Construction Law Review

Construction Law Review – February

Please refer below to our Construction Law Review, selected from AR Conolly’s Daily Bulletins covering Insurance, Banking, Construction & Government.

Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZSC 158
Court of Appeal of New South Wales
Gleeson JA, Barrett AJA & McDougall J
Insurance – appellant owned land occupied by three story building – building used by appellant for primarily commercial purposes – appellant insured building with respondent on indemnity, not reinstatement, basis – ‘total building sum insured’ was $1,605,000 – building moderately damaged in 2010 Christchurch earthquake (first earthquake), and suffered further damage in Boxing Day 2010 earthquake (second earthquake) and in 2011 (third earthquake) building was severely damaged – building demolished – appellant claimed on insurance policy – parties agreed respondent would pay $1,050,000 plus GST in claim’s ‘full and final settlement’ – appellant challenged settlement, seeking difference between the now claimed amount of $3,388,000 plus GST and amount it was paid – ‘The Contractual Mistakes Act argument’ – terms of policy – settlement agreement – proper interpretation of insurance policy – held: appeal dismissed.

Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang [2016] NSWCA 370
Court of Appeal of New South Wales
Macfarlan & Leeming JJA; Sackville AJA
Contract – insurance – plaintiff injured when weld attaching hydraulic ram supporting ramp to trailer failed – plaintiff sued driver of truck which was pulling trailer, company which owned trailer, fleet insurer of plaintiff’s deregistered employer and company which installed hydraulics – insurer’s defence centred on exclusion clause relating to defects – clause provided that insurer would not pay ‘for any liability for death or bodily injury arising out of or in any way connected with a defect in Your Motor Vehicle or in a Motor Vehicle, but in Queensland only if it causes loss of control of the vehicle whilst it is being driven’ – plaintiff succeeded against all parties except the installer of the hydraulics – insurer sought to appeal – plaintiff appealed against judgment in favour of the hydraulics installer – held: no error in finding that exclusion clause unavailable – insurer’s challenge to liability of insured to plaintiff failed – no error in finding plaintiff did not establish any breach by installer of hydraulics caused injury – insurer refused leave to challenge costs orders – appeals dismissed.

Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. 2016 SCC 37
Supreme Court of Canada
McLachlin CJ, Abella, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon, Côté & Brown JJ
Insurance – contract – construction – exclusion clause – cleaners scratched windows of buildings they were hired to clean – cleaners had used improper tools and methods – windows had to be replaced – building’s owner and contractor in charge of construction project claimed replacement costs from builders’ risk insurance policy – insurers denied coverage due to exclusion for ‘cost of making good faulty workmanship’ – trial judge found insurers liable, holding exclusion clause ambiguous and that rule of contra proferentem applied – Court of Appeal reversed decision – Court of Appeal developed new test and concluded window damage was excluded from coverage – held: appropriate standard of review was correctness – ‘physical or systemic connectedness’ test established by Court of Appeal unnecessary – exclusion clause excluded only cost of redoing faulty work – damage to the windows and thus cost of replacement covered – not necessary to turn to contra proferentem rule – appeal allowed.

ABB Australia Pty Ltd v CH2M Hill Australia Pty Ltd & Ors [2017] NTSC 1
Supreme Court of the Northern Territory
Kelly J
Security of payments – first and second respondents (respondent) were joint venturers who entered construction contract with applicant for supply of equipment for power plant – applicant served payment claim on respondent on 7 March 2016 [PC-009 Rev 2] – on 10 June 2016 applicant sought adjudication under s28 Construction Contracts (Security of Payments) Act 2004 (NT) of payment dispute – adjudicator dismissed application on ground payment dispute arose on 2 March and application not made within 90 days as required by s28(1) – applicant had sent payment claim to respondent on 19 February 2016, PC-009 Rev 1 – on 2 March 2016, respondent advised applicant it was in breach of contract’s security requirement which was condition precedent to delivery of payment claim – held: adjudicator erred in concluding PC-009 Rev 1 was valid payment claim and letter of 2 March 2016 gave rise to payment dispute – appeal allowed.