Insurance - Motor vehicles - Prime mover and low loader - Compulsory Third Party Insurance - Bodily injury - Directly caused by, or by the driving of, motor vehicle

Insurance - Motor vehicle - Private insurance policy - Renewals and extensions to cover various business activities of the insured - Limitation - Occupiers' Liability only - Whether a limitation to designated premises - Whether cover extended to vehicle in remote location

Insurance - Motor vehicle - Private insurance policy - Exclusion clause - Whether excluded claims made for bodily injury caused by registered and insured low loader - Construction of term of insurance contract in light of legislative policy

Australian Iron and Steel Pty Ltd v GIO of NSW (1990) 20 NSWLR 633

Balfour Beatty Powel Construction (Australia) Pty Ltd v Government Insurance Office of New South Wales, unreported; SCt of NSW; 18 July 1996

Fawcett v BHP Bi­Products Pty Ltd [1960] HCA 59; (1960) 104 CLR 80

Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390

McEwann v Gold Coast City Council [1987] 1 Qd R 337

Mendozona v Knuth, unreported; SCt of QLD (Thomas J); No 313/92; 31 July 1987

Rooney v Australian Turf Industries Pty Ltd, unreported; DCt of WA (Macknay DCJ); Library No 970359; 14 November 1997

SGIC v Stevens Brothers Pty Ltd [1984] HCA 32; (1984) 154 CLR 552

Sinfein v State Government Insurance Commission [1996] 18 Leg Rep SL 2a

1 WALLWORK J: I agree with the reasons for judgment of Roberts-Smith J and with the conclusions which have been reached by his Honour. There is nothing I wish to add.

2 WHEELER J: I have had the advantage of reading in draft the reasons for decision of Roberts-Smith J. I am in agreement with them and with the orders his Honour proposes.

3 ROBERTS-SMITH J: March is not a good month to be driving in a prime mover and low loader in the remote outback of Western Australia. It is desert country and can be exceptionally hot.

4 The third respondent (plaintiff) ("Sutton") however, found himself doing exactly that as a passenger in mid-March 1998.

5 About midday on 15 March that year, the low loader and prime mover combination in which he was travelling suffered mechanical problems. Smoke and fumes were coming from one of the rear wheel hubs of the low loader. The driver decided that both wheels on that hub would have to be removed. That meant that end of that particular axle would have to be lifted and secured to the bed of the low loader, otherwise it would drag on the ground and cause further problems. In the course of assisting the driver to change the axle in this way, and whilst crouched underneath the low loader adjacent to the axle and between it and the chassis, Sutton was keeping himself stable by placing his hand in a gap in the chassis and holding on to it. The jack slipped and the axle suddenly fell onto Sutton's hand against the chassis causing a "brutal injury", to use the language of his counsel at trial.

6 The findings made by the learned trial Judge in his reasons for decision delivered on 17 October 2000 ([2000] WADC 254) included the following. His Honour found it was entirely foreseeable that an injury of the type sustained by Sutton could be sustained by persons attempting to effect emergency roadside repairs to a vehicle such as this. A prudent employer in the position of the defendant should have properly equipped its vehicles for the carrying out of emergency roadside repairs to the wheels and axles of its low loader. The defendant had failed to do that. There was no trolley jack of sufficient lifting capacity to lift an axle of the prime mover and the low loader. The only jack which was available was inadequate. Additionally, braces or supports should have been provided so that the axle was at all times supported. There were no such braces or supports; nor were any planks or blocks provided to afford the trolley jack

a secure footing and nor were chains of sufficient length provided to enable an axle to be secured to the bed of the tray.

7 Sutton was a passenger in the rig at the time because he was the operator of a crane which was being transported on the low loader from a job at Telfer to the Nifty Strikes copper mine near Port Hedland. They were in the remote north of Western Australia, in the desert, in a location accessible only by rough unsealed roads and in conditions which obliged Sutton and the driver to use gloves because it was so hot they could not otherwise handle the metal equipment.

8 The learned trial Judge further found that when the crane had been put on the low loader at Telfer there was obvious difficulty in the hydraulic power unit of the low loader. That power unit ordinarily enables the tray to be lowered and raised and had it been in proper working order, it could have been utilised to assist in the operation of changing the axle by lowering the tray towards the axle so that chains or other security linkages could have been then used to secure the axle to the tray.

9 So far as the driver was concerned, his Honour found negligence to have been established on his part. He should have instructed Sutton to get out of the position that he was in and to attempt to connect the chains securing the axle to the tray only if it was safe for him to do so. He should not have used the particular jack that was used without first ensuring that it had a firm, stable footing and could get sufficient purchase on an appropriate part of the axle so as to prevent it from slipping. The driver should not have commenced to jack the axle without ensuring Sutton was in the clear. Finally, he found that the driver had failed to inspect his emergency repair equipment before commencing the journey, because had he done so, he would have ascertained that he did not have sufficient equipment to effect any emergency roadside repairs with wheels and tyres and should have requisitioned the appropriate materials from his employer.

10 His Honour concluded that Sutton's claim for damages in negligence against Container Handlers Pty Ltd ("Container Handlers") succeeded and there was no contributory negligence on Sutton's part. However, his Honour also found that the third party claim by Container Handlers against the first third party, the Insurance Commission of Western Australia ("the Commission") and the second third party, the Union Des Assurances De Paris ("UAP") failed.

11 None of the learned trial Judge's findings of fact as to negligence are challenged on this appeal. The appellant's grounds of appeal are concerned only with the proper construction and applicability of the relevant statutory provisions and the terms of a private policy of insurance. The grounds of appeal were set out in the notice of appeal dated 6 November 2000 as follows:

"a) the learned trial Judge erred in law in finding that the liability of the Appellant (Defendant) to the Third Respondent (Plaintiff) was not incurred by the owner or any person who drives a motor vehicle in respect of the bodily injury to any person directly caused by, or in the driving of, the motor vehicle and, accordingly, was outside the scope of the risks covered by a policy of insurance which existed between the Appellant (Defendant) and the first Respondent (First Third Party);

b) the learned trial Judge should have found that, upon the proper interpretation of the Motor Vehicle (Third Party Insurance) Act (1943), as amended) and, upon the proper construction of the relevant policy of insurance, the First Respondent (First Third Party) was bound to indemnify the Appellant (Defendant) for the liability of the latter to the Third Respondent (Plaintiff) in the events which had happened;

c) further, the learned trial Judge should have found that the liability of the Appellant (Defendant) to the Third Respondent (Plaintiff) was incurred in the respect of bodily injury to the Third Respondent (Plaintiff):-

(i) directly caused by the motor vehicle or;

