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[2016] QCA 208
Here, the appellant argued that it should have been entitled to indemnity under a policy of insurance it had entered into with the respondent in respect of a 100 tonne crane which was damaged beyond economical repair. [13]. The incident occurred whilst the crane was “carrying a 39 tonne panel on a seven degree slope in clear contravention of the manufacturer’s manual and the Australian Standards”. [1]. The respondent refused indemnity under the policy, relying upon the “accidental overload clause” in the “Additional Benefits” section of the agreement. The appellant submitted that the primary judge erred in characterising the facts as a deliberate courting of the risk such as to render the overloading and consequential damage neither unexpected nor unforeseen and thus not accidental.
The critical issue on appeal was whether the overloading was “accidental” overloading within the meaning of the accidental overload clause, and whether the damage was “accidental, sudden and unforeseen”. If the definition of “insured damage” was read into the accidental overload clause, the clause read:
“We will pay for accidental sudden and unforeseen physical loss of or damage to a machine caused by or resulting from accidental overloading which is non-deliberate and clearly unintentional. The onus rests with you to substantiate any claims relating to accidental overload.” [30].
The words “overloading” and “overload” were not defined within the policy. [31].
At the time of the incident, the crane was operating on a slope when the boom collapsed. The primary judge concluded that its operation did not comply with the manufacturer’s guidelines that the recommended ground slope for normal operation was 0.3 degrees, which additionally warned of the risk of structural overload in the event the crane was not operated on level ground. His Honour also concluded that its operation on a slope contravened Australian Standards concerning the safe use of mobile cranes. [29].
By majority on appeal (his Honour Justice Fraser dissenting), the court determined that the structural overloading which caused the incident was, in terms of the policy, “accidental...non-deliberate and clearly unintentional” and the resulting damage to the crane “accidental sudden and unforeseen”. [11]. In forming that view, it was noted that the appellant’s case at trial differed materially from its case on appeal. [4].
Importantly, the President took the view that the fact that the crane driver’s negligence caused the structural overloading and resulting damage was not determinative. That was because it was a precondition that, for the appellant to be deprived of the benefit of the accidental overload clause, the overloading and damage must have been expected: see Westco Australia Pty Ltd v Manufacturers Mutual Insurance Ltd (Unreported, Supreme Court of Queensland, Derrington J, D M Campbell and Kelly JJ agreeing, 22 May 1984). If each could be categorised as “an unlooked-for mishap or an untoward event which is not expected or designed”: Fenton v Thorley & Co Ltd. [1903] AC 443, 448 then they would be rendered accidental. [5].
Importantly the President noted that the crane driver was cognisant that the crane needed to be operated on near level ground, and took certain precautions consistent with common practice to level the subject area, [6], [88], her Honour formed the view that his conduct simply “was not so hazardous and culpable that the subsequent overloading and the resulting damage could not be called an accident”. She held that whilst he clearly took a risk that did not equate to “inviting the disaster which ensued”. An important consideration was that the parties involved had the common design of ensuring, for professional, financial and personal safety reasons, that the crane safely traversed the raised ground to deliver its load, and “no other interest”. [10]. In short, the conduct of the contractor and crane operator did not involve such a level or recklessness or risk-taking that it could not be regarded accidental. [101], [102].
In the result, the appeal was allowed with costs and the judgment below set aside. The respondent was ordered to pay the applicant the agreed quantum for the total loss of the crane and the agreed sum for the loss of revenue, amounting to some $2,254,904, together $378.00 per day being the agreed daily rate for loss of revenue from 15 April 2015 to the date of the order and interest. [12].