District Court New South Wales Medium Neutral Citation: Australian Prestressing Services Pty Ltd v Vero Insurance Ltd [2012] NSWDC 239 Hearing dates: 1-3 August 2011; 5-6 October 2011 Decision date: 09 March 2012 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Judgment for the first plaintiff (Australian Prestressing Services Pty Ltd). (2) The parties are to bring in short minutes of order reflecting the agreed quantum of the sums claimed in accordance with the itemised amounts set out at paragraphs 160-165 of this judgment, together with interest if mathematically agreed. (3) Liberty to restore in relation to interest. (4) First defendant to pay plaintiffs' costs. (5) Liberty to restore in relation to costs. (6) Exhibits retained for 28 days. Catchwords: INSURANCE - construction of policy of insurance - whether policy covered emergency work carried out to prevent collapse of a coffer dam, following extensive rain and flooding - whether pumping out the flood and storm water fell within the "dewatering" exclusion in the policy Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), Part 31 r 31.23 Cases Cited: Australian Securities & Investments Commission (ASIC) v Rich (2005) 190 FLR 242; (2005) 53 ACSR 110; (2005) 23 ACLC 430; [2005] NSWSC 149 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 Blacktown Workers' Club Ltd v O'Shannessy (2011) 183 LGERA 184; [2011] NSWCA 265 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Darlington Futures Limited v Delco Australia Pty Limited (1986) 161 CLR 500 Dasreef Pty Ltd v Hawchar (2011) 9 DDCR 25; (2011) 243 CLR 588; (2011) 277 ALR 611; (2011) 85 ALJR 694; [2011] HCA 21 Dyson (trading as Pharmacy Plus Tumut) v Pharmacy Board of New South Wales (2000) 50 NSWLR 523 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; (2009) 264 ALR 15; [2009] NSWCA 407 Gagner Pty Ltd t/as Indochine Cafe v Canturi Corp Pty Ltd (2009) 262 ALR 691; (2009) 236 FLR 401; (2009) 77 ATR 157; [2009] NSWCA 413 Guardian Assurance Co Ltd v Underwood Constructions Pty Ltd (1974) 48 ALJR 307 Hide and Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 Ingham v ACN 000 333 844 Limited [2006] NSWCA 63 Jae Kyung Lee v Bob Chae-Sang Cha [2008] NSWCA 13 Johnson v American Home Assurance Ltd (1998) 192 CLR 266 Jones and Harbour Radio Pty Limited v Trad (No 2) (Eod) [2011] NSWADTAP 62 Legal and General Insurance Australia Limited v Eather (1986) 6 SNWLR 390 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; (2001) 25 NSWCCR 218 Mandla v Lee [1982] UKHL 7 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; (2000) 176 ALR 711; (2000) 75 ALJR 325; (2000) 21(20) Leg Rep 24; (2001) 11 ANZ Ins Cas 61-479; [2000] HCA 65 MGICA Limited v United City Merchants (Australia) Limited (1986) 4 ANZ Ins Cas 60 729 Mining Technologies Australia Pty Ltd, Re [1999] 1 Qd R 60; (1997) 10 ANZ Ins Cas 61-389 MLC Limited v O'Neill [2001] NSWCA 161 Prenn v Simmonds [1971] 1 WLR 1381 Provincial Insurance Australia Limited v Consolidated Wood Products Limited (1991) 25 NSWLR 541 R v WR (No 3) [2010] ACTSC 89 Re Mining Technologies (Aust) Pty Ltd (Queensland Supreme Court, White J, 28 November 1996, unreported) Rouleston Clarke Pty Ltd (In Liq) v FAI General Insurance Co Limited (2000) 11 ANZ Ins Cas 61-473 Taylor Woodrow International Ltd v Minister of Health (1978) 19 SASR 1 The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 157 Todorovic v Moussa (2001) 53 NSWLR 463; [2001] NSWCA 419 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342; (2004) 79 ALJR 129; (2005) Aust Contract R 90-204; [2004] HCA 52 Traxys Europe SA v Balaji Coke Industry Pty Ltd [2011] FCA 1132 Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; (2005) 214 ALR 410; (2005) 79 ALJR 872; (2005) 13 ANZ Ins Cas 61-641; [2005] HCA 17 Texts Cited: Dorter & Sharkey, Building and Construction Contracts in Australia (2nd ed) N B Rao, "The Interpretation of Lesser Words in Insurance Contracts: A Matter of Contextual Commonsense?" (2011) 22 ILJ 26 Ritchie's Uniform Civil Procedure NSW (LexisNexis) Category: Principal judgment Parties: First Plaintiff: Australian Prestressing Services Pty Ltd (ACN 082 408 124) Second Plaintiff: Bedi Enterprises Pty Ltd (ACN 003 295 994) First Defendant: Vero Insurance Ltd previously known as Royal & Sun Alliance Insurance Australia Ltd (ACN 005 297 807) Second Defendant: Marsh Pty Ltd (ACN 004 651 512) Representation: Plaintiffs: Mr M Gracie Defendant: Mr A Martin SC Plaintiffs: Balmain Lawyers Defendants: McMahons Lawyers File Number(s): 2009/334000 Publication restriction: None Judgment Background 1In May 2003, torrential rain fell on Sydney. Mr Michael O'Neill, a director of the first plaintiff, Australian Prestressing Services Pty Ltd ("APS") had more than the usual reasons for concern when he saw news reports of the extensive floods of the inner eastern suburbs and, in particular, flooding in low-lying areas and natural watercourses in or near Centennial Park (affidavit of Michael O'Neill, 31 March 2010). APS had entered into a Works contract with the Department of Public Works and Services ("DPWS") in January 2003 to carry out extensive remediation work on the Centennial Park lakes in Randwick in New South Wales, for a total lump sum price of just under $3 million. At the time of the torrential rains falling, a temporary construction, called a cofferdam, had been constructed in the Kensington Lake in Centennial Park, to allow for further works on the ponds to be undertaken. Mr O'Neill knew that the integrity of this cofferdam was at risk of being compromised by the torrential downpour. 2As soon as Mr O'Neill realised the danger, he called an emergency meeting of all government and contractual parties, including the Police, the New South Wales Fire Brigade and the State Emergency Service. His concern was that, having regard to the quantity of water stored behind the cofferdam, which extended over much of the lower areas in Centennial Park, cofferdam failure would have a disastrous effect not only on the surrounding park grounds but on nearby land and buildings, including Randwick Race Course (which is lower than Kensington Culvert and between Kensington Culvert and Botany Bay). If the cofferdam failed, a wall of water 3-4 metres high would have been released, which would flood the roads, wash away vehicles, damage buildings and lead to potential loss of life. 3Everyone at the meeting took the potential catastrophe seriously. Workmen were sent to work on the dam wall to shore it up. John Gan, who was introduced to Mr O'Neill as the DPWS expert on dams, told Mr O'Neill: "Mike, I can't tell whether the dam wall is saturated but I can see water coming from the base of the wall. This doesn't look good. I believe that it is unsafe for those blokes to be working under the dam wall. They should be ordered to move to a safe place immediately." (Paragraph 112) 4The workmen were ordered to move away, and the emergency services took over the job of pumping out the water which had built up and was threatening to burst out from the cofferdam. The New South Wales Fire Brigade and State Emergency Services had already dispatched a substantial number of fire trucks and pumps to the cofferdam to pump out this water, and they shut the roads surrounding the park before starting work. The Fire Brigade Services firemen, according to the invoice later provided for their services, worked for 72 hours straight, pumping water out of the cofferdam. Mr O'Neill instructed his employees that they would be required to work 24 hours 7 days a week if necessary, until the emergency abated (paragraph 113). 5Lack of equipment was a big problem. The existing pumps and syphons could not cope with the sheer volume of water. The plaintiffs' employees started calling hire companies in Sydney, calling the closest first, to see if they have large pumps available for hire. 6Heavy rain continued to fall and Peter Austin of Bedi Enterprises Pty Ltd ("Bedi"), the second plaintiff, another company working on the site, told Mr O'Neill: "Mike, we're gonna need more grunt, if we're gonna divert enough water away from this cofferdam to save it. I know a bloke up in the cotton country who's got some syphons that they use to transfer water from one place to another on their properties and they move a hell of a lot of water quickly, what do ya reckon, should I give him a call?" 7As a result of this conversation, syphons were brought in from country New South Wales to move large volumes of water and to syphon water out of the area behind the cofferdam and other places around Centennial Park. 8The situation was described by Mr O'Neill in his affidavit as an emergency (paragraph 119) and he was not cross-examined about this (although he was cross-examined as to whether an emergency or contingency plan was prepared and whether any costs were passed onto their client: T 77-78). 9As pumps were brought to the site, between them, the Fire Brigade Services, State Emergency Services and the employees of the plaintiffs, worked through the night under specially erected floodlights. Over the next few days, they were able to pump enough water out of Kensington Lake and other areas behind Kensington Lake behind the park, into available stormwater channels, pipes and culverts, and to prevent disaster. The water was diverted, through pumps and syphons, away from Kensington Lake and the cofferdam, either out of the Kensington Lake, or out of adjoining areas before the water got into Kensington Lake. 10The State Emergency Services Authorities, which had been managing traffic in Alison Road in concert with the Police, were able to open the roads again. 