An Australian Supreme Court dismissed a claim for a contribution by one insurer against another because the earthmoving plant loader that was involved in the accident was being operated at the time as a mechanical tool of trade.  A tool of trade was defined to mean “the operation of your motor vehicle whilst engaged in and undertaking its designed purpose of excavating, digging, grading, drilling, spraying, scraping, pumping, vacuuming, suction, lifting, or like operations”.

The loader was used to lift a section of railway track and to move it and place it in another position.  When it reached the point where it was being lowered into place, it swung sideways into the face of a welder on the ground causing injuries. The indemnity paid by the claimant insurer seeking the contribution of was little over $1 million.  The defendant insurer’s liability was excluded for the operation of the vehicle when engaged in and undertaking its designed purpose, namely the designed purpose of performing the nominated activities and “like operations”.  Although some ambiguity may arise from the phrase “like operations”, it was clear that the purpose of the exclusion was to excise from the scope of cover the use of the vehicle as a tool of trade as defined, as opposed to its use as a motor vehicle. The technical capabilities of the loader meant that it could be used to lift, suspend at a height, transport and unload materials.  The risks associated with each of these activities was the same.  It would arbitrary to find (as was suggested by the claimant) that it related only to the lifting and not the transport and lowering of the load.  Such an interpretation would be arbitrary and uncommercial because the policy excluded these vehicles when used for their designed purpose as tools of trade.  At the time of the accident the loader was still engaged in the implementation of the loader’s designed purpose. The claim for contribution was dismissed.

QBE Insurance (Australia) Limited v NTI Limited [2022] NSWSC1273