Windsurf Pty Ltd v HIH Casualty and General Insurance Ltd

[1999] QCA 360

IN THE COURT OF APPEAL	[1999] QCA 360
SUPREME COURT OF QUEENSLAND

Appeal No 2380 of 1999

Brisbane

Before de Jersey CJ
White J
Muir J

[Windsurf P/L v HIH Casualty & Gen Ins Ltd]

BETWEEN:

WINDSURF PTY LTD (ACN 052 490 712)

(Plaintiff) Appellant

AND:

H I H CASUALTY AND GENERAL INSURANCE LTD (ACN 008 482

291)

(Defendant) Respondent

REASONS FOR JUDGMENT - de JERSEY CJ

Judgment delivered 3 September 1999

1   This case raises two short points of construction with relation to a constructions risk insurance

policy. The appellant was the developer of units at Runaway Bay. BM Culley and Associates Pty Ltd

was its construction manager. Mr and Mrs Colston purchased one of the units. The carpet on a set

of stairs had been negligently laid. On 14 June 1993, the carpet moved, causing Mrs Colston to fall and

break her ankle. She recovered damages against the appellant and Culley. Culley was entitled to be

indemnified by the appellant. The appellant claimed to be entitled itself to be indemnified under its

insurance contract with the respondent. The respondent refused to indemnify the appellant. Subsequent

litigation increased the appellant’s ultimate claim to $106,126.20, for which it unsuccessfully sued the
respondent in the District Court.

2   The contract of insurance entitled the appellant to indemnity for sums payable “in respect of or

arising out of or by reason of . . . personal injury . . . happening as the result of an occurrence . . .”. The

period of that cover was expressed to operate “in full force and effect” until completion of the

maintenance/defects liability period, which concluded at the end of March 1993. The carpet was

negligently laid prior to that, but Mrs Colston’s fall occurred subsequently, on 14 June 1993. What was

the “occurrence” which led to Mrs Colston’s injury? The learned District Court Judge held that it was

the movement of the carpet which on 14 June caused her to fall, and that because of the time limitation,

the cover provided by the policy therefore did not apply.

3   The appellant submits, first, that on the proper construction of the time limitation provision, the

policy applied in respect of occurrences whether before or after the completion of the

maintenance/defects liability period; and second, and alternatively, that a relevant “occurrence” did in

any case take place prior to the expiration of the maintenance/defects liability period.

4   The first submission fastens on what was said to be a less than direct temporal limitation

established by these words:-

“The insurance by this Section of the Policy shall operate in full force and effect until completion of the Maintenance/Defects Liability Period(s) of the Insured Contract(s).”

Those words must not however be read in isolation. Any arguable uncertainty about the ambit of the

provision taken alone is plainly dispelled by the opening provision of the policy:-

“THE INSURERS AGREE, subject to the terms, conditions, limitations provisions and exclusions hereinafter contained to indemnify the insured to the extent and in the manner hereinafter provided.

. . .

THE SCHEDULE

. . .

PERIOD OF INSURANCE:	Construction from 29 November 1991 to 29 October 1992 at 4.00 pm local standard time.
Maintenance/Defects Liability period 26 weeks.
Extension in time automatically held covered at premium to be agreed however not exceeding pro- rata of original rate.”

5   The inclusion of the words “in full force and effect”, which led to the contention of Counsel for

the appellant, is explained by the other provision made in respect of “material damage” claims (section

1):-

“It is agreed that insuring clause paragraph 1 of this Section of the Policy shall operate in full force and effect until such time as the interest insured has been handed over to and accepted in its entirety by the Principal/Proprietor notwithstanding the fact that portions of the interest insured may have been handed over and accepted prior to that time.”

6   Thus seen in context, the time limitation as applicable to this public liability claim perfectly clearly

prescribes the end of the maintenance/defects liability period as the “cut-off” point. The first submission

must therefore fail.

7   Turning to the second submission, the contract defines the word “occurrence” to mean “the

event (including a continuous or repeated exposure to substantially the same general conditions) from

which a loss or series of losses may emanate”. The learned judge referred to the ordinary conception

of “event”, as being “something that happened at a particular time, at a particular place, in a particular

way . . . an occurrence or an incident”, and took the view that the “event” here was “the shifting of the

carpet as (Mrs Colston) walked upon it rather than the negligent laying of the carpet or the negligent

inspection of the carpet as laid”.

8           The appellant contends that the relevant “occurrence”, the “event”, was the negligent laying of the carpet and the related inspection. Supporting the judgment, the respondent points, on the other hand, and among other things, to the words in brackets, which it submits “make it plain that the event

in question is the event that is the proximate cause of the loss”. The respondent’s written submission

goes on: “Those words (the words in brackets) are apt only to refer to the consequence of, for example,

negligence and are entirely inapt to refer, as the appellant would construe the policy, to the negligent act

or omission that created the consequence.” The outcome is not particularly affected by that

consideration, which in the end need not be explored. The true construction more simply emerges.

9   The use of the word “event” would ordinarily invite one to focus on the proximate or immediate

incident leading to the injury, here the shifting of the carpet, which occurred outside the period of

insurance. The word means something which happens (The Macquarie Dictionary), an incident (Shorter

Oxford English Dictionary). What, in ordinary parlance, was the “event”, the happening or incident,

from which Mrs Colston’s injury flowed? Surely the shifting of the carpet and her fall. That conclusion

itself answers an additional contention for the appellant, that the injury could be seen to have resulted

from more than one occurrence.

