Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788

The High Court of Australia considered an appeal by Allianz Australia Insurance Limited against a decision of the Full Federal Court concerning a dispute over insurance coverage for a building defect claim. The respondent, Delor Vue Apartments CTS 39788, a body corporate, had sought indemnity from Allianz under a building works insurance policy for costs associated with rectifying defective work in the building. The core of the dispute revolved around whether the policy provided cover for the rectification of the defective work itself, or only for damage caused by the defective work.

The High Court was required to determine the proper construction of the insurance policy, specifically whether the policy covered the cost of rectifying defective workmanship or materials, or if it was limited to damage consequential to such defects. This involved an analysis of the policy's wording, including definitions and exclusions, in the context of the insured event and the nature of the claim made by the body corporate.

The Court reasoned that the policy, as worded, did not cover the cost of rectifying the defective work itself. It found that the policy was designed to cover damage to other parts of the building or property caused by the defective work, rather than the cost of repairing the defective work or materials. The principles applied focused on the ordinary meaning of the policy terms and the intention of the parties as expressed in the contract of insurance, distinguishing between the defect itself and the resulting damage.

The High Court allowed the appeal, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for further determination in accordance with the High Court's judgment.