(ii) alternatively, directly caused by the driving of the motor vehicle;

d) the learned trial Judge erred in law in finding that the policy of insurance existing between the Appellant (Defendant) and the Second Respondent (Second Third Party) did not cover the liability of the Appellant (Defendant) to the Third Respondent (Plaintiff) established by the judgment of the District Court of Western Australia of 17 October 2000 in favour of the Third Respondent (Plaintiff);

e) the learned trial Judge should have found that, upon the proper construction of the terms of the policy of insurance which exists between the Appellant (Defendant) and the Second Respondent (Second Third Party) and in the events which happened, the Second Respondent (Second Third Party) was obliged to indemnify the Appellant (Defendant) for the liability of the latter to the Third Respondent (Plaintiff);

f) in particular the learned trial Judge should have found that upon the proper construction of the policy of insurance between the Appellant (Defendant) and the Second Respondent (Second Third Party):-

(i) the liability of the Appellant (Defendant) to the Third Respondent (Plaintiff) was within the scope of the risks insured against; and

(ii) in the event that the terms of the policy were limited to liabilities incurred under the provisions of the Occupiers Liability Act (1985) (WA), the liability of the Appellant (Defendant) to the Third Respondent (Plaintiff) was within the scope of that risk by reason of the definition of 'premises' contained in that Act which extends to include any structure, fixed or movable, including a vessel, aircraft or vehicle;

g) the learned trial Judge erred in finding that the Appellant(Defendant) and the Second Respondent (Second Third Party) expressly limited the nature of the insurance cover for the business entity, Coleman's Transport Services, in such a manner as to exclude cover for the risk of the liability incurred by the Appellant (Defendant) to the Third Respondent (Plaintiff)."

12 A notice of contention was filed by UAP. That claimed that:

"The learned Judge erred in law and in fact in failing to find, as he (with respect) should have, namely that the second respondent's (second third party's) policy of insurance with the appellant (defendant) entered into on or about 1 September 1996, relevantly entitled 'General and Products Liability Policy' did not provide cover to the appellant (defendant) in respect of, relevantly, the low loader or its prime mover.

Particulars

(1) By its express terms, and as a matter of proper construction, item 9 of the policy, under the heading 'exclusions', applies to both the low loader and its prime mover as each, being a 'vehicle' is:

(a) required to be registered by virtue of the provisions of the Road Traffic Act 1984 (WA); and

(b) required to be insured by reason of the provisions of the Motor Vehicle (Third Party Insurance) Act 1943 (WA), further or alternatively, the provisions of the Road Traffic Act;

and as a result, claims made in respect of the low loader or its prime mover are excluded under the said policy: refer reasons for decision at pages 14-15 for wording of item 9 and trial judge's reasoning.

(2) At all relevant times, the low loader and the prime mover, and each of them, was duly registered pursuant to the provisions of the Road Traffic Act and, by reason of such registration, was in fact relevantly insured.

(3) (a) By section 3R(2) (issue of policies of insurance) of the Motor Vehicle (Third Party Insurance) act, in respect of the said vehicles, and each of them, was restricted to the Director General, on behalf of the Commission, and who thereby exercised an exclusive entitlement to cause policies of insurance in respect of the said vehicles to be issued under and for the purposes of the said Act.

(b) Such 'exclusive entitlement' has the effect of precluding insurance cover applying under the said policy in any event."

13 As I have noted, having found for Sutton and against Container Handlers on the issue of liability for negligence and that there was no contributory negligence, the learned trial Judge then found against Container Handlers that there was no liability under the compulsory motor vehicle insurance policy ("the statutory policy") with the Commission and nor was there liability under the private insurance policy with UAP. The grounds of appeal go first to the issue of liability under the statutory policy and secondly, to the issue of liability under the private policy.

14 The learned trial Judge noted it was not in dispute that each of the prime mover and low load loader were registered and were the subject of a compulsory Third Party Insurance policy under the Motor Vehicle (Third Party Insurance) Act 1943 ("the MV Act"). Under that policy (Schedule to the MV Act) the Commission was required to indemnify the owner of the insured vehicle and any other person driving it:

"... in respect of all liability for negligence which may be incurred by the owner or other person in respect of the death of or bodily injury to any person directly caused by it, or by the driving of, that motor vehicle...."

15 His Honour referred to s 3(7) of the MV Act which provides that:

"For the purposes of this Act, the death of or bodily injury to any person shall not be taken to have been caused by a vehicle if it is not a consequence of the driving of that vehicle or of the vehicle running out of control."

However, his Honour reached the conclusion that s 3(7) had no application in the circumstances because of the provisions of s 4(1). That section provides that:

"When any motor vehicle is on a road there is required to be in force in relation to the motor vehicle a contract of insurance entered into by the owner of the motor vehicle under which the owner has insured subject to and in accordance with this Act against any liability which may be incurred by the owner or any person who drives the motor vehicle in respect of the death of or bodily injury to any person directly caused by, or by the driving of, the motor vehicle." (Original emphasis).

16 His Honour's conclusion was that the policy referred to in s 4 is clearly the policy in the Schedule to the Act. He considered that contained all the terms of the statutory insurance and it was by reason of that policy that Container Handlers claimed its indemnity against the Commission.

17 His Honour then turned to the import of the word "directly", referring to State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR 434 as establishing that the phrase "directly caused by ... the driving of the vehicle" limits the test for causation that would otherwise have applied. On that view his Honour said (AB 28):

"In the instant case it cannot be said that the plaintiff's injuries were directly caused by the driving of the vehicle in the sense that it was the proximate cause of the plaintiff's injuries. The most I think that can be said of the driving of the vehicle is that if the vehicle had not been driven and, probably, driven along such bad roads, the low loader's wheel bearings (I presume that's what failed) would not have developed the problems they did necessitating the wheels being removed. Whether the plaintiff's injuries were directly caused by the vehicle ie. the low loader represents a greater difficulty because in one complete sense they were: part of the low loader crushed the plaintiff's hand, but it seems to me that the true direct cause was the negligent repair of the vehicle by Mr Reiball. On the face of it this may be a fine distinction but it is a distinction I draw nevertheless, and not without some misgiving as to its correctness, because I am mindful of what Parker J foreshadowed in SGIC v Sinfein Pty Ltd when he said:

'I expect that the significance to be properly attached to the phrase 'directly caused by' will only emerge from a course of decisions involving a variety of factual situations.' (At 462)

In my opinion the defendant's claim for an indemnity against the first third party must fail."

18 Section 4(1) of the MV Act was amended in 1987 following the decision in the High Court of Australia in Dickinson v The Motor Vehicle Insurance Trust [1987] HCA 49; (1987) 163 CLR 500. Section 4(1) had previously required insurance in respect of "... the death of or bodily injury to any person caused by or arising out of the use of such motor vehicle". The High Court held the words "arising out of" were wider than the words "caused by" and did not require a direct proximate relationship between the use of the vehicle and the injuries, although there had to be some causal or consequential relationship. The section was therefore wide enough to cover a situation in which children who were passengers in a parked car set fire to it whilst playing with matches. The amendment removed the words "... caused by or arising out of the use of such motor vehicle" and replaced them with the phrase "... directly caused by, or by the driving of, the motor vehicle". The purpose of the amendment was to limit the scope of the statutory liability.

