaintiff on 28 October 2016 and recorded that the plaintiff fell, landing on the left side of his body, grazing his left arm and leg. Dr Aziz further recorded a bilateral 10 to 15 degree extension deficit in both elbows. Both arms were subsequently x-rayed, however the x-ray results were not otherwise referred to.

Subsequent treating doctor reports

1. The Westmead Hospital discharge summary shows the plaintiff did not suffer a fracture or dislocation from the 24 March 2019 accident. The plaintiff suffered a deep laceration in his left forearm that did not require stitches.
2. On 26 March 2019 (that is two days after the accident), the plaintiff again attended Dr Aziz. Dr Aziz recorded that the plaintiff presented with left shoulder aggravation of pre-existing condition of rotator cuff tear and adhesive capsulitis, "soft tissue injury shoulder". He recorded the plaintiff suffered extensive soft tissue injury to his left upper arm with laceration, soft tissue injury to his left hand with bruises and swelling, very painful restricted left shoulder movements and painful restricted left elbow movements.
3. Two subsequent reports from Dr Aziz were also admitted into evidence. A handwritten report dated 30 July 2020 recorded that the plaintiff was capable of performing office work at home and that he had a good prognosis, the only ongoing pain being the pre-existing left shoulder injury and that the plaintiff would need analgesics on demand.
4. In his report dated 8 February 2022, Dr Aziz recorded that the plaintiff was "generally not fit to presume (sic - resume) work but I believe his work capacity potential has been reduced further with his above injury".

Medico-legal reports

1. The plaintiff relies on medico-legal reports of Dr Yuk Kai Lee and Dr Sean Low.
2. On 7 December 2021 the plaintiff attended the rooms of Dr Lee, an orthopaedic surgeon. Dr Lee recorded the plaintiff's injuries as being to his shoulders, neck and back. He recorded a rotator cuff tear bilaterally and aggravation of facet joint arthritis in the cervical spine. In Dr Lee's view, the plaintiff would not be fit to be a chef whose job includes lifting of heavy pots and pans and in a stressful environment. He recorded that the plaintiff could not help with housework and that his partner, who is on WorkCover, does all the work. Dr Lee considered that six hours of domestic help per week is appropriate.
3. In Dr Lee's view, the plaintiff's shoulders may be treatable surgically and he suggests the plaintiff see a shoulder surgeon. The particular surgery, acromioplasty, rotator cuff repair and biceps tenodesis of the left shoulder, would cost about $9,000. Post-operative physiotherapy would cost a further $3,000.
4. Dr Lee expects the plaintiff to continue to have pain and stiffness in his spine and shoulders, which may become worse in the future. He expects the plaintiff to develop arthritis in the traditional sense.
5. Dr Lee's report is criticised by the defendants on the basis that he was not provided with or did not refer to any scans that predated the accident and appeared to be unaware of, or did not consider, the plaintiff's relevant history (the fall on 27 October 2016, ultrasound report of 8 February 2017, reports of Dr Aziz of 30 July 2020, consultation of 19 March 2019).
6. On 7 December 2021, the plaintiff also saw Dr Low, an occupational physician. In Dr Low's view, the plaintiff remained unfit to return to work in any capacity. Dr Low considered that the plaintiff remains significantly disadvantaged in the open labour market, that he requires ongoing physical restrictions against performing any manual tasks and that overall he remains unfit to return to work in any capacity. He would be unable to tolerate the inherent duties in working as a kitchen hand or chef and would be unable to perform repetitive upper limb tasks involved in cooking and manoeuvring kitchen items, would be unable to tolerate prolonged periods on his feet or to tolerate full-time hours. Unless he had assistance from family members, he would require two hours of domestic assistance each week to assist with heavy household tasks such as vacuuming, mopping and cleaning bathroom services.

Treatment

1. The plaintiff continues to suffer physical pain in his shoulders and upper back, neck and arms. He is not undergoing any active treatment to manage his pain, although he takes Celebrex and Diazepam for pain relief.
2. Drs Lee and Low recommend the plaintiff see a surgeon in respect of possible surgical intervention, although I do not read their evidence as affirmatively recommending surgery. Professor Cameron does not agree that it could assist. I am not satisfied that Drs Lee and Low have articulated a sufficient basis for me to conclude that surgical intervention is warranted.

