Landel Pty Ltd v Insurance Australia Ltd

[2021] QSC 247

SUPREME COURT OF QUEENSLAND

CITATION:	Landel Pty Ltd & Anor v Insurance Australia Ltd [2021] QSC 247
PARTIES:	LANDEL PTY LIMITED as trustee for the Lancini Family Discretionary Trust (ACN 010 889 193)
(first plaintiff)
FAIRFIELD LAND PTY LIMITED as trustee for the Fairfield Land Unit Trust (ACN 070 431 220)
(second plaintiff)
v INSURANCE AUSTRALIA LIMITED trading as CGU Insurance (ABN 11 000 016 722)
(defendant)
FILE NO:	14163/19
DIVISION:	Trial
PROCEEDING:	Trial
ORIGINATING	Supreme Court at Brisbane
COURT:
DELIVERED ON:	11 October 2021
DELIVERED AT:	Brisbane
HEARING	14 June 2021 – 22 June 2021, 24 June 2021 – 25 June 2021
DATES:
JUDGE:	Dalton J
ORDER:	Judgment for the plaintiffs in the sum of $21,132.85
CATCHWORDS:	INSURANCE – PROPERTY AND PECUNIARY LOSS INSURANCE – CONDITIONS, WARRANTIES AND EXCEPTIONS – FLOOD DAMAGE – where the plaintiffs owned a shopping centre that was inundated by floodwater –
where the defendant insured the plaintiffs under an industrial
special risks policy – where the insurance policy contained a perils exclusion which operated to limit the insurer’s liability
to the plaintiff for flood damage to $250,000 – where the flood exclusion applied to “damage occasioned by or happening
through flood” – where “occasioned by or happening through”
provided for a wide causal relationship
INSURANCE – THE POLICY – PRINCIPLES OF CONSTRUCTION – causation of damage – application of Wayne Tank principles – where various water sources
contributed to the inundation – where defendant insurer proved
there was a single, proximate cause of the loss or damage caused by inundation to the shopping centre
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PROCEDURAL ASPECTS OF EVIDENCE – EXPERT REPORTS AND EXPERT EVIDENCE – where the cause of the inundation was the subject of expert evidence of water and flood engineers –
where the expert witnesses conferred with one another before
expert reports were written – where two experts called by the defendant gave evidence on the same subject – where leave
was not given under rule 423 of the Uniform Civil Procedure
Rules – where expert witness was asked to adjudicate on reports of other expert witnesses – where expert witness briefed with matters pertaining to legal issues – role of lawyers in editing expert reports for Court – where expert witnesses
undertook work before formal written instructions were given
Uniform Civil Procedure Rules 1999 (Qld), r 212, r 423
CIC Insurance Ltd v Bankstown Football Club Ltd (1995) 8 ANZIC 61-232, cited Elilade Pty Ltd v Nonpareil Pty Ltd & Anor (2002) 124 FCR 1; [2002] FCA 909, followed Jaffarie v Quality Castings Pty Ltd [2018] NSWCA 88, cited
LMT Surgical Pty Ltd v Allianz Australia Insurance Ltd
[2014] 2 Qd R 118; [2013] QSC 181, considered McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65, cited
Mercantile Mutual Insurance (Aust) Ltd v Rowprint Services
(Victoria) Pty Ltd [1998] VSCA 147, cited
Mitchell Contractors Pty Ltd v Townsville-Thuringowa Water
cited
Supply Joint Board [2005] 1 Qd R 373; [2004] QSC 329, cited
Petersen & Ors v Union des Assurances de Paris IARD
(1997) 9 ANZIC 61-366, cited
Provincial Insurance Australia Pty Ltd v Consolidated Wood
Products Pty Ltd (1991) 25 NSWLR 541; (1991) 6 ANZIC 61-066, considered Sheehan v Lloyds Names Munich Re Syndicate Ltd (2017) 19 ANZIC 62-158; [2017] FCA 1340, cited Smits v Roach (2006) 227 CLR 423; [2006] HCA 36, cited State of New South Wales v Paton [2020] NSWSC 1707, cited State of New South Wales v Williams [2021] NSWSC 1140, cited State of New South Wales v WXN1 [2020] NSWSC 993, cited
Switzerland General Insurance Co Ltd v Lebah Products Pty
Ltd (1983) 2 ANZIC 60-498, cited
Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v
QBE Insurance (Australia) Ltd (2010) 240 CLR 444; [2010] HCA 9, cited
Wayne Tank & Pump Co Ltd v Employers Liability
Assurance Corporation Ltd [1974] 1 QB 57, applied Wiesac Pty Ltd v Insurance Australia Ltd [2019] 1 Qd R 198; [2018] QSC 123, cited
COUNSEL:	D Lloyd SC with D Delany for the plaintiffs
P O’Shea QC with D Williams for the defendant
SOLICITORS:	Salerno Law for the plaintiffs
Carter Newell for the defendant

[1]        The plaintiffs own land in Townsville which is the site of a shopping centre. The defendant insured the plaintiffs under an industrial special risks policy. There was monsoonal rain and consequent flooding in Townsville in late January and early February 2019.

[2]        On 31 January 2019 water:

(a)	entered the shopping centre through the roof, and
(b)	surcharged out of drains in loading docks at the back of the centre.

[3]        Between 6.20 pm on 3 February 2019, and about 12.20 am[1] on 4 February 2019, water flowing over the ground entered the shopping centre and rose to the height of around half a metre.

[1]            Dr Macintosh, the plaintiffs’ expert, gave his view that the flood peaked at 12.21 am on 4 February

[4]        On 8 March 2019 the insurer wrote to the plaintiffs admitting that damage caused by water through the roof, and through the loading dock drains, was covered by the policy. However, the insurer has never paid any sum to the plaintiffs in respect of this damage. By the same letter the insurer accepted a limited liability for the flooding damage on 3 and 4 February 2019; it stated that its liability was limited to $250,000 because the losses were caused by flood as defined.

[5]        The plaintiffs sue claiming indemnity under the policy for the whole of the damage they say was suffered in both events. The inundation of 3 and 4 February was the main focus of the proceeding. So far as that is concerned, the plaintiffs contend that the physical circumstances of the inundation were not within the definition of flood

in the policy, and that therefore the $250,000 limit on the insurer’s liability is

inapplicable.

The Policy

[6]        The plaintiffs organised insurance through a large broker, Jardine Lloyd Thompson (JLT). Prior to the insurance year in issue here, they were insured on terms put up by their broker, the JLT Taipan ISR Mark IV modified.

[7]        A Mr Swaney of JLT dealt with the plaintiffs’ account. On 22 June 2018 the defendant insurer sent an email to Mr Swaney saying, “Please find attached the ISR renewal for 18/19”. Attached to the email was a document headed “JLT Taipan

Industrial Special Risks Mark IV Modified: Invitation to Renew”. The document

proposed a policy wording:

“The CGU ISR Mark IV (Modified) policy conditions with

modifications only as specified in the following sections titled

‘Definitions’ and ‘Endorsements’.”

Under the heading “Endorsements” was a definition of flood more favourable to the

insurer than the definition of flood found in the JLT Taipan ISR Mark IV Modified

policy. The insurer was inviting renewal on its terms, not the broker’s.

[8]        JLT replied to this email on 29 June 2018 saying, “Thank you for your support on

this account, please find attached the Placement Slip”. That placement slip proposed

the policy wording and conditions as the “JLT Taipan ISR: Mark IV … with modifications only as specified in the following section titled Endorsement”. The

placement slip had a blank signature block for the insurer to sign, adjacent to the

words “accepted on behalf of”. The insurer did sign the placement slip in the

signature block, and returned the signed placement slip by email to JLT that same
day.

[9]        In my view, the proper contractual analysis of these documents is that the invitation to renew was an invitation to treat on the basis of the CGU ISR Mark IV (Modified) wording. The placement slip sent by JLT to the insurer was an offer to contract on the basis of the JLT Taipan ISR Mark IV policy conditions, and by signing the placement slip and returning it, the insurer accepted that offer.

[10]      The exchange of emails described did not annex or include the JLT Taipan ISR Mark IV policy conditions. However, in my view, they were incorporated by reference as the policy conditions upon which the parties contracted.[2] They were the terms the parties had contracted on in the past.

[2]            Smith & Ors v South Wales Switchgear Ltd [1978] 1 All ER 181.

[11]      On 5 February 2019 (after the loss) the insurer asked for a copy of the “schedule and wording for [the plaintiffs]”. JLT emailed a copy of the JLT Taipan ISR Mark IV

policy conditions to it in response. On 18 February 2019 the insurer sent an email to

JLT to the attention of Mr Swaney which said that it attached a “copy of signed policy wording for [the plaintiffs]”. The wording was that of the JLT Taipan ISR Mark IV

policy, but containing an endorsement with the CGU definition of flood. Mr Swaney immediately emailed in response rejecting that endorsement as a term of the insurance contract. He was correct to do so. There is no basis upon which the CGU definition of flood could have formed part of the insurance contract between the plaintiffs and the defendant, and this was conceded by counsel for the insurer on the second day of trial.

[12]      The insurer took the point that the plaintiffs had not proved the terms of the policy they relied upon. As mentioned above, the exchange of emails constituting the contract did not include or attach the JLT Taipan ISR Mark IV policy conditions. Those which are in evidence are dated, in a word-processing footer, 5 February 2019, that is, after the date of contract, and after the date of loss. Mr Swaney swore that these conditions were in a standard form. He says that the date 5 February 2019 appears in the footer of the set of conditions which he emailed to the insurer because he accessed the standard form terms and conditions on that date to send them to the insurer (see [11] above). Mr Swaney says that while the copy of the policy conditions bears the date 5 February 2019 in the footer, it was the set of standard conditions in

existence at 29 June 2018; JLT’s practice was that while endorsements were made to

change the application of the standard conditions on any particular policy, the text of the standard conditions did not change. Mr Swaney was not required for cross- examination by the insurer.

[13]      I am satisfied on the balance of probabilities that the JLT Taipan ISR Mark IV policy conditions exhibited to the affidavit of Mr Swaney are the policy conditions applicable to the contract of insurance between the plaintiffs and the defendant.

Terms of the Policy

[14]      The policy provided that, “In the event of any physical loss, destruction or damage … not otherwise excluded happening at the Situation to the Property Insured … the

Insurer will, subject to the provisions of this Policy including the limitation on the

Insurer’s liability, indemnify the Insured in accordance with the applicable Basis of
Settlement”.

[15]      There was also consequential loss insurance. The insurer promised that “In the event

of any building or any other property or part thereof used by the Insured at the Premises for the purpose of the Business being physically lost, destroyed or damaged

by any cause or event not hereinafter excluded … and the Business carried on by the

Insured being in consequence thereof interrupted or interfered with, the Insurer will,

subject to the provisions of this Policy including the limitation on the Insurer’s

liability, pay to the Insured the amount of loss resulting from such interruption or

interference in accordance with the applicable Basis of Settlement”.

[16]      The placement slip accepted by the insurer added “perils exclusions” to the JLT

policy. They included:

“3. physical loss, destruction or damage occasioned by or

happening through:-

(a) flood, which shall mean the inundation of normally dry land by water overflowing from the normal confines of any natural watercourse or lake (whether or not altered

or modified), reservoir, canal or dam.”

[17]      Although this clause is worded as an exclusion, it was accepted that, having regard to the documents which comprised the policy, in fact it operated to define flood for the

purpose of the policy, and that the policy operated to limit the insurer’s liability for

flood to $250,000, rather than exclude it altogether.[3] It was also accepted that clause 3(a) had to be treated as an exclusion in construing the clauses in the policy which contained the insurer’s promise of indemnity, [14] and [15] above.[4]

[3]            T 8-10.