11On Sunday 18 May 2003, there was a meeting at which representative of the Fire Brigade, APS's employees, Bedi's employees and others noted with relief that the rain had reduced substantially in its intensity. The fire trucks were withdrawn on the evening of 18 May, although the pumps installed by the first plaintiff, the second plaintiff and the State Emergency Services continued to be in use. 12By Monday 19 May 2003, the emergency had ended. According to Mr O'Neill, the danger of the cofferdam failing and releasing water into the surrounding areas had also passed. He continued to observe and direct the continued pumping out of flooded areas of Centennial Park and cleaning up the works and generally dealing with the damage to the works from the flood. He prepared a situation report which is discussed in more detail below. The subject matter of the plaintiff's claim 13The costs incurred by the plaintiffs in carrying out this emergency work were substantial. Both plaintiffs made a claim under a policy of insurance taken out with the first defendant. 14Vero Insurance Ltd ("Vero"), the first defendant, rejected a substantial part of the claim, by reason of an exclusion clause in the contract of insurance which provided as follows: "Special conditions - section 1 Dewatering 1. The company will not indemnify the insured against any costs associated with the installation and operation of any dewatering equipment or any other costs of dewatering operations." 15The question of what "dewatering" is, and whether the steps taken by the plaintiffs to remove the excess water following the torrential rains and flooding amounted to "dewatering", are important issues in this case. The dewatering exclusion clause was part of a separate Endorsement dated 20 March 2003 to a policy which was effected by Vero in September 2003, four months after these events. The dewatering exclusion applies to Section 1 of the policy in respect of "material damage" to the works. Section 2 of the policy, in respect of "Public Liability" is not subject to this express exclusion. 16In addition, objections have been raised as to the sums claimed on other bases, such as duplication, lack of receipts and claims for GST. 17In addition, claims under the policy totalling $67,904.93 have been assessed by the first defendant as payable under the policy, such as road works in the Busby and Randwick Ponds areas. These costs have never been paid. The issues in this case 18The issues of fact and law in this case relate solely to the question of construction of the policy; the plaintiffs' claim for misleading and deceptive conduct has been abandoned (T 385). 19For convenience, I have referred to the "plaintiffs", although in reality the claim is made by the first plaintiff, as there has been a resolution of issues in relation to the second plaintiff (T 1). The orders refer only to the first plaintiff. 20The court must construe the policy of insurance relating to construction work undertaken by the plaintiffs (APS and Bedi) described above, including the remediation of ponds in the park, culvert repair works at a location adjacent to Kensington Pond, Centennial Park (inundated by flooding during the torrential rainfall) and other related work designed to prevent the cofferdam from overtopping with floodwater which the plaintiffs submit would have not only destroyed the cofferdam itself, as well as the civil works to the culvert, but cause substantial third party property damage and perhaps even loss of life. 21The "special conditions" relating to dewatering formed part of a separate Endorsement "attaching to and forming part of" the construction risk policy number CR305008DF ("the CR policy"). This Endorsement was dated 20 March 2003, although the relevant policy covering the period of the contract works was issued by the broker Marsh Pty Ltd on 17 September 2003 (affidavit of R Kurland, 27 January 2011, tab 2, page 37 and tab 3). 22I shall first set out the works the subject of the contract. The works the subject of the contract 23The first plaintiff, APS entered into a contract with the Minister for Public Works and Services for the State of New South Wales to carry out remodelling and construction work which may be broadly described as follows: (1)Remediation of the Busby and Randwick Ponds; (2)Remodelling of Mission Fields; (3)Repair and construction of the Kensington Culvert. 24The issue in these proceedings relate essentially to the Kensington Culvert works. These are as follows. Repair work to the Kensington Culvert was necessary after it collapsed in heavy rains in February 2002. The Centennial Park ponds formed part of the local area stormwater control system. The conditions of tendering explained this problem as follows: "Urban stormwater runoff enters Centennial Park from the north-east, west and east and travels between the ponds via pipes and culverts. Stormwater exits the Centennial Park via the Kensington Pond along Alison Road and move south to the Botany Wetlands. During high storm periods, the ponds are subject to high through flows as well as runoff from the parkland. Pond levels rise, overflow the weirs and then slowly recede over a period of days." 25This extract is taken from "Project Significance and Environmental Considerations", set out on page 34 of Tab 1 to Mr O'Neill's affidavit. The works to be carried out are described at paragraph 1.4 of this document as including aquatic planting, irrigation works and the like. The irrigation system was to be installed by an irrigation maintenance contractor, Brooks Irrigation. The ponds remediation tenderer was, under clause 3.1 of the tender, to be responsible for controlling the flow of water within, through or around the site throughout the duration of the contract. 26It was noted that water flowing into the site may result from the following sources: (1)Flow within stormwater channels and culverts flowing to the ponds; (2)Stormwater runoffs from area adjacent to the site; and (3)Groundwaters from the bed and banks of the ponds. 27It was also noted that the lower areas of the upstream stormwater systems were prone to flooding. Clause 3.3 provided that the contractor was responsible for the lowering of pond water levels and the maintenance of water levels at low levels throughout the period of the works, including any necessary pumping of water, delays where sedimentation/flocculation is required prior to discharge of water from the ponds, or delays due to time to draw down the ponds using gravity or pumping methods. 28The "Information for tenderers" in respect of the ponds remediation included estimated storm flows and water levels but only in relation to the Randwick and Busby Ponds, the first of the three components of the work listed above. 29Counsel for the plaintiffs, in his helpful opening outline of submissions, draws to my attention the notation in the "Information for tenderers" at water levels in the Randwick and Busby Ponds refers to "stormwater inflows as well as groundwater levels in the Botany Sands Aquifer" and that other influences on the pond water level "include runoff base flow from the catchment, evaporation, groundwater inflow/outflow". An estimate was given for the main operating pond water level, with a notation that variation does occur, but that no monitoring of this fluctuation had been undertaken. 30There were also outlet structures such as the sluice gates in Randwick Ponds to control the water level in the Busby and Randwick Ponds. 31The earthworks in respect to the Randwick and Busby Ponds required the plaintiffs to specify flow diversions and requirements for pond water level lowering for this work to be carried out (see the earthworks clause set out at paragraph 3.4 of the section marked "Section 4 - Earthworks" at page 212 of Tab 1 to Mr O'Neill's affidavit). In much the same way, surface water in the Randwick and Busby Ponds had to be diverted around the outlet structures in Randwick Pond and the use of "sump pumps or other appropriate equipment" had to be used for this purpose (see clause 3.1 at page 266 of Tab 1 to Mr O'Neill's affidavit). 32Thus the pond remediation part of the contract works expressly included a requirement for lowering and maintaining a lowered water level "during the earthworks". 33These are not the works which have led to the claim in these proceedings, they are the works which were in progress when the torrential rains commenced. This brings me to a consideration of the construction of the cofferdam which APS submits was at risk following the torrential rains. The construction of a cofferdam 34Item 14.4 of the schedule provides for cofferdam, diversion, dewatering and flow protection" (page 376, Tab 4 of Mr O'Neill's affidavit). Clause 1.7 of the Technical Specification which commences at page 335 of Tab 3 to Mr O'Neill's affidavit helpfully sets out the obligations of APS not only in relation to both "Flood Protection" and "Cofferdam, Diversion and Dewatering" as follows: "1.7 STORMWATER MANAGEMENT DURING CONSTRUCTION & COFFER DAM Prior to commencement of physical work on site, the Contractor shall submit a soil and water management plan during construction for the approval of Superintendent's Representative. This shall include details of the cofferdam, diversion routes explaining how it could cater for large storm events. The plan shall be prepared in accordance with Managing Urban Stormwater, Soil and Construction, August 1998 (3rd edition) guidelines published by the NSW Department of Housing, the Erosion and Sediment Control Policy. Flood Protection The Contractor shall take all necessary measures to keep the works free of stormwater and groundwater through out the construction period. The Contractor shall construct and maintain all the necessary diversion and protective works including sump, pumps and