Hammersley v National Transport Insurance

[2015] TASFC 5

[2015] TASFC 5

COURT:        SUPREME COURT OF TASMANIA (FULL COURT)

CITATION:                  Hammersley v National Transport Insurance [2015] TASFC 5

PARTIES:  HAMMERSLEY, Andrew John
  KELLARA TRANSPORT PTY LTD
  v
  NATIONAL TRANSPORT INSURANCE (a firm)

FILE NO:  FCA 283/2014
JUDGMENT

APPEALED FROM:  State of Tasmania v Hammersley [2014] TASSC 15

DELIVERED ON:  6 May 2015
DELIVERED AT:  Hobart
HEARING DATE:  26 August 2014
JUDGMENT OF:  Blow CJ, Porter and Pearce JJ

CATCHWORDS:

Insurance – Motor vehicles – Insurance of motor vehicles for loss or damage – Warranties and conditions excluding liability – Exclusion when vehicle overloaded unless overloading accidental – Exclusion when vehicle in an unsafe or unroadworthy condition – Exclusion when reckless non-compliance with regulations – Collision between excessively high load and overpass.

Australian Casualty Co Ltd v Federico (1986) 160 CLR 513; Povey v Qantas Airways Limited (2005) 223 CLR 189; National & General Insurance Co Limited v Chick [1984] 2 NSWLR 86; Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898, considered.
Clarke v National Insurance and Guarantee Corporation Limited [1964] 1 QB 199, distinguished.
Aust Dig Insurance [1014]

REPRESENTATION:

Counsel:
             Appellants:  P L Jackson
             Respondent:  B R McTaggart SC
Solicitors:
             Appellant:  Hunt & Hunt
             Respondent:  Page Seager

Judgment Number:  [2015] TASFC 5
Number of paragraphs:  37

Serial No 5/2015

File No 283/2014

ANDREW JOHN HAMMERSLEY, KELLARA TRANSPORT PTY LTD
v NATIONAL TRANSPORT INSURANCE (a firm)

REASONS FOR JUDGMENT  FULL COURT

BLOW CJ
PORTER J
PEARCE J
6 May 2015

Orders of the Court

1. Appeal allowed.

1. Order dismissing third party proceedings set aside.

Serial No 5/2015

File No 283/2014

ANDREW JOHN HAMMERSLEY, KELLARA TRANSPORT PTY LTD
v NATIONAL TRANSPORT INSURANCE (a firm)

REASONS FOR JUDGMENT  FULL COURT

BLOW CJ
6 May 2015

1. This appeal concerns three exclusion clauses in a policy of motor vehicle accident insurance held by a company that operated a fleet of trucks.  That company was the second appellant, Kellara Transport Pty Ltd.  The insurer was the respondent, National Transport Insurance. 

2. On 1 July 2008 the first appellant, Andrew Hammersley, in the course of his employment by Kellara, was driving one of its prime movers along the East Tamar Highway. It was towing a trailer, on which there was a Caterpillar excavator. Mr Hammersley came to a railway overpass. The excavator was positioned in an unusual way.  The top of it was too high to pass under the overpass. It collided with the overpass, causing damage. 

3. The State of Tasmania was the owner of the overpass.  It sued Mr Hammersley and Kellara for damages for negligence.  They instituted third party proceedings claiming an indemnity from the insurer. Drivers were covered by the policy. The action and the third party proceedings were tried together by Tennent J. She gave judgment for the State against Mr Hammersley and Kellara, but dismissed their claim against the insurer: State of Tasmania v Hammersley [2014] TASSC 15. This is an appeal by Mr Hammersley and Kellara against the dismissal of that claim.

4. At the trial, the insurer relied on three exclusion clauses in the policy.  The learned trial judge based her decision to dismiss the third party claim on only one of those clauses, cl 4(c)(2). That clause was in a list of exclusions.  It read as follows:

   "4   Loss, damage, liability and or compensation for damage caused to or by Your Motor Vehicle whilst Your Motor Vehicle is;

   …

   (c)

   …

   (2) conveying any load in excess of:

   (i)   that for which constructed or for which licensed (whichever the lesser), or

   (ii)  that permitted by law."