19 In State Government Insurance Commission v Sinfein Pty Ltd (supra) the respondent had been held liable in negligence for injuries suffered by one of its employees in an accident on a farm. The employee was driving a wheat truck in a paddock during harvesting. The trial Judge found the truck was unsafe for use in carting wheat through harvested fields because the exhaust system was dangerous, having a tendency to catch straw and chaff against the hot pipes. He found that straw or chaff had caught against the pipes and ignited because of the heat of the exhaust and dropped into the stubble, setting fire to it.

20 There was no doubt that the fire was directly caused by the wheat truck or by the driving of the wheat truck through the paddock; the question raised was whether the injuries the plaintiff suffered were directly caused by the wheat truck or the driving of it.

21 When the plaintiff became aware of the fire he left the wheat truck in a safe location and returned on foot to help fight the fire. A fire truck, provided by the respondent for the purpose of fighting any fire which might occur during harvesting, had been driven to the scene by a director of the respondent. One of the pumps fitted to the fire truck was a low pressure unit intended only as a herbicide spray unit and was unsuitable for fire fighting. The plaintiff was unaware of this, and when their attempts to extinguish the fire were unsuccessful (partly because of the inadequacy of the second pump) he returned to the wheat truck and brought back a jerry can of fuel with which to refuel the second pump. Fuel spilled from the jerry can and was ignited by the burnt stubble on the ground below the truck. That led to further spillage onto the plaintiff's clothes which caught fire and he suffered substantial burns.

22 In his dissenting judgment, Malcolm CJ found there was, in the context of insurance law, no difference in meaning between the word "direct" and the word "proximate" (443). He considered that the use of the word "directly" does not imply that there can be no steps between a death or bodily injury in the driving of the vehicle (445). In his Honour's opinion, the sequence of events resulting in the injuries to the plaintiff "was the very kind of thing that was likely to happen if a fire started as a result of the respondent's negligence" (449). In his Honour's view, neither the parking of the wheat truck in a safe place and the return of the plaintiff to the fire to assist in extinguishing it, nor his return to the wheat truck to obtain petrol, was an intervening cause. Both were reasonably foreseeable. Nor was the plaintiff's attempt to refuel the deficient pump an intervening cause; the attempt to refuel the pump was both a direct result of the driving of the truck which caused the fire and of a sufficiently high degree of foreseeability as not to be regarded as an intervening cause (450).

23 The Chief Justice considered the use of the phrase "directly caused by" in an insurance context required the application of general principles of causation in that context, and in his opinion the injuries suffered by the employee were a direct result or consequence of the driving of the motor vehicle across the paddock in circumstances in which, by reason of a defect in the motor vehicle, a fire was started. He found they were a direct result or consequence in the sense that there was an unbroken chain of causation from the driving of the defective truck across the paddock to the injuries suffered by the plaintiff (451).

24 The members of the majority (Ipp and Parker JJ) took a different view.

25 Ipp J agreed with Malcolm CJ that "directly" did not mean "immediately" (that is coming in time immediately after the driving of the vehicle) and that the phrase "directly caused by" was to be equated with "proximate cause". However, Ipp J said that that finding was significant because it followed that the term "directly caused by" in the phrase, "the death of or bodily injury to any person directly caused ... by the driving of the vehicle" serves to limit the test for causation that would otherwise have applied. The effect is that the ordinary common law test of causation is not applicable. His Honour observed (454) that the limitations so introduced are those inherent in the term "proximate cause" as it is understood in insurance law and to which Tadgell J referred in Transport Accident Commission v Jewell [1995] VicRp 22; (1995) 1 VR 300. Ipp J agreed with the general principles applicable to the determination of questions of causation according to the common law as explained by Malcolm CJ, but differed from his Honour in the application of those principles to the particular case.

26 The point of difference between Malcolm CJ and the majority was the determination whether or not there had been a new intervening cause of the employee's injury.

27 Despite accepting that the employee's conduct in returning to the wheat truck to get petrol, attempting to refuel the pump and spilling the petrol was reasonable, and that although it was not foreseeable that he would have taken those particular steps it was foreseeable that, were a fire to be caused by the driving of the truck, he would take some steps to put it out (in other words the kind of thing that occurred was foreseeable in a general way), reasonable foreseeability is not always an appropriate criterion whereby causation is to be judged (see particularly 456 - 457). Ipp J referred to the following passage of McHugh J in March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 at 530 - 531:

"[T]he reality is that such a limiting rule is the product of a policy choice that legal liability is not to attach to an act or omission which is outside the scope of that rule even though the act or omission was a necessary precondition of the occurrence of damage to the plaintiff".

28 His Honour did not favour the "very kind of thing" approach, observing that whilst it is a useful tool in many cases for determining causation, it remains subject to broad considerations of commonsense and value judgments. He placed particular importance on the statement of the majority in Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 at 6, that:

"The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent [act] or decision the defendant's wrongful act or omission is, as between the plaintiff and the defendant and as a matter of commonsense and experience, properly to be seen as having caused the relevant loss or damage."

29 This approach led his Honour to the following conclusion (457 - 458):

"It can be seen that the web of circumstances which resulted in Mr Miller suffering injuries from the fire was tangled indeed. Amongst those circumstances were negligent acts of Mr Miller unrelated to the driving of the fire truck. It is to be emphasised that the respondent had to establish that the injuries were directly caused by the driving of the wheat truck, not that the injuries were directly caused by the negligence of Mr Miller. Also amongst the essential links in the causation chain were deliberate acts of Mr Miller, without which the injuries would not have occurred. Furthermore, the temporal connection between the injuries and the driving was much less than immediate. There was a considerable lapse of time between the cessation of driving and the spilling of fuel on the stubble by Mr Miller. During this time many incidents occurred, without which the injuries would not have been sustained, and which were unconnected to the driving.

The injuries were caused by a concatenation of random acts and omissions, involving deliberate conduct, coincidence, inadvertence and neglect. These matters, together with the significant passage of time that elapsed between the driving of the vehicle and the injuries, lead me to the conclusion that the injuries suffered by Mr Miller were so remote from the driving of the vehicle that it could not be said that they were directly caused by the driving of the vehicle. I come to this conclusion by applying what I consider to be a commonsense approach. While I am of the view that the driving of the wheat truck was not the proximate cause of the injuries (and that the driving was not a cause which was proximate in efficiency, or the effective or dominant cause) I consider that, even applying the ordinary common law test of causation, the driving of the wheat truck was not the cause of the injuries. The injuries were too remote from the driving to be regarded, in law, as having been caused by the driving."

