AMP General Insurance Ltd. v. Kull & Anor. [2005] NSWCA 442

AMP General Insurance Ltd. v. Kull & Anor. [2005] NSWCA 442 - NSWCA 2005 case summary — Zoe

[15]

Policy 9 7 In my opinion, exclusion 1.b. applied. 8 It is understandable to see the policy as intended to cover the insured against claims arising from the use of a motor vehicle which are not covered by the compulsory third-party policy. But that must yield to the words of the policy, and I respectfully prefer the approach of Mason P in HIH Casualty & General Insurance Ltd v Pluim Constructions Pty Ltd [2000] NSWCA 201 at [25] to that of Handley JA and Foster AJA at [76]-[78]. 9 Further, the postulated intention is ephemeral. Even if "in respect of which insurance is required ... " qualifies "use", cover under insurance so required mayor may not turn only on use of the motor vehicle. In the present case, for example, the third party policy under s 10 of the Motor Accidents Compensation Act 1999 ("the Act") did not do so. Because it provided cover against "injury", meaning injury as defined in the Act, in addition to use (or operation) there had to be driving, a collision etc. Thus on any view there was a gap between the cover under the compulsory third party policy and the cover under Policy 9. 10 Clause ii. in exclusion 1.b., referring to the use of any Vehicle "which is otherwise insured by a person other than you in respect of the same liability", most naturally qualifies "Vehicle" rather than "use" (or "claims"). So also must clause i. If it then be asked whether the Landcruiser was a vehicle in respect of which insurance was required by legislation relating to the registration of motor vehicles, the answer is yes. The exclusion is thus enlivened. 11 For the exclusion to apply it is necessary also that Mr Kull's claim arose directly or indirectly out of or was caused by or in connection with "the use of' the Landcruiser. 12 The Government Insurance Office of New South Wales v King (1960) 104 CLR 93 was concerned with bodily injury "caused by or arising out of the use of an insured motor vehicle", and distinguished between using a motor vehicle and putting it in order for some subsequent use. The facts were different from those of the present case; work had been done on the engine, the defendant was trying to start it, and it was not established that he was trying to start it preparatory to driving the motor vehicle as distinct from testing the efficacy of the work. In the present case turning the ignition key was part of Mr Maloney's endeavours to start a motor vehicle which had broken down in the course of a journey, bringing into play the observation of Menzies J (at 101) in The Government Insurance Office of New South Wales v King that the case was - " ... quite different from one where a car breaks down in traffic and attempts are then made to get it going again. In such a case, the attempts to start it might well, on the view I have taken, be regarded as part of the use of the car." 13 The line between doing work on a motor vehicle and using it can be difficult to draw, but a narrow scope of "use" in the policy does not sit well with the exception to the exclusion, which indicates that loading or unloading is regarded as use of a vehicle. This reminds of Government Insurance Office (New South Wales) v R J Green v Lloyd Pty Ltd (1955) 114 CLR 437, in which it was so held. Windeyer J said in that case (at 446-7) that "[a]ny use that is not utterly foreign to its character as a motor vehicle is, I consider, covered by the words [use of a motor vehicle]". In Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 the occupation of a motor vehicle by children as passengers while it was stationary was held to be a use of the vehicle, and it was said (at 505) that use for the purposes of the legislation "extends to everything that fairly falls within the conception of the use of a motor vehicle and may include a use that does not involve locomotion". The width of the conception caused the legislature to confine it by the Motor Accidents Amendment Act 1995, see Allianz Australia Insurance Ltd v GSF Australia Ltd (2005) 215 ALR 385 esp at [80]-[81]. It remains unconfined in the policy. 14 In my view, turning the ignition key as part of attempting to restart the broken down Landcruiser in the course of a journey was, while not driving it, using it within exclusion 1.b. Mr Kull's claim arose out of that use. 15 Mr Maloney is therefore not entitled to indemnity under Policy 9.

