Failure To Render "Professional Advice"… Or A Defective Product?

In a recent Victorian Supreme Court decision, the trial judge was required to consider whether a claim which had been made by Timelink Pacific Pty Limited (Timelink) against Major Engineering Pty Limited (Major) triggered the provision for the payment of legal costs in the insurance policy between Major and CGU Insurance Limited (CGU).

In December 2004, during the Sydney to Hobart Yacht Race, the maxi racing yacht "Skandia" was damaged when its piston rods on the canting keel buckled and broke, causing the keel to detach from the hull, forcing the crew to abandon the yacht. Timelink brought an action against Major, which had designed and manufactured the hydraulic cylinders that controlled the keel of the yacht, alleging Major had caused the loss by its defective performance or failure to perform the formulating of the design. Relevantly, Timelink did not allege that the hydraulic cylinders were defectively constructed. The claim was ultimately determined in Major's