Background
Major held products liability insurance with CGU providing cover
for an occurrence caused by an unknown defect in Major's
products, pursuant to which CGU was obliged to pay Major's
legal costs in respect of such claims.
Major supplied two hydraulic cylinders for a yacht owned by
Timelink. The piston rods on the canting keel buckled, broke and
caused the keel to detach from the hull during a race resulting in
damage to the yacht and consequential loss. Timelink sued Major for
damages essentially on the ground that the cylinders were not fit
for purpose, that they had relied on Major's skill as a
specialist hydraulic engineering company, and that Major had
supplied the cylinders which were not appropriate for their
intended use. In essence, Major contended that it merely provided a
component which it did not design, and which was specified by
Timelink's own engineer.