5. When the collision with the overpass occurred, the insured vehicle was conveying a load in excess of that for which it was "licensed", and in excess of that permitted by law.  Provisions as to the loaded heights of vehicles were contained in the Vehicle and Traffic (Vehicle Operations) Regulations 2001. As a general rule, it was an offence to use a "vehicle" that exceeded 4.3 metres in height: reg 16(a). That measurement included any load: reg 9. The Transport Commission had issued a permit for the vehicle pursuant to reg 49, permitting it to be driven with a loaded height not exceeding 4.9 metres. However that permit did not apply for the journey in question for at least one reason namely that the vehicle was not accompanied by a pilot vehicle, as required by the permit: reg 54(1)(c). Mr Hammersley also contravened reg 102(1) of the Traffic (Road Rules) Regulations 1999 by driving past a sign reading "CLEARANCE 5.2m", when the loaded height of his vehicle was greater than that. He also contravened reg 8(1) of the Vehicle and Traffic (Vehicle Operations) Regulations by using the insured vehicle when the excavator's boom was not fully retracted and his load was not reduced to the smallest practicable dimensions.

6. However the policy also included an extension clause limiting the scope of exclusion  4(c)(2). That extension clause read as follows:

   "ACCIDENTAL OVERLOAD

   Notwithstanding exclusion 4(c)2, Your policy is extended to include accidental overloading, but You must prove that such overloading was accidental."

7. The policy does not contain a definition of "accidental", but it defined "Accident" to mean "an unintended, unforeseen, unlooked-for happening or mishap, which is not expected or designed". 

8. At the trial, Mr Hammersley and Kellara conceded that the trailer was overloaded for the purposes of cl 4(c)(2), because its load was too high, but argued that that clause did not apply because the overloading was accidental.

Was the overloading "accidental"?

1. The evidence established that Mr Hammersley was an experienced driver who had often carted similar excavators on similar trailers along the same road, passing under the same overpass without incident.  Normally such an excavator was transported with its boom in the lowest possible position.  On this occasion, apparently because other items were being transported on the same trailer, the excavator's bucket could not be folded into the position it normally occupied, with the result that the excavator's boom was at a higher level than usual, with some of it above the level of the excavator's cabin roof, which was ordinarily its highest part.  Mr Hammersley gave evidence that he believed that this was the first time that he had taken an excavator along the East Tamar Highway in a position other than the ordinary position.  He gave evidence that he assessed the height of his load before setting out by standing about 6 to 8 metres back from the truck to assess the highest part of the boom, then using his tape measure to measure the distance from the highest point to the deck of the float, and then measuring the distance from the deck of the float to the ground.  He said the first measurement was about 3.5 metres, and the second 923 to 925 millimetres, and that he added these together and got 4.5 metres.  The trailer had airbag suspension.  Mr Hammersley gave evidence that he reinflated the airbags after taking these measurements, measured the distance between the deck and the ground a second time, and believed that the total height of his load was about 4.75 metres when he set out. 

2. The learned trial judge rejected much of Mr Hammersley's evidence as to his measurements and calculations, and rejected the submission that the overloading was accidental within the meaning of the relevant clause.  At [71] and [72] of her reasons, she said:

   "The overloading in this case cannot be said to be due to accident. Hammersley knew the route he was to take, and knew it had an overpass with a height restriction. As an experienced truck driver and one used to carting heavy machinery, he had to have been aware of the need to ensure the height of his vehicle and its load enabled him to travel on a route he had travelled many times before. He knew what the accepted mode of transportation was for an excavator of this type, and knew he was transporting it in a different way. That the trailer and its load could have been over height simply because of the different way in which the excavator was positioned to accommodate extra equipment, had to have been an event which could be expected or foreseen. Even if Hammersley measured as he said he did, the difference between what he said he believed the height to be and what it was, was so great that it must have been obvious to the naked eye. The difference between the two was not so slight that it could be inadvertent either as a result of error in measuring or in adding up.

   In the circumstances I am not satisfied that the defendants have discharged their onus of proving the overloading was accidental."

3. It should be noted that, whilst her Honour made a finding to the effect that the fact that the trailer and its load were too high for the overpass "could be expected or foreseen", she did not make a finding that that situation was actually expected or foreseen.  Whilst she made a finding that the discrepancy concerning the true height of the trailer and its load was so great that the difference between the true height and the height calculated by Mr Hammersley "must have been obvious to the naked eye", she did not make a finding to the effect that Mr Hammersley noticed that which was obvious. 

