Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance

Weir Services Australia Pty Ltd (the appellant) sought indemnity from AXA Corporate Solutions Assurance (the respondent) under a broadform liability insurance policy for liabilities it incurred following the failure of a refurbished semi-autogenous grinding mill. The mill owner had commenced arbitration proceedings against the appellant for breach of contract and misleading or deceptive conduct. A "cap and collar" agreement was reached between the parties to the arbitration, the terms of which were contingent on the arbitration outcome. Despite the arbitration finding no liability on the part of the appellant, the appellant was nevertheless obliged to pay a contracted "collar" amount and its own costs. The appellant contended these liabilities were covered by its insurance policy.

The central legal issues before the court were whether the appellant's liabilities under the "cap and collar" agreement constituted "compensation" for "property damage" within the scope of the policy. This required the court to determine the meaning of "occurrence" in the context of the policy, specifically whether the disintegration of the weld, cyclic loading in normal operation, or the appellant's faulty work constituted an "occurrence". Furthermore, the court had to consider whether certain policy exclusions, namely for professional services and product defects, applied to the appellant's conduct and liabilities.

The court reasoned that the "collar" payment was not compensation for property damage suffered by the mill owner, but rather a contractual obligation arising from the settlement agreement. It held that the disintegration of the weld was not an "occurrence" in itself, but rather the damage that resulted from an occurrence. The court further found that the faulty welding work fell within the exclusion for professional services, as it involved the application of specialised skills and knowledge. Similarly, the making of actionable representations was also considered to be within the scope of professional services. The product defect exclusion was also found to be applicable.

Consequently, the appeal and cross-appeal were dismissed, and the judgment of the court below was affirmed. The appellant was ordered to pay the costs of the respondent.