Tasker v Munro

The legislation

1. The Civil Liability (Third Party Claims Against Insurers) Act provides relevantly as follows: 4 Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4)… 5 Leave to proceed (1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced. (2) An application for leave may be made before or after proceedings under section 4 have been commenced. (3) Subject to subsection (4), the court may grant or refuse the claimant's application for leave. (4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law. 7 Matters on which insurer may rely In proceedings brought under section 4, the insurer is entitled to rely on any defence or any other matter in answer to the claim or in reduction of its liability to the claimant: (a) that the insurer would have been entitled to rely on in a claim made by the insured person under the contract of insurance, or (b) that the insured person would have been entitled to rely on in proceedings brought by the claimant against the insured person in respect of the insured liability.

The NRMA policy

1. It is common ground that at the time of the incident, Mr Munro held policy number HOM 524 898 988 comprised of the following documents: 1. 2016-2017 Certificate of Insurance - Home@50 Buildings Renewal; 2. Home Insurance Buildings & Contents - Product Disclosure Statement and Policy Booklet; and 3. Home Insurance Buildings & Contents Supplementary Product Disclosure Statement.
2. In the section of the policy headed "What you're covered for", the following descriptions appear: "Liability cover - claims made against you… What we cover Covered under Buildings Insurance We cover the legal liability of you or your family for: • Death or bodily injury to someone else, or • Loss or damage to someone else's property in an incident that takes place in your home or at the site and for which you or your family is responsible as an owner or occupier of your home or the site. … Definitions Home is any enclosed building at your site that has walls and a roof and can be locked up which you use mainly for domestic purposes… Site is the land where your home is located and the yard or garden surrounding it that you use primarily for domestic residential purposes, at the address shown on your current Certificate of Insurance. The site includes any land or other area that touches your site and for which any statutory authority has made you responsible, but it does not include the nature strip outside your home. … Other liability exclusions We will not cover you or your family if liability arises or results from: • Using or owning a … watercraft…"
3. Except as an aid to the interpretation of these provisions, no other sections of the NRMA policy are relevant.

The Liberty policy

1. It is also common ground that at the time of the incident, Mr Munro held a policy of insurance with Liberty International Underwriters that covered him trading as Munro Sandman for the defined business of "Sand Extraction - Sales/Distribution". Under the section entitled "Exclusions", the following appears: "7. Exclusions This policy does not cover liability directly or indirectly caused by, arising out of or in any way connected with: … 7.20 The ownership, maintenance, operation, possession or use by or on behalf of the insured of: … 7.20.2 Any watercraft exceeding 10 metres in length; or…"
2. Clause 2.9 of the Schedule is relevantly as follows: "2.9 'Occurrence' means an event, including continuous or repeated exposure to substantially the same general conditions, which results in Injury and/or damage neither expected nor intended from the standpoint of the Insured."
3. No other provisions of the Liberty policy appear to be relevant.

