Multiplex Constructions Pty Ltd v Royal & Sun Alliance Insurance Australia Ltd & Ors

Multiplex Constructions Pty Ltd (Multiplex) brought proceedings against Royal & Sun Alliance Insurance Australia Ltd and others (the Insurers) in the Supreme Court of New South Wales. The dispute concerned the interpretation of an insurance policy and whether it covered certain losses incurred by Multiplex during the construction of a large commercial building. The primary judge found in favour of the Insurers, and Multiplex appealed to the High Court of Australia.

The central legal issue before the High Court was whether the "all risks" policy issued by the Insurers to Multiplex covered damage caused by the collapse of formwork during the construction of the Perth Convention and Exhibition Centre. Specifically, the court had to determine whether the collapse constituted a "physical loss or damage" within the meaning of the policy, and if so, whether any exclusions within the policy operated to deny coverage. The court also considered the proper approach to construing insurance policies, particularly in the context of complex construction projects.

Gummow and Hayne JJ, in their joint judgment, held that the collapse of the formwork, which was an integral part of the construction process and resulted in its own destruction and damage to other parts of the work, constituted "physical loss or damage" under the policy. Their Honours rejected the Insurers' argument that the damage was merely to the "means" of construction rather than the "work itself." They applied the principle that the policy should be construed broadly in favour of the insured, especially in an "all risks" policy, and that exclusions must be interpreted strictly. The court found that the collapse was not excluded by the policy's terms.

The High Court allowed the appeal, setting aside the orders of the primary judge and remitting the matter to the Supreme Court for further determination of the quantum of loss.