Policy coverage – Is it really excluded?

In Issue

The relevant issues for determination by the Court included whether the loss and damage to the Plaintiff was caused by a deliberate act (suicide) or an “accident”, and whether the Defendant’s liability was excluded under the relevant policy by reason of the deceased’s intoxication or failure to take reasonable precautions to avoid the accident.

The background

On 31 October 2013, Mr Anthony Goncalves (deceased) died when he rode his Harley Davidson motorcycle, at speed, into the path of an oncoming truck owned by Cleanaway Waste Management Ltd (Plaintiff). At the time of the collision, the deceased had a Harley motorcycle insurance policy (policy) with Insurance Australia Ltd trading as Swann Insurance (Defendant).

Immediately before the collision, the deceased travelled onto the wrong side of the road to overtake another vehicle. Whilst overtaking, the deceased accelerated at speed and collided with the centre-front of the Plaintiff’s truck.

The post-mortem results revealed the deceased had methylamphetamine in his system. Eyewitness reports of the collision noted the deceased was wearing sunglasses, but no helmet and had accelerated to a speed of about 100km per hour, before impact.

The Defendant denied liability in relation to the collision, as the policy excluded liability for deliberate acts or intoxication or arising from a failure to take reasonable precautions. It was the Defendant’s contention that the policy did not extend to cover the Plaintiff’s loss. However, the policy did not provide a definition for ‘accident’, ‘under the influence’, or ‘property’ for the purposes of assessing damages.

The decision at trial

The Court ultimately found in favour of the Plaintiff.

Deliberate Act Exclusion

In arriving at its decision, the Court found the collision was the result of the deceased’s negligence and not an act of suicide on his part. The Court rejected the submission that the deceased’s decision to speed on the incorrect side of the road was indicative of a suicide. The Court found that a more likely explanation for the deceased’s actions included frustration or a desire to impress the passengers of a vehicle he was overtaking. The Court relied on the evidential principle that an intention on the part of the deceased to cause damage was improbable in the absence of clear evidence by the Defendant to the contrary¹ to support this finding.

Under the Influence Exclusion

A definition for ‘under the influence’ was not contained within the policy. In defining that term, the Court formed the view that the ingested drug needed to be at a level capable of affecting behaviour. Consequently, the Court rejected the view the deceased was ‘under the influence’ simply by virtue of the fact that traces of methylamphetamine were found in his post-mortem results.

Reasonable Precautions Exclusion

The Court rejected the arguments that the deceased’s speed, distance covered and direct line into the centre of the Plaintiff’s truck constituted a failure to take reasonable precautions. The Court found there were other reasonable explanations for the deceased’s conduct that did not involve any deliberate courting of danger², including overtaking another vehicle on the road. The Deceased’s failure to avoid the collision was explained by the combined effect of speed and lack of proper eyewear.

Damages

The Court found the Defendant was liable for all loss flowing from the damage to the Plaintiff’s truck, which totalled $73,337.84. Consequential loss, including counselling fees, overtime, and sick leave, totalling $6,822.59, whilst attributable to the collision, did not flow from the property damage.

Implications for you

This case illustrates the difficulty in establishing to a court’s satisfaction that particular policy exclusions apply to relieve an insurer of the obligation to indemnify in respect of a claim, especially where relevant terms are not clearly defined in the policy documents. If other plausible explanations for an event or chain of events is available, a court may construe the policy exclusion in favour of a claimant.

Cleanaway Waste Management Ltd v Insurance Australia Ltd t/as Swann Insurance [2022] WADC 37