General Insurance Insights – Key Judgments – May 2024 

11 June 2024

Welcome to our General Insurance Insights newsletter, bringing you the latest case notes on key judgments from May 2024 affecting general insurers in Australia.

Victorian WorkCover Authority v Spotless Facility Services Pty Ltd [2024] VSC 237

The worker was the property manager of Geelong Grammar School. The defendant was contracted to provided catering and cleaning services.

In 2016, the worker slipped on a liquid in the main dining hall and fell heavily, suffering an injury to his cervical spine. The worker alleged that he slipped due to spilt liquid (ie soup) on the dining hall floor. The worker’s damages claim settled. The plaintiff issued recovery proceedings under s369 of the Workplace Injury Rehabilitation and Compensation Act 2013 against the defendant.

The parties accepted that the defendant owed the worker a duty of care and that the risk of injury from food spillage during meal service in the dining hall was reasonably foreseeable. The plaintiff argued that, whilst the defendant had a system of cleaning before and after meal service, it did not have an adequate system of inspection for the detection and cleaning of food spills during service in accordance with its contractual obligation to provide “continuous spot cleaning“. The defendant argued that the cleaning contract only required it to respond to any reported spills within a reasonable period of time.

The Court found that a reactive system of cleaning was insufficient and that the defendant should, but failed to, have a system that involved the continuous inspection of all areas of the dining hall. It also found that the school failed to discharge its non-delegable duty of care, as there was no evidence that it had taken steps to ensure that the defendant was exercising reasonable care in addressing the risk of injury from spillage during meal service. Based on those findings, the Court assessed the defendant’s Factor X at 60%.

Click here to view the full case.

Baralaba Coal Company Pty Ltd v AAI Ltd trading as Vero Insurance [2024] FCA 532

The applicants operated the Baralaba North coal mine and associated infrastructure in Central Queensland. They were issued with an industrial special risks policy by the respondents. That policy provided cover for property damage in relation to certain coal operations.

As part of their mining operations, the applicants operated a radial coal stacker, which conveyed coal onto a product stockpile. The stacker sustained substantial structural damage during a storm in March 2019, which was within the period of insurance ie 1 May 2018 to 30 April 2019. The respondents granted indemnity to the applicants in respect of that damage.

The second applicant, a subsidiary of the first applicant, subsequently entered into a contract for remediation works. In October 2019 (being after the end of the relevant period of insurance), the stacker collapsed during a test to determine if the repairs had been properly completed. The cause of the collapse was identified as a failure in re-torquing rope clamps on the machine. In June 2020, the first applicant signed a release in return for payments made by the respondents, under the policy, in discharge of all claims arising from the storm damage in March 2019.

The applicants alleged that the respondents were liable, under the policy, to pay for the reinstatement of the stacker to achieve its pre-damaged state, including remediation works associated with the damage caused by the collapse. The respondents disputed liability, asserting that they were only required to meet the cost of repairing the initial damage caused by the storm, as it was different damage from that which resulted from the collapse and that several exclusions, including a Testing and Commissioning exclusion, applied to that damage. Further, they argued that, by reason of the signed release, the respondents were thereafter released from all liability for damage to the stacker, including the damage that occurred as a result of the collapse.

The Court ordered declaratory relief in favour of the applicants on the following grounds:

  1. The damage stemming from the collapse was directly related to and connected with the respondents’ performance of their obligation to remedy the original storm damage and, therefore, fell within their obligation to indemnify in respect of that damage;
  2. The respondents’ obligation to meet the cost of reinstatement attached during the period of insurance. Therefore, it did not matter that the further damage occurred after the end of that period;
  3. The Testing and Commissioning exclusion did not displace the respondents’ primary obligation to indemnify and otherwise should be read down to apply to damage caused by the testing and commissioning of relevant construction works referred to in the first part of the exclusion (not at large); and
  4. In accordance with the objective intention of the parties, which could be informed by contemporaneous correspondence, the release only applied to the respondents’ liability in respect of the original damage to the stacker.

Click here to view the full case.

Hodson v Hurex Pty Ltd and Lederer Pty Ltd [2024] NSWDC 143

The plaintiff was employed by the first defendant, a labour hire company, and placed to work as a cleaner for the second defendant at a shopping centre.

In October 2020, an elderly gentleman was runover by a semitrailer in the shopping centre’s dock area and sustained fatal injuries. The second defendant directed the plaintiff to attend the scene of the accident to relieve a colleague and perform other duties. The plaintiff brought a claim in negligence against both defendants for psychological injury he alleged he suffered as a result of his exposure to the scene of the accident.

The Court found the second defendant legally liable on the basis that it was reasonably foreseeable that a person may suffer a psychological injury from being exposed to the aftermath of a fatal accident and, in those circumstances, the plaintiff’s supervisor, an employee of the second defendant, should have directed the plaintiff not to attend the scene. Insofar as the first defendant was concerned, the Court rejected the argument that the plaintiff’s injuries resulted wholly from a casual act of negligence on the part of the plaintiff’s supervisor and found that the first defendant also breached its duty of care by failing to have an adequate system in place to address the risk of psychological injury to the plaintiff in his workplace. In reaching that finding, it took note of the evidence that the plaintiff was performing quasi-security, as well as cleaning, duties at the shopping centre. Accordingly, it found there was a risk the plaintiff could be exposed to various types of significant incidents.

On the basis that the first defendant’s role was limited to placing the plaintiff at the shopping centre and performing routine visits/inspections, whilst the second defendant was responsible for the plaintiff’s training, daily supervision and the allocation of work duties, and the plaintiff’s attendance at the accident scene was as a direct result of a direction issued by the second defendants’ employee, the Court apportioned 15% liability to the first defendant and 85% to the second defendant. The Court otherwise allowed 10% for the plaintiff’s contributory negligence on the basis that he re-attended the scene, later in the day, of his own initiative and absent any direction by the second defendant.

Click here to view the full case.

Gomez v Woolworths Group Limited [2024] NSWCA 121

The plaintiff slipped and fell on a piece of fruit on the floor at the entrance to the defendant’s store at 5.11pm on the date of the incident. CCTV footage showed the fruit had fallen approximately nine minutes beforehand (ie at 5.02pm) when another customer left the store.

The defendant had a number of systems of inspection and cleaning in place at the store, including a ‘service zero’ system. That involved staff being required to stop what they were doing and look around their immediate area to identify any hazard when ‘service zero’ was called over the public announcement system every hour. That system did not require staff to move from where they were standing. One of those staff members was standing around five metres away from where the incident occurred at a coffee counter. There was no evidence that a ‘service zero’ announcement was made at 4.00pm or 5.00pm on the date of the incident.

The trial judge found that, whilst the defendant had breached its duty of care by failing to enforce and ensure the ‘service zero’ system was properly implemented, there was no causation, because the relevant piece of fruit was dropped after the last ‘service zero’ inspection would have occurred. The trial judge also rejected the argument that the defendant was required to have a more regular system of inspection in relation to the entrance to the store or that it breached its duty on the basis that one of its off-duty employees failed to identify and pick up the fruit when he was leaving the store one minute after it fell.

Those findings were upheld on appeal.

Click here to view the full case.

This newsletter was written by Ashley Harding, Partner, Theodore Heretakis, Associate, and Madeleine Dashiell, Law Graduate.

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