other temporary diversion, or dewatering, and flood protection works. The Contract shall supply and install all materials and provide, maintain, and operate all necessary pumping and other equipment for dewatering and maintaining the Works free of water if required during progress of the work. This may involve the use of materials which cannot be recovered on completion of the Contract. Coffer Dam, Diversion and Dewatering The Contractor shall be responsible for and repair, at no expense to the Superintendent any damage to equipment and to structures, foundations, or any other part of the Works under this Contract caused by water due to the failure or insufficient capacity of any part of the dewatering system or flood protection works provided by the Contractor. It is the Contractor's responsibility to design and construct the coffer dam and maintain throughout the construction period ensuring no damages occur to all existing infrastructure what so ever by flooding. The contractor is to ensure that the temporary coffer dam or other protection mechanisms will provide the same level of flood protection as the Kensington embankment prior to the culvert collapse. The Contractor shall not dispose of dirty wash or sluicing water in to the river or into Council's stormwater drainage system. In addition, the Contractor shall prevent deposition of excavated or eroded material from the Works in areas below mean high water surface. Prevention of Erosion, Sediment Control and Soil Contamination The Contractor is required provide all that is required to prevent erosion and control sediment movement during construction works. In accordance with the soil and water management practices, the Contractor shall erect siltation fences around the works." 35In order to understand the difference between flood protection and dewatering, it is helpful to look at the requirements under "Extent of Work" at paragraph 1.1 which note that on 4 February 2002 the Centennial Park Catchment was inundated by flood water, after heavy and extended rainfall which meant that the ponds and existing drainage conveyance system was unable to cater for the surface runoff from the upstream catchment to convey these flows to the stormwater system. This resulted in the collapse of the control structure at Kensington Ponds located near Alison Road. The collapsed structure needed to be demolished and a new structure completed. The contractor was required to carry out all temporary works required including stormwater management during construction, sediment and erosion controls, cofferdams, as well as shoring and protection of existing trees. 36The work to be done, according to the Work Method Statement prepared by APS, was described as follows: "Following the establishment of the site and the removal of the existing fence and the erection of a site temporary fence, construction of the coffer dam will commence. Material for the dam will consist of rock, clay and mud form the immediate area of the pond. Material will be placed in position using the long reach excavator and will be compacted using the tracks of a smaller excavator. A high capacity 150mm diesel powered suction pump will be used to pump the water from the pond to the downstream culvert under Alison Street. Once dewatered, the existing works will be demolished, except the heritage brickwork that will be salvaged and stored. Compaction of the sub base and installation of the subsequent concrete and pipeworks will progress in an orderly manner. The works will be prepared and executed in such a manner that should there be storm rains, sufficient to cause inundation of the works, then only minimum exposure will be had and minimum effort required to repair any damage to the work in progress..." (Affidavit of P Hiser (PAH2)) 37The next step in relation to the carrying out of the works, was the January 2003 project meeting. The project meeting in January 2003 38In January 2003, a project meeting was held to discuss, primarily, the culvert which controlled the water out of the ten Centennial Park lakes into the water system. Failure of the culvert to be able to control the flood of this water would mean substantial flowing of this area below the culvert, including the adjoining commercial, residential and industrial areas such as Randwick Racecourse and Moore Park. While the culvert was a simple structure, it had a "very high priority" (page 539 of Tab 15 to the affidavit of Mr O'Neill of 31 March 2010), because it was the central mechanism in the control of the flow of water. 39The minutes of the meeting also went on to refer to a secondary spillway in the lake adjacent to Doncaster Avenue, put in place because of its adjacent position to this busy road, so that if there was a "one in 100 year flood", Doncaster Avenue could be used as a spillway into the Randwick Racecourse. The minutes then go on to note: "15. The engineer for the subcontractor raised the need for the preparation of an emergency plan, that is a contingency plan to be put in place should there be a flood during the time of the work. At the same time he raised the issue in relation to the protection of the works during the work period, and was concerned that having regard to discussions that were taking place around the table, particularly from the superintendent, that in some way the subcontractor or indeed the principal contractor might be responsible for the works in for example a one in 100 year flood. 16. The engineer for the subcontractor indicated clearly to the superintendent the subcontractor and in turn of course the principal contractor saw their responsibility as simply the protection of the works from manageable attacks, and not certainly from for example an act of God in respect of a one in 100 year flood. The superintendent assured all that it was not the intention of the principal to require such protection. Questions then were asked about the position in respect of insurances and discussions took place about that." (pages 540-541 of the affidavit of Mr O'Neill of 31 March 2010) 40Mr O'Neill has set out his recollection of the meeting in his affidavit, and it is clear (paragraph 64) that he was concerned that if there was a "one in 100 year flood" he wanted to make sure that insurance was in place. He specifically said at paragraph 66: "We are going to build a dam across the stormwater channel that has a huge catchment area. If something goes wrong everyone will want to be sure that we are covered, particularly if we have something like a one in 100 year flood." 41Mr O'Neill went on to state (paragraph 67) that he was relying on his own long-term experience of visiting the park as a visitor in this regard. Mr O'Neill was told by Mr Thompson that "we are negotiating with Marsh the broker about the insurance". He later received a questionnaire, which is set out behind Tab 17 of his affidavit of 31 March 2010. The insurance questionnaire 42The project managers, Colin Ging & Partners, were responding to a questionnaire received by Mr Geoff Owen of Marsh Pty Ltd, the insurance broker. 43Colin Ging & Partners, in their letter of 19 February 2003, identified the Kensington Culvert works (see page 576 of Tab 17 of the affidavit) as: " - Demolition of existing structure- Construction of new outflow structure including, cut-off wall, piling, pipe laying, culvert head walls, inlet, spillway, stilling basin, fencing, landscaping" 44The response to the questionnaire went on to note that pond water levels had been significantly lowered and the upstream Busby and Randwick ponds were at 50% capacity; the cofferdam was described as preventing "premature washouts" of works in the culvert. Section 2.7 to 2.9 concerning water flow details and controls to be exercised by the contractor are as follows: "2.7 Waterflow Details and Control to be Exercised by the Contractor See attached DPWS Dams & Civil Unit Report 2.8 Protection of Works from Flood & Stormwater Pond water levels were already significantly lowered prior to commencement of the works. It should be noted that the ponds upstream of Busby's and Randwick ponds are currently (Feb 02) at about 50% capacity. Therefore there is a considerable 'freeboard' available to absorb storms arising in the eastern and northern catchments. Weir plates are also installed at all the outlet points to each upstream pond and can be raised to restrict water flow as necessary. The contractor is responsible for maintaining appropriate water levels throughout the period of the works in order to complete his works. For works in the culvert a cofferdam wall must be built temporarily to prevent premature washouts. This wall will be 300mm above the base levy bank this will then in time of emergency overflow the water into the general bypass system operating down Doncaster Ave. 2.9 Potential Flood Measures A cofferdam wall is to be built 300mm above the height of the existing adjacent bank at the Kensington Culvert, this is the discharge point for stormwater into the local Council system. If flood levels were to reach the height of the Alison Road levy bank, the water would backflow into the low parklands then spill over the alternate flood way located to the west of the culvert works and drain into the storm water system via Doncaster Ave." (page 578 behind Tab 17 of Mr O'Neill's affidavit of 31 March 2010) 45It is helpful, when considering the difference between dewatering and removal of floodwaters to have regard to the Work Method Statement which this attached to this questionnaire (tab 17, pages 584-586), as this explains the work done and the way in which dewatering formed a part of those works. I particularly note that the remediation of the ponds was to be based upon the expeditious use of two longreach excavators with attachments and other mechanical equipment to minimise the amount of disturbance of the mudflats and ponds environs. The aim was "to gradually release the pore water within the mud, by applying a gradual, but ever increasing, surcharge on the material, until the pore pressure within the interstices of the mud equates to and is able to support the static load". Liquefaction of the mud resulting from vibrations caused by equipment movement and consequent "pumping" of the pore water is noted to be capable of resulting in significant construction problems and delays. 