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

FEDERAL COURT OF AUSTRALIA

R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Limited (No 2) [2019] FCA 458 File number: WAD 226 of 2018

Judge: ALLSOP CJ

Date of judgment: 5 April 2019

Catchwords: INSURANCE – commercial general liability insurance – construction subcontract – defective works – distinction between loss of use and physical injury – distinction between "injury" and "physical injury" – no physical injury to tangible property – application dismissed INSURANCE – exclusions – property in physical or legal control – tunnel was in physical control of applicant INSURANCE – exclusions – faulty workmanship – insurer will not pay anything in respect of performing, correcting or improving any work undertaken – consequential costs INSURANCE – exclusions – contractual liability – within ordinary limits of liability

Legislation: Sale of Goods Act 1895 (WA), s 17(2) Insurance Contracts Act 1984 (Cth), s 57

Cases cited: Allstate Exploration NL v QBE Insurance (Australia) Ltd [2008] VSCA 148; 15 ANZ Insurance Cases 61-773 Armstrong World Industries Inc v Aetna Casualty and Surety Co 52 Cal Rptr 2d 690 (1996) Attorney General of Ontario v Fatehi [1984] 2 SCR 536 Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 4; 7 ANZ Insurance Cases 61-110 Australian Pipe & Tube Pty Ltd v QBE Insurance (Australia) Ltd (No 2) [2018] FCA 1450 Bituminous Casualty Corp v Gust K Newberg Construction Co 218 Ill App 3d 956; 578 NE 2d 1003 (1991) Bundy Tubing Company v Royal Indemnity Company 298 F 2d 151 (6th Cir, 1962) Canadian Equipment Sales & Service Co Ltd v Continental Insurance Co (1975) 59 DLR (3d) 333 Canadian Indemnity Insurance Co v Andrews & George Co [1952] 4 DLR 690 Carwald Concrete and Gravel Co Ltd v General Security Insurance Company of Canada and Anor (1985) 24 DLR (4th) 58 Diamond State Insurance Co v Chester-Jensen Co 243 Ill App 3d 471; 611 NE 2d 1083 (1993) Dominion Bridge Company Ltd v Toronto General Insurance Company [1964] 1 Lloyd's Rep 194 Elco Industries v Liberty Mutual Insurance Co 90 Ill App 3d 1106; 414 NE 2d 41 (1980) Eljer Manufacturing Inc v Liberty Mutual Insurance Co 972 F 2d 805 (7th Cir, 1992) Erie Railroad Co v Tompkins 304 US 64 (1938) F & H Construction v ITT Hartford Insurance Company of the Midwest 12 Cal Rptr 3d 896 (2004) Federal Commerce and Navigation Company Ltd v Tradax Export S.A. (The "Maratha Envoy") [1977] AC 1 Graham Evans & Co v Vanguard Insurance Co Ltd (1981) 4 ANZ Insurance Cases 60-689 Hamilton Die Cast Inc v United States Fidelity and Guaranty Co 508 F 2d 417 (7th Cir, 1975) James Budgett Sugars Ltd v Norwich Union Insurance [2002] EWHC (Comm) 968 Karenlee Nominees Pty Ltd v ACN 004 312 234 Ltd (1994) 8 ANZ Insurance Cases 61-236 Kraal v Earthquake Commission [2015] NZCA 13; 2 NZLR 589 Larson Construction Co v Oregon Automobile Insurance Co 450 F 2d 1193 (9th Cir, 1971); [1972] 2 Lloyd's Rep 87 Marathon Plastics Inc v International Insurance Co 160 Ill App 3d 452; 514 NE 2d 479 (1987) Maryland and Casualty Co v Reeder 270 Cal Rptr 719 (1990) Maryland Casualty Company v WR Grace & Company 23 F 3d 617 (2nd Cir, 1993) McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579 Moore v Evans [1917] 1 KB 458 Murphy, McCarthy & Associates Pty Ltd v Zurich Australia Insurance Ltd [2018] NSWSC 627 O'Neill v FSS Trustee Corporation [2015] NSWSC 1248 Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; 59 NSWLR 14 Pilkington United Kingdom Ltd v CGU Insurance Plc [2004] EWCA Civ 23; [2005] 1 All ER (Comm) 283 Pittway Corp v American Motorists Insurance Co 56 Ill App 3d 338; 370 NE 2d 1271 (1977) Poole-Pritchard Canadian Ltd v Underwriting Members of Lloyds (1969) 71 WWR 684 Promet Engineering (Singapore) Pte Ltd v Sturge (The "Nukila") [1997] EWCA Civ 1358; 2 Lloyd's Rep 146 QBE Underwriting Ltd v Southern Colliery Maintenance Pty Ltd [2018] NSWCA 55 Re Mining Technologies Australia Pty Ltd [1999] 1 Qd R 60 Regional Steel Corporation v Liberty Surplus Insurance Corporation 225 Cal App 4th 1377; 173 Cal Rptr 3d 91 (2014) Rivtow Marine Ltd v Washington Iron Works [1974] SCR 1189 Rodan International Ltd v Commercial Union Assurance Company PLC [1997] Lloyds Rep IR 495 Shade Foods Inc v Innovative Products Sales and Marketing 93 Cal Rptr 2d 364 (2000) St Paul Fire and Marine Insurance Co v Coss 145 Cal Rptr 836 (1978) Sturges Manufacturing Co v Utica Insurance Co 37 NY 2d 69; 332 NE 2d 319 (1975) Swift v Tyson 41 US 1 (1842) Technical Products Pty Limited v State Government Insurance Office (Queensland) [1989] HCA 24; 167 CLR 45 Tesco Stores Ltd v Constable [2008] EWCA Civ 362 Tokio Marine and Fire Insurance Co Ltd v Costain Aust Ltd [1988] NSWCA 157; (1989) 5 ANZ Insurance Cases 60-891 Transfield Construction Pty Ltd v GIO Australia Holdings Pty Ltd (1997) 9 ANZ Insurance Cases 61-336 Traveler's Insurance Co v Eljer Manufacturing Inc 197 Ill 2d 278; 757 NE 2d 481 (2001) United States Fidelity & Guaranty Co v Wilkin Insulation Co 144 Ill 2d 64; 578 NE 2d 926 (1991) Walker Civil Engineering Pty Ltd v Sun Alliance & London Insurance Plc (1999) 10 ANZ Insurance Cases 61-418 Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; 259 ALR 314 Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 Yanner v Eaton [1999] HCA 53; 201 CLR 351 Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd [2006] NSWCA 328; 14 ANZ Insurance Cases 61-715