Matton Developments Pty Ltd v CGU Insurance Limited

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - WHAT AMOUNTS TO REPUDIATION - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - where the plaintiff alleged the defendant failed to properly investigate the claim and sought only to prove its own version of events - whether a wrongful denial of indemnity pursuant to an insurance policy amounts to a repudiation of the policy - whether the defendant's alleged conduct amounted to a repudiation of the policy - whether the plaintiff accepted any alleged repudiation

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - REMOTENESS AND CAUSATION - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - where the crane had been financed by the plaintiff and default interest was payable by the plaintiff pursuant to its finance - where the policy limited indemnity for loss of revenue - where the plaintiff claimed the defendant's denial of indemnity amounted to a breach of the policy - where the plaintiff claimed loss of revenue in excess of the policy limit and default interest pursuant to its financial arrangements - whether the damages claimed by the plaintiff for loss of revenue and default interest were too remote

INSURANCE - CLAIMS GENERALLY - REFUSAL - GENERALLY - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - whether the policy responds to the claim - whether any exclusion clauses apply to exclude the plaintiff's claim - whether the defendant breached the policy by refusing to pay the plaintiff's claim - whether the defendant breached the duty of utmost good faith by refusing to pay the plaintiff's claim - whether s 54 of the Insurance Contracts Act 1984 (Cth) has any operation so as to prohibit the defendant from refusing the plaintiff's claim

INSURANCE - THE POLICY - CONDITIONS, WARRANTIES AND EXCEPTIONS - EXCLUSION CLAUSES - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - where the policy contained primary cover and additional cover - where the additional cover insured the plaintiff for, inter alia, accidental, sudden and unforeseen damage caused by or resulting from an accidental overload - whether any exclusion clauses applied to exclude the plaintiff's claim, including a claim for additional cover -whether the additional cover is illusory if the exclusion clauses are applicable - whether the exclusion clauses are required to be read down - whether the additional cover is stand-alone cover and not subject to any exclusion clauses

INSURANCE - THE POLICY - OBLIGATION OF UTMOST GOOD FAITH - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - where the plaintiff alleged the defendant failed to properly investigate the claim and sought only to prove its own version of events - where the plaintiff claimed the duty of utmost good faith pursuant to s 13 of the Insurance Contracts Act 1984 (Cth) was a statutory duty the breach of which allows the plaintiff to sue in tort for breach of statutory duty - whether the defendant's alleged conduct amounted to a breach of the duty of utmost good faith - whether the denial of indemnity amounted to a breach of the duty of utmost good faith - what "utmost good faith" means and requires of an insurer - what conduct does or does not breach the duty of utmost good faith - whether the duty of utmost good faith is a statutory duty - what damages are compensable following a breach of the duty of utmost good faith

INSURANCE - THE POLICY - PRINCIPLES OF CONSTRUCTION - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the policy covered accidental, sudden and unforeseen damage to the crane while it was located and in use in the manner in which it was designed to be used - where the policy contained primary cover and additional cover - where the additional cover insured the plaintiff for, inter alia, accidental, sudden and unforeseen damage caused by or resulting from an accidental overload and "owner's indemnity" - where the policy contained an optional extension of "dry hire" - where the plaintiff sought indemnity under the insurance policy - where the defendant denied indemnity claiming the crane was operated on a slope in contravention of Australian standards and manufacturer's guidelines and was therefore excluded from the policy - where the plaintiff denied any contravention and asserted the crane was operated on level ground and the collapse was due to an inherent defect - whether the collapse of the crane's boom was accidental, sudden and unforeseen - whether the crane was located and in use in the manner in which it was designed to be used - whether the collapse of the crane's boom resulted from an accidental overload of the crane - whether accidental, sudden and unforeseen is from the perspective of the plaintiff or from the operator of the crane - whether the crane was dry-hired at the time of the collapse of the boom - whether the owner's indemnity additional cover has any application - whether any exclusion clauses apply to exclude the plaintiff's claim, including a claim for additional cover - whether the additional cover is illusory if the exclusion clauses are applicable - whether the exclusion clauses are required to be read down - whether the additional cover is stand-alone cover and not subject to any exclusion clauses

STATUTES - ACTS OF PARLIAMENT - ENFORCEMENT OF STATUTORY RIGHTS AND REMEDIES - BREACH OF STATUTORY DUTY - GENERALLY - where the defendant provided Contractors and Plant Insurance to the plaintiff in respect of a crane - where the crane was rendered a total loss when the crane's boom collapsed - where the plaintiff was denied indemnity under the insurance policy - where the plaintiff alleged the defendant failed to properly investigate the claim and sought only to prove its own version of events - where the plaintiff claimed the duty of utmost good faith pursuant to s 13 of the Insurance Contracts Act 1984 (Cth) was a statutory duty the breach of which allows the plaintiff to sue in tort for breach of statutory duty - where the plaintiff claimed damages to put itself in the position it would have been but for the alleged breach of the duty of utmost good faith including damages excluded by the insurance policy - whether the defendant's alleged conduct amounted to a breach of the duty of utmost good faith - whether the denial of indemnity amounted to a breach of the duty of utmost good faith - whether the duty of utmost good faith is a statutory duty - whether the Commonwealth Parliament intended for the duty of utmost good faith to give rise to a private action for its breach

Insurance Contracts Act 2013 (Cth), s 8(1), s 12, s 13(1), s 13(2), s 14A, s 54, s 55A

ACN 007 838 584 Pty Ltd v Zurich Australia Insurance Ltd [1997] SASC 6338; (1997) 69 SASR 374, cited

AF & G Robinson v Evans Bros Pty Ltd [1969] VR 855, cited

Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209, considered

Alex Kay Pty Ltd v General Motors Acceptance Corporation [1963] VicRp 66; [1963] VR 458, cited

Allianz Australia Insurance Ltd v Bluescope Steel Ltd [2014] NSWCA 276, cited

Allianz Australia Insurance Limited v Vitale [2014] NSWSC 364, cited

Arturi v Zupps Motors Pty Ltd (1980) 49 FLR 283; [1980] FCA 164, cited

Australia & New Zealand Banking Group v Rqa Accountants Pty Ltd [2013] NSWSC 165, cited

Australian Casualty Co Limited v Federico (1986) 160 CLR 513; [1986] HCA 32, applied

Australian Iron & Steel v Ryan (1957) 97 CLR 89; [1957] HCA 25, cited

Bridgeman v Allied Mutual Insurance Ltd [2000] 1 NZLR 433, cited

Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24, applied

Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975, considered

CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1; [2007] HCA 36, applied

CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680; [2007] NSWCA 193, considered

DA Constable Syndicate 386 v Auckland District Law Society [2010] 3 NZLR 23; [2010] NZCA 237, cited

De Souza v Home & Overseas Co Ltd [1995] LRLR 453, cited

Dhak v Insurance Co of North America (UK) Ltd [1996] 2 All ER 609, cited

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12, cited

Dunn v Pain; Co-operative Insurance Company Australia (1991) 57 SASR 133, cited

Entwells Pty Ltd v National and General Insurance Co Ltd (1991) 5 ACSR 424, distinguished

FAI General Insurance Co Ltd v Maracorp Financial Services Ltd [1994] VicRp 34; [1994] 1 VR 455, cited

Fenton v Thorley & Co Ltd [1903] AC 443, applied

Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd (1993) 176 CLR 332; [1993] HCA 5, cited

Fogarty v CGU Insurance Ltd [2015] ACTSC 44, cited

Fraser v BN Furman (Productions) Ltd [1967] 1 WLR 898, cited

Gibbs Holdings Pty Ltd v Mercantile Mutual Insurance (Australia) Limited [2002] 1 Qd R 17; [2000] QCA 524, cited

Gray v Barr [1971] 2 QB 554, considered

Gutteridge v Commonwealth (Unreported, Supreme Court of Queensland, Ambrose J, 25 June 1993, No 586 of 1993), cited

H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159, cited

Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18, distinguished

Hawley v Luminar Leisure Plc & Ors [2005] EWHC 5, distinguished

Highway Hauliers Pty Ltd v Maxwell [2012] WASC 53, considered

Hurley Contractors Ltd v Farmers Mutual Association (1991) 6 ANZ Ins Cases 61-076, applied

Judd v Suncorp Insurance & Finance (1988) 5 ANZ Insurance Cases 60-832, cited

Kassem v Colonial Mutual General Insurance Co Ltd [2001] NSWCA 38, cited

Kelly v New Zealand Insurance Co Ltd (1996) 130 FLR 97, cited

L'Union Des Assurances De Paris Iard v Sun Alliance Insurance Limited (1995) 8 ANZ Insurance Cases 61-240, applied

Larratt v Bankers & Traders Insurance Co Ltd [1941] NSWStRp 34; (1941) 41 SR (NSW) 215, cited

Linsley v Petrie [1998] 1 VR 427, cited

Lomsargis v National Mutual Life Association of Australasia Limited [2005] 2 Qd R 295; [2005] QSC 199, applied

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69, cited

McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65, cited

Mills v Smith [1964] 1 QB 30, cited

Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, considered

Moss v Sun Alliance Australia Ltd (1990) 55 SASR 145, cited

National and General Insurance Co Limited v Chick [1984] 2 NSWLR 86, cited

O'Connor v S P Bray Ltd (1937) 56 CLR 464; [1937] HCA 18, cited

Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, applied

Rossi v Westbrook [2013] QCA 102, cited

Russell Young Abalone v Traders Prudent Insurance Company Ltd (1993) 7 ANZ Insurance Cases 61-182, cited

S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14, distinguished

Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 2) [2010] FCA 275, cited

Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53, cited

Schiliro v Peppercorn Childcare Centres Pty Ltd (No 2) [2001] 1 Qd R 518; [2000] QCA 018, considered

Slivak v Lurgi (Australia) Pty Ltd (2001) 205 CLR 304; [2001] HCA 6, cited

Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397; [1967] HCA 31, applied

Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd (2009) 226 FLR 306; [2009] WASCA 31, cited

Syddall v National Mutual Life Association of Australasia Ltd [2011] QSC 389, cited

Stuart v Guardian Royal Exchange Assurance of NZ Ltd (No 2) (1998) ANZ Insurance Cases 60-844, cited

Taylor v J Thomas & Son (a firm) (1983) 2 ANZ Insurance Cases 60-524, cited

The Federation Insurance Ltd v R Banks [1984] VicRp 42; [1984] VR 525, cited

Trim Joint District School Board of Management v Kelly [1914] AC 667, cited

Visy Packaging Pty Ltd v Siegwerk Australia Pty Ltd (2013) 301 ALR 560; [2013] FCA 231, cited

Webber v Mutual Community Ltd (1991) 6 ANZ Ins Cas 61-079, cited

Wesfarmers General Insurance Ltd [2013] NSWSC 1975, cited

Westco Australia Pty Ltd v Manufacturer's Mutual Insurance Limited (Unreported, D M Campbell, Kelly and Derrington JJ, Full Court of the Supreme Court of Queensland, Appeal No 83 of 1983, 22 May 1984), applied

Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17, cited

Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd (2007) 209 FLR 247; [2007] WASC 62, cited

G A Thompson QC, with K F Holyoak, for the defendant

The sequence of events and the location of the Crane

The cause of the collapse - the plaintiff's experts

The cause of the collapse - the defendant's experts

Does the Policy respond to the plaintiff's claim?

If the defendant breached the implied duty what losses are recoverable?

[1] This case concerns a refusal by an insurance company to indemnify the owner of a crane for damage caused to the crane when the boom collapsed.

[2] The plaintiff acquired a 2007 Liebherr LTR100 Telescopic Crawler Crane in May 2007.

[3] Pursuant to a written contract of insurance Policy No CPE20000688, the defendant provided Contractors and Plant Insurance to the plaintiff in respect of the Crane for the period 21 November 2008 to 15 November 2009.

[4] The plaintiff was in the business of providing the Crane and a crane operator to third parties for financial reward.

[5] Prior to 30 January 2009 the plaintiff contracted with Gary Sprecak of G & M Panel Constructions Pty Ltd for the hire of the Crane and a crane operator. The services of the crane operator, James Hitaua, were supplied by Pinjarra Constructions Pty Ltd. Some of the directors and shareholders of the plaintiff were common to Pinjarra.[1]

[6] Between 30 January 2009 and 1 February 2009 the Crane was being used to lift and place about 25 concrete tilt panels, each weighing between approximately 36 and 38 tonnes. The tilt panels were part of the construction of an extension to a factory situated at 58 Perivale Street, Darra in Queensland.

[7] On 1 February 2009, in the course of seeking to lift the second last concrete tilt panel into position (panel 30), the Crane's boom collapsed effectively damaging the Crane beyond economical repair.

[8] In early February 2009 the plaintiff notified the defendant of the damage to the Crane. On 9 February 2009 the plaintiff submitted a claim to the defendant seeking indemnity under the Policy for the damage to the Crane.

[9] By letter dated 1 April 2009 the defendant informed the plaintiff that it refused to indemnify the plaintiff under the Policy for the damage to the Crane primarily because the damage was:[2]**

(a) not "accidental, sudden and unforseen" within the meaning of that expression in the Policy; and

(b) excluded by operation of the exclusions contained in clauses 21, 26 and 27 of the Policy.

[10] Relevantly the letter of 1 April 2009 stated:[3]

"The policy expressly requires that equipment insured is used 'in the manner in which it was designed to be used'.

The expert evidence secured to date strongly evidences that the machine was being used well outside of its design specifications and operating manuals and therefore policy exclusion 27 applies to exclude this damage.

Solely as a result of the decision to operate the machine well beyond manufacturers' operational design the crane catastrophically failed and was extensively damaged."

**[11] Whilst the parties have identified numerous issues for determination, the resolution of many of these issues flows from identifying the sequence of events and the cause of the collapse.

[12] There are, in essence, two competing hypothesis. The plaintiff's pleaded case is that the boom of the Crane collapsed because of a failure of the heel weld joints that resulted from a structural pre-existing weakness near the boom heel weld joints on the right-hand side of the boom.[4] At the time of the collapse the Crane was stationary, level and on level ground.[5]

[13] The defendant's pleaded case is that the boom of the Crane collapsed due to structural overload as a consequence of a side load induced by the Crane operating on a 7 degree slope.[6]

[14] It is trite to say that Cranes simply do not collapse. There must have been a cause for the collapse.

[15] For the plaintiff's hypothesis to be accepted there are three primary factors that are required to be established:**

(a) the Crane, at the time of collapse of the boom, was operating on level or near level ground;

(b) the boom of the Crane collapsed because of a pre-existing defect; and

(c) the Crane came to rest in its final position as depicted in the bundle of photographs (exhibits 1 and 12) on an agreed slope of 7 degrees because it was inadvertently driven forward to this position by the operator, James Hitaua.[7]

**[16] For the defendant's hypothesis to be accepted there is really only one factor that requires to be established, namely that at the time the boom collapsed the Crane was being operated from its final position as depicted in the photographs on an agreed 7 degree incline.

[17] The case proceeded by way of an agreed list of issues (exhibit 44). This list was subsequently amended (exhibit 69). The amended agreed list of issues exceeds seven pages. The issues may be distilled as follows:**

(a) What was the sequence of events leading to the collapse of the boom?

(b) At the time of the collapse of the boom what was the location of the Crane? (Was it being operated on level ground or on a 7º slope?)

(c) What caused the collapse of the boom of the Crane?

(d) Does the Policy respond to the plaintiff's claim?

(e) Do any of the exclusions apply to exclude the plaintiff's claim?

(f) Does s 54 of the Insurance Contracts Act 1984 (Cth) ("the Act") operate so as to prohibit the defendant from refusing the plaintiff's claim?

(g) Has the defendant breached the Policy by refusing to pay the plaintiff's claim?

(h) If so, what losses are recoverable by the plaintiff?

(i) What is the scope of the duty of utmost good faith implied into the Policy by s 13 of the Act?

(j) Does s 13 of the Act (properly construed) impose a statutory duty of utmost good faith on the defendant over and above the implied duty?

(k) Has the defendant breached either the implied duty or the alleged statutory duty?

(l) If the defendant breached the implied duty what losses are recoverable by the plaintiff?

(m) If the defendant breached the statutory duty what losses are recoverable by the plaintiff?

[18] The resolution of a number of these issues turns upon a proper construction of the Policy. It is therefore necessary to set out the relevant clauses of the Policy.

[19] The Product Disclosure Statement identifies that the Policy contains two types of cover. Section 1 deals with Material Damage cover. Relevantly, this covers insured damage to plant and machinery subject to the terms, conditions and exclusions of the Policy. Section 2 deals with Third Party Property Damage cover. With each type of cover, a range of additional benefits are included and are shown in the Policy wording under "Additional Benefits - Section 1" on pages 7 and 8; and "Additional Benefits - Section 2" on page 14.

[20] The Policy identifies, inter alia, the following "Words with special meanings":[8]**

• beginning with the occurrence of insured damage, and
• ending on the earlier of:

• - six (6) months after the insured damage occurred, or
  • - the date on which the results of the business are no longer affected by the insured damage.

Insured damage Accidental sudden and unforeseen physical loss of or damage to a machine which occurs during the period of insurance and requires immediate repair or replacement to allow continuation of use.

Machine Where referred to in this Policy either a static machine or a mobile machine.

Market value The cost to buy an equivalent static or mobile machine of the same age, condition, model and make, as assessed by us.

Mobile machine or Any type of machine or vehicle on wheels or self

Your vehicle - laid track made or intended to be propelled by other than manual or animal power, provided they are not used for private and domestic purposes.

Period of Insurance The period shown in the Policy Schedule.

Policy Schedule The schedule of insurance or any endorsement schedule we give you.

Sum Insured The sum specified in the Policy Schedule."

[21] Section 1 which contains the primary and additional cover and exclusion clauses relevantly provides:[9]

We will cover you for insured damage to a machine while it is located and in use in the manner in which it was designed to be used, or in transit by land, sea or air between locations, anywhere within Australia and whether at work, at rest, or being dismantled for the purpose of cleaning or overhauling, in the course of these operations, or in the course of subsequent re-assembly, but only after successful initial commissioning.

Where we in our sole discretion accept that there has been a total loss of a machine, we will pay the lesser of the Sum Insured or the current market value at the time of the loss, for the machine as specified in the Policy Schedule

However if the machine was under 2 years of age from the date of original commissioning as a new machine at the time of loss or damage, we will pay you the Sum Insured.

Our liability will not exceed in respect of any loss an amount greater than the Sum Insured stated in the Policy Schedule.

We will pay for insured damage caused by or resulting from accidental overloading which is non-deliberate and clearly unintentional.

The onus rests with you to substantiate any claims relating to accidental overload.

A breach or non-compliance with any provision of this Policy without the knowledge of you or your responsible officer(s) will not affect your right to the cover under this Policy.

However, where you or your responsible officer(s) become aware of such breach or non-compliance, you must notify us immediately.

The following extensions apply where indicated on the Policy Schedule as being operative.

If the business carried on by you is interrupted or interfered with as a consequence of insured damage to a machine which is covered under this Policy and for which we have admitted liability, this extension operates to indemnify you during the indemnity period only against loss of revenue and an increase in the cost of working resulting from such interruption or interference. Provided that:

(a) our total liability for any one period of insurance will not exceed the amount specified in the Policy Schedule.

(b) our liability under this extension is limited to the loss of revenue and an increase in the cost of working and the amount payable will be limited to the portion of the loss of revenue and an increase in the cost of working affected by the machine which has suffered insured damage.

(e) we will not be liable for loss, damage or costs incurred by you during the time excess.

(f) the amount of each claim otherwise payable will be reduced by the amount of excess shown on the Policy Schedule.

(g) the indemnity period will not exceed six (6) months.

We will pay for the machines specified in the Policy Schedule for this extension for insured damage to a machine while on hire to another party where you did not supply an operator. We will not pay for claims under this extension:

(a) unless you have taken all reasonable steps to ensure that the hirer, or any other person who will operate the machine, is authorised to do so under any relevant legislation.

(b) unless you have provided the hirer with adequate operating instructions and the loss or damage was caused by incorrect operation.

(c) for theft occasioned by any person to whom your machine is let on hire.

(d) where another policy has been effected for the loss by a party other than you, however, if such cover is not as extensive as this policy we will pay for all losses arising from the difference in the cover and conditions subject to the conditions and exclusions of this Policy.

19. the amount of the excess specified in the Policy Schedule.

1. insured damage occurring while any machine is undergoing a test of any kind or is being used in any manner or for any purpose other than that for which it was designed.
2. insured damage if, at the time of an accident, a machine being used as a crane or lifting device was:

(a) being operated with your knowledge or the knowledge of any of your agents or employees or by any person in contravention of any applicable statutory requirement; or

(b) loaded in excess of the safe working load specified by any relevant statutory authority manufacturer's specification; or

(c) being used in any raising or lowering operation in which a single load is shared between two or more cranes or lifting devices except when covered under optional extension 'Dual or multiple lifting' and that optional extension is noted on the Policy Schedule;

(d) not used in compliance with the relevant Australian standard.

1. insured damage to any machine which is, or has, been operated contrary to the manufacturers guidelines."

[22] The contractors plant and machinery insurance schedule relevantly states:[10]

PERIOD OF INSURANCE: From: 21/11/2008 To: 15/11/2009

Please note that this Schedule is a brief summary of the cover provided and should be read in conjunction with the Policy Wordings.

• Recovery costs
• Expediting costs
• Return of machine(s)
• Hired in machines
• Automatic additions and deletions
• Damage to goods lifted - $10,000 (unless extended below)
• Appreciation
• Owner's indemnity
• Accidental overload
• Emergency travel costs
• Sign writing

Exclusions: Refer to the CPE Mobile Plant & Machinery Policy Wording, underwritten by CGU Insurance Limited.

Excess: 1% of sum insured subject to a minimum of:

Operational The following Optional Extensions form part

[23] On the morning of the second day of the trial the court viewed a 100 tonne capacity Leibherr LTR1100 Crawler Crane and a precast concrete panel and witnessed a demonstration of the crane lifting the concrete panel.

[24] The crane and concrete panel were of similar dimensions to the actual Crane being operated on 1 February 2009 and panel 30. The general dimensions of the Crane are contained in exhibit 20. The Crane is approximately 13 metres in length. The boom can extend to 52 metres and has a maximum elevation of 82 degrees. The length of the actual tracks of the Crane are approximately 26.4 metres.[11] The weight of an LTR1100 is approximately 100 tonnes. Panel 30 was approximately 14 metres in length. It weighed approximately 39.2 tonnes.