Principles for determination of liability

1. The circumstances of the plaintiff's claim against the first and second defendants are governed by the Civil Liability Act 2002 (NSW) (the "CLA"). The relevant provisions are: 5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless - (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things) - (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. …. 5D General principles (1) A determination that negligence caused particular harm comprises the following elements - (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). …. 5E Onus of proof In proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.
2. There was no dispute that the first and second defendants owed a duty to exercise reasonable care to prevent foreseeable injury to the plaintiff as an entrant using reasonable care on his part for his own safety: Australian Safeways Stores Pty Ltd v Zaluzna (1987) 162 CLR 479; [1987] HC 7; Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HC 42. The duty extends to taking precautions a reasonable person in the circumstances would take by way of response to the risk that a person may slip on tiles: Schultz v McCormack [2015] NSWCA 330 at [73].
3. An occupier is not under a duty to engage an expert in the field of slip resistance testing where such risks of defects could, in the nature of things, be seen as a possibility: Jones v Bartlett (2000) 205 CLR 166 at [184] per Gummow and Hayne JJ. However, once alerted to a risk, the occupier's duty is to exercise reasonable care to take such steps as a reasonable person would take in response to the risk so identified: Bunnings Group Ltd v Giudice [2018] NSWCA 144 per Leeming JA at [34].

Breach and causation

1. The plaintiff bears the onus of proving any fact relevant to the issue of causation: s 5E, CLA.
2. The plaintiff relies on an expert report of Denis Carduro of Carduro Worksafe Pty Limited dated 8 June 2022 (the "Caduro report"). The Caduro report was admitted without objection and there is no other expert material before the Court on any question relevant to liability. I accept Mr Carduro's analysis and conclusions.
3. On the basis of the Caduro report, I am satisfied that the surface of the stairs failed the minimum standards of the relevant Australian Standards requirements in that they were inadequately slip resistant when wet and inappropriate for use on external surfaces, which surfaces would almost certainly be wet from time to time. Mr Caduro identified reasonable preventive measures that could (and in his opinion should) have been implemented. In a non-exhaustive list, he identified the installation of slip resistant visually contrasting nosing, grip tape and a hand rail, each of which could be achieved simply and inexpensively. Obvious notices could also have been prominently and permanently displayed, advising that the stairs were slippery when wet. I consider each of these steps to be a reasonable response to a foreseeable risk, of which the first and second defendants had actual notice from November 2018.
4. By way of summary with specific reference to the elements identified in s 5B of the CLA, I find that the risk of personal injury being suffered by an entrant to the Property by slipping on wet tiles was foreseeable and was a risk of which the first and second defendants had actual knowledge from no later than November 2018. That risk was not insignificant and there was a high probability of harm if someone were to slip on the tiled stairs when wet. The burden of taking the precautions identified by Mr Carduro was slight. The injury suffered by the plaintiff was serious and, as senior counsel for the plaintiff submits, had the plaintiff hit his head, the injury might have been fatal.
5. Accordingly, in the circumstances I find a reasonable person in the position of the first and second defendants would have taken the precautions against the risk of harm. As the first and second defendants did not take such precautions, I am satisfied that they breached their duty of care to the plaintiff.

Findings as to liability

1. On the facts as I have found them, I find that the first and second defendants are liable to the plaintiff for negligently failing to take reasonable steps to protect him from the risk of injury resulting from slipping and falling on the tiled surface of the stairs at the rear of the property when wet. That risk eventuated on 24 March 2019 as a result of which the plaintiff suffered injury to his shoulders, left arm, neck and upper back.

Damages

1. The plaintiff seeks damages for non-economic loss, past and future out of pocket expenses, past and future economic loss and past and future domestic assistance.

