IAG New Zealand Limited v QBE Insurance (Australia) Limited

IAG New Zealand Limited appealed against a decision that it was not entitled to recover the full cost of repairing defects in a home damaged by an earthquake. The home was insured by IAG, and the repairs were carried out by Hawkins Management Ltd, which was insured by QBE Insurance (Australia) Limited. The appeal centred on the interpretation of an indemnity clause in a contract between IAG and Hawkins, specifically the term "completion" as it related to the certification of progress payments. IAG argued that visibly defective work could not be considered completed, while QBE maintained that the contractual standard was "completion" and that the High Court Judge's application of a "naked eye test" was erroneous. The Court of Appeal allowed the appeal in part, finding that Hawkins was liable to indemnify IAG for the cost of rectifying certain defects that were visible to the naked eye and significantly impacted the building's integrity. QBE applied for a recall of the judgment, arguing that the Court of Appeal misinterpreted the High Court judgment by attributing factual findings that were not made. However, the Court of Appeal found that the factual distinctions made by QBE did not warrant a recall of the judgment, as the key point was the formulation of the "naked eye test" rather than the specific costs of repair. The Court of Appeal declined the application for recall and ordered QBE to pay IAG's costs for the appeal.

In summary, the Court of Appeal allowed IAG's appeal in part, finding that Hawkins was liable to indemnify IAG for certain visible and significant defects in the repair work. QBE applied for a recall of the judgment, arguing that the Court of Appeal misinterpreted the High Court judgment. However, the Court of Appeal declined the application for recall, finding that the precedential value of the judgment lay in its formulation of the "naked eye test" rather than the specific costs of repair. QBE was ordered to pay IAG's costs for the appeal.