46Much of the Work Method Statement relates to how this work is to be done efficiently and there are specific descriptions of the work on the mission fields remodelling and Kensington Culvert. In relation to the Kensington Culvert it is noted: "A high capacity 150mm, diesel powered suction pump will be used to pump the water from the pond to the downstream culvert under Alison Street. Once dewatered, the existing works will be demolished, except the heritage brickwork that will be salvaged and stored. Compaction of the sub-base and installation of the subsequent concrete and pipe works will progress in an orderly manner. The works will be prepared and executed in such a manner that should there be storm rains, sufficient to cause inundation of the works, then only minimum exposure will be had and minimum effort required to repair any damage to the work in progress" [Tab 17, pages 585-586; emphasis added] The technical specification relating to stormwater management for Kensington Culvert 47The technical specification at Section 1.7 "Stormwater management during construction of coffer dam" also contained the following: "Flood protection The contractor shall take all necessary measures to keep the works free of stormwater and groundwater throughout the construction period. The contractor shall construct and maintain all the necessary diversion and protective works including sumps, pumps and other temporary diversion, all dewatering, and flood protection works. The contractor shall supply and install all materials and provide and maintain and operate all necessary pumping and other equipment for dewatering and maintaining the works free of water if required during the progress of the work. This may involve the use of materials which cannot be recovered on completion of the contract. Coffer dam, diversion and dewatering The contractor shall be responsible for and repair, at no expense to the superintendent any damage to equipment and to structures, foundations, or any other part of the works under this contract caused by water due to the failure or insufficient capacity of any part of the dewatering system or flood protection works provided by the contractor. It is the contractor's responsibility to design and construct the coffer dam and maintain throughout the construction period ensuring no damages occur to all existing infrastructure whatsoever by flooding. The contractor is to ensure that the temporary coffer dam or other protection mechanisms will provide the same level of flood protection as the Kensington embankment prior to the culvert collapse. The contractor shall not dispose of dirty wash or sluicing water into the river or into Council stormwater drainage system...". 48As these documents show, there were different sources of water: stormwater, pond water and groundwater. In addition, the work envisaged different ways of dealing with this water: water diversion, removal of flood or rain water caused by storms, and dewatering. Stormwater, groundwater and dewatering - some general comments 49The following should be noted: (1)The distinction between stormwater and groundwater In the technical specifications, as elsewhere, there is a distinction made between the terms "stormwater" and "flood" with the water already in the ponds, which Mr Gracie refers to (written submissions paragraph 36) as "groundwater". Mr Gracie submits that this makes clear there is a contractual distinction between the diversion of water, dewatering and flood protection where there is stormwater and flooding. In other words, there is a different conceptual intent, in contractual references, where there are references to a dewatering system and flood protection works. The purpose of the cofferdam was to provide flood protection to the same level of flood protection as had been the case prior to the culvert collapse during the flood in 2002. The cofferdam had to be higher than the embankment by approximately 300mm (see the affidavit of Vero's assessor Mr McWalter, paragraph 9). (2)Dewatering The references to dewatering in the contractual documents relate either to the lowering of the water table level at and around a particular contract worksite to permit the construction of the works, or to the removal groundwater where the works have been excavated below the level of the water table. That is the definition of dewatering which is advanced by APS and Bedi. When the work carried out by APS is examined, it can be seen that there was no contract work on the northern side of the cofferdam which contained the water in the Kensington Ponds which required any dewatering or lowering of the level of the ponds to enable any construction work to occur on that side of the cofferdam. Dewatering might be required on the southern side of the cofferdam where the culvert and outlet works were being performed if any excavation was required to lower the level of worksite below the water table, which would have permitted groundwater or pond water to intrude into the worksite through the embankment or cofferdam, requiring its removal to enable works to continue. However, as the description of the flooding from the storm and the work carried out to remove the water shows, the diversion of water was on the northern side of the cofferdam in the pond, and this occurred only during the inundation of the park by rain as a flood protection measure to lower the level of the water in the ponds sufficiently to prevent damage to the culvert and outlet works, collapse of the cofferdam itself and, perhaps more importantly, the build up of water pressure which would have led to extensive damage and potential loss of life by flooding across Alison Road if the cofferdam collapsed. It was by reason of concerns that this might occur that the State Emergency Services, Fire Brigade, Police and Council as well as the park authorities closed Alison Road to traffic in the event that the flood water could not be drained away and this event can occur. (3)Was all water removal dewatering? The submissions of the defendant are that the plaintiffs' costs are "costs associated with the installation and operation of any dewatering equipment" within the meaning of clause 5 of the Endorsement and that "dewatering" should it be applied, in accordance with its "ordinary English meaning" (written submissions, paragraphs 90-95) to the removal of all water from the property, including the water which accumulated from the torrential rains which fell on the building site. This includes the cost of Fire Brigade and SES activities to remove water from the property. It is not however necessary for me to determined these costs as due to the effluxion of time since the removal of the flood water, and the somewhat leisurely process of these proceedings, these substantial claims for reimbursement are now statute barred. 50The first defendant's arguments in relation to what constitutes "dewatering" are, however, only one of the arguments advanced on behalf of the first defendant in relation to the issue of liability. I shall briefly note the other matters raised by the first defendant in relation to liability: (1)The first defendant acknowledges that the policy does apply to costs incurred by the plaintiffs to protect the cofferdam identified in Exhibit IJM 22A, 22B and 22C of the affidavit of Ian James McWalter dated 11 June 2010 (Exhibit 4). These costs which amount to $67,904.93 are identified as follows: (a)IJM 22A - $23,285.70; (b)IJM 22B - $35,417.25; and (c)IJM 22C - $9,201.98 (d)Total - $67,904.93 The balance of the plaintiffs' claim of $474,544.16 relates to the removal of water from the large Kensington Pond, for which the first defendant submits it is not liable under the policy to indemnify the plaintiffs. (2)The first defendant submits that the claim made by the plaintiffs for these amounts, which are costs for the removal of water from the large Kensington Pond, are not "Loss, Destruction of or Damage to Property Insured" within the meaning of the insuring clause. (3)The first defendant claims that the sum claimed by the plaintiffs does not fall within the temporary protection clause in Section 1 of the Policy for the following reasons: (a)the Plaintiffs' costs are not for work to "avoid further Loss, Destruction of or Damage to the Property Insured occurring" since no such loss, destruction or damage had previously occurred to the coffer dam; (b)the Plaintiffs or any professionally qualified representative, had not deemed necessary the work to "avoid further Loss, Destruction of, or Damage to Property Insured occurring"; (c)the Plaintiffs' costs are not "consequent upon" any physical loss, destruction or damage to the property insured being indemnified under the Policy. (4)The first defendant claims that the Endorsement does attach to and form part of the Policy because: (a)the Works Contract was a high risk civil engineering contract; (b)even if it is held that the Works Contract is not a high risk civil engineering contract (contrary to the First Defendant's primary submission), the Endorsement, on its proper construction, still attaches to and forms part of the Policy. The Works Contract is a High Risk Civil Engineering Contract. (5)The first defendant also makes submissions in relation to quantum of the claim. 