AXA Global Risks (UK) Ltd v Haskins Contractors Pty Ltd

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.