Major Engineering Pty Ltd v CGU Insurance Ltd

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.