CGU Insurance Ltd v Lawless [2008] VSCA 38

**1 I have had the advantage of reading in draft the reasons of Redlich JA. I too would dismiss the appeal and, subject to what follows, I would do so for the reasons which his Honour gives.

2 As noted by Redlich JA, the insurer argued on the appeal that, once the judge had rejected the evidence of Lawless that he had not been aware that Anthony was holding the fencepost, it was not open to Lawless to contend - or to the trial judge to decide - that Lawless had nevertheless taken 'reasonable precautions' (in the relevant sense). Senior counsel for the insurer argued that the question whether Lawless had taken reasonable precautions was to be determined by reference to - and only to - the state of affairs as Lawless perceived it to be. The case put by Lawless was that he had not been aware of Anthony's presence holding the fencepost and that, in proceeding to use the fencing machine in those circumstances, he had not wilfully exposed Anthony to risk. In the language of the written submission:**

[A]t trial it was not the case of Mr Lawless that he held a requisite state of mind in respect of Anthony's holding of the fence post. His case was that Anthony was not holding the post.

3 It followed, so the insurer argued, that Lawless could not show, and the judge could not find, that he had any particular state of mind with respect to a different state of affairs - the actual state of affairs - which was that Anthony was holding the fencepost. According to the written submission:

By putting a case as to the fundamental facts necessarily alternative to those found to have existed, Mr Lawless effectively deprived himself of the ability to prove satisfaction of the condition.

4 In argument (although not in the written submission), counsel for the insurer urged the Court to hold, by analogy with the decision of the High Court in Suvaal v Cessnock City Council,[1] that it was not open to the judge to uphold this 'alternative case' once Lawless's actual case had been rejected. In my opinion, there is no relevant analogy with Suvaal. As I sought to explain in Alcoa Portland Aluminium Pty Ltd v Husson, Suvaal concerned two alternative 'hypotheses' of causative negligence, each put forward to explain the accident in which the plaintiff was injured.[2] The explanation given in the plaintiff's evidence was that the accident was caused by the negligence of the first defendant. The second hypothesis, adopted by the trial court after rejecting the plaintiff's account, attributed the accident to the negligence of the second defendant. By majority the High Court concluded that, once the trial court had rejected the explanation which the plaintiff had put forward, the court was not entitled, less still obliged, to find 'some other explanation for the accident'.[3] As Gleeson CJ and Heydon J said:

A trier of fact, confronted with divergent cases being advanced by the parties, may decline to accept either case and may proceed to make findings not exactly representing what either party said. But that does not justify the creation of an entirely new case with which the losing party had no testimonial or other evidentiary opportunity to deal.[4]

**5 The present case is quite different. The insurer was well aware during the trial that there was a conflict between the injured grandson and Lawless as to whether or not Anthony was holding the post. Counsel for the insurer cross-examined Lawless on this very point. But counsel for the insurer was bound to address the question of Lawless' state of mind - and his attitude to risk - without knowing which version of events would be accepted by the trial judge. Evidently recognising this, counsel made submissions in final address that the judge should find that Lawless had failed to discharge his 'reasonable precautions' onus, whether it was found that Anthony was holding the post or not.

6 Furthermore, as Redlich JA points out, the course of evidence at the trial clearly reflected an acceptance by counsel for the insurer that evidence of a general nature from Lawless, about his perception of the lack of risk associated with the fencing operations, was relevant to the question of his state of mind at the time of the**

accident. No objection was taken to the relevance of any of this evidence. On the contrary, it was conceded by counsel for the insurer in final submissions that the evidence was relevant, although they argued that the evidence did not justify inferences being drawn in favour of Lawless as to his state of mind.

**7 This was not a case of the trial judge creating 'an entirely new case' for Lawless. On the contrary, the judge was obliged, by reason of the issues joined in the proceeding, to decide whether he was satisfied, on the balance of probabilities, that Lawless had taken 'reasonable precautions' before operating the machine at the time of the accident. In accordance with authority, his Honour had to decide whether Lawless had established on the balance of probabilities that he had not wilfully exposed his grandson to risk.