51The principal issue between the parties is however the question of what amounts to "dewatering". 52Having noting these preliminary matters, I now turn to a consideration of the terms of the insurance policy. The insurance policy 53The relevant terms of the contract are as follows: (1)Under "SECTION 1 - MATERIAL DAMAGE" the Policy relevantly states (p.8): "INSURING CLAUSE - APPLICABLE TO SECTION 1 1. The insurance by this Policy indemnifies the Insured against Loss, Destruction of or Damage to Property Insured occurring during the Construction Period arising from any cause not hereinafter excluded, wherever the Property Insurance may be located within the Territorial Limits detailed in the Schedule." (2)The Schedule to the Policy states (p. 4): "NAMED INSURED: Clients that the NSW Department of Public Works and Services contract to represent, as well as: The State of NSW, the Minister for Public Works and Services, the NSW Department of Public Works and Services, other State and/or Local Government Authorities, instrumentalities and/or agencies and/or contractors, subcontractors, workmen, project directors, project managers, construction managers and all like disciplines associated with the Insured Projects. INSURED PROJECTS: All works including temporary works under construction contracts awarded by Department Public Works and Services or the Minister for Public Works and Services, or their agents, or any construction work commenced by Department of Public Works and Services itself, during the Duration of Policy, unless excluded by notification from Department of Public Works and Services. Where any of the following apply to a contract, it is held covered only for 60 days from the date of the award of the contract unless the Insured gives the Insurer any information reasonably requested by the Insurer and the Insurer agrees, on any reasonable terms or conditions, and at any premium, which may be different from that in this policy, to continue the insurance ... Any High Risk Civil Engineering Contract where the Contract Price (excluding GST) at the time of award is greater than $500,000." (3)Under "DEFINITIONS - APPLICATION TO SECTION 1" to the Policy states (p. 7) "1. PROPERTY INSURED "Property Insured" shall mean the following real and personal property: (a) all materials, goods, equipment and supplies (including owner supplied materials) forming a permanent part of, or which will form a permanent part of, the Insured Projects; (b) all temporary works and/or structures erected, installed and/or constructed by the Insured for the purpose of completing the Insured Projects, including but not limited to, props, slipform, shuttering, formwork, falsework, hoardings, bunding, bridging and the like; (c) ... (d) ... (e) All buildings used for construction purposes (but not mobile plant and equipment), subject to the limit stated in the schedule; owned by the Insured, or in the Insured's care, custody or control, or for which the Insured is legally liable or has assumed the responsibility to insure, and which is to be used in the course of construction of, or in connection with, and for the purpose of, the Insured Projects detailed in the Schedule." 2. LOSS, DESTRUCTION OF OR DAMAGE TO PROPERTY INSURED "Loss, Destruction of or Damage to Property Insured" shall mean physical loss of, physical destruction of, or physical damage to Property Insured."" (4)Under "BASIS OF SETTLEMENT - APPLICABLE TO SECTION 1" the Policy provides (p. 9): "1. THE WORKS (AS DEFINED UNDER PROPERTY INSURED (A), (C) AND (D)): 1. The amount payable in respect of Loss, Destruction of or Damage to Property Insured as defined under Property Insured (a), (c) and (d) shall be the cost of reinstatement of the Property Insured at the time of reinstatement. 2. For the purpose of this Basis of Settlement "reinstatement" shall mean: (a) Where property is lost or destroyed: in the case of a building, the rebuilding thereof or in the case of property other than a building, the replacement thereof by similar property; in either case in a condition equal to, but not better or more extensive than, its condition when new. (b) Where property is damaged: the repair of the damage and the restoration of the damaged portion of the property to a condition the same as, but not better or more extensive than, its condition when new. (c) Notwithstanding the provisions of clauses (i) and (ii) above, the cost of reinstatement shall also extend to include the extra cost of reinstatement (including demolition or dismantling) of damaged property necessarily incurred to comply with the requirements of any Act of Parliament or Regulation made thereunder, or any By-Law or Regulation of any Municipal or other Statutory Authority; Provided always that the amount recoverable shall not include the additional cost incurred in complying with any such Act, Regulation, By-Law or requirement with which the Insured had been required to comply prior to the happening of the Loss, Destruction of or Damage to Property Insured. 2. TEMPORARY WORKS, BUILDINGS AND HAND TOOLS (AS DEFINED UNDER PROPERTY INSURED (B) AND (E)) AND ANY PRE-EXISTING STRUCTURES THAT MAY BE INSURED 1. The amount payable in respect of Loss, Destruction of or Damage to Property Insured as defined under Property Insured (b) and (e) shall be the cost necessary to reinstate the Property Insured to the same condition as existed immediately prior to the Loss, Destruction of or Damage to Property Insured, subject only to the respective Limits of Indemnity." (5)The insuring clause applicable to Section 1 only indemnifies the Insured against "Loss, Destruction of or Damage to Property Insured". This term is defined to mean "physical loss of, physical destruction of, or physical damage to the Property Insured". (6)Under "MEMORANDUM - APPLICABLE TO SECTION 1" the Policy relevantly states (p.12): "4. TEMPORARY PROTECTION AND/OR GOVERNMENT EXPENSES This insurance automatically extends to cover costs and expenses necessarily and reasonably incurred by or on behalf of the Insured for: (a) shoring up, propping, underpinning or other temporary protection of the Property Insured, deemed necessary by the Insured or by a professionally qualified person or entity representing the Insured, to avoid further Loss, Destruction of or Damage to Property Insured occurring; (b) ... consequent upon any Loss, Destruction of or Damage to Property Insured being indemnified under this Policy and subject to limitations shown in the Schedule." Some general comments about the policy document 54By way of background, the "Conditions of tendering" at Section 2 of the contract of works said that the relevant insurance policy was available for viewing at the offices of DPWS. Section 4 of the contract contained a reference, at clause 18.1, to "basic contractual insurance" as being policy number CTW8749461, which was to be issued through Marsh Pty Ltd as broker and cover not only the first plaintiff but also the DPWS, the contractor, the superintendent and "all subcontractors employed on work under the contract" which would therefore include the second plaintiff, Bedi. For reasons that are unrelated to the facts in this case, the CTW policy contemplated by the contract was not actually in place after the expiry of that policy on 29 August 2003. 55During the period of the works and before the policy came into effect on 17 September 2003, there was already a draft policy which was mistakenly believed by some, such as the assessor (Mr Kurland) acting on behalf of the plaintiffs to be the applicable policy under the works. As I have rejected the arguments of the plaintiffs in relation to the existence of an implied term and the relevance of pre-contractual negotiations (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342; (2004) 79 ALJR 129; (2005) Aust Contract R 90-204; [2004] HCA 52), I will simply note the submissions of the plaintiffs (paragraphs 41-65) in relation to these previous negotiations. 56As Section 1 of the policy sets out, the policy covers both the works defined as the insured property as well as temporary works, and there is coverage for loss, destruction or damage to the property insured (see page 46 of the policy). The amount payable in respect of the insured works, or the temporary works, is defined as the cost of reinstatement of the property to the same condition as existed immediately prior to the loss, destruction or damage, subject only to the limits of indemnity. There are in addition provisions for an excess, depending on the nature of the cause of loss. 57Temporary works, within the meaning of both the contract of works and the insurance policy, clearly include the cofferdam. 58Section 1 of the policy provides: "This insurance automatically extends to cover costs and expenses necessarily and reasonably incurred by or on behalf of the insured for: (a) shoring up, propping, underpinning or other temporary protection of the property insured, deemed necessary by the insured by a professionally qualified person or entity representing the insured, to avoid further loss, destruction of or damage to property insured occurring; (b) any fee, contribution or other imposte (excluding fines an/dor penalties) payable to any government, local government or statutory authority for services rendered or equipment supplied for the purpose of helping the prevent further, mitigate or confine imminent loss, destruction of or damage to property insured at the situation where the property insured is located, consequent upon any loss, destruction of or damage to property insured being indemnified under this policy and subject to limitations shown in the schedule." 