Government Insurance Office of NSW v RJ Green and
Lloyd Pty Ltd (1965) 114 CLR 437
In Australia, the High Court's decision in Government
Insurance Office of NSW v RJ Green and Lloyd Pty Ltd (1965)
114 CLR 437 is often cited when the words "arising out
of" require interpretation. In that case, the High Court was
asked to consider the operative provision of a policy that provided
that the insurer would indemnify the insured against "all
liability incurred by the [insured] in respect of the death or
bodily injury to any person caused by or arising out of the use of
the motor vehicle".
Ultimately, the High Court in that case did not consider it
necessary to express a general view as to the precise meaning and
ambit of the expression "arising out of". However,
Barwick CJ, Menzies and Windeyer JJ all indicated that the words
"arising out of" imported a causal connection that was
"wider", "less proximate" and "less
immediate" than that imported by the words "caused
by". This has been applied by many a lesser court in
The meaning of the words "arising out of" has recently
been considered, with interesting effect, by the High Court of
England and Wales (Queen's Bench Division) in the decision of
British Waterways v Royal & Sun Alliance Insurance
 EWHC 460 (Comm).
The decision arose out of a tragic set of circumstances. British
Waterways had engaged two men, a father and son, to trim hedges
along the towpath of the Kennett and Avon Canal. To undertake the
work, the men used a tractor, with an attached hedge cutter, owned
by British Waterways. As the men were carrying out the work, the
bank of the canal along which they were reversing collapsed and the
tractor toppled into the canal. Both men were killed. The families
of the men brought claims against British Waterways. British
Waterways sought indemnity in respect of the claims from its
insurer, Royal & Sun Alliance.
The insurer declined cover in respect of the claim, pointing to
an exclusion in the policy that provided that:
"The insurers shall not be liable for liability arising
out of the operation as a tool of the Insured Vehicle or attached
The insurer sought to rely on this exclusion and the question
for the court was whether the deaths "arose out of" the
operation of the tractor as a tool.
Mr Justice Burton held that:
The tractor was on the towpath to carry out hedge-cutting;
Hedge-cutting had taken place immediately prior to the
The tractor was being reversed so that it could make its way to
another part of the towpath to recommence hedge-cutting;
The proximate cause of the tractor toppling into the canal was
it being reversed too close to a vulnerable part of the canal bank;
The men's deaths had arisen out of the collapse of the bank
and not out of the operation of the tractor as a tool.
In coming to these conclusions, Mr Justice Burton found that the
words "arising out of" in the policy exclusion before him
required him to consider what the "proximate cause" of
the men's deaths was. He noted that this was contrary to
indications given by Australia's High Court in the
Government Insurance Office of NSW case. However, he drew
a distinction between the meaning of the words "arising out
of" when used by an insurer to rely on an exclusion containing
them, compared to their meaning when used to determine whether
there is cover under an insuring clause.
If a similar approach is adopted by Australian courts, insurers
will need to consider carefully the wording of future policy
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Whereas most insurance policies exclude liability arising under contract, insurers can
positively benefit where an insured has limited or excluded its liability under contract.
This usually arises where the insured's contract has a limitation or exclusion of liability clause in the insured's favour.