8 An important - but by no means the only - aspect of that enquiry concerned the question of fact whether Lawless was aware at the time that Anthony was holding the post. The fact that the judge determined that question adversely to Lawless did not preclude, or in any way inhibit, the judge from reaching a conclusion on the critical question of Lawless's state of mind. Indeed, he was bound to do so. Naturally, his rejection of Lawless's account, and his adverse view of Lawless's credit, were factors to be taken into account in deciding where the probabilities lay. But there was other evidence on the basis of which the judge could be satisfied on the probabilities - as I too am satisfied - that Lawless did not wilfully expose his grandson to risk.**

9 For the reasons given by Redlich JA, I would also dismiss the appeal.

10 On 2 July 2002 Anthony Tilley (the plaintiff), then ten years old, suffered an injury to his left hand when it became caught between a post driver and a fence post.

Anthony's grandfather, Graham Lawless (the respondent), was then operating the post driver on his farm property at Talbots Road, The Heart, via Sale. Lawless had leased the farm property to Frank and Dawn Boulton who had covenanted to effect a public risk policy indemnifying Lawless against public liability. The Boultons already held a multi-risk insurance policy with CGU Insurance Ltd (the appellant), which agreed to extend the cover to the respondent.

**11 The plaintiff commenced proceedings in the Supreme Court seeking damages for personal injury as a consequence of the respondent's negligence in operating the post driver. The respondent issued a third party notice against CGU seeking indemnity against the plaintiff's claim. Although there were other parties in the proceedings and other claims, they are not relevant to the appeal. Following a trial in the Supreme Court, Cavanough J gave judgment for the plaintiff against the respondent and CGU was ordered to indemnify the respondent. CGU now appeals against that order on the ground that the trial judge should have found that the respondent was in breach of a special condition of the policy which required him to take all reasonable precautions to prevent personal injury, so that CGU was entitled to refuse indemnity.

12 The special condition in the policy which CGU relied upon provided that the insured must 'take all reasonable precautions to prevent personal injury or damage to property.' There was a second part of the condition relating to 'recognised standards'. It required the insured to comply with all laws, by-laws, regulations and recognised standards for the safety of persons or property but CGU did not place any separate reliance on this part of the special condition.**

Construction of the term 'reasonable precautions'

13 The term 'reasonable precautions' in a contract of insurance between insured and insurer must be construed having regard to the commercial purpose of the contract which was, inter alia, to indemnify the insured against liability for his personal negligence. At the trial and on appeal it was accepted that in construing the special condition, the trial judge was to be guided by the following passage from the judgment of Diplock LJ in Fraser v B N Furman (Productions) Ltd[5] which was approved in Albion Insurance Co Ltd v Body Corporate Strata Plan No 4303:

Obviously the condition cannot mean that the insured must take measures to avert dangers which he does not himself foresee, although the hypothetical reasonably careful employer would foresee them. That would be repugnant to the commercial purpose of the contract, for failure to foresee dangers is one of the commonest grounds of liability in negligence. What, in my view, is reasonable, as between the insured and the insurer, without being repugnant to the commercial object of the contract, is that the insured should not deliberately court a danger, the existence of which he recognises, by refraining from taking any measures to avert it. Equally, the condition cannot mean that, where the insured recognises that there is a danger the measures which he takes to avert it must be such as the hypothetical reasonable employer, exercising due care and observing all the relevant provisions of the Factories Act 1961 would take. That, too, would be repugnant to the commercial purpose of the contract, for failure to take such measures is another ground of liability in negligence for breach of statutory duty. What, in my judgment, is reasonable as between the insured and the insurer, without being repugnant to the commercial purpose of the contract, is that the insured, where he does recognise a danger should not deliberately court it by taking measures which he himself knows are inadequate to avert it. In other words, it is not enough that the employer's omission to take any particular precautions to avoid accidents should be negligent; it must be at least reckless, that is to say, made with actual recognition by the insured himself that a danger exists, and not caring whether or not it is averted. The purpose of the condition is to ensure that the insured will not, because he is covered against loss by the policy, refrain from taking precautions which he knows ought to be taken.[6]

