In the early hours of 22 December 1989, two full tourist coaches collided head on at Clybucca Flat, 12 km north of Kempsey. The collision released the seats from their anchors, pushing seats and passengers forward. The impact forced the Sydney (south) bound coach into the cabin of the Brisbane bound (north) coach. A major emergency response saw fleets of ambulances, helicopters, State Emergency Services, fire brigades and police attending the incident. As a result of the accident, 35 people died and 41 people were injured.

A New South Wales Coroners report found that the Sydney bound coach driver fell asleep at the wheel which resulted in the collision.  The Coroner found the Sydney bound coach missed a bend on the highway and there was no indication that the driver had applied brakes or dimmed the headlights before the collision. Neither coach was speeding at the time of the crash, and no mechanical faults were found in either vehicle, the coroner said.

The coroner renewed calls for the creation of a dual-carriageway highway between Newcastle and the Queensland border, following 21 deaths in a coach/semi-trailer accident at Cowper, north of Grafton in October 1989 (see similar events). The Coroner also recommended a review of coach seats, seat anchorages, seatbelts and better emergency exits for coaches, as rescuers were unable to enter the wreckage immediately because the exits were more than two metres above the ground.