In April 2015 the Queensland Supreme Court Trial Division awarded judgment in favour of the insurer, CGU, finding that damage to a crane owned by Matton Developments was not accidental and therefore excluded from coverage.[i]
In rather unique facts, a 100 tonne telescopic “crawler” crane was lifting and moving a 39 tonne concrete panel as part of the construction of a factory extension. The process involved a number of difficulties, though the difficulty that is the subject of the litigation was that the ground over which the crane needed to travel to install the panel had deteriorated and was not level. Due to the weight of the load and the angle of the boom, it was imperative that the crane be driven on level ground.
In an effort to level the ground, broken concrete was spread on the deteriorated surface and sat deliberately above what could be considered as a true level of the ground to offset the concrete rubble and ground compressing with the weight of the crane and load. It was accepted that there were concerns about the incline presented by the concrete rubble, notably by the dogman. As the crane crawled slowly over the rubble over a 12 second period, it failed to compress to a level surface and the boom collapsed.
The incident resulted in the crane being damaged beyond economical repair.
The decision at first instance involved a detailed dissection of the facts and evidence surrounding the crane’s collapse as well as the terms of the CGU policy and the trial judge, Flanagan J, was, in effect, invited to choose between two competing hypotheses as to the cause of the overloading (which was not disputed as the cause of the damage):-
- a failure of specific weld joints in the crane’s boom (“Matton’s Hypothesis”); or
- structural failure of the boom due to the crane operating on a 7 degree slope in contravention of the manufacturer’s manual and the relevant Australian Standards (“Insurer’s Hypothesis”).
The trial judge did not accept the testimony of the crane driver as to how the crane came to be overloaded (namely that the crane was being operated at ground level as he was looking at the spirit level inside the cabin) and it followed then that Matton’s Hypothesis was not accepted (and the Insurer’s Hypothesis accepted) on the basis that the driver was aware of the risk of overloading when driving on a slope and had ‘courted that risk’ by continuing to crawl the crane along the slope knowing that the gradient was not levelling.
That lead to the finding that the overloading was not accidental as the risk causative of the damage to the crane was not ‘unintended and unexpected’ damage within the definition of the CGU policy.
Matton (“Appellant”) appealed the trial judge’s findings to the Queensland Court of Appeal.[ii] The basis of the appeal was essentially that, despite the trial judge’s findings of fact (notably rejecting the driver’s testimony), the overloading and resulting damage to the crane was ‘accidental’. The seminal question to be tried was whether the Appellant had “courted the risk”.
In a 2:1 majority (McMurdo P and Morrison JA; Fraser JA dissenting) the Court of Appeal allowed Matton’s appeal and set aside the judgment of the trial judge.
McMurdo P and Morrison JA handed down separate judgments, both finding that the overloading was ‘accidental’, though both were critical of the trial judge’s findings in that the driver’s recklessness resulted from him failing to ensure that the rubble was compressing as he crawled the load over it in circumstances where they said:-
- the method adopted of spreading rubble to a height above true level was a common industry practice for levelling uneven ground by allowing for compression by the weight of the crane/load;
- the driver and dogman had taken steps towards avoiding the very risk that culminated- namely operating an uneven surface and both expected that the rubble would compress under the crane, which was why the driver proceeded to crawl the crane forward;
- the incident had occurred in 12 seconds which was not enough time for the driver to have recognised that concrete rubble was not levelling beneath the crane the overloading and collapse was imminent and unavoidable; and
- although the trial judge had rejected the driver’s testimony that the spirit level was level at all times, there was tension in the fact that his Honour found that the driver knew that the rubble was not compressing “from looking at the spirit level”.
President McMurdo also noted that the driver had no interest in proceeding as he did “other than ensuring, for professional, financial and safety reasons, that the crane safely traversed the raised ground…”- ie. specific evidence as to his state of mind, perhaps psychological disintegration.
In concluding his judgment, Morrison JA summarised the relevant passages from a number of relevant authorities in the area regarding what circumstances/conduct will deviate from an ‘accident’ (at  & ):-
“The judgments that the rubble would compress and therefore the crane could be driven onto it, and the failure to realise in time that the rubble was not compressing, meant that the damage was an “unlooked for mishap or an untoward event which [was] not expected or designed”. [vis Fenton v Thorley & Co Ltd  AC 443, 448]
The judgment that the rubble would compress, and the failure to realise in time that it was not compressing, may have been wrong, even negligent, but did not, in my view, reach the point where it could be said:
(a). the “risk of the mishap was foreseen or courted even though it was thought unlikely that it would occur” [vis Australian Casualty Co Ltd v Frederico (1986) 160 CLR 513, 532]; or
(b). that they were gambling or courting the risk, or taking a calculated risk, deliberately accepting the outcome; or
(c). that they voluntarily embarked on a foolhardy venture, with the damage an inevitable consequence, by “courting, inviting or wooing” of the risk [vis Hurley Contractors Ltd v Farmers Mutual Association (1991) 6 ANZ Insurance Cases 61-076]; or
(d). that they deliberately incurred the risk. [vis Mount Albert City Council v New Zealand Municipalties Co-operative Insurance Co Ltd  NZLR 190, 194]”
In his dissenting judgment, Fraser JA found merit in the Respondent’s argument that the Appellant could not fulfil its onus in proving that the boom collapse was unexpected or unforeseen in circumstances where the trial judge had rejected the evidence of the driver that the crane was level. It was also emphasised that the driver knew that operating on a slope created a risk of boom failure, the consequences of which were made very clear in the crane’s operating manual.
It would be difficult to not have sympathy for the insurer in this instance given the findings made through the tribunal of fact, particularly regarding the conduct of the driver, given that damages of just shy of $2.5million were awarded.
The Court of Appeal rings comparisons with judgments from other appellate jurisdictions where, despite making adverse findings regarding the critical testimony of tortfeasors, a finding has still been made that the questionable conduct did not amount to recklessness- see Hammersley v National Transport Insurance  TASFC 5 (where a subsequent appeal for special leave by the insurer was refused).
Whilst time will only tell whether the insurer elects to challenge the judgement from the Court of Appeal, the decision serves as a telling reminder for insurers of the difficulties (and costs) in establishing that the circumstances of a claim fall outside of what could possibly be perceived as an accident.