Rockhampton City Council v Yorkshire Insurance Company Limited

The Rockhampton City Council (the Council) appealed to the High Court of Australia from a decision of the Supreme Court of Queensland. The dispute concerned an employer's indemnity policy issued by Yorkshire Insurance Company Limited (Yorkshire). The Council sought to be indemnified by Yorkshire for a sum it was ordered to pay to the dependants of a deceased worker. The policy covered liability arising from personal injury to workers employed by the Council whilst actually engaged in the business of tramway construction.

The legal issues before the High Court were whether the accident, which resulted in the death of a worker, was covered by the policy and, if so, whether the Council had breached a condition of the policy requiring it to take all reasonable precautions to prevent accidents. Specifically, the Court had to determine if the running of a tram for passenger traffic on an incomplete tramway line was part of the business of tramway construction and whether the Council's actions in operating the tram constituted a failure to take reasonable precautions.

The High Court, affirming the decision of the Supreme Court, held that the Council was not entitled to indemnity. The Court reasoned that the policy stipulated that the indemnity was for liabilities arising whilst workers were "actually engaged in the business of tramway construction." While the deceased worker was engaged in construction, the operation of the tram on the incomplete line, particularly without adequate precautions such as a lookout, was found to be negligent. This negligence constituted a breach of the policy condition requiring the Council to take all reasonable precautions to prevent accidents. The Court found that either the accident was not within the scope of the insured risk because the operation of the tram was considered distinct from construction, or if it was within the scope, the Council's failure to take reasonable precautions voided the indemnity.

Consequently, the appeal was dismissed, and judgment was entered in favour of Yorkshire Insurance Company Limited.