[4]            T 8-13 and t 8-88.

Expert Evidence

[18]      The cause of the inundation of the shopping centre on 3 and 4 February 2019 was the subject of expert evidence which occupied almost all the trial time. The plaintiffs relied upon the views of Dr John Macintosh and the defendant relied upon the views of Mr Ben Caddis and Dr Tom Connor. There were significant issues with the expert reports, and I will say something about them for the guidance of the profession.

[19]      First, while lawyers must not coach expert witnesses, or influence the substance of an expert report so that it favours their client, it is permissible, and usually desirable, that lawyers do become involved in the editing of expert reports so that they present material in a way which is accessible and comprehensible, and do not contain irrelevant material. Draft expert reports are disclosable so that the effect of any such

input will be obvious to the other parties to the litigation – see r 212(2) and Mitchell

Contractors Pty Ltd v Townsville-Thuringowa Water Supply Joint Board.[5]

[5] [2005] 1 Qd R 373, [10]-[15].

[20]      In this case, Dr Macintosh’s reports are prolix and disorganised. There ought to have been conferences between Dr Macintosh and the plaintiffs’ lawyers before they were

filed to see what could be done to improve these types of problems. Conferences like this are a proper, necessary part of preparing a case. In a proceeding like this I would expect that attention to have come from both the solicitors and counsel briefed in the matter.

[21]      Any disciplined and structured conferences with Dr Macintosh would have revealed that there were faults in his opinions which went beyond matters of expression and presentation. They would have revealed significant contradictions, errors and gaps in reasoning in his reports. It is permissible for matters of substance like this to be

drawn to an expert’s attention in conference with lawyers, and remedied if the expert

is able and willing to do so. Again, coaching is not permitted, and drafts will be
disclosable.

[22]      The course of this proceeding shows the importance of attention to the reports of experts by the lawyers running the case, not just to achieve a comprehensible and rational expert opinion for use at the trial, but to evaluate the strength of the case sought to be advanced by the litigant. In this case, had early attention been paid to

what reasoned opinion Dr Macintosh could give, the plaintiffs’ lawyers would have

understood the weaknesses in their expert case at a stage of the litigation when there might still have been alternatives open to them. Instead, it appears that the only effort

the plaintiffs’ lawyers made to come to terms with Dr Macintosh’s opinions was

immediately prior to trial, by which time any such avenues were very limited. Thus,

counsel for the plaintiffs said in his opening, “there’s more common ground than one

might think from these reports” – t 1-28. By the time of closing addresses, counsel

for the plaintiffs had all but abandoned reliance on Dr Macintosh’s views, describing
them only as a “plausible theory” – t 9-15.

[23]      Turning to the other side of the record, a peculiar arrangement was undertaken by solicitors acting for the defendant. Mr Caddis who is employed by an engineering firm, BMT Commercial Australia Pty Ltd, was engaged to prepare a report on the cause of the inundation, and so was Dr Connor, who is semi-retired and has never worked for BMT.

[24]      Mr Caddis had earlier produced a report dated 7 March 2019 apparently on instructions directly from the defendant insurer, not the insurer’s lawyers.[6] Criticism

was made of Mr Caddis’ independence on this basis. It was said that he worked as a

consultant to the insurance company rather than an independent expert aware of his duties to the Court. As a matter of general practice, I accept that this is potentially a legitimate basis for criticism. However, in this case, having regard to the substance

of the expert opinions, discussed below, and Mr Caddis’ impressive and professional

demeanour when giving evidence, it is not a matter which causes me any disquiet

[6]            This report was in evidence, although not as one of the reports relied upon by the insurer. It was apparently given by the insurer to the plaintiffs early on and was in evidence as part of the material which was briefed to Dr Macintosh when he was asked to prepare his first report.

about Mr Caddis, or his opinions.

[25]      The initial retainer of Mr Caddis and Dr Connor by the insurer’s lawyers was oral, in

or around March 2019. I see no difficulty with an initial oral retainer, or indeed an

[7]            It is recognised at para [212.20] of the LexisNexis annotations to the Uniform Civil Procedure Rules that since changes to disclosure rules to make expert opinion disclosable there has been a practice of

initial oral exchange of views prior to the engagement of an expert.[7]

[26]      After the retainer of Mr Caddis and Dr Connor, there were meetings between the two

experts, the defendant’s solicitors, and apparently counsel, on between five and ten

occasions.[8] They preceded the delivery of any written report. I do not have any criticism of these meetings having taken place. However, I am critical of the

defendant’s lawyers for meeting with both experts together. Lay witnesses should

never discuss their evidence with each other. Experts see each other’s reports before

trial, and sometimes there are Court-ordered conferences between expert witnesses. Here, where the plan apparently was to present two independent views to the Court, meeting with both experts together, particularly before they had committed their views to writing, obviously had the potential to compromise that independence.

[8]            In this regard I prefer Mr Caddis’ evidence, t 5-18. Dr Connor plainly struggled to recall the details

[27] As to the idea that there could be two experts on the same subject matter called by the defendant, r 423 provides that a party will be limited to one expert opinion in a proceeding, unless leave is given. This rule was new when the UCPR was introduced in 2000. It was introduced because parties would sometimes obtain reports from several different experts who all practised in the same field. Quite often this occurred in personal injuries cases which, in those days, used to run to trial. This increased the costs and length of trial, and no doubt introduced a risk that the weight of numbers added authority to the opinions, see r 423(d).

[28]      In a case like this, where expert opinion is crucial to the liability dispute between the parties, and the area of expert opinion is not one commonly encountered by the Courts, a Judge might well have given leave for the defendant to use two reports on the same topic. Certainly there was no objection from the plaintiffs to Mr Caddis and Dr Connor both giving opinions on essentially the same questions.

[29]      There is a practice, particularly in large accounting cases, where it is not possible for one accountant to do all the work necessary to prepare an expert report, whereby the partner of a firm will sign an expert report, but acknowledge that other named accountants have performed various tasks which feed into his or her ultimate conclusions. Generally it is only necessary to cross-examine the accountant who signs the report and swears the affidavit in the proceeding. In such cases there is no objection to all the accountants involved conferring with lawyers together and working together. They are not purporting to give independent views, but working as a team.

[30]      Here there was an undesirable, and confused process. By a letter dated 29 July 2020 addressed to both Mr Caddis and Dr Connor, solicitors for the defendant instructed

them both to “prepare a co-authored written report”. The instructions include asking

Mr Caddis to conduct flood modelling in respect of the inundation of the shopping centre on 3 and 4 February 2019. As well as being asked to give his opinion as to the

cause of the inundation on 3 and 4 February, Dr Connor was instructed “to review

and consider the results of Mr Caddis’ flood modelling … as well as the Macintosh
report, and advise whether you agree with Mr Caddis’ findings”.

[31]      This set of instructions led to one report being provided which was branded

extensively with the BMT logo. It was, as the defendant’s solicitors had asked, in

two parts. Part A bore the signature of Mr Caddis on page 56 above the date 7 August 2020. Pages 58 to 88 of the report were labelled Part B. It was in the same format as Part A and bore the same colours (shades of BMT blue) as the rest of the report in terms of headings and footers but, on careful inspection, did not bear the BMT logo.

The same can be said for the pages of the report which give Dr Connor’s CV; although

they have been put into a format closely resembling the pages which bear Mr Caddis’

CV. Dr Connor signed Part B on page 88, also dated 7 August 2020.

[32]      The fact that the two expert views were presented as coming from one source – BMT – rather than being presented as two independent opinions points strongly in the

direction of confusion being responsible for the way the solicitors and counsel conferred with both experts together before production of written reports, rather than

some attempt to mislead, as was suggested by the plaintiffs’ counsel in addresses.

[33]      Another undesirable consequence of the unusual instructions given to Dr Connor is that his report not only gives his opinion as to the cause of the inundation of the shopping centre (which is the legitimate subject matter of expert opinion in this case), it reviews the reports given by Dr Macintosh and Mr Caddis, at times, line-by-line. In accordance with his instructions, he assumes the role of some sort of uber-expert,

or perhaps engineering-judge, in explaining why he prefers Mr Caddis’ opinions to

those of Dr Macintosh. This is not the role of an expert witness.

[34]      Nor is it the role of expert witnesses to concern themselves with the legal issues in the case. It is the job of the lawyers in any case to define questions upon which they seek expert opinion. This has to be carefully done so that the expert opinion obtained is relevant to the legal issues in the case. Unfortunately, in this case all the experts were briefed with the words of the insurance policy.

[35]      Lastly, the plaintiffs pointed to the very short time between the formal written instructions and the dates of the first Caddis/Connor report. A submission was made that Mr Caddis and Dr Connor had not been properly retained and had prepared this first report by reference to material and instructions which were not placed before the Court. While I am not critical about lawyers meeting with experts, or potential experts, before there is anything put in writing, I do think it is good practice to brief an expert in writing once a decision has been made to retain them. To let matters progress as this one did, where the experts were plainly retained, and Mr Caddis at least was undertaking substantial work, before written instructions were provided, has the potential to give the impression that something ulterior is going on.

[36]      While I understand the plaintiffs’ exploration of these issues, I do not accept the

submissions made by counsel for the plaintiffs that Dr Connor and Mr Caddis were
not independent of CGU.

[37]      There was a vast gulf in the quality of expert opinion in the case between Dr Macintosh on the one hand, and Dr Connor and Mr Caddis on the other. As his reports presaged, Dr Macintosh was discursive and non-responsive in the witness box. He showed strong emotional attachment to his ideas. On the other hand, Dr Connor and Mr Caddis were responsive witnesses, who gave reasoned and logical explanations for their views both in writing and in the witness box. I do not doubt that they presented their honest opinions in their reports and in oral evidence. Dr Connor and Mr Caddis received unusual instructions and complied with them. I cannot see that the oddities which resulted are their fault. I have a strong preference for the opinions of Mr Caddis and Dr Connor over those of Dr Macintosh. I turn to the substance of their reports to explain why.

Uncontroversial Background to Inundation of 3 and 4 February 2019

[38]      The shopping centre was located in the middle of what was once the floodplain of Gordon Creek.[9] In 2014/2015 the Townsville City Council commissioned a flood study of the area and, acting on the study, undertook earthworks to divert the flow of Gordon Creek to the north of its original course. After that, it allowed the shopping centre (and quite a number of houses) to be built on the old floodplain.

[9]            Dr Macintosh agrees that the whole of the area north of Racecourse Road to the alignment of the Gordon Creek diversion would accurately have been described as the floodplain of Gordon Creek

[39]      I think it is impossible to understand the matters which fall for decision in this case without some pictorial aid. I incorporate three images. The first was prepared by Dr John Macintosh, and the others were prepared by Mr Caddis of BMT. They are

photographs with overlays. They all show the shopping centre. Dr Macintosh’s view is from furthermost away, and Mr Caddis’ Map B2 is most closely focussed on the

immediate surrounds of the centre.

Macintosh Figure 4.1 – Potential Sources of Inundation Water

MAP B1

MAP B2

[40]      In very broad terms, the natural flow of water across this area was:

(a)	across the plain from the west to east. In particular, from the Ross River, Gordon Creek and Stuart Creek into a large estuarine area to the east, and then eventually to the sea;
(b)	at a more local level, down Mt Stuart to the plain below, that is from the south and south-west to the north and north-east, and from there, east to the estuary.