59Finally, and most importantly, it should be noted that there was no actual loss or destruction of the works, because the actions of the plaintiffs prevented any loss, destruction or damage. 60I shall set out a summary of the relevant issues of law raised by the parties in relation to the interpretation of the policy document. Claims brought where the costs which arise have prevented the loss or destruction 61These costs are costs for successfully preventing the loss, destruction or damage of the property and the surrounding areas. As I have noted in the section of this judgment concerning whether or not there is an implied term to this effect, claims for costs of this kind have been held to be recoverable from an insurer even where no provision is specifically made for them in the contract: Guardian Assurance Co Ltd v Underwood Constructions Pty Ltd (1974) 48 ALJR 307; Mining Technologies Australia Pty Ltd, Re [1999] 1 Qd R 60; (1997) 10 ANZ Ins Cas 61-389 (on appeal from Re Mining Technologies (Aust) Pty Ltd (Queensland Supreme Court, White J, 28 November 1996, unreported)). 62As is set out further below, I have referred and accepted the approach of McPherson JA in Mining Technologies Australia Pty Ltd, Re, supra, and have accepted what I considered to be the plaintiffs' primary position, namely that such costs are recoverable, although I have not accepted their argument that no excess should be paid. 63This brings me to the question of the correct approach to the interpretation of the words and phrases used to invoke or exclude insurance policy liability. The interpretation of words and phrases used to invoke or exclude insurance policy liability 64The necessity for a link between the loss and the event often requires an interpretation of words in insurance contracts which are sometimes called "lesser words" (N B Rao, "The Interpretation of Lesser Words in Insurance Contracts: A Matter of Contextual Commonsense?" (2011) 22 ILJ 26). These words are invariably words commonly used in the English language such as "directly" or "indirectly"; "arising from" or "out of"; and "in relation to" or "in respect of". Basic principles have been helpfully summarised by Allsop J in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; (2009) 264 ALR 15; [2009] NSWCA 407 at [14]: "[14] ... The construction and interpretation of written contracts is to be undertaken by an examination of the text of the document in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction and by assessing how a reasonable person would have understood the language in that context. There is no place in that structure, so expressed, for a requirement to discern textual, or any other, ambiguity in the words of the document before any resort can be made to such evidence of surrounding circumstances." 65Both the plaintiffs (written submissions, at paragraph 66) and the first defendant (written submissions, at paragraph 82) referred me to High Court authority stating that a policy of insurance is a commercial agreement between the parties and should be given a business-like interpretation requiring "attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure" (McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; (2000) 176 ALR 711; (2000) 75 ALJR 325; (2000) 21(20) Leg Rep 24; (2001) 11 ANZ Ins Cas 61-479; [2000] HCA 65 at [22] per Gleeson CJ; see also Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; (2005) 214 ALR 410; (2005) 79 ALJR 872; (2005) 13 ANZ Ins Cas 61-641; [2005] HCA 17 at [15]; see also MGICA Limited v United City Merchants (Australia) Limited (1986) 4 ANZ Ins Cas 60 729 at 74,349 and 74,350; Darlington Futures Limited v Delco Australia Pty Limited (1986) 161 CLR 500 at 510; Prenn v Simmonds [1971] 1 WLR 1381; Legal and General Insurance Australia Limited v Eather (1986) 6 SNWLR 390 at 394). 66The first defendant (written submissions, at paragraph 84) refers to the contra proferentum principle as being a "rule of last resort and a principle for construction to remove ambiguities only when other, more rational approaches fail": Rouleston Clarke Pty Ltd (In Liq) v FAI General Insurance Co Limited (2000) 11 ANZ Ins Cas 61-473 at 75,417; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at [74]; MLC Limited v O'Neill [2001] NSWCA 161 at [20]; Johnson v American Home Assurance Ltd (1998) 192 CLR 266 at [19]; Ingham v ACN 000 333 844 Limited [2006] NSWCA 63 at [6]. 67However, as N B Rao explains, evidence may also be adduced to ascertain the meaning of words in a contract in order to determine the purpose and object even where there is no ambiguity to clarify, and the assertion of a requirement for ambiguity in order for surrounding circumstances to be admissible (Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352) is no longer required. 68Both the plaintiffs (referring to Hide and Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 at 313 to 314) and the first defendant (referring to Provincial Insurance Australia Limited v Consolidated Wood Products Limited (1991) 25 NSWLR 541 at 553-554) referred statements by Kirby P about the undesirability of policies of insurance being construed in an artificial and microscopic way and to the need for the court to determine first what is the ordinary or natural meaning of the words used because it is primarily from the intention of the parties that this is to be ascertained: Provincial Insurance Australia Limited v Consolidated Wood Products Limited at 560 per Mahoney JA. Dictionary definitions and expert evidence - the principles 69In Jones and Harbour Radio Pty Limited v Trad (No 2) (Eod) [2011] NSWADTAP 62, the respondent called expert evidence from sociologists as to the development of contemporary ideas of race and ethnicity. The court set out the findings of the tribunal, and its reasons for rejecting them, at [10]-[13] and [15]-[16] as follows: "[10] Mr Trad called evidence from two apparently well-qualified sociologists. That evidence included the facts and opinions extracted in the Second Appendix to the first decision (see [2011] NSWADTAP 19). The 'evidence' included opinions on legal matters, historical material as to the development of contemporary ideas of race and ethnicity and opinions on relevant sociological matters, as well as sociological, factual matter. Of this material the Tribunal said: 144 Expert evidence was given for the applicant by Professor Humphrey and Dr Celermajer on the subject of the meanings to be attached to the term "Muslims" used by Mr Jones during the broadcasts. Mr Jones and 2GB take issue with much of that evidence and object to one of the reports presented. We accept that "the court does not abdicate its responsibility to an expert; an expert's opinion cannot be determinative, particularly in relation to ultimate facts": Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [60]. In this case, the tests to be applied are objective and relate to what meanings an ordinary, reasonable listener would give to the broadcasts. Ultimately, when the evidence is considered closely, we consider that the appropriate approach is to give little or no weight to those expert reports and to allow the transcripts to speak for themselves. [11] We think that, despite Khan et al the Tribunal did not correctly appreciate the meaning of 'ethno-religious ... origin' in the definition of 'race'. In our view, on the preferable view of that expression, but depending on the context, and we stress the importance of the context, verbal abuse aimed at people identified by the abuser as 'Muslims' might indeed be abuse of them as a group of 'ethno-religious origin' without the necessity to show precisely that Muslims of some common ethnicity were targeted. In our view, there was much helpful material that might have been of persuasive value in the experts' report, notwithstanding (with due respect to a discipline that is not our own) that some of the jargon and an occasional problematic scent of post-modernism, and that in parts the report is best seen as submissions. [12] It would in the present case be a separate question entirely as to whether any such abuse was on the ground of any such ethno-religious origin, or only on the ground of the religious beliefs or religiously determined, supposed attributes of the group. [13] In our view there is no simple answer to the questions raised by Mr Trad's appeal. As the statutory concepts of race, origin, ethnicity, ethno-religious are notoriously muddy, slippery and (to say the least of it) imprecise, before setting out our reasoning, some examples may clarify our general approach to the matter: a) Consider the statement 'Muslims leave their brains behind when they enter the mosque. They believe in ludicrous, supernatural events. They are, if anything, even less rational than Christians and Jews'. This abuse is clearly of a religious group only and on religious grounds. It has nothing to do with ethnicity. b) 'Muslim immigration should be stopped. Islam does not accept a secular state and its attitude to women is medieval'. That is fairly clearly calumniation on the ground of religious affiliation, even if the group might, though we think probably not, be regarded as one of ethno-religious origin. c) If the insult is however: 'The Muslims here, as in Europe, are a bad lot. They don't want to integrate with us and their first allegiance is to their fellow Muslims, including terrorists such as Al Qaeda', that might (depending on all the evidence) well be seen as an insult to Muslims seen as a group of ethno-religious origin, and on the ground of that origin. ... [15] As a matter of purely textual interpretation, the 'ethno-religious origin' of a group must be a species or subset of, or practically synonymous with, the religious origin of the group. If the 'ethno-religious origin' of a group were a species or subset of, or practically synonymous with, the ethnic origin of the group, there would be no need of the expression 'ethno-religious' in the definition of 'race'. Words in a statute should not lightly be treated as otiose." 