[25] The view and the demonstration were conducted in accordance with a protocol.[12] The relevant paragraph of the protocol dealing with the demonstration is [6]. The court did not observe the crane crawling without a load but did observe the crane crawling with a load. The demonstration did not however include the crane slewing the panel 180 degrees or the crane crawling under load for 10 metres as proposed.[13]

[26] The hard drive containing a video clip of the view and demonstration was tendered by consent.[14] The hard drive of the video was tendered on the basis that none of the oral commentary accompanying the video constituted evidence in the case.[15]

The sequence of events and the location of the Crane

[27] James Hitaua was the operator of the Crane. The services of Hitaua as operator were supplied by the plaintiff through Pinjarra. Hitaua explained that the purpose of Pinjarra was to provide to the plaintiff Hitaua's services as operator of the Crane.[16] The quotation provided to G & M Panel Constructions by the plaintiff dated 7 January 2009 quotes not only hourly rates for the Crane but also quotes overtime rates for the "Driver" showing that the plaintiff was supplying both the Crane and the operator.[17]

[28] Hitaua obtained his licence to operate the Crane in or about February 2008.[18] To obtain this licence (called a C1 licence) Hitaua required a minimum of 300 hours of operating a Crane. He completed those hours over a period of six to seven years with a person who operated a 70 tonne crane.[19] He also received training in the operation of the Crane from a company called Baden Cranes. The training was conducted over a week and covered the functions, operations and capacity of the Crane.[20]

[29] There is a computer display panel in the cabin of the Crane which includes a spirit level indicator that shows the level of the Crane.[21] Hitaua emphasised that in operating the Crane one had to refer to this spirit level "every time" because the Crane must be level.[22]

[30] There is very little difference between the parties' positions as to the relevant sequence of events leading to the collapse of the boom of the Crane. The panels were placed into position over the course of three days in accordance with a document described as a "lift plan".[23] Sprecak of G & M Panel Constructions prepared this plan. The lift plan identified the building to be constructed, the location of each stack of panels and information concerning each panel within a stack (including the panel number and final location).[24]

[31] Between 30 January 2009 and 1 February 2009 Hitaua operated the Crane to lift and erect concrete tilt panels on the project site. On Friday, 30 January 2009, lifting took place towards the back of the factory. Approximately 12 panels were placed on the Friday.[25] Further panels were placed on Saturday, 31 January 2009, leaving approximately five or six panels to be lifted and placed on Sunday, 1 February 2009. The sequence in which the remaining panels were to be erected was 29, 34, 32, 31, 30 and 33.[26] At the time of the collapse of the boom the Crane was loaded with panel 30. Photographs 2 and 23 of exhibit 1 identify the placement positions of panels 29, 31, 32 and 34 prior to the placement of panel 30. Panel 30 was to be placed between panels 29 and 31. For the purposes of lifting the panels the Crane was set up in operating mode 5039. Hitaua referred to code 5039 as the working mode to operate and lift panels.[27] This code, 5039, sets the length of the boom at 26.4 metres at approximately 71 degrees. This operating mode allowed a maximum lateral inclination of 0.3 degrees measured at the pin at the base of the boom. Hitaua readily acknowledged that in the operating mode 5039 one had to operate the Crane on level ground. This was something he had known since receiving his training from Baden Cranes.[28]

[32] Panel 30 was the second last panel to be placed on the exterior wall facing the road. The placement of panel 30 was more difficult than the previous panels because the Crane could not drive straight towards the placement position. This was because, as evidenced by photograph 6 of exhibit 1, panel 33, which was the bottom panel of the stack to be placed last, was positioned in front of the gap where panel 30 was to be placed between the already erected panels 29 and 31.

[33] Hitaua noticed that the ground along which the Crane had to travel for the purposes of placing panel 30 had deteriorated because of the operation of the Crane. He formed the view that he did not have a level platform in order to "walk on for panel 30".[29] In order to place panel 30 he had to move the Crane "right up hard" against panel 31.[30] He had one of Sprecak's workers use a measuring tape to measure the radius from the base of the footing to the centre of the slew. The measured spot was marked with a cross using white spray paint.[31] The white cross indicated the measurement of 6.5 metres radius. It was necessary for Hitaua to crawl the Crane to the centre of his slewing circle onto the white cross in order to have a radius of 6.5 metres for the placement of panel 30.[32] To permit Hitaua to crawl the Crane hard against panel 31 three instead of five props or braces were affixed to panel 31.[33] Only three props were affixed to panel 31 because the intention was to walk the Crane in between the props for the purposes of placing panel 30.[34]

[34] Steps were taken in an attempt to level the ground over which the Crane had to traverse for the purposes of placing panel 30. Sprecak, at the request of Hitaua,[35] instructed one of his workers, Maurice Clark, to place concrete rubble between the stack of panels and the building under construction.[36] Maurice Clark used the excavator to break up the caster beds inside the building on which the stacks of panels had sat.[37] Hitaua referred to this concrete as "sacrificial concrete" which was concrete that had no reinforcing.[38] After Maurice Clark had completed his task Sprecak observed that the ground "looked nice and flat".[39]

[35] Hitaua then positioned the Crane against the long edge of panel 30 as it sat on the caster bed on top of panel 33. The front of the tracks of the Crane were facing the building about 2 metres behind the edge of panel 30.[40] Hitaua then slewed the boom of the Crane to about 90 degrees from straight ahead towards the building. The riggers attached the rigging gear to panel 30 and the hook of the Crane. Hitaua then disengaged the slew brake and lifted panel 30 off panel 33 raising it to a vertical position.[41] Panel 30 was then slewed anti-clockwise about 125 degrees and lowered so that the base was on the ground. The Crane held panel 30 in the vertical position while the riggers used an elevated work platform to attach the props to panel 30.[42]

[36] Whilst the props were being affixed to panel 30 Hitaua did something which he had not done in relation to lifting the other panels. He left the cabin of the Crane to work on the rubble platform over which the Crane had to crawl in order to place panel 30 in the footing.[43] According to Hitaua he worked on levelling the rubble for approximately 10 to 15 minutes.[44] Sprecak, however, thought that Hitaua took 30 minutes or maybe a bit longer.[45]

[37] After Hitaua had worked on the rubble he was of the opinion that the ground looked level to him and that it was fine.[46] Sprecak, however, did not share this opinion. He accepted in cross-examination that he questioned Hitaua as to the "ramp" being too high.[47]

[38] Caution should be exercised in relation to the use of the word "ramp". In the joint expert report of 16 November 2012, the experts agreed on the following point:[48]

"The use of the term ramp is eschewed. Loose rubble was placed on the ground in front of the crane. The rubble was proud of the surrounding ground surface. The rubble was overfilled deliberately with the intention of it being compressed by the crane."

My use of the word "ramp" in this judgment should therefore be understood in this context. It is clear from the evidence of both Hitaua and Sprecak that even though the rubble was high, they expected the combined weight of the Crane and panel 30 to compress the rubble ramp which had been created by Hitaua.[49]

[39] I accept that Sprecak told Hitaua that the ramp that he had constructed was too high. The statement is consistent with a statutory declaration sworn by Sprecak on 27 February 2009 in which he stated:[50]

"At some point about then, James the crane driver ordered Maurice to get the loose concrete from the broken out voids in the panels and pile it into a ramp or platform for the crane to work on. I questioned James that the ramp was too high."

[40] Sprecak's evidence is also consistent with his answers given in a record of interview with officers from Workplace Health and Safety Queensland conducted on 23 November 2009:[51]

"Gary said: Oh yeah well before we put in before we put as we were going to put 30 panel 30 in yeah then he said he was gunna build ah actually he didn't tell me that he was gunna build a ramp. I went up to the office and that's I come back out and that's when I seen nothing was happening and then yeah he started throwing all this gravel all this rubble in here.

Gary said: Oh with the bobcat and excavator and that's when... ...

Gary said: Yeah and that's when I said to him I said to him ah don't you think that's a little bit high. You know I said you should knock that down cause you don't need you don't need that. You know probably only two bits two or three bits of concrete just to keep it level keep your toe of your crane it's got to be flat on the ground and that's where you get your troubles if you have your rocking now..."

[41] Hitaua's denial of this conversation was both unconvincing and equivocal:[52]

"Did Mr Sprecak have a conversation with you about building that rubble up?---Yes.

Did he tell you that he thought it was too high?---No.

He didn't tell you that?---No. He might have but I can't recall it.

'Don't you think that's a little bit high' - he could have said that?---I don't know.

All right. And, 'you should knock it down because you don't need that' - did he say that?---I don't know. I can't recall."

[42] James Strong, who was working on the site as a rigger, accepted in cross-examination that Sprecak said to Hitaua that the ramp he had built was too high.[53] Hitaua did not heed this warning, responding to Sprecak with words to the effect:[54]

"When the red light is flashing, do not listen to Gary [Sprecak]."

[43] Both Sprecak and Strong in cross-examination were reluctant to accept that Hitaua made such a response. However, when Sprecak recalled this conversation in his statutory declaration of 10 February 2009 and when Strong recalled the conversation in his statutory declaration of 13 May 2009 both refer to this response having been made by Hitaua. Strong ultimately accepted that if the conversation was as recorded in his statutory declaration then "that's what happened".[55] Hitaua's response should not be understood as suggesting that the red light on the Crane was actually flashing. Rather, the response suggests that he as the operator of the Crane was ultimately responsible for ensuring that it was operating on level ground. As the operator of the Crane he had the last say and had to be satisfied with the level of the ground upon which the Crane would be operating.[56] Hitaua knew that if the Crane was operated on a slope it exposed the Crane to a risk that there might be a failure of the boom or other structural members.[57] He knew that if the Crane was to operate at more than 1 degree gradient such a situation had to be separately assessed:[58]

[44] Upon completion of the rubble platform, Hitaua returned to the cabin of the Crane. Sprecak was acting as dogman. Under direction from Sprecak, Hitaua slewed the boom of the Crane clockwise from the position where the props had been affixed. The panel was about 600mm to 800mm off the ground and was guided by the two riggers, James Strong and David Pascoe.[59] When panel 30 reached about 90 degrees, Sprecak directed Hitaua to lower panel 30 to be closer to the ground. This was done.

[45] It is at this point of the narrative that the parties part company. The three eyewitnesses to the collapse called by the plaintiff, Hitaua, Sprecak and Strong, gave evidence that at the time of the collapse the Crane was being operated on level ground. By reference to a photograph (exhibit 40), Hitaua marked with the letter "B" where he says the front tracks of the Crane were at the time of the collapse of the boom. An eyewitness called by the defendant, Stanley Corbett, identified that the position of the front tracks of the Crane were not in the location marked "B" on exhibit 40 but were in the position as shown in another photograph (exhibit 65). This photograph shows the Crane in its final resting position.

[46] David Hartigan of Field Engineers measured the angle of the Crane's superstructure shortly after the collapse as 7 degrees from front to rear. There is no dispute as to the correctness of Hartigan's measurement. It follows that if the Crane was in the final position as shown in exhibit 65 at the time of the collapse of the boom, then it was being operated well outside the manufacturer's recommended level of 0.3 degrees. In order to determine whether the Crane was being operated on level ground as asserted by the eyewitnesses called by the plaintiff it is necessary to analyse their evidence in some detail.

[47] Hitaua's evidence was that once he had brought the panel back to 90 degrees over panel 33 he had to slew panel 30 around to his right approximately 45 degrees.[60] Panel 30 was pointing in the direction where it was going to be placed. He commenced to track forward until he came to the rubble which he could see from the cabin.[61] It is this position that Hitaua marked with the letter "B" on exhibit 40.

[48] Hitaua's evidence as to the sequence of events thereafter is as follows:[62]

"What happened then?---I told Gary I'm going to slew around a wee bit more.

Yep?--- - - - in its right - in its right position so I can place it.

All right?---So I can track forward a wee bit more then I can drop it into place.

As you're doing this, what functions of the - sorry, are you looking at the functions of the crane on the computer?---Yes.

Which functions are you looking at?---I always look at the - the bubble.

Yep. Which shows you what?---The bubble which shows you the level of the crane.

Which shows what?---It shows the capacity - capacity - if the load decides to move or - move, the bar graph might change.

All right. Now, you were telling his Honour you looked at these two thing?---Yes.

And what did you see? What did you see?---What did I see?

Yes?---What I saw was the - the ground - the bubble was level.

Yep?---Okay? And the bar graph was - was - I think it was below 75 per cent.

Within capacity?---Just on 50 - yes, it was in capacity.

All right. Now, you've just told us you've got - you've told Gary you're going to move the panel further around?---Yes.

So what did you do then?---Well, I wanted to - I started to slew around. And just when that happened, two or three seconds, I heard two big bangs.

As you engaged the - did you engage the slew right motion, is that what you - - -?---Yes.

What happened after you engaged the slew right motion to move it around?---It wouldn't - all I heard was two big bangs to slew right.

What did you say before that? It wouldn't? Is that what you said?---Yeah.

What do you mean by that?----It wouldn't let me slew around.

Have you ever encountered this phenomenon before?---No. No.

And sorry, and then you said you heard two bangs?---Two big bangs. In three - in between three or four seconds the whole boom come down.

And how did you - what was your first indication that something had gone wrong?---Oh - oh, just - just the windscreen in front of me just came towards me and shattered.

And how did you react when that happened?---Oh, all I could remember is this - this - my hands pushed forward and my - and my head went to the left.

Yes?---Because I - because I got cuts and - and grazes from the glass.

And you indicated pushing your hands forward; you can recall doing that?---Yes."

[49] Hitaua denied that he drove the Crane to the position shown in photograph 4 of exhibit 1.[63] In cross-examination Hitaua insisted that the Crane was level at all times.[64] In a further exchange in cross-examination Hitaua not only stated that the Crane was level at all times but further that it was "dead level":[65]

"... I suggest to you, Mr Hitaua, that the crane was exactly where it's shown in the photograph [photograph 13 of exhibit 12] when the boom collapsed?---Well, if that's what you said, just, you're wrong, mate, because that crane was dead level."

[50] The plaintiff submitted that I should accept Hitaua's evidence as to the above outlined sequence of events. Two bases for this submission were identified. First, Hitaua's denial as to the position of the Crane at the time of the collapse of the boom had been consistent throughout the investigation into the collapse and the trial.[66] Secondly, Hitaua was aware of his obligations to operate the Crane in accordance with the operating manual and in particular on level ground.[67] I do not accept this submission. There are three aspects of Hitaua's evidence which cannot be accepted. The first is that at the time of the collapse of the boom the Crane was being operated on level ground in the position marked "B" on exhibit 40. Secondly, I do not accept that the Crane came to be in its final position (as evidenced in exhibit 12, photograph 13) by being accidently driven forward by Hitaua. Thirdly, I do not accept that Hitaua was, in the course of operating the Crane, "always" looking at the spirit level.

[51] As to the first issue, Hitaua's evidence that he was operating the Crane on level ground is inconsistent with the photographic evidence which shows the final position of the Crane. The final position of the Crane shown in the photographs is exactly where Hitaua intended to crawl the Crane in order to reach the white cross. This is basically the same position identified by Corbett in exhibit 65. Hitaua's intention was to crawl the Crane "right up hard" against panel 31. He therefore intended to crawl the Crane over the rubble which he had constructed beyond the final position of the Crane as shown in the photographic evidence.

[52] According to Hitaua after he heard the two bangs the boom collapsed within three or four seconds.[68] If the Crane was in the position as suggested by Hitaua it could not possibly have driven to its final position as shown in the photographs. This is because there was unchallenged expert evidence of Hartigan[69] that it would have taken the Crane 12 seconds to travel from point "B" to the final position of the Crane after the collapse. The defendant, in [14] of its written submissions, identifies a number of factors which support a finding that the Crane was not being operated on level ground at the time the boom collapsed:**

(a) Hitaua's account is inconsistent with the location of the counterweights which had fallen directly behind the right hand track of the Crane as shown in its final resting position. The joint expert report by Cusack, Hartigan and Spanswick dated 16 November 2012 (exhibit 33) identified as a point of agreement between Cusack and Hartigan that the counterweight position on the ground indicates that the Crane was in the final position at the time that the counterweights were dislodged by the boom.

(b) If the Crane had been in the position identified by Hitaua at the time of the collapse, one would expect some evidence of drag marks on the concrete slab from the boom being dragged by the Crane if it had moved forward from the position marked by Hitaua as "B". This absence of drag marks was identified by Hartigan in his report of 27 November 2014.[70] He was not challenged in cross-examination on this point.

(c) As is evidenced by photograph 3 of exhibit 12, the hoist rope sheave shaft penetrated the concrete slab and is surrounded by concrete fragments. As submitted by the defendant:[71]

"This suggests that the sheave shaft hit the concrete surface with a high speed (Hartigan, Ex 64 para 14(d)). Mr Hartigan was not challenged on this point in cross-examination. Cusack accepted the boom fell quickly (tp.5-14 ln.5). Even accepting that the Crane (in creeping gear and moving at a maximum speed in that gear of 28 cm per second) could have moved slightly forward during the time the boom was falling if the Crane was crawling forward, the fact that the boom has not been dragged after it struck the ground is powerful evidence the crane was not in the position (position "B" on Ex 40) asserted by Hitaua."

(d) The section of the boom's side wall that remained connected to the Crane's superstructure after the collapse did not appear to have been subject to tensile load. This remained the only connection between the boom and the Crane. For the Crane to have travelled forward, it would have had to drag the boom by this section of plate.[72]

(e) Photograph 1 of exhibit 12 shows that the rear right corner of the utility tray of the vehicle damaged during the collapse had been struck from above by the boom tip and remained beneath it. The defendant therefore submits that if the boom had been dragged forward by the Crane the boom tip would be either under the utility tray or pulled up against it.[73] I accept this submission. It is entirely consistent with the photographic evidence and the Crane not moving any further forward after the boom had collapsed.

**[53] I consider the evidence of Sprecak, Strong and Corbett below. For the reasons identified below a consideration of the totality of their evidence is also inconsistent with Hitaua's assertion that the Crane was operating on level ground at the time the boom collapsed.

[54] The second aspect of Hitaua's evidence which I reject is the suggestion that by pushing his hands forward after the windscreen of the cabin shattered this caused the Crane to move from position "B" on exhibit 40 to the Crane's final position. The plaintiff's case as originally pleaded was that the collapse of the Crane's boom caused the Crane to lurch forward about 2 metres and onto the rubble. The original source of this information appears to be Hitaua and Steven Clark. Hartigan recorded in his first report dated 18 February 2009 the following:[74]

"During interview with myself and Greg McCosker [a loss adjuster], both the Operator James Hitaua, and the Supervisor, Steven Clark stated that the crane was working on the level ground to the rear of where the crane was seen sitting at the time of site inspection [9 February 2009]. They have stated that the crane was pushed to the final position by the inertia of the tipping boom."

[55] On the first day of the trial however, Senior Counsel for the plaintiff in opening Hitaua's evidence stated:[75]

"He will say at this time he then heard in quick succession two bangs and suddenly the boom collapsed without warning. He will say that the windscreen shattered over him and that in terror he turned his head away to avoid being hit in the face with glass and pushed his hands forward quite strenuously. His hands were on the levers which drive the crane at the same time, so he did this motion, and that, of course, meant as the crane was under power it moved forward."

[56] Unsurprisingly objection was taken by Senior Counsel for the defendant on the basis that the evidence as opened was inconsistent with the plaintiff's pleaded case.[76] I therefore granted leave to the plaintiff to amend its pleading on the first day of trial to amend [17](c) of the amended fresh statement of claim which now pleads:

i. the Crane to drive lurch forward about 2 metres and onto the rubble pleaded in paragraph 12(f) due to the action of the operator pushing the handle leavers that were attached to the foot pedals away from his body in a forward motion;"

**[57] The change in the plaintiff's case as to how the Crane came to be in its final resting position may be explained by the fact that the expert evidence did not support any theory that the collapse of the boom would have propelled the Crane forward. To the contrary, the unchallenged expert evidence suggested that the collapse of the boom may have had the contrary effect.[77]

[58] Hitaua in any event, did not give evidence in accordance with the case as opened. He did not in fact say that he pushed the levers of the Crane forward. His evidence, which I have quoted above, goes no further than an assertion that he pushed his hands forward and his head to the left.[78] He did not give evidence that the Crane moved forward up the ramp as a consequence of him pushing the levers forward. In cross-examination Hitaua reverted to a version he originally gave to investigators, namely that the collapse of the boom and panel 30 caused the Crane to be catapulted forward into the rubble and up the ramp.[79]

[59] On the plaintiff's case there is no logical explanation as to how the Crane came to be in its final position. The plaintiff expressly abandoned any case based on the Crane being catapulted forward because of the collapse of the boom and panel 30. Hitaua ultimately did not give evidence that the Crane was unintentionally driven forward up the ramp because of him thrusting his hands forward. As I have already observed, such a scenario should not in any event be accepted. Hitaua himself described the crawling speed of the Crane as "real slow".[80] The crawling speed of the Crane is 27.8 centimetres per second.[81] Given the time lapse of 12 seconds to drive from point "B" to the final position of the Crane, it is improbable that the Crane was inadvertently driven this distance by Hitaua and in such a straight line that it came to rest exactly between the props of panel 31. The probability of such a scenario may be further discounted when one has regard to the lack of any drag marks and the position of the counterweights.

[60] The third aspect of Hitaua's evidence which I reject is that he was at all times observing the spirit level on the computer panel in the cabin of the Crane. It is not disputed that the Crane came to rest at a 7 degree angle. I find that Hitaua drove the Crane into this position intending to drive it further to the painted X near panel 31. There is no suggestion that the spirit level was not operating correctly. Hitaua had been warned by Sprecak that the rubble ramp he had constructed was too high. Whilst I accept that Hitaua's expectation (from previous experience) was that the rubble would crush under the combined weight of the Crane and panel 30, the rubble did not in fact crush as expected. This resulted in Hitaua crawling the Crane up the rubble ramp for approximately 12 seconds. Had he been observing the spirit level it must have been obvious to him that the Crane was not being operated on level ground. His evidence that "the bubble was level"[82] (at all times) must be rejected.

[61] There is a fourth contentious aspect of Hitaua's evidence. This concerns whether he was crawling panel 30 forward with the boom at 90 degrees or 45 degrees. Hitaua's evidence was that prior to crawling the Crane forward he slewed it around another 45 degrees.[83] The defendant submits that Hitaua's evidence that the boom was at 45 degrees is inconsistent with previous statements he has made.[84] In particular, the defendant refers to the accounts in the McCosker interview of 18 March 2009[85] and in Cusack's report of 21 May 2009[86] where it is suggested that the boom was at 90 degrees when the Crane was moved forward. It is not necessary for me to resolve this factual issue. Irrespective of whether the boom was at 90 degrees or 45 degrees, the Crane was not being operated on level ground and the side load induced by the Crane operating on a 7 degree slope was sufficient to cause the collapse of the boom whether it was at 90 degrees or 45 degrees.

[62] It may however, be accepted that Hitaua, in order to place panel 30 into position tried to "slew around a wee bit more" to the right so he could track forward "a wee bit more".[87] The Crane would not let him slew and then he heard two big bangs. The language used by Hitaua in his evidence-in-chief is significant. His use of the words "track forward a wee bit more then I can drop it into place" suggests that he was close to his intended final position for the placement of panel 30, which was hard against panel 31. If Hitaua was in the position on level ground as he suggests it would take him approximately 12 seconds to crawl the Crane to the position shown in the photographs. This is hardly tracking forward a "wee bit more" to drop panel 30 into position. What his evidence does suggest is that Hitaua had crawled the Crane to the position shown in the photographs (exhibit 12) and whilst in that position on a 7 degree slope had attempted to slew the panel right, albeit a "wee bit more". This is when the boom collapsed.