30 In his judgment, Parker J observed (460) that pursuant to s 4(1)(a) it is the injury or death which must be directly caused by the motor vehicle or the driving of it, not the liability for injury or death. His Honour also drew attention to the fact that the scope of what otherwise might fall within s 4(1)(a) was further circumscribed by the operation of s 3(7), which requires that the injury be "a consequence of the driving of that vehicle or of the vehicle running out of control" for it to be caused by the motor vehicle. His Honour then said (460)":

"In the context of ss 3 and 4 of the Act it is possible that the notion of 'the driving of' a motor vehicle could be confined to denoting the quality, nature or manner of the control exercised by the driver over the motor vehicle (relating to the manner of control), or it could extend to the wider denotation of mere fact or circumstances that a motor vehicle is operated or driven (relating to the fact of operating). The wider includes the narrower denotation. While the history and in particular s 3(7) could possibly be seen as affording some justification for adopting the narrower denotation of driving, there is no convincing basis for taking such a limited view so that it must be accepted that 'driving' within the meaning of the sections extends to include both the manner of control of a motor vehicle and the fact of operation of a motor vehicle."

31 His Honour then turned to a consideration of whether there was a relevant distinction between the meaning of "direct" and "proximate" and took the view there was not. Whichever term was used, a cause should be the effective or dominant cause of the occurrences, citing Wayne Tank & Pump Co v Employers' Liability Ltd [1974] 1 QB 57 at 66F. In that regard his Honour said (461):

"To be 'direct' or 'proximate' for this purpose a cause should be the effective or dominant cause of the occurrences: see Wayne Tank & Pump Co v Employers' Liability Ltd [1974] 1 QB 57 at 66F. It is inherent in this view that it need not be the sole cause. In determining this matter of causation, which is essentially one of fact, commonsense and everyday experience of human affairs have a significant role, and are in truth the determinant rather than any artificial rule or formula.

The ultimate question is always whether the defendant's conduct is, as a matter of commonsense and experience, properly to be seen as having caused the relevant injury or death. This is so even where the chain of causation is affected by the intrusion of an act or decision of the deceased or injured party or of a third party: see Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 at 6."

32 At that point his Honour was brought to a consideration of the significance of the phrase "directly caused by" rather than merely "caused by". He agreed with the reasons of Ipp J and that in a series of Victorian cases (Transport Accident Commission v Hoffman [1989] VicRp 18; [1989] VR 197, Transport Accident Commission v Treloar [1992] VicRp 31; (1992) 1 VR 447 and Transport Accident Commission v Jewell, supra), and commented (462):

"No statement defining the effect of 'directly caused' has yet been attempted in these Victorian cases. The complexities of the issue, like most aspects of causation, are unlikely to be fully developed in any one case or explained adequately by any one formulation of words. I expect that the significance to be properly attached to the phrase 'directly caused by' will only emerge from a course of decision involving a variety of factual situations. For the purposes of this present decision it is sufficient for me to indicate my view that 'directly caused by' was intended by the legislature to provide, and, in the same statute and in policies of insurance reflecting the statutory provision should be construed as requiring a more proximate or direct relationship between a death or bodily injury and a motor vehicle or its driving, than would be comprehended by the words 'caused by'."

33 These comments were obiter because his Honour in fact reached the conclusion that the plaintiff's injuries were not sufficient proximate to the driving of the wheat truck to be "caused by" that driving, let along "directly caused by" it. His Honour found there were numerous distinct acts of negligence by the employer, or for which it was liable in tort, which were not an aspect of the driving of the wheat truck; their tendency was to weaken rather than strengthen the causative connection between the driving of the truck and the bodily injuries required by the statute in the insurance policy. There was simply not a sufficient proximate or direct connection between the driving and the bodily injuries, whatever view might be taken of the test of causation required.

34 I accept that "driving" within the meaning of s 3 and s 4 of the MV Act extends to include both the manner of control of a motor vehicle and the fact of its operation.

35 In the present case it is arguable that it was the manner of control of the rig which commenced the chain of causation which culminated in the bodily injury to Sutton. I refer to the "manner of control" in the sense of the way in which the rig was driven along unsealed, rough, desert tracks in extreme heat causing the wheel hubs to overheat and seize up so as to require removal of the wheels and the chaining of the axle.

36 As to the learned trial Judge's view that the terms of the insurance liability are (by virtue of s 4(1) of the MV Act) to be found exclusively in the terms set out in the schedule to the Act, I accept the submission made by Mr Heenan QC that the proper approach is to regard the cover provided by the policy in the schedule and the liability created by the Act as coterminous. It would be anomalous in the extreme if the cover provided by the policy scheduled to the MV Act was more or less than the liability imposed by that Act. When one also looks to the words "subject to and in accordance with this Act" in s 4(1) and condition 4 to the policy and the schedule, namely "this contract of insurance is subject to the provisions of the Act" that conclusion is, I think, inescapable.

37 On this view then, s 3(7) did have application in this case.

38 This brings me to the next submission on behalf of the appellant, which starts with an appreciation of the dichotomy of liability in s 4(1). That dichotomy is liability in respect of bodily injury to any person:

• directly caused by the driving of the motor vehicle.

On then applying s 3(7) to the first of those, there is liability in respect of bodily injury caused by a vehicle where the injury is a consequence of the driving of that vehicle or of the vehicle running out of control.

39 It is to be noted that the definition in s 3(7) applies to the phrase "caused by a vehicle" - not "directly caused by a vehicle". The word "directly" still has work to do which must be more than a reiteration of the words "caused by". The approach required is to pose the question in two parts: first, was the injury directly caused by the vehicle; secondly, was the injury a consequence of the driving of the vehicle or of the vehicle running out of control?

40 Here, Sutton's injury was directly caused by the low loader. The axle of the vehicle fell and crushed his hand against the chassis. It is the second question which is difficult. Was the injury a consequence of the driving of the vehicle? I accept it does not have to be a direct consequence of the driving.

41 The South Australian Full Court held in State Government Insurance Commission (SA) v Wagner [1993] SASC 4354; (1993) 62 SASR 175 that there was no liability under a similar statutory provision where the bodily injury was caused by a backhoe, but arising out of its use as a backhoe, not the driving of it. There was a distinct separation between the activity of the driving, which had been completed, and that of preparing the backhoe for operation (King CJ at 176); the relevant activities were totally divorced from any act of driving but were rather an integral part of the "separate backhoe operation" (Olsson J at 182).