Against NRMA

1. The proposed second amended statement of claim alleges a breach of duty on the part of Mr Munro arising from the events that are said to have occurred while those who were later present on the vessel when Mr Tasker was injured had also earlier been present at Mr Munro's home or at the site as defined in the policy. Mr Tasker contends, for example, that if Mr Munro failed at the site to warn those who were then about to board his vessel that they should not dive or jump from the vessel at any time, then such a failure gave rise to a liability on the part of Mr Munro that was covered by the NRMA policy. Mr Tasker submitted that such a case was "arguable": see, for example, Ritchie v Advanced Plumbing and Drains Pty Ltd [2019] NSWSC 1028.
2. I disagree. In my view, that contention confuses a possible Mr Munro's breach of a duty owed to Mr Tasker with NRMA's potential liability to indemnify him for what is alleged to have occurred as the result of that breach. NRMA is only obliged to indemnify Mr Munro if the incident, which Mr Tasker contends resulted from the breach, occurred in Mr Munro's home or at the site as defined. It did not: it happened on the river some distance away where the boat from which Mr Tasker jumped was located. The territorial or physical limitation upon NRMA's liability is not overcome by the fact, if it can be established, that Mr Munro allegedly committed an act of negligence at some earlier time within his home or at the site if the incident did not also occur there.
3. Secondly, Mr Tasker argued that Mr Munro's liability to Mr Tasker did not arise from his use or ownership of a watercraft. He somewhat unsurprisingly did not contend that Mr Munro's substantial houseboat, from which Mr Tasker fatefully entered the water, and which had cruised along the Nambucca River to a point on the estuary where it stopped adjacent to or upon a sandbank, was not up until that time a watercraft. Rather, Mr Tasker contended that the vessel became something else when it came to a stop on the sandbank where it was located at the time of the incident. Mr Tasker suggested that the vessel at that time was a pontoon or what he described in written submissions as a "floating platform attached to land" or some other manifestation of a land-based structure that converted it, albeit temporarily, into something other than a watercraft. It was not, in such a configuration, what Mr Tasker described as a watercraft "in the classic sense".
4. In a different but related argument, Mr Tasker submitted that if the houseboat was a watercraft at the relevant time when he was injured, it was not being used as such by Mr Munro. He submitted that "use" must be related to the features of the houseboat as such, including navigation, racing [sic!], docking, and taking on cargo and passengers, said to be the classical features of marine craft.
5. I do not agree with either of these submissions. To start with, the fact that the houseboat was stationary with part of its hull upon a sandbank does not convert it from a watercraft to something else. A houseboat that is being transported by road to a new mooring remains a watercraft notwithstanding that it is nowhere near water but is being pulled on a trailer behind a vehicle along a road. Such an example, of course, draws attention to the "using or owning" limitation in the exclusion clause in question. I do not consider that a houseboat that is stationary in the estuarine waters of the Nambucca River ceases to be a watercraft simply because part of its structure happens temporarily to be in contact with the riverbed.
6. Nor does it seem to me to be the case that the houseboat was not being used as such at the time of the incident. Of its very nature, the use of a houseboat contemplates recreational activities in and upon the adjacent waterways. The fact that Mr Tasker is said to have jumped or dived from the vessel in an attempt to save or rescue a fellow passenger who was in the water at the time does not detract from that fact. For example, it can hardly be thought that if the houseboat had been diverted from its course while cruising along the river in order to rescue someone in distress it would for that reason then have ceased to be a watercraft.
7. NRMA submitted more generally that Mr Tasker could not succeed in establishing any liability on the part of their putative insured inasmuch as the gravamen of the pleaded case against him was an allegation, howsoever formulated, of a failure to warn of an obvious risk. NRMA submitted that the substance of Mr Tasker's case was that Mr Munro failed to warn him of the danger of diving into potentially shallow water, whether that advice was to be given generally or only in relation to emergencies or both.
8. Section 5F(1) of the Civil Liability Act 2002 defines an "obvious risk" to a person who suffers harm as "a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person." This includes "risks that are patent or a matter of common knowledge": s 5F(2). A risk can be obvious "even though it has a low probability of occurring" or "is not prominent, conspicuous or physically observable": s 5F(3), (4). In negligence proceedings, a person who suffers harm is presumed to have been aware of an obvious risk unless they prove otherwise: s 5G(1). Moreover, a defendant "does not owe a duty of care to another person…to warn of an obvious risk": s 5H(1).
9. The concept of an obvious risk was considered in Wyong Shire Council v Vairy (2004) Aust Torts Report 81-754; [2004] NSWCA 247: "[161] At this point it is appropriate to comment that, according to my research, none of the Australian cases attempt to define what is meant, at least generally, by an obvious risk. This is not to say that the authorities referred to above are inconsistent in approaching the question of whether a risk is, in fact, obvious in a given circumstance. However, I see no reason not to adopt the definition found in the commentary to s343A of the Restatement (Second) of Torts (1965) (Rest 2d Torts s343A). This definition is consistent with the Australian authorities discussed above which have emphasised the importance of an individual taking care for his or her own safety. In the commentary, 'obvious' is defined as follows: '"Obvious" means that both the condition and the risk are apparent to and would be recognized by a reasonable man, in the position of the [plaintiff], exercising ordinary perception, intelligence, and judgment.' [162] In this definition 'condition' refers to the factual scenario facing the plaintiff. Thus, in a diving case the condition might typically be the fact that the plaintiff is faced with water of unknown depth. Under such a condition the risk would be that diving into the water (while the depth remains unknown) might result in (serious) injury. This risk would be considered obvious if, in the context of the case, it was perceptible to a reasonable person in the position of the plaintiff that if you do not know the depth of a body of water into which you are about to dive, then to dive into such water under such conditions inevitably brings with it the risk of injury."
10. The application of this principle depends on the factual context: Laoulach v Ibrahim [2011] NSWCA 402 at [120]. In that case, a passenger on board a sports cruiser vessel dived from its bow while it was moored in Botany Bay off Brighton-Le-Sands, striking his head on the sandy bottom and suffering severe injury. The vessel was moored only 50 to 60 metres from the shoreline, so that the risk of injury from diving in was obvious. This was so even though the risk appeared to be low because the water was dark blue and thus seemed deep enough: at [119].
11. In the present case, Mr Tasker's draft evidentiary statement describes the location of the houseboat leading up to the incident: "[27] I had never been to the area on a large vessel in my life. I do know the creek and river well and know that it has sand banks that shift from time to time. [28] At around 6.30pm [on the day of the incident], the houseboat came to a stop at the destination and the front end was facing towards the sand. Frank [Munro] put the front ramp down to allow us to walk straight on to the sand from the boat. This was at a sand bar inside the V wall of Nambucca headwaters. The boat was over the sand and the front part of the hull was on the sand bank. … [31] The tide wasn't running, the boat was sitting still on the bank facing inwards. The rear of the vessel was about 20 meters from the sand bank. We were positioned in a wide sand cove bay."
12. NRMA submitted that in those circumstances it is "clear beyond argument" that a reasonable person in Mr Tasker's position, who knew the sand banks shifted from time to time and that part of the houseboat was resting directly on a sand bank, would have realised the houseboat was, or could very well be, in shallow water, a matter expressly pleaded by him, and that diving into the water therefore carried a risk of injury. NRMA contended that any such risk was accordingly "obvious" within the meaning of s 5F(1) of the Civil Liability Act, and under s 5H(1) of that Act, Mr Munro had no duty to warn of it. Mr Tasker's case, the substance of which being that there was a duty to warn of the risk of diving into the water, is therefore untenable. NRMA submitted that, in the absence of negligence, there is no arguable claim, not simply a defence to an otherwise arguable claim: see Motorcycling Events Group Australia Pty Ltd v Kelly (2013) 86 NSWLR 55; [2013] NSWCA 361 at [24], [44] and [87]-[88].
13. Mr Tasker pleads in paragraph 5 of his proposed second amended statement of claim that he sustained his severe injuries when he "dived from the vessel" and "struck his head on the river bed". He alleges that Mr Munro failed "to take reasonable care to implement reasonable precautions prior to departure of the vessel…so as to prevent the risk of [Mr Tasker] diving from the vessel at the anchorage, at any time, to perform a rescue in shallow water". Mr Tasker's pleading defines that circumstance as "the risk".
14. Whichever way one construes that allegation, having regard to Mr Tasker's description of what occurred, it inevitably distils to a contention that Mr Munro should have taken steps to warn Mr Tasker not to dive into water of unknown depth. In the absence of some idiosyncratic factors that qualify that allegation or modify the facts that are said to give rise to it, Mr Tasker's claim is one that Mr Munro failed to warn him of an obvious risk. As such, Mr Tasker's claim against Mr Munro is untenable and unarguable.

