Skip to main content
Share via Share via Share via Copy link

Australian Court of Appeal considers welding exclusion

11 October 2023

In Ritchie v Insurance Australia Ltd [2022] NSWCA 278, the New South Wales Court of Appeal has upheld the first instance judgment on the meaning of a public liability policy

The appeal concerned only one element of the judgment, the construction of a ‘Welding Endorsement’. 

Facts

The case concerned a bush fire which was caused when employees of Advanced Plumbing & Drains Pty Ltd (in liquidation) were cutting reinforced steel with a power cutter. The friction between the steel and cutting blade produced sparks, and the sparks ignited a bush fire. 

The claimant brought proceedings on behalf of group members who suffered property damage or personal injury as a result of that fire. Advanced Plumbing went into liquidation and so the claimant sought leave to bring the claim directly against insurers. 

The relevant insurance policy contained a “Welding Endorsement” which stipulated that the insurer would not pay any liability arising out of or in any way connected with:

“….arc or flame cutting, flame heating, arc or gas welding… and/or spark producing equipment… unless such activity is conducted in strict compliance with the Australian Standard AS 1674, Part 1 - 1997 'Safety in Welding and Allied Processes – Fire Precautions”. 

NSW Court of Appeal decision

The words “spark producing equipment” were interpreted as referring not only to equipment which generated sparks as part of its purpose, but also equipment which generated sparks when used in a specific way. 

The purpose of the Welding Endorsement was to exclude a list of activities carrying a risk of fire unless they were carried out in strict compliance with fire precaution standards. On that basis, there was no cover, and the appeal was dismissed.

Comment

Although a decision of the Australian court, and so persuasive but not binding on an English court, this case serves as a useful reminder of the need for strict compliance by insureds with the terms of any ‘hot works’ conditions in their policy if liability is to attach.

Key contact

Key contact

Laura Brown

Senior Associate

laura.brown@brownejacobson.com

+44 (0)115 934 2051

View profile
Can we help you? Contact Laura

Colin Peck

Partner

colin.peck@brownejacobson.com

+44 (0)20 7337 1016

View Profile
Can we help you? Contact Colin

You may be interested in...