A taekwondo centre’s landlord that denied a “men’s shed” was also in operation at its site but failed to disclose storage of property there has won a million-dollar fire damage dispute.

The Australian Financial Complaints Authority has ruled Blue Zebra Insurance must assess the amount payable, subject to the maximum $631,500 the ombudsman can award.

“I have no hesitation in finding that the insurer has not established the complainant made a misrepresentation,” an AFCA ombudsman said.

“Storage by a landlord on its tenanted property of its items and those of others without charge does not mean the landlord becomes a tenant. A landlord cannot be a tenant of itself.”

The building – with a $525,000 sum insured under a business policy but no contents cover – was severely damaged in the October 2024 fire. Repair costs exceeded $1 million.

A fire investigator said the building was dual occupancy, with the front half housing the taekwondo centre and the rear a “fabrication, mechanical, or processing business”.

The taekwondo club manager told Blue Zebra’s investigator the landlord’s director and his friends worked on cars and built things on-site, and they both contributed to utility costs.

A news broadcast days after the fire said a men’s shed-style factory at the back of the property had for 16 years been a hub for locals to work on projects like vehicle restoration, and the owners estimate more than $100,000 of equipment was inside.

The landlord said community members rented access to the rear of the property for a long time, but the arrangement ended before the Blue Zebra policy started.

Blue Zebra denied the claim, saying the insured’s broker made a misrepresentation by disclosing only one tenant; storage of property on site should have been disclosed; and the most hazardous activity – storage of personal property/equipment/vehicles – should have been selected in the online application, rather than martial arts and self-defence instructions service.

But AFCA says a lease agreement shows the only confirmed tenant was the taekwondo club, and there is no reason the landlord’s director should have disclosed that he stored items and sometimes used the rear of the property.

AFCA says Blue Zebra has not shown there was a men’s shed tenancy, and it did not ask any questions relevant to storing property or suggest such actions would affect the offer of insurance.

“An insured is not ... obliged to guess what information might be relevant,” it said.

Blue Zebra’s investigator found three shipping containers containing items belonging to the landlord’s director, plus supplies stored for free for a builder.

Other directors said they and friends also stored items for free at the rear of the property from time to time.

Blue Zebra said this constituted a separate tenancy, and a reasonable person – particularly one sharing utilities and occupying a substantial portion of the premises – would understand this to be material and requiring disclosure.

But AFCA says it should accept the claim “given the limited information the insurer sought from the complainant before the policy incepted and renewed”.

See the ruling here.