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Accident, recklessness and insurance November 15, 2016

Margaret McMurdo P:

For the appellant to be deprived of the benefit of the accidental overload clause, the overloading and damage must have been expected (Westco Australia Pty Ltd v Manufacturers Mutual Insurance Ltd (Unreported, Supreme Court of Queensland, Derrington J, D M Campbell and Kelly JJ agreeing, 22 May 1984); Mount Albert City Council v NZMC Insurance Co [1983] NZLR 193 – 194 (Cooke J, Somers and Jeffries JJ agreeing).  Both the overloading and the damage will be accidental if each can be categorised as “an unlooked-for mishap or an untoward event which is not expected or designed”: Fenton v Thorley & Co Ltd.8 As Cooke J in Mount Albert City Council v NZMC Insurance Co (Somers and Jeffries JJ agreeing) stated:

“… there is a category of cases falling short of a deliberate causing of the damage by the insured where his conduct is nevertheless so hazardous and culpable that the event cannot fairly be called an accident. It can only be a question of fact whether a case falls within this category. 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. On the other hand it seems to me not decisive that the risk may have been deliberately run or calculated. For instance, if the risk was reasonably seen by the insured as not a high one, the occurrence might still be found to be an accident.

It is not profitable to essay precise rules or semantics in this field. Facts and risks vary too greatly. One expression that has been used in some cases and was used by [the trial judge] here, is “courting” the risk. If that is understood as a term stronger than merely running or incurring, and in the sense rather of inviting or wooing, I respectfully agree that it can be a useful test for the tribunal of fact to apply. So can Lord Macnaghten’s definition [“an unlooked-for mishap or an untoward event which is not expected or designed”]. But in the end … I doubt whether as a matter of law the Court can go further than to say that those are helpful but not necessarily exhaustive tests…”

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