Insurers have been told they must finish restoring a piece of damaged mine equipment after a legal battle over their payout obligations. 

Vero, QBE and Singapore’s Star International Insurance argued they were not liable for the radial coal stacker’s collapse during an equipment test that followed initial storm damage repairs paid for by the trio’s industrial special risks policy. 

The policy, held by Baralaba Coal Company, had ended in the time between the storm damage and the Queensland mine’s claim for further repair costs relating to the collapse. But the Federal Court has ruled the insurers remained liable because the machinery had not been fully returned to service when it broke down for a second time. 

“It is not to the point that the further damage sustained to the stacker occurred following the conclusion of the period of policy cover,” Justice Sarah Derrington wrote in her ruling. 

“The insurers’ obligation to meet the cost of reinstatement attached during the relevant period, and it does not matter that the obligation became more onerous after the end of the period of cover ... the stacker had not been put back into its pre-damaged state prior to the second incident, such that the insurers’ obligation had not yet been completed.” 

The stacker was initially damaged in March 2019 – a month before the ISR policy period ended – and the insurers paid for repairs in September of that year. The following month, during tests to see if the repairs had been successful, the stacker collapsed. 

“The insurers’ primary position was that the stacker was ‘substantially reinstated’ to the point where it was undergoing testing and commissioning on October 27 2019 and, on that date, being after the end of the period of insurance ... it sustained different damage by the collapse,” the judge said. “The cost of reinstatement of that damage, so it was said, was not indemnifiable under the policy because the policy had expired.” 

Justice Derrington rejected this argument. 

The insurers also noted that Baralaba signed a “form of release” regarding the initial payout in June 2020. 

They argued this form “released them from all liability relating to the storm damage, which ... included the damage arising from the collapse of the stacker in October 2019”. 

But Justice Derrington said: “The surrounding circumstances in which the document was produced and executed indicate its purpose was to bring an end to the issue of the amount the insurers were required to pay in respect of the damage to the stacker, to the extent to which it occurred as a result of the storm on March 12 2019 ... There is nothing in the context to suggest it was also applicable to the claim in relation to the damage the stacker sustained when it collapsed on October 27 2019.” 

She ordered the insurers to cover the subsequent damage and pay the mine’s legal costs. 

See the ruling here.

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