Non-economic loss

1. Damages for non-economic loss are assessed in accordance with s 16 of the CLA, which provides a mechanism for assessing the severity of such loss with reference to the most extreme case.
2. Each of the parties contended for a different finding as to the severity of the plaintiff's loss: the plaintiff ultimately contended that his loss was 32% of a most extreme case; the first and second defendants said the proportion was 23% and the Insurer said it was no greater than 10%.
3. The defendants point out that the plaintiff has suffered from Type II diabetes since 2004 and PTSD since 2006. He has suffered from lower back pain from 2003 and underwent numerous investigations to 2009. Damage at the L5/S1 vertebrae, structural changes at the thoraco-lumbar junction and somatic pain referred into the right leg were identified by Dr McGrath in March 2009. Extensive degenerative changes were identified at L4/5 with a posterior protrusion deviated towards the right and a small posterior protrusion at L5/S1 towards the left were identified by Dr Anderson in September 2009. At that time Dr Anderson considered the plaintiff was not fit to return to work and his prognosis was poor.
4. It should be noted, however, that the plaintiff through his own efforts made enormous progress in the period to 2013 such that he could participate in community and social activities that would have seemed highly unlikely in 2009.
5. Nevertheless, the plaintiff's pre-accident medical history as set out above shows continuing pain in his shoulders, neck and upper back. Pains continued and the plaintiff sought medical treatment in respect of them as late as 5 days prior to the accident. I have already indicated above that to the extent that the plaintiff denies this history, I prefer the objective and contemporaneous reports of various treating practitioners, particularly Dr Aziz.
6. I have accepted that the plaintiff suffered injury to his neck, shoulders, upper back and left forearm in the 24 March 2019 accident. The laceration to his left arm, which has healed, is an uncontroversial injury suffered in the accident. The extent of the soft tissue injury caused by the 24 March 2019 accident, however, is in issue. The first and second defendants accept it is probable that the accident aggravated pre-existing conditions and that as a result the plaintiff has suffered an increased level of pain and restriction in his physical capacity, particularly in his neck, upper back and shoulders. The defendants add that these issues would have resolved within 4 weeks.

Out of pocket expenses

1. Past out of pocket expenses are agreed at $3,928.50.
2. In respect of future out of pocket expenses I do not accept that the plaintiff requires surgery. Nevertheless, I accept that the plaintiff will require analgesics to manage his pain and may need to consult his general practitioner from time to time. In this respect I propose to allow a buffer of $3,000.00.

Past and future economic loss

1. The plaintiff's claim for economic loss is essentially that by reason of the breach by the first and second defendant's duty of care to him, he has been injured by the impairment of his earning capacity. That injury is primarily alleged to have been the ability he otherwise would have had to take up employment as a sous chef, either with his nephew Simeon Walsh in Melbourne or otherwise. The plaintiff also seeks to recover as past economic loss his lost capacity to earn income from his Mr Clip gardening business.
2. As at March 2019, the plaintiff had not worked in any capacity other than his volunteer work, odd jobs and his Mr Clip business for about 12 or 13 years. He had continually been on a disability support pension for that whole period.
3. The plaintiff's evidence is that he proposed to enter the world of commercial cooking in his mid to late 50s. He made a number of unsuccessful applications to a variety of establishments. He had had conversations with his nephew, Simeon Walsh, who manages a café in Melbourne at which he has responsibility for hiring staff. The plaintiff gave evidence that he was prepared to move to Melbourne to take up that opportunity.
4. Mr Simeon Walsh gave evidence by AVL that he had been prepared to hire the plaintiff as a sous chef on completion of the plaintiff's Certificate III commercial cooking course but could not do so once the plaintiff suffered his injuries from the 24 March 2019 accident. In cross examination, however, he provided the following evidence as to the physical demands of working in a commercial kitchen and its effect on hiring decisions: Q. … I want you to assume a hypothetical set of facts, please. Someone comes to you and tells you between 2003 and 2010 "I had back pain and a back condition that caused me significant disability". If someone had come to you with that background at any time between 2019 and 2022, would you give that person a job? A. If I was to understand that someone was injured, I could not employ them. Q. Can I give you another assumption? Someone comes to you and says, "I've had post-traumatic stress disorder and I haven't been in full-time employment since 2006", would you employ that person? A. I guess - sorry, again, I could not employ someone that was injured. And if I could give you an example, when I was first employed, I was asked if I had any injuries and if my had strong wrists. That was my first question when I was an apprentice was, do I have strong wrists and a strong back because there is a lot of heavy lifting and a lot of workloads. So, I, as a head chef, moving forward to the time you're referring to, and in present time, cannot employ someone who is injured, it's a risk of themselves and others. Q. Can I ask you then a question based on a different assumption? Can I ask you to assume that someone comes to you and says, "I have a previous injury, I injured my left shoulder in 2016 and I had problems with that shoulder for a number of months after that injury". Would you give that person a job as a sous chef? A. I'm sorry to be short with you, but are these assumptions leading somewhere? Q. If I could just ask you to answer the question and I will ask you one further question thereafter. HIS HONOUR Q. Can I just intervene, Mr Walsh, it's the judge here. A. Yes. Q. You don't have to have the end result in mind in answering these questions. These are just questions which are being put to you. And you just answer each question on its merits. If there is a reason‑‑ A. Okay, I understand that he's‑‑ Q. If there is a reason for you not to answer that question, the plaintiff's barrister will object and then I'll rule on the objection, but in the meantime‑‑ A. Okay, I understand, but these are all assumptions, am I correct, this all assuming that someone is‑‑ Q. Yes. These are all put to you, Mr Walsh, on the basis that they're assumptions. And so you just make the assumption that's embedded in the question and then just answer it on those terms. A. I'll answer again then, I would not hire someone who has an injury that could harm themselves or others in the workplace dealing with possibly hot water in pots, lifting heavy trays, dealing with sharp knives and could possibly injure myself, themselves or others, so, no, I would not hire someone with his assumed injuries.

