“Appalling inadvertence” not enough to topple claim
The Full Court of the Supreme Court of Tasmania recently held that the driver of an overloaded heavy vehicle that caused damage to a railway overpass was entitled to indemnity on the basis that the overloading was accidental and was not reckless and therefore no exclusion clauses applied.
The case serves as a reminder of the difficulties insurers face in establishing that the conduct of an insured was so unreasonable that it is excluded by the policy.
On 1 July 2008, Mr Hammersley, in the course of his employment with Kellara Transport Pty Ltd (Kellara), was driving one of its prime movers along the East Tamar Highway, Tasmania. It was towing a trailer on which there was an excavator. Normally such an excavator was transported with its boom in the lowest possible position. On this occasion, however, other items were also being transported and the excavator’s boom sat higher than usual. When Mr Hammersley came to a railway overpass, the boom was too high to pass under the overpass and therefore collided with the overpass, causing damage.
The State of Tasmania (the State) was the owner of the overpass. It sued Mr Hammersley and Kellara for damages in negligence. Mr Hammersley and Kellara commenced third party proceedings claiming an indemnity from the insurer, National Transport Insurance (NTI).
At trial, NTI relied on 3 exclusion clauses to deny indemnity – namely conveying an excess load, an unsafe or unroadworthy condition and reckless non-compliance with regulations.
The policy also contained an extension clause that extended coverage to include accidental overloading. Mr Hammersley and Kellara admitted that the trailer was overloaded at the time of the incident because its load was too high, but argued that the exclusion clause did not apply because the overloading was accidental. Mr Hammerlsy gave evidence that he assessed the height of his load before setting out and believed the total height to be within the clearance of the overpass.
The trial judge gave judgment for the State against Mr Hammersley and Kellara. Her Honour dismissed the claim against NTI on the basis that the insured vehicle was conveying an excess load at the time of the incident and the excess load exclusion therefore applied. Her Honour 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 extension clause. The trial judge thought that the experience of Mr Hamersley was such that he ought to have been aware of the need to ensure the load would travel safely beneath the overpass.
Mr Hammersley and Kellara argued that the trial judge had erred in her approach to the issue of whether the overloading was accidental. They contended that, on a proper interpretation of the accidental overloading extension clause, the overloading was accidental unless it was something that Mr Hammersley intended, foresaw, looked for, expected, or brought about by design. The full court accepted this approach.
The full court noted that the commercial purpose of the policy was to provide the insured with indemnity against liability for the consequences of negligence and that negligent overloading must therefore sometimes amount to accidental overloading for insurance purposes.
The full court found that the issue as to whether the overloading was accidental required a finding as to Mr Hammersley’s state of mind and that no such finding was made by the trial judge. The full court was satisfied on the balance of probabilities that Mr Hammersley did not advert to the height of the load. It followed that the overloading was neither intended, foreseen, looked for, expected, nor brought about by design. The overloading was therefore accidental within the meaning of the policy and the exclusion was not triggered.
As to the clause that excluded coverage for loss caused by the vehicle being used in an unsafe or unroadworthy condition, the full court found that the exclusion was concerned with such things as the ability of the driver to safely control the vehicle. 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 and the exclusion was not triggered.
As to the clause that excluded coverage for loss caused by reckless non-compliance with regulations, the full court noted that, for insurance purposes, recklessness ordinarily involved a recognition that danger exists and indifference as to whether or not it is averted. The full court could find 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. Whilst the full court acknowledged Mr Hammersley’s “appalling inadvertence”, it was satisfied that that did not amount to recklessness or reckless failure that would entitle NTI to rely on the exclusion clause.
There is often a fine line between “negligence”, “inadvertence” and “accident” on the one hand and “recklessness” on the other. The courts are loath to allow insurers to deny indemnity, particularly in circumstances where there is evidence that the insured took some action to avoid the risk of harm.