4. The appellants contend that her Honour erred in her approach to the issue of whether the overloading was accidental. They contend that, in view of the policy's definition of "Accident", on a proper interpretation of the accidental overloading clause, the overloading was accidental unless it was something that Mr Hammersley intended, foresaw, looked for, expected, or brought about by design. I accept that that is the correct approach.

5. The commercial purpose of the policy in question was to provide the insured with an indemnity against liability for the consequences of negligence.  Negligence is essentially the risk that was insured against.  It follows that negligent overloading, depending on the circumstances, can sometimes amount to accidental overloading for insurance purposes.  There is a body of case law which establishes that the words "accidental" and "accident" should be given an interpretation with which the policy's definition of "Accident" is consistent.

6. In Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, the High Court considered the meaning of a provision in a disability insurance policy that entitled the insured to monthly payments for life if he suffered total disability as a result of "bodily injury caused by an accident". The insured had injured his spine by doing some very heavy work. The insurer contended that the injury was not "caused by an accident" because it resulted from a deliberate choice by the insured as to his system of work. That argument failed. At 527, Wilson, Deane and Dawson JJ said:

   "As a matter of ordinary language in this country, an 'accident' (from the Latin accidens) means very much what the etymologist would expect. It is something which happens without intention or design. When used with reference to something which causes injury, it means an unexpected and unintended mishap. In that context, the ordinary and natural meaning of the word still corresponds with Lord Macnaghten's definition in Fenton v Thorley & Co Ltd [1903] AC 443, at p 448 which, although propounded in a Workmen's Compensation Act case, has commonly been accepted as applicable to the use of the word in public liability and other insurance policies: 'an unlooked for mishap or an untoward event which is not expected or designed': see, to the same effect, Lord Lindley [1903] AC 443, at p 453."

7. In Povey v Qantas Airways Limited (2005) 223 CLR 189, which concerned the provisions of the Convention for the Unification of Certain Rules Relating to International Carriage by Air, usually known as the Warsaw Convention, Gleeson CJ, Gummow, Hayne and Heydon JJ observed at [32] that the word "accidental" is "usually used to describe the cause of an injury rather than the event and is often used as an antonym to 'intentional'."

8. In National & General Insurance Co Limited v Chick [1984] 2 NSWLR 86, the New South Wales Court of Appeal had to consider whether the husband of an insured woman had shot himself dead by "accidental" means. The majority held that he had pulled the trigger of his revolver after making a most unfortunate mistake as to which of its six chambers contained a bullet. Samuels and Mahoney JJA held that, in those circumstances, the shooting was accidental within the meaning of the policy. At 105-106, Samuels JA observed that "negligence does not deprive a happening of the character of an accident". At 111, Mahoney JA rejected the proposition that, because the possibility of the bullet being fired was foreseeable, it followed that the firing and the consequent injury were not accidental.

9. There is no reason for this Court not to accept the learned trial judge's findings as to the lack of credibility of Mr Hammersley's evidence.  That is to say, this Court should proceed on the basis that he did not make an inadvertent error in measuring, adding up, or estimating the height of the load.  However it does not follow that the evidence fell short of proving that the overloading was accidental.  If Mr Hammersley paid no attention at all to the height of his load, and set off on his journey without thinking about its height, then the overloading of the vehicle to an excessive height must have been accidental, in that it was neither intended, foreseen, looked for, expected, nor brought about by design.  The issue as to whether the overloading was accidental required a finding as to Mr Hammersley's state of mind.  No such finding was made. 

10. It would be most unusual for an experienced truck driver like Mr Hammersley to embark upon a journey knowing, or foreseeing a possibility, that his trailer was loaded to too great a height, when a moment's thought would have led him to realise that he was going to encounter an overpass with which his load would or might collide.  Such conduct could only be explained by mental illness, anger, hostility towards his employer or a customer, or some such extreme state of mind.  A collision would result in embarrassment, the closure of a busy highway, damage to the customer's goods and the overpass, probably prosecution, and possibly dismissal from his employment.  It is therefore far more probable that Mr Hammersley did not advert to the height of the load at all.  I am satisfied on the balance of probabilities that, if he did not make an inadvertent error in measuring, adding up, or estimating the height of the load, then he must not have adverted to the height of the load at all.  It follows that the overloading was neither intended, foreseen, looked for, expected, nor brought about by design, and that it was therefore accidental within the meaning of the policy.  That is to say, I am satisfied that liability under the policy was not excluded by cl 4(c)(2).

