MMI (Aust) Ltd v Rowprint Services

MMI (Aust) Ltd v Rowprint Services - [1998] VSCA 147 - VSCA 1998 case summary — Zoe

[14]

"1. The subject machine is a fully automatic Heidelberg 'Speedmaster' model MOZP printing press manufactured in Germany by Heidelberg Druckmaschinen Aktiengesellschaft. 2. The machine is arranged as two integrated rotating cylinder printing presses mounted on a common base with one paper feed mechanism. 3. Printing is achieved in each press by paper being fed as a single pass through two cylinders. 4. Running clearances are adjustable. 5. The operation of the machine is to draw one sheet of paper at a time and to feed it through the machine. 6. The machine operates at high speed and mechanical inertia is significant. 7. At each stage of the process of paper travel through the machine, paper is held onto the relevant cylinders by grippers which maintain the correct relationship of the paper to the cylinder. 8. Timing of the machine is critical. It is set by mechanical adjustment. 9. A misalignment of timing will result in misdelivery of paper within the machine. 10. To adjust the mode of printing to be performed by the machine the timing must be altered. 11. During normal operation of the machine vibration will be caused by the mechanical components. 12. If the locking screws on the timing adjustment are not sufficiently tight to prevent movement the vibration of the mechanical components of the machine may allow the timing to alter. 13. The machine stopped printing suddenly during the course of a printing run. 14. The sudden stop of the machine was brought about by a number of sheets of paper being jammed between the printing cylinders of the 2nd stage. 15. The machine was damaged by an excess of paper entering between the 2nd stage printing cylinders having accumulated in the space between the reversing drive and 2nd stage cylinders. 16. The excess of paper was caused by a loss of timing of the machine during operation. 17. The loss of timing was most probably caused by an employee of the Plaintiff failing to tighten sufficiently the bolts integral to the operation of the timing device."

[32]

More probably appellant's counsel was seeking to do no more than emphasise the importance of the functioning of the machine to the occurrence of the damage, and so much may be accepted if only because it was the vibration during running that seems to have precipitated the unintended change in timing and thus the jamming of the paper and the consequential damage to the cylinders. Counsel also emphasised the use in the exclusion clause of the words "occasioned by or happening through" to denote the relevant causal link. These words were common enough within this policy, though sometimes they appeared in conjunction with "directly or indirectly" (for example, in perils exclusion 1(a)), but they stood in contrast to other expressions used within the same policy - in particular "caused by" in property exclusion clause 13, "caused by or arises out of" in perils exclusion clause 3 and "caused by or contributed to by or arising from" in perils exclusion 2; compare also "arises out of" which is used in property exclusion 2(e) and "which results from" and "resulting from", one or other of which appears in the first two lines under the heading PROPERTY EXCLUSIONS (in the introductory reference there to consequential loss under Section 2), in perils exclusion 10 and in the respective provisoes to property exclusion clause 16 and perils exclusion clauses 4 and 7. Counsel accepted, at least for the argument, that the words "caused by" did require a search for the "proximate cause", meaning nowadays not the latest cause "but the direct ... real or common sense, ... dominant ..., operative or efficient one": National & General Insurance Co. Ltd. v. Chick [1984] 2 N.S.W.L.R. 86 at 97-8 per Samuels, J.A., City Centre Cold Stores at 742-3 per Clarke, J., Wayne Tank at 66 per Lord Denning, M.R.. But, according to the submission, that was not the inquiry when the words were not "caused by" but "occasioned by or happening through". That phrase, said counsel, had the effect of "stretching" the causal association between the potential excluded cause and the loss: Cooper v. General Accident Fire and Life Assurance Co. (1922) 128 L.T. 481, Spinney's (1948) Limited v. Royal Insurance Co. Ltd. [1980] 1 Lloyd's Reports 406 and Switzerland General Insurance Co. Ltd. v. Lebah Products Pty. Ltd. (1983) 2 ANZ Ins. Cases 60-498.

[39]

As earlier mentioned the judge took the view that the exclusion clause was "designed to specifically address the breakdown of any machinery through the ordinary course of attrition", so that is how his Honour construed the word "malfunction". Yet this, said appellant's counsel, could not be correct because perils exclusion clause 4(b) already excluded "wear and tear", so that there was no point in the policy's excluding elsewhere malfunction "through the ordinary course of attrition". Two answers may be made to this contention. First, it cannot be surprising in policies of insurance to find some overlap between different clauses; commonly they are cobbled together from a number of sources and then overlap is only to be expected. Secondly, it may be too narrow to refer to "the ordinary course of attrition"; for myself, with respect, I prefer counsel's formulation on appeal which was malfunctioning "due to the innate condition of the machine". Indeed, in the course of argument Callaway, J.A. suggested another possible distinction, between endogenous malfunctioning and exogenous malfunctioning. Fortunately perhaps, it is unnecessary for the resolution of this appeal to chose between these various possible distinctions, which are subtly different; they all lead to the same conclusion in this instance. The conclusion is that property exclusion clause 16 has no application where the malfunctioning is but the direct result of an external cause like the employee's conduct in this case. It may be that where damage is the result of the functioning of the machine otherwise than in the intended fashion, the exclusion clause will apply if nothing more is known, but where the cause of the malfunctioning is known and that cause is altogether independent of the machine itself, the exclusion clause does not apply. That was the case here. It is known what caused the damage; it was the loss of timing and jamming of the paper as a direct result of the employee's failing to tighten the critical bolts as he should have done, and so it was not the malfunction of the machine within the meaning of clause 16.

At a glance

Court

Decision date

Before

Source

Judgment (57 paragraphs)

Parties