An insurance expert has warned that insurers could refuse to pay out on this week’s fire at SkyCity’s new convention centre site if it’s proven to be caused by “recklessness or gross irresponsibility.”
Rohan Havelock, a senior lecturer in insurance law at the University of Auckland, said lead contractor Fletcher Building, a subcontractor, and even an individual employee of the subcontractor could all face issues if they were found to be reckless.
“For the condition to be not complied with you need more than just carelessness, you need recklessness or gross irresponsibility,” Havelock told NZ Herald. “For example, where the insured – the subcontractor, assuming they are covered – knows there was a risk but chose to disregard it, or where the risk should be so obvious to the ordinary person as to be inescapable.
“If the subcontractor was doing work with a blowtorch and he or she left it unattended, my view would be that that probably does amount to recklessness or gross irresponsibility, just because of the immediate risk of damage.”
He said Fletcher Building and the subcontractor would then be forced to pay out of their own pocket, which could cost them millions of dollars.
Havelock said he expects SkyCity to sue both Fletcher Building and the subcontractor.
“So we are potentially looking at both parties being found liable,” he said. “Then it would be a question of who SkyCity can actually enforce against, so I would think that Fletcher is primarily in the firing line as the party with the deeper pockets.
“If Fletcher was found to be not liable, which I think would be very unlikely, then yes, SkyCity would not be able to recover [its losses].”
“In a worst-case judgment against the subcontractor, and the subcontractor can’t pay or can’t pay very much, then essentially SkyCity is left with a loss. That would be a worst-case scenario for SkyCity and I think that is very unlikely,” Havelock concluded.