[63] Sprecak's evidence-in-chief was that at the time that the boom collapsed the Crane was on level ground.[88] In cross-examination Sprecak was initially emphatic that the Crane at the time of the collapse was on level ground.[89] When pressed however, Sprecak agreed that the Crane had commenced on the ramp and was "slightly" out of level at the time of the collapse.[90]

[64] Sprecak's evidence (that at the time of the collapse of the boom the Crane was on level ground) must be rejected. First, it must be rejected for the reasons I have identified above in relation to the evidence of Hitaua. Further, Sprecak's evidence that the Crane was level is inconsistent with more contemporaneous statements he made after the collapse. In this respect, the defendant tendered the transcript of an interview between Sprecak and Workplace Health and Safety Officers (exhibit 8) and a statutory declaration made by Sprecak on 27 February 2009 (exhibit 7). In the statutory declaration he stated: "[t]he crane was in the position that it was in after the accident."[91] In the record of interview (exhibit 8) Sprecak stated that the Crane was in the position depicted in the photographs when the boom collapsed and he proffered an opinion that the cause of the collapse was because the Crane was operating on a slope:[92]

"Andrew [Schostakowski, Workplace Health and Safety Queensland] said: Um from like your experience of operating cranes

and your industry experience I suppose do you know do you have any do you know any of what sort of your opinion as far as um why the boom sort of has collapsed?

Gary said: That's what I said before you know like if it's up like that it's gotta you gotta have it level or within you know you can't have it too far out of level.

[65] There is no dispute that Sprecak made those two statements. The statements are in his statutory declaration and record of interview. They are admissible as evidence of the facts stated therein.[93] In determining the weight (if any) to be attached to these statements I am required to have regard to all the circumstances from which an inference can reasonably be drawn as to the accuracy or otherwise of the statement.[94]

[66] Sprecak did not deny making the statements. He sought to explain the inconsistency between his statement in the statutory declaration to which I have referred and his evidence-in-chief:[95]

"MR THOMPSON: I see. Why did you say it was in that position - - -?---Well that - this - back then, my - I went all over the shop. My brain wasn't good. I lost - I was going through a divorce at the time. Builders - the builder wasn't going to - didn't pay me. I paid Matton Developments, so I was losing - I lost a lot of money, and I just - I wasn't even in my right frame of mind. So I scanned through this. Yes, it's my fault. I scanned through this statement."

[67] Sprecak's explanation of the inconsistency between the answers given in his record of interview quoted above and his evidence at trial was equally unconvincing:[96]

"... Now, on a previous occasion, you have said that this crane probably came down because it was out of level. That's true, isn't it? That was your opinion at the time?---Well, must - if I said it, I - but I - I don't know - - -"

[68] In re-examination Sprecak sought to explain the inconsistencies by the fact that he was "pretty shaken up" after the incident and he had a lot happening. As to the record of interview of 9 October 2009, Sprecak explained that he had not been given advanced notice of the issues to be discussed.[97]

[69] Whilst I accept that the collapse had a considerable impact on Sprecak's life and business, this does not constitute a sufficient explanation for the clear inconsistencies between his previous statements and his evidence at trial. His contemporaneous statements made in 2009 are consistent with the photographic evidence as to the final position of the Crane. One of the prior inconsistent statements, namely that "the crane was in the position that it was in after the accident" was sworn to in a statutory declaration. Sprecak accepted that a statutory declaration is a serious document and that this was a declaration he made shortly after the event.[98] The contemporaneous statements of Sprecak are of sufficient weight to support a factual finding that at the time of the collapse of the boom the Crane was not being operated on level ground. The contemporaneous statements also support a finding that the Crane at the time of the collapse was on the rubble ramp in the position depicted in the photographic evidence.

[70] Strong was an employee of G & M Panel Constructions. On Sunday, 1 November 2009 he was working on the Project site. He was one of the persons responsible for attaching the props to panel 30.[99] It took him approximately half an hour to attach the props. During this time he observed Hitaua building what he referred to as "the ramp".[100] He states that Hitaua slewed panel 30 to approximately 10 o'clock with 12 o'clock being the building.[101]

[71] In evidence-in-chief Strong was shown exhibit 18 which is a photograph of where the Crane came to rest after the boom had collapsed. He denied that the Crane was in that position at the time of the collapse.[102]

[72] Strong's evidence at trial as to the position of the Crane when the boom collapsed is inconsistent with a statement he made on 24 February 2009 (exhibit 21). In that statement Strong said:[103]

"P30 was on the hook, the props were on, it was being swung around to the north. The panel was about 1m off the ground and Gary directed the crane driver to bring it down to about 20cm from the ground. The boom was fairly square toward the north. The crane base was driven up on the ramp before the panel was slewed around. The crane did not sink on the ground or on the ramp at all. There was a noise and the panel came down the last 20cm and I heard another noise from the crane and new [sic] something was wrong. I heard someone say the boom is crumbling and I ran into the building. I could then see the driver, he was still trying drive it down. Three of us ran into the middle of - ..."

This evidence supports a finding that Hitaua had driven up the slope prior to attempting to slew panel 30. It also supports the finding that the rubble ramp did not compress under the combined weight of the Crane and Panel 30 as Hitaua had expected.

[73] In a statutory declaration made by Strong on 13 May 2009 (exhibit 22) he stated:[104]

"Panel 30 was coming over across the top of panel 33 that was still on the casting bed as the crane crawled forward. As the crane began to crawl up the ramp James [Hitaua] had built the bottom of panel 30 contacted panel 33. I heard a bang and that's when the crane boom and the panel fell back towards the road. I ran in towards the building. I saw all the glass in the cab smash. I thought there would have been dead people for sure."

[74] Strong sought to explain these inconsistencies by suggesting that when he declared those matters in his statutory declaration he was "mistaken".[105] A further explanation that he proffered for the inconsistencies was that his story had changed because of subsequent discussions he held with others including Sprecak.[106]

[75] I accept the submission of the defendant that Strong's oral evidence at trial was of no probative value because his change of story had been influenced by others.[107] The previous statements of Strong are admissible as evidence of any fact stated therein. As to the weight that should be accorded to his previous statements, they are relatively contemporaneous statements. Unlike his testimony at trial, there is no evidence that his contemporaneous recollection was influenced by his discussions with others. His previous statements are of sufficient weight to support the ultimate factual finding that Hitaua had driven the Crane up the ramp prior to the boom collapsing.

[76] Corbett was called by the defendant. He was, as at 1 February 2009, working for Sprecak. He was an experienced panel construction worker.[108] He witnessed the collapse of the boom on 1 February 2009. The plaintiff's trial plan (exhibit 46) identified Corbett as a witness originally intended to be called by the plaintiff.

[77] By reference to a photograph (exhibit 65), Corbett identified that he was standing in front of the Crane as it approached panel 31. He was in this position to ensure that the track of the Crane came between the two braces.[109] The two braces referred to are two of the props that were supporting panel 31 which had already been placed. Whilst in or about the position shown in exhibit 65 Corbett heard a little crack and then a bigger crack. When he heard the two cracks, he looked up and saw the boom falling. He said the boom came down "pretty quick".[110] Immediately before he heard the two cracks, the crawler of the Crane was through the line of braces shown in exhibit 65 - "somewhere between two and 300 through - between the braces", "just through the braces".[111] The Crane was in the position shown in exhibit 65, not in the position marked "B" on the photograph (exhibit 40) as identified by Hitaua.[112] Corbett stated that immediately before the two bangs the crawler was about a metre away from where he was standing - he could have touched it.[113] Corbett did not move from his position as the boom collapsed. Corbett's evidence as to his position is also consistent with a contemporaneous drawing (exhibit 11) made by Sprecak on or about 29 March 2009.

[78] In cross-examination a previous statement made by Corbett on 10 June 2009 was tendered (exhibit 66). On my reading of this statement it is generally consistent with the evidence which he gave at trial. Corbett stated at [15]:

"When they lifted panel 30 I was standing in front of the left crane track which I have marked on photograph F. I was watching that the track was not going to hit the braces. Gary was standing in front of the other track watching it."

[79] The reference to photograph F is a reference to exhibit 65. In cross-examination it was not put to Corbett that the Crane was not in the position between the braces as he described in his evidence-in-chief.

[80] The plaintiff submits that Corbett's evidence should be disregarded as "unreliable".[114] This submission should be rejected. I found Corbett's evidence as to the position of the Crane at the time of collapse highly persuasive. The suggested inconsistencies between what he told the solicitors for the plaintiff in conference and his contemporaneous statement are in my view not significant. The plaintiff submits, for example, that in his contemporaneous statement Corbett stated that the boom of the Crane collapsed when the Crane was attempting to lift panel 30 off the caster bed.[115] The transcript reference given for such a submission[116] is a reference to a statement allegedly made to the plaintiff's solicitors in conference. What he says in relation to panel 30 in his statement (exhibit 66) is as follows:[117]

"We got panel 30 ready, again I think that all the braces were put on. Some of these had reversed brace feniles, so needed to be put on from the elevated work platform."

[81] This passage from exhibit 66 does not support the submission that Corbett mistakenly recalled that the Crane was attempting to lift panel 30 off the caster bed at the time of collapse. Corbett's evidence at trial is consistent with the photographic evidence of the final position of the Crane. His evidence is also consistent with the fact that there was an intentional decision to remove two of the props or braces from panel 31 so as to permit the Crane to be driven hard against panel 31 in order to place panel 30.

[82] The plaintiff's trial plan (exhibit 46) reveals that the plaintiff intended to call Steven Clark as a witness in the trial. For reasons which remain unexplained Clark was not ultimately called as a witness. Paragraph 82 of the defendant's submissions identifies what the evidence establishes in respect of Clark. This may be accepted as an accurate summary:

"82. The evidence establishes the following in respect of Steven Clark:**

(a) Mr Clark is, and was, a director of the Plaintiff as well as a director of Pinjara [sic] Constructions Pty Ltd on or about the 1st of February 2009[118]. He was also a director of Masters Projects Group Pty Ltd.[119];

(b) He was on the site before and during the collapse of the Crane[120]. His ute was struck by the boom of the Crane as it collapsed[121];

(c) Mr Clark was a person helping Mr Hitaua to do his work or controlling him to do his work[122];

(d) He took some photographs with his mobile phone shortly before the collapse occurred[123];

(e) He communicated with the builder to ensure that the ground was suitable and verbally communicated that it was to Mr Hitaua[124];

(f) He had operated the relevant Crane himself[125] and participated in a training course[126]. Mr Clark had removed the Crane off the truck and positioned it off the ground at the site[127];

(g) Mr Clark was present during, and involved in the interview with Mr McCosker[128]. In the interview with McCosker he said he saw Hitaua jump from the Crane after the boom collapsed. He also said that the Crane had operated at 4 degrees on other occasions.

(h) Information has been imparted by Mr Clark to Mr Cusack which was significant to his analysis of the facts[129]."

**[83] The photographs taken by Clark on his phone are Figure 8 and Figure 9 to the report of Cusack dated 21 May 2009 (exhibit 26). According to Cusack, the photographs were taken by Clark shortly before the collapse. The panel shown in the photographs, which one may assume is panel 30, has braces attached to it. It may therefore be accepted that Hitaua had constructed the ramp prior to the taking of these photographs. According to Cusack he interviewed Clark as well as Hitaua on several occasions.[130] No notes were kept by Cusack of these interviews. The notations to Figure 8 and Figure 9 however indicate that Clark relied on these photographs as demonstrating that the Crane was level at the time of the collapse. The photographs in my view show no such thing. According to Hitaua's own evidence he slew the panel from 125 degrees back to 90 degrees over the panels.[131] He then slewed the panel from 90 degrees to 45 degrees and commenced to track forward.[132] It follows that Clark's photographs shown in Figure 8 and Figure 9 of exhibit 26 do not show the position of the Crane at the time the boom collapsed.

[84] The defendant, relying on the principle in Jones v Dunkel[133] submitted that the plaintiff's failure to call Clark permitted me to more readily reject the inferences proposed by the plaintiff.[134] The defendant readily acknowledged that a Jones v Dunkel inference cannot fill gaps in the evidence.[135]

[85] In arriving at my primary finding that at the time of the collapse of the boom the Crane was on a 7 degree angle on the rubble ramp in the position depicted in the photographs in exhibit 12, it is not necessary for me to rely on any Jones v Dunkel inference.

[86] The failure to call Clark however, is relevant to other issues in this case. In particular, whether the plaintiff has discharged its onus of proof that the relevant loss or damage to the Crane is covered by the Policy. I deal with these issues later in these Reasons.

[87] The plaintiff's experts were Cusack, an engineer and Alex Dziouba, a metallurgist. The defendant's experts were Hartigan, Dr Jones, Keith Spanswick and Slawek Drabot.

[88] Cusack was the only expert called by either party who propounded the theory that the boom collapse was caused by a pre-existing defect. For the reasons which follow I do not accept Cusack's opinion as to the cause of the collapse of the boom.

[89] In his initial report of 21 May 2009 (exhibit 26) Cusack rejected as a cause of the collapse the Crane being on a 7 degree slope:[136]

"Positioning the crane on the 7° slope was not the root cause of this boom collapse because such a tilt angle would not have produced sufficient side force to cause the observed fracturing at the heel of the boom."

[90] He identified the most probable root cause of the collapse was the presence of one or more large cracks in the heel of the boom caused through either welding or a manufacturing defect.[137]

[91] In his report of 4 March 2014 (exhibit 31) Cusack abandoned his initial theory as to the existence of large cracks in the heel of the boom. He accepted the correctness of the reports of Dziouba, Spanswick and Dr Jones in this respect.[138] He also accepted that a pre-existing defect in the boom structure had not been identified upon an examination of photographs and fracture surfaces.[139] However, despite this apparent absence of evidence, Cusack, in his report of 4 March 2004, still held the opinion that such a pre-existing defect existed and accounted for the boom failure at a relatively low stress level calculated from the prevailing load conditions.[140] The theory Cusack ultimately advanced was that the failure initiated in two areas at the bottom of the heel of the boom which, he postulated, must have contained welding defects. He therefore identified the "root cause" of the collapse as follows:[141]

"It is my opinion that the root cause of this boom collapse has now been identified, in the form of a series of pre-existing discontinuities in two Boom Heel welds (at A and B in Figure 1 to Figure 9). The discontinuities have been described by others as "pores", "inclusions" and "lack of fusion", and have been exposed and are now visible on the fracture surfaces in two failed horizontal welds on the Heel Plate at A and B. These discontinuities significantly reduce the effective area of those welds and hence significantly reduce the stress level which could cause failure of those welds."

[92] There is a stark difference between Cusack's initial theory of large cracks in the most highly stressed weld to explain the failure as opposed to small pores in the least highly stressed welds. Significantly, the plaintiff's own metallurgist Dziouba in his report dated 11 February 2014 (exhibit 41) expressly disavowed the basis of Cusack's opinion:[142]

"Some increases and reductions of hardness associated with welding were evident at the Heat Affected Zone (HAZ) regions near the fractures, however, it was considered unlikely that these variations were the causal factors for the fractures. Majority of the examined bottom wall fracture surfaces displayed ductile dimples. Numerous welding defects such as porosity, inclusions and lack of fusion were evident particularly where the welds on the outer and inner surfaces merged. Although the bottom wall fracture did not originate at these welding defects the presence of such defects is undesirable, as they reduce the strength of the weld joints."

[93] Cusack accepted in cross-examination that Dziouba rejected his theory.[143]

[94] The only reason Cusack had to come up with a new theory for the cause of the collapse of the boom was the inability of the various experts to find any significant defects in the highly stressed plating on the right side where the collapse initiated.

[95] There are several reasons why Cusack's new explanation for the collapse should be rejected. Not only is it not supported by any evidence of a metallurgist (including the plaintiff's own metallurgist), Cusack produced no microscopic pictures to support his theory. A Finite Element Analysis conducted by Drabot, confirmed that the tensile stress in the bottom region before the primary fracture occurred was very small compared to the "right side". I accept Dr Jones' opinion that it was not possible that the collapse could initiate in areas of such low stress even if the welds at A and B contained defects as alleged by Cusack.[144] A real difficulty with Cusack's new explanation is that any alleged pre-existing defect identified by him is separate from the right side where the failure occurred. This separation is constituted by a gap and cut-out. Dr Jones identified this flaw in Cusack's new explanation as follows:[145]

"Even if the bottom welds and plating at A and B failed completely, the fracture surfaces would be entirely separate from the main area of 'right side' plating. (B and A are separated from the right side by respectively a gap and then a cut-out) ... Therefore the A and B fractures could not propagate into the right side plating by the two possible mechanisms of fatigue cracking or a single 'unzipping' fracture."

[96] It is not only Cusack's change of position that causes me to reject his evidence. In respect to his first theory as to the failure of the boom he advanced a number of stress calculations which significantly understated the level of stress at the heel of the boom. Dr Jones identified these errors and changes in Cusack's stress calculations.[146]

[97] Cusack's calculations of the maximum stress ranged from 172 MPa in his first report to 278 MPa in the joint report dated 16 November 2012 (exhibit 33), when in fact the maximum level of stress identified by the Finite Element Analysis exceeded 960 MPa. Cusack accepted that the Finite Element Analysis modelling provided the most accurate indication of stress at the heel of the boom.[147]

[98] The significance of these erroneous calculations is that Cusack initially used these calculations in an attempt to discredit the defendant's theory as to the cause of the collapse of the boom being the side load caused by the Crane operating on a 7 degree slope. As identified in the defendant's written submissions, Cusack relied on his erroneous calculation of the stress on the boom for the statement that the differences between the calculated stress level and the boom plate strength "... are of such magnitude and in such direction as to exclude the possibility that the failure was caused by the magnitude of the 7° slope observed after the fact".[148]

[99] This leads to what I consider to be the most significant flaw in Cusack's analysis. His theories that the cause of the collapse of the boom was some type of latent defect proceeded on the basis that the Crane at the time of collapse was being operated on level ground. Implicit in his theories therefore was an acceptance of Hitaua's account of the sequence of events including his assertion that he was operating the Crane on level or near level ground. For the reasons outlined above I do not accept that the Crane was operating on level ground at the time of the collapse. To the extent that Cusack relied on Hitaua's assertion, his final theory as to the collapse of the boom must be rejected. Cusack admitted that he kept no record of what he had been told by Hitaua. His reports however proceed on the basis of the correctness of Hitaua's assertion that the Crane was operating on level ground.

[100] Cusack initially sought to demonstrate that the Crane operating on a 7 degree slope in itself could not have been the cause of the collapse.[149] This initial view by Cusack however, gave way to the Finite Element Analysis conducted by Drabot.[150] This analysis considered static loads only. Drabot's analysis showed that the stressors in the base of the boom were likely to have exceeded the ultimate strength of the material. The analysis proceeded on a carried load of 39.2 tonnes and applied an offset of 7 degrees. As is clear from the plaintiff's written submissions, Cusack himself adopted the Finite Element Analysis as correct.[151]

[101] Cusack, in his report of 10 February 2014, suggested that if the Crane was on a 7 degree slope it could not slew "uphill".[152] In an earlier report of 18 July 2012[153] Cusack suggested that it was impossible for the Crane to slew under the relevant loading conditions if it was on a slope greater than 2.1 degrees. He accepted in a subsequent report that his calculations in this respect were erroneous. He revised those calculations in a report dated 30 October 2012 (exhibit 28) to 4.56 degrees.[154] The joint expert statement dated 16 November 2012[155] records an agreement that the nominal capacity of the slewing brake to restrain the boom from rotating is exceeded if the Crane is at more than 5.8 degrees. Hartigan however, in the same joint report, noted that it is likely that the German manufacturer of the Crane allowed a factor of safety in the design and construction of the slew brake because of its dependence upon friction. There is also some evidence that the boom was operating at 4.5 metres radius at the time of the collapse, rather than at 6.5 metres.[156] If the boom radius was less than 6 metres then it was accepted by Cusack that the slew brake could restrain the boom and other structure of the Crane from rotating if the Crane was on an angle of 7 degrees. Cusack's analysis in relation to the Crane's ability or inability to be held by a slewing brake or to slew on a 7 degree slope is not in my view sufficiently compelling to overcome the photographic evidence and Corbett's evidence as to the position of the Crane at the time the boom collapsed.

[102] The primary reason why I reject Cusack is that rather than analyse the most obvious cause of the collapse, namely the Crane being operated on a 7 degree slope, he propounded theories of latent defect so as to explain how the boom could have possibly collapsed whilst being operated on level ground.

[103] Having rejected Cusack's theory that the collapse of the boom was caused by a pre-existing defect it must follow that I also find that the collapse of the boom was not caused by a combination of a pre-existing defect and the operation of the Crane on an angle of lateral inclination slightly greater than 0.3 degrees.

[104] The experts called by the defendant were unanimous in their opinion as to the cause of the collapse of the boom.

[105] Hartigan's principal report is dated 21 September 2012 (exhibit 63). Hartigan's opinion is that the boom failed due to structural overload rather than material defect.[157] In order to check the boom capacity to withstand side loads, Drabot conducted a Finite Element Analysis assessment of the boom. This analysis concluded that as a result of the loads induced by 7 degree side slope, the boom base was stressed to a minimum of 1.8 times the ultimate strength of the material that it is made from.[158]

[106] The plaintiff sought to discount the expert opinions of Hartigan and Drabot on the basis that the underlying facts or assumptions supporting their opinions were not established. In particular, the plaintiff submitted that it was not established that the boom was operating at 90 degrees at the time of collapse. This submission does not withstand examination. Hartigan, in his report dated 21 September 2012, stated his understanding of the key events of the incident as follows:[159]**

(a) the Crane was driven onto a prepared ramp of rubble at the construction site while carrying a 39.2 tonne load;

(b) the slope of the ramp in conjunction with the load carried at the time induced a side load at the tip of the boom; and

(c) this side load exceeded the capacity of the boom, and caused failure of the material of its base.

[107] Hartigan further identified that the side load acting on the boom of the Crane at the time of failure was calculated using the following configuration:[160]

(c) load: 39.2 tonnes (combination of load and rigging).

**[108] The side load was calculated as being approximately 3.4 times the minimum side load capacity required by the relevant Australian Standard.[161] No part of this calculation required any particular assumption as to the angle of the boom, whether it be 90 degrees or 45 degrees.

"For the court to accept Hartigan's opinion, the court must determine that the Crane was operating on a 7° slope with the boom at 90°.[162] It is only with those underlying facts that Hartingan's [sic] opinion carries any weight."

[110] The transcript reference is to Hartigan's evidence in cross-examination which was as follows:[163]

"... Your scenarios [sic] is the crane was tracking up this solid seven-degree ramp and it's got a 39 tonne load, 90 degrees to the left-hand track. That's your scenario, isn't it?---Yes.

And you've always believed that to be how this accident occurred, haven't you?---Well, I've never specifically said that the crane had to be - that - that the crane was operated with the load at 90 degrees the entire time. My point has always been no.

So my - my point in focusing on the load being held over the side at 90 degrees is that it must have been slewed past that point at some stage so ---"

[111] The answers given by Hartigan when read in the light of his reports do not support the submission that his opinion was founded upon the boom being at a particular angle of 90 degrees. It was not.

[112] The plaintiff makes a similar submission in respect of the opinion of Drabot. The plaintiff submits:[164]

"Drabot was the creator of the FEA modelling undertaken concerning the Crane. In cross-examination, Drabot accepted that the FEA does not consider dynamic effects. He used the imports of a 7-degree slope, the boom at 90 degrees to the left track and the working radius of 6 to 6.5m."

[113] Drabot's report of 10 September 2012 does not refer to any specific angle of the boom:[165]

"The analysis documented herein used a carried load of 39.2 tonnes (combined lifted load and rigging) and the self weight of the boom, applied at an offset of 7 degrees. These conditions were derived from FIELD Engineers' calculation 00170-001-EC-01-REV1, which appears as Appendix B of report 00170-001-ER-03."