Exclusion 4(d) – unsafe or unroadworthy condition

1. At the trial, as I have said, the insurer relied on two other exclusion clauses which the learned trial judge saw no need to consider.  The first of those was cl 4(d).  It provided that the insurer would not pay for:

   "Loss, damage liability and or compensation for damage caused to or by Your Motor Vehicle whilst Your Motor Vehicle is;

   …

   (d)being used in an unsafe or unroadworthy condition, unless such condition could not be readily detected by You."

2. The insurer does not contend that there was anything wrong with the insured vehicle, which comprised the prime mover and the trailer, but contends that the clause did not relate only to the intrinsic condition of the vehicle. It contends that the vehicle was unsafe or unroadworthy within the meaning of the clause, because its load was too high.

3. Counsel for the insurer relied on the decision of the English Court of Appeal in Clarke v National Insurance and Guarantee Corporation Limited [1964] 1 QB 199. That case concerned a journey made by nine men who set out in a Ford Anglia, described by Harman LJ at 204 as "a modern up-to-date kind of car", from Highgate to the West End. The Court held that, within the meaning of an exclusion clause in a policy of insurance, the car was "being driven in an unsafe or unroadworthy condition". The evidence established that the car was so grossly overloaded that its steering was affected, and that it could not safely be driven at speeds above 25 miles per hour. All members of the Court concluded that the car was "being driven in an unsafe or unroadworthy condition" because of the overloading. At 207-208, Harman LJ emphasised the importance of the words "being driven", and concluded that "when it was being driven, it was, by reason of overloading … rendered unsafe and unroadworthy". Pearson LJ observed, at 210, that an "unroadworthy condition" did not have to be permanent, but could be a temporary state. Havers J, at 213, reached a conclusion to the effect that the vehicle was "so grossly overloaded with passengers" that it was unroadworthy.

4. An attempt to rely on that case failed in Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Limited (1989) 5 ANZ Ins Cas ¶60-907. In that case a crane had collapsed because it had been set up on ground which yielded. It was argued that, within the meaning of an exclusion clause, the crane was "being used in an unsafe condition". Giles J (of the Supreme Court of New South Wales) rejected that argument, holding at 75,804 that "there was nothing unsafe in the condition of the crane itself".

5. Another attempt to rely on Clarke failed in A P Salmon Contractors Limited v Monksfield [1970] 1 Lloyd's Rep 387. That was a decision of Judge Rogers in the Mayor's and City of London Court. It concerned an accident that occurred when part of a load fell from a lorry and hit a pedestrian. It was argued that the lorry was "driven or used in an unsafe condition" within the meaning of an exclusion clause because the load was not properly secured. Judge Rogers rejected that argument, observing that there was no evidence that the handling of the vehicle was in any way affected by the faulty loading.

6. This case concerns a very different factual situation from that in Clarke.  In this case the high load did not affect the ability of the driver to control the vehicle.  The vehicle was safe and roadworthy.  The problem was that the driver attempted to drive under too low a bridge.  That can occur when a driver attempts to drive a vehicle with a load of an ordinary height under a bridge that happens to be too low for that load.  The exclusion clause is not concerned with particular loads or particular obstacles.  It is concerned with such things as the ability of a driver safely to control the vehicle.

7. In this case, since the handling of the vehicle was not affected by the height of its load, it was not "being used in an unsafe or unroadworthy condition" within the meaning of exclusion 4(d).

Exclusion 7(i) – reckless non-compliance with regulations

1. The other exclusion clause relied upon by the insurer is cl 7(i).  That clause provided that the insurer will not pay for loss or damage or liability caused by:

   "recklessness by You or any person acting on Your part or by reckless failure to comply with any statutory obligations and by-laws or regulations imposed by any public authority, for the safety of the Motor Vehicle/s and, for the carriage of goods and merchandise."