14 Thus, contrary to the ordinary meaning of the words, the insured is not required to take such precautions as should reasonably be taken so as not to be negligent or in breach of duty as an occupier or as an operator of dangerous machinery, as such a construction would be repugnant to the commercial purpose of the contract. As McGarvie J, with whom Young CJ and Anderson J agreed, said in Albion:

the condition will protect the insurer where there is a failure to take reasonable precautions which is due to 'a deliberate decision to expose himself to the risk of bodily injury occurring, because he did not care whether it occurred or not.'... The insured is in breach of the condition if, through a lack of concern and desire to prevent bodily injury, he deliberately adopts a course of action or inaction which he realises exposes him to the risk of someone being injured by the recognised danger.[7]

15 McGarvie J also held that the insured may rely on evidence of the circumstances to show that whatever errors of judgment may have led to particular reasonable precautions not being taken, it was not due to a lack of desire and concern to prevent bodily injury. Similar views are to be found in Legal and General Insurance Australia Ltd v Eather[8] where Glass JA agreed that the promise by the insured to take all reasonable precautions to prevent loss should be read down below the level of obligation denoted by such language in the realm of negligence law. His Honour also observed:

... The insured person will not be in breach if he shows either that he did not recognise that a danger existed or that perceiving its existence he took some action to avoid it and was not indifferent to whether the danger was averted or not.[9]

**16 McHugh JA in Eather referred with approval to the judgments of Diplock LJ in Fraser and McGarvie J in Albion.[10] Glass JA agreed with McHugh JA that the interpretation of a 'reasonable precautions' condition in Fraser was correct, Albion being part of a 'formidable line of authority' supporting that conclusion.[11] At trial CGU relied upon the passage from the judgment of Glass JA in Eather which I have quoted as a correct formulation of the test. Cavanough J thought that formulation to be too narrow but considered that Glass JA did not intend to modify the test formulated in Fraser and adopted in Albion. Nothing was said in Eather which in my opinion requires any qualification of the test as stated in Fraser and adopted in Albion.

17 The test is wholly subjective. A failure to take reasonable precautions will occur only where there is a deliberate course of action or inaction which the insured realises exposes him to the risk of someone being injured by the danger which has been recognised. Hence the phrase 'a deliberate decision to court the danger'.[12] The insured might establish compliance with the condition by showing one or more of the following things:**

(1) There was no recognition of the danger or the extent of the danger of bodily injury;

(2) Particular precautions would not have been reasonable in the circumstances;

(3) No particular precaution was considered or it was not regarded as reasonable or practicable in the circumstances;

(4) The failure to take the precautions was not due to a lack of desire and concern to prevent bodily injury.[13]

**18 On appeal it was contended that it was not open to the trial judge to find that the respondent had taken 'reasonable precautions' because of the nature of the case that he had advanced at trial. Alternatively it was argued that the evidence did not support a finding that he had taken reasonable precautions. It is therefore necessary to examine the findings made by the trial judge and consider the manner in which the trial was conducted.

19 The trial judge found that on the day of the accident, whilst the respondent prepared the tractor with the post driver attached to the back of it, Anthony and his brother, Shannon, carried a fence post up to where the fencing was being done. At least two fence posts were then put in without incident. The first of these posts was held steady by Sandra Lawless, Anthony's grandmother, and Donna Lawless, Anthony's aunty. The respondent operated the controls and Anthony and Shannon stood nearby. The second post was held steady by Donna and Anthony while the respondent again operated the controls. The third post was also held by Donna and Anthony. Donna was standing to Anthony's right and the respondent was standing to the right of Donna operating the controls. Sandra Lawless and Shannon were nearby but further away from the post driver. The trial judge found that as the post is driven in, the top of the post naturally tends to get closer to the hands of the person who is holding it. The hammer tends to bounce a little as it strikes the top of the post. On this occasion, on the third descent of the hammer, the hammer bounced and Anthony's left hand slipped into the space between it and the fence post and was crushed. These findings were largely based upon the testimony of Anthony and his brother Shannon who the trial judge accepted were truthful witnesses doing their best to be accurate.

20 The evidence of the respondent, Sandra and Donna Lawless was in conflict with that of Anthony and Shannon. In substance, the case of the respondent was that Anthony must suddenly have left his grandmother's side and gone to the post without any of them noticing. They denied that Anthony had been holding the post with Donna or that he had held any of the other posts that had been put in that morning. Each said that Donna alone was helping the respondent by holding the post. Each said that they did not see Anthony holding the post and first knew of the injury when they heard a scream.