Domestic assistance: past and future

1. Pursuant to s 15(3) of the CLA, damages for gratuitous attendant care services are only payable if the services are provided (or to be provided) for at least 6 hours per week, and for a period of at least 6 consecutive months.
2. On the facts as I have found them, the plaintiff does not reach this threshold. Accordingly, I do not award any damages in respect of this claimed head of damage. Further, the plaintiff claims damages in respect of future commercial domestic assistance calculated at 2 hours per week for life. By reason of application of the statutory multiple, this amounts to a claim for $69,183. On the basis of my findings as to the plaintiff's ability to perform domestic tasks and care for himself, I do not find that this claim is made out.

Conclusion as to damages

1. The damages to which the plaintiff is entitled are, therefore: Non-economic loss 25% of a most extreme case $46,000.00 Past out of pocket expenses $3,928.50 Future out of pocket expenses, buffer $3,000.00 Past economic loss $22,300.00 Future economic loss or buffer $26,229.00 Total $101,457.50

The insurance issues

1. The insurance issues may be summarised as follows: 1. The first and second defendants (already defined in these reasons as the "Insured") claim indemnity under the Policy, entered on 19 February 2019. 2. The Insurer says that liability is excluded under the Policy due to any or all of six enumerated exclusions, which defeat the Insured's claim for indemnity and any direct claim made by the plaintiff under the Third Party Claims Act. The Insured (and the plaintiff) contend that, as a matter of construction, the exclusions do not apply. The relevant exclusions are described in these reasons as: 1. the business occupation exclusion; 2. the business use exclusion; 3. the unlawful activity exclusion; 4. the ordinary resident exclusion; 5. the building regulation exclusion; and 6. the local authority regulation exclusion. 1. Alternatively, to the extent that they do apply, the Insured say that pursuant to s 35(1) of the ICA, the Insurer may not refuse to pay the claim as the Policy is a prescribed contract and the event giving rise to the claim is a prescribed event within the meaning of s 35(1) of the ICA. 2. If that be right, the Insurer in turn relies on s 35(2) of the ICA to defeat the Insured's reliance on s 35(1) on the basis that, before the Policy was taken out, the Insurer clearly informed the Insured in writing of the relevant provision of the proposed Policy, or the Insured knew, or a reasonable person in the circumstances could be expected to have known, the Policy would not provide insurance cover in respect of the happening of the relevant event.