70The court noted in [28] states by Lord Fraser in Mandla v Lee [1982] UKHL 7 concerning the factors as to which expert evidence might be useful to determine meanings of words such as "ethnic group". 71As the Court of Appeal pointed out in Blacktown Workers' Club Ltd v O'Shannessy (2011) 183 LGERA 184; [2011] NSWCA 265 at [37]: "[37] ... The value of a dictionary in providing common (and indeed uncommon) uses of words is undeniable; the pitfalls with respect to their use in statutory construction derive from their strengths. A common word may have a core meaning, but it may also be used analogically, figuratively, metaphorically and sometimes merely to raise illuminating associations. The danger was famously identified by Judge Learned Hand in Cabell v Markham (1945) 148 F.2d 737 at 739: But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning." 72While the court was considering the proper construction of a word in a statute, the warning has some relevance, because there was evidence, in the case for consideration before the Court of Appeal, of expert evidence concerning whether or not mesh screens were "walls". The fact that a word appears in the dictionary is not an invitation to a judge to construe that word without the benefit of expert opinion. This is particularly the case with a word such as "dewater", an uncommon word which appears only in larger dictionaries, as became apparent it would not be found in the shorter dictionary in the court's possession. 73The first defendant, urged me to rely upon a dictionary definition for the word "dewater" in support of the contention that "dewater" should be construed broadly, in accordance with the terms of the dictionary definition. The word "dewater" is defined in The Oxford English Dictionary (2nd Ed - 1989 - Clarendon Press) to mean "to remove the water from". A like definition appears in the Shorter Oxford English Dictionary (6th Ed - 2007 - Oxford University Press) which is "remove water from". The Macquarie International English Dictionary - Complete and Unabridged Edition (2nd Ed - 2004, Bloomsbury Publishing Plc) defines it as "to remove water from a substance, especially sewerage or crude oil, or from a place". (first defendant's written submissions, paragraph 92) 74However, some caution should be exercised when looking at dictionary definitions of words. As C Mitchell in "Interpretation of Contracts" Routledge-Cavendish 2007 (page 94) notes, it is "rare, and arguably impossible" for a judge to give a completely "acontextual" interpretation to the words of a contract. 75While the words "dewater" and "dewatering" appear in dictionaries, the use of these words should have regard both to the context in which the words appear in the policy of insurance and in the evidence of witnesses in the construction industry (as the first defendant notes in written submissions at paragraphs 97-98). 76During the trial, I inquired as to the word "from" in the phrase "to remove the water from". This was because the Macquarie International English Dictionary - Complete and Unabridged Edition made it clear that what was involved was the removal of water from a substance, especially sewage or crude oil, or from a place. 77"Dewatering" is defined in international electronic dictionaries such as Wikipedia in similar terms. Wikipedia defines "dewatering" as "the removal of water from solid material or soil by wet classification, centrifugation, filtration, or similar solid-liquid separation processes, such as removal of residual liquid from a filter cake by a filter press as part of various industrial processes". Wikipedia goes on to note "Construction dewatering, unwatering, or water control are common terms used to describe removal or draining groundwater or surface water from a riverbed, construction site, caisson, or mine shaft, by pumping or evaporation. On a construction site, this dewatering may be implemented before subsurface excavation for foundations, shoring, or cellar space to lower the water table. This frequently involves the use of submersible "dewatering" pumps, centrifugal ("trash") pumps, eductors, or application of vacuum to well points." 78This description is very similar to the evidence given on behalf of the plaintiffs. 79However, before I deal with this issue, I need to deal with objections to both the lay and expert evidence concerning the definition of "dewatering". 80I shall set each of these out in turn: (a) Objections to the evidence of Mr O'Neill as to the meaning of the word "dewatering" In a ruling on Tuesday 2 August 2011, I rejected an objection to the first and third sentences in paragraph 95 of the affidavit of Mr O'Neill dated 31 March and paragraph 34 of his affidavit of 13 September 2010. The objection was taken on the basis that the word was to be found in an exclusion clause, and it should be considered in its context. A significant part of the objection related to the circumstances in which persons were seeking to give evidence, whether lay or expert, as to a word which was found in the dictionary. I have dealt with that issue in more detail in the paragraphs above. A second basis for objection was that the giving of such evidence contravenes the principles set out by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342; (2004) 79 ALJR 129; (2005) Aust Contract R 90-204; [2004] HCA 52. However, as is clear from the summary of lay evidence concerning dewatering which is set out below, Mr O'Neill was one of a number of witnesses who described to the court the scope of the works performed and what was involved. That explanation was not an attempt to import meaning by reason of extrinsic facts into the contract, but an explanation of the actual work carried out. (b) Application to exclude the evidence of Mr Pena At T 340, I rejected the tender of Mr Pena's affidavit (Exhibit ZZZ), for two reasons. The first was the failure to refer to the Expert's Code of Conduct in his affidavit. The expert witness code is not intended to operate as a formal rule of admissibility, but rather as a code of conduct designed to improve the quality of expert evidence: Australian Securities & Investments Commission (ASIC) v Rich (2005) 190 FLR 242; (2005) 53 ACSR 110; (2005) 23 ACLC 430; [2005] NSWSC 149. However, as Ritchie's Uniform Civil Procedure NSW notes at [31.23.10]: "An expert witness's evidence, whether oral or written, is inadmissible in the absence of an acknowledge of the code of conduct - unless the court otherwise orders." The second, more serious, failure, was that, in addition to objections to Mr Pena's qualifications (he being an underwriter), he had failed to expose the information upon which he assumptions of fact were based in that he had merely stated that "based on the information received", he had come to certain conclusions (see also Dasreef Pty Ltd v Hawchar (2011) 9 DDCR 25; (2011) 243 CLR 588; (2011) 277 ALR 611; (2011) 85 ALJR 694; [2011] HCA 21). These matters were the subject of submissions by the parties: see T 332-340. This was a clear case of failure to comply not only with UCPR Part 31 r 31.23 but, more importantly, with the warnings of the Court of Appeal and the High Court in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; (2001) 25 NSWCCR 218 and Dasreef Pty Ltd v Hawchar, supra. In the course of submissions on this issue, the first defendant complained that these objections had not been raised until the trial. Subsequent to my ruling (T 340) the plaintiffs sought to tender a letter dated 2 August 2011 from Balmain Lawyers to the first defendant's solicitors which conflicted with this submission. (c) Ruling on Exhibit O (letter dated 2 August 2011 from Balmain Lawyers) After the first defendant's claim that the plaintiffs "first objection" to the tender of Mr Pena's report was "yesterday" (Tuesday 4 October 2011), the plaintiffs sought to tender a letter from Balmain Lawyers dated 2 August 2011 to provide "full and proper context to that matter". It was submitted (written submissions dated 12 October 2011) that this letter makes it clear that a copy of the letter of instruction to Mr Pena, which was not attached to his report and which did not give vital information such as his sources for his opinion, had in fact been called for. Tender of the letter is objected to on the basis that it amounts to a request to reopen the argument or for the court to change or revisit this ruling. It is submitted that while judges may revise reasons for decision, especially delivered ex tempore, it is not possible to make corrections that alter the substance of the published reasons: Todorovic v Moussa (2001) 53 NSWLR 463; [2001] NSWCA 419 at [46]-[48]. Judges can and do revise their position concerning the admissibility of documents. However, in the present circumstances, that is not really what the plaintiffs are seeking to do. When I made my ruling, it was in the belief that the first defendant's submission, namely that the plaintiffs had, for forensic advantage, not raised the matter until the day before the submission was made. It now appears that this was incorrect. There are many examples of judges revisiting their rulings on evidence (for a recent example, see Traxys Europe SA v Balaji Coke Industry Pty Ltd [2011] FCA 1132; see also Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 302-303 per Mason CJ). I note that this has included occasions when rulings on expert evidence may be revisited: see for example R v WR (No 3) [2010] ACTSC 89 at [9]. Accordingly, Exhibit O should therefore be admitted. Lay evidence concerning dewatering 81The first defendant's primary position is that the plaintiffs' costs fall outside the terms of the insuring clauses in Section 1 of the policy. However, the issue which dominated the trial was whether or not the plaintiffs' costs related to "dewatering operations" and "dewatering equipments" referred to clause 5 of the Endorsement. I have dealt with this issue first, which is in reverse order to the manner in which the first defendant's written submissions are structured, but is consistent with the flow of the evidence at the trial. 