AXA Global Risks (UK) Ltd v Haskins Contractors Pty Ltd - [2004] NSWCA 138

Reported Decision:
(2004) 13 ANZ Insurance Cases 61-611

Court of Appeal

CITATION: AXA GLOBAL RISKS (UK) LTD v HASKINS CONTRACTORS PTY LTD [2004] NSWCA 138

HEARING DATE(S): 24 March 2004

JUDGMENT DATE:
6 May 2004

JUDGMENT OF: Mason P at 1; Bryson JA at 87; Windeyer J at 88

DECISION: Appeal upheld in part (see par 86)

CATCHWORDS: INSURANCE CONTRACT - whether damages occurred during the period of insurance - distinction between damaged property and property liable to become damaged - whether "condition when new" confined recovery to reconstruction with original faults - whether supervisory costs were necessarily incurred - whether losses were a 'single event' or 'series'.

PARTIES :
AXA GLOBAL RISKS (UK) LTD
HASKINS CONTRACTORS PTY LTD

FILE NUMBER(S): CA 40591/03

COUNSEL: Appellant: J E Marshall SC/ D S Weinberger
Respondent: J Kelly SC/ M Orlov

SOLICITORS: Appellant: Moray & Agnew
Respondent: Abadee, Dresdner & Freeman

LOWER COURTJURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 10568/01

LOWER COURT
JUDICIAL OFFICER : Puckeridge DCJ

CA 40591/2003
DC 10568/2001

MASON P
BRYSON JA
WINDEYER J

Thursday 6 May 2004

AXA GLOBAL RISKS (UK) LTD v HASKINS CONTRACTORS PTY LTD

BACKGROUND:

The respondent (the insured) entered into a building contract to construct a subdivision project at Bayview. The construction of two timber crib retaining walls was sub-contracted to Terra Services Pty Ltd. The eastern wall was completed in October 1999 and the western wall completed in March 2000. During March 2000 various defects and non-conformities were identified with the construction of the walls. Terra Services was advised that rectification work was required, however, it failed to carry it out and later went into liquidation. As time progressed, further damage was observed in the walls, including the splitting and crushing of headers.

The walls were demolished and reconstructed by the insured. Under a Contract Works and Liability Insurance Policy (the Policy), the appellant (the insurer) had provided the insured with insurance for the period 31 December 1999 to 31 December 2000.The insurer accepted liability for the western wall but submitted that the Policy did not respond in relation to the eastern wall because the relevant physical loss or damage occurred before the period of insurance.

At trial, Puckeridge DCJ held that the insured property fell within the scope of the insuring clause and that the insured was entitled to be indemnified for the total cost of rebuilding both the eastern and western walls.

HELD: per Mason P (Bryson JA and Windeyer J agreeing) upholding the appeal in part and upholding the cross-appeal:

1. The policy responded to the eastern wall

There was no proof of splitting or cracking before March 2000. There is a critical distinction between property that is liable to become damaged and property that is damaged. Although the eastern wall was defective when built, until the defects manifested themselves in injury to the structure there was no “physical damage to the property insured” within the meaning of the policy.

2. The appellant’s submission on the quantum issue…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] NSWCA 138
Decision Date: 6 May 2004

CaseChat Overview and Summary

AXA Global Risks (UK) Ltd (AXA) appealed from a decision of the primary judge concerning an insurance policy issued to Haskins Contractors Pty Ltd (Haskins). The dispute arose from damage to a concrete structure constructed by Haskins, which was insured by AXA. Haskins claimed under the policy for the costs of rectifying the defective concrete work and for supervisory costs incurred during the rectification process. AXA denied liability, arguing that the damage did not occur during the period of insurance and that the policy did not cover the rectification of pre-existing defects. The appeal was heard by Mason P, Bryson JA, and Windeyer J of the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether the damage to the concrete structure occurred during the currency of the insurance policy, the proper interpretation of the policy's "condition when new" exclusion, and whether the costs of supervision incurred by Haskins were necessarily incurred within the meaning of the policy. The court also considered whether the losses constituted a "single event" or a "series of events" for the purposes of the policy's excess provisions.

The Court of Appeal analysed the distinction between property that was damaged during the policy period and property that was merely liable to become damaged due to inherent defects. It found that the primary judge had erred in concluding that the damage occurred during the policy period, holding that the defects were present from the time of construction and did not constitute damage that arose during the currency of the policy. The court further interpreted the "condition when new" exclusion to mean that recovery was confined to reconstruction with the original faults, and that the policy did not cover the cost of rectifying inherent defects. Regarding supervisory costs, the court determined that these were not necessarily incurred within the meaning of the policy. The court also addressed the "single event" versus "series of events" issue, finding that the defects arose from a single cause.

The appeal was upheld in part, with the Court of Appeal overturning the primary judge's decision on the key issues of when the damage occurred and the scope of the policy's coverage for pre-existing defects.

Orders

Orders of the court

Appeal upheld in part (see par 86)

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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CITATION:	AXA GLOBAL RISKS (UK) LTD v HASKINS CONTRACTORS PTY LTD [2004] NSWCA 138
HEARING DATE(S):	24 March 2004
JUDGMENT DATE:	6 May 2004
JUDGMENT OF:	Mason P at 1; Bryson JA at 87; Windeyer J at 88
DECISION:	Appeal upheld in part (see par 86)
CATCHWORDS:	INSURANCE CONTRACT - whether damages occurred during the period of insurance - distinction between damaged property and property liable to become damaged - whether "condition when new" confined recovery to reconstruction with original faults - whether supervisory costs were necessarily incurred - whether losses were a 'single event' or 'series'.
PARTIES :	AXA GLOBAL RISKS (UK) LTD HASKINS CONTRACTORS PTY LTD
FILE NUMBER(S):	CA 40591/03
COUNSEL:	Appellant: J E Marshall SC/ D S Weinberger Respondent: J Kelly SC/ M Orlov
SOLICITORS:	Appellant: Moray & Agnew Respondent: Abadee, Dresdner & Freeman

LOWER COURTJURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 10568/01
LOWER COURT JUDICIAL OFFICER :	Puckeridge DCJ