The recent English case of M J Gleeson Group Plc v AXA Corporate Solutions Assurance SA, while only of persuasive precedent before the Irish Courts, serves as a useful reminder of how courts approach the interpretation of insurance policies
One of the preliminary issues in this case was the scope of the indemnity for the defective workmanship of sub-contractors in M J Gleeson Group Plc’s (Gleeson) public-liability cover. The general insuring clause provided that Gleeson would be indemnified for certain events, including damage to property. The standard exclusions for damage occurring to the works before practical completion and for defective workmanship were included. “Memorandum 23” to the policy, however, purported to extend indemnity to Gleeson’s legal liability for the defective workmanship of its subcontractors. There was no express mention that such liability had to arise from damage to third-party property.
When a claim was issued against Gleeson in respect of the defective workmanship of its roofing sub-contractor, Gleeson sought AXA’s confirmation that it would provide cover. AXA contended that damage to property other than the part subject to the defective workmanship had to have occurred for cover under Memorandum 23 to be triggered.
The judge, in agreeing with AXA, said that while not expressly stated, cover was only triggered where there was damage to other property as a result of sub-contractors’ defective workmanship. It was indicated in the expression used in Memorandum 23 “[t]his section extends to indemnify” that it was not intended to be a self-standing insuring clause. Conversely the expression of “[t]he Company will indemnify” in the general insuring clause signified that this provision was intended to be self-standing. Therefore, Memorandum 23 did not displace the general insuring clause and damage to other property was required to trigger cover.
This case serves as a reminder to be cautious as to the wording of policy extensions, and to ensure that all the elements which trigger cover are included in the wording.