Major Engineering Pty Ltd v CGU Insurance Ltd

Link copied
Case Copied 33 min read

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2009 3891

MAJOR ENGINEERING PTY LIMITED (ACN 005 432 397)

Appellant

v

CGU INSURANCE LIMITED
(ABN 27 004 478 371)

Respondent

---

JUDGES

BONGIORNO and HANSEN JJA and KYROU AJA

WHERE HELD

MELBOURNE

DATE OF HEARING

14 and 15 February 2011

DATE OF JUDGMENT

9 August 2011

MEDIUM NEUTRAL CITATION

[2011] VSCA 226

JUDGMENT APPEALED FROM

Major Engineering Pty Ltd v CGU Insurance Limited [2009] VSC 504 (Pagone J)

---

INSURANCE – Appellant insured under contract of insurance – Incurred significant legal costs successfully defending claim made against it – Whether appellant entitled to recover costs under costs extension clause – Whether costs extension clause subject to exclusion clauses – Whether exclusion clauses applied – Appellant held to be entitled to recover costs – Appeal allowed.

---

APPEARANCES: Counsel Solicitors
For the Appellant      Mr P Cawthorn SC with
Mr C Madder
Dermenzies Lawyers
For the Respondent Mr M Thompson SC with
Mr M Osborne
Norris Coates

BONGIORNO JA:       

  1. The appellant, Major Engineering Pty Ltd (‘Major’), was the insured under a contract of insurance (‘the Policy’) with the respondent, CGU Insurance Ltd (‘CGU’) in respect of certain risks to which it was exposed in the course of its business.  That business was described in the Policy as being:

Principally but not limited to Property Owners, occupiers, importers and exporters, design, manufacture, sales service and installation of heat transfer capital equipment, general engineering fabrication, hydraulic pneumatic and lubrication equipment.

  1. The Policy was entitled ‘Liability Insurance — Broadform Policy’ and, in general terms, provided cover to Major in respect of its legal liability to third parties arising out of its business.  That liability was described in the Policy as being either ‘Products Liability’ or ‘Public Liability’, which terms were themselves defined.  However, the Policy also provided, under a heading in a section entitled ‘Additional Benefits’, cover in respect of certain legal costs incurred by the insured.  Such additional cover is commonly referred to as a ‘costs extension’.  As far as is relevant to this judgment, that cover was in the following terms:

1.        Your Legal Costs

(a)       In the case of:

(1)       Public Liability or Products Liability;

or

(2)a claim of Public Liability or Products Liability being made against You;

for which indemnity is, or would be, available under this Policy, We will pay Your Legal Costs.

(b)       Your Legal Costs means:

(1)the legal costs and expenses, that You incur with Our written agreement, in defending a claim of Public Liability or Products Liability made against You;

(2)the legal costs and expenses of any claimant claiming against You for Public Liability or Products Liability that You are liable to pay; and

…

  1. This appeal concerns a claim by Major against CGU under the costs extension clause for costs which it incurred in successfully defending a claim brought against it by Timelink Pacific Pty Ltd (‘Timelink’).  Timelink’s claim was for damages arising out of the failure of two hydraulic cylinders that were supplied by Major…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Major Engineering Pty Ltd v CGU Insurance Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2011] VSCA 226
Decision Date

CaseChat Overview and Summary

The appellant, Major Engineering Pty Ltd, was insured under a contract of insurance with the respondent, CGU Insurance Ltd. Major Engineering incurred significant legal costs successfully defending a claim made against it. The primary issue before the court was whether Major Engineering was entitled to recover those costs under a costs extension clause in the insurance contract. Another issue was whether the costs extension clause was subject to exclusion clauses in the contract, and if so, whether those exclusion clauses applied to the costs incurred by Major Engineering. The court was required to interpret the insurance contract and determine the scope and effect of the costs extension clause and exclusion clauses.

The court examined the insurance contract and found that the costs extension clause did not explicitly state that it was subject to the exclusion clauses. The court held that the costs extension clause was intended to provide coverage for legal costs incurred in defending claims, and that the exclusion clauses did not apply to the costs incurred by Major Engineering. The court found that Major Engineering was entitled to recover the costs it had incurred in successfully defending the claim against it. The appeal was allowed, and the decision of the lower court was set aside.

Major Engineering was held to be entitled to recover the legal costs it had incurred in successfully defending a claim against it. The costs extension clause in the insurance contract was found to be applicable and not subject to the exclusion clauses. The court's interpretation of the insurance contract and the costs extension clause was pivotal in determining the outcome of the case. The appeal was allowed, and the decision of the lower court was set aside.

Orders

Orders of the court

Appeal allowed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.