A property owner embroiled in a court dispute with a broker over a policy that excluded cover for her 25-metre swimming pool has lost an appeal. 

The dispute was sparked after Vero rejected her claim on October 8 2013, and she unsuccessfully pursued damages of about $2.08 million, alleging the broker was negligent as he did not advise her about the policy restrictions. 

She had been with CGU previously but switched to the Vero homeowners’ policy in 2012 after a surge in premiums. 

But Robert Bernasconi, the broker who was employed by Nadic Insurance Brokers at that time, did not tell her about the Vero pool exclusion which was not in the CGU policy. He also did not tell her there were other insurers aside from CGU who would offer cover for the pool. 

In March 2013 the pool was empty as a result of actions taken by the insured. Following periods of heavy rain, the pool partially lifted out of the ground, causing extensive damage to the pool and causing one of the walls of the pool building to collapse. 

In her appeal Sue Flanagan, a medical doctor, contended Supreme Court Acting Justice Monika Schmidt had “erred” in her ruling last year. She disagreed, among other things, with the ruling’s conclusion that she “had failed to take reasonable precautions” to avoid a claim. 

Justice Schmidt had ultimately dismissed the doctor’s claim on the basis of her findings as to causation. She held that the insurance policy that the insured would have obtained but for the broker’s breach of duty would not have covered her claim, due to exclusions around defects and an obligation to take reasonable precautions. 

The NSW Court of Appeal in its ruling says the insured was “aware of the risk of the pool lifting” and had various means including “obvious, simple and cost-free options” to address it. 

“Instead, she acted with indifference to that risk, deciding not to address it for her own (financial) reasons. The primary judge was correct to conclude that such measures were not difficult, nor were they costly or beyond Dr Flanagan’s means,” the Court of Appeal ruling says. 

The Court of Appeal also noted had the insured made appropriate inquiries, she would have been told the pool could only be left empty if the hydrostatic valves were functioning correctly, but they weren’t. 

“In circumstances where Dr Flanagan did not investigate its cause and instead left the pool empty…  Dr Flanagan courted the risk, of which she was aware, of the pool ‘popping up’,” the Court of Appeal ruling says. 

“The appeal should be dismissed.” 

The Court of Appeal says given its decision it is unnecessary to determine the cross appeal filed by Mr Bernasconi and Nadic Insurance Brokers challenging “certain findings” in the Supreme Court decision. 

In their cross appeal they alleged the judge erred in concluding that Dr Flanagan would have taken out insurance cover which did not include the pool-related exclusion in the Vero policy, and further in failing to dismiss Dr Flanagan’s claim on the basis that the evidence did not establish that there was an available alternative policy which would have covered her claim. 

Click here for the appeal decision.