[114] The soundness of the opinions expressed by Hartigan and Drabot are, in my view, unaffected by the actual angle of the boom being at either 90 degrees or 45 degrees. Their analysis proceeds on a consideration of the carried load of 39.2 tonnes and the offset of 7 degrees.

[115] Spanswick is an experienced metallurgist. He provided three reports.[166] Spanswick identified that the boom failed due to overstress and tension. He did not identify any significant pre-existing defects. For the purposes of his report of 24 December 2013, Spanswick referred to examinations conducted at magnifications of up to 30X by means of a stereomicroscope.[167] Whilst this examination identified two welding defects, these defects were buried within the weld and were not represented on the fracture surface. These weld defects were remote from the fracture path and in Spanswick's opinion had not been a factor in causing or contributing to the failure of the boom. Spanswick concluded:[168]

"The fracture path was predominantly through the parent material adjacent to the welds and this, together with the plastic deformation of the parent material associated with the fracture path, showed that the failure was due to overstress."

[116] As to Dr Jones' evidence, the plaintiff correctly conceded that Dr Jones has excellent qualifications.[169] Dr Jones is the former President of Christ College Cambridge, Life Fellow, Christ College and Emeritus Member of the Faculty of Engineering, University of Cambridge. His opinion was that side loading the boom caused static and dynamic stresses on the boom which ultimately overcame the boom's inherent strength:[170]

"... I consider that the failure occurred because the total of the out-of-plane forces on the crane boom (produced by static and dynamic loading when lifting and slewing a load) gave rise to a tensile stress at the base of the boom which exceeded the strength of the boom plating next to the welds."

[117] The plaintiff does not cavil with Dr Jones' conclusions. The plaintiff submitted however:[171]

"...if the [Finite Element Analysis] inputs are correct and the dynamic forces were in fact imparted on the boom at the relevant time, Dr Jones' opinion may have some force. But the basis upon which the plaintiff submits that Dr Jones' opinion is of no moment is that the [Finite Element Analysis] inputs are incorrect in the respect that the Crane was not operated on a 7 degree slope with the boom at 90 degrees to the left track, and Dr Jones' evidnece [sic] is that the dynamic forces alone could have caused the boom to fail."

[118] This submission, in effect, concedes that if the Crane was operating on a 7 degree slope (which I have found) then Dr Jones' evidence may be accepted. The soundness of the opinion of Dr Jones is in my view unaffected by the actual angle of the boom being at either 90 degrees or 45 degrees. His analysis, similar to that of Hartigan and Drabot, proceeds on a consideration of the carried load of 39.2 tonnes and the offset of 7 degrees or less.

[119] The unanimous opinion of the defendant's experts is entirely consistent with the photographic evidence which places the position of the Crane at the time the boom collapsed on a 7 degree slope. Not only is it consistent with the photographic evidence, it is also the most logical explanation for the collapse of the boom. Hitaua himself acknowledged that if the Crane was operated on a slope it exposed the Crane to a risk that there might be a failure of the boom or other structural members.[172]

[120] It follows that I reject the evidence of Cusack and accept the evidence of the defendant's experts.

[121] From a consideration of the evidence, both lay and expert outlined above, I make the following factual findings:**

• Hitaua knew that the Crane had to be operated on level ground.

• Hitaua was aware of his obligations to operate the Crane in accordance with the manufacturer's guidelines.

• He appreciated that if the Crane was operated on a slope it exposed the Crane to a risk that there might be a failure of the boom or other structural members.

• He knew that if the Crane was to be operated at more than 1 degree gradient this required separate assessment.

• Hitaua, for the placement of panel 30, spent somewhere between 10 to 30 minutes (perhaps longer) in constructing a rubble ramp (as that term is described in [38] above).

• Sprecak told Hitaua that the ramp which he had constructed was too high. This advice was ignored.

• Hitaua, prior to crawling the Crane onto the ramp, expected that the combined weight of the Crane and panel 30 would compress the rubble, so that the Crane would be operating on level to near level ground.

• Hitaua intended to crawl the Crane past the final position of the Crane shown in the photographs (exhibit 12) hard up against panel 31 in order to reach a marked white cross.

• Hitaua crawled the Crane for a period of 12 seconds from the position marked "B" on exhibit 40 to the final position of the Crane depicted in the photographs (exhibit 12).

• The boom was somewhere between a 45 degree or 90 degree angle when Hitaua was crawling up the ramp.

• Hitaua crawled the Crane between the two props or braces that were supporting panel 31 to the position shown in exhibit 65.

• At the position of the Crane shown in the photographs (exhibit 12 and exhibit 65), Hitaua attempted to slew "a wee bit more" to the right so that he could track forward "a wee bit more" in order to drop panel 30 into place.

• The ramp did not compress as Hitaua had expected.

• Hitaua had 12 seconds of crawling the Crane up the ramp to appreciate that the rubble was not compressing as he expected.

• Hitaua, if he had been looking at the spirit level at any time within the 12 seconds the Crane was crawling up the ramp from the position marked "B" on exhibit 40 to the Crane's final position, would have known that the Crane was not being operated on level ground.

• The boom of the Crane collapsed when the Crane was on the ramp in the position depicted in the photographs (exhibit 12 and exhibit 65).

• The Crane in its final position was on a slope of 7 degrees.

• The boom of the Crane collapsed because of structural overload due to the slope of the ramp in conjunction with the carrying of a 39.2 tonne load.

[122] As a consequence of my findings there are a number of matters that naturally follow:

(a) The Crane being operated on a 7 degree angle did not comply with the manufacturer's guidelines in that the recommended ground slope for normal operation is 0.3 degrees. Whilst the manufacturer allows for operation of the machine on ground slopes of up to 4 degrees, the capacity of the machine is significantly reduced to a maximum load of 9 tonne in this configuration.[173] The operation of the Crane on a 7 degree slope meant there was a real risk of structural overload. The manufacturer's guidelines warns of the risk of structural overload if the Crane is not operated on level ground at section 2.6 of the Load Handling Chart Book.[174] The side load imposed on the boom of the Crane was outside the manufacturer's guidelines and was approximately 3.4 times the design capacity required by Australian Standard: Cranes, hoists and winches: Part 5: Mobile cranes (AS1418.5 - 2002) (exhibit 6).

(b) The Crane being operated at a lateral inclination of 7 degrees was also contrary to Section 10.2 of the Load Handling Chart Book in lifting and moving panel 30 in that the inclination was outside the maximum permissible lateral inclination of the Crane when working in Operation Code 5039, which was 0.3 degrees. There was no real dispute between the parties that if the Crane was operating on a 7 degree slope that this would constitute a breach of the relevant Australian Standards.[175]

(c) The operation of the Crane on a 7 degree slope and imposition of a side load on the boom of the Crane outside of the manufacturer's guidelines also constitutes contraventions of Australian Standard: Cranes, hoists and winches - Safe use: Part 5: Mobile Cranes (AS2500.5 - 2002) (exhibit 4) and Australian Standard: Cranes, hoists and winches - Safe use: Part 1: General requirements (AS2500.1 - 2002) (exhibit 5).

**Does the Policy respond to the plaintiff's claim?

[123] This issue requires a consideration of a number of clauses of the Policy including those dealing with material damage cover, accidental overload, dry hire, owner's indemnity and the exclusion clauses. These relevant clauses have already been set out in full above.

[124] Interpreting a policy of insurance 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".[176] Ultimately, the duty of the Court is to determine the intention of the parties from the words of the policy. The words must be given their ordinary and fair meaning. The meaning is ascertained by determining what the document would convey to a reasonable person in the position of the parties to the contract.[177] Thus, the policy wording, the surrounding circumstances, the purpose of the policy and the coverage and object of the transaction are relevant.

[125] One cannot however contradict the language of a policy that has a plain meaning.[178] Further, the trend is to adopt a liberal interpretation in favour of the specific assured so far as the natural and ordinary meaning of the word or words allows.[179]

[126] An exclusion clause is to be construed in the context of the policy as a whole including the insuring coverage clause.[180] As observed by Mason, Wilson, Brennan, Dawson and Deane JJ in Darlington Futures Ltd v Delco Australia Pty Ltd:[181]

"... 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, thereby 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."

[127] The parties accepted that the plaintiff carries the burden of proof as to whether the Policy responds to the plaintiff's claim and the defendant carries the onus as to the application of the exclusion clauses.

[128] Adopting the definition of "insured damage", the material damage cover covered the plaintiff for accidental, sudden and unforeseen damage to a machine (the Crane) while it was located and in use in the manner in which it was designed to be used.

[129] I am content to adopt the defendant's identification of the relevant elements of the material damage cover:[182]**

(c) while the Crane was located in the manner in which it was designed to be used; and

(d) while the Crane was in use in the manner in which it was designed to be used.

**[130] If, contrary to my findings above, the evidence had demonstrated that the damage to the Crane was caused by the catastrophic failure of the boom due to a pre-existing defect whilst it was being operated on level ground there would be no difficulty in describing the loss or damage to the Crane as accidental, sudden and unforeseen.

[131] Whilst I have rejected the plaintiff's primary contentions that at the time of the collapse the Crane was being operated on level ground and the cause of the collapse was a pre-existing defect, it still remains necessary, in accordance with the findings that I have made above, to determine whether the loss or damage to the Crane was "insured damage", that is, accidental, sudden and unforeseen. It is also necessary to determine whether the Crane was located and in use in the manner in which it was designed to be used.

[132] "Accident" has been judicially considered in a large number of insurance cases, although none similar to the current matter. It has generally been considered in the context of personal accident insurance policies (personal injuries sustained by the assured in life insurance policies, personal accident insurance or workers' compensation schemes) or liability policies (personal injuries sustained by third party due to the assured's actions).

[133] At a very general level, therefore, the definitions and discussions of "accident" from personal injury cases are prima facie distinguishable from the present case. The word "accident" is not a defined word in the Policy. It has been stated in a number of cases that no comprehensive legal definition can be given to the word "accident" or "accidental" as much depends on the wording adopted within the specific policy and all the circumstances of the case at hand.[183] The starting point is that "accident" is to be given its ordinary and popular meaning if there is nothing contrary indicated in the policy document.[184] The most authoritative case on the definition of "accident" is Federico[185] and this case does no more than adopt the definition expounded in Fenton v Thorley & Co Ltd 70 years prior. In Federico, Wilson, Deane and Dawson JJ observed:[186]

"As a matter of ordinary language in this country, an 'accident' (from the Latin accidens) means very much what the etymologist would expect. It is something which happens without intention or design. When used with reference to something which causes injury, it means an unexpected and unintended mishap. In that context, the ordinary and natural meaning of the word still corresponds with Lord Macnaghten's definition in Fenton v. Thorley & Co. Ltd. which, although propounded in a Workmen's Compensation Act case, has commonly been accepted as applicable to the use of the word in public liability and other insurance policies: "an unlooked for mishap or an untoward event which is not expected or designed": see, to the same effect, Lord Lindley.

The accident or mishap which causes an injury may occur quite independently of any act of the person injured, e.g., as the result of an explosion of a boiler, the collapse of a building or the failure of the brakes of another's motor vehicle. On the other hand, it may be the result of the injured person's own mistake or miscalculation. In the latter case, it may involve an involuntary act of the injured person such as slipping and falling on a slippery floor or dropping a heavy object on one's foot. Or it may represent an unintended and unexpected characteristic or consequence of an intended act such as the application of unintentionally excessive force or the creation of an unintentionally excessive pressure or strain." (emphasis added) (footnotes removed)

[134] "Accident" is therefore an "unlooked for mishap or an untoward event which is not expected or designed".[187] This definition has also been adopted and applied in a large number of insurance cases.[188]

[135] Gallen J in Hurley Contractors Limited v Farmers Mutual Association[189] identified that one of the categories of case where great difficulty has been encountered is endeavouring to decide whether or not deliberate action with unexpected or unintended results can be regarded as giving rise to a situation amounting to "accident" for the purposes of a policy.

[136] In National and General Insurance Co Limited v Chick[190] a man who was pretending to play "Russian roulette" discharged a gun into his own head thinking the bullet was in a different chamber. The question was whether the dominant cause was the pressing of the trigger (a deliberate act) or the discharge of the gun. It was held to be the discharge (unexpected). Mahoney JA stated:[191]

"An event may be accidental because the happening of it was accidental: thus the trigger of a gun may be pulled accidently in the sense that the trigger was moved but the person whose finger moved it did not intend that it be moved. But 'accidental' may also ... be applied to an event to indicate that, viewed as a consequence of a previous event, it was an accidental consequence of it. ... The fact that the mechanism struck the loaded chamber and caused the gun to fire was, I think, an unintended consequence of what the deceased did and in this sense the means by which the injury was inflicted on him may properly be described as accidental."

[137] The defendant relied on this passage for two propositions. First, that what is "accidental" may depend on the subjective viewpoint from which it is asked.[192] Secondly, that the consequence of an event will not be "accidental" if it is, on the whole of the evidence, a consequence which is not both unintended and unexpected. The defendant submitted that this is a matter upon which the plaintiff bears the onus of proof and would ordinarily require evidence from the insured.[193]

[138] The word "sudden" appears to add very little to accidental damage due to the requirement in accidental of "unexpected".

[139] As stated in Visy Packaging Pty Ltd v Siegwerk Australia Pty Ltd[194] (non-insurance context):

"[92] It is clear that these words [sudden and accidental] are intended to have their ordinary meanings when used in the policy. They are not technical terms. The Macquarie Dictionary provides two alternative meanings of the word 'sudden', being 'happening, coming, made, or done quickly, without warning or unexpectedly' or 'sharp; abrupt'. In construing the meaning of the word 'sudden' in an insurance policy in Sun Alliance & London Insurance Group v North West Iron Co Ltd (1974) 2 NSWLR 625 at 631-3, Sheppard J adopted the 'unforeseen and unexpected' meaning of the word. The Macquarie Dictionary defines 'accidental' as 'happening by chance or accident, or unexpectedly'. Again, in an insurance context, the High Court in Australian Casualty Co Ltd v Federico (1986) 160 CLR 513; 66 ALR 99 adopted the meaning of 'accident' involving its unintended and unforeseen elements. At CLR 527; ALR 108, Wilson, Deane and Dawson JJ said:

As a matter of ordinary language in this country, an 'accident' (from the Latin accidens) means very much what the etymologist would expect. It is something which happens without intention or design. When used with reference to something which causes injury, it means an unexpected and unintended mishap.

[93] The focus on the unexpected element of both 'sudden' and 'accidental' means that there is considerable overlap between the two words ..."

[140] The question is whether "unforeseen" adds anything to "accident" (unintended and unexpected). Naturally "unforeseen" adds to "unintended". It is not so clear whether "unforeseen" adds to "unexpected". For example, could something be foreseen yet still be unexpected? In similar cases to those to which I have been referred as to the meaning of "accident", reference has been made to "unforeseen" as well.[195] It may be that there is a considerable overlap between the words in the Policy.

[141] Both parties accepted that either from the point of view of Hitaua or the plaintiff the damage to the Crane was clearly unintended. The real question is whether, either from Hitaua or the plaintiff's perspective, the damage was unexpected and unforeseen. These are matters for which the plaintiff carries the onus.

[142] There has been judicial debate[196] as to whether there is, or ought to be, a distinction between accidental means and accidental results. That is, whether it is the cause of the loss or damage which must be accidental, or the loss or damage itself.[197]

[143] In enquiring as to whether it is the act or event (the cause of the damage) that is required to be "accidental, sudden and unforeseen" or whether it is the damage, namely the collapse of the boom, that is required to be "accidental, sudden or unforeseen", one must start with the words of the Policy itself. Samuels JA, for example, in National and General Insurance Co Limited v Chick[198] determined that there was a distinction between means versus results when giving proper weight to the wording of the policy. His Honour emphasised that it is the words of the policy which must be considered. In Chick's case the words looked to cause and not to result and had to therefore be distinguished from the language of other policies which predicate recovery upon the occurrence of an accidental injury, or an injury by accident, without requiring any defined antecedent cause. In that case Hutley JA was of the view that the distinction between accidental means and accidental results is conceptually clear and fundamental.

[144] In Federico, Gibbs CJ and Brennan J both separately concluded that, according to the words of the policy in question, there was a difference between "accidental injury" and an "injury caused by an accident".[199]

[145] The wording in this Policy of "material damage cover" makes it clear that it is the "loss of or damage to" the Crane that must be "accidental, sudden and unforeseen", not the cause of that loss or damage. To find otherwise necessitates "ignoring the clear language of the policy".[200]

[146] The damage to the Crane must therefore be unintended and unexpected (accidental), sudden and unforeseen.

[147] Lord Denning accepted that it was a settled principle in insurance law that the cause of the loss is that which is the effective or dominant cause or what in substance was the cause even if more remote in time than the proximate event, such case to be determined by common sense.[201] In the present case, as a matter of common sense, the direct or dominant cause of the loss or damage to the Crane was the collapse of the boom due to structural overload resulting from operating the Crane on a slope of 7 degrees in conjunction with the carrying of a 39.2 tonne load.

[148] Before I determine whether the loss or damage to the Crane was accidental it is necessary to determine an important issue in the present proceedings, namely whether the "accidental, sudden and unforeseen" loss of or damage to the Crane is determined from the perspective of the insured or from the perspective of the Crane operator, Hitaua.

[149] The plaintiff submitted that the loss or damage to the Crane must be "accidental, sudden and unforeseen" from the perspective of the operator Hitaua rather than the plaintiff. Senior Counsel for the plaintiff orally submitted that Hitaua was the only person who rationally could establish that the loss was unexpected and unforeseen.[202] This was because, as was submitted, Hitaua was the mind of the plaintiff so far as operating the Crane was concerned. It was further submitted that even though Steven Clark, a director of the plaintiff, was on site he was not giving directions to Hitaua.[203]

[150] The plaintiff did not seek to support this submission with authority. The wording of the Policy may, however, support the plaintiff's submission that the determination of whether the loss or damage is unexpected or unforeseen is from the perspective of the operator of the Crane rather than the plaintiff. Relevantly, the Policy offers cover to the plaintiff in circumstances where the plaintiff provides both the Crane and the operator and also where only the Crane is provided. The scope of cover dealing with dry hire covers the plaintiff where it hires the Crane to another person but the plaintiff does not supply an operator. Claims under this extension are not paid unless the plaintiff has taken all reasonable steps to ensure that the hirer or any other person who will operate the Crane is authorised to do so and has been provided with adequate operating instructions. The dry hire scope of cover seeks to provide cover where the plaintiff does not have control over the operator. This would suggest that where the plaintiff supplies the operator, as was the case here, the operator is in effect the plaintiff in the sense that the plaintiff exercises control over the operator. Such a conclusion is further supported by the fact that the Policy in its material damage cover seeks to indemnify for insured damage to the Crane while it is located and in use in the manner in which it was designed to be used. The relevant exclusion clauses also concentrate on the operation of the crane. Clause 21 for example, excludes insured damage occurring where machinery is being used in a manner or for any purpose other than that for which it was designed. Clause 26 excludes insured damage if the machinery is not being used in compliance with the relevant Australian Standard or was being operated contrary to manufacturer's guidelines.

[151] The emphasis under the Policy is on the operation of the Crane. Where the plaintiff supplies the operator (unlike a dry hire situation) the plaintiff may be considered sufficiently associated with the operator such that, as is submitted by the plaintiff, the operator is the mind of the plaintiff. Where the plaintiff therefore supplies the operator it matters not whether that operator is a director or employee of the plaintiff. If the question of whether loss or damage to the Crane was unexpected or unforeseen is from the perspective of Hitaua as the operator, the plaintiff made no submissions as to whether such a perspective is to be assessed by the application of a subjective or objective test. The thrust of the plaintiff's submissions however, seems to be that a subjective test should be applied.[204]

[152] The defendant submitted that whether the loss or damage was unexpected or unforeseen should be considered from the perspective of the plaintiff which is the named insured under the Policy. The defendant relied on S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd,[205] a decision of the Court of Appeal of the Supreme Court of the Northern Territory. In that case the appellant was the owner of a hotel business. The hotel was extensively damaged as a result of cyclone Tracy on 25 December 1974. Because of this damage the bar areas to the hotel could not be secured. The manager of the hotel therefore slept at the bar at night armed with a loaded shotgun. The manager arranged for an electrician to carry out certain works at the hotel. Whilst the electrician was on the premises the manager shot him and the electrician died. The electrician's widow successfully sued the owner of the hotel and the manager claiming damages for negligence. Subsequently the owner of the hotel sued the insurance company for indemnity under a public liability policy which required that the bodily injury (which included death) occurred "as a result of an accident and happening in connection with the [hotel] business". The insurer submitted that the death did not occur "as a result of an accident" because the manager deliberately and recklessly discharged a rifle in the direction of the deceased. Kearney J accepted that the proximate cause of the injury to the deceased was the deliberate firing of the shotgun by the manager. His Honour accepted that this may not have been an accident when viewed from the perspective of the manager in that it was a deliberate and reckless act in which the manager courted the risk of what actually occurred. The manager, however, was not the named insured under the policy. His Honour observed:[206]

"But the act of Mr Holmes [the manager] was not the act of the insured whose point of view, as the learned trial judge pointed out, determines whether an occurrence is an accident. His Honour considered that if the appellant 'can be totally disassociated from Holmes ... then the shooting was an accident;' I respectfully agree. As far as the insured is concerned, the shooting of Mr Logan by Mr Holmes was an unlooked-for mishap, an untoward event which it did not expect or design; in short, an 'accident' for the purposes of its policy."

[153] To similar effect is the decision of Ipp J in Entwells Pty Ltd v National and General Insurance Co Ltd.[207] Ipp J stated that where the insured is a company on the policy then the insured is entitled to indemnity unless the act of the individual is to be regarded as the act of the insured company itself:[208]

"Where the insured is a company the act of an individual said to be acting on the insured's behalf will only defeat the insured company's claim for indemnity when the act of the individual is to be regarded as the act of the insured company itself.

There is no evidence that either Mrs Nikolic or Sasha acted with the authority of the plaintiff.

The question therefore arises whether the acts of either of them could, by reason of the close connection which each had with the company, be regarded as the acts of the company itself."

[154] Ipp J then quoted from Denning LJ in H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd:[209]

"So here, the intention of the company can be derived from the intention of its officers and agents. Whether their intention is the company's intention depends on the nature of the matter under consideration, the relevant position of the officer or agent and the other relevant facts and circumstances of the case."

[155] In Hawley v Luminar Leisure,[210] a security firm, ASE Security Services Limited, employed Jeffrey Warren as a security guard. Whilst he was on duty outside a club Warren punched a patron, Hawley, so hard in the face that he fell to the ground and suffered a fractured nose, jaw and skull, ultimately resulting in permanent and serious brain damage. ASE held an insurance policy that indemnified them for liability arising from an accidental bodily injury.