21 His Honour did not accept those parts of the evidence of the respondent or his wife or step daughter Donna, which did not accord with his finding that Anthony had held the second and third posts while they were hammered in. His Honour found that the respondent was aware, prior to the accident, that Anthony was helping Donna to hold the post. The primary judge found that it was 'not necessary or appropriate to conclude that the respondent or any of the witnesses he called told deliberate untruths in court'. His Honour left open that they 'may have convinced themselves that these things did not happen but I find on balance that they did.'

22 His Honour also made important findings concerning the respondent's experience and practice in operating a post driver. He found that the respondent had been doing fencing work for decades. The original post driver with which he worked did not have any sort of guard or safety cage. Two persons were required to perform the job, one of them holding and manoeuvring the post whilst the second operated the controls to drive the hammer. The respondent had never had an accident with this post driver nor had he heard of anyone else having an accident with it. In the mid-1980s he had purchased a new post driver of his own. He had seen other persons in the district operating similar machines and no one used the guard which came with the machine. As soon as he purchased the post driver he removed the guard. He did so because he believed that it was not possible to operate the machine satisfactorily with the guard on. If the guard were on, a bar and chain which came with the machine would have to be used but he did not believe that they would keep the fence post straight. He continued to operate the machine without a guard from the mid-1980s. The trial judge in his reasons remarked that CGU did not challenge any of these propositions.

23 The trial judge further found that the respondent would have put in at least 5,000 posts as a fencing contractor but that the figure may have been much higher than that. His Honour accepted that his wife and his step-daughter, Donna, had regularly assisted him with fencing both on the farm and at outside jobs. The usual procedure was for the respondent to position the post with direction from his wife. Donna would then take over holding the post from him while he backed the tractor up to the post and then operated the control levers while helping Donna hold the post straight. The trial judge accepted the respondent's testimony that before the injury to Anthony he had never had any accidents with the post driver, no one had been hurt and he had never heard of anyone being hurt using the post driver. None of these matters was put in controversy during the course of the trial. The trial judge stated in his reasons that 'CGU had every opportunity to investigate whether there had in fact been prior accidents with post drivers, and, if so, whether publicity had been given to such accidents, but it called no evidence of that kind'.[14]

24 The trial judge's conclusion was expressed in these terms:**

[F]or the purposes of the Albion Insurance test, I am satisfied on the evidence that Mr Lawless did not recognise the relevant danger or at least the extent of it. Further and in any event, I have no hesitation in finding that it was not due to a lack of desire and concern on the part of Mr Lawless to prevent bodily injury that he failed to take reasonable precautions to prevent the injury to Anthony Tilley. Similarly, I am fully satisfied that he did not make a deliberate decision to court the danger to Anthony.[15]

25 To explain those conclusions his Honour then adverted to the respondent's experience and established practice in using the post driver. His Honour found the respondent to be a person of limited perspicacity and inferred that the respondent was quite convinced by what he had seen and heard and experienced in relation to the use of post drivers over the previous 25 years, that it was not dangerous - or, at least, not dangerous to any significant extent - to operate it in the way in which he usually did or even with his 10 year old child taking part. His Honour accepted that both the respondent and his wife were close and loving grandparents to Anthony and were greatly distressed by the injury to his hand. Acting upon that uncontested evidence that they were loving grandparents who at all times cared deeply about the plaintiff, His Honour found it impossible to conclude that they deliberately exposed Anthony to a recognised danger not caring whether or not he suffered bodily injury.

Was it open to the trial judge to consider an alternative view of the facts to that advanced by the respondent?

**26 The primary argument advanced on appeal, which had not been advanced before the trial judge, was as follows. Once the trial judge made findings contrary to the respondent's case as to how the accident occurred, the respondent was precluded from establishing that he took reasonable precautions. He was not permitted to establish a state of mind in relation to facts which was inconsistent with the case he advanced at trial that he was not aware that Anthony was holding the post. The respondent had not given evidence that he did not consider it dangerous for Anthony to hold the post, as he had put his case on the basis that Anthony was not holding the post. Once the trial judge had rejected his evidence and found that he in fact knew that Anthony was holding the post, it was not open to him to argue that he did not appreciate the danger arising in respect of Anthony holding the post or that he did not deliberately court that danger.