[41]      The salient features surrounding the shopping centre were as follows:

(a) To the south was Mt Stuart. This mountain covered a considerable area of land and rose steeply from the relatively flat plain below it. Between the base of Mt Stuart and the centre was an area of flat land which drained to the east. The part of Mt Stuart and the flat land which lay to the south of the shopping centre was called Catchment A1 by the experts.

The flat land below Mt Stuart was bounded on the north by the west-bound carriageway of Racecourse Road. This carriageway comprised two lanes, shaped so that the road fell away (was lower) to the south. There was a large grassy swale between the west-bound carriageway and the east-bound carriageway of Racecourse Road.

The east-bound carriageway also had two lanes and fell away to the north. To its north was a wide table drain referred to in the evidence as the northern table drain. At the northern edge of the table drain, bounding the shopping centre carpark, was a slightly raised area of garden beds with concrete edging. North of the carpark was the shopping centre itself, on a slightly raised platform.

(b) To the west of the shopping centre was a rectangular block of vacant land. A separate triangle of vacant land lay on the western boundary of this block and its western corner butted up against Stuart Drive. These features are best seen on Map B1. Stuart Drive was a major four-lane road which intersected with Racecourse Road at a point below the south-westerly corner of the rectangular vacant lot.

Gordon Creek flowed from west to east. Its course began west of Stuart Drive. It passed under Stuart Drive through culverts (which were not allocated a letter on the maps) to arrive on the same side of the road as the shopping centre. Two fairly major tributaries joined it. One joined at about the point of the unlettered culverts. The second tributary joined a little further to the east where Culverts A, B and C allowed it to flow under Racecourse Road and Stuart Drive and arrive on the same side of the road as the shopping centre, see Maps B1 and B2. I will call this second tributary Drain A2, as the experts have. Although it is not named on Maps B1 and B2, it is shown as draining Catchment A2.

The original flow path of Gordon Creek had been from west to east across the bottom of the triangular shaped vacant land; the bottom of the rectangular vacant land, and then the southern edge of the shopping centre carpark.[10] Further east it had taken a northerly course and emptied into the Ross River, well downstream from the environs of the shopping centre.

The Council’s diversion works saw the main part of Gordon Creek which

passed through the unlettered culverts under Stuart Drive flow in its original course for a short time on the northern side of Racecourse Road and then it was diverted into a man-made channel (shown on Maps B1 and B2 as a broad blue band) and then a man-made lake (Lake 3) to the north of the shopping centre. The design was that the diverted water was then to flow north-east until it reached the original course of Gordon Creek flowing into Ross River.

On the west side of Stuart Drive, at the point where Gordon Creek and the first unnamed tributary join, close to the unlettered culvert which takes Gordon Creek under Stuart Drive, is the Gordon Creek Alert, a weather station which measures rainfall and water level, see Map B2.

Drain A2 crossed to the north side of Racecourse Road, but at least under low-flow conditions, the design was that it would then flow in the opposite direction to its original flow. That is, it was designed to flow west into the man-made channel shown as a broad blue band.

Under low-flow conditions, the table drain was designed to flow west so as to join in with the diverted water from Gordon Creek; flow into the blue band area, and then flow north of the shopping centre. Water flowing along the table drain in this way was flowing in much the same course as the original Gordon Creek, but in the opposite direction.

[10]           Nicely seen in Caddis, Figure 2-3, p 14752 of the trial bundle.

(c)	To the east of the shopping centre was Lakeside Drive. This short road ran between Racecourse Road and a channel to the north-east of the shopping centre which formed part of the Gordon Creek diversion. A block or two further east ran Abbott Street, a major road which intersected with Racecourse Road at about 90 degrees.
(d)	To the north of the shopping centre was Lake 3, the last in a series of man-made lakes which was designed to receive flood overflow from the Ross River to the north; direct it south, and then, at Lake 3, direct it to the east. The bank of the Ross River had been lowered to direct overflow into the first of this series of lakes.

[42]      There had been days of monsoonal rain before 3 February 2019. From about 4.00 pm on 3 February there were two rainfall events after which water entered the shopping centre. In the first report delivered in this proceeding Dr Macintosh labelled these rainfall events Storm Burst 1 and Storm Burst 2. These labels were retained as the course of the expert reports continued. Storm Burst 1 began at about 4.00 pm after a period of about six hours during which no rain fell[11]. Storm Burst 1 lasted 130 minutes and was followed immediately by Storm Burst 2 which lasted 140 minutes. During each of Storm Burst 1 and Storm Burst 2 around 70 millimetres of rain fell.

That is, despite Dr Macintosh’s rather dramatic nomenclature, the rain which fell in

these storm bursts was not an extraordinary amount.[12]

[11]           Trial Bundle 14762.

[12]           T 5-37.

[43]      No expert was of the view that inundation of the shopping centre was caused by rain falling over the immediate environs of the centre. It was common ground that the inundation was caused by the flow of water into the centre from some other area.

Area of Expert Controversy

[44]      In broad terms the difference between the experts was that Dr Macintosh swore he believed that as the result of Storm Bursts 1 and 2, runoff from Catchment A1 on Mt Stuart travelled north across both carriageways of Racecourse Road, across the table drain and into the shopping centre causing the inundation. A later variation of this might have been that this runoff travelled at least to the table drain, where it mixed with the water already in the table drain and caused this mixture of water to inundate the shopping centre. Dr Connor and Mr Caddis were of the view that water inundating the centre came from overflows from the Ross River and Gordon Creek which formed a large sheet of water travelling west to east across the floodplain on which the shopping centre was located.

[45]      Dr Macintosh delivered three reports dated 23 December 2019, 5 October 2020, and 19 February 2021. Dr Connor and Mr Caddis delivered two reports, one in August and one in November 2020. All three experts gave opinions based on their assessment of the real evidence available. Mr Caddis also undertook computer simulated modelling. He carried out the modelling after forming his opinions from the available real evidence and put it forward as secondary to those original opinions. It is convenient to discuss the evidence relating to modelling after I discuss the primary opinions of the experts.

Dr Macintosh’s opinion

[46]      Dr Macintosh begins by dividing the slopes of Mt Stuart into the three drainage catchments which he labels A1, A2 and A3. This was not controversial between the experts.

[47]      In his first report Dr Macintosh’s conclusion was that:

“•	Initial inundation of the centre occurred at about 18:20 on 3 February 2019.
•	The source of inundating water was rainfall runoff from
Mt Stuart Catchment A1, via overflows from Racecourse Road’s
northern table drain on the southern site [sic, query side] of the Centre site.
•	Inundation from the Mt Stuart source continued until about 20:50hr, at which time the depth of inundation in the centre would have been at least 0.35 m.
•	No inundation ingress would have entered the Centre from any
other source during this period.”[13]

[13]           Paragraph 7.55, trial bundle p 14471.

[48]      The first of these points was not controversial. Nor was the third, except so far as it ascribed Mt Stuart as the source of inundating water.

[49]      At page 65 of his third report Dr Macintosh says:

“To provide clarity I restate my view that prior to the occurrence of

inundation of the centre water in the Gordon Creek, the Table Drain

and the Centre’s southern carparks would likely to have contained

[sic] water from the Gordon Creek Diversion, Ross River, Catchment

A1 (via Racecourse Road overflow), and direct rainfall.” – p 14670

trial bundle.

[50]      It seems from this, and the paragraphs which follow, that Dr Macintosh is resiling from the opinion he expressed in his first report (fourth dot point) that inundation of the centre was from Catchment A1 and no other source. That is certainly what he

said in Court – t 4-73.

[51]      Therefore, I limit my consideration of his conclusions to the opinion expressed at the second dot point above. I turn to examine the reasons Dr Macintosh gives for this conclusion. Towards the end of his first report he says:

“7.37 … I have formed the view that the water which inundated came

from Racecourse Road’s northern table drain located

immediately adjacent to southern property boundary of the Centre site, as shown on Figure 7.11. I am of this view because:

• The colour of the water observed entering the carpark area (Figure 7.10) was the same as that observed in the table drain (Figure 7.11)

• The over carpark water flow (ref. App. A Item 5.55 and Figure 7.10) was observed coming from the direction of the table drain

• The observed occurrence of reverse water flow through the carpark drainage grids at 17:25hr (Figure 7.10), ahead of over-surface flow, is consistent with what I would expect under circumstances of rising water levels in Racecourse

Road’s northern table drain and subsequent inflow into the

carpark drainage system, via the drainage grids located along the southern carpark boundary (Figure 7.12)
•	I observe runoff water from Mt. Stuart Catchment A.1 overtopping Racecourse Road and flowing into its northern

table drain.”

[52]      At paragraph 7.46ff of his first report he describes a fifth reason which he relies upon to support his idea that water which inundated the shopping centre came from

Catchment A1 via the table drain – t 4-95. This last reason relates to the rate of rise

of water at the centre, as compared to the rate of rise at the Gordon Creek Alert. In total then, Dr Macintosh put forward five reasons for his opinion. I now examine each of them.

[53]      Paragraph 7.37, second dot point. When asked to explain what the second dot point meant as a matter of English, Dr Macintosh claimed that it meant the same as the third

dot point – t 4-94. I must say I doubt that. However, sufficient to say that by the time

he gave evidence, Dr Macintosh did not rely upon his second dot point as an
independent reason for his view.

[54]      Paragraph 7.37, fourth dot point: Observed flow from A1 into the table drain.

By the time he gave evidence Dr Macintosh did not rely upon the fourth dot point at paragraph 7.37. It is worth examining what he had said about this topic before giving oral evidence, because it contributes significantly to my conclusion that his opinions are unreliable.

[55]      Footage taken by an emergency services crew at 17:35hrs on 3 February 2019 shows water over the east-bound carriageway of Racecourse Road; water filling the table drain, contiguous with water to the north of the table drain. It shows water ponding in the swale between the east and west-bound carriageways of Racecourse Road. The footage shows other matters of significance dealt with below. However,

Dr Macintosh’s point only concerns the parts of the footage I have just described.

[56]      In his first report Dr Macintosh said that this footage “showed runoff water

overflowing the road from its southern (Mt Stuart) side”.[14] He also said that the

shopping centre carpark “appears to be inundated with water from the road table

drain”.[15] (my underlining).

[14]           Page 14462 trial bundle. There is some legitimate uncertainty about whether Dr Macintosh meant to

[15]           P 14462 of the trial bundle.

[57]      Dr Macintosh conceded in cross-examination that he could not see water overflowing the road. Further, he could not tell that the carpark had been inundated with water from the road and table drain; all the images show is that there is inundation; they say nothing about its source.[16]

[16]           Tt 3-24, 3-29 and tt 3-91-92.

[58]      It was not explored how Dr Macintosh came to say he observed matters which are in fact not to be seen. It should be noted however that these were not simply stray comments.

[59]      Figure 7.8 of his first report, trial bundle 14463, is entitled “Racecourse Road

Overflows at 17:35hr” and shows a still from the emergency services video.

Dr Macintosh has placed a large arrow pointing from south to north across the

east-bound carriageway of Racecourse Road under which he has written “overflow”. In Mr Caddis’ first report he commented that water could not be seen to be flowing

across the road in the emergency services footage. In his third report Dr Macintosh says that he also cannot discern flow from the footage (in direct contradiction of what

he said in his first report). He explains that “the direction of flow that I indicated on

Figure 7.8 (Main Report) was on the basis of my view that overflow of Catchment

A1 runoff had appeared to have commenced just 10 minutes earlier … .” – p 14646

trial bundle. That is, the explanation for his arrow marked overflow is that, according to his theory, water was flowing across the road from Catchment A1. In the context

of his having put forward his “observation” of flow as a reason to arrive at his theory,

the circulatory of reasoning is remarkable.