42 It is true, as Mr Heenan QC pointed out, that Wagner was not followed in two subsequent decisions of the Full Court of South Australia, they being Motor Accident Commission v ANI Corporation (1997) 26 MVR 57 and Heath v Tea Tree Gully City Council [1996] SASC 5588; (1996) 66 SASR 548. But that was only in relation to an obiter observation of Olsson J in Wagner (at 180) that the onus lies upon the insurer relying upon the limiting provisions of s 99(3) of the Motor Vehicles Act 1959 (SA) (the substantially equivalent provision to s 3(7) of the Act) to establish them. Thus, in ANI Corporation the court held that the onus of proving in third party proceedings the injury suffered by the plaintiff was not a consequence of the driving of the forklift in that case, rested upon the person who relied upon the insurance policy, namely there the employer. In both Heath and ANI Corporation, the Full Court held that the bodily injury was not a consequence of the driving of the vehicle. In Heath it was a front end loader. The vehicle was not moving. The plaintiff had difficulty manually loading a heavy slab into the bucket and to assist him, the driver tilted and curled the bucket to adjust the balance of the load, causing the plaintiff to be injured. The majority held that the injury was not a consequence of the driving of the vehicle; it was a question of fact and degree, and required more than a mere temporal connection between the driving and the non-driving use to come within the statutory provision and that in that case the actions which caused the injury were properly characterised as loading the vehicle rather than the driving of it. In ANI Corporation it was a forklift. The plaintiff was standing on the tray of a semi-trailer. Another employee was operating a forklift, loading a number of steel frames from a stack in the depot, onto the truck, a short distance away. Having placed a number of frames on the tines of the forklift, he drove it to the truck, stopped it and lifted the tines so that the load would clear the tray. When he stopped the lifting mechanism, the plaintiff fell over the opposite edge of the tray onto the ground and a small frame which had been on the top of the load on the forklift fell on top of him. The Court (by a majority) held that once the forklift stopped alongside the semi-trailer, it was not being driven but was being used as a loading device and thus the plaintiff's injuries were not a consequence of the "driving" of the forklift for the purposes of s 99(3)(a) of the Motor Vehicles Act 1959 (SA). On the other hand, in Workcover Corporation v Reiter [1997] SASC 6765; (1997) 70 SASR 347, a finding that the injury suffered by a truck driver when a bale of wool fell on him when he unfastened a tarpaulin for the purpose of unloading the truck at the end of a trip, was a consequence of the driving. That was because the wool bale which struck him in the act of unloading had been destabilised by the motion of the driven truck. Lander J (with whom Doyle CJ and Bleby J agreed) thought it did not assist to construe the statutory provision by reference to an activity test or a question of the proximate cause of the injuries received and in his opinion it properly required an examination as to whether the bodily injury was a consequence of the driving of the vehicle. It is a question of fact and judgment, to be resolved by a factual enquiry, in every case.

43 The broad problem of characterising causation is not new; it was certainly a feature of the previous wider statutory test. Cases involving repair or testing of motor vehicles also show differing outcomes on an examination of the factual circumstances.

44 In Government Insurance Office of New South Wales v King [1960] HCA 60; (1960) 104 CLR 93, the High Court held there was a distinction between using a motor vehicle and working on it. In the original proceedings the defendant's car had been parked in the street in front of the plaintiff's home. The defendant had made repairs to it. He subsequently attempted to start the engine. It was not established whether that was for the purposes of testing the repairs or preparatory to driving the vehicle. He was attempting to start the engine by having a person pour petrol into the carburettor while he pressed the self-starter. While the other person was pouring petrol into the running engine there was a backfire, the can of petrol caught fire in the other person's hand, he threw it away and it hit the defendant who was standing about 6 feet away in the street in the front of his house. In holding that there was no evidence from which the conclusion could reasonably be drawn that the injury was caused by or arose out of the use of the vehicle, Dixon CJ nonetheless observed (96) that:

"I would feel no difficulty in the chain of causation resulting in the injury, if the accident had occurred when the vehicle had been in the course of a journey or when it had been on the point of commencing a journey however short.

But there is in my opinion a distinction between using a car and putting it in order for some subsequent use...."

His Honour emphasised that it must always be kept in mind that all the incidents attending the actual use of the vehicle form part of its use; in that case however, the accident was not caused in the course of a present use of the car or an attempt to use it, but in the final stages of a repair or adjustment made for the purpose of putting it in order for some subsequent use.

45 Menzies J thought it inadvisable to attempt what might well be impossible, namely to draw a hard and fast line between things which do and which do not amount to the use of a motor vehicle for the purposes of the legislation (99) although he did enumerate some which fell into each category. The "clear distinction" which his Honour saw, is that between using a motor car and working upon it (100). Interestingly, his Honour observed (at 101):

"This case, I may say, is 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."

46 Whilst the driving of a vehicle must always, I would have thought, constitute the "use" of it, the converse of course does not apply - the concept of "driving" is narrower than that of "use". Even so, in my view, the example given by Menzies J is also apt to constitute the "driving" of a vehicle.

47 As Windeyer J pointed out (at 105) the question is one of fact and in any doubtful case, much might depend on the particular circumstances.

48 The distinction between liability for negligence on the one hand and death or bodily injury being caused by, or arising out of (or being directly caused by a motor vehicle or by the driving of it) has been acknowledged since Government Insurance Office of New South Wales v Green [1966] HCA 6; (1965-1966) 114 CLR 437. Again, that case concerned the wider test, but the High Court pointed out that under the wider formula it is the death or bodily injury which must be caused by, or arise out of the use of the motor vehicle, not the liability for injury.

49 I accept the appellant's submission that the distinction is still maintained in the present statutory formulation. And the consequence is that the statutory cover may still apply where injury is caused by the vehicle or directly caused by the driving of it, even though liability in negligence arises out of an unsafe system of work.

50 In my opinion, on the facts in this case, the injury was directly caused by the vehicle and was a consequence of the driving of it. The driving of the vehicle along unsealed desert roads in extreme heat causing the wheel hubs to overhead and seize up necessitating removal of the wheels and chaining the axle are matters which fall within the operation of the vehicle. Unlike the factual situation in Sinfein, the distinct acts of negligence by Container Handlers, or those of its employee driver for which it was liable in tort, were aspects of the fact of operation of the vehicle and so of the driving of it. These included the unserviceable nature of the hydraulic power unit of the low loader and those findings of his Honour as to the driver's negligence to which I have referred above.

51 In my view there was here a sufficient proximate or direct connection between the driving and Sutton's injuries for them to have been regarded as directly caused by the driving. There were no matters of intervening negligence sufficient to remove the injuries from proximity to the driving of the vehicle. This was not a situation in which the vehicle was being worked upon independently of the driving of it. The mechanical problem occurred in the course of the driving from Telfer to Port Hedland. The breakdown occurred in a remote desert location. Repairs had to be effected for the purpose of enabling the vehicle to complete its journey and as part of the driving of it. The events were not merely preparatory, nor did they involve some activity associated with the vehicle (such as merely loading or unloading it) and nor was there some intervening cause or event (such as repair work being undertaken in a mechanical workshop or garage during a break in the journey) nor lapse of time sufficient to break the direct chain of causation between the driving and the injury. The injury was caused by the vehicle as a direct consequence of the driving of it. It follows that his Honour erred in concluding otherwise.

