QBE Insurance (Australia) Limited v NTI Limited

1. [1]

   The plaintiff, QBE Insurance (Australia) Ltd (“QBE”), seeks a declaration that the defendant, National Transport Insurance Ltd (“NTI”), is liable to make a 50% contribution in respect of an amount QBE paid to defend and settle a claim against its insured, George’s Loader Hire Pty Ltd (“GLH”). The claim against GLH arose from an accident that occurred on 17 November 2014 involving a worker, Mr Joel Renall. QBE’s total costs of indemnifying GLH were a little over $1 million.

2. [2]

   GLH owns a large fleet of motor vehicles used for rail maintenance work, including a Volvo L120E Earthmoving Plant Loader (“the Loader”).

3. [3]

   On 17 November 2014, GLH maintained policies of liability insurance with both QBE and NTI in connection with risks associated with its business. The QBE policy was a General and Products Liability Insurance Policy (“the QBE Policy”). The NTI policy was a Fleet Insurance Policy (“the NTI Policy”).

4. [4]

   Although GLH made no claim under the NTI Policy in relation to the 17 November 2014 accident, QBE contends that the NTI Policy also responded to the claim made against GLH in respect of Mr Renall’s injuries. QBE contends that NTI thus has a coordinate liability with QBE in relation to that claim, in accordance with the principles set out in Albion Insurance Co Ltd v Government Insurance Office (NSW). [1]

5. [5]

   NTI accepts that:

6. [6]

   What divides QBE and NTI is whether the NTI Policy responded to the claim made against GLH arising from Mr Renall’s injuries.

7. [7]

   It is agreed that this depends upon whether, had GLH made a claim under the NTI Policy, it would have been excluded by cl 9 of certain “Specific Exclusions” (“the Exclusion”) in the NTI Policy, which was in the following terms:

8. [8]

   “Tool of Trade” was defined to mean:

9. [9]

   Reading these provisions together, and omitting words irrelevant to the particular circumstances, the question is whether GLH’s liability to Mr Renall was “incurred or caused by” “the operation of [the Loader] whilst engaged in and undertaking its designed purpose of … lifting, or like operations”.

The circumstances of the accident

1. [10]

   The circumstances of the accident were described in a statement made by Mr David Coultas, then an employee of GLH, on 15 September 2021.

2. [11]

   GLH had supplied the Loader on hire to a contractor to be used in connection with rail maintenance work near Greta in the Hunter Valley, New South Wales.

3. [12]

   The Loader, in the position it was when the accident occurred, is pictured in this photograph:

4. [13]

   First, Mr Coultas used the Loader to lift a length of rail, called a “rail closure”.

5. [14]

   Mr Coultas said:

6. [15]

   The “tongs” to which Mr Coultas referred can be seen in the above photograph suspended from the jib of the Loader in an “open” position. In oral evidence, Mr Coultas explained that, when lowered onto the rail, the tongs closed around the rail by what he called “centripetal force”.

7. [16]

   Second, Mr Coultas used the Loader to “transport” the rail closure “[a] couple of hundred metres” up the track. Mr Coultas explained:

8. [17]

   Assuming that Mr Coultas travelled 200 metres at 5 kilometres per hour, his journey would have taken approximately 2.5 minutes.

9. [18]

   Third, when Mr Coultas got to the point where the rail closure was to be installed, he turned the Loader in readiness for crossing the rail tracks. He said:

10. [19]

    Fourth, Mr Coultas then drove the Loader over the first set of tracks so that it ended up in the position depicted in the photograph. Mr Coultas said:

11. [20]

    Finally, the accident that caused Mr Renall’s injuries occurred. Mr Coultas said:

Is the Exclusion enlivened?

1. [21]

   A policy of insurance is a commercial contract. [3] There is no special rule which applies to the construction of exclusion or limitation clauses in contracts of insurance. [4]

2. [22]

   In relation to exclusion clauses, it has also been said that:

3. [23]

   Further, as has also been correctly stated, concerning contracts generally:

4. [24]

   In this case, it is necessary to pay close attention to the words actually used in the Exclusion by the parties to the NTI Policy.