[17]

CIRCUMSTANCES 19 Mr. Kull was born in 1943. At the time of the accident giving rise to the proceedings, he was living at Mittagong. Prior to 1980, he had conducted a transport and mechanical repair business with his brother. After 1980, Mr. Kull's brother continued to own and conduct the transport yard and Mr. Kull lived in a caravan on the site. Between 1980 and the date of the accident, Mr. Kull did some mechanical repairs, with some part-time driving and some selling of trucks. 20 On the evening of 15 February 2000, at about 10.00pm or 10.30pm, Mr. Kull was at home in his caravan, drinking a beer, when he heard a continuous clicking noise coming from outside his caravan. He walked through the transport yard to the front gate onto the road, where he saw two motor vehicles - a Toyota Land Cruiser belonging to Mr. Maloney, and a Nissan FW belonging to a Mr. Ireland - parked nose to nose with their bonnets open and jumper leads joining the two vehicles, apparently to re-charge a battery. Both men were known to Mr. Kull. 21 At some earlier time, Mr. Maloney's vehicle had broken down adjacent to the property where Mr. Kull's caravan stood. When Mr. Kull arrived, it still would not start. Mr. Kull told Mr. Maloney about a fault in Land Cruiser circuits and offered the advice that the fault could be fixed by moving the fan belt a millimetre. Mr. Maloney indicated acceptance of that advice. Mr. Kull then leant under the bonnet and put his right hand on the fan belt in order to make the adjustment. Mr. Kull was standing alongside the vehicle on the driver's side, and Mr. Maloney was also standing on the same side. To effect the operation proposed by Mr. Kull, it was not necessary to start up the engine, but only to re-position the fan belt. 22 While the bonnet was still up and the jumper leads still in place, Mr. Maloney turned the ignition key, located on the steering column, while he was still standing outside the Land Cruiser. He did this without warning, and without any request from Mr. Kull either to take or not to take that action. As a result, the fan belt moved and Mr. Kull's right hand became jammed in the fan belt mechanism. The first three fingers of Mr. Kull's right hand were seriously injured, requiring partial amputation of the index finger.

[25]

SECTION A6 - REPLACEMENT VEHICLE COVER If you sell the Vehicle and replace it with another motor vehicle, we will extend cover to you as provided by Sections A1 and A2 of this Policy to the extent that the replacement motor vehicle will be and become the Vehicle provided that: a. you notify us in writing as to full details of the replacement motor vehicle within fourteen days of acquiring it; b. you pay to us any additional premium which we require within fourteen days of being notified as to the amount. 30 Policy 9 covered certain legal liability for bodily injury, with exclusions including exclusion 1, which was in the following terms: We shall NOT pay for any claims: 1. Arising directly or indirectly out of or caused by or in connection with: a. the use of any lift, elevators, escalator, aircraft or aerial device in your physical or legal control or used in work undertaken by you or on your behalf; b. the use of any Vehicle: i. in respect of which insurance is required by any legislation relating to the registration of motor vehicles; ii. which is otherwise insured by a person other than you in respect of the same liability; This Exclusion 1.b. shall not apply to any claim caused by or from the delivery or collection of goods to or from any Vehicle where the injury or damage occurs beyond the limits of any roadway or arises out of the loading or unloading of or the delivery or collection of goods to or from any Vehicle used in work undertaken by you or on your behalf but which is not in your physical or legal control; c. the ownership, possession or use by you or on your behalf of any watercraft while afloat, aircraft or aerial device. 31 In relation to these policies, there were the following agreed facts: RE POLICY 8 1. That Vehicle PMM-009 was, at the time of Mr. Kull's accident, being used in connection with the occupation or business of Mr. Maloney. 2. That the Vehicles listed on the Schedule to Policy 8 were not in use at the time of Mr. Kull's accident.

[27]