[60]      Although in the part of his third report just dealt with, Dr Macintosh expressly resiled from his claim to have observed a south to north flow in the emergency services video, he relies on the claim at least three more times in this very long report.

[61]      First, 26 pages after his concession that he cannot see a flow, Dr Macintosh says:

“… I remain in disagreement with Dr Connor’s opinion in that:

(a)	my view of the observed overtopping of Racecourse Road at 17:35hr [emergency services footage time] on 3 February is that the observed water was flowing from south to north.
(b)	my view is that water was overflowing the west-bound [sic] carriageway of Racecourse Road at 17:35hrs on 3 February from Catchment A1 which was because the level of the ponded water to the south of the road had risen to greater than the low point of the carriageway at adjacent to the observed overflow

[sic]. …” – p 14673 trial bundle.

[62]      Second, at p 14674 of the trial bundle, Dr Macintosh repeats his view that Catchment A1 runoff water crossed Racecourse Road and inundated the centre. He says:

“Given the intensity of the storm burst that was occurring at the time

of the observation … and the limited capacity and potential for

blockage of the BMT Racecourse Flow Path … I believe it reasonable

to conclude that the observed flow over Racecourse Road east-bound

shown in the emergency services vehicle video … was likely to have

been on account of Catchment A1 ponded runoff rising and then

overflowing the southern Racecourse Road carriageway. …

I note Mr Caddis’ comment in paragraph 22 (Further BMT Report)

‘There is nothing to confirm that water is flowing in the direction

(from right to left) as suggested by Dr Macintosh’. In my view it is

not surprising that Mr Caddis was not able to discern direction of flow

from the photograph, as I have discussed in paragraph 7.27 above.”

[63]      The reference to paragraph 7.27 is a reference to Dr Macintosh’s earlier expressed

view that it was not possible to determine any flow of water from the emergency
services footage. This passage is, I am afraid, very confused.

[64]      I deal with the third instance of reliance on “observed flow” after having disclaimed

the ability to see any such thing at [86] below.

[65]      Before leaving this point I note that the fourth dot point to paragraph 7.37 of the first report goes considerably further than saying that Dr Macintosh observed water flowing over the east-bound carriageway into the table drain, as he had claimed in the earlier part of his first report. To say that he observed runoff water from Catchment A1 overtopping Racecourse Road and flowing into the table drain is a distinctly different, and quite extraordinary, assertion. There is no evidence in the case at all which could possibly support that observation.

[66]      Paragraph 7.37, third dot point: Surcharging Grates. Within the shopping centre carpark there were 17 grates covering drains designed to take runoff water to

stormwater pits.[17] There were two stormwater pits, one at the southern end of the

[17]           See Macintosh Figure 7.12, first report, trial bundle p 14467, for a diagram of the grates, and see schematic representations of a cross-section through the two carriageways of Racecourse Road, the carpark and the shopping centre at the top right corners of pp 14869-14876 of the trial bundle, Caddis first report, for a representation of the stormwater drainage pits and their position relative to inundating waters on 3 February 2019.

carpark and one at the northern end.

[67]      There were security cameras at various positions in the carpark. Footage from them showed muddy brown water emerging from one of the grates in the carpark

approximately one minute before a similar “reverse flow” of muddy brown water

emerged at another grate in the carpark. The grates were only a few metres apart.
This is the extent of the useful footage. Obviously it is limited and incomplete.

[68]      In his first report Dr Macintosh says:

“7.32 In my view, my observation of the occurrence of reverse flow indicates that water levels had risen sufficiently to allow runoff to recommence flowing into the Racecourse Road drainage system

as of 17:42hr.”

[69]     It is difficult to know what this sentence means. Dr Macintosh said in

cross-examination that he did not mean recommence but commence – t 4-17. I find

it most unlikely that he meant to refer to the Racecourse Road drainage system, as having regard to his Figure 7.3 he uses this term to refer to an area to the south-east

of the racecourse. I think he meant to refer to the table drain – t 4-18. Thus

interpreted, he draws from the security camera footage that runoff had begun flowing
from Catchment A1 into the table drain.

[70]      At paragraphs 7.33 and 7.34 of his report he gives the two pieces of wrong information: (1) that he observed water flowing from south to north across the east-bound carriageway of Racecourse Road in the emergency services footage, and (2) that at the time of the emergency services footage the carpark had been inundated with water from the table drain. He makes a temporal link between these wrong observations and his observations about the drainage grates, noting that the

emergency services footage was 10 minutes after the reverse flows – paragraph 7.35.

Then at paragraph 7.36 he notes, as is the case, that the drainage grates are connected by pipes which run north-south. In his first report there is no more reasoning or explanation than this, as to why this observation supports the idea that the inundation of the shopping centre was caused by runoff water from Catchment A1.

[71]      Southern grate discharged first. At paragraph 8.5 of his third report (p 14650 of the trial bundle) Dr Macintosh introduces the idea that it is significant that surcharging was first observed from a grate slightly to the south of the grate observed

to be surcharging a minute later. He describes this sequence as “consistent with

expectations” but does not explain any further.

[72]      His idea seems to have been that the fact that the southern-most of the two grates surcharged first supported his theory because it showed that water causing the surcharging was moving across the carpark drainage system from south to north. This

was robustly rejected by Mr Caddis – t 5-40 and tt 5-41-43; and Dr Connor – t 6-47

and t 6-49. The grate through which water first surcharged was lower than the second

– it is their relative levels which determine the order of surcharging, not their

proximity to the table drain. I reject the idea that the order in which the grates surcharged water was significant in determining the cause of the inundation of the shopping centre.

[73]      Time of surcharging water. In his third report Dr Macintosh says that the “primary value” of his surcharge observation was “not so much whether or not the Table Drain

water was sourced from Catchment A1 or Gordon Creek or a mixture thereof”, but

that it identified when there was a change in water level in the table drain.

Remarkably, he goes on to say, “the makeup of the water in the Table Drain at the

time backflow occurred is of no significance to my views on the circumstances of

Centre inundation as presented in Section 7 of my Main Report” – trial bundle

p 14652. I can only regard this as a departure from, and abandonment of, those views originally expressed at dot point one in paragraph 7.37 of his first report, see [51] above.

[74]      Dr Macintosh continues this section of his third report over six pages of abstruse, and to my mind largely irrelevant, argument before concluding, at p 14658 trial bundle, that because he calculates a rise in water level in the table drain or southern carpark of the shopping centre of 0.07m in a period of 19 minutes at or about the time of the

reverse flow observations, “this leads to the conclusion of a plausible connection

between the observed reverse flow and the occurrence of an overflow event of Racecourse Road at or shortly before 17:24hrs on 3 February 2019 (time of reverse

flow observation)” – (my underlining) trial bundle p 14658.

[75]      I do not accept this conclusion. It is obscurely explained, and comes from an expert whose views are otherwise unreliable. It seems to be linked to his discredited, and (sometimes) abandoned notion that there was observed overflow across the east-bound carriageway of Racecourse Road, see my underlining. It depends on a finding that water surcharging from the drains came from the table drain, and I am not prepared to make that finding for reasons I now explain.

[76]      Source of surcharging water. Mr Caddis and Dr Connor think that it is unlikely that water surcharging from the grates in the carpark came from the table drain. They think it likely to have come from Lake 3.

[77]      Mr Caddis describes that the stormwater drains under the carpark are not connected by pipes to the table drain, but are connected by pipes to Lake 3. The system is designed to take water from under the carpark and discharge it into Lake 3. Pipes at the southern end of the carpark are smaller, beginning at 300 millimetres diameter, but by the northern boundary of the system, ie the outlet to Lake 3, the pipes are 1350 millimetres diameter.

[78]      Mr Caddis allowed that once water in and around the table drain rose so as to overtop the concrete garden edge and commence spreading across the carpark, there was a possible route for water to enter the carpark drainage system through the grates at the southern end of the carpark. Whether the water could in fact have done this, and then flowed through the carpark drainage system and surcharged at the two grates shown on the security camera footage, would depend upon whether or not there was sufficient hydraulic head at the grates to the south of the carpark.

[79]      Mr Caddis concludes that there would not have been sufficient hydraulic head to drive water encroaching on the southern edge of the carpark into the drainage grates to the south of the carpark. His view was that as this water came to the southern edge of the carpark it would flow across the surface of the carpark toward the shopping centre rather than force its way down the stormwater pit, along the length of the pipe networks, displacing their contents, until the silty water from the table drain emerged

at two grates at the northern end of the carpark– tt 5-51-52.

[80]      It must be remembered that there had been heavy rain for days, and these systems of

pipes would have been full at the time I am concerned with – t 5-51.

[81]      Mr Caddis concludes that the water discharging through the stormwater grates was

from Lake 3 based on the ground levels at the southern end of Lake 3 – t 5-54.

[82]      Dr Connor could not be definitive, tt 6-47-49, but thought it was unlikely that the muddy water surcharging from the carpark grates came from the southern edge of the carpark, and likely that it came from Lake 3. His view was also based on the principle

of hydraulic head, “… because the ground level at the surface of the pit was already

under water at the time muddy water emerged, it could not have come from the table drain overflowing into the carpark, and from there down into a stormwater pit closer to the table drain, through and along the drainage network and then up onto the

carpark surface. … if the pits’ surfaces were immersed, a rising water level in the

table drain area would more easily flow across the carpark … towards the Centre than via the stormwater system.” – p 14823 trial bundle. In oral evidence he said, “… and,

remembering … the water levels in the lake were so high that you’re getting a lot of
resistance to that pipe flow flowing along as well.” – t 6-48.

[83]      I find on the balance of probabilities that water discharging through the carpark grates came from Lake 3, not the table drain or adjacent inundated areas to the south of the carpark. Dr Connor and Mr Caddis give a reasoned analysis of this question based on the physical parameter of the carpark drainage system and its relation to the table drain and Lake 3. Dr Macintosh initially made the assertion without any such analysis, and when confronted with views based on factual parameters, could not engage in any reasoned way with them.

[84]      Paragraph 7.37, first dot point: colour of surcharging water. At tt 3-92-93 Dr Macintosh conceded that the colour of the water surcharging from the grates in the carpark was no independent support for his theory. It was muddy floodwater, not clear rainwater, but this did not mean it was runoff from Catchment A1; it could have come from Gordon Creek via the floodwaters to the south of the carpark; it could have come from Lake 3.

[85]      Paragraph 7.37 dot points, reprise. Before finishing with the dot points at

paragraph 7.37 of Dr Macintosh’s first report, I want to deal with what seems to be

their last (somewhat varied) expression at page 71 of his third report:

“I disagree with Dr Connor’s opinion in relation to the Racecourse Road

overtopping. I consider the occurrence quite plausible that the subject

flow did occur [sic] for the following reasons:

(a)	Drone video captured at 14:30hr showed that the Ross River was
overflowing its banks at upstream of Bowen Bridge Road … and Northview Lake …
(b)	It appears that inflows from Ross River were probably entering the diversion downstream from the station [sic, query Gordon Creek Alert] at 14:30hr. Inflows into the creek upstream from the

Gordon Creek Alert station would have occurred at a later time …

(c) It appears that Storm Burst 1 runoff from Catchment A3 also

reported to the Gordon Creek Alert at about 16:30hr …

(d) Gordon Creek Alert records indicates [sic] that water levels continued to rise for the rest of the day. Rainfall commenced at

15:30hr and also continued for the rest of the day …

(e) It is expected that rainfall continued for the rest of the day then so

too should catchment runoff from Mt Stuart catchments [sic] … .”

