The decision of the Supreme Court in You v Thomas  VSC 255 was an appeal from a determination of the Building Appeals Board (Board) that an insurance policy for the protection of adjoining property did not comply with section 93 of the Building Act 1993 (Act).
The property owner is building a new house on his property. The relevant building surveyor determined that protection work was required, being work designed to protect the adjoining property from damage. The owner's builder took out insurance for the protection work as required by section 93 of the Act.
The adjoining owner argued that the insurance contract did not comply with section 93, and referred the issues of the insurance and the costs of the protection work to the Board1.
The Board determined that the insurance contract for the protection work did not comply with section 93 of the Act, and ordered that the owner provide the adjoining owner a contract of insurance that did comply.
The Board's reasons for why the insurance policy did not comply included that:
- the period of insurance was only for one year rather than for the whole period of the building work
- the contract named the builder rather than the adjoining owner as the insured party.
Supreme Court decision
The owner appealed to the Supreme Court for review of the Board's decision. He challenged the decision on a number of bases, including that the Board made legal errors in misinterpreting section 93 and the effect of the insurance contract.
The Court held that there is no requirement for:
- the period of cover in an insurance contract to cover the entire duration of the building work, as otherwise there would be no place for section 93(4), which provides for contracts to be renewed or extended;
- the adjoining owner to be named as the insured in a policy under section 93. This is the case because, in the context of subsection 93(1)(a), the Insurance Contracts Act 1984 provides that a person may be insured under the contract without being explicitly named as the insured and in the context of subsection 93(1)(b), the insurance is liability insurance that will cover the adjoining owner as a third party.
As such, the Court found that the Board had taken into account irrelevant considerations and to the extent it had based its decision on the incorrect requirements of section 93, it had erred in law. The Court set aside the Board's decision and remitted the matter back to it.
The decision may come as a surprise to some, but ultimately provides helpful guidance about insurance contracts under section 93, which will assist any party who deals with protection work. In turn, this may reduce the amount of disputes in relation to protection work, at least in relation to insurance.