When is the Product Definition not Productive?

Key Point
  • Despite the broad definition of Product in most liability policies, not all claims involve products.

In Weir Services Australia Pty Limited v AXA Corporate Solutions Assurance [2017] NSWSC 259, the Supreme Court of NSW examined a number of issues arising from a claim by an insured for indemnification under 3 liability policies.  This Blog looks at a comment made by the judge with respect to the definition of Product.

Weir Services Australia Pty Ltd (Weir) was retained by Phil Gold Processing and Refining Corp (Phil Gold) to work on a grinding mill in the Philippines. The welding work performed by Weir disintegrated.

Phil Gold commenced arbitration proceedings against Weir, seeking damages for breach of contract and misleading and/or deceptive conduct.

Weir held three insurance policies with AXA.  The one the subject of this blog was an Australian Policy and was a broadform liability policy.

It provided cover for legal liability for “property damage” happening during the insurance period caused by an occurrence which happened in connection with Weir’s business as well as costs and expenses incurred in the defence of a claim.

Weir sought indemnity from the insurer for an amount paid to Phil Gold and for its defence costs in the arbitration.

The insurer refused to indemnify Weir.

The Supreme Court of New South Wales dismissed Weir’s claim.

One of the defences raised by the insurer was that the liability was excluded because of the exclusion for “Property Damage to Your Products if such Property Damage is attributable to any defect in Your Product”.  Hammerschlag J noted that there was significant debate between the parties as to what, if anything was Weir’s Product, for the purposes of the broadform policy.  The definition was expansive and included “anything (after it has ceased to be in [Weir’s] possession or in [Weir’s] legal control) which has been… repaired… by [Weir] in the course of [Weir’s] business”.

One position adopted by the insurer was that Weir’s Product was the whole of the mill, however the insurer failed to establish that Weir had possession or control of the whole of it so as to make it Weir’s Product.  Weir’s position was that its Product was the weld.  His Honour concluded that the weld was not “any[thing]” for the purposes of the definition of Product.  The weld was a method of repair.  He also rejected the insurer’s submission that Weir’s Product was the drum.  His Honour commented: “The drum is but one integral component of the Mill and is not, on its own, in my view “any[thing]” within the definition of Product.  The definition of Product, albeit expansive, is still to be approached in a common sense commercial way. Weir’s function was to perform services. Not in every case does the definition have the effect that there must be a Product.”

Post by Paul Hendriks

Most Popular Articles


Commonwealth Redress Scheme for Institutional Child Sexual Abuse

On 26 October 2017 the Federal Social Services Minister introduced two bills facilitating a Commonwealth redress scheme for victims of institutional child sexual abuse.

Motor Accident Injuries Act 2017- Effects on Section 151Z(1)(d) – Indemnity Claims

The Motor Accident Injuries Act 2017 commences operation on 1 December 2017.
Firm News

Welcome to our new site

Hicksons are excited by the launch of our new website.

Subscribe to Our Blog

Keeping you connected, Hicksons regularly publishes articles to keep you up to date on the latest developments. To receive these updates via email, please subscribe below and indicate which areas of law you would like to receive information on.