[156] Wilkie J at first instance identified the issue as being from whose perspective must the bodily injury be "accidental". His Honour considered that the assault was deliberate. His Honour found however, that when viewed from the assured's [ASE's] perspective, the bodily injury should be considered accidental. This was because the assured followed policies laid down by the contractor and by the local authority which adopted a precautionary attitude towards handling members of the public. On appeal,[211] Latham, Neuberger and Hallett LJJ upheld the decision of Wilkie J. Their Lordships, in construing the relevant policy, warned that because the contractual and commercial circumstances of each case are inevitably different, it can be positively dangerous to draw assistance from decisions of other courts as to the meaning of a particular word, when context is so important on issues of interpretation.[212] Their Lordships construed the policy as being one concerned with protecting the assured against liability arising from the actions or inactions of its security guards and door supervisors. Their Lordships also accepted that a number of cases (consistent with S & Y[213]) support the proposition that the question of accident is normally judged by reference to the state of mind of the assured. This case is readily distinguishable from the present case in that it concerned an intentional assault by a security officer. The result that one could not attribute the state of mind of the security officer to the assured is not at all surprising.[214]

[157] Ultimately this question of perspective must be resolved upon a proper construction of the Policy. By analogy to Hawley v Luminar, can it be said that the Policy was concerned with protecting the plaintiff from liability arising from the actions or inactions of an operator supplied by the plaintiff? In my opinion, the Policy construed as a whole (including the material damage cover, cover for dry hire and exclusions) aligns the actions of the operator (where the operator is supplied by the insured) with the plaintiff.

[158] The significance of from whom's perspective one determines accident and whether the test is subjective or objective arises more squarely in the context of the additional cover under the Policy for accidental overload. It is however convenient to first deal with the issue of whether the test is subjective or objective.

[159] The question is whether the collapse of the boom was actually unintended and unexpected, sudden and unforeseen by Hitaua or the plaintiff (subjective) or whether the test is from the perspective of a reasonable person in the position of Hitaua or the plaintiff (objective).

[160] The defendant ultimately submitted that the enquiry as to whether damage is unexpected or unforeseen requires subjective evidence from the perspective of the insured.[215] The defendant, relying on AF & G Robinson v Evans Bros Pty Ltd[216] and Gray v Barr,[217] also submitted that a person may be taken to have courted a risk even though he or she was not aware of its existence, or being aware of it believed it would not eventuate.[218]

[161] In England there appears to be more support for an objective test. That is, whether an ordinary reasonable person would not have expected the occurrence. An objective test was applied by Lord Loreburn LC in Clover, Clayton and Co Limited v Hughes.[219] There his Lordship, in determining that a particular event was an accident, stated:[220]

"It was unexpected in what seems to me the relevant sense, namely, that a sensible man who knew the nature of the work would not have expected it."

[162] In England it has also been held that if the relevant event was the natural and probable consequence of an act deliberately done by the assured or was the "natural and direct consequence" of an intended act, then it would not constitute an accident.[221]

[163] In Australia however, the weight of authority is that the relevant test is subjective.[222] In L'Union Des Assurances De Paris Iard v Sun Alliance Insurance Limited,[223] the New South Wales Court of Appeal had to consider an exclusion policy that excluded the assured from liability for contamination unless the contamination was sudden and unforeseen (that is similar to accident). It was succinctly stated by Sheller JA (with whom Priestly and Handley JJA agreed):[224]

"'Unforeseen' does not mean 'unforeseeable' either as a matter of language or law. The former is subjective and speaks of the mind of the insured. The latter is objective and speaks of the object of perception or thought."

[164] Although in Federico the plurality of Wilson, Deane and Dawson JJ spoke of a subjective test, their Honour's then qualified the test in obiter by suggesting that it may not be an accident if the "risk of the mishap was foreseen or courted even if it was thought unlikely it would occur."[225] The above statement was made by the plurality in the context of the necessity of having a more precise definition of what was involved in a mishap being unexpected and unforeseen:[226]

"There are two further matters to which brief reference shall be made. The first is that it may, in some cases, be necessary to define with greater precision what is involved in the notion that a mishap be unintended and unexpected. An obvious example of a case where more precise definition of those notions would be required is where the risk of the mishap was foreseen or courted even though it was thought unlikely that it would occur. It is not suggested, however, that the present is such a case."

[165] In Westco Australia Pty Ltd v Manufacturer's Mutual Insurance Limited,[227] a vehicle was stolen from the plaintiff's car repair business. The car was left in the yard with the keys in the ignition and the car unlocked as was the ordinary practice. Another 40 to 50 vehicles were in the yard and it was surrounded by a 10 foot high iron fence with only one gate kept open during business hours. The relevant insurance policy covered "loss of property occurring during the period of insurance as a result of accident happening in connection with the business...". The insurer declined indemnity. On appeal the insurer submitted that the test for "unexpected" was an objective test as to whether an ordinary reasonable man would have expected the occurrence of the relevant event and placed reliance on AF & G Robinson v Evans. Although Derrington J found that AF & G Robinson v Evans was persuasive, his Honour stated that in that case the insured had experience of the danger so that the result "must have been expected in the true sense of the term". Derrington J also stated that the test was not one of negligence as an insured "rightly expects to be covered ... against liability ... which arises even though it be the result of negligence". To fall outside an accident, Derrington J held that the relevant conduct is required to be so bad that it is more than merely an accident because the assured should have expected the result due to the obvious nature of the circumstances leading to the relevant event. I read that as a qualification to a subjective test.

[166] As to the position in New Zealand, Cooke J accepted in Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd[228] that there is a category of cases falling short of a deliberate causing of the damage by the insured where his or her conduct is nevertheless so hazardous and culpable that the event cannot be fairly called an accident. His Honour identified that it can only be a question of fact whether a case falls within this category. His Honour specifically identified that the insured's knowledge of the risk must be important in that unless the evidence justifies the inference that he deliberately incurred the risk, one would be very slow to find that the event was other than an accident. Cooke J did not accept that the fact that the risk may have been deliberately run or calculated was in any way decisive. This was because if the risk was reasonably seen by the insured as not a high one, the occurrence might still be found to be an accident.

[167] Gallen J in Hurley Contractors Ltd v Farmers Mutual Association[229] also adopted a subjective test:

"I do not think there is anything in the evidence to suggest that his action could be categorised as courting the risk or inviting or wooing the risk. There is no element of deliberation or imputed deliberation present in the circumstances of this case. It may have been negligent of Mr Canute to act as he did, but the existence of negligence is not sufficient to make an action non-accidental ..."

[168] From the above analysis a number of propositions may be identified. Each of these propositions are of course always subject to the actual wording of the relevant policy. First, foreseeability, subjective or objective, has no place as the test for accident. It is well established that an accident can occur as a consequence of the insured's negligence, even negligence that may attract a certain degree of criticism.[230] Secondly, an objective test should be rejected. There is very little law in Australia whereby a solely objective test has been adopted. Whilst an objective test may be a more accepted test in England, in Australia the leading authority of Federico adopts a subjective test with an objective qualification. To adopt a solely objective test reads down the accepted meaning of "accident" being "unexpected" and "unforeseen". As observed by Sheller JA "unforeseen" does not mean "unforeseeable" either as a matter of language or law.

[169] The proper test in my view is a subjective test with an objective qualification. There cannot be unlimited indemnification by solely focusing on an assured's subjective beliefs, opinions or expectations. One cannot claim cover by virtue of gross stupidity or ignorance. There must be some qualification to the subjective test; where it would be "unreasonable" to say the damage arose from accident. It is a question of fact as to whether the circumstances of the case fall outside an accident. The courts appear to be slow in finding an event is other than an accident unless it can be established that there is something more, like a deliberately incurred or courted risk.[231]

[170] The cases that apply a subjective test do so in a way that leaves open conduct which, as a matter of common sense, commerciality and public policy, ought not to receive indemnification under an accident policy. Otherwise, in practical terms, an insurer is taking a gamble when offering a policy based on an assured's constitution or fortitude. To quote Phillimore LJ from Gray v Barr:[232]

"Who can suppose that either party, if told the facts of this case when entering into the contract, would have agreed that the death of Gray could be regarded as an 'accident' covered by the policy?"

[171] The objective qualifications to the subjective test appear to be:**

(a) where an assured gambles or courts a risk or takes a calculated risk with knowledge of its outcome,[233] that is, a deliberate acceptance of that risk; or

(b) where an assured voluntarily embarks on a foolhardy venture from which the loss or damage that resulted was the almost inevitable consequence.[234]

**[172] As to (b) above perhaps the most appropriate way to categorise this test is to adopt Gallen J in Hurley Contractors Ltd v Farmers Mutual Association by "imputing intention" or "imputing deliberation" because one's actions are so hazardous and culpable they amount to a courting, inviting or wooing of the risk. Alternatively, that espoused by Derrington J in Westco whereby the situation must be "so bad that it was more than merely an accident on [the insured's] part and was such as [the insured] should have expected in the result because of [the insured's] experience or because of the obvious nature of the circumstances leading to the event."

(viii) Was the damage to the Crane accidental, sudden and unforeseen from Hitaua's perspective?

[173] It is uncontroversial that the collapse of the boom was not intended by Hitaua. The critical question is whether the collapse was unexpected and unforeseen? Hitaua's belief was that the concrete rubble would crush under the weight of the loaded crane and create a level working ground. There was evidence to suggest that this was common practice and a belief held by a number of individuals including Sprecak who was experienced in operating a 70 tonne crane. Both Sprecak and Hitaua speak of this rubble filling as a common method of ground filling in the tilt panel construction industry.[235] Even if the belief is reasonable that generally speaking a crane would crush concrete rubble there are in my view three factors which dictate against the collapse of the boom being "accidental" for the purposes of the Policy. The first is that Hitaua fully appreciated that the Crane had to be operated on level ground. He knew that if the Crane did not operate on level ground there was a risk of the boom failing. He was warned by Sprecak that the ramp which Hitaua had constructed was too high. Hitaua chose to disregard this advice. Hitaua had a full 12 seconds of crawling the Crane up the ramp from the position marked "B" on exhibit 40 to the Crane's final position. Within those 12 seconds he must have appreciated two things. First, the rubble was not compressing as he expected and second, from looking at the spirit level, the Crane was not being operated on level ground. The simple point is that Hitaua knew that the Crane should never be operated on a slope and that if it was there was a real risk of the boom collapsing.

[174] A distinction can therefore be drawn between this case and Bridgeman v Allied Mutual Insurance Ltd[236] where damage resulted to an adjoining property following an attempt to flatten land by the plaintiff landowner. The plaintiff landowner immediately ceased work, called out inspectors and suspended all work except preventative work. It appears to be implicit in that decision that had he not taken those steps but continued on with his actions from that point on, he could no longer claim the damage was accidental. The same reasoning is apt here. Hitaua, by continuing to crawl the Crane up the ramp without ensuring that the rubble was crushing in accordance with his expectations, fails to satisfy the requirement of accident due to recklessness, a gamble or a deliberate courting of the risk of which he was well aware.

[175] The evidence was that the Crane moved very slowly. The Crane was a significant way along the rubble ramp when the boom collapsed. Hitaua must have reached a point where his belief or expectation that the rubble would crush simply could not be sustained. In such circumstances, the plaintiff has failed to establish that the collapse of the boom was either unexpected or unforeseen.

(ix) Was the damage to the Crane accidental, sudden and unforeseen from the plaintiff's perspective?

[176] The only director called by the plaintiff was Mark Kenwood. He was not on site (unlike fellow director Steven Clark) when the boom collapsed. He knew that Hitaua had been a rigger, an excavator and a bobcat operator. He also knew that Hitaua held the relevant 100 tonne crane licence. He knew that Hitaua had operated the Crane on 10 to 12 projects prior to the incident. Kenwood was aware that both Hitaua and Clark had been trained in the operation of a 100 tonne crane.[237] There was no evidence that the plaintiff ought to have known that Hitaua was other than a trained and competent operator of the Crane.

[177] It is the plaintiff however who carries the onus of proof to establish that the damage to the Crane was accidental and unforeseen. The defendant submits that the failure to call Clark permits the Court to more readily draw the inference that Clark, as part of the directing mind and will of the plaintiff, knew of the position of the Crane. The defendant points to the fact that Clark was knowledgeable of the Crane having driven it before. He was also, like Hitaua, aware of the requirement that the Crane operate on level ground. The defendant therefore submits that in those circumstances an inference arises that the evidence of Clark would not have assisted the plaintiff's case.[238]

[178] Given that Clark was on site both before and after the collapse and participated in interviews with investigators, it is difficult to see how Clark and therefore the plaintiff can be "totally dissociated" from the actions of Hitaua.[239]

[179] The failure to call Clark in circumstances where he was on site both before and after the collapse, leads to an inference that he would not have assisted the plaintiff's case in establishing that the damage to the Crane was "accidental". The plaintiff has therefore failed to discharge its onus of proof in establishing that the damage was "accidental" in the sense of either "unexpected" or "unforeseen" from the perspective of the plaintiff itself.

[180] It is not sufficient that the damage merely be accidental, sudden and unforeseen. The material damage cover also requires that such insured damage to the machine occurs while it is located and in use in the manner in which it is designed to be used. It follows from my findings of fact that the Crane was not located nor in use in the manner in which it was designed to be used. The Crane was designed to be used in mode 5039 on level ground or on a slope of only 0.3 degrees.

[181] There was no real dispute between the parties that if the Crane was operating on a slope of seven degrees carrying a load of 39.2 tonnes that it was neither located in the manner in which it was designed to be used nor in use in the manner in which it was designed to be used when the boom collapsed. It follows that even if the collapse of the boom was unexpected and unforeseen from Hitaua's perspective or from the plaintiff's perspective, the plaintiff is in any event not entitled to be indemnified under the material damage cover because the accidental damage to the Crane did not occur while the Crane was located and in use in the manner in which it was designed to be used.

[182] Section 1 of the Policy contains additional coverage in certain circumstances. The accidental overload additional coverage provides:

"We will pay for insured damage caused by or resulting from accidental overloading which is non-deliberate and clearly unintentional.

The onus rests with you to substantiate any claims relating to accidental overload."

[183] Substituting the definition of "insured damage" the provision reads:

"We will pay for accidental sudden and unforeseen physical loss of or damage to a machine caused by or resulting from accidental overloading which is non-deliberate and clearly unintentional."

[184] The first inquiry is whether there has been accidental, sudden and unforeseen damage to the Crane. It follows from the discussion above in relation to material damage cover that the plaintiff has failed to establish that there was accidental, sudden and unforeseen damage to the Crane.

[185] The second inquiry under the accidental overload provision is whether such accidental damage was caused by accidental "overload" within the meaning of the term in the Policy. The words "overload" and "overloading" are not defined in the Policy. The Macquarie and Oxford definitions of the word "overload" include:

• an excessive load or burden; too great a load; the condition of being overloaded (Oxford); and

• to load with too great a burden or cargo; to put an excessive load on; overburden; overcharge (Oxford).

[186] For the collapse of the boom to fall within "overload" it will require overload to be read as encompassing a situation where the Crane is overloaded because it was operated on a slope. The defendant submitted that there was no "overloading" of the Crane as overloading within the meaning of the Policy means simply lifting something too heavy for the Crane to handle.[240] The plaintiff, in oral submissions, submitted that the word overload goes beyond something too heavy for the Crane to lift and that an overload could arise in many different circumstances. The plaintiff submitted if overload was limited to something too heavy it would be defined to mean that within the Policy.[241]

[187] The plain meaning that may be attributed to the word "overload" is the Crane being physically overloaded with an excessive load (for example 45 tonnes instead of 40 tonnes). That is being "loaded up" to excess; too great a burden or cargo; when the Crane is first loaded.

[188] This plain meaning of the word "overload" is consistent with a proper construction of the Policy as a whole. The accidental overload provision is additional cover to the primary cover provided by the material damage cover provision. That provision only provides cover in circumstances where the Crane is located and in use in the manner in which it was designed to be used. The additional cover needs to "add" something further to that. In that sense the additional cover permits indemnity where there has been an accidental (unintended and unexpected) physical overload of the Crane but it has otherwise been operated in the manner in which it was designed to be used.

[189] I acknowledge that such a construction requires clauses 21, 26(b), 26(d) and 27 of the exclusions to be read down but only to the extent that a physical overloading of the Crane would be contradictory to their application. The reading down of at least exclusion 26(b) was accepted by the defendant as necessary to give the Policy a commercial construction.[242] If these clauses are not read down then it would result in the additional cover being rendered illusory[243] as the physical overloading of the Crane would be:**

• operating the Crane other than in a manner or for a purpose than that for which it was designed (exclusion 21);

• loading the Crane in excess of the safe working load specified by any relevant statutory authority manufacturer's specification (exclusion 26(b));

• operating the Crane in non-compliance with the relevant Australian standards (exclusion 26(d)); and

• operating the Crane contrary to manufacturer's guidelines (exclusion 27).

**[190] However, to give "overload" a meaning that would permit an overload occurring when a crane is operated on a slope would mean that all four relevant exclusion clauses would have to be read down significantly to the point of having little or no operation. Reading down the four relevant clauses to be inapplicable to a physical overload when the Crane is first loaded does not render the additional cover illusory. It permits the additional cover to operate as the parties would have intended. In my view the parties would not have intended to permit recovery in circumstances where the Crane was overloaded by virtue of being operated on a slope in clear contravention of the relevant manufacturer's guidelines and Australian Standards.

[191] I do not accept, contrary to the plaintiff's submissions,[244] that the additional cover for accidental overload is a standalone provision. It falls within section 1 of the Policy. As a matter of construction of the Policy as a whole, this additional cover adds to section 1 and incorporates all corresponding provisions of the Policy applicable to section 1, including the exclusion clauses subject to the reading down of some clauses indicated above.

[192] The overload must also itself be accidental, that is unintended and unexpected. Even if I am wrong and "overload" for the purposes of the additional cover includes an overload resulting from the Crane being operated on a slope, such an overload in this matter is not unintended and unexpected for the same reasons identified above as to why the boom collapse does not constitute "insured damage".

[193] The additional cover under this provision does not therefore assist the plaintiff.

[194] The dry hire cover constitutes an optional extension to Section 1 of the Policy. It provides:

"We will pay for the machines specified in the Policy Schedule for this extension for insured damage [accidental, sudden and unforeseen] to a machine while on hire to another party where you did not supply an operator. We will not pay claims under this extension:

(a) unless you have taken all reasonable steps to ensure that the hirer, or any other person who will operate the machine, is authorised to do so under any relevant legislation.

(b) unless you have provided the hirer with adequate operating instructions and the loss or damage was caused by incorrect operation."

[195] Dry hire is also defined in the Schedule as:

"Hire of a machine excluding the cost of delivery, set up and pick up, operator costs and consumables."

[196] The plaintiff submitted that the word "supply" in the dry hire cover does not mean supply in its figurative sense, but means "legally responsible for the provision of someone". That is, it was Pinjarra who was legally responsible for Hitaua, and not the plaintiff.[245] The defendant submits it was the plaintiff that supplied both the Crane and Hitaua as operator.[246]

[197] The additional cover only applies where the insured has not supplied an operator. On an ordinary and plain meaning, the word "supply" does not require the operator to be either an employee or officer of the insured. In the present case the plaintiff contracted to provide both the Crane and the Crane operator Hitaua. It matters not that Hitaua was employed by Pinjarra.

[198] There are two additional features in the provision of Hitaua by the plaintiff. First, both the plaintiff and Pinjarra share common directors. Second, the invoice from the plaintiff to G & M Panels included both operator cost and crane hire cost.[247]

[199] The Policy must be given a business-like interpretation requiring attention to the language used by the parties, the commercial circumstances which the document addresses and the objects which it is intended to secure.[248] The dry hire coverage was intended arguably, on a commercial and natural reading, to provide cover when the Crane was hired by a third party and the plaintiff did not provide an operator. The clause places an onus on the plaintiff to ensure that whoever operated the Crane did so legally under relevant legislation and that they were given proper operating instructions. In the present case the operating manual and load handling chart were stored in the cabin of the Crane. As a matter of construction the dry hire cover would only apply where an entity in the plaintiff's position solely supplied a crane and the relevant hiring entity then provided the operator of the crane itself or the hiring entity sought another operator from a separate entity to that of the plaintiff. That was not the case here. The plaintiff invoiced for the hiring of Hitaua. It was on the same invoice as charges for the hiring of the Crane. G & M Panels did not provide an operator. To the contrary, G & M Panels sought a package deal (crane plus operator) and that was provided and invoiced accordingly. Based on the object the Policy was intended to secure, it is more probable than not that the arrangement between G & M and the plaintiff and the plaintiff and Pinjarra was not intended by the parties to constitute dry hire within the meaning of the Policy nor within its ordinary meaning.

[200] The additional cover of "Owner's Indemnity" is also contained in Section 1 of the Policy and provided:

"A breach of non-compliance with any provision of this Policy without the knowledge of you or your responsible officer(s) will not affect your right to the cover under this Policy.

However, where you or your responsible officer(s) become aware of such breach or non-compliance, you must notify us immediately."

[201] The plaintiff addressed no written submissions in relation to this additional cover other than "owner's indemnity ... answers the plaintiff's claim".[249] The defendant submitted there is no scope for the operation of the owner's indemnity additional benefit because there is no breach or non-compliance with a provision of the Policy by the plaintiff.[250]

[202] As a matter of construction, a breach or non-compliance with a provision of the Policy is a reference to provisions such as disclosure, payment, renewal and notices being given. If, for example, there is a failure to disclose by an employee, the insured can still retain the benefits under the Policy so long as a director or officer was not privy to such non-disclosure. It would in my view strain the meaning of the word "provision" if a "breach or non-compliance" with a provision of the Policy could encompass the causing of "insured damage". By causing "insured damage", one does not breach a provision of the insurance policy. When one claims under an insurance policy, one does not say that they "breached" a provision of the insurance policy. There is therefore no breach or non-compliance with a provision of the Policy within the terms of the additional benefit.

[203] I have set out exclusions clauses 21, 26(b), (d) and 27 above. The heading to these exclusion clauses is "Exclusions applying to Section 1". As I have already observed, both the material damage cover and the additional benefits including accidental overload and owner's indemnity constitute additional benefits contained in Section 1 of the Policy. The dry hire constitutes an optional extension to Section 1. The exclusion clauses therefore on their face apply to Section 1 including the material damage cover, accidental overload, owner's indemnity and dry hire.

[204] With the exception of reading down the exclusions only insofar as they render the additional benefit for accidental physical overloading illusory, the exclusion clauses would apply. Each of the exclusion clauses apply where there is "accidental sudden and unforeseen physical loss of or damage to a machine". This is because each clause refers to "insured damage" which is a defined term within the Policy. It follows from my factual findings and the consequences of those findings[251] that:

(a) the insured damage occurred while the Crane was being used in a manner other than that for which it was designed (clause 21);

(b) at the time of the collapse of the boom the Crane was not used in compliance with the relevant Australian Standards (clause 26(d)); and

(c) at the time of the collapse of the boom the Crane was being operated contrary to the manufacturer's guidelines (clause 27).

[205] As to clause 26(d), the plaintiff admitted in its reply that if the Crane was in its final position as shown in exhibit 12 that would constitute a breach of the Australian Standards.[252]

[206] As to clause 27, as I have already identified, the manufacturer's guidelines recommended a ground slope for normal operation of 0.3 degrees. Whilst the manufacturer allows for operation of the machine on ground slopes of up to 4 degrees, the capacity of the machine is significantly reduced to a maximum load of 9 tonne in this configuration. The side load imposed on the boom of the Crane by operating on a 7 degree slope was outside the manufacturer's guidelines.

[207] It follows that even if I am wrong as to my conclusion that the damage to the Crane was not accidental, sudden and unforeseen the plaintiff would otherwise not be entitled to indemnity because of the operation of the relevant exclusion clauses.

[208] On the sixth day of the trial the plaintiff sought and was subsequently granted leave to amend its reply to plead s 54(3) and s 54(4) of the Act which provide:

"(3) Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act.