The policy of insurance

1. The Policy schedule provided that the Policy was for building and contents insurance. The Insured's relationship to the Property was described as "live in it as your home. Do not expect the property to be unoccupied for more than 60 days in a row in the policy year".
2. The process of applying for cover involved answering a number of questions on the Insurer's website. Ms Yang undertook that task for both Insured. In answer to the question of how the home would be used, she answered "To live in as your main home". In answer to the question "Is any part of the home used for business purposes", Ms Yang answered "No." The position of persons residing at the Property who were not ordinarily part of the policy holders' household was not expressly addressed other than a question was directed to whether 5 or more unrelated people lived in the home.
3. The insuring clause provided cover for loss or damage caused by 13 specified insured events not relevant to the current proceedings. A further insuring clause provided cover for legal liability as follows: Legal Liability cover insures you against the costs of paying compensation for death or bodily injury to other people or for loss or damage to their property. … If your schedule shows that you have Building and Contents cover, we cover your legal liability as a result of an incident which happens anywhere in Australia.
4. There is no dispute that prima facie the insuring clause responds to the Insured's claim in the present circumstances.
5. The relevant exclusions are set out below. In the Legal Liability Cover section, the Policy is described as providing additional cover for legal liability. It further states: What is not covered We will not cover liability for personal injury or property damage arising from, or in connection with directly or indirectly from: …. • Any of the General Exclusions on page 54-57 • any trade, business, occupation or employment carried on by you, your family or anyone living at your home, for reward, [referred to in these reasons as the "business occupation exclusion"]; • the use of your home or the site for any business purpose or farming activity, unless we agree to the cover, and this is specified on your schedule, [referred to in these reasons as the "business use exclusion"]; … • Any illegal or unlawful activity by you or your family or anyone acting with the consent of you or your family, (the "unlawful activity exclusion") • claims by you, your family, any resident ordinarily residing with you or with whom you ordinarily reside, (the "ordinary resident exclusion") …

Relevant principles of construction of the Policy: the exclusion clauses

1. The relevant principles of contractual construction are not in doubt. As with any commercial contract, a policy of insurance must be construed in a businesslike manner, paying attention to the language used by the parties, the commercial circumstances which the document addresses and the objects which it is intended to secure: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22]. Construction is determined objectively according to what a reasonable businessperson would have understood the terms to mean: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47].
2. The Insurer bears the onus of proving any qualification or limitation on cover: Wallaby Grip Pty Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444; [2010] HCA 9 at [36]. Unless evidence demonstrates that both parties are aware of extrinsic facts or there is some evidence as to a practice to which both parties subscribe, I cannot take any extrinsic material into account on the question of construction of the Policy. This includes other policies of insurance issued by the Insurer but not the subject of agreement between the parties or of which there is no evidence that the Insured had notice.

Relationship between liability and exclusions

1. As a matter of ordinary construction, the Policy excludes liability where there is a sufficiently close relationship between the basis for the Insured's liability to the plaintiff and the exclusion in the Policy. A question nevertheless arises as to how close the relationship must be in order to enliven the relevant exclusions in this case.
2. The Policy uses two composite formulations to connote the requisite relationship between the liability and the exclusion: 1. "arising from, or in connection with directly or indirectly" for the purpose of each of the exclusions (the first formulation) 2. "arising directly or indirectly from or in any way connected with" for the purpose of the building regulation and local authority exclusions (the second formulation).
3. The Insurer says both limbs of each formulation are engaged; the Insured says they are not.
4. The relational terms, "arising out of" and "in connection with" are each ambulatory terms, the construction of which does not involve the resolution of ambiguity but, rather, an analysis that takes into account their context and purpose: R v Khazaal [2012] HCA 26; 246 CLR 601; 86 ALJR 884; 289 ALR 586; 217 A Crim R 96 at [31].
5. Of the various terms used, the words "arising from" are the narrowest. They connote a causal relationship, albeit a less proximate relationship than would be connoted by the words "caused by": Government Insurance Office (NSW) v R & J Green & Lloyd Pty Ltd (1966) 114 CLR 437 at 443. In the well-known example of Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500; [1987] HCA 49, a father drove to a town centre with two very young children, leaving them alone in the car while he temporarily went shopping as a stop on a longer journey. During his absence one of the children was injured when the other found and started playing with a box of matches. The issue was whether the injury arose out of the use of the vehicle. The High Court found that it had, because the vehicle had been used to carry the children as passengers in the course of a journey which was only temporarily interrupted. It was in use in that way when the fire occurred and the injuries which were sustained had arisen out of that use. At 505 the Court stated: The test posited by the words "arising out of" is wider than that posited by the words "caused by" and the former, although it involves some causal or consequential relationship between the use of the vehicle and the injuries, does not require the direct or proximate relationship which would be necessary to conclude that the injuries were caused by the use of the vehicle …

The "business occupation exclusion" and the "business use exclusion"

