In the case of M.J.Gleeson & Group Plc and AXA Corporate Solutions Assurance SA, AXA provided public liability insurance to Gleeson which included additional cover in respect of the defective workmanship of its Sub-Contractors.
 
Gleeson engaged Sub-Contractors to provide curtain walling and cladding and roof sheeting. After the Certificate of Making Good Defects was issued, the owners of the development experienced issues with the building which were attributed to the work carried out by the two Sub-Contractors of Gleeson.
 
Gleeson put AXA on notice on the nature of the issues and sought confirmation from AXA that they be indemnified against the costs of the claim under the terms of the insurance policy. AXA and Gleeson therefore asked the Court to tell them what the clause meant.
 
AXA argued that the public liability insurance should be read with regard to Section 1 which was a public liability general insuring clause. The provision providing additional cover for defective workmanship of Sub-Contractors was an extension to this clause and the two must be read together. Effectively the 
extension did not provide stand alone cover and there must, under the terms of the policy, be physical damage to other property.  
 
Gleeson argued that the extension provided cover for pure economic loss and for contractual liability. They also argued that there was a general indemnity in respect of legal liability arising from the defective workmanship of SubContractors, and that this was a unique insuring provision and was effectively selfcontained.  
 
The Judge agreed with AXA’s approach in interpreting the extension of the policy.  He did not believe that the extension was intended to be a self standing insuring clause but had to be governed by the general provisions in Section 1 of  the policy. It provided an indemnity against the cost of making good defective  workmanship itself where property other than the part which was the subject of  the defective workmanship of a Sub-Contractor was damaged as a result of the defective workmanship. The extension to the policy did not have the effect of guaranteeing the workmanship of Sub-Contractors irrespective of whether an event had occurred under Section 1 of the policy. Essentially, damage to Property other than the part which was the subject of the defective workmanship had to have occurred as an essential pre-condition to cover.
 
The particular provisions of the insurance policy here were negotiated between the parties to provide cover which was beyond that normally included in such a policy. Even then the cover was not sufficiently wide.  Inherent defects in workmanship are ordinarily excluded, but cover for this type of risk can be written back into a bespoke contract works policy (not a public liability policy). Contractors would be well advised to check the terms of their current cover. If it is desirable to have wider  cover or even specific cover for particular projects then it is wise to address that at this point rather than looking to the policy once the events have happened