Australia: Recent Cases - At the Courthouse

Insurance Focus Bulletin - March 2010
Last Updated: 29 March 2010
Article by James Bruun

Major Engineering Pty Limited v CGU Insurance Limited [2009] VSC 504

This case involved an insurance claim which was brought following damage caused to a yacht 'Skandia' during the Sydney to Hobart Yacht race in December 2004.

Major Engineering supplied hydraulic cylinders to Timelink Pacific Pty Ltd (Timelink), the owners of the Skandia. These cylinders were fitted on the Skandia. During the yacht race, the piston rods broke causing damage to the keel and the yacht had to abandon the race. Timelink sued Major Engineering for loss and damage alleging that the cylinders supplied were inadequately specified and not fit for the purpose intended. Major Engineering contended that they merely manufactured and supplied the product in line with the specifications requested by Timelink's engineer.

Major Engineering notified its insurers, CGU Insurance Limited, under a public and products liability policy. CGU denied liability under the policy, relying on exclusion clauses for liability arising from the rendering of professional advice or service or the making or formulating of a design or specification within the domain of the engineering profession.

Timelink's claim against Major Engineering proceeded to trial in 2006 and was successfully defended by Major Engineering. Timelink appealed and had the primary judgment overturned in its favour in 2008. In 2009, there was a subsequent appeal which was decided in favour of Major Engineering.

Major Engineering incurred defence costs of around $1.1 million and claimed these costs from CGU. In maintaining its denial of indemnity, CGU argued that the nature of the claim against Major Engineering was, in essence, not a product liability claim – there had been no complaint about a defect in the product itself. Instead, the complaint was that Major Engineering had advised on the requirements for, designed, manufactured and supplied, the hydraulic cylinders.

CGU argued Timelink's claim was fundamentally not a complaint about a defect or deficiency in the product supplied, or a failure to provide directional advice concerning the use or storage of the products supplied, but that the product (however good it may have been) should not have been supplied for the purpose which had been sought.

CGU argued that the insurance policy was directed to protect Major Engineering from liability arising from unknown defects in its products. It did not extend, and expressly excluded, liability arising out of other such circumstances as the rendering of professional advice or service, or the making and formulation of a design or specification within the domain of engineering.

The Court noted that in determining the operation of the CGU policy, it was required to consider the true nature of the claim. The Court agreed with CGU's submissions that the claim from Timelink was essentially a claim arising from 'product suitability' rather than 'product liability'. The proceedings were dismissed in favour of CGU.

David Michael Wilson v Nilepac Pty Limited Trading as Vision Personal Training (Crows Nest ) [2009] NSWSC 1365

Mr Wilson, sued his personal trainer for damages after suffering an injury to his lower back about four weeks into a training program.

Wilson signed up for a 12 week training program based on four sessions with a personal trainer each week at Vision Personal Training (Vision). Wilson alleged that his back injury could be attributed to the negligence of the personal trainer assigned to him and the defendant company, Vision.

Wilson's allegations included that the systems under which his training plan was established were flawed and made specific allegations in relation to a particular exercise which was part of his program. Wilson complained that his training included a 'hazardous' exercise which required him 'to twist from side to side whilst sitting up from a prostrate position and catching a heavy medicine ball'.

Vision acknowledged that it owed Wilson a duty of care and conceded that there was an implied term of the contract commensurate with that duty. However, they argued that the personal trainer exercised all reasonable care in the circumstances.

Prior to commencing training at Vision, Wilson attended an initial assessment with a consultant employed by Vision. The assessment took about two hours in which Wilson was asked a series of questions, completed a number of forms on a computer and performed a number of basic exercises. At the time of the assessment, Mr Wilson believed that his level of fitness was average or below average.

The Court found that the risk of injury to Wilson was foreseeable and not insignificant. The Court stated that it would have been obvious to a reasonable personal trainer taking on a client with Wilson's history that there was a prospect of injury if he trained too hard and that a delicate balance had to be found. Further, the Court was satisfied that Wilson's injury was caused or materially contributed to by the medicine ball exercise.

However, the Court found that the personal trainer was adequately qualified and it also found that there was no evidence to support a claim that the personal trainer failed to take precautions which a reasonable personal trainer would have taken. As to the specific exercise, the Court found that there was no breach of contract or breach of duty of care on the part of Vision or the personal trainer.

The Court ordered judgment in favour of Vision.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

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