52 For these reasons, it is my conclusion that the appellant is entitled to indemnity under the statutory policy. I would allow the appeal on grounds (a), (b) and (c).

53 The argument here turned on two issues, the first being whether cover extended to the appellant in respect of its business "Coleman's Transport Services" or was confined to the operating entity UHS Transport and the second being whether there was an exclusion in respect of any claim "... arising out of the use of any vehicle owned by or in the physical or legal control of the appellant".

54 The learned trial Judge dealt with this issue very shortly. I set out below the whole of what his Honour said about it (AB 31):

"... The plaintiff said that he was a passenger with Coleman's when he sustained his injury. The low loader depicted in the photographs prominently displays the signs "Coleman's" and the invoice for the work sent by the defendant to Brambles in Port Hedland is seen to have been sent by "Container Handlers Pty Ltd - Coleman's Transport Services - PO Box 1096 Bibra Lake WA 6163."

When one considers the schedule to the policy with the extension of cover to Coleman's Transport Services, it is in the following terms:

Public Liability

Description: Coleman's Transport Services - 2 Stockdale Road, O'Connor 6163

Occupiers liability only - cover excludes products liability, care, custody and control, bailee or carriers liability ... "

This shows that the defendant and second third party expressly limited the nature of the insurance cover for the business entity Coleman's Transport Services. In my opinion the policy does not respond to the defendant's claim for indemnity in respect of the plaintiff's claim against it."

55 Before considering the arguments advanced on this issue, it is necessary to examine the policy documentation.

56 The policy is headed "General and Products Liability Policy". The general coverage clause is cl 1 under the heading "Insuring Agreements"; it reads:

"Subject to the terms, definitions, conditions, limitations and exclusions of this Policy the Company will indemnify the insured for all sums which the insured shall be legally liable to pay as Compensation in respect of Personal Injury or Property Damage (including Personal Injury or Property Damage within the Products Hazard) occurring during the Policy Period as a result of an Occurrence happening in connection with the Business of the Insured described in the annexed Schedule.

'Occurrence' is defined in clause 3 of the definitions as:

'An event including continuous or repeated exposure to conditions which results in Personal Injury or Property Damage neither expected nor intended from the standpoint of the Insured. All Occurrences of a series consequent upon or attributable to one source or original cause shall be deemed one Occurrence'."

57 The schedule attached to, and forming part of the policy, names the insured as:

"Container Handlers Pty Ltd as trustee for the Container Handlers Unit Trust trading as: Australian Wool Processors."

No issue arose in these proceedings as to the description of the trustee nor the business name.

58 By cl 6 of the definitions section, "Insured" is defined as:

"6. INSURED

The Insured named in the annexed Schedule, and:

(a) any subsidiary company (including subsidiaries thereof) of the named insured and any other organisation under the control of the named insured and over which it is exercising active management;

(b) any new organisation acquired by the named Insured during the Policy Period through consolidation, merger, purchase of assets or assumption of control and active management, provided such acquisition or assumption is reported to the Company within ninety (90) days after it is effected and provided further such acquisition is endorsed on this Policy."

59 It is apparent that cover was extended or otherwise amended at various times on renewal. The policy itself was dated 15 November 1994. There is a document entitled "Amended Schedule of Insurance" dated 26 November 1996 (AB 181). It contained an endorsement on the policy, extending it to include UHS Transport. So far as is presently relevant, the terms of the amended schedule were those set out below:

" -- Details of risks insured --

Section: 1 PUBLIC LIABILITY

Description: WOOL PROCESSORS/BROKERS

50 MIGUEL ROAD BIBRA LAKE 6163

ANY ONE OCCURRENCE LIMITED TO $5,000,000

Excess: $250

EXCESS-PROPERTY DAMAGE CLAIMS ONLY

OTHER CLAUSES AS PER POLICY SCHED.

PUBLIC LIABILITY

Description: COLEMAN TRANSPORT SERVICES

2 STOCKDALE ROAD, O'CONNOR 6163

Occupiers Liability Only - Cover excludes Products Liability, Care Custody and Control, Bailee or Carriers Liability

LIMIT OF LIABILITY $5,000,000

Excess: $250

EXCESS-PROPERTY DAMAGE CLAIMS ONLY

PUBLIC LIABILITY

Description: CONTAINER HANDLERS / FARM AT

SOOTHSAY ESPERANCE 6450

ANY ONE OCCURRENCE LIMITED TO $5,000,000

Excess: $250

EXCESS-PROPERTY DAMAGE CLAIMS ONLY

PUBLIC LIABILITY

Description: PROPERTY OWNERS / LOT 13 CNR

RUSSELL & ANDERSON ROADS, HENDERSON 6166

PUBLIC LIABILITY (continued)

LIMIT OF INDEMNEITY

Excess: $250

EXCESS-PROPERTY DAMAGE CLAIMS ONLY

PUBLIC LIABILITY

Description: U H S TRANSPORT [PTY LTD]

13 PEAWAH STREET, PORT HEDLAND 6721

LIMIT OF LIABILITY

Excess: $250"

60 The second entry affords public liability coverage for Coleman Transport Services. That was the business name under which the low loader was being operated.

61 It was accepted before us that the last entry did not relate to a corporation - UHS Transport Pty Ltd was a business being operated by Container Handlers under that name at Port Hedland.

62 The appellant's argument in this regard turned on a submission that the policy documentation is "clearly ambiguous" in its reference to the insurance cover afforded. The amended schedule dated 26 November 1996 is said to be confusing and ambiguous because it "segmented" the appellant's business activities and attributed insurance cover to each business segment. Furthermore, the limitation to "Occupiers Liability only" to the public liability cover for Coleman Transport Services was not expressly placed on the cover provided by the immediate schedule to UHS Transport - and the meaning of that limitation is itself unclear. Further, the reference to Occupiers Liability is, on the face of it, inconsistent with the terms of the general coverage clause in the policy itself. It is argued that given this situation of confusion and uncertainty, the learned trial Judge erred in failing to apply the contra proferentem rule against the insurer and holding that the policy did respond in the circumstances.

63 As Gibbs CJ explained in Australian Casualty Co Ltd v Federico [1986] HCA 32; (1986) 160 CLR 513 at 520, the ordinary rules of interpretation apply to a policy of insurance so that as in the case of any other commercial contract, a court may depart from the strictly literal meaning of a particular expression and place upon it an alternative construction which is more reasonable and more in accord with the probable intention of the parties if the words will bear that construction. His Honour noted further the passage that "the trend is, if anything, to adopt a liberal interpretation in favour of the assured, so far as the ordinary and natural meaning of the words used by the insurers permits this to be done" from Halsbury's Laws of England, 4th ed, vol 25, par 594, N1, cited in Mount Albert City Council v New Zealand Municipality Co-operative Insurance Co Ltd [1983] NZLR 190 at 193. I note that the liberal interpretation to be adopted must still be one within the scope of the ordinary and natural meaning of the words used.