27 In support of the contention that the respondent had deprived himself of the ability to prove that he took reasonable precautions, as he was not entitled to have the benefit of an alternative case which he had positively and expressly disclaimed, counsel for CGU relied upon the cases of Issitch v Worrell;[16] JC Decaux Pty Ltd v Adshel Street Furniture Pty Ltd;[17] Brailsford v Tobie;[18] and Suvaal v Cessnock City Council.[19] The first three cases concern a general pleading rule that prohibits a party from pleading an inconsistent sets of facts in the alternative where one of those sets of facts must be known to the party to be false. Such a pleading is embarrassing and will be struck out.[20] The rationale for this pleading principle is that it would be an abuse of the Court's process to permit facts to be pleaded which deliberately place on the record positive statements of fact, one or other of which must be known by the pleading party to be untruthful. The appellant contended that, although the respondent was not obliged to plead and had not pleaded as to the manner in which he alleged that he had satisfied the special condition,[21] the principle remained applicable that he was precluded from pursuing necessarily inconsistent cases.

28 The case presented by the respondent was that Donna was holding the post, that he did not recognise that it was dangerous for a person to hold the post, that he was unaware that Anthony had his hand on the post, and that even if Anthony was holding the post he did not recognise the extent of the danger and deliberately court it. There was no impediment in law to the respondent relying upon each aspect of his case. The pleading principle does not restrict a party's right to plead or rely upon an alternative view of the facts because their account of an event in issue is rejected and another party's account accepted. Thus, where the occurrence of an event is not in dispute and competing accounts are proffered in explanation of its occurrence, a party whose account is rejected may rely upon another person's account and other evidence that bears upon that person's account in resolving issues in the case.

29 Counsel for CGU relied in particular upon the High Court's decision in Suvaal. There the majority held that, because of the way in which the proceedings were conducted and because the primary judge had rejected the plaintiff's evidence, it was not open to the primary judge to adopt an alternative explanation which had not been pleaded or raised during the course of the evidence. In their joint judgment, Gleeson CJ and Heydon J said that it was not open to the primary judge to adopt the alternative explanation as the course of the trial had not made that permissible.[22] The alternative hypothesis was never in issue in the trial before the close of evidence and was never raised in addresses.[23]

30 The present case is fundamentally different from Suvaal, as the trial judge was confronted from the outset with the divergent cases of Anthony and the respondent. The respondent's work experience and practice in using the post driver was primarily led in evidence as part of the respondent's case against CGU. The relevant part of the amended defence of CGU pleaded that the respondent was not entitled to be indemnified by it in relation to any liability that he had to Anthony because he was in breach of the special condition in the policy. Particulars were provided which alleged that the respondent had:**

removed a guard from the post driver in contravention of the contents of the instruction manual for the equipment and operated the machinery with contumelious disregard for the safety of others in breach of recognised safety standards" [and had] "operated the post driver knowing that the plaintiff was in the immediate vicinity thereof without any or any due regard for his personal safety.

**31 Thus it was unsurprising that in opening the case for the respondent and in his evidence-in-chief, attention was drawn to his experience in operating a post driver. That evidence was not the subject of objection or challenge by counsel for CGU. Counsel for CGU could not have been in any doubt that this evidence was introduced into the case of the respondent in response to CGU's allegation that he had operated the machine in 'contumelious disregard' of the safety of others, including the plaintiff, and that such evidence bore upon whether he had deliberately courted the danger.

32 The respondent's case was opened on the basis that, however Anthony came to have his hand on the post, the trial judge was entitled to have recourse to all of the evidence in the trial from which an inference might be drawn as to the respondent's state of mind at the time of the accident. Counsel for CGU adopted Anthony's account of the accident and put to the respondent in cross-examination that he was 'fully aware' that Anthony and Donna were holding the post at the time of the accident. The respondent maintained that he knew that Donna was holding the post but not Anthony. He had testified in evidence in chief that Donna suffered from epilepsy and was on a disability pension. Counsel for CGU concluded his cross-examination by asking him whether he thought that Donna was an appropriate person to be holding the post. The respondent thought she was.

