In Hammersley v National Transport Insurance, the Full Court of Tasmania’s Supreme Court examined the authorities on the meaning of “accidental”, “recklessness” and “used in an unsafe or unroadworthy condition” – terms which commonly appear in exclusions clauses in motor vehicle insurance policies.

Facts

Hammersley was a truck driver employed by Kellara Transport who held a motor vehicle accident insurance policy with National Transport Insurance (NTI). In July 2008 Hammersley drove a prime mover towing a trailer laden with a large excavator which collided with an overpass.

At first instance the Court gave judgment for the State of Tasmania, the owner of the overpass, but dismissed the third party proceedings against NTI – the trial judge being satisfied that the insurer could successfully rely on the first of three exclusion clauses in the policy under which it denied liability. Hammersley and Kellara appealed the dismissal of their claim against the insurer.

Exclusion #1 – Meaning of accidental

Exclusion clause 4(c)2, which the insurer successfully relied on at trial, read:

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

conveying any load in excess of:

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

(ii) that permitted by law.

However the scope of this exclusion was limited 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.

The appellants conceded that when the collision occurred, the vehicle was conveying a load in excess of that for which it was licensed and that permitted by law, however they argued that the overloading was accidental and therefore the exclusion did not apply.

On the issue of whether the overloading was accidental, the trial judge found that, despite Hammersley taking certain measurements of the height of the load prior to commencing his journey, the difference between what he said he believed the height to be and what it was, “was not so slight that it could be inadvertent either as a result of error in measuring or in adding up” and “must have been obvious to the naked eye.” The Full Court found that her Honour erred in her approach.

The policy did not contain a definition of accidental but defined “Accident” to mean “an unintended, unforeseen, unlooked-for happening or mishap, which is not expected or designed”. The Full Court confirmed the case law establishes that the word “accidental” should be given an interpretation consistent with this definition.

Blow CJ (with whom Porter and Pearce JJ agreed) cited the High Court in Federico where it held that an accident “is something which happens without intention or design…an unexpected and unintended mishap…an unlooked for mishap or an untoward event which is not expected or designed.” His Honour also looked to Povey v Qantaswhich observed 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” ” and cited the New South Wales Court of Appeal in Chick which found that “negligence does not deprive a happening of the character of an accident”.

On the issue of whether the overloading was accidental, His Honour found this required a finding as to Hammersley’s state of mind. He proffered that it would be most unusual for an experienced truck driver like Hammersley to commence his journey foreseeing a possibility that his trailer was over-height and might encounter an overpass on his journey with which his load might collide. Rather he was satisfied on the balance of probabilities that Hammersley did not avert to the height of the load at all, it thereby following that the overloading was neither intended, foreseen, looked for, expected nor brought about by design and was therefore accidental.

Exclusion #2 – Meaning of being used in an unsafe or unroadworthy condition

Having overturned the basis for the trial judge’s decision, the Full Court proceeded to consider the next exclusion clause on which the insurer relied. It provided 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; 

being used in an unsafe or unroadworthy condition…

The insurer contended that the vehicle was unsafe or unroadworthy because its load was over-height. It referred to the English Court of Appeal in Clarke where a Ford Anglia, grossly overloaded by nine men, was found to have been used in an unsafe or unroadworthy condition because its steering was affected by the overloading – the Court stating “when it was being driven, it was, by reason of overloading…rendered unsafe and unroadworthy”.

In essence, Clarke established that the overloading of the vehicle caused it to be unsafe and unroadworthy because it affected the driver’s ability to control the car. The Full Court distinguished the facts in this case finding that the truck being over-height did not affect the driver’s ability to control the vehicle – the vehicle itself was safe and roadworthy, the problem lay in the driver attempting to drive under an overpass which was too low.

The Full Court concluded that since the handling of the truck was not affected by the height of its load, it was not being used in an unsafe or unroadworthy condition.

Exclusion #3 – Meaning of recklessness

The final exclusion clause relied on by the insurer provided that the insurer will not pay for loss, 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.

Hammersley had contravened various aspects of the Vehicle and Traffic (Vehicle Operations) Regulations and the insurer contended that those contraventions were reckless.

Disagreeing with the insurer, Blow CJ stated that “…recklessness ordinarily involves a recognition that a danger exists, and indifference as to whether or not it is averted.” This paraphrases Diplock LJ’s comment in Fraser that for an act or omission to be reckless it must be at least “made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted.” His Honour found that Hammersley did not know about the regulations or the terms of the permit under which his journey was undertaken – he considered that this was a case of appalling inadvertence but not recklessness.

Lessons for insurers

  1. To determine whether or not conduct was accidental requires an examination of the individual’s state of mind and a conclusion that the act or omission was neither intended, foreseen, looked for, expected nor brought about by design.
  2. A vehicle being used in an unsafe or unroadworthy condition refers to the intrinsic condition of the vehicle such as the driver’s ability to control the vehicle being affected.
  3. Recklessness requires actual recognition that a danger exists and indifference as to whether or not it is averted; it is distinguishable from inadvertence.

Cases cited

Hammersley v National Transport Insurance [2015] TASFC 5 (appeal from Tasmania v Hammersley [2014] TASSC 15) 

Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 

Povey v Qantas Airways Ltd (2005) 223 CLR 189 

National & General Insurance Co Ltd v Chick [1984] 2 NSWLR 86 

Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898 

Clarke v National Insurance and Guarantee Corp Ltd [1964] 1 QB 199