64 In Darlington Futures Limited v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 the Court held that its past decisions had authoritatively stated the approach to be adopted in Australia as to the construction of exclusion and limitation clauses. At 510 the Court pointed out that the decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, so giving due weight to the context in which the clause appears, including the nature and object of the contract and, where appropriate, construing the clause contra proferentem in case of ambiguity. The same principle applies to the construction of limitation clauses.

65 McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 176 ALR 711 also concerned an exclusion clause. At [22] Gleeson CJ said:

"A policy of insurance, even one required by statute, is a commercial contract and should be given a business-like interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure." (Citations omitted).

At [73] and [74] Kirby J set out the basic principles applicable to the resolution of ambiguities of interpretation which he had collected in Johnson v American Home Assurance Company [1998] HCA 14; (1998) 192 CLR 266 at 272 - 276. They included the following:

(1) An insurance policy is a species of commercial contract and so must be interpreted giving to the words used their ordinary and fair meaning.

(2) The meaning to be given to an insurance policy must take into account the commercial and social purposes for which it was written.

(3) Where, in a contract written for application in different jurisdictions, language has been used which enjoys a settled meaning, courts will ordinarily endeavour to adhere to that meaning, particularly in a policy of a commercial character upon which the parties might have been expected to obtain expert advice.

(4) Notwithstanding the primary duty of courts to give meaning to the words in an insurance policy, in cases of ambiguity a 'liberal approach' will generally be adopted in the construction of insurance contracts. However, courts now generally regard the contra proferentem rule as one of last resort. It is preferable that judges should struggle with the words actually used as applied to the particular circumstances of the case rather than by the application of mechanical formulae.

At [89] his Honour summarised the question in that case as being, so far as the insurance policies were concerned, what did a practical and business-like construction of the exclusion clause suggest?

66 As I understand it, there was no dispute between the parties as to the principles to be applied as explained in the above authorities. The real point at issue is whether or not the terms of the policy were ambiguous.

67 First of all, I cannot accept the submission advanced on behalf of the appellant that ambiguity arises because of a conflict between particular limitations or exclusions imposed by later amendments to the policy and the cover provided in the general coverage clause. That is because the latter expressly begins with the words "subject to the terms, definitions, conditions, limitations and exclusions of this policy...". The policy clearly includes the schedule as amended from time to time.

68 Nor do I accept the submission that the fact that the appellant's separate business activities were attributed separate insurance cover manifests some ambiguity. To the contrary, I accept the submission of Mr McCormack that such separate allocation for the separate businesses for separate risks to be covered reflects precision.

69 That brings me to the argument about the scope of Occupiers Liability under the policy.

70 There are two limbs to the appellant's argument in relation to this. The first is that the learned trial Judge should have found that upon the proper construction of the policy, the liability of the appellant to Sutton was within the scope of the risks insured against, and secondly, if the terms of the policy were limited to liabilities incurred under the provisions of the Occupiers' Liability Act 1985 (WA), such liability was within the scope of that risk.

71 The low loader was registered to Container Handlers Pty Ltd (AB 183) and it was common ground that the low loader was being operated under the business name Coleman Transport Services (that name being painted on the side of it).

72 Given the selective way in which the risks insured have been specified for each of the business operations being run by Container Handlers, there is to my mind nothing ambiguous about the scope of the liability being covered in respect of Coleman Transport Services at 2 Stockdale Road, O'Connor. The amended schedule means exactly what it says, namely that the liability is confined to Occupiers Liability only in respect of the designated premises at Stock Road. That is what his Honour found. The appellant complains that the learned trial Judge seems to have assumed without question that given that limitation the policy did not respond. The appellant's contention is that it did.

73 The liability section in the Occupiers' Liability Act is s 5, which provides:

"5. (1) Subject to subsections (2) and (3) the care which an occupier of premises is required by reason of the occupation or control of the premises to show towards a person entering on the premises in respect of dangers which are due to the state of the premises or to anything done or omitted to be done on the premises and for which the occupier is by law responsible shall, except in so far as he is entitled to and does extend, restrict, modify or exclude by agreement or otherwise, his obligations towards that person, be such care as in all the circumstances of the case is reasonable to see that that person will not suffer injury or damage by reason of any such danger."

74 Subsection (2) limits the liability to a person who willingly assumes the risk. Subsection (3) limits the liability towards a person who is on the premises for a criminal purpose.

75 By s 2 the word "premises" is defined to include:

"... any fixed or movable structure, including any vessel, vehicle or aircraft."

76 The appellant's argument here is that Container Handlers either directly or by its employee driver, failed to discharge its statutory duty of care towards him in respect of dangers due to anything done or omitted to be done on the vehicle (ie "the premises") and that the exercise of repairing it in the circumstances generated liability under the Occupiers' Liability Act.

77 Senior counsel for the appellant relied on Jones v Bartlett [2000] HCA 56; (2000) 176 ALR 137. I see nothing in this case which would support the argument being advanced by the appellant. In any event, because of the conclusion to which I have come in respect of the second limb of this ground, it is unnecessary for me to consider the first further.

78 The second limb turns on the definition of "premises" in s 2 of the Occupiers' Liability Act.

79 As I understand it, the appellant's submission here would mean that the policy would respond to any liability in Coleman Transport Services arising anywhere in the State under the Occupiers' Liability Act, and whether arising in respect of any fixed or moveable structure, vehicle or aircraft. The countervailing submission for UAP is that the cover is expressly confined to such liability arising in respect of that business conducted by the appellant under the name Coleman Transport Services and only in respect of the premises described, namely those at 2 Stockdale Road, O'Connor.

80 In the context of the policy as a whole the fact that the Occupiers' Liability limitation was placed on the Coleman Transport Services at Stock Road but not on UHS Transport Pty Ltd at Port Hedland must be taken to have been deliberate. There is simply no evidence to suggest otherwise, nor that the distinction between the two businesses imports any ambiguity.

81 In my view the ordinary meaning of the words used, considered in the context of the amended schedule dated 26 November 1996 and in the context of the policy as a whole, is that urged upon us by counsel for UAP. His Honour was correct in so concluding. Grounds (d), (e), (f) and (g) are not made out.

82 The next point raised turned on the application of cl 9 of the exclusions. That clause provided that:

"This policy does not cover:

...