DECISION OF PRIMARY JUDGE 32 A central question before the primary judge was whether the injury in respect of which Mr. Kull claimed damages was an "injury " within the Act: if it was, then it was common ground that Mr. Kull had failed to comply with the requirements of that Act, so that the proceedings must fail. Then, there were the ordinary issues of whether Mr. Kull established that his injury was caused by the negligence of Mr. Maloney, whether he was guilty of contributory negligence, and the quantum of damages. Finally, there was the question of whether Mr. Maloney was entitled to an indemnity under either Policy 8 or Policy 9. 33 Neither Mr. Maloney nor Mr. Ireland gave evidence, although they were available to do so. 34 The primary judge was unable to determine what Mr. Maloney's intention was in turning the ignition on, that is, whether he was intending to drive or was testing the repair. The judge was left in doubt as to when the repairs to the vehicle had been completed, that is, whether the vehicle was in the process of being repaired at the time when Mr. Maloney turned the ignition on or whether repairs had been completed. He was unable to conclude that the engine started and "ran". When Mr. Kull's hand became jammed in the fan belt, Mr. Kull called to Mr. Maloney to turn the engine off. 35 As to whether there was an injury within the meaning of the Act, the primary judge held that, although Mr. Maloney was the owner and driver of the Land Cruiser, his actions did not amount to driving or attempting to drive it; and he held there was no collision. Accordingly, the injury did not fall within either par.(i) or par.(ii) of the definition of "injury" in s.3 of the Act; and accordingly the Act did not apply. 36 On the question of negligence, the primary judge found that Mr. Kull's injury was caused by the negligence of Mr. Maloney who, without warning Mr. Kull, turned the ignition key to test if the jamming of the fan belt had not been freed by Mr. Kull's actions. (Mr. Kull was not in fact freeing a jammed fan belt, but that does not matter.) He was unable to find any contributory negligence by Mr. Kull. He held it was not negligence not to have asked Mr. Maloney not to interfere with the mechanism of the vehicle: Mr. Kull was entitled to expect that Mr. Maloney would remain standing alongside the vehicle until he had completed the repair, and removed his body entirely from under the bonnet. 37 As regards the cross-claim against AMP, the primary judge held that Mr. Maloney was entitled to an indemnity under Policy 8. He held that because the injury was not an injury under the Act, the vehicle was being used other than in circumstances for which insurance was required by law under a compulsory insurance scheme. In circumstances where the vehicles in the Schedule were not being used, the judge held that the Land Cruiser was "a motor vehicle other than the Vehicle" within s.A4 of Policy 8. 38 Having found that Mr. Maloney was entitled to an indemnity under Policy 8, he made no findings in relation to Policy 9. 39 As regards damages, the primary judge found out-of-pocket expenses to be $135.00 and non-economic loss to be $78,653.00 including interest. No challenge is made to these elements. 40 In relation to economic loss, Mr. Kull gave no evidence in chief as to his pre-accident earnings. In cross-examination, he agreed that his taxable income, as shown in his tax returns for the years ended June 1998 and 1999, was $4,000.00: however, these tax returns were not put into evidence. Evidence was given in Mr. Kull's case by two witnesses concerning amounts paid to Mr. Kull for maintaining motor vehicles: a Dr. Mayman estimated that he paid Mr. Kull between $10,000.00 and $12,000.00 per year in the five years preceding the accident to service and repair large farm vehicles, such work costing him since the accident up to $20,000.00 per year; and a Mr. McMurray, a haulage contractor, estimated that in the five years preceding the accident he paid Mr. Kull an average of $20,000.00 per year. The primary judge estimated Mr. Kull's pre-accident earning capacity as: declared income $8,000.00; casual repairs (gross) $35,000.00; sub-total $43,000.00; less expenses, tax and penalties $25,000.00; giving $18,000.00 or about $320.00 net per week. He assessed Mr. Kull's past economic loss for 250 weeks at $320.00 per week, giving $80,000.00. 41 As for future economic loss, the judge considered Mr. Kull may have continued to do mechanical work on heavy vehicles of local citizens for many years beyond the age of 65; but that his willingness to overcome his injury meant that he might have some capacity to earn in other occupations. Using an earning capacity of $320.00 per week, mitigated by the possibility of other income, the judge awarded Mr. Kull a buffer of $20,000.00 for future economic loss.

[30]

