The recent case of Canny v Primepower Engineering Pty Ltd
and Allianz Australia Insurance Ltd  WADC 81 is a
classic example of the operation of Murphy's Law, namely;
"anything that can possibly go wrong, does."
The facts are relatively simple. Friday 11 November 2011 was the
birthday of Primepower's managing director, Mr Peter Allan. It
was also Remembrance Day and, importantly, a workday. Mr Allan
decided to throw a birthday at Primepower's workplace. The
theme of the party was "Eleven." In line with the theme
he arranged for 11 kegs of beer ($3,000 worth) for staff to
consume. Given the theme it is perhaps not surprising the party
also started at 11:00 am. At about mid-day, Primepower's
apprentices decided to try to "seize" a disused diesel
engine (or to run it to the point of failure). Later that
afternoon, Mr Canny, a Primepower employee, decided to get
involved. He, along with others at the party had been drinking. At
about 7:00 pm a 20 litre jerry can of petrol was produced. The idea
was, it seems, to see what effect the petrol may have had on the
engine, which had been running all afternoon without seizing. Mr
Canny decanted some petrol into an open container which he was
holding when a fireball unexpectedly flew from the engine. He was
engulfed in flames suffering burns to 60% of his body.
Mr Canny sued his employer alleging negligence. Primepower in
turn sought cover under its employers' indemnity policy, held
with Allianz. However, Allianz argued Primepower was not entitled
to cover as it was in breach of the terms of the policy which
required Primepower to take "reasonable precautions" to
prevent workplace injury. Primepower then sued Allianz seeking
The Court was asked to decide three things:
Was Primepower negligent?
If so, was Mr Canny guilty of contributory negligence?
Was Primepower entitled to cover under its policy with
Her Honour Judge Stewart held that Primepower had breached its
duty of care to Mr Canny in failing to
provide a safe place and a safe system of work, because the
attempts to "seize" the engine should not have been
allowed and in the event such activity was ever contemplated, the
consumption of alcohol should not have been permitted. Further, Her
Honour noted this was not one beer drunk after work, but a
celebration involving 11 kegs which had been in full swing for 8
hours at the time the accident occurred.
She also found Mr Canny guilty of contributory negligence as his
actions in decanting petrol near the engine were not prudent. He
had also been drinking and "his judgement was not 100%."
He was considered to be "a young man with very limited
experience." These factors perhaps led Her Honour to only find
him 15% to blame for his injuries.
These two findings are not unusual or controversial.
However the third finding was and should be a salutary lesson to
all employers. In deciding whether Primepower was not entitled to
policy cover, Her Honour was required to consider whether Mr Allan
recognised the danger of what was being done that day and
deliberately courted it by intentional and considered action or
inaction. She held:
He made no enquiry as to what flammable substances were being
used in the attempts to "seize" the engine. He could have
but chose not to.
He allowed the apprentices to work on the engine
He knew Mr Canny had brought petrol onto the premises but did
not stop it being used. He could have.
He was indifferent to events and his inaction was a critical
The activity was not planned and no trained employees were
His attitude to the consumption of alcohol was relaxed even
though he recognised the dangers. Had he followed Primepower's
own policies, he should not have allowed alcohol consumption on a
Despite his knowledge of the risks of injury, he encouraged
unsupervised and potentially intoxicated apprentices to work on the
engine and allowed intoxicated supervisors to give them
Given the amount of alcohol consumed, the potential danger was
increased so greater steps were required to protect
Primepower's employees from the risk of injury. He took no such
His actions were not inadvertent. They amounted to more than
negligence. His conduct amounted to a deliberate flouting of the
insurance policy and, in all the circumstances, it amounted to his
courting of the danger.
She therefore held that Primepower did not comply with the
"reasonable precautions" clause of its policy and so it
was not entitled to indemnity. This meant Primepower was
effectively uninsured and required to pay Mr Canny's damages
out of its own pocket. The Court was not required to decide
quantum, but given the serious nature of Mr Canny's injuries
and his age, we would expect any award of damages, even if reduced
by 15%, to be a not insignificant sum.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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