(4) Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act."

[209] The plaintiff, by the late amendment to the reply, sought to argue that even if the Crane was:**

• being used in any manner or for any purpose other than for which it was designed;

• being loaded in excess of the safe working load specified by relevant statutory authority or manufacturer's specification;

• otherwise being operated contrary to the manufacturer's guidelines;

that such alleged breaches did not cause the boom of the Crane to collapse.

**[210] The plaintiff relying on s 54(3) pleaded that the boom of the Crane collapsed not because of these alleged breaches but because of the pre-existing defect. It follows from my rejection of Cusack's theory that the collapse of the boom was caused by a pre-existing defect that s 54(3) has no operation in the context of the present case.

[211] It also follows that s 54(4) similarly has no operation because of my finding that the collapse of the boom was not caused by a combination of a pre-existing defect and the operation of the Crane on an angle of lateral inclination slightly greater than 0.3 degrees.[253]

[212] I have found that the boom of the Crane collapsed because of structural overload due to the 7 degree slope of the ramp in conjunction with the carrying of a 39.2 tonne load. The Crane was not designed to be operated in this manner. Such operation was, as I have found, contrary to Australian Standards and the manufacturer's guidelines.

[213] To use the language of s 54(2), the act of operating the Crane on a 7 degree slope with a load of 39.2 tonnes could reasonably be regarded as being capable of causing or contributing to the collapse of the boom. My findings of course go further in that I have found that the operation of the Crane on the 7 degree slope was the actual cause of the collapse of the boom and that no identified pre-existing defects played any part in that collapse.[254]

[214] The defendant referred to the evidence of Dr Jones in his 2 December 2014 report (exhibit 50) where he stated that it was not possible to conclude that no part of the collapse was caused by operating the Crane on sloping ground assuming:

(i) there was a pre-existing defect as postulated by Cusack; and

(ii) the Crane was operating on a slope exceeding 0.3 degrees.

Dr Jones was not cross-examined on this report. The defendant also relied on the cross-examination of Cusack[255] where he accepted that operating on a slope of greater than 3 degrees could contribute to the collapse of the boom. He also accepted that beyond 3 degrees the operation at those higher angles is a significant contribution to the failure.[256] Relying on that evidence, the defendant submitted that the plaintiff cannot discharge the burden cast upon it by s 54(3) to show that "no part of the loss" was caused by the operation of the Crane on a slope. Given my factual findings this submission must be accepted.

[215] The plaintiff alleges that the defendant in declining to indemnify the plaintiff under the Policy breached the contract of insurance.

[216] It follows both from my factual findings and construction of the Policy that the Policy does not respond to the plaintiff's claim. Given those findings the plaintiff's allegation that the defendant breached the contract of insurance must fail.

[217] If, contrary to my findings, the Crane at the time the boom collapsed was operating on level or near level ground and the cause of the collapse was a pre-existing defect, then it is necessary to consider whether there has been a breach of the policy.

[218] Both parties accepted that if an insurer denied liability to pay a valid claim that may constitute a breach of the contract of insurance.[257]

[219] Both parties also accepted that the mere fact that an insurer denies a claim for indemnity under a policy is not in itself enough to amount to a repudiation of a contract of insurance.[258] The plaintiff identifies the conduct constituting the repudiation as being the defendant's failure to properly investigate the plaintiff's version of events, namely that the Crane was operating on level ground at the time the boom collapsed. The plaintiff alleges that the defendant, after preliminary advice, "went about seeking to prove that the Crane was operating on the ramp on a 7 degree slope".[259]

[220] The difficulty with this submission is that the information being provided by the plaintiff from eye witnesses such as Hitaua was prima facie inconsistent with the final position of the Crane. There was cogent evidence to support the defendant's refusal to indemnify the plaintiff under the Policy. The plaintiff further alleges that the defendant's failure to indemnify the plaintiff under the Policy amounts to a breach of the implied term of utmost good faith pursuant to s 13 of the Act. There is however, no plea that the defendant repudiated the Policy or that such repudiation was accepted by the plaintiff and the contract terminated. Repudiation and acceptance of repudiation must be clearly pleaded.[260]

[221] The mere refusal to indemnify the plaintiff does not constitute a repudiation of the contract of insurance. There was a proper basis upon which the defendant could refuse indemnity. Such a refusal did not mean that the defendant was not willing to perform the contract of insurance. It simply meant that in the circumstances of the present case the defendant was of the opinion that the Policy did not answer.[261]

[222] Even assuming that the defendant's refusal to indemnify was wrongful and constituted a repudiation of the contract of insurance there was no acceptance of the alleged repudiation by the plaintiff. The plaintiff has identified two matters said to constitute acceptance of the alleged repudiation. The first was that the plaintiff commenced proceedings against the defendant seeking damages for breach of the Policy. The plaintiff's claim is, in essence, a claim for indemnity under the Policy. The plaintiff seeks such indemnity relying on the coverage and additional coverage for insured damage under the Policy. The defendant relies on the same terms as well as the exclusion clauses to deny liability. The present action therefore proceeds on the basis that the contract of insurance remains on foot. The commencement of the action cannot by itself be viewed as constituting an acceptance by the plaintiff of the alleged repudiation.

[223] The second matter relied on by the plaintiff is that the terms of the Policy operate so as not to require the plaintiff to actively communicate its acceptance of the defendant's repudiation to the defendant. This submission is made on the basis that the Policy was for a specified period of time from 21 November 2008 until 15 November 2009.[262] The plaintiff therefore submitted:[263]

"As at 15 November 2009, the defendant was under no illusion that it remained bound by the terms of an obligation under the Policy, because the Policy was at an end thereafter. The defendant did not regard it as being bound to the contract of insurance, especially after 15 November 2009."

[224] This submission should be rejected as it misconstrues the Policy. The primary obligation of the defendant under the Policy was to cover the plaintiff for insured damage to the Crane that occurred within the period of insurance, namely 21 November 2008 to 15 November 2009. That obligation is a continuing obligation to indemnify the plaintiff for any relevant insured damage that occurred at any time within that period. That continuing obligation does not come to an end simply because the period of insurance has expired.

[225] It follows that the contract of insurance has not been terminated and remains on foot.

[226] Both parties accepted that if the contract of insurance has been terminated then the assessment of damages is at large as both parties have been discharged from further performance of the contract.[264] If the contract of insurance has been terminated for repudiation then the claim is for unliquidated damages.[265] Unliquidated damages may include consequential losses within the contemplation of the parties.[266]

[227] The parties also accepted that where there is no repudiation and no termination of the contract of insurance the measure of damages is guided by the Policy.

[228] If the measure of damages is limited by the Policy then the plaintiff's damages would be $1,521,684.00. This consists of $1,397,934.00 being the agreed quantum for the total loss of the Crane.[267] The additional $123,750.00 is for loss of revenue pursuant to the optional extension to Section 1 under the Policy less the excess of $1,250.00.

[229] The plaintiff would also be entitled to interest pursuant to s 57 of the Act. To determine the period in respect of which interest is payable it is necessary to identify the day from which it was unreasonable for the defendant to have withheld indemnity. That date for the calculation of interest pursuant to s 57 may be taken from the letter of refusal of 1 April 2009 to the date of judgment.

[230] If however, the contract of insurance was terminated the plaintiff claims consequential loss greater than the sum of $123,750.00 in two respects:

(a) a claim for loss of revenue in excess of the Policy limit of $123,750.00, which for quantification purposes has been agreed in the amount of $530,000.00 for the period 1 February 2009 to 30 November 2012 and for the period of 1 December 2012 to the date of judgment at a daily rate of $378.00;[268] and

(b) default interest pursuant to financial arrangements.[269]

[231] These consequential losses are only claimable by the plaintiff if the contract of insurance has been terminated. As I have already observed, it was accepted by the plaintiff that absent acceptance of the defendant's alleged repudiation, the measure of damages is guided by the Policy.[270] If the contract of insurance is still on foot exclusion 2 specifically excludes consequential loss of any kind or description whatsoever. The plaintiff submitted that the consequential losses were not too remote in that they were losses within the contemplation of the parties.

[232] The plaintiff in this respect relied on the decision of Corboy J in Highway Hauliers Pty Ltd v Maxwell.[271] His Honour accepted that consequential loss was recoverable for breach of an insurance contract where it was contemplated by the parties that financial loss would be a likely consequence of the breach.[272] His Honour held that the consequential damages were not too remote because the insurer would have reasonably contemplated that if Highway Hauliers lost the use of a prime mover and trailer without replacement in a reasonable time after a claim was made that Highway Hauliers could lose the opportunity to operate a replacement vehicle as part of its haulage business and earn income by doing so.[273]

[233] The plaintiff identified the following matters as supporting the submission that the consequential losses were within the contemplation of the parties:[274]

(a) the defendant was aware that the machine the subject of the Policy was a large crane, worth in excess of $1 million, which the plaintiff intended to use to earn an income in its business;

(b) if the Crane was damaged, it might be unavailable for use by the plaintiff in its business;

(c) it was reasonably within the contemplation of the defendant at the inception of the Policy that the Crane would be subject to finance arrangements via a bank or other financial institution, necessitating repayments on such finance;

(d) the defendant knew that the plaintiff required insurance to meet the risk of losses to the plaintiff's business if the Crane was damaged;

(e) the parties agreed that if the defendant paid a benefit on the Policy in accordance with the Policy terms, the plaintiff would be reimbursed loss of revenue provided for in the Policy;

(f) it was reasonably within the contemplation of the defendant that if it unlawfully refused to pay the plaintiff a benefit pursuant to the Policy, the plaintiff would suffer financial losses over and above the amount agreed between the parties; and

(g) the exclusion concerning consequential loss applied to limited the plaintiff's claim only in circumstances where the defendant paid a benefit (including loss of revenue) to the plaintiff because of damage to the Crane.

[234] The defendant, however, submitted that there was no or no sufficient evidence that would bring the plaintiff within the second limb of Hadley v Baxendale[275] by establishing that, in some general way, the parties contemplated the type of damage suffered in the manner in which it occurred. The defendant pointed to the fact that there was no evidence regarding the surrounding circumstances of the entry into the contract of insurance.[276] The Policy however, identified that the occupation of the plaintiff was "principally crane operator". The defendant accepts that a large crane was the subject of the Policy and that the crane was likely to be a profit earning chattel. The fact that the Policy also contained an optional extension for loss of revenue suggests that it was within the contemplation of the parties that if the Crane was damaged then there was a real probability that the plaintiff would lose revenue.

[235] If there had been a wrongful refusal of indemnity under the Policy (including the replacement value of the Crane and the agreed amount for loss of revenue) it must have been in the contemplation of the parties that without the means for the plaintiff to carry out its occupation as notified in the Policy it would incur a loss of revenue. The claim for loss of revenue for the period 1 February 2009 to 30 November 2012 is in the sum of $530,000.00 and thereafter to the date of judgment at a daily rate of $378.00. Such loss is not, in my view, too remote.

[236] I have however, come to a different conclusion in respect of the claim for default interest. As pleaded in paragraph 28(c) of the amended fresh statement of claim, the plaintiff alleges that it became liable to pay default interest to Gallop Reserve Pty Ltd pursuant to certain "Equipment Finance". I do not accept that it was reasonably within the contemplation of the parties at the inception of the Policy that the Crane would be subject to finance arrangements. The Policy Schedule does not note any interested party such as either Westpac or Gallop. The Policy in respect of "Interested Parties" notes "nil advised". I accept the submission of the defendant[277] that there was no evidence from Mr Kenwood to support the suggestion that the defendant ought to have been aware of the terms of any financial provision including a requirement for default interest. The assignment to Gallop occurred after the insurance was entered into and after indemnity was refused by the letter of 1 April 2009. There was no evidence that it was in the contemplation of the parties that, even if the insurer knew of some financial arrangement, the defendant ought to have known that if the Crane was damaged the plaintiff would be rendered unable to meet any commitments it had entered into under such a financial arrangement.

[237] Section 13 of the Act, as in force at the time,[278] implies into a contract of insurance, "a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith". This duty "cannot be limited or restricted in any way by any other law".[279] Further, s 14 provides, without limiting the duty, that if "reliance by a party to a contract of insurance on a provision of the contract would be to fail to act with the utmost good faith, the party may not rely on the provision".

[238] Amendments to the Act by the Insurance Contracts Amendment Act 2013 (Cth) made the duty of utmost good faith subsection (1) of s 13 and inserted the following subsections into s 13 of the Act:

(2) A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection (1) is a breach of the requirements of this Act.

(3) A reference in this section to a party to a contract of insurance includes a reference to a third party beneficiary under the contract.

(4) This section applies in relation to a third party beneficiary under a contract of insurance only after the contract is entered into.

[239] These subsections only apply to a contract of insurance originally entered into after the commencement of the Insurance Contracts Amendment Act 2013 (Cth).[280]

[240] At common law, the relationship between insured and insurer has always been recognised as one of utmost good faith. Despite this, "there was no reported case in which the common law duty clearly operated to the benefit of the insured." This was because at common law the remedy for breach of the duty of utmost good faith was avoidance of the contract; a remedy rarely of benefit to an insured. [281] Instead, it primarily had relevance in respect of an insured's duty of disclosure.[282]

[241] The inclusion of ss 12 - 14 in the Act, by implying the duty of utmost good faith as a term into the contract of insurance, confirmed that the duty was, for practical purposes, reciprocal, applied to all aspects of the relationship between insurer and insured, and afforded a remedy by way of contractual damages for breach.[283] This also complemented the consumer protection purpose of the Act.[284]

[242] There has not been, as yet, a comprehensive definition of the duty of utmost good faith nor an identification of the types of conduct for which it would be contravened.[285]

[243] The most recent authoritative proposition as to what "utmost good faith" requires of an insurer is that of Gleeson CJ and Crennan J in CGU Insurance Limited v AMP Financial Planning Pty Ltd:[286]

"Conversely, an insurer's obligation to act with utmost good faith may require an insurer to act, consistently with commercial standards of decency and fairness, with due regard to the interests of the insured."

[244] Just what "due regard to the interests of the insured" would require will, no doubt, depend upon all of the circumstances of the matter under consideration.[287] Nevertheless, as stated by Chesterman J, "[o]ne can readily see how the insurer should be mindful of its insured's position when defending, suing or compromising".[288]

[245] However, a lack of utmost good faith is "not to be equated with dishonesty only"[289] and may require the party seeking to claim a breach of the implied term to "not ... be guilty of tainted relevant conduct" in the sense of mutuality and reciprocity of the duty to the other contracting party.[290]

[246] The duty of utmost good faith has been said to:**

• impose principles of fairness and honesty;[291]

• compel full and frank disclosure;[292]

• require notice of important obligations;[293]

• necessitate avoidance of conflicts of interest;[294] and

• oblige a timely response to a claim for indemnity.[295]

[247] However, the duty of utmost good faith does not:

• prevent an insurer putting an insured to proof when the insurer is suspicious of a claim or where the insurer has bona fide reservations concerning its obligations to indemnify;[296]

• impose an "obligation in an insurer to coddle its insured and to allow idiosyncratic judicial solicitude to replace principle";[297]

• require a party to "surrender any commercial advantage which they may seek to take advantage of during negotiations in favour [of] the other party";[298]

• require an insurer to give an assurance, not required to be given under the policy, that it would indemnify the insured for any further damage resulting from reparations for which liability was accepted;[299]

• prohibit an insurer from relying on an assumption against the interests of the insured after inquiries were made of the insured and no information was received;[300] and

• require an insurer to subjugate its interest to that of another party to a contract of insurance, for example requiring an insurer to refrain to seek contribution from a co-insurer.[301]

[248] It follows that the duty of utmost good faith will require an insurer to act in accordance with commercial standards of decency and fairness, and with due regard to the insured's interests,[302] but will not require the insurer to put the interests of the insured above its own.[303] The duty of utmost good faith does not equate to, nor is it synonymous or analogous to, a fiduciary duty.[304] An insurer is legitimately entitled to:

• a reasonable period of time to make further inquiries of all the circumstances giving rise to a claim, including inquiries of the insured and those involved in its occurrence;

• put an insured to proof if suspicious of the bona fides of the claim; and

• decline indemnity if the circumstances giving rise to the claim fall outside the insurable interest or an exclusion clause is applicable to the circumstances.

[249] In its amended fresh statement of claim, the plaintiff pleaded that s 13 imposed, in addition to an implied term, a statutory duty on the defendant requiring it to:[305]**

"a) in respect of any matter arising under or in relation to the Policy, act towards the Plaintiff with the utmost good faith;

b) apply real and genuine consideration to a claim on the Policy;

c) reach a proper decision in respect of a claim on the Policy on the evidence before it;

d) address the correct question(s) when considering a claim on the Policy;

e) not act unreasonably, arbitrarily or oppressively;

g) obtain, of its own volition, all relevant evidence to enable it to make a fair and proper assessment of a claim on the Policy;

h) act with fair consideration to the Plaintiff's interests;

i) provide the Plaintiff procedural fairness in assessing a claim on the Policy;

j) make a prompt admission of liability to meet a sound claim for indemnity;

k) make a prompt payment concerning an accepted claim"

**[250] The plaintiff submitted that, as a matter of statutory construction, when considering the clear meaning of the text[306] and the context of the Act, including its purpose, policy and the mischief it is seeking to remedy,[307] a statutory duty of utmost good faith is imposed upon the defendant.[308]

[251] The context of the Act and the mischief that the duty of utmost good faith sought to remedy is identified in the Australian Law Reform Commission Insurance Contracts Report that gave rise to the enactment of the Act:[309]

Legislation should make it clear that the duty of good faith applies to all aspects of the relationship between the insurer and the insured, including the settlement of claims. An insured should be entitled to recover damages for losses suffered by him as a result of the insurer's breach of the duty of good faith in relation to the settlement of a claim.

[252] The provisions of the Act that the plaintiff submitted imposed the statutory duty as a matter of necessary implication include:[310]**

• Section 12 which prohibits the limiting or restricting of the duty of utmost good faith "by any other law"; and

• Section 13(2) that deems a breach of the duty of utmost good faith to be a breach of the requirements of the Act as creating an "obligation extending outside the contract".[311]

**[253] The plaintiff submitted[312] that further support for a statutory duty is found in the judgment of Gleeson CJ and Crennan J in CGU Insurance Limited v AMP Financial Planning Pty Ltd where their Honours stated:[313]

"Conversely, an insurer's statutory obligation to act with utmost good faith may require an insurer to act, consistently with commercial standards of decency and fairness, with due regard to the interests of the insured." (emphasis added)

[254] As a consequence of the breach of statutory duty, the plaintiff submitted that all damages causally connected to a breach of the statutory duty are compensable[314] and consequently are "assessed akin to tort rather than contract" to put the insured in the position it would have been had the breach not occurred.[315]

[255] Ultimately, the plaintiff claimed that a statutory duty of utmost good faith arises on the part of the defendant and that, as a consequence of its breach, it sounds in damages for all causally connected lost, including the default interest on the finance of the Crane from Westpac and then Gallop Reserve Pty Ltd.[316]

[256] The defendant submitted that "no authority can be found" for s 13 giving rise to a statutory duty and that such a contention "is a misconception of section 13".[317] The mischief to which s 13 was directed was to provide a remedy for breach of the term sounding in contractual damages.[318] Further, the imposition of such a statutory duty would be directly contrary to the view expressed by Gleeson CJ and Crennan J in CGU Insurance Limited v AMP Financial Planning Pty Ltd:[319]

"However, the Act does not empower a court to make a finding of liability against an insurer as a punitive sanction for not acting in good faith. If there is found to be a breach of the requirements of s 13 of the Act, there remains the question how that is to form part of some principled process of reasoning leading to a conclusion that the insurer is liable to indemnify the insured under the contract of insurance into which the parties have entered. Let it be assumed, for example, that CGU's failure throughout substantially the whole of the year 2002 to admit or deny liability was a failure to act with the utmost good faith. What follows from that? Most of the settlement amounts were paid during 2001. Again, even if it be said that CGU should have made up its mind about liability before October 2001 (a difficult assertion to sustain having regard to what was said at the meeting of 5 October 2001), what follows? Between a premise that CGU's delay constituted a failure to act with the utmost good faith, and a conclusion that CGU is liable to indemnify AMP in respect of the settlement amounts, there must be at least one other premise. What it might be has never been clearly articulated."

[257] A tort of bad faith based on the implied term of utmost good faith has been rejected by both this Court and the New South Wales Court of Appeal.[320] The defendant submitted that this shows that there are no other causes of action available to increase the contractual remedies otherwise available.[321]

[258] Finally, the defendant submitted that the newly introduced s 13(2) of the Act, deeming a breach of the duty of utmost good faith to be a breach of the requirements of the Act, provides no civil sanctions for its breach but instead provides for regulatory sanctions by the Australian Securities and Investments Commission ("ASIC").[322]

[259] ASIC's powers in this respect are found in s 14A and s 55A of the Act. These sections were introduced by the Insurance Contracts Amendment Act 2013 (Cth). These powers extend to ASIC dealing with an insurer's failure to comply with the duty of utmost good faith in relation to handling or settlement of claims. ASIC is also empowered to bring, in certain circumstances, a representative action on behalf of insureds.

[260] The Explanatory Memorandum for the Insurance Contracts Amendment Act 2013 (Cth) explains the rationale for the inclusion of these provisions, stating that enforcing compliance of the duty of utmost good faith may present "too great an expense for some parties and does not provide long-term solutions to systemic breaches of utmost good faith committed over time".[323] Consequently, to remedy this mischief, the newly enacted sections allow ASIC to exercise its Corporations Act 2001 (Cth) powers,[324] such as banning and suspension of financial services licences, and, as mentioned, to undertake representative action on behalf of an insured,[325] and thereby alleviate the expense for an aggrieved insured. The Explanatory Memorandum further states that a breach of the duty is "not an offence against the [Act], nor does it attract any penalty under the [Act]."[326]

[261] The elements of a civil action for breach of statutory duty are identified in chapter 18 of the 10th edition of Fleming's "The Law of Torts"[327] and adopted by Le Miere J in Alcoa of Australia Ltd v Apache Energy Ltd:[328]**

• the plaintiff must fall within the "limited class" of the public for whose benefit the statutory provision was enacted;

• the damage must also fall within the intended scope of the statute;

• the obligation under the statute was imposed on the defendant;

• the defendant must have breached the statute; and

• that breach must have caused actual damage of some sort to the plaintiff.

**[262] In Sovar v Henry Lane Pty Ltd, Kitto J outlined indicia of an intention of Parliament to allow an action:[329]

The legitimate endeavour of the courts is to determine what inference really arises, on a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation.

[263] In determining whether a statutory duty arises the starting point is the words of the relevant provisions of the Act. On an ordinary reading of s 13(1), it does no more than imply into a contract of insurance a provision requiring each party to act towards the other party with the utmost good faith. It takes effect "by a legal fiction ... that the parties had made a contract which included the obligation".[330] Such terms, implied by statute, are common. The breach of which is the breach of "an obligation imposed by the contract itself."[331] The mere implication of a term into a contract of insurance by statute does not, in itself, give rise to a statutory duty. More is required.

[264] The plaintiff placed significant reliance on s 13(2) as providing a basis for the imposition of a statutory duty. This must be rejected. The enactment of s 13(2) was to provide ASIC with wide powers for regulatory action against an insurer and to conduct representative actions on behalf of aggrieved insureds. On a plain and natural reading of the Act, a "breach of the requirements of the Act" simply provides a trigger for ASIC to exercise its powers. It does not provide support for a statutory duty.