2. As I have said, the insurer relied at the trial on contraventions of regulations by Mr Hammersley as follows:

   · He contravened reg 16(a) of the Vehicle and Traffic (Vehicle Operations) Regulations by using a vehicle with a loaded height exceeding 4.3 metres.

   · He contravened reg 102 of the Traffic (Road Rules) Regulations by driving past a clearance sign specifying a clearance of 5.2 metres when the loaded height of his vehicle was greater than that.

   · He contravened reg 8(1) of the Vehicle and Traffic (Vehicle Operations) Regulations by driving the insured vehicle when the excavator's boom was not fully retracted and the load was not reduced to the smallest practicable dimensions.

1. The insurer contends that these contraventions were reckless.  I disagree. 

2. For insurance purposes, recklessness ordinarily involves a recognition that a danger exists, and indifference as to whether or not it is averted.

3. In Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898, the English Court of Appeal was concerned with a policy indemnifying an employer against liability for damages in respect of personal injuries suffered by employees. The policy required the insured to "take reasonable precautions to prevent accidents and disease". In that context, Diplock LJ made a comment as to the meaning of the word "reckless" that has often been cited with approval. At 906, his Lordship said:

   "What, in my judgment, is reasonable as between the insured and the insurer, without being repugnant to the commercial purpose of the contract, is that the insured, where he does recognise a danger, should not deliberately court it by taking measures which he himself knows are inadequate to avert it. In other words, it is not enough that the employer's omission to take any particular precautions to avoid accidents should be negligent; it must be at least reckless, that is to say, made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted."

4. Essentially his Lordship concluded that a requirement to take reasonable precautions was satisfied when the insured perceived the existence of a danger and took some action to avoid it, without being indifferent as to whether the danger was averted or not.  The same approach to the meaning of "reckless" has been adopted in a number of insurance cases: W & J Lane v Spratt [1970] 2 QB 480 at 493 (Roskill J); Legal & General Insurance Australia Limited v Eather (1986) 6 NSWLR 390 at 397 (Kirby P) and 403 (Glass JA); VACC Insurance Limited v BP Australia Limited (1999) 47 NSWLR 716 at [58] (Brownie AJA, dissenting, the majority not having addressed the question); Mead v Allianz Australia Limited [2006] NSWSC 366 at [56], [57] (Bergin J).

5. Counsel for the insurer did not submit to us that a wider definition of "recklessness" or "reckless" should be adopted.  He argued that Mr Hammersley must have actually recognised a danger of damage to the overpass, or a possibility that he would not be complying with the relevant regulations, and that he did not care whether or not any such danger or breach was averted.

6. Under cross-examination Mr Hammersley said that he did not know about reg 8(1), that he did not know that there was a requirement to fully retract a boom, nor a requirement to minimise the dimensions of a load, and that he did not consult the permit before his journey. There is no reason to doubt the truthfulness of his evidence on those points.

7. For the reasons I have already stated when considering the accidental overloading issue, I consider that this was a case of appalling inadvertence, but not recklessness. I see no basis for concluding that Mr Hammersley foresaw, and was recklessly indifferent to, the possibility of any collision with the overpass or any breach of any relevant regulation. I am satisfied that there was not any recklessness or reckless failure that would entitle the insurer to rely upon cl 7(i).

Conclusion

1. For the reasons stated, I would allow the appeal, set aside the order dismissing the third party proceedings, and order that judgment be entered in those proceedings for the appellants against the respondent.  Counsel should have an opportunity to make submissions as to the terms of the judgment.

   File No 283/2014

ANDREW JOHN HAMMERSLEY, KELLARA TRANSPORT PTY LTD
v NATIONAL TRANSPORT INSURANCE (a firm)

REASONS FOR JUDGMENT  FULL COURT

PORTER J
6 May 2015

1. I agree with Blow CJ.

   File No 283/2014

ANDREW JOHN HAMMERSLEY, KELLARA TRANSPORT PTY LTD
v NATIONAL TRANSPORT INSURANCE (a firm)

REASONS FOR JUDGMENT  FULL COURT

PEARCE J
6 May 2015

1. I also agree with the learned Chief Justice.