By Andrew Steele - 1 Mar 2012
If a party facing liability in a "leaky home" case has liability
insurance, they can involve their insurance company in the
litigation. In cases where this happens, a key issue is
whether the other parties facing liability can seek recovery from
the insurance company directly, rather than from the insured
party.
Such attempts can increase the time it takes for cases to be
resolved, particularly if the insurance company's lawyers take an
aggressive stance, and may make early settlement less likely.
A recent High Court decision has confirmed that these sorts of
claims against insurers can only be brought in special
circumstances.
In Chow v Thomson the High Court considered an
application by the Franklin District Council to join the insurer of
two building contractors as a defendant. The insurer was
already involved in the proceeding but the Council had brought the
application so they could claim against the insurer directly.
The Court recognised that it could not join the insurer as a
defendant if it was possible for the Council to bring its claim
against the insured party, i.e. the contractors. The Court
determined that the Council could bring its claim against the
contractors directly, and therefore dismissed the application to
join the insurer as a defendant.
This decision shows that a claim cannot be brought against an
insurer if a claim against the insured party will enable
recovery.
If you would like more information about this or leaky buildings
in general please contact our leaky building team.