[86]      I interrupt the stream of sub-paragraphs in this quotation to observe that Dr Macintosh no longer insists that water did come from Catchment A1 across Racecourse Road to

inundate the centre. He now considers such an occurrence “quite plausible”. The

first five paragraphs given as reasons why such a thing is plausible amount to no more than reference to the uncontentious fact that it was raining on 3 February which could be expected to produce runoff from the Ross River, Gordon Creek, and Mt Stuart catchments, increasing in the afternoon from about 15:30hrs. I now resume the

material quoted from Dr Macintosh’s report:

“(f)	Stream flow water level records from Gordon Creek Alert …
indicate the occurrence of peak Catchment A3 runoff rate Storm Burst 1 at about the same time as the observed overtopping, with
the runoff commencing at about 16:30hrs. …
(g)	Water was ponding to southern sides of both the east-bound and west-bound carriageways of Racecourse Road prior to the
reporting of rainfall and runoff from Storm Burst 1. …
(h)	The observation of overtopping at 17:35hr is consistent with circumstances where the rate of inflow from Catchment A1 into the southern ponding area had increased above the capacity of the drainage system (flowing to the east) which serviced the area. Rapid accumulation of water in the ponded area then occurred resulting in the observed overtopping when pond levels exceed
road pavement levels. …
(i)	The observation of reverse flow of muddy brown water from grated stormwater pits on the southern carpark of the centre at 17:24hr on 3 February 2019 appears to coincide well with the observation of water over Racecourse Road at 17:35hr on the same day. In my view the correlation between the two observations provided indication of the occurrence of a Racecourse Road overflow event on account of rainfall runoff
from Catchment A1 …” (my underlining)

[87]      Dr Macintosh re-asserts that he can see overflowing of Racecourse Road in the emergency service video taken at 17:35hrs. This is the only evidence he relies upon in this series of paragraphs except for the evidence of surcharging from drainage grates to the north in the carpark (which he wrongly calls pits on the southern side of the carpark). It seems that the surcharging only has significance if it occurred at the same time as the overflowing, which he did not in fact observe at the relevant time.

[88]      Fifth reason for opinion: rate of rising water at the centre and at the Gordon

Creek Alert. Having reached the point where I do not see any support for

Dr Macintosh’s views in the dot points at paragraph 7.37 of his first report, I turn to

explain why I do not accept his further reason about water level rises, mentioned at
[52] above.

[89]      At table 7.1 of his first report Dr Macintosh collects information from the Gordon Creek Alert showing flood levels at 17:21, 17:40 and 18:20hrs on 3 February 2019. He also shows his estimations of water levels at the shopping centre at these times. He explains that he is not interested in the absolute numbers, but in the rate of rise of the water levels at the two locations. He says that at 17:40 and 18:20hrs the rate of rise at the shopping centre carparks is higher than at the Gordon Creek Alert: approximately 40% higher at 17:40 and over 200% higher at 18:20.

[90]      For some reason which is not explained, Dr Macintosh does not give similar data for the period before 17:21hrs, even though he notes that water levels at the Gordon

Creek Alert have been rising since 4.20 pm – see [129] below.

[91]      Dr Macintosh does not draw any express conclusion in a reasoned way from this data. All that can be said is that it is presented in a series of paragraphs immediately prior

to his conclusion that, “the source of inundating water was rainfall runoff from

Mt Stuart Catchment A1 via overflows from Racecourse Road’s northern table drain
…” – paragraph 7.55 of his first report.

[92]      In his third report Dr Macintosh does give information about rate rise over the whole of what may be accepted is the relevant period. He plots water level rise at the Gordon Creek Alert and at the shopping centre for the whole of 3 and 4 February 2019. In my view this graph shows clearly that the rate of rise at the shopping centre was closely connected with the rate of rise at the Gordon Creek Alert, implying very strongly that the source of inundation of the shopping centre was water which came from the north and west of the shopping centre, producing higher water levels at the Gordon Creek Alert on its way east. It is worth reproducing the table.

Macintosh Figure 5.3 – Observed Water Levels at the Centre and Gordon Creek Alert

[93]      Dr Macintosh estimated that it took 50 minutes for water travelling east from the Gordon Creek Alert to reach the shopping centre.[18] A time lag of about that length was evident in the two lines showing water rate rise on his table. The lines on the graph may not be strictly parallel, but from around 16:00hrs on 3 February 2019 until, say, 03:00hrs on 4 February 2019, they assume very similar trajectories. As a piece of visual evidence, this simply cannot be denied and one of the most revealing moments of the trial was the part of cross-examination where Dr Macintosh first

accepted, and then repeatedly denied this – tt 3-46-48.

[18]           Macintosh first report, trial bundle p 14456.

[94]      Mr Caddis thought that water rose at the Gordon Creek Alert and the shopping centre

“at proportionate rates, given the time lag” – t 5-25 and t 5-35. He described the

comparison as “a reasonably uniform rate of rise but … the Gordon Creek Alert is

actually on the main watercourse and the [shopping centre] carpark is on the

floodplains. So there are going to be variations in that.” – t 5-26. That is, he would

not expect precise correlation in the two rates. The flow of water downstream from

Gordon Creek Alert across the floodplain was a “dynamic system” – t 5-31, having regard to the “obstacles to flow” and “complex terrain” on the floodplain including

“storages” on the floodplain which were being filled as the water advanced – t 5-33.

[95]      Mr Caddis’ view was that a comparison of rate of rise at the Gordon Creek Alert and

at the centre did not support Dr Macintosh’s view; he did not claim that it supported
his own – t 5-38; tt 5-59-60.

[96]      Dr Connor’s view was slightly different. He would have expected a consistent or

similar rate of rise between the two places with a lag, and that is what he saw in

Dr Macintosh’s figure – tt 6-39-40. He saw this as consistent with his understanding of where the water inundating the centre came from (west of the centre) – tt 6-39-40.

At tt 6-44-45 he explains the mathematics which he sees as supportive of his views

by reference to Dr Macintosh’s own figure.

[97]      It was common ground that on 3 February water levels at the Gordon Creek Alert began to rise at about 4.20 pm. That is before Storm Bursts 1 and 2. The lag in time for that water to be received downstream at the shopping centre or its environs accounts for early rises in levels at the shopping centre which Dr Macintosh presents in his first report, out of context and which seem disproportionate to rises at Gordon Creek Alert once the storm bursts begin, see [89] above. Dr Connor points out in cross-examination that to regard these rises independently of what was happening

from about 4.00 pm is only looking at part of the evidence – tt 6-44-45.

[98]      Dr Connor explained that the scenario in Dr Macintosh’s first report, which was put

to both him and Mr Caddis in cross-examination, was selective. It began at 17:25hrs,
ignoring what had earlier happened. He said:

“If you go back to 16:24, which is one hour before, the level at the

Gordon Creek Alert I think was 4.09. So in that hour it went up by 39

centimetres. So that rate of – high rate of rise that you talk about at

the carpark had actually occurred in the hour before 17:24, and if you

compare the total rise in the Gordon Creek Alert from about 16:20, it’s

about one metre, and the carpark went up by about .9. So by ignoring

that hour before 17:24, it’s just a false analysis, because that’s that

hour that the water took to come from Gordon Creek to the centre.” –

tt 6-44-45.

[99]      I prefer the views of Dr Connor about this topic. They are logical and borne out by

Dr Macintosh’s own figure.

[100]    In submissions, counsel for the plaintiffs described that it was Mr Caddis and

Dr Connor who “resorted to a new theory that there was a lag between the rate of rise

at Gordon Creek Alert and the centre carpark … this was a new theory.”[19] This is

quite incorrect. It was Dr Macintosh who introduced the idea of a 50 minute lag in

his first report – trial bundle p 14456.

[19]           Paragraph 117 written addresses of plaintiffs.

[101]     There are two further related points which it is convenient to mention here. First, despite the fact that Dr Macintosh expressly says he is not concerned about absolute levels of rise, just differences in rates of rise, there does appear to be a point raised at the very end of his first report, where he says that as at 12.20 am on 4 February 2019 there had been a 55 centimetre rise at the shopping centre but only a 44 centimetre rise at Gordon Creek. The implication seems to be that Dr Macintosh thinks this difference shows the water at the centre came from Mt Stuart Catchment A1, not Gordon Creek.

[102]     If this is what Dr Macintosh says, I reject it. First, there is water coming down Drain A2 into the Gordon Creek floodplain which does not pass through the Gordon Creek Alert so that water levels at the centre would not be the same as those at the Gordon Creek Alert. Second, while the height of 55 centimetres at peak flood within the centre was not a source of dispute in the trial, it was not a scientific measurement. It was simply evidence from laypeople who measured water damage on walls inside the shopping centre after the floods had receded.[20] The height of apparent water damage could be influenced by matters such as water soaking upwards into plasterboard walls, or waves or splashing within the centre. Further, it can readily be imagined that once water flowed into the shopping centre building, its rate of flow out of the building might have been impeded. That is, I think the level of peak flood at 55 centimetres inside the shopping centre must be regarded as indicative only.

[20]           T 8-32.

[103]     If and insofar as Dr Macintosh does make a point about absolute flooding levels within the centre, I do not find it persuasive because he has in no way examined and discussed the type of things I have just referred to. At most, Dr Macintosh presents an unexamined, unanalysed anomaly as to the peak flood level in the shopping centre. There is no reasoning to suggest that it has anything to do with water entering the shopping centre from Catchment A1.

[104]     Secondly, in Dr Macintosh’s first report he says that the peak of the inundation at the

centre was at 12.21 am on 4 February 2019 – trial bundle 14473. This is the time at

which the Gordon Creek Alert reached its peak level, see his report at p 14471. In this first report he insisted that all water inundating the centre came from Catchment

A1 and that “no inundation ingress would have entered the centre from any other

source during this period” – trial bundle p 14472. It is utterly illogical in those

circumstances to attribute the time of peak inundation at the centre to the time of peak
inundation at Gordon Creek Alert.

[105]    Lack of rational enquiry. Having dealt with, and rejected, the five reasons Dr Macintosh put forward as supporting his views, I wish to note what Dr Macintosh does not do in offering his opinions. Although he notes at paragraph 4.9 of his first report that rainfall runoff from Mt Stuart was only a potential source of the shopping

centre inundation in “circumstances when inflowing water exceeds the capacity of

the Bruce Highway (Racecourse Road) drainage works”, he makes no attempt to

show that the capacity of these drainage works was exceeded.

[106]     He makes no attempt to estimate the volume of water which might have been held on the low-lying southern side of the west-bound carriageway of Racecourse Road either by way of using LiDAR height data, survey data or from photographs and footage of that area during the course of 3 and 4 February 2019.

[107]     He makes no attempt to estimate the volume of water received over Catchment A1 in Storm Bursts 1 and 2. As noted above, it was not a particularly high amount of rain.[21]

[21]           See Mr Caddis at t 5-37, “Storm Burst 1 was 70 millimetres of rainfall. That’s all it was. It wasn’t a significant event.” Storm Burst 2 was about the same amount – t 5-66.

[108]     He makes no enquiry as to the height of the carriageways he postulates the water from Catchment A1 flowed over, this is notwithstanding that reliable height datum is available on the LiDAR system for the area.