[265] A private action for breach of statutory duty is more readily inferred were there is no other adequate or alternative remedy.[332] Although not in the form of a penalty, the Act provides the possibility for regulatory sanction and consequential deterrence as a means for enforcing the statutory obligation other than by private action.[333] A party may also sue in contract for a breach of the implied term.

[266] It has also been noted that the generality of the provision in question tends against the inference of a private action for breach of statutory duty.[334] Section 13 has, so far, been incapable of precise definition and the conduct that falls inside or outside of the ambit of the duty of utmost good faith remains undecided.[335]

[267] Examination of the historical legislative context of the Act and of recent decisions exploring the effect of the duty of utmost good faith provides further argument against s 13(1) creating a statutory duty. In Re Zurich, Chesterman J held that there was not a separately existing independent duty of good faith.[336] In Lomsargis, McMurdo J, after a thorough examination of English, American, Canadian and Australian decisions, held that there was no separate cause of action in the form of a tort of bad faith if the s 13 duty of utmost good faith is breached.[337] As identified by his Honour, "[a]s a matter of principle and policy, there seem to be good reasons for not recognising a concurrent liability in tort for their breach."[338] His Honour left open the question of whether exemplary damages may be available for breach of the duty of utmost good faith in contract.[339] A separate "cause of action" by reason of an alleged breach of the duty of utmost good faith was also rejected in ANZ Banking Group v Rqa Accountants Pty Ltd.[340]

[268] Section 13 of the Act was enacted to fill a significant gap[341] in relation to insurance contracts in clarifying with certainty that the duty of utmost good faith applies to both the insured and the insurer for the life of the policy of insurance. It provides a basis for either party to seek contractual damages for its breach. Further amendments provide regulatory sanctions for its contravention and allow ASIC to provide assistance to aggrieved persons in seeking contractual remedies. These factors do not support the existence of a concurrent liability in tort, whether by way of a statutory duty or a tort of bad faith.

[269] In Byrne v Australian Airlines Ltd, McHugh and Gummow JJ stated that where the legislation is that of the Commonwealth, and the question is one respecting the creation of new rights and liabilities which will engage Ch III of the Constitution, it is expected that the Parliament would clearly state its will.[342] The difficulties in finding for a private action identified above shows that Parliament has not clearly stated its will as to the existence of a statutory duty.

[270] There are two additional considerations which tell against a statutory duty. The first is that s 13(1) applies to all insureds and insurers. The implied duty is mutual and reciprocal and extends to "all contracts of insurance and proposed contracts of insurance".[343] This is a very wide class; one could easily envisage a very large portion of the community would hold insurance. Any one insured could not be said to belong to a "limited class" of the public for whose benefit s 13(1) was enacted. Secondly, the obligation created by s 13(1) is not solely imposed on insurers. It applies also to insureds. It cannot be said that the provisions are designed to "protect" a class of persons,[344] namely insureds, of which the plaintiff is a member, any more than the provisions are designed to "protect" insurers.

[271] Section 13(1) does not therefore create a statutory duty affording the plaintiff a private right of action for its breach.

[272] The plaintiff submitted that the defendant breached its duty of utmost good faith in refusing indemnity. The essence of the alleged breach is that the defendant, in refusing to indemnify, relied on the conclusions drawn by its own experts rather than having a proper regard to the eye witness testimony including that of Hitaua. The plaintiff alleges that the defendant sought to disprove the plaintiff's version of events.[345] The plaintiff further alleges that the defendant failed to apply any real and genuine consideration to the claim and in refusing the claim acted unreasonably, arbitrarily or oppressively and did not have regard to all relevant information. The defendant therefore, as is alleged, failed to act with fair consideration to the plaintiff's interest and provide the plaintiff procedural fairness.[346]

[273] In considering these alleged breaches it is necessary to first identify the investigative steps taken by the defendant. Most of these steps have been set out in the plaintiff's submissions.[347] This history is largely drawn from the documents in the Agreed Bundle (exhibit 17). The documentary history was supplemented by the defendant calling Gordon Nichols. Nichols was the former National Technical Claims Manager for the defendant. He was not initially involved in the claim which was notified through a wholesale broker Austagencies. Nichols however, became the relevant claims manager because of his expertise in the construction industry. He is the signatory to the letter of 1 April 2009 refusing indemnity.

[274] The day after the collapse of the boom the defendant caused a solicitor to be appointed to act on its behalf. The solicitor was instructed to appoint appropriate experts including a metallurgist to assist with the investigation into the cause of the boom collapse.[348] On 6 February 2009 Hartigan was appointed to investigate the incident. On 9 February 2009 Hartigan, in company with McCosker, attended the site with a representative from Liebherr-Australia Pty Ltd, the manufacturer of the Crane. Hartigan's preliminary conclusions are contained in his report of 18 February 2009.[349] The executive summary to Hartigan's first report identified his belief as to how the boom collapsed:[350]

" 3. I believe that the crane was driven onto a slope of 7 degrees while lifting a load of 39.2T.

4. Such operation is against the instructions of the manufacturer.

5. I believe that operation on the 7 degree slope is the cause of the boom collapse."

[275] Hartigan's preliminary view is consistent with my factual findings. Prior to the letter of refusal of indemnity of 1 April 2009, Hartigan supplied two further reports.[351] In his report of 5 March 2009, Hartigan provided an opinion as to whether the Crane was operated contrary to manufacturer's guidelines. His preliminary findings in this respect are again consistent with my findings. In his third report of 30 March 2009, Hartigan specifically considered the record of interview of Hitaua and Steven Clark of 18 March 2009.

[276] Also prior to the letter of refusal, Nichols required a further detailed statement from the Crane manufacturer. He also required Hitaua to be re-interviewed.[352]

[277] Nichols had previously arranged for a metallurgical expert, Spanswick, to be appointed. Spanswick provided a report dated 19 February 2009.[353] Spanswick carried out a site investigation specifically for the purpose of determining whether the failure of the boom was due to some pre-existing metallurgical defect. His conclusion was that the boom had failed in response to an overstressed state. No metallurgical defects were detected that were likely to have caused or contributed to the failure. Spanswick further concluded that the Crane had probably been driven to the site of the failure.

[278] On 19 March 2009 Nichols also received an email outlining the salient issues arising from the further interview of Hitaua.[354] A statement from Hitaua's first interview had already been compiled. One of the points made by Hitaua when he was re-interviewed was that he had not started to negotiate the "ramp" at the time of the collapse and that the Crane was thrown to where it came to rest. I note that Hitaua's suggestion that the Crane was thrown to its final position was a part of the plaintiff's case that was expressly abandoned.

[279] Nichols replied to this email on 19 March 2009.[355] He noted that Hitaua's assertion that he was not walking the machine at the time of the collapse appeared to be inconsistent with Sprecak's statement. This is a reference to an unsigned statement of Sprecak which had been provided to Nichols. In that unsigned statement Sprecak at [19] identified that the Crane "was on a bit of a slight angle forwards" and "the crane was not level, but it was not much out of level".[356]

[280] The last paragraph of Nichols' letter of 1 April 2009 provided the following opportunity to the plaintiff:[357]

"Should you seek to dispute this decision or consider there is additional information or documentation which may cause us to alter our stance then we invite its early submission. Your further rights and entitlements are spelt out in the attached brochure including your entitlement to seek determination from the FOS should you consider you have been unjustly dealt with however your first step in this process is to seek consideration by CGU's insurance dispute resolution area."

[281] The plaintiff took up this invitation and in a letter from Sirius dated 28 May 2009 submitted that the information provided in the reports of Hartigan and Spanswick was fundamentally incorrect. Reports of Cusack and another expert, Jenkins, were enclosed with the letter. The letter restated that the plaintiff maintained that the machine was never operated from its final resting place shown in the photographs. That submission, it was said, was supported by eye witness reports. The letter further submitted that the independent reports from Cusack and Jenkins were supportive of the proposition that the Crane was not being operated from the "ramp".[358] The defendant continued to refuse indemnity.

[282] Mr Nichols in evidence confirmed that he had regard to the reports of Hartigan, Spanswick and the statements which had been obtained in refusing cover.[359] Upon consideration of that information he formed the view that Hitaua had misconceived where he was actually positioned on the ramp at the time of the collapse.[360] It was forcefully put to Nichols in cross-examination that his agenda was to do everything he could to disprove the way the accident happened according to the plaintiff. Nichols' response was as follows:[361]

"No, I entirely disagree with you. And that has never been my way in my whole career. I have found ways to pay claims not reject them."

[283] I found Nichols to be an impressive witness. He was an experienced claims manager who gave detailed consideration to the claim. This detailed consideration included the appointment of loss adjusters and assessors, receiving reports from engineering and metallurgist experts and giving consideration to the eye witness accounts. I accept the defendant's submission that the decision to decline was one which evolved and was made after careful consideration of the available evidence including the lay evidence. To the extent that Hitaua's evidence was not accepted by the defendant, an insurer is not obliged to accept the statement of an operator or even an insured, who may be honestly mistaken.[362] On the information that was before the defendant prior to 1 April 2009, it was entitled to refuse cover. The refusal of cover in the circumstances of the present case does not constitute any breach of the defendant's implied duty of utmost good faith. As stated by Kirby J in CGU Insurance Limited v AMP Financial Planning Pty Ltd:[363]

"An insurer, acting in good faith, is perfectly entitled to deny indemnity. It can put the insured to proof where it rejects a claim, where it is suspicious about it or where it has bona fide reservations concerning its obligations to indemnify the insured. Then, at least, insurer and insured know where they each stand. Each can take appropriate advice. Each can prosecute and defend its legal entitlements ..."

If the defendant breached the implied duty what losses are recoverable?

[284] If I am wrong in my conclusions that no statutory duty arises and that there was no breach of the implied duty of utmost good faith, it is necessary to consider the assessment of damages.

[285] In its claim for damages the plaintiff did not seek to differentiate between damages arising from a breach of statutory duty and damages arising from a breach of the implied duty. Submissions were only made by the plaintiff in respect of an assessment of damages for breach of the implied duty. The damages identified were the plaintiff's liability for default interest on the Crane equipment finance agreement and legal costs. The liability to pay default interest on the Westpac loan and the Gallop loan arises in the plaintiff's submission because of the defendant's failure to pay the benefit to the plaintiff pursuant to the Policy.[364] This submission however, proceeds on the basis that the measure of damages for breach of the implied duty is not solely based on contractual principles. I have already found above that the claim for default interest under the finance agreement is too remote in respect of the plaintiff's breach of contract claim. I do not see any reason in principle why a claim for damages based on a breach of the implied term of utmost good faith would not be assessed in accordance with the same contractual principles.

[286] Re Zurich and Lomsargis support this conclusion. In Re Zurich, Chesterman J questioned whether a breach of the duty of utmost good faith would add anything to damages flowing ordinarily from a contractual breach.[365] Likewise, in Lomsargis, McMurdo J remarked:[366]

"To recover damages for breach of these implied terms, the plaintiff must establish his entitlement to be paid the benefits, but in that event, he will recover the benefits then accrued due together with a further sum for interest under s. 57. The statement of claim does not plead any facts from which he will have suffered some further damage in that event. It is submitted that a plaintiff is entitled to plead his case in the alternative. But the claim for damages for breach of contract is dependent upon proof of the plaintiff's entitlement to payment of the agreed weekly benefits; it [the breach of the duty of utmost good faith] is not an alternative to a claim to that entitlement. And, plainly, he cannot recover both the amounts in paras 27 and 28, together with s. 57 interest, and damages for the losses alleged in para. 32."

[287] A breach of the duty of utmost good faith cannot be an alternative claim to indemnification. A breach "does not empower a court to make a finding of liability against an insurer as a punitive sanction for not acting in good faith."[367] Contractual damages in the form of indemnification resulting from an alleged breach of the duty of utmost good faith necessarily requires proof of the entitlement to indemnity itself.[368] It follows that a breach of the contract of insurance through a denial of indemnity that collaterally breaches the duty of utmost good faith would simply result in damages to be assessed in accordance with ordinary contractual principles. However McMurdo J left open the question of whether exemplary damages may be awarded for a breach of the implied contractual duty of utmost good faith.[369]

[288] As to any claim for legal costs, whether costs for an action based on a breach of the implied duty warrants the assessment of those costs on a standard or indemnity basis should be determined in the ordinary course and not as an award of damages.

[289] I order that the claim filed 1 March 2011 be dismissed.

[1] Mark Kenwood was, for example, a director of both the plaintiff and Pinjarra Constructions.

[2] Amended defence of the defendant filed 28 October 2014, [20]; exhibit 17, agreed bundle, document 35, letter CGU to Matton Developments, 229-271.

[3] Agreed Bundle, document 35, letter CGU to Matton Developments, 229-230.

[4] Second further amended reply filed by leave on 4 December 2014, [12](f).

[5] Amended fresh statement of claim filed by leave on 1 December 2014, [16](b).

[6] Amended defendant of the defendant filed 28 October 2014, [12].

[7] See [17](c)(i) of the amended fresh statement of claim filed by leave on 1 December 2014.

[8] Exhibit 17, agreed bundle, document 6, contractors plant and machinery product disclosure statement and policy, 4-5.

[9] Exhibit 17, agreed bundle, document 6, contractors plant and machinery product disclosure statement and policy, 88-94.

[10] Exhibit 17, agreed bundle, document 7, contractors plant and machinery insurance schedule, 103-104.

[11] Transcript of proceedings, 3-40, lines 24-43.

[12] Exhibit 14, protocol: view & demonstration.

[13] Exhibit 14, protocol: view & demonstration, [6](d), [6](e).

[14] Exhibit 43, hard drive containing video footage of view and demonstration.

[15] Transcript of proceedings, 8-19, lines 16-18.

[16] Transcript of proceedings, 3-57, lines 1-2.

[17] Exhibit 9, quotation to G & M Panel Constructions from Matton Developments dated 7 January 2009.

[18] Transcript of proceedings, 2-29, lines 40-46.

[19] Transcript of proceedings, 2-31, lines 37-45.

[20] Transcript of proceedings, 2-32, lines 6-20.

[21] Transcript of proceedings, 2-36, lines 25-31.

[22] Transcript of proceedings, 2-37, lines 7-19.

[24] Transcript of proceedings, 1-47, lines 9-12; 39-46; 1-49, lines 1-5.

[25] Transcript of proceedings, 1-49, lines 20-21; 34-35.

[26] Transcript of proceedings, 3-4, lines 15-16.

[27] Transcript of proceedings, 2-43, lines 21-22.

[28] Transcript of proceedings, 2-43, lines 24-29.

[29] Transcript of proceedings, 3-13, lines 7-46.

[30] Transcript of proceedings, 3-14, lines 10-11.

[31] Transcript of proceedings, 2-45, lines 40-46; 2-46, lines 17-20.

[32] Transcript of proceedings, 3-45, lines 33-46; 2-7, lines 1-16.

[33] Exhibit 1, plaintiff's bundle of photographs, photograph 2.

[34] Transcript of proceedings, 1-64, lines 15-28; exhibit 8, record of interview - G & M Panel Constructions Pty Ltd dated 9 October 2009, 26-27.

[35] Transcript of proceedings, 2-7, lines 23-24.

[36] Transcript of proceedings, 1-50, lines 36-43; 1-51, lines 1-4.

[37] Transcript of proceedings, 1-53, lines 19-24.

[38] Transcript of proceedings, 3-72, lines 40-47; 3-73, lines 9-10.

[39] Transcript of proceedings, 1-52, line 1.

[40] Transcript of proceedings, 3-14, lines 30-36.

[41] Transcript of proceedings, 3-75, lines 5-24.

[42] Transcript of proceedings, 3-75, lines 26-30.

[43] Transcript of proceedings, 3-18, lines 25-27.

[44] Transcript of proceedings, 3-19, lines 21-22.

[45] Transcript of proceedings, 1-52, lines 11 to 13. Paragraph [8](c)(xi)C of the plaintiff's second further amended reply filed by leave on 4 December 2014 pleads that Hitaua took about 30 to 45 minutes to spread the rubble.

[46] Transcript of proceedings, 3-19, lines 4-5.

[47] Transcript of proceedings, 1-58, lines 25-34.

[48] Exhibit 33, joint expert report of Patrick Cusack, David Hartigan and Keith Spanswick dated 16 November 2012, 3.

[49] Transcript of proceedings, 1-50, lines 36-43 (Sprecak); 3-72, lines 22-47 (Hitaua).

[50] Exhibit 7, statutory declaration of Gary Sprecak sworn 27 February 2009, 5.

[51] Exhibit 8, record of interview - G & M Panel Constructions Pty Ltd dated 9 October 2009, 28.

[52] Transcript of proceedings, 3-61, lines 34-45.

[53] Transcript of proceedings, 3-79, lines 31-34.

[54] Transcript of proceedings, 3-79, lines 36-42.

[55] Transcript of proceedings, 3-81, lines 41-42.

[56] Transcript of proceedings, 3-15, lines 39-47.

[57] Transcript of proceedings, 3-41, lines 40-43.

[58] Transcript of proceedings, 3-71, lines 15-16.

[59] Transcript of proceedings, 3-76, lines 4-34.

[60] Transcript of proceedings, 3-22, lines 1-4.

[61] Transcript of proceedings, 3-22, lines 35-39; 3-23, line 4.

[62] Transcript of proceedings, 3-23, lines 23-47; 3-24, lines 2-43.

[63] Transcript of proceedings, 3-25, lines 38-44.

[64] Transcript of proceedings, 3-49, lines 4-7.

[65] Transcript of proceedings, 3-52, lines 40-42.

[66] Plaintiff's submissions dated 10 December 2014, [123].

[67] Plaintiff's submissions dated 10 December 2014, [129].

[68] Transcript of proceedings, 3-24, lines 29-30.

[69] Exhibit 64, report of David Hartigan dated 27 November 2014, [11].

[70] Exhibit 64, report of David Hartigan dated 27 November 2014, [14](e).

[71] Defendant's submissions undated, [14](c).

[72] Exhibit 64, report of David Hartigan dated 27 November 2014, [14](b).

[73] Exhibit 64, report of David Hartigan dated 27 November 2014, [14](c).

[74] Exhibit 56, report of David Hartigan dated 18 February 2009, [26].

[75] Transcript of proceedings, 1-19, lines 36-42.

[76] Transcript of proceedings, 1-31; 1-32; 1-33.

[77] Exhibit 56, report of David Hartigan dated 18 February 2009, [39].

[78] Transcript of proceedings, 3-24, lines 36-43.

[79] Transcript of proceedings, 3-48, lines 32-45; 3-52, lines 37-38.

[80] Transcript of proceedings, 2-34, lines 27-29.

[81] Transcript of proceedings, 3-31, lines 40-43.

[82] Transcript of proceedings, 3-23, line 47.

[83] Transcript of proceedings, 3-48, lines 21-22.

[84] Defendant's submissions undated, [11].

[85] Exhibit 17, agreed bundle, document 35, interview of Hitaua and Clark by McCosker, 247.

[86] Exhibit 26, report of Patrick Cusack dated 21 May 2009.

[87] Transcript of proceedings, 3-23, lines 23, 29.

[88] Transcript of proceedings, 1-53, lines 12-13.

[89] Transcript of proceedings, 1-61, lines 1-3; 2-15, lines 12-15.

[90] Transcript of proceedings, 2-18, lines 29-45; 2-19, lines 1-2.

[91] Exhibit 7, statutory declaration of Gary Sprecak sworn 27 February 2009, 5.

[92] Exhibit 8, record of interview - G & M Panel Constructions Pty Ltd dated 9 October 2009, 37.

[93] Evidence Act 1977 (Qld) s 101(1).

[94] Evidence Act 1977 (Qld) s 102.

[95] Transcript of proceedings, 1-61, lines 43-46; 1-62, lines 1-2.

[96] Transcript of proceedings, 1-67, lines 29-32.

[97] Transcript of proceedings, 2-21, lines 33-34.

[98] Transcript of proceedings, 1-57, lines 41-42.

[99] Transcript of proceedings, 3-75, lines 26-30.

[100] Transcript of proceedings, 3-75, line 46.

[101] Transcript of proceedings, 3-76, lines 43-46; transcript of proceedings, 3-77, lines 1-6.

[102] Transcript of proceedings, 3-77, lines 40-45.

[103] Exhibit 21, statutory declaration of James Strong sworn 24 February 2009, 3.

[104] Exhibit 22, statutory declaration of James Strong sworn 13 May 2009, [21].

[105] Transcript of proceedings, 3-82, lines 5-7.

[106] Transcript of proceedings, 3-82, lines 9-47; 3-83, lines 1-18.

[107] Defendant's submissions undated, [14](i).

[108] Transcript of proceedings, 10-2, lines 18-20.

[109] Transcript of proceedings, 10-3, lines 19-20.

[110] Transcript of proceedings, 10-4, lines 6-8.

[111] Transcript of proceedings, 10-4, lines 10-16.

[112] Transcript of proceedings, 10-5, lines 26-33.

[113] Transcript of proceedings, 10-4, lines 20-41.

[114] Plaintiff's submissions dated 10 December 2014, [173].

[115] Plaintiff's submissions dated 10 December 2014, [175].

[116] Transcript of proceedings, 10-12, line 35.

[117] Exhibit 66, witness statement of Stan Corbett dated 10 June 2009, [14].

[118] Second further amended reply filed by leave on 4 December 2014 [5](b); transcript of proceedings, 3-56; transcript of proceedings, 3-92.

[119] Transcript of proceedings, 3-93, lines 18-19.

[120] Transcript of proceedings, 3-47, line 31.

[121] Transcript of proceedings, 2-8, lines 15-25.

[122] Transcript of proceedings, 2-4, lines 32-33.

[123] Transcript of proceedings, 3-47, lines 33-35. See also: transcript of proceedings, 5-14, lines 22-45; 5-15; 5-16; 5-17, lines 3-6; 7-36, lines 30-45.

[124] Transcript of proceedings, 3-7, lines 15-20.

[125] Transcript of proceedings, 3-92, lines 41-45.

[126] Transcript of proceedings, 3-92, lines 45-47; 3-93, line 6.

[127] Transcript of proceedings, 2-42, lines 13-23.

[128] Transcript of proceedings, 3-28, lines 34-36.

[129] Transcript of proceedings, 7-35, lines 30-45.

[130] Exhibit 26, report of Patrick Cusack dated 21 May 2009, [4.1].

[131] Transcript of proceedings, 3-19, lines 40-47.

[132] Transcript of proceedings, 3-22, lines 4-39.

[133] [1959] HCA 8; (1959) 101 CLR 298.

[134] Also relying on Rossi v Westbrook [2013] QCA 102, [37] (Fryberg J).

[135] Defendant's submissions undated, [76].

[136] Exhibit 26, report of Patrick Cusack dated 21 May 2009, [2.2].

[137] Exhibit 26, report of Patrick Cusack dated 21 May 2009, [2.4].

[138] Exhibit 31, further supplementary engineering report by Patrick Cusack dated 4 March 2014, 2.

[139] Transcript of proceedings, 5-19, lines 20-22.

[140] Exhibit 31, further supplementary engineering report by Patrick Cusack dated 4 March 2014, 3.

[141] Exhibit 31, further supplementary engineering report by Patrick Cusack dated 4 March 2014, 9.