33 It was by then apparent that both Anthony and CGU would invite the trial judge to find that the respondent knew Anthony was holding the post. Counsel for CGU did not take the opportunity that was open to him to question the respondent as to whether he would have regarded it as dangerous to let Anthony hold the post. In closing address counsel for CGU then addressed the alternate views of the facts and submitted that, whether or not the respondent had observed Anthony holding the post, the trial judge should conclude that he had failed to take reasonable precautions. He submitted that the trial judge should not draw the inference from such circumstantial evidence that the respondent did not recognise the danger of having his grandson hold the post.

34 The issue which squarely arose between the respondent and CGU was whether the respondent recognised the extent of the danger of Anthony holding the post and had deliberately courted that danger. It was proper for the trial judge to evaluate the competing hypotheses of the respondent and the appellant as to the respondent's state of mind so long as he remained within the evidence and acted with procedural fairness to the parties.[24] It was not suggested on appeal that His Honour had erred in either of these respects. Those considerations which precluded the primary judge from entertaining an alternate explanation for the accident in Suvaal did not arise in this trial. This ground is not made out.**

Was the evidence sufficient to show compliance with the condition

**35 CGU's argument at trial was that the trial judge should find on the evidence that the respondent did not take reasonable precautions, or at least that he had failed to discharge his onus, partly because he had given no evidence as to his state of mind. The learned trial judge rejected that submission. The appellant renewed the argument on appeal that, on the evidence, the trial judge was bound to have concluded that the respondent failed to show that he did not deliberately court the danger of injury to Anthony.

36 Counsel for CGU accepted that under the Albion test, the respondent was required to prove either that**

• he was unaware that Anthony was holding the post; or
• he did not recognise the danger or the extent of the danger posed to Anthony by permitting him to hold the post; or
• having recognised that danger, he did not through a lack of concern and desire to prevent bodily injury deliberately court that danger.

In substance it was contended that he failed to establish any of these propositions, as he had denied that he saw Anthony holding the post and had given no evidence that he did not regard that as a dangerous situation.

**37 At trial, counsel for the respondent submitted that the insurer bore the onus of proof in relation to this special condition. The learned trial judge accepted that it was arguable that the case of Albion was wrongly decided on this point as the question had not been argued before the Full Court, but held that he would not be justified in refusing to follow the decision of Kaye J at first instance as he was not of the view that it was clearly wrong[25] and was bound by the Full Court decision in Verna Trading Pty Ltd v New India Assurance Ltd.[26] Accordingly, the trial was conducted on the basis that the onus of proof of fulfilment of the condition was upon the respondent.

38 On the appeal the respondent filed a Notice of Contention seeking to support the ultimate conclusion of the primary judge on an alternative basis, by relying upon the argument that the onus of proof rested upon the insurer. That is the law in the United Kingdom,[27] New Zealand,[28] South Australia,[29] Queensland[30] and the Northern Territory.[31] In Victoria the burden of proving compliance with such a condition is borne by the insured.[32] Similarly, in New South Wales the courts have consistently held that the onus rests upon the insured.[33] Counsel for the respondent conceded in oral argument on the appeal that, if it were to be found that the ultimate conclusion reached by the trial judge was in error, the judgment at first instance could not be supported on the basis that the trial judge had erred as to the onus of proof. Thus, the notice of contention was abandoned and I express no view as to its substance.

39 In support of the argument that the trial judge should have found that the respondent had failed to discharge his onus, it was said that his Honour had erred in failing to find that the respondent told deliberate untruths as to the circumstances of the accident. As I have already mentioned, the trial judge thought it neither necessary nor appropriate to reach any conclusion on that question. The appellant contends that there should have been a finding that the respondent deliberately gave false evidence. Counsel for CGU also point to the fact that Sandra Lawless, Donna Lawless and the respondent all gave the same false evidence that Anthony was not holding the post. It was said that this smacked of a conspiracy to give false evidence. A finding that the respondent falsely denied that he was aware that Anthony was holding the post would have been significant, it was said, because it would have added support to the conclusion that the respondent had callously disregarded the risk of personal injury to the plaintiff. That submission cannot be sustained. A false denial by the respondent in his evidence - if it should be so regarded - that he observed Anthony holding the post does not give rise to the likely inference that the respondent lied because he had deliberately courted the danger. It may say something of the respondent's state of mind, with the benefit of hindsight, at the time of his testimony, but it does not advance the question of the respondent's state of mind shortly before the accident.