Against Liberty

1. Mr Tasker submitted that one of the bases for establishing Mr Munro's liability was that he breached his duty as the result of acts or omissions that occurred on premises from which Mr Munro conducted his sand extraction business. These acts or omissions are said to have occurred immediately prior to Mr Tasker boarding the houseboat. In that sense, Mr Munro's alleged acts or omissions were at least physically connected with the business of sand extraction which was the business insured by Liberty. In its simplest configuration, Mr Tasker's contention is that the alleged breach of duty was "connected" to Mr Munro's "insured business" because the breach occurred there and accordingly the Liberty policy responds to the incident said to have arisen as the result of that breach.
2. Once again, there is a distinction to be drawn between the breach of duty said to give rise to the cause of action against Mr Munro and the question of whether or not the Liberty policy responds to the incident that caused Mr Tasker's injuries. Even assuming for the purposes of the argument that the houseboat was used by Mr Munro as an advertising vehicle for his business, on the basis that it was called Shiftin' Sands, there is no reference in the policy Schedule or any other documents to suggest or to indicate that any business trading under the name "Shiftin' Sands" was also covered under the policy. The Schedule of Insurance issued by the broker indicates that the business covered by the policy was "Sand Extraction - Sales/Distributing" without any indication that a business trading under any other name was covered under the policy.
3. Liberty submitted in any event that the incident that resulted in Mr Tasker's injuries could not as a matter of fact have had any connection with Mr Munro's business of sand extraction, even if it could be argued that the houseboat was utilised by him as part of that business. At the time of the incident in question, the vessel was being used for recreational purposes. It was a recreational vessel. Even if the vessel had been used to carry advertising for a business operated by Mr Munro or depreciated as a business asset, of which there was either no evidence or no evidence that was not in contest, it was not being used for the purpose of Mr Munro's sand extraction business at the relevant time.
4. However, for presently relevant purposes, the factual question of whether the houseboat was in fact being used for a purpose arguably connected with Mr Munro's business cannot be finally determined. It is potentially at least arguable that it was.
5. The more fundamental difficulty for Mr Tasker on this application is that the Liberty policy in my view decisively excludes liability "directly or indirectly caused by, arising out of or in any way connected with…the ownership, …operation, possession or use by or on behalf of [Mr Munro] of any watercraft exceeding 10 metres in length". For reasons that have already been given, I do not accept that the houseboat was not relevantly a watercraft. Accordingly, even putting aside a liability arising from "operation…or use", Mr Munro's asserted liability unquestionably arises from the "ownership" or "possession" of the houseboat by him or on his behalf. Indeed, Mr Tasker pleads in terms that Mr Munro was the "owner, occupier and/or controller of" the houseboat in question and that Mr Tasker was an invitee on the vessel during its "ownership, occupation and control" by him.

Conclusion

1. It follows in my opinion that leave to proceed against both proposed defendants should be refused. Mr Tasker has no arguable case against Mr Munro as it is based upon an allegation of a failure to warn of an obvious risk: Mr Munro had no duty to do so. In the case of the NRMA policy, I consider that Mr Tasker has no arguable case that the policy responds to his claim, and that the watercaft exclusion applies in any event. In the case of the Liberty policy, I am not in a position on an application such as this to determine whether the policy responds but the exclusion relating to a watercraft exceeding 10 metres in length clearly applies in any event.
2. In the circumstances, the notice of motion filed on 21 July 2020 should be dismissed with costs.

Amendments 25 November 2020 - [20] Typographical error corrected DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 November 2020