10   It is not necessary to go to other cases. But it is worth noting two which reinforce this view.

11   The issue in The Distillers Company Bio-Chemicals (Aust.) Pty Ltd v Ajax Insurance

Company Ltd (1973-4) 130 CLR 1 was whether the “occurrence” was the injury, or the mishap which

caused it. Children born deformed, following their mothers’ ingestion of a particular drug during

pregnancy, claimed damages. The insurance cover extended to compensation payable “arising out of

any one occurrence . . .”. Interesting for the present is Stephen J’s focus on the proximate, rather than

remote, causative “event” (p.20):-

“Whether or not an occurrence is the mishap or its consequences, as manifested in the victim’s injuries, it seems clear that in the present case there was not one occurrence in respect of which or arising out of which compensation may become payable to all these infant claimants. Only if the links in the chain of causes be traced as far back as the act on the part of the insured in distributing “Distaval” can one event common to each claimant be found and the proviso should not, I think, be construed as including such a remote cause within the meaning of “occurrence”.”

(The Court comprised three only Justices. In this respect, Gibbs J, as he then was, agreed with

Stephen J).

12   The second case is Pickford & Black Ltd v Canadian General Insurance Co (1976)

64 DLR (3d) 179. The policy covered liability for damage caused by “accident”, but not if the

accident occurred outside Canada. Cargo, negligently stowed onboard a ship within Canada,

shifted at sea outside Canada, causing damage. The “accident” was held to be the event causing

the damage, the shifting of the cargo at sea, not the anterior negligent stowing. Delivering the

judgment of the Supreme Court of Canada, Ritchie J said (p.184):-

“Like the Court of Appeal, I agree with the learned trial Judge’s finding that the
`accident’ was the shifting of the cargo which took place at sea beyond the territory
of Canada and the United States, but I am, with the greatest respect, unable to
conclude that the accident at sea was so bound up with the negligence at the
dockside as to transform the latter from being an originating cause into being the
event of which it was causative. Such a construction appears to me to rob the
word `accident’ as used in the policy of its natural and ordinary meaning by

interpreting it as connoting not the ‘accident’ but the cause of the accident.”

The intermediate appeal court had read “accident”, as used in the policy, as meaning “the event

which resulted in the property damage” ((1974) 53 DLR (3d) 277, 282), suggesting comparability

with the case before this Court. (The Supreme Court did not differ from the lower court in that

respect.)

13   The learned District Court judge correctly held that the contract of insurance did not cover

this claim, because the “occurrence” which led to Mrs Colston’s injury was the shifting of the carpet

and her fall, events which occurred outside the period of insurance.

14   The appeal should be dismissed, with costs to be taxed.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No 2380 of 1999

Brisbane

[Windsurf P/L v HIH Casualty & Gen Ins Ltd]

BETWEEN:

WINDSURF PTY LTD

(ACN 052 490 712)

(Plaintiff) Appellant

AND:

HIH CASUALTY AND GENERAL INSURANCE LTD

(ACN 008 482 291)

(Defendant) Respondent

de Jersey CJ
White J

Muir J

Judgment delivered 3 September 1999

Separate reasons for judgment of each member of the Court; each concurring as to the order made.

APPEAL DISMISSED WITH COSTS TO BE TAXED.

CATCHWORDS:	INSURANCE - construction of policy - owner of units injured falling on carpet negligently laid in liability period - liability to indemnify for an "occurrence" - whether negligent act or fall the occurrence.
Distillers Company Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Company Ltd (1973-4) 130 CLR 1 Pickford & Black Ltd v Canadian General Insurance Co (1976) 64 DLR (3d) 179
Counsel:	Mr F L Harrison QC for the appellant Mr R M Derrington for the respondent
Solicitors:	Chan Lawyers for the appellant Dunhill Madden Butler for the respondent
Hearing Date:	30 July 1999

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No 2380 of 1999

Brisbane

Before de Jersey CJ
White J
Muir J

[Windsurf P/L v HIH Casualty & Gen Ins Ltd]

BETWEEN:

WINDSURF PTY LTD
(ACN 052 490 712)

(Plaintiff) Appellant

AND:

HIH CASUALTY AND GENERAL INSURANCE LTD

(ACN 008 482 291)

(Defendant) Respondent

REASONS FOR JUDGMENT - WHITE J

Judgment delivered 3 September 1999

1                    I agree with the Chief Justice that the “occurrence” which led to the occupant’s injury was the

shifting of the carpet and her fall. Since these events occurred outside the period of insurance the

respondent was not obliged to indemnify the appellant.

2                    I agree for the reasons expressed by his Honour that this appeal should be dismissed with costs

to be taxed.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal. No. 2380 of 1999

Brisbane

Before de Jersey CJ
White J
Muir J

[Windsurf P/L v HIH Casualty & Gen. Ins. Ltd]

BETWEEN:

WINDSURF PTY LTD ACN (052 490 712)

(Plaintiff) Appellant

AND:

HIH CASUALTY AND GENERAL INSURANCE LTD

(ACN 008 482 291)

(Defendant) Respondent

REASONS FOR JUDGMENT - MUIR J

Judgment delivered 3 September 1999

1                 I agree with the reasons to be given by the Chief Justice in this matter and with the orders he

proposes.