[142] Exhibit 41, report of Alex Dziouba dated 11 February 2014, 12.

[143] Transcript of proceedings, 5-43, lines 7-8.

[144] Exhibit 48, supplementary report on crane collapse by Dr Jones dated 25 August 2014, [4.3].

[145] Exhibit 48, supplementary report on crane collapse by Dr Jones dated 25 August 2014, [4.4].

[146] Exhibit 47, report on crane collapse by Dr Jones dated 25 January 2014, [6.1].

[147] Transcript of proceedings, 5-29; 5-30; 7-15.

[148] Defendant's submissions undated, [35](g).

[150] Exhibit 54, affidavit of Slawek Drabot sworn 27 November 2014, exhibit SD-1, "Boom Mount Analysis Report" dated 10 September 2012.

[151] Plaintiff's submissions dated 10 December 2014, [223].

[152] Exhibit 29, supplementary report of Patrick Cusack dated 10 February 2014, 4.

[153] Exhibit 27, report of Patrick Cusack dated 18 July 2012, 9.

[154] Exhibit 28, supplementary report of Patrick Cusack dated 30 October 2012, 3.

[155] Exhibit 33, joint expert report of Patrick Cusack, David Hartigan and Keith Spanswick dated 16 November 2012.

[156] Transcript of proceedings, 8-8, lines 1-3; exhibit 26, report of Patrick Cusack dated 21 May 2009, 5.

[157] Exhibit 63, report of David Hartigan dated 21 September 2012, [49]-[50].

[158] Exhibit 63, report of David Hartigan dated 21 September 2012, [49]; appendix D.

[159] Exhibit 63, report of David Hartigan dated 21 September 2012, [6].

[160] Exhibit 63, report of David Hartigan dated 21 September 2012, [35].

[161] Exhibit 63, report of David Hartigan dated 21 September 2012, [36].

[162] Transcript of proceedings, 9-39, line 20.

[163] Transcript of proceedings, 9-39, lines 21-47.

[164] Plaintiff's submissions dated 10 December 2014, [217].

[165] Exhibit 54, affidavit of Slawek Drabot sworn 27 November 2014, exhibit SD-1, "Boom Mount Analysis Report" dated 10 September 2012, 3.

[166] Exhibit 45, report of Keith Spanswick dated 19 February 2009; exhibit 52, report of Keith Spanswick dated 7 September 2012; exhibit 53, report of Keith Spanswick dated 24 December 2013.

[167] Exhibit 53, report of Keith Spanswick dated 24 December 2013, 3.

[168] Exhibit 53, report of Keith Spanswick dated 24 December 2013, 4.

[169] Plaintiff's submissions dated 10 December 2014, [208].

[170] Exhibit 47, report on crane collapse by Dr Jones dated 25 January 2014, [5.3].

[171] Plaintiff's submissions dated 10 December 2014, [212].

[172] Transcript of proceedings, 3-41, lines 40-43.

[173] Exhibit 56, report of David Hartigan dated 18 February 2009, [32].

[174] Exhibit 56, report of David Hartigan dated 18 February 2009, [34].

[175] Transcript of proceedings, 1-20, lines 35-44; 1-21, lines 1-10.

[176] McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579, 589 [22] (Gleeson CJ). See also: Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522, 529 [15] (Gleeson CJ, McHugh, Gummow and Kirby JJ).

[177] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, 176 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); International Air Transport Association v Ansett Australia Holdings Limited [2008] HCA 3; (2008) 234 CLR 151, 174 [53] (Gummow, Hayne, Heydon, Crennan and Kiefel JJ).

[178] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352 (Mason J).

[179] Australian Casualty Co Limited v Federico (1986) 160 CLR 513, 520 (Gibbs CJ); Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, 193 (Cooke J).

[180] FAI General Insurance Co Ltd v Maracorp Financial Services Ltd [1994] VicRp 34; [1994] 1 VR 455, 470 (Nathan J), 477-478 (Ashley J); Wilkie v Gordian Runoff Limited [2005] HCA 17; (2005) 221 CLR 522, 529 [16] (Gleeson CJ, McHugh, Gummow and Kirby JJ).

[181] [1986] HCA 82; (1986) 161 CLR 500, 510 (Mason, Wilson, Brennan, Deane and Dawson JJ).

[182] Defendant's submissions undated, [107].

[183] Trim Joint District School Board of Management v Kelly [1914] AC 667, 681 (Earl Loreburn); Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, 193 (Cooke J); Gray v Barr [1971] 2 QB 554, 585 (Phillimore LJ); Hurley Contractors Ltd v Farmers Mutual Association (1991) 6 ANZ Ins Cases 61-076, 77,241-77,242 (Gallen J); Mills v Smith [1964] 1 QB 30, 35 (Paull J).

[184] Fenton v Thorley & Co Ltd [1903] AC 443, 451 (Lord Shand); Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, 197 (Somers J); Gray v Barr [1971] 2 QB 554, 585 (Phillimore LJ); Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 525, 527 (Wilson, Deane and Dawson JJ).

[185] Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 527-528 (Wilson, Deane and Dawson JJ).

[186] Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 527-528.

[187] Fenton v Thorley & Co Ltd [1903] AC 443, 448 (Lord Macnaughten), quoted in Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 527 (Wilson, Deane and Dawson JJ).

[188] See, for example: National and General Insurance Co Limited v Chick [1984] 2 NSWLR 86; Hurley Contractors Limited v Farmers Mutual Association (1991) 6 ANZ Insurance Cases 61-076; Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, 193; AF & G Robinson v Evans Bros Pty Ltd [1969] VR 855.

[189] (1991) 6 ANZ Insurance Cases 61-076.

[190] [1984] 2 NSWLR 86.

[191] [1984] 2 NSWLR 86, 111.

[192] Defendant's submissions undated, [120].

[193] Defendant's submissions undated, [121].

[194] [2013] FCA 231; (2013) 301 ALR 560.

[195] See, for example: The Federation Insurance Ltd v R Banks [1984] VicRp 42; [1984] VR 525, 531 (Starke J).

[196] AF & G Robinson v Evans [1969] VicRp 110; [1969] VR 885, 892-895 (Starke J); National and General Insurance Co Limited v Chick [1984] 2 NSWLR 86, 91 (Hutley JA) 102-103 (Samuels JA); The Federation Insurance Ltd v R Banks [1984] VicRp 42; [1984] VR 525, 529-531 (Starke J), 537 (Kaye J); Dhak v Insurance Co of North America (UK) Ltd [1996] 2 All ER 609, 619-622 (Neill LJ); Dunn v Pain; Co-operative Insurance Company Australia (1991) 57 SASR 133, 155.

[197] See the comments of Lord Lindley in Fenton v Thorley & Co Ltd [1903] AC 443, 453.

[198] [1984] 2 NSWLR 86, 97.

[199] Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 521 (Gibbs CJ), 534 (Brennan J).

[200] The Federation Insurance Ltd v R Banks [1984] VicRp 42; [1984] VR 525, 537 (Kaye J).

[201] Gray v Barr [1971] 2 QB 554, 567. See also: Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 536 (Brennan J); National and General Insurance Co Limited v Chick [1984] 2 NSWLR 86, 97-98 (Samuels JA).

[202] Transcript of proceedings, 11-37, lines 14-20.

[203] Transcript of proceedings, 11-37, lines 22-29.

[204] Plaintiff's submissions dated 10 December 2014, [234]-[240].

[206] S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14, 23 (Kearney J).

[207] (1991) 5 ACSR 424.

[208] Entwells Pty Ltd v National and General Insurance Co Ltd (1991) 5 ACSR 424, 425-426.

[209] H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159, 173, quoted in Entwells Pty Ltd v National and General Insurance Co Ltd (1991) 5 ACSR 424, 428.

[210] Hawley v Luminar Leisure Plc & Ors [2005] EWHC 5 (first instance); Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18 (on appeal).

[211] Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18.

[212] Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18, [102].

[213] S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14.

[214] Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18, [107].

[215] Defendant's submissions undated, [123], [137].

[216] [1969] VicRp 110; [1969] VR 885.

[217] [1971] 2 QB 554.

[218] Defendant's submissions undated, [125].

[219] [1910] AC 242.

[220] [1910] AC 242, 245-246.

[221] See Gray v Barr [1971] 2 QB 544, 586-587 (Phillimore LJ); Dhak v Insurance Co of North America (UK) Ltd [1996] 2 All ER 609, 619-622 (Neill LJ). See also: De Souza v Home & Overseas Co Ltd [1995] LRLR 453 (Mustill LJ).

[222] See, for example: Australian Casualty Co Ltd v Federico (1986) 160 CLR 513; S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14; National & General Insurance Co Ltd v Chick [1984] 2 NSWLR 86; Dunn v Pain; Co-operative Insurance Company Australia (1991) 57 SASR 133.

[223] (1995) 8 ANZ Insurance Cases 61-240.

[224] L'Union Des Assurances De Paris Iard v Sun Alliance Insurance Limited (1995) 8 ANZ Insurance Cases 61-240, 71,714.

[225] Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 532.

[226] Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 532.

[227] (Unreported, D M Campbell, Kelly and Derrington JJ, Full Court of the Supreme Court of Queensland, Appeal No 83 of 1983, 22 May 1984).

[228] [1983] NZLR 190, 194 (Cooke J).

[229] (1991) 6 ANZ Insurance Cases 61-076.

[230] Hurley Contractors Ltd v Farmers Mutual Association (1991) 6 ANZ Insurance Cases 61-076; Westco Australia Pty Ltd v Manufacturer's Mutual Insurance Limited (Unreported, DM Campbell, Kelly and Derrington JJ, Full Court of the Supreme Court of Queensland, Appeal No 83 of 1983, 22 May 1984).

[231] Mount Albert City Council v New Zealand Municipalities Insurance Co Ltd [1983] NZLR 190, 194 (Cooke J) cited in: Bridgeman v Allied Mutual Insurance Ltd [2000] 1 NZLR 433, 443 (Nicholson J).

[232] Gray v Barr [1971] 2 QB 554, 587.

[233] Dunn v Pain; Co-operative Insurance Company Australia (1991) 57 SASR 133; Mount Albert City Council v New Zealand Municipalities Insurance Co Ltd [1983] NZLR 190, 193; Australian Casualty Co Ltd v Federico (1986) 160 CLR 513, 532; Bridgeman v Allied Mutual Insurance Ltd [2000] 1 NZLR 433, 443-445.

[234] S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14, 23-24 (Kearney J). Here Kearney J did not focus on whether the manager had knowledge of the risk, but rather that by trying to frighten an intruder by firing a gun, he courted a risk that an injury would occur. However it may be that knowledge of that risk is presumed in that case. See: Gray v Barr [1971] 2 QB 554, 586-587 (Phillimore LJ). See also: Westco Australia Pty Ltd v Manufacturer's Mutual Insurance Limited (Unreported, DM Campbell, Kelly and Derrington JJ, Full Court of the Supreme Court of Queensland, Appeal No 83 of 1983, 22 May 1984); Hurley Contractors Ltd v Farmers Mutual Association (1991) 6 ANZ Insurance Cases 61-076.

[235] Transcript of proceedings, 1-50; 1-51; 1-54, 1-60; 1-66; 3-15; 3-16; 3-18.

[236] [2000] 1 NZLR 433.

[237] Transcript of proceedings, 3-85; 3-86; 3-87.

[238] Defendant's submissions undated, [85]-[90].

[239] S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14, 23 (Kearney J).

[240] Defendant's submissions undated, [132]; transcript of proceedings, 11-25, lines 8-14.

[241] Transcript of proceedings, 11-59, lines 44-47; 11-60, lines 2-22.

[242] Defendant's submissions undated, [139]; transcript of proceedings, 11-19; 11-20.

[243] Alex Kay Pty Ltd v General Motors Acceptance Corporation [1963] VicRp 66; [1963] VR 458, 462-463 (Sholl J); Fraser v BN Furman (Productions) Ltd [1967] 1 WLR 898, 905-906 (Diplock LJ with whom Willmer and Winn LJJ agreed).

[244] Transcript of proceedings 11-49; 11-50.

[245] Transcript of proceedings, 11-62, lines 7-33.

[246] Defendant's submissions undated, [143].

[247] Exhibit 9, quotation to G & M Panel Constructions from Matton Developments dated 7 January 2009.

[248] McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579, 589 [22] (Gleeson CJ).

[249] Plaintiff's submissions dated 10 December 2014, [269].

[250] Defendant's submissions undated, [144]; transcript of proceedings, 11-20, lines 33-41.

[252] Second further amended reply filed by leave on 4 December 2014, [13](a); transcript of proceedings, 1-20, lines 40-44.

[254] See generally: Gibbs Holdings Pty Ltd v Mercantile Mutual Insurance (Australia) Limited [2002] 1 Qd R 17, 28 [21], [22]; 30 [30]-[34] (Thomas JA); Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd [1993] HCA 5; (1993) 176 CLR 332, 339-340 (Brennan, Deane, Dawson, Gaudron and McHugh JJ).

[255] Transcript of proceedings, 7-27, lines 25-45; 7-28, lines 1-26.

[256] Transcript of proceedings, 7-29, lines 34-48.

[257] Plaintiff's submissions dated 10 December 2014, [314]; defendant's submissions undated, [191] citing Stuart v Guardian Royal Exchange Assurance of NZ Ltd (No 2) (1998) ANZ Insurance Cases 60-844, 75,279; DA Constable Syndicate 386 v Auckland District Law Society [2010] NZCA 237; [2010] 3 NZLR 23.

[258] Plaintiff's submissions dated 10 December 2014, [315] citing Judd v Suncorp Insurance & Finance (1988) 5 ANZ Insurance Cases 60-832, 75,191 (Carter J); defendant's submissions undated, [192] citing Syddall v National Mutual Life Association of Australasia Ltd [2011] QSC 389, [321] (Daubney J).

[259] Plaintiff's submissions dated 10 December 2014, [319].

[260] Defendant's submissions undated, [195] citing Taylor v J Thomas & Son (a firm) (1983) 2 ANZ Insurance Cases 60-524 (McPherson J, with whom Kelly and GN Williams JJ agreed).

[261] See generally: DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 432 (Stephen, Mason and Jacobs JJ).

[262] Plaintiff's submissions dated 10 December 2014, [322].

[263] Plaintiff's submissions dated 10 December 2014, [323].

[264] Plaintiff's submissions dated 10 December 2014, [324]; defendant's submissions undated, [199].

[265] Plaintiff's submissions dated 10 December 2014, [324], defendant's submissions undated, [198] referring to Larratt v Bankers & Traders Insurance Co Ltd [1941] NSWStRp 34; (1941) 41 SR (NSW) 215, 223 (Jordan CJ).

[266] Judd v Suncorp Insurance & Finance (1988) 5 ANZ Insurance Cases 60-832; Russell Young Abalone v Traders Prudent Insurance Company Ltd (1993) 7 ANZ Insurance Cases 61-182; Kassem v Colonial Mutual General Insurance Co Ltd [2001] NSWCA 38.

[267] Exhibit 42, agreement on quantum.

[268] Exhibit 42, agreement on quantum.

[269] Amended fresh statement of claim filed by leave on 1 December 2014, [28](b), [28](c), [30](b), [30](c).

[270] Plaintiff's submissions dated 10 December 2014, [324].

[271] [2012] WASC 53.

[272] Highway Hauliers Pty Ltd v Maxwell [2012] WASC 53, [107].

[273] Highway Hauliers Pty Ltd v Maxwell [2012] WASC 53, [163].

[274] Plaintiff's submissions dated 10 December 2014, [328].

[275] Hadley v Baxendale [1854] EngR 296; (1854) 9 Exch 341.

[276] Defendant's submissions undated, [220](a).

[277] Defendant's submissions undated, [227]-[228].

[278] Insurance Contracts Act 1984 (Cth), compilation prepared on 14 July 2008.

[279] Insurance Contracts Act 1984 (Cth) s 12.

[280] Insurance Contracts Amendment Act 2013 (Cth) sch 1, s 6(1).

[281] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 41 [126] (Kirby J).

[282] Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 209 [36]-[37] (Chesterman J); Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975, [106] (Sackar J).

[283] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 41-42 [127] (Kirby J); Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 209 [36] (Chesterman J); Lomsargis v National Mutual Life Association of Australasia Limited [2005] QSC 199; [2005] 2 Qd R 295, 209 [39]-[41] (McMurdo J); Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975, [107], [109] (Sackar J); Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) 202 [328]. See also, the opinions of Stephen J in Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd [1974] HCA 3; (1974) 130 CLR 1, 31; [1974] HCA 3, opining that there was no reported decision in Australia applying the duty to the payment of claims.

[284] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 41-42 [127] (Kirby J).

[285] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 77-78 [257] (Callinan and Heydon JJ).

[286] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 12 [15] (Gleeson CJ and Crennan J). See also: Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 210 [40], 218-219 [82] (Chesterman J).

[287] Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 219 [84] (Chesterman J).

[288] Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 219 [86] (Chesterman J).

[289] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 12 [15] (Gleeson CJ and Crennan J); 77-78 [257] (Callinan and Heydon JJ).

[290] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 77-79 [257], [261] (Callinan and Heydon JJ).

[291] Kelly v New Zealand Insurance Co Ltd (1996) 130 FLR 97; Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975.

[292] Webber v Mutual Community Ltd (1991) 6 ANZ Ins Cas 61-079.

[293] Associated Motor Insurers Ltd v Ellis (1990) 54 SASR 61.

[294] ACN 007 838 584 Pty Ltd v Zurich Australia Insurance Ltd [1997] SASC 6338; (1997) 69 SASR 374

[295] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 78-79 [259] (Callinan and Heydon JJ); Gutteridge v Commonwealth (Unreported, Supreme Court of Queensland, Ambrose J, 25 June 1993, No 586 of 1993); Moss v Sun Alliance Australia Ltd (1990) 55 SASR 145 (Bollen J).

[296] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 27-28 [72] (Kirby J); approved by New South Wales Court of Appeal in Allianz Australia Insurance Ltd v Bluescope Steel Ltd [2014] NSWCA 276, [271] (Ward JA).

[297] Re Zurich Australian Insurance Limited [1998] QSC 209; [1999] 2 Qd R 203, 218 [81] (Chesterman J).

[298] Allianz Australia Insurance Limited v Vitale [2014] NSWSC 364, [125] (Sackar J).

[299] Fogarty v CGU Insurance Ltd [2015] ACTSC 44, [65]-[66] (Murrell CJ).

[300] Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 2) [2010] FCA 275, [23] (Rares J); not disturbed on appeal: Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53.

[301] Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31; (2009) 226 FLR 306, 333 [163] (Beech AJA).

[302] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 12 [15] (Gleeson CJ and Crennan J); Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd [1974] HCA 3; (1974) 130 CLR 1, 31 (Stephen J); Linsley v Petrie [1998] 1 VR 427, 440 (Hayne JA).

[303] Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd [2007] WASC 62; (2007) 209 FLR 247, 312 [297], [300] (Johnson J). Reversed in part on appeal but not on this point by Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31; (2009) 226 FLR 306.

[304] See, for example, the remarks of Mason P in CGU Workers Compensation (NSW) Ltd v Garcia [2007] NSWCA 197; (2007) 69 NSWLR 680, 693 [60].

[305] Amended fresh statement of claim filed by leave on 1 December 2014, [7].

[306] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27, 46-47 [47] (Hayne, Heydon, Crennan and Kiefel JJ).

[307] Project Blue Sky Inc. v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, 381 [69] (McHugh, Gummow, Kirby and Hayne JJ).

[308] Plaintiff's submissions dated 10 December 2014, [336]-[344].

[309] Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) 202 [328].

[310] Plaintiff's submissions dated 10 December 2014, [336]-[344].

[311] Transcript of proceedings, 11-47, lines 23-24.

[312] Plaintiff's submissions dated 10 December 2014, [338]; transcript of proceedings, 11-49, lines 28-38.

[313] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 12 [15] (Gleeson CJ and Crennan J).

[314] Plaintiff's submissions dated 10 December 2014, [351]-[352], citing: Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 509 [34] (McHugh, Hayne and Callinan JJ).

[315] Plaintiff's submissions dated 10 December 2015, [350], [352], [353], citing Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 99 (Brennan J).

[316] Plaintiff's submissions dated 10 December 2014, [361]-[364].

[317] Defendant's submissions undated, [242]-[243].

[318] Defendant's submissions undated, [244]-[246], citing CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 41-42 [126]-[127] (Kirby J); Lomsargis v National Mutual Life Association of Australasia Limited [2005] QSC 199; [2005] 2 Qd R 295, 309 [39]-[41] (McMurdo J).

[319] CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1, 12-13 [16] (Gleeson CJ and Crennan J).

[320] Lomsargis v National Mutual Life Association of Australasia Limited [2005] QSC 199; [2005] 2 Qd R 295, 299 [10]-[14] (McMurdo J); CGU Workers Compensation (NSW) Ltd v Garcia [2007] NSWCA 197; (2007) 69 NSWLR 680, 704 [129] (Mason P with whom Hodgson and Santow JJA agreed).

[321] Defendant's submissions undated, [248]-[250].

[322] Insurance Contracts Act 1984 (Cth) s 14A.

[323] Explanatory Memorandum, Insurance Contracts Amendment Bill 2013 (Cth), [1.6].

[324] Insurance Contracts Act 1984 (Cth) s 14A; Explanatory Memorandum, Insurance Contracts Amendment Bill 2013 (Cth), [1.8], [1.11]-[1.14].

[325] Insurance Contracts Act 1984 (Cth) s 55A; Explanatory Memorandum, Insurance Contracts Amendment Bill 2013 (Cth), [1.9].

[326] Explanatory Memorandum, Insurance Contracts Amendment Bill 2013 (Cth), [1.15].

[327] Neil Foster, 'The Tort of Breach of Statutory Duty' in Carloyn Sappideen and Prue Vines (eds), Fleming's the Law of Torts (Lawbook, 10th ed, 2011), 423.

[328] Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209.

[329] Sovar v Henry Lane Pty Ltd [1967] HCA 31; (1967) 116 CLR 397, 405 (Kitto J). See also: Australian Iron & Steel v Ryan [1957] HCA 25; (1957) 97 CLR 89, 97-98 (Kitto J); Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 424 (Brennan CJ, Dawson and Toohey JJ).

[330] Arturi v Zupps Motors Pty Ltd [1980] FCA 164; (1980) 49 FLR 283, 286 (Brennan J).

[331] Arturi v Zupps Motors Pty Ltd [1980] FCA 164; (1980) 49 FLR 283, 286 (Brennan J).

[332] Sovar v Henry Lane Pty Ltd (1967) 116 CLR 395, 405 (Kitto J). See also: Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 425-426 (Brennan CJ, Dawson and Toohey JJ).

[333] Sovar v Henry Lane Pty Ltd (1967) 116 CLR 395, 405 (Kitto J); Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209, [109] (Le Miere J).

[334] O'Connor v S P Bray Ltd [1937] HCA 18; (1937) 56 CLR 464, 478 (Dixon J); Smith v Macquarie Stevedoring Co (1965) 67 SR (NSW) 32, 44 (Wallace J); X (Minors) v Bedfordshire County Council [1995] UKHL 9; [1995] 2 AC 633, 732 (Lord Browne-Wilkinson); Schiliro v Peppercorn Childcare Centres Pty Ltd (No 2) [2000] QCA 18; [2001] 1 Qd R 518, 526 [23] (McMurdo P, Pincus, Davies and Thomas JJA and Helman J); Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209, [106]-[107] (Le Miere J).