1. The Insurer contends that the Insured's conduct in letting the flat to the plaintiff and Ms Radovan in consideration of the payment of rent constituted a business, sufficient to enliven the business occupation exclusion and/or the business use exclusion. Notwithstanding that the accident did not occur within the flat, the Insurer contends that the Insured's liability arose indirectly from the conduct by the Insured of the business comprised in letting the flat to the plaintiff and Ms Radovan from October 2018 and was therefore caught by the exclusion clause.
2. Counsel for the Insured submitted that the exclusions do not apply because, properly construed, they are both directed to the carrying on of a trade, business, occupation or employment rather than the use of the Property as a residence itself comprising the relevant business.
3. "Business" is not defined in the Policy. There was, however, broad agreement between the parties that a business involves repeat activity and a one-off rental cannot constitute a business activity. As the learned authors of Derrington and Ashton, The Law of Liability Insurance, 3rd ed, LexisNexis 2013 noted "there must be continuity and customary engagement … It usually requires a habitual factor in the relevant occupation, profession or trade rather than an isolated, irregular or illegal occasion …".
4. Counsel for the Insurer contended, however, that the characteristics of continuity and repetition were made out by 24 March 2019, in circumstances where the plaintiff and Ms Radovan had occupied the flat and paid rent over a period of about 5 months.
5. On balance, I consider that a business was not established over that period. Prior to the occupation of the flat by the plaintiff and Ms Radovan, the flat had been unoccupied. There was no evidence that the Insured contemplated letting the flat to anyone else on their departure. The Insured let the flat to the plaintiff and Ms Radovan in order to assist them and they remained friends, occasionally sharing meals and the plaintiff performing odd jobs and gardening for Ms Yang, indeed the restoration of the services in the flat was one such job. Their friendship was a key factor in the foundation of the arrangement. The fact that the arrangement had continued for 5 months as at the date of the accident did not change its character in that period.

The ordinary resident exclusion

1. Mr Horsley, while not abandoning the point, placed little weight on the ordinary resident exclusion. As with the business occupation and use exclusions, Mr Horsley's key point was that by the time of the accident, a degree of continuity and repetition had been established with respect to the plaintiff's residency of the flat sufficient to characterise him as ordinarily resident there.
2. Mr Walsh took the Court to Derrington and Ashworth, which identifies the vice that the exclusion addresses. That is, it is directed to preventing collusive claims by members of an insured's family and household and who live under the same roof as the insured, including parties who are or have an interest in the policy. In my view this informs the construction of the relevant exclusion, which I take to refer to those who are part of the insured's household and remain so on other than a transitory basis.
3. On the facts as I have found them, I consider that the plaintiff did not reside with the Insured in any relevant sense. While they maintained friendly relations - indeed, Ms Yang at one point described the plaintiff and Ms Radovan and "like family" - they nevertheless lived their lives independently of each other and were more like neighbours than family members or flatmates. The fact that the plaintiff and Ms Radovan did not reside in the main house but in the flat, while not dispositive, adds a further basis to this finding. In my view, they were not part of the same household and as a result do not fall within the operation of the ordinary resident exclusion.
4. I therefore find that the ordinary resident exclusion is also not made out.

The unlawful activity, building regulation and local authority regulation exclusions

