The Supreme Court of Queensland has considered the meaning of accidental, sudden and unforeseen damage in a Contractors and Plant insurance policy.
The insured was in the business of supplying cranes and a crane operator to third parties. On the day of the relevant events, the crane operator noticed that the ground conditions on which the crane had to travel had deteriorated. In an effort to level the ground, the operator constructed a ‘ramp’ using crushed rubble which he believed would compress as the crane travelled over it. While the operator was driving the crane over the ramp, its boom collapsed, rendering the crane uneconomical to repair. The insured made a claim under its insurance policy.
The policy covered damage to the crane that was accidental, sudden and unforeseen which occurred while the machine was being used in the manner in which it was designed to be used. The insurer denied indemnity on the basis that the crane was being used in contravention of the operating guidelines and in circumstances where the operator was well aware of the inherent risk.
At the trial, the Court made a factual finding that the crane was positioned at an angle of 7 degrees at the time the boom collapsed. The Court rejected evidence from the insured’s expert that the boom collapsed due to a pre-existing structural defect in the welding of the boom. The Court accepted evidence from the insurer’s experts that the cause of the collapse was a structural overload caused by the crane being operated on a 7 degree slope while carrying a 39 tonne load.
In relation to the construction of the policy, the Court considered whether the damage was ‘accidental, sudden and unforeseen.’ It was not alleged that the operator intended to cause the damage to the crane, but the Court found that he did deliberately drive the crane over the ramp. In finding that the damage was not accidental, the Court found that the operator deliberately and recklessly courted a risk of which he was well aware. The Court found that the operator knew the crane had to be operated on level ground, he ignored the warning of a witness that the ramp was too steep and, while driving over the ramp, he would have been aware that the rubble was not crushing as he had planned and that the crane was not being operated on level ground.
It was not controversial that the operating guidelines and the relevant Australian Standard prohibited the crane being operated on an angle of 7 degrees. The Court therefore found that even if the damage had been accidental, sudden and unforeseen, the crane was clearly not being used in the manner for which it was designed and so the insurer was entitled to decline cover.
Finally, the insured sought to rely on an additional benefit that covered damage to the crane caused by accidental overload. The Court agreed with the insurer’s interpretation of the clause that it was limited to accidental physical overload and did not respond to structural overload caused by the crane being operated on a slope.
Matton Developments v CGU
The courts ordinarily impose a very high threshold for reckless acts. However, this case is an example of a court being prepared to find that an insured had willingly courted a known risk.