40 It was further submitted that, because of the adverse finding as to the respondent's credit, the trial judge should not act upon the circumstantial evidence of the respondent's practice and experience with the post driver so as to draw any inference as to the respondent's state of mind, unless that body of circumstantial evidence was corroborated by other witnesses. The trial judge did not accept this submission. The circumstantial evidence had not been challenged nor had the respondent been cross-examined by counsel for CGU so as to undermine the inference which could be drawn from such evidence. The submission cannot be sustained.

41 Senior counsel for CGU pointed to certain evidence which he said was 'highly suggestive' that the respondent did appreciate that Anthony would be exposed to significant danger if he were holding the post. He pointed to a warning given to the respondent by Mr Boulton that he thought it dangerous for the respondent to operate the post driver whilst other people were in the vicinity of the operation. Mr Boulton said, when cross-examined by counsel for CGU, that he had told the respondent that he was concerned that he had a lot of people hanging around when he was knocking in posts. He had stopped giving the respondent fencing work because of that concern. Mr Boulton did not testify that he had ever suggested to the respondent that it was dangerous for anyone to hold the fence posts while using the post driver.[34] The trial judge found that the respondent was not prepared to modify the way he used the machine in order to continue to get fencing work from Mr Boulton, despite his impecuniosity, and thought that to be a measure of the strength of the respondent's opinion that his method of operation was not dangerous. The appellant further relies upon the evidence-in-chief of the respondent that he had required Anthony and Shannon to initially stand back from fencing operations. He further explained in cross-examination that he did not want them under his feet when he was using the machinery. The trial judge accepted the respondent's submission that this did not amount to an admission that he knew that having children around the operation was dangerous to them but, rather, reflected the view that it was inappropriate to have them around when he was trying to operate machinery because he thought they would get in the way. Finally, counsel relies upon the evidence of the respondent that if he had seen Anthony holding the post he would have stopped working straight away to make sure that he got out of the way.

42 Counsel for CGU did not cross-examine the respondent on the second or third of these pieces of evidence. As the trial judge observed in his reasons, neither of these points was the subject of submission in closing address. As to the third point, the trial judge did not accept the respondent's evidence that he would have stopped work straight away had he seen Anthony holding the post. I see no error in his Honour's conclusion that the question as to the respondent's state of mind shortly before the accident was not much illuminated by what the respondent said in evidence 'with the powerful addition of hindsight about what he 'would' have done if he had seen Anthony holding the post.'

43 Each of the matters which CGU specifically relies upon in support of its contention that the respondent failed to discharge his burden of proof was the subject of specific consideration by the trial judge in his reasons for judgment. In my view, that evidence, whether viewed in isolation or in combination with all of the evidence in the trial, does not warrant the conclusion that his Honour erred in finding that the respondent had not failed to take reasonable precautions. There was no incontrovertible evidence which called for a different conclusion, nor were his Honour's findings 'glaringly improbable' or 'contrary to compelling inferences'.[35]

44 Notwithstanding the absence of direct testimony from the respondent as to his state of mind, there was in my view ample circumstantial evidence from which the judge was entitled to infer that he had not deliberately courted the danger. The evidence from which such an inference was to be drawn was not affected by the view which the trial judge formed of the credibility of the respondent's account of the circumstances of the accident. CGU did not dispute the evidence of the respondent's experience and the practice that he had followed for decades of having a person hold the post whilst he operated the post driver, or the evidence of the bond of affection which he had for his grandson. On that evidence, the trial judge was satisfied - correctly, in my view - that the respondent did not recognise the extent of the danger of Anthony holding the post, did not have a lack of concern to prevent injury to Anthony and did not deliberately court the danger.

