R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Limited (No 2) [2019] FCA 458

R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Limited (No 2) [2019] FCA 458

The placement of defective conduits and grout within the tunnel rendered it unusable for its intended purpose, but did not physically injure or alter the underlying tangible property (the tunnel or sleeve), as the defective material could be removed and the tunnel restored without any injury to its structure. Consequently, there was no 'physical injury to tangible property' as required by the policy. Even if there were, the policy exclusions for property in physical control of the insured and for the costs of correcting faulty workmanship would apply to exclude coverage.

Jurisdiction
Australia
Judgment Date
05 April 2019
Procedural Posture
Insurance Claim (liability Insurance) / Judgment After Final Hearing
Outcome
Application dismissed with costs.
Legal Topics
['public Liability Insurance' 'commercial General Liability' 'defective Workmanship' 'faulty Workmanship Exclusion' 'physical Injury to Property' 'loss of Use' 'contractual Liability Exclusion' 'interpretation of Insurance Policies']
['insurance Law' 'commercial Law' 'contract Law'] ['public Liability Insurance' 'commercial General Liability' 'defective Workmanship' 'faulty Workmanship Exclusion' 'physical Injury to Property' 'loss of Use' 'contractual Liability Exclusion' 'interpretation of Insurance Policies']

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Procedural Posture

Insurance Claim (liability Insurance) / Judgment After Final Hearing

Legal Issues

  1. 1 ['Whether the applicant is entitled to indemnity under a public liability insurance policy for defective works that rendered a tunnel temporarily unusable' "Whether the loss of use or impairment of the tunnel constitutes 'physical injury to tangible property' under the insurance policy" 'Whether policy exclusions for property in physical or legal control, faulty workmanship, or contractual liability remove cover']

Ratio Decidendi

The placement of defective conduits and grout within the tunnel rendered it unusable for its intended purpose, but did not physically injure or alter the underlying tangible property (the tunnel or sleeve), as the defective material could be removed and the tunnel restored without any injury to its structure. Consequently, there was no 'physical injury to tangible property' as required by the policy. Even if there were, the policy exclusions for property in physical control of the insured and for the costs of correcting faulty workmanship would apply to exclude coverage.

Court Disposition

Application dismissed with costs.

Orders

  • ['The application be dismissed with costs.']