[109]     He makes no examination of the volume of water travelling east towards the centre from the Ross River overflows into Gordon Creek and Gordon Creek itself. They are an obvious source of water to inundate the centre. Although he does not deal with it,

he has Mr Caddis’ original opinion given to CGU that they were the source of water

inundating the centre.

[110]    These absences were unexplained, and to my mind inexplicable, if a competent professional were genuinely trying to determine the source of water inundating the centre. [22]

[22]           Ironically underscoring this point, counsel for the plaintiffs attacked Mr Caddis on the basis that he was prepared to say water did not cross the west-bound carriageway of Racecourse Road before a

[111]     Matters of Timing. In his third report Dr Macintosh said:

“When I state my view that runoff from Catchment A1 was

responsible for the occurrence of the observed inundation, I am

implicitly also meaning to say ‘at the observed time’. To further

elaborate on my view of the circumstances, the corollary to this is that if no runoff had occurred from Catchment A1, or if it did occur but arrived too late, then my view is that inundation of the shopping centre would still have occurred, but at a later time than observed and from water that may not necessarily have been sourced directly from Catchment A1.

I trust that my clarification serves to underscores [sic] my view on the very significant impact made by the occurrence of local runoff from

Mt Stuart at the precise time that it did.” – p 14531 trial bundle.

[112]    During his oral evidence Dr Macintosh postulated what he called “conjunctive

sources contributing to the table drain area which worked together to cause the

observed inundation” – t 4-73. He seems to be postulating that water from several

different sources, including Catchment A1, flowed into the table drain and then this
inundated the centre. As part of this he says:

“… if run off from Catchment A1 did not go over the flow path that

I’m talking about, it did not overtop the roads, then I’ve said there that,

well, in the fullness of time inundation of the centre would still have

occurred and that’s obvious. It’s self-evident just by looking at the

other information.”

[113]     I struggle to understand what Dr Macintosh is saying at this part of his evidence. As noted, his views moved around a great deal over the course of this proceeding. It may be that these comments were a last attempt to justify some credible role for runoff water from Catchment A1. If so, I reject them: they are not reasoned; they are not at all persuasive.

Conclusions as to Dr Macintosh’s Evidence

[114]     The foregoing analysis has explained why I would not rely upon Dr Macintosh’s

views in deciding issues which are relevant to this case unless they were adopted or

agreed in by the defendant’s experts. I also reject Dr Macintosh’s views so far as they

are based on the modelling evidence, see below. I put Dr Macintosh’s opinions to

one side and turn to whether or not the defendant has proved by their expert evidence a basis upon which the flood exclusion applies. This case is not to be resolved on a competition between expert reports so that the plaintiff fails because I reject

Dr Macintosh’s views. It is the insurer who bears the legal and evidentiary onus of

proving that the exclusion applies: Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Ltd.[23] Accordingly, I turn now to consider the opinions of Mr Caddis and Dr Connor on the topic of how the inundation of the shopping centre occurred.

Opinions of Dr Connor and Mr Caddis

[23] (2010) 240 CLR 444, [25].

Water did not cross Embankment of Western Carriageway

[115]     Both Mr Caddis and Dr Connor did investigate the physical parameters of the site and the rainfall events to conclude that water runoff from Catchment A1 did not cross the west-bound carriageway of Racecourse Road. I accept that conclusion and now explain why.

[116]     Mr Caddis begins by describing the minor and major flow-paths in the vicinity of the shopping centre. His Maps B1 and B2 (above) were prepared to illustrate his views on these topics.

[117]     Minor flows from Catchment A1 accumulate in an open channel along the southern side of the west-bound carriageway of Racecourse Road where they flow in an easterly direction. They cross Lakeside Drive through Culvert G and continue to flow east in an open channel before flowing north-east underneath Racecourse Road through Culvert K. They then run in an open channel on the west side of Abbott Street, discharging into Gordon Creek via Culvert L.

[118]     Major flows from Catchment A1, which exceed the capacity of the minor drainage system, flow east in the low-lying area between the west-bound carriageway of Racecourse Road and the racecourse itself, overflowing Abbott Street, and discharge into Gordon Creek well to the north-east of the shopping centre. Flow to the east is along fairly flat land and it can be expected that water will accumulate in the

low-lying area to the south of the west-bound carriageway – trial bundle p 14757.

[119]     In Mr Caddis’ view neither minor nor major flows from Catchment A1 will overtop

the west-bound carriageway of Racecourse Road, much less flow on to the shopping centre. He based his opinion in part on LiDAR Australian Height Datum (AHD). On his Map B3 Mr Caddis marked some relevant levels from LiDAR. The LiDAR data

shows that the low point on the Racecourse Road’s west-bound carriageway is 4.41

metres above AHD.[24] Ground levels to the south of Lakeside Drive are lower than this (3.85 metres, 3.69 metres and 3.56 metres) and Abbott Street is at 3.66 metres

AHD. Mr Caddis concludes that, “From these levels, it can be expected that the accumulation of water to the south of Racecourse Road’s west-bound carriageway

would freely drain to the east, rather than overtopping Racecourse Road and flowing

onto the [shopping centre] site” – p 14758 trial bundle.

[24]           A survey was commissioned by the insurer, under Dr Connor’s direction. That level was confirmed to be accurate – t 5-62.

MAP B3

[120]     So far as the subject inundation is concerned, Mr Caddis relied on the available video footage to say that there was nothing to suggest water flowing over the embankment

of the west-bound carriageway of Racecourse Road – t 5-34. Neither Dr Connor nor

Mr Caddis thought that the emergency services video showed water was coming

across the west-bound carriageway of Racecourse Road – see Mr Caddis at t 5-34 and

Dr Connor at t 6-55.

[121]     Mr Caddis referenced drone footage (2.15 pm) which gave him a reliable basis to estimate water ponding to the south of the west-bound carriageway before Storm Burst 1 at 3.5 metres.[25] This water level was almost a metre lower than the lowest point of the embankment to the western-bound carriageway (4.4 m). In evidence he said:

“So in order for that west-bound embankment to be overtopped, you

would need the rainfall burst to occur, it would need to fill that storage

… neglecting any discharge from that storage area via culvert K, it

would need to fill that storage before it then overtopped.” – t 5-35.

[25]           Dr Macintosh had originally referenced the same point at 3.8 metres, but during the course of the trial came to revise his estimate to between 3.5 and 3.7 metres, t 6-5.

[122]     In the passages of cross-examination which follow immediately on from this answer it is clear that he regards that as not possible having regard to the physical reality of the area, including the drainage culverts at the eastern end of the low-lying area to the south of the west-bound carriageway of Racecourse Road. At a later point in the cross-examination he said:

“… the drone footage from around about 2 o’clock in the afternoon to

2.30, there’s – you can see from the – that drone footage how much

ponded water there was at that earlier time in the afternoon and the

water level was at about 3.5 in that area. That’s my estimate. That

would suggest that there’s 900 millimetres of depth of additional water you’d need to build up in order for that west-bound carriageway to be

overtopped.

…

There’s the presence of a flow path which – the presence of the

culverts underneath Lakeside Drive which drain that ponded area to the east together with a low [lying swathe] of land which goes [past]

the stub of Lakeside Drive into the area directly sort of north of the …

racecourse and there’s culvert K, which are a very large set of culverts,

which allow that area to drain. So by looking at all of those different pieces of evidence that was the intended drainage path from that area.

That is my opinion that water drained by that mechanism.” – t 5-65.

[123]    Dr Connor’s views, and the reasons for them, were substantially the same as Mr Caddis’. He examined any possible mechanisms for water to run from Catchment

A1 to the shopping centre. There were no culverts allowing flow under Racecourse Road. Therefore, for flows from Catchment A1 to enter the table drain it was necessary for them to overtop the west-bound carriageway of Racecourse Road. Dr Connor attended the site to instruct a surveyor to survey the relevant length of road. Dr Connor explained that it was very important to him to see the channels to

the south of the west-bound carriageway which could take the flow to the east – t 6-43. In his report, Dr Connor records, “… the lowest points where overtopping

could first occur were at 4.401 metres near Lakeside Drive and 4.405 metres midway along towards Stuart Drive. Therefore 4.4 metres seems an appropriate level to

consider for initial overtopping of the embankment.” – paragraph 162.

[124]    Dr Connor then looked at the height of the low-lying land to the east of the west-bound carriageway of Racecourse Road, and the culverts located there to conclude that there was adequate capacity to convey water from Catchment A1 to the east before overtopping of the western-bound carriageway occurred at a level of 4.4 m. At t 6-42 he explained the detail of his investigations and calculations in that regard.

[125]    In cross-examination Dr Connor said this as to the idea that water crossed the west-bound embankment in the volumes necessary to overflow both carriageways of the road, the swale, the table drain, the carpark, and then fill the shopping centre to a level of half a metre or more:

“I want to suggest, at a minimum, it provides no more support for your

theory than it does for Dr Macintosh’s. Do you agree with that?--- No.

His view is – honestly, it’s – it’s not believable.

Not believable?--- Not believable. Yes.

What, are you suggesting that he’s not telling the truth?--- No, no, no, not at all. But our view – my view, using those levels, there’s a lot of

consistency to it. This other view has to have an enormous flow come

across that west-bound embankment, and as I’ve just explained, there’s so much opportunity for capacity to go off to the east that it

doesn’t make sense you’re going to get an enormous flow. Remember,

anything that went over there, if it did – and I don’t believe it did –

would just be the top of the flow. Remember, all of this is going the

over which water travelled”.[48]

[48]           Written submissions paragraph 169.

[188]     Dr Connor noted that if a north-south line through the shopping centre was drawn on

the computer model for the “as-it-happened” scenario, water levels all along this line

were the same, which he said was:

“… an indication that in this situation of high flood, the Centre is in

the middle of a floodplain which is generally conveying this large flow in the west to east direction towards Abbott Street and thence to the downstream areas of Gordon Creek. In these circumstances, the local topographic nuances of relatively minute table drains and small

culverts make very little difference to the flood outcomes.” – p 14818

trial bundle.

[189]    This observation of Dr Connor’s was made on the modelling, but he said the

photographs of the flood over the floodplain demonstrate that it was what actually happened. I think that the photographs and video evidence from before and after the inundation of the shopping centre do demonstrate that the observation he makes on the modelling is reflective of reality.

[190]     Essentially the plaintiffs’ submission was that once water encountered the table drain

as part of its overland flow from Gordon Creek or the Gordon Creek diversion, it should stop being regarded as water which was overflowing Gordon Creek or the diversion, and begin to be regarded as water which was overflowing the table drain. Having regard to: (1) the size of the body of water moving across the floodplain compared to the relatively small amount of water in the table drain; (2) the fact that the table drain was not flowing independently of the body of water moving across the flood plain, and (3) the fact that the table drain was completely submerged by about 17:35hrs; I cannot see that it is realistic to characterise the water which inundated the shopping centre as water overflowing the table drain.

[191]     Even if it were, the flaw in the argument remains that clause 3(a) is not simply concerned with identifying the source of inundating water. The damage excluded by

clause 3(a) is “… damage occasioned by or happening through … water overflowing

from the normal confines of any natural watercourse …”. Switzerland General

Insurance Co Ltd v Lebah Products Pty Ltd[49] is authority for the proposition that the

expression “occasioned by or happening through” provides for a very wide scope of

causal relationship. In Mercantile Mutual Insurance (Aust) Ltd v Rowprint Services (Victoria) Pty Ltd[50] the Court of Appeal in Victoria said this as to the words

“occasioned by or happening through” in the context of an exclusion clause:

“The words ‘occasioned by or happening through’ have a wide

meaning: … A motor car may be stolen or a shop may be looted, the proximate cause of the loss being theft. The ‘occasion’ of the loss may nevertheless be riot or civil commotion: …”

[49]           (1983) 2 ANZIC 60-498.