[1] [2003] HCA 41; (2003) 77 ALJR 1449 ('Suvaal').

[2] [2007] VSCA 209, [15].

[3] Suvaal [2003] HCA 41; (2003) 77 ALJR 1449, 1474 [144] (Callinan J).

[4] Ibid 1455 [36] (citations omitted).

[5] (1967) 3 All ER 57, 60-1.

[6] [1983] VicRp 94; [1983] 2 VR 339 ('Albion'), 342-3.

[8] (1986) 6 NSWLR 390, 397.

[11] Tilley (A Minor) v Lawless [2007] VSC 103, [40].

[12] Albion [1983] VicRp 94; [1983] 2 VR 339, 345.

[14] [2007] VSC 103, [54].

[16] [2000] FCA 477; (2000) 172 ALR 586, 598

[17] [2000] FCA 1118; (2000) 178 ALR 339, 343.

[18] (1888) 10 ALT 194.

[19] [2003] HCA 41; (2003) 77 ALJR 1449 ('Suvaal').

[20] Brailsford v Tobie (1888) 10 ALT 194, 195 (Holroyd J); Issitch v Worrell [2000] FCA 477; (2000) 172 ALR 586, 594-5.

[22] Suvaal [2003] HCA 41; (2003) 77 ALJR 1449, 1454 [23].

[24] Suvaal [2003] HCA 41; (2003) 77 ALJR 1449, 1463 [81] (McHugh and Kirby JJ).

[25] Tilley (A Minor) v Lawless [2007] VSC 103, [35].

[26] [1991] VicRp 12; [1991] 1 VR 129, 148, 156.

[27] Stebbing v Liverpool and London and Globe Insurance Co Ltd [1917] 2 KB 433; Bond Airservices Pty Ltd v Hill [1955] 2 QB 417; Fraser v B N Furman (Productions) Pty Ltd [1967] 3 All ER 57.

[28] Cee Bee Marine Ltd v Lombard Insurance Co Ltd [1990] 2 NZLR 1; Dawson v Monarch Insurance Co of New Zealand Ltd [1977] 1 NZLR 372.

[29] Australian Associated Motors Insurance Ltd v Wright (1997) 70 SASR 110; McInerney v Shultz (1981) 28 SASR 542.

[30] Legal and General Assurance Society Ltd v Commonwealth and Precision Cranes and Hoists Pty Ltd [1985] 3 ANZ Ins Cas 60-621; Bedford v James [1986] 2 Qd R 300, 308.

[31] Timms v FAI Insurances Ltd (1976) 12 ALR 506; S & Y Investments (No 2) Pty Ltd (In Liq) v Commercial Union Assurance Co of Australia Ltd [1986] NTSC 15; (1986) 82 FLR 130, 85 FLR 285.

[32] Green v Windman; Scottish Union & National Insurance Co (Third Party) [1964] VicRp 42; [1964] VR 297; Body Corporate Strata Plan No 4304 v Albion Insurance Co Ltd [1982] VicRp 70; [1982] VR 699; Cox v Trade Indemnity Insurance Co Ltd [1986] VicRp 35; [1986] VR 343; Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] VicRp 12; [1991] 1 VR 129, 148.

[33] Kodak (A'asia) Pty Ltd v Retail Traders Mutual Indemnity Insurance (1942) 42 SR(NSW) 231; Legal and General Insurance Australia Ltd v Eather [1986] NSWLR 390; Toikan International Insurance Broking Pty Ltd v Plasteel Windows Australia Pty Ltd [1989] 15 NSWLR 641; Southern Union Insurance Co of Australia Ltd v Altinier [1969] 2 NSWR 333, 335.

[34] The trial judge accepted Mr Boulton's evidence but contrary to the trial judge's finding Mr Boulton did not testify that he had told Lawless that it was dangerous for Donna to be holding the fence posts: [2007] VSC 103, [54].

[35] CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, 128 [28]-[29], 139 [66], 165-6 [148]; Devries v Australian National Railways Commission (1992-3) 177 CLR 472; State Rail Authority (New South Wales) v Earthline Constructions [1999] HCA 3; (1999) 73 ALJR 306; Leeks v XY [2008] VSCA 21, [38].