Decision 48 It is common ground that the injury to Mr. Kull was caused by the fault of the owner of the relevant motor vehicle, that is, Mr. Maloney. In my opinion, the relevant fault was in the operation of the motor vehicle, because activation of the starter motor did involve operation of the motor vehicle. It is unnecessary to decide whether this would also amount to use of the motor vehicle, or whether it falls within the definition of "use or operation" because it was part of maintenance of the vehicle. 49 However, in my opinion the injury was plainly not a result of and caused during the driving of the motor vehicle. The motor vehicle was parked nose to nose with another motor vehicle, both with bonnets open, and attached by jumper leads. Activation of the starter motor occurred after Mr. Kull told Mr. Maloney that the fault in his motor vehicle could be fixed by moving the fan belt, and placed his hand on the fan belt to make the adjustment. Mr. Maloney was standing beside the door of the vehicle. In the absence of evidence from Mr. Maloney, it would have been wrong to infer in those circumstances that Mr. Maloney activated the motor as part of a process of setting off in the vehicle, and the primary judge did not do so. 50 The case is different from Shortland County Council and Maguire because in those cases the activation of the starter motor caused the motor vehicle to move, and in those circumstances it was reasonable to hold that the motor vehicle was driven. It is also different from QBE v. Smith, because in that case the motor vehicle was stationary because of a pause in the course of a continuous process of driving. 51 It may be, as suggested in Container Handlers at [153], that activating a starter motor with a view to setting off in a vehicle can be considered driving, or at least the commencement of driving. However, this is not what happened in this case. Although the primary judge could not draw a definite conclusion as to what Mr. Maloney's intention was, it seems clear that at least part of his intention was to check if the motor would now start. Even if he had in mind getting into the driver's seat and setting off, this could not happen until the jumper leads had been removed and the bonnet shut. It is not clear whether or not the jumper leads could have been safely removed with the engine running, but it does not matter. In my opinion, in the circumstances of this case, the operation of the starter motor was too far removed from actually driving off in the vehicle to count as being part of the driving of the vehicle. 52 The other question is whether the injury was the result of and caused during a collision with the vehicle. In my opinion, to call the contact of Mr. Kull's hand with the fan belt mechanism "a collision with the vehicle" would be a significant departure from the natural meaning of the phrase: cf. Townsville Trade Waste Pty. Ltd. v. Commercial Union Insurance Co. of Australia Ltd. [1999] QCA 386, 29 MVR 503. The contact of a pedestrian with a stationary vehicle could possibly fall within that expression; and such a collision could be with an appendage to the vehicle, such as a wing mirror. But there at least has to be injury caused by an impact that can fairly be described as a collision with the vehicle, that is, an impact due to the mutual motion of whatever collides with the vehicle and the vehicle itself. A hand being drawn into a fan belt mechanism does not in my opinion amount to a collision of the hand, or the person whose hand it is, with the vehicle.

[36]

Decision 63 In my opinion, s.45 of the Insurance Contracts Act can have no application: Policy 9 contains no provision having the effect of limiting or excluding liability by reason of the insured having entered into some other contract of insurance. 64 I agree that it is reasonable to think the intention of the policy was to cover the insured against claims arising from the use of a motor vehicle which claims were not covered by compulsory motor vehicle insurance. I agree also, as suggested by Pluim, that the construction of such a clause should not be governed by the terms of the legislation dealing with compulsory insurance that happens to be in force in New South Wales at any particular time. However, it is necessary to construe the words actually used, and I do not think that the terms of the applicable legislation are irrelevant. 65 Registration is required for a vehicle used on a road or road-related area, with certain exceptions: Road Traffic (Vehicle Registration) Act 1997, s.18. Insurance in terms of the Motor Accidents Compensation Act is required to obtain registration: Road Transport (Vehicle Registration) Regulation 1998, reg.11. As we have seen, compulsory insurance is required in respect of vehicles used on roads: s.8 of the Act. 66 I do not think the wording of Policy 9 is such that one can apply "in respect of" to claims. However, those words could apply either to "use" or "Vehicle". It is closer to the inferred intention of the provision that it apply to "use"; and there being some ambiguity here also, this conclusion is supported by the contra proferentem approach. 67 In my opinion, the claim in this case does not arise directly out of the use of the Land Cruiser in respect of which insurance is required for registration, nor do I think it was caused by such use: this follows from what I said in relation to Policy 8. There may be some question whether it arises "indirectly" from such use, or is caused "in connection with" such use. The relevant use would be the use by Mr. Maloney of the Land Cruiser before it broke down. However, even if the claim can be considered as arising indirectly from, or in connection with, the breaking down of the vehicle, in my opinion it did not arise indirectly from the use preceding the breaking down, nor was it caused in connection with that prior use. Again, in so far as there is any ambiguity, the contra proferentem principle would support this result. 68 Accordingly, Mr. Maloney is entitled to a indemnity under Policy 9 as well as Policy 8.

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