The winding fault and resulting catastrophic failure is from conductor insulation failure. The insulation failure could be from a continuous overvoltage condition, overload or manufacturer assembly failure. Most likely an overload. This transformer was probably serving 3-5 residences and as typical for a utility transformer, it is easier for them to replace it after failure, as opposed to monitor loads and apply it correctly to the loads or application.
Consider that the full load current of the transformer secondary is 312.5A @ 240V, and many new utility services are 240V and 200A plus.
Interesting question from an attorney.
[This message has been edited by Ron (edited 12-21-2002).]