[50] [1998] VSCA 147, [24].

[192]     A similar argument to that relied upon by the plaintiffs was advanced in Provincial Insurance (above). Mahoney JA said this of it:

“It was submitted for the insured that the loss or damage in question

was not ‘occasioned by’ nor did it ‘happen through’ a flood as defined.

The argument was, in effect, that the water which entered the insured’s

premises and caused the loss or damage was not shown ever to have been in the relevant canal or natural watercourse and therefore it was

not water ‘escaping … from the normal confines of’ the watercourse

or canal. Therefore, the argument suggested, the exclusion did not
apply.

I do not think that argument should be accepted. For the exclusion to apply, it is not necessary that the precise water which escaped from the watercourse or canal be identified as having actually entered the

insured’s premises. The exclusion is of loss or damage ‘occasioned

by or happening through’ the inundation of normally dry land ‘by

water escaping … from …’ a watercourse or canal. If, by reason of

the inundation of normally dry land by water so escaping, other water

was forced into the insured’s premises and occasioned loss or damage,

that would, in my opinion, be loss or damage ‘occasioned by or

happening through’ the escape caused by such a flood.” – p 564.

[193]     This is consistent with the conclusion reached by Jackson J in LMT:

“The prepositional phrase ‘from the natural confines’ modifies

‘overflowing’, not ‘water’. The ordinary meaning of the words is

directed to the place from where the overflowing occurred, not the

place from where the water was sourced.” – [45].

[194]    The reasoning in Provincial is also consistent with the conclusion of Davis J in Wiesac Pty Ltd v Insurance Australia Ltd.[51]

[51] [2019] 1 Qd R 198, [110].

[195]     Inundation damage to the shopping centre was occasioned by, or happened through, water escaping from Drain A2, Gordon Creek and the Gordon Creek diversion. That some water from those sources might at some time have lain in the table drain, or more likely, travelled across a flooded area beneath which was submerged the table drain, before flowing onto the shopping centre does not change that.

[196]     Surcharging grates. Dr Connor did say that he thought perhaps 2.6% of water in the shopping centre carpark might have come from Lake 3 through surcharging grates. I accept that this water was not overflowing Lake 3 via its normal confines; it is analogous to the water which surcharged through pipes in LMT. However, I cannot see that damage to the shopping centre was occasioned by, or happened through, this amount of surcharging water.

[197]     Local rainfall. It was submitted on behalf of the plaintiffs that rainfall onto the shopping centre site was a significant contributor to the damage caused by inundation of the shopping centre. Taking some evidence of Mr Caddis out of context, it was submitted that perhaps 12.7 centimetres of rainwater might have contributed to what

was said to have been a metre’s rise in water levels on the carpark to peak inundation

of the shopping centre.

[198]     I find that rainfall to the shopping centre carpark must have contributed some water to the body of water which inundated the shopping centre. However, there is no evidence that local rainfall made up 12.7% of the water which inundated the shopping centre. Mr Caddis makes clear that 12.7 centimetres of rain fell over the shopping

centre and carpark over an extended period of time. The plaintiffs’ submission

assumes no mechanism for rainwater to drain from the carpark, yet there was: to the south over Racecourse Road, as shown by the modelling, and to the east over Lakeside Drive, as shown by the modelling, and from the height data collected by

Mr Caddis – see Map B3 above. Secondly, Mr Caddis raises the topic of rainfall at

the shopping centre site to exclude it as a significant cause of the inundation:

“Prior to the start of rainfall at 16:00 on 3 February 2019, there had

been a period of 6 hours of no rain. The water level in the carpark at 11:57 on 3 February 2019 is estimated to be around 3.85m AHD based on comparison of water levels in Figure 2-14 and Figure 2-15 to As Constructed drawings of carpark ground levels (points 106 and 194 on dwg 944704-02). The estimated water level is 450mm below the Fairfield Central Shopping Centre floor level of 4.30m AHD. The depth of rain falling in the afternoon of 3 February 2019 was only 93mm to 18:20 when initial inundation is estimated. This depth of rainfall would equate to 127mm depth of water across the site once roof water had combined with water on the ground. Given 127mm is less than the required 450mm needed to reach the floor level, I conclude that the volume of rainfall is insufficient to increase water levels to a level necessary to inundate the shopping centre, showing

that rainfall alone was not the cause of the inundation.” –trial bundle

p 14762.

[199]     That the source of some small part of the water which inundated the centre was local rainfall does not mean that the damage to the shopping centre was occasioned by, or happened through local rainfall. Had there been nothing but local rainfall, an amount of water, something less than 12.7 centimetres in depth, would have accumulated on the surface of the shopping centre carpark. It was the sheet of water moving across the floodplain which occasioned the inundation.

[200]    Swale. The plaintiffs submitted that water from the swale between the two carriageways of Racecourse Road rose up and flowed to the north, ultimately ending up in the shopping centre. I cannot see an evidentiary basis for that idea other than

in Dr Macintosh’s views, which I reject. There was no evidence from Mr Caddis or

Dr Connor that water from the swale was likely to have overtopped the east-bound carriageway of Racecourse Road. Given the small size of the swale compared to the size of the overflow from Gordon Creek, I find it most unlikely that water from the swale began flowing north through Culverts D, E and F. To the contrary, Mr Caddis

and Dr Connor’s evidence was that water originally entered the swale through

Culverts D, E and F: that is, most water in the swale was originally from the northern side of Racecourse Road. Further, their view was that once water flowed across both carriageways of Racecourse Road, flow was in a north to south direction. In these circumstances, I certainly would not infer that water from the swale flowed over the east-bound carriageway of Racecourse Road to join with the table drain. Or that it did so in any significant amount. Or that any amount of it entered the shopping centre.

Wayne Tank Principles

[201]     In Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation Ltd[52] the English Court of Appeal dealt with a case where faulty equipment was installed in a factory. Without testing it, the factory owners switched it on and left it unattended overnight. The equipment caused a fire. The supplier of the equipment sued its insurer. The insurer relied upon a clause excluding liability for goods supplied. Lord Denning and Roskill LJ both thought that the faulty equipment was the dominant effective cause of the loss, but both acknowledged that the failure to test the equipment before leaving it unattended could also be regarded as a cause. The case

is famous for the principle, “that if the loss is caused by two causes effectively

operating at the same time and one is wholly expressly excluded from the policy, the

policy does not pay”.

[52] [1974] 1 QB 57, 66, 67, 69 and 75.

[202]     In Sheehan v Lloyds Names Munich Re Syndicate Ltd[53] Allsop CJ gave a modern re-statement of the applicable principles:

“Thus, the Court should first seek to identify a single proximate cause

of the loss or damage. If a conclusion is reached that there are instead multiple proximate causes, and one is an insured event but the other is not, then the insured will be able to recover. However, where there are two proximate causes and these are concurrent and interdependent, and where one is an insured event and one is an excluded event then as a matter of construction of the policy the insured will not be able to recover. The causes are inseparable, and as one is excluded under the

policy recovery will not be possible. …”

[53] [2017] FCA 1340, [81].

[203]     Mr Caddis used modelling to give the relative proportions of flow from the Ross River, Gordon Creek and Drain A2, which contributed to the inundation of the shopping centre. At the time of initial inundation of the shopping centre, 67% of the water flow across Stuart Drive was from the Ross River, 22% was from Gordon Creek, and 11% was from Drain A2. At peak inundation 42% of water from Gordon Creek flowed across the floodplain and 58% passed through the Gordon Creek diversion.

[204]     Using Mr Caddis’ modelling Dr Connor calculated the relative proportion of those

flows for himself. He said:

“Upstream of Stuart Drive, it can be seen that Ross River inflows from

west of Stuart Drive dominate the mix: 68% at initial inundation and 91% at peak. Gordon Creek inputs are 21% and 6% respectively.

Drain A2 inflows are 11% and 3% respectively.” – trial bundle

p 14822.

[205]     He went on to say:

“At Lake 3, further inflows from Ross River arrive via the breakout at

Northview Lake … . Once these are added to the combined Ross River

inflows downstream of Stuart Drive, the total contribution to the

[shopping centre] site by the Ross River inflows … represent a

proportion of the total inputs of 82% and 96% respectively.

In summary, Ross River inflows from the two breakouts dominate the floodwater inputs to the site. Regardless of modelling nuances, the conclusion can be reached that the prime source of floodwater across

this floodplain are Ross River breakout flows.” – trial bundle p 14822.

[206]     Dr Connor noted that the flood modelling did produce some inaccuracies, but said,

“… value is derived from such modelling even when such absolute accuracy is not

achieved. If the model is being used for relative proportions of flow and for flow

directions, it is very useful for that purpose.” – p 14818 trial bundle. He concludes, “I consider therefore the outcomes reported in Mr Caddis’ section 3.5 important to

understand the contributions of various sources of floodwaters to the inundation.

There is no other means to do so.” – p 14819 trial bundle.

[207]     If this case depended upon determining the precise level of water at a precise place at a particular time, I would be hesitant to rely only on the modelling evidence. However, the modelling generated very large differences between the sources of water flowing across the floodplain and into the shopping centre. In these

circumstances I am happy to accept Dr Connor’s evidence that, in essence, the figures

generated by the model are accurate enough.

[208]     That having been said, the calculations of relative flow proportions in the expert evidence are of limited assistance in determining the questions which arise for me. First, the experts were concerned to attribute a proportion of flow from the Ross River. As an individual source of flooding, the Ross River assumes lesser importance when dealing with exclusion clause 3(a).

[209]     The calculations of relative proportions of flow do show that water from Drain A2 comprised a relatively small part of the flow across the floodplain from west to east with the rest of that flow coming from Gordon Creek and the diversion. From

Dr Connor’s figures it seems that another relatively small contribution to the flows to

the shopping centre came from Lake 3.

[210]     I have discussed the other sources of water which I accept may have contributed something to the body of water which inundated the shopping centre: less than 3% came from Lake 3 via surcharging grates in the carpark; an amount which I would put at less than 10% came from local rainfall. If the table drain were to be regarded as an independent source of water, some relatively small part of the water which flooded the shopping centre came from there. The relative size of the table drain compared to the continuous sheet of water that covered it, and land all the way back to Stuart Drive, can be gauged from the emergency services footage; the stills from it

in Figures 2.16 and 2.19 of Mr Caddis’ first report, and the video footage from earlier

in the afternoon – exhibits 22, 30, 31 and 32. The relative size of the Ross River, Gordon Creek and the table drain can be seen from Figure 2.4 of Mr Caddis’ first

report.

[211]    In these circumstances, I think the defendant has proved that there was a single proximate, effective or real, cause of the loss and damage caused by inundation of the shopping centre within the principles in Wayne Tank. That cause was water overflowing from the natural confines of Gordon Creek as altered or modified. That

being so, clause 3(a) of the policy applied and the insurer’s liability to the plaintiffs

was limited to $250,000. That amount has been paid.

Obiter Decision as to Proof of Woolworths’ Landlord’s Works

[212]     The quantum of damages suffered by the plaintiffs as a result of the inundation on 3 and 4 February 2019 was agreed, save for one matter relating to damage to the Woolworths’ tenancy at the shopping centre. Obiter, given my earlier findings, I will

determine that quantum issue.