5. [25]

   The Exclusion focuses on the operation of the relevant “Motor Vehicle”, here, the Loader, “whilst engaged in and undertaking its designed purpose” of performing certain nominated activities or “like operations”.

6. [26]

   Liability is thus excluded by operation of the relevant vehicle when engaged in and undertaking “its” designed purpose; that is, the vehicle’s designed purpose of performing the nominated activities and “like operations”.

7. [27]

   This suggests that the parties intended to exclude not only liability arising at the actual moment of the nominated activities, but also liability arising while the designed purpose of the relevant vehicle was being implemented; by engaging in those or similar (“like”) operations.

8. [28]

   Looking at the circumstances here, the Loader was equipped with tongs on the end of a hydraulic arm which were capable of gripping and holding a rail so that it could be lifted and, while suspended above the ground, moved to a different location where the rail closure was to be placed. Each activity, to lift, suspend and move the rail closure, was a necessary step in the engagement in and undertaking of the Loader’s “designed purpose” (“the Designed Purpose”); and ensured the Loader was suitable for completing railway maintenance work.

9. [29]

   Although some ambiguity may arise from the phrase “like operations”, it is clear, as NTI submitted, that the purpose of the Exclusion is to excise from the scope of cover the use of the vehicle as a “Tool of Trade” (as defined) as opposed to its use as a “Motor Vehicle”. The technical capabilities of the Loader meant that it could be used to lift, suspend at a height, transport and unload materials. The risks associated with each of these activities are the same.

10. [30]

    Were the Exclusion to be construed, as QBE contends, so as only to be enlivened if GLH’s liability was incurred whilst the relevant vehicle was actually engaged in one of the specified activities, arbitrary and capricious results would follow.

11. [31]

    For example, if a person was injured while the relevant vehicle was actually excavating, the Exclusion would be enlivened. But if the person was injured while the vehicle was pausing, even momentarily, between excavation tasks, the Exclusion would not, on this construction of it, be enlivened.

12. [32]

    Returning to the facts here, on QBE’s construction of the Exclusion, if Mr Renall had been injured while the Loader was actually lifting the rail closure, the Exclusion would be enlivened. But if Mr Renall was injured the moment after lifting actually occurred, or after the Loader had travelled a metre, or indeed any distance, from the point where the rail closure was actually lifted, the Exclusion would not be enlivened.

13. [33]

    Before me, QBE placed emphasis on the fact that the stretch of rail on which GLH was working was approximately three kilometres long and that the accident took place “[a] couple of hundred metres” from where the Loader actually lifted the rail closure. But on QBE’s construction, the distance between the location of the actual lifting and the location where GLH’s liability was incurred is irrelevant; on QBE’s construction, if GLH’s liability was not incurred at the actual point of the activity in question, the Exclusion is not enlivened.

14. [34]

    It is unlikely that the parties intended the Exclusion to operate in such an arbitrary and uncommercial fashion. Rather, it is likely, as was submitted on behalf of NTI, that the parties intended that there be excluded from cover under the NTI Policy the risks associated with GLH’s operation of each of its vehicles for their “designed purpose” as “Tools of Trade”; as opposed to their use as motor vehicles.

15. [35]

    In this case, when the accident occurred, the Designed Purpose of the Loader was in the process of being implemented.

16. [36]

    As Mr Coultas said:

17. [37]

    Thus, in my opinion, any liability of GLH to Mr Renall was incurred whilst the Loader was still engaged in and undertaking the implementation of the Loader’s Designed Purpose.

Conclusion

1. [38]

   For those reasons, I find that the Exclusion to the NTI Policy was enlivened by the circumstances of the accident.

2. [39]

   It follows that QBE is not entitled to the contribution it seeks from NTI.

3. [40]

   The Summons must be dismissed. If there is any dispute as to costs, the parties should confer and agree on a timetable for short written submissions, to be provided no later than 5pm on 26 September 2022. I will deal with any such dispute on the papers.