Storage tank pipes at a petrol station can be classified part of an insured building, the NSW Court of Appeal has ruled.

The decision overturns a Supreme Court ruling that denied a claim for the pipes because they were underground.

Petrol station owner Tanwar Institute of Professional Studies appealed against the Supreme Court judgment in favour of run-off specialist Gordian Runoff, which had taken on a policy issued by Calliden and originally issued by Great Lakes Insurance.

In awarding Tanwar $149,021 and costs, the Appeal Court found “buildings” in the policy included petrol storage tanks and structural improvements. The pipes were structural improvements to the tanks.

In 2015 the Environment Protection Authority told Tanwar it needed to upgrade the petrol station in the Sydney suburb of Lewisham.

Company director Ramesh Tanwar, a licensed builder, undertook the work, which involved replacing underground pipes connecting the petrol storage tanks to the bowsers.

When the work was finished it was discovered the bowsers were not working properly and Tanwar claimed against its policy, while Mr Tanwar began remedial work. 

Gordian denied liability and Tanwar started legal action, claiming $444,305.

The insurer presented expert evidence that the value of the upgrade work was $312,402 and the value of the remedial work was $149,021.

The initial judgment found the pipes were not part of the building and the damage occurred during the upgrade work; the contract value of that work was more than $100,000 (more than 20% of the sum insured); and, at most, Tanwar was entitled to recover $149,021 for the cost of the remedial work.  

The Appeal Court would not allow a retrial on the amount claimed because it said the $149,021 had already been decided in the first trial.

The court also rejected a business interruption claim for lost rent, saying Tanwar had failed to prove its case.  

Find the judgment here.