[213]    After the inundation Woolworths told the plaintiffs that it would repair its own

tenancy, including those works which were defined as “landlord’s works” in the lease

between the plaintiffs and Woolworths. Mr Guardala on behalf of the plaintiffs said

that he “was okay” with that arrangement, and the Woolworths’ representative said words to the effect that Woolworths would invoice the plaintiffs for the landlord’s

works. This conversation occurred sometime before 20 February 2019.

[214]     On 20 and 23 February 2019 Mr Guardala wrote to Woolworths chasing a “cost plan … for the landlord’s works component of the works”. One was sent on 24 February

2019. Mr Guardala swears that he observed Woolworths complete the rectification

work set out in the cost plan in the “early part of 2019”. Woolworths has never

invoiced the plaintiffs for the landlord’s works. All Mr Guardala says about this is:

“Woolworths have not yet issued an invoice to the [plaintiffs] for the

work which Woolworths performed. However, I have no reason to

believe that Woolworths will not, in the future, issue such an invoice.”

[215]     The February 2019 cost plan included all the works which Woolworths would carry

out, whether landlord’s works under the tenancy or otherwise. Mr Guardala used the

cost plan to identify, according to his understanding of the lease, the items in the cost

plan which he believed were landlord’s works. He then asked a construction

contractor to estimate the costs of the works which he, Mr Guardala, believed to be

landlord’s works. Mr Guardala reviewed that information, “taking into account my own experience within the retail leasing market”. On the basis of that, Mr Guardala

thought that the landlord’s works would cost $1,260,658.77.

[216]    The plaintiffs say that they are entitled to receive the amount of Mr Guardala’s

estimate as part of the calculation of loss and damage which the insurer should pay (had my decision on the exclusion clause been different). The plaintiffs say that to incur a liability is sufficient to prove damage within the meaning of the insuring clause. I accept that proposition. On the evidence before me, the plaintiffs may have incurred a liability to Woolworths.

[217]     The onus is on the plaintiffs to prove the amount of their liability to Woolworths and in my view they have not done so. There is no evidence that the plaintiffs and Woolworths have ever agreed what part of the works undertaken by Woolworths

constituted landlord’s works within the meaning of the lease. There is no evidence

that Woolworths would agree with the costs estimated to be attributable to the

landlord’s works by Mr Guardala and his contractor.

[218]     There was no explanation put forward by the plaintiffs as to why they had reached such an open-ended and unusual agreement with Woolworths. There was no explanation from the plaintiffs as to why they had not crystalised the amount of the liability they say they owe to Woolworths before the trial in this proceeding.

[219]     It was submitted by the plaintiffs that, as the evidence did establish a liability on their part to Woolworths and that therefore I ought to take the course preferred in CIC Insurance Ltd v Bankstown Football Club Ltd.[54] That was to make a declaration that the plaintiffs were entitled to an indemnity from the insurer once costs had been established. I would not make such a declaration in this case. The situation is unusual

and unexplained. It appears to be of the plaintiffs’ own making. The situation

between the plaintiffs and Woolworths is uncertain so that there is potential for

unfairness to the insurer: if Woolworths delivered a bill for the landlord’s works greatly in excess of Mr Guardala’s costs estimate after the Court had made such a

declaration, the plaintiffs would have no incentive to challenge it; they could simply

[54]           (1995) 8 ANZIC 61-232, 75, 568.

pass it on to the insurance company.

Roof and Loading Dock Damage

[220]     It will perhaps be recalled that on 31 January 2019 water entered the shopping centre through the roof and surcharged out of drains in loading docks at the back of the centre. Further, that the insurer accepted that damage caused by these events was covered by the policy, but had never paid any money in respect of that part of the

plaintiffs’ claim. The plaintiffs claimed an amount in respect of physical loss and

damage caused by these events and a further sum in respect of business interruption.

[221]     The parties agreed loss caused by the entry of water through the roof of the shopping centre and surcharging through the drains in the loading dock in an amount of $189,500 and business interruption loss for the period 31 January 2019 to 3 February 2019 at $19,590. The defendant contended that was the only period during which it was liable for business interruption loss. I accept that.

[222]     I think the case is analogous to that considered by Mansfield J in Elilade Pty Ltd v Nonpareil Pty Ltd & Anor.[55] In that case water entered premises damaging much of the stock there. That event of destruction was within the insurance policy. Some hours later a second event occurred, a flood of a type which was excluded under the policy. Mansfield J first rejected the contention that there were two contemporaneous

[55] (2002) 124 FCR 1.

causes of Elilade’s loss – [52]. There were two separate occasions of damage: the

first was insured, and the second was not. The first occurrence damaged some significant part of the stock owned by Elilade; the second occurrence damaged more.

Mansfield J thought that, “The test of whether the initial inundation is a predominant

or effective or proximate cause of loss is one of fact to be determined by applying

commonsense principles …” – [52]. Applying that, he concluded:

“From that point, that is from the time of the second inundation, I do

not consider that Elilade is entitled to be indemnified under the policy for any damage to its stock or plant and equipment. There are two means of reaching that conclusion. The first is to treat the initial inundation and the second inundation from that point as each operating

as effective or proximate causes of Elilade’s losses sustained

thereafter. In that event, as one of the proximate causes was an exempted event under the policy, Elilade would not be entitled to indemnity: Wayne Tank and Pump Co; Countrywide Finance Ltd v State Insurance Ltd [1993] 3 NZLR 745. The second is to conclude, as I do, that in a real and practical sense, the proximate or effective cause of any damage caused after that time was the second inundation. It effectively rendered the initial inundation of no ongoing significance

to the losses sustained after that time. …

It is therefore neither necessary, nor appropriate, in my judgment to undertake any hypothesis as to what damage might have been caused to the stock and plant and equipment of Elilade from the initial inundation had the second inundation not occurred. The fact is that the second inundation did occur, and from the time of its occurrence I consider, for the reasons given, that any damage to the stock and plant and equipment of Elilade was not damage in respect of which Elilade

is entitled to indemnity under the policy.” – [55]-[56].

[223]     Like the factual scenario in Elilade, there were two distinct occasions of damage in this case. The first (31 January 2019) was within the insurance policy, and the second (3 and 4 February 2019) was excluded; the principles in Wayne Tank do not apply.

There was some interruption to the plaintiffs’ business following the events of

31 January 2019. By the night of 3 February 2019 an excluded flood overtook these

earlier events as the cause of interruption to the plaintiffs’ business thereafter.

[224]     The insurer also argued that this result was achieved by application of a trends clause located in section 2 of the policy. It is very difficult to apply the Basis of Settlement

as stipulated by the insurance policy to this insured’s business. I think it is impossible

sensibly to apply the trends clause to the insured’s business in the factual

circumstances here. I decline to do so.

Disposition

[225]     Damage to the roof and loading dock and business interruption loss total $209,090. The parties agreed that interest on this claim was to run at Court rates from the commencement of these proceedings. This amounts to $14,226.12. A payment of nearly this amount was made by the defendant to the plaintiffs on the last day of the trial. Most undesirably, the first the Court was informed of this was at 2.30 pm on the day before judgment was to be delivered. The communication was simply of the fact of payment, not the basis for it. It appeared from what was said at the time fixed for delivery of judgment that there was no agreed basis for the payment. I asked the parties to agree the amount in which I should give judgment given what my findings would be as to the amounts due under the policy for business interruption loss; damage to the roof and loading docks, and taking into account the payment made on the last day of trial.

[226]    In accordance with the information agreed by the parties in that respect, I give judgment for the plaintiffs against the defendant in the sum of $21,132.85. I will hear the parties as to costs.

2019 at the centre – trial bundle p 14473. That is almost certainly wrong, see [104] below. However,

the parties assumed it was correct and ran the trial on that basis. Any inaccuracy makes no difference
to my findings.

orally engaging experts and receiving, at least their initial, opinions orally. Only if the expert’s initial

oral opinion is favourable are documents produced. To my understanding this is a common practice

and permitted by the rules. I note that the LexisNexis annotations include, “Although the consultation

draft for the UCPR contained a provision that required the recording in writing and disclosure of

expert’s oral opinions, that provision was ultimately omitted from the Rules.” If, when an expert is

giving such an oral opinion, a solicitor takes notes, those notes are disclosable in my opinion.

of any meetings – t 6-30.

before the diversion works, and notes that this was the view taken by the 2014 flood study – p 14619

trial bundle.

refer to the eastern-bound carriageway in saying “the road”. When he was cross-examined about this

topic he said he was referring to the east-bound carriageway of Racecourse Road.

While I cannot reach a conclusion about it, and I do not need to do so, I think there is a real possibility that Dr Macintosh wrote most of his first report without understanding that Racecourse Road consisted of two separate carriageways. Dr Macintosh concentrates on the Townsville flood study of 2014 to a great extent at the beginning of his first report. This was prepared before Racecourse Road had two

carriageways – see pp 14755 to 14757 of the trial bundle.

One of the difficulties with his first report is that he does not clearly define his understanding of the road system to the south of the shopping centre and there is a distinct impression in parts of his report that he did not understand that Racecourse Road was in two separate carriageways. There is only one reference in his first report which unequivocally shows a correct understanding of Racecourse Road

as it was at the time of the flood – paragraph 7.20. In cross-examination he would not concede that he

had mistaken the roads to the south of the shopping centre. See also Dr Connor paragraph 177 p 14817 trial bundle as to the possibility that Dr Macintosh does not understand that Racecourse Road has two separate carriageways.

Interestingly, the 2014 Townsville City Council Flood Study showed runoff from Catchment A1 crossing the earlier version of Racecourse Road and flowing into the area which is now the table drain

– see pp 14755 to 14756 of the trial bundle. Before the construction of two carriageways Racecourse

Road was lower than it is now and there was a culvert taking water from the southern ponding area to the north side of the road. That culvert no longer exists. So that it may be that this confusion on

Dr Macintosh’s part played some part in his initial opinions.

survey was performed – t 5-62. In fact, Mr Caddis had used the LiDAR height datum, rather than use

a survey initially. It was Dr Connor who asked for a survey. In fact, the LiDAR height datum was the

same as the survey – t 5-62. In any case, the point is that neither Mr Caddis nor Dr Connor were

prepared to simply make assertions about whether or not water could or could not overtop the embankment of the west-bound carriageway without checking basic things, such as its height. Similarly, Dr Connor was challenged by counsel for the plaintiff in cross-examination that he had never done the calculations to see what volume of water would have fallen over Catchment A1 during

the storm bursts – t 6-42. Dr Connor had not, however, he had done considerable investigation and

calculation bearing upon likely volume of water received from Catchment A1 to the south side of the west-bound carriageway and the methods for its disposal available for it would overtop the embankment of the western carriageway. Mr Caddis of course had done his modelling exercise (see below).

14786.

into significant points – see paragraphs (ix), (x) and (xi) at p 14520 of the trial bundle. Others, such

as (xii), are frankly querulous. At paragraph 5.19(b)(iv), Dr Macintosh criticises Mr Caddis for not adopting parameters from the 2014 Townsville City Council Flood Study, yet only a few paragraphs in, at (vii), he makes the opposite criticism. At various places in this report Dr Macintosh states things

which are simply not true – see the first sentence of paragraph 5.19(c)(i), and see paragraph 22 of Mr Caddis’ reply report, p 14932 of the trial bundle. He spends some time criticising the way an upstream weir, Aplin’s Weir, is incorporated into Mr Caddis’ model but goes on to say that he has not

made a “quantified estimate” of the effect.

boundary conditions which do directly affect the result of his simplified version – p 14960 trial bundle.