1. Mr Horsley's principal submission on the operation of the exclusion clauses was directed to the building regulation and local authority regulation exclusions. As they overlapped with the unlawful activity exclusion, it is convenient to address that exclusion here as well.
2. As set out above, Ms Yang and Mr Xu received correspondence from Council in 2015 directing them to remove certain services from the flat. Some, but not all, of those services were removed. There the matter rested until about October 2018 when the plaintiff, with the consent of Ms Yang, reconnected certain services and reinstalled certain kitchen appliances, thereby making the flat habitable. The circumstances are addressed above.
3. The Environmental Planning and Assessment Act 1979 (NSW) (the "EPAA") relevantly provided: 3.31 Making of environmental planning instruments for local areas (LEPs) (cf previous ss 53, 53A) (1) A local plan-making authority may make environmental planning instruments for the purpose of environmental planning - (a) in each local government area, and (b) in such other areas of the State (including the coastal waters of the State) as the local plan-making authority determines. (2) Any such instrument may be called a local environmental plan (or LEP). (3) For the purposes of this Division, the following are local plan-making authorities - … (c) a council for its local government area if the gateway determination under this Division authorises the council to make the local environmental plan concerned.
4. Council made an environmental planning instrument for the purpose of the EPAA, being The Hills Shire Plan 2012 (the "Hills Plan"). In Council's correspondence and in Mr Horsley's submissions, it was stated that the Hills Plan required development consent for the conversion of the garage into a secondary dwelling.
5. Section 4.2 of the EPAA provided: 4.2 Development that needs consent (cf previous s 76A) (1) General If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless - (a) such a consent has been obtained and is in force, and (b) the development is carried out in accordance with the consent and the instrument. Maximum penalty - Tier 1 monetary penalty. (2) For the purposes of subsection (1), development consent may be obtained - (a) by the making of a determination by a consent authority to grant development consent, or (b) in the case of complying development, by the issue of a complying development certificate. (3), (4) (Repealed) (5) Complying development An environmental planning instrument may provide that development, or a class of development, that can be addressed by specified predetermined development standards is complying development. (6)-(9) (Repealed) … 6.9 Requirement for occupation certificate (cf previous ss 109H(1), 109M, 109N) (1) An occupation certificate is required for - (a) the commencement of the occupation or use of the whole or any part of a new building, or (b) the commencement of a change of building use for the whole or any part of an existing building. (2) However, an occupation certificate is not required - (a) for the commencement of the occupation or use of a new building - (i) for any purpose if the erection of the building is or forms part of exempt development or development that does not otherwise require development consent, or (ii) that is the subject of a compliance certificate in circumstances in which that certificate is an authorised alternative to an occupation certificate (such as a swimming pool or altered part of an existing building), or (iii) by such persons or in such circumstances as may be prescribed by the regulations, or (iv) that has been erected by or on behalf of the Crown or by or on behalf of a person prescribed by the regulations, or (b) for the commencement of a change of building use for the whole or any part of an existing building - (i) if the change of building use is or forms part of exempt development or development that does not otherwise require development consent, or (ii) by such persons or in such circumstances as may be prescribed by the regulations, or (iii) if the existing building has been erected by or on behalf of the Crown or by or on behalf of a person prescribed by the regulations … 9.37 Failure to comply with order - offence (cf previous s 125) (1) A person to whom a development control order is given or is taken to have been given must comply with the terms of the order. (2) It is a sufficient defence to a prosecution for an offence against this section if the defendant satisfies the court that the defendant was unaware of the fact that the matter in respect of which the offence arose was the subject of an order. Maximum penalty - Tier 1 monetary penalty.

Section 35(1) of the Insurance Contracts Act

1. To the extent that exclusions apply, the Insured rely on s 35 of the ICA to preclude the Insurer from relying on the exclusions in terms.
2. Section 35 relevantly provides: 35 Notification of certain provisions (1) Where: (a) a claim is made under a prescribed contract; and (b) the event the happening of which gave rise to the claim is a prescribed event in relation to the contract; the insurer may not refuse to pay an amount equal to the minimum amount in relation to the claim by reason only that the effect of the contract, but for this subsection, would be that the event the happening of which gave rise to the claim was an event in respect of which: (c) the amount of the insurance cover provided by the contract was less than the minimum amount; or (d) insurance cover was not provided by the contract. (2) Subsection (1) does not have effect where the insurer proves that, before the contract was entered into, the insurer clearly informed the insured in writing (whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise) or the insured knew, or a reasonable person in the circumstances could be expected to have known: (a) where the effect of the contract, but for subsection (1), would be that the liability of the insurer in respect of a claim arising upon the happening of the event would be less than the minimum amount - what the extent of the insurer's liability under the contract in respect of such a claim would be; or (b) where the effect of the contract, but for subsection (1), would be that the insurer would be under no liability in respect of such a claim - that the contract would not provide insurance cover in respect of the happening of that event. (3) Regulations made for the purposes of this section take effect at the expiration of 60 days after the day on which they are registered on the Federal Register of Legislation under the Legislation Act 2003. (4) Where regulations made for the purposes of this section are amended after the day on which a particular contract of insurance is entered into, the amendments shall be disregarded in relation to the application of subsection (1) to that contract.
3. Regulations 18 and 19 of the Insurance Contract Regulations 2017 (the "ICR") relevantly provide: 18 Prescribed contracts The following class of contracts of insurance is declared to be a class of contracts in relation to which Division 1 of Part V of the Act applies, namely, contracts that provide insurance cover (whether or not the cover is limited or restricted in any way) in respect of destruction of, or damage to, a home building, where the insured or one of the insureds is a natural person. 19 Prescribed events (1) The following, except in so far as they are excluded by subsection (2), are declared to be prescribed events in relation to a contract referred to in section 18: …. (d) the insured or a residing family member of the insured incurring a liability as owner or occupier of the home building to pay compensation or damages to some other person. (2) The following are excluded: …. (d) destruction or damage, or the incurring of a liability as mentioned in paragraph (1)(d), as a result of: … (iv) the use of the home building for the purposes of a business, trade or profession; or (k) the incurring of a liability as mentioned in paragraph (1)(d): (i) to the insured or a residing family member of the insured; …