(9) any liability arising out of the use of any vehicle owned by or in the physical or legal control of the insured:

(a) which is required to be registered by virtue of any legislation relating to vehicles; or

(b) in respect of which insurance is required by virtue of any legislation relating to vehicles;

Exclusion 9 shall not apply to vehicles described in exclusion 2(c)(ii)."

83 Exclusion 2(c)(ii) related to property damage to vehicles (other than vehicles owned or used by or on behalf of the insured) in the care, custody or control of the insured whilst such vehicles are in a carpark owned or operated by the insured other than for income or reward as a carpark operator.

84 The word "vehicle" is defined in cl 9 of the definitions portion of the policy as:

"Any type of machine on wheels or on caterpillar tracks made or intended to be self-propelled by mechanical power".

85 His Honour found the low loader was a vehicle which had to be registered pursuant to the provisions of the Act and at all relevant times was in fact registered and so was insured. He found the low loader was a separate vehicle from the prime mover and not to be regarded as a vehicle which could only be considered as part of an integrated unit comprising the prime mover and low loader together when linked. He found the low loader was not a vehicle made or intended to be self-propelled by mechanical power and accordingly the policy did not exclude claims made in respect of the low loader.

86 It is this conclusion which is challenged by the second respondent's notice of contention and I turn now to deal with that.

87 The issue is simply a question of construction. It is best approached first by reading the definition into cl 9 of the exclusions, which would then read:

"This policy does not cover:

Any liability arising out of the use of any type of machine on wheels ... made or intended to be self-propelled by mechanical power, owned by or in the physical or legal control of the insured:

(a) which is required to be registered by virtue of any legislation relating to vehicles; or

(b) in respect of which insurance is required by virtue of any legislation relating to vehicles."

88 Before the trial Judge UAP argued that the policy did not extend to the low loader because the low loader and the prime mover were to be regarded as an integral unit (cf not "integral units" as stated by his Honour at AB 30) and so as both were registered and insured and as a unit, made or intended to be self-propelled by mechanical power, they were within the exclusion clause. That argument was expressly not advanced before us.

89 Mr McCormack submitted that for the purposes of exclusion cl 9, the word "vehicle" is to be construed having regard to the prohibition against multiple insurance cover for personal injury relevantly "caused" by a motor vehicle within the meaning of s 4 of the Act. To construe the policy as providing cover to any motor vehicle within the meaning of s 4 of the Act would necessarily involve a finding there was an "illegal contract" (s 3R(2) of the MV Act provides that no person other than the Director General on behalf of the Commission shall issue any policy of insurance under or for the purposes of (the) Act"). This submission was founded on the proposition that the meaning of the policy is to be ascertained in light of the provisions of the Road Traffic Act 1974 (WA) ("the RT Act") because the policy must exist in a commercial environment where what it contains within its terms does not include either double insurance, illegal contracts or otherwise comes into collision with any legislative requirement. To put it another way, the argument was that what is excluded by statute from the policy cannot be covered by the policy.

90 The low loader is a "vehicle" within the definition in s 5 of the RT Act:

(a) every conveyance, not being a train, vessel or aircraft, and every object capable of being propelled or drawn on wheels or tracks, by any means; ..."

It is required to be registered (and hence insured) by s 15 of the RT Act which stipulates that a vehicle licence is required for any vehicle described in the First Schedule whilst that vehicle is being used on a road. The First Schedule includes a "trailer" (being a vehicle (not including a semi-trailer) drawn by another vehicle and a "semi-trailer". I take the low loader to fall within the statutory description of "trailer".

91 It was submitted on behalf of UAP that as a matter of construction the word "vehicle" in exclusion cl 9 should be read consistently with the definition of the term "motor vehicle" in s 3(1) of the MV Act. The word "vehicle" is not defined in that Act; the term "motor vehicle" is defined as meaning:

"... any vehicle propelled by gas, oil, electricity or any other motive power, not being animal power, required to be licensed, and complying with the requirements necessary for licensing, under the Traffic Act and includes a caravan, trailer or semi-trailer drawn or hauled by a motor vehicle."

It is said that to read the word "vehicle" otherwise would involve such a strained interpretation as to conflict with the statutory prohibition against multiple insurance cover for bodily injury caused by a motor vehicle within the meaning of s 4 of the MV Act. The contention is that the policy definition of "vehicle" in Definitions cl 9 is not applicable to exclusion cl 9 because its context in the latter specifically provides to the contrary (the preamble to the "Definitions" section of the policy states that:

"Whenever appearing in the Policy or any annexes forming part hereof, the following terms shall, unless the context specifically provides to the contrary, be interpreted in the manner described below: (underlining added)).

On this approach the exclusion clause would exclude liability arising out of the use of a ... trailer .... drawn or hauled by a motor vehicle, owned by the insured and required by legislation to be registered or insured.

92 The construction advocated by counsel for UAP reflects the ordinary and fair meaning of the words used in exclusion cl 9 - if the policy definition in cl 9 is put aside. The first question is whether the policy definition of "vehicle" applies; does the context of exclusion cl 9 "specifically provide to the contrary"? The phrase "specifically provides to the contrary" has its own difficulties. It is not usual to speak of a "context" as specifically providing anything - that expression would normally be expected to refer to a provision, a term or a phrase or the like. The more usual formulation of a preamble to a definition clause would speak of the defined terms applying "unless the context otherwise requires". Be that as it may and despite the infelicitous mode of expression I think the intent of the preamble to Definition cl 9 can only have been that it was intended to be read in that way.

93 In my view, application of the basic principles of interpretation and construction explained in Darlington Futures, supra and McCann v Switzerland Insurance, supra, leads to the conclusion that for the purposes of exclusion cl 9 the word "vehicle" was intended to have the same meaning as the term "motor vehicle" in s 3(1) of the MV Act. Exclusion cl 9 is expressly concerned to exclude any liability arising out of the use of vehicles which legislation relating to vehicles requires to be registered or insured. Giving to this a business-like interpretation requires attention to the commercial circumstances and social purposes for which it was written. I accept Mr McCormack's submission that this involves appropriate recognition of the compulsory third party insurance scheme established by the MV Act and the RT Act. Acceptance of the appellant's argument on this would produce the result that (certainly in the circumstances of this case) the UAP policy was intended to, and did, provide insurance cover in addition to the statutory cover and in contravention of s 3R(2) of the MV Act. That construction was plainly not what was intended. In my opinion the clause operates such that the policy does not respond to the appellant's claim. I would uphold the second respondent's notice of contention.

94 In the event therefore, I have come to the conclusion that the appellant succeeds as against the first respondent on grounds (a), (b) and (c), but fails as against the second respondent on grounds (d), (e), (f) and (g) and the second respondent succeeds on its notice of contention against the appellant.

95 I would allow the appeal as against the first respondent but dismiss it as against the second respondent. There was no ground of appeal going to the position of the third respondent and no appearance by him.