The operation of s 35(2)

1. For s 35(2) to operate, the Insurer must establish it "clearly informed" the Insured in writing, or a reasonable person in the position of the Insured would have known that the Policy would not cover the Insured's liability to the plaintiff.
2. As a matter of construction, the inclusion in s 35(2) of the word "clearly" must have some work to do. In my view, its construction is informed by three relevant factors. First, s 35 is a form of consumer protection legislation in that it is concerned with ensuring that consumers are adequately informed of the limits of cover in a policy to enable them to make properly informed decisions as to whether to enter into a particular policy on particular terms. Secondly, as a matter of language in its context it contemplates that not all provision of information will be sufficiently clear to achieve this purpose. Where the terms of an exclusion are difficult to understand, either as a matter of language or otherwise, it is incumbent on an insurer seeking the benefit of s 35(2) to make the operation of the exclusion sufficiently clear to inform the insured of the effect of the exclusion. Finally, as I read s 35(2), the provision of the actual policy wording may be sufficient, but will not necessarily be so. Ultimately this becomes a question of fact in the whole of the relevant circumstances.
3. The parties agree that, through the online portal which Ms Yang used to complete the proposal and take out the Policy, the wording of the exclusions was disclosed to her. It was not contended that Ms Yang had actual knowledge of the exclusions on any other basis or that she ought to have known liability to the plaintiff would not be covered by the Policy.
4. The question remains whether provision of the policy wording "clearly informed" Ms Yang that the relevant event would not be covered. The Insurer says that the provision of the actual Policy wording is contemplated by s 35(2) and is enough. The Insured says that the wording requires such careful and detailed analysis in order properly to be understood that, even if as a matter of construction the exclusions apply, the Insurer has not "clearly informed" the Insured of the effect of the exclusion simply by providing the Policy wording at the time the Policy is proposed.
5. In Lockwood & Lockwood v Insurance Australia Ltd t/as SGIC Insurance [2010] SASC 140, Kourakis J (as the learned Chief Justice then was) considered an exclusion in a motor vehicle policy (to which s 35 of the ICA also applies) which excluded liability "if at the time of the incident …your vehicle was being driven … by a person who was not licensed or permitted to drive it".

Conclusion as to indemnity

1. In my view, therefore, the Insurer has not made out its claim that the exclusions in the Policy apply such that it is entitled to decline cover.

Conclusion and orders

1. My reasons in this matter were initially delivered on 30 June 2023, and on that occasion, I asked the parties to bring in short minutes giving effect to them and to raise with me any matters which may still require determination.
2. At the time, I also indicated that my preliminary view as to costs, which would ordinarily follow the event, was that the plaintiff should have his costs and Ms Yang and Mr Xu should have their costs of the cross-claim. I afforded the parties an opportunity to agree on costs or otherwise apply for any special costs order.
3. Since then, the parties brought to my attention the fact that my reasons did not separately address the plaintiff's claim for commercial care, which is now addressed at paragraph 149 above. The parties have otherwise agreed on orders, including as to costs, which give effect to my reasons, which orders I made on 10 August 2023 and set out below.

Orders In the proceedings brought by the Plaintiff against the First, Second and Third Defendants: 1. Judgment for the Plaintiff against the Defendants in the sum of $102,508.20. 2. Order the Defendants to pay the Plaintiff's costs on an ordinary basis. In the First Cross-Claim: 1. Judgment for the Cross-Claimants against the Cross-Defendant in the amount of: 1. the First and Second Defendants' liability to pay damages to the Plaintiff; 2. the First and Second Defendants' liability to pay the Plaintiff's costs of the proceedings, including interest on costs; and 3. the First and Second Defendants' costs of defending the proceedings brought by the Plaintiff on a solicitor and own client basis. 1. Order the Third Defendant to pay the First and Second Defendants' costs of the First Cross-Claim on an ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 August 2023