82I note that I have set out the relevant authorities as to the appropriate way to interpret words in commercial agreements. Those principles are not in dispute. The issue in dispute is the actual question of what is meant by the word "dewatering". Mr O'Neill 83Mr O'Neill gave evidence at T 51-52 about the need to have pumps available to enable the lowering and maintaining of the lowered water level of the ponds (referred to in the tender), and explained that this was an item which was costed. He went on to explain: "Q. Well, can I just ask you a general question? Do you recall whether your company in the tender process costed the item of work which is described there at 14.4, that is, stormwater diversion, dewatering and flood protection during construction? A. We did. Q. You did. Then if you could go over to page 341, there's technical specification halfway down the page, "Cofferdam diversion and dewatering." Do you have that? A. Yes. Q. Did you read that clause at some stage during the tender process? A. Yes. Q. And you understood that your company was to be responsible for and repair at no expense to the superintendent any damage to equipment and to structures, foundations or any part of the works under this contract caused by water due to the failure or insufficient capacity of any part of the dewatering system or flood protection works provided by the contractor. You understood that? A. I understood that, and we didn't claim anything against the client." (T 52-53) 84He explained further in cross-examination (T 138 line 31-32): "The meaning is you remove water from an area where you have to do work to allow you to do work in that area." 85He went on to state: "Q. Mr O'Neill, the term "dewatering equipment", was it a commonly used word in the construction industry at the time this work was performed? A. Yes. Q. I want to suggest that the term dewatering was commonly used in the construction industry to mean implements which remove water from an area. A. Dewatering doesn't mean that. Q. Just please A. Could you rephrase the question because I I Q. I'll repeat it to you. I want to suggest to you that the term dewatering equipment is a commonly used word in the construction industry which means implements which remove water from an area. A. Dewatering equipment could be used to move water from an area. It could be used for many other reasons and Q. Sorry. A. In this case I understand dewatering to mean a specific thing, not a general movement of water. Q. But you agree that it could mean as used in the construction industry implements which remove water from an area? A. Dewatering implements, the same as a hammer can be used to bang a nail in and pull a nail out, can be used for a number of different reasons. Dewatering equipment could be used for a number of different applications. Q. Yes, but just coming back to my question, please, sir, the term dewatering equipment could be used and indeed has been used in the I withdraw that. I want to suggest to you that the term dewatering equipment has been commonly used in your industry to mean implements which remove water from an area. A. Where there is work to be done, yes. Q. So it is the context in which the words are to be used? A. The context of which the equipment is used. It's not considered to be dewatering equipment if it's moving something pumping water in to fill up a dam or some Q. All right. I want to A. It's the same equipment. Q. Yes, thank you. I want to suggest to you that pumps are commonly referred to in the industry as dewatering equipment, aren't they? A. They're commonly referred to as pumps. Q. But pumps can also be described and have been commonly described in the industry as dewatering equipment. A. Where they are dewatering they could be called dewatering equipment." (T 141-142) 86Mr O'Neill made confirmatory statements at T 143 lines 16-22 concerning removal of water from a completed basement of an unfinished apartment building. Mr Daniel Barrow 87Mr Daniel Barrow, the former construction manager for the first plaintiff, says in paragraph 44 of his affidavit that dewatering was "the removal of water from the work face to allow the contractor to commence or progress works at that face". He went on to state (paragraph 45) that the work carried out at Centennial Park lakes was not work of this character, but was the work of diverting water out of Kensington Lake in order to protect the integrity of the cofferdam to avoid catastrophic flooding of the park and surrounding areas. It was not the removal of water from a work site to allow works to progress. He went on to state that the Fire Brigade's work did not consist of dewatering the site either. 88Mr Barrow stated (T 169) that "dewatering equipment" was equipment such as a pump. However, he did not resile from his assertion that the work carried out was not dewatering. Mr Michael Russell 89Mr Michael Russell, the project manager employed by DPWS, was an impressive witness. As an independent observer, he gave objective and clear evidence as to what "dewatering" was. He stated at paragraphs 7-8 in his affidavit: "7. During the almost thirty (30) years in working for the DPWS on numerous occasions I have been involved with what is commonly referred to in the construction industry as "dewatering" which has been a part of those works or which became a necessary part of those works because of the entry of water onto those works before the works were to commence or during the currency of those works. On many occasions dewatering is an integral process of a job where, for example, rain falls into an open excavation in the works. 8. Based on my education and experience in the building industry and in having to deal with the dewatering of building sites on many occasions for my job, I use and understand the term 'dewatering' to be where water enters a construction site, dewatering is the process of removing that water to permit work to begin or ongoing work to continue. Dewatering is where it rains in an excavation or on a building or construction site into an excavation or onto those works. Where works can't be commenced or progressed until the water is taken out of the excavation or off the site, the act of removing that water is dewatering." 90Mr Russell explained the work defined as "dewatering" in the contract as follows: "16. As part of the invitation to tender and as part of the Works the contractor was required to undertake dewatering and to charge for those Works in responding to the invitation to tender in the contractor's quotation for that part of the Works. 17. While this is not meant to be an exhaustive description of the dewatering portion of the Works described in the invitation to tender the dewatering related to the drying of material taken from some of the lakes and the removal of water from around the banks of the lakes that were to be remediated." 91Mr Russell went on to describe the emergency meeting following the torrential rains and how he noticed what he called a "substantial trickle of water" coming from the base of the cofferdam wall at the bottom of the Kensington culvert. His immediate concern was for the safety of the men who were placing boulders along the outside base of the cofferdam wall and he called them away. He described the situation as a "grave emergency" (paragraph 45) and describes the activities to drain the water from the site, which involved the police closing Alison Road and representatives of the SES, Fire Brigade, Police, the DPWS, the local council and other authorities working together on a 24-hour basis. He concluded by saying at paragraph 64, in relation to the work the subject of the claim in the spreadsheets: "I can say, having regard to my understanding of the word "dewatering" as it relates to building and construction and having regard to my observations of those activities so referred to in the column headed "Activity" whilst I was at the Works site during the time of the flood and after, that none of those activities I would have described as the "dewatering" of the Works site." 92The defendant places emphasis upon acknowledgements by Mr Russell that the word "dewatering" means "the removal of water from an area" at T 181 and "dewatering equipment" at T 182 as amounting to an acceptance that the use of pumps to remove water from one place to another meant that they could be described as "dewatering equipment". However, as Mr Russell stated several times (for example, at T 182 line 27) it depends on what these pumps and other equipments are used for. He stated in re-examination: "WITNESS: Dewatering in as I understand it is removing water from a construction area to perform construction work and then maintaining it in that condition during construction. GRACIE Q. Do you draw a distinction between that and removing water from one area to another? MARTIN: I object to that, your Honour. HER HONOUR: I'll allow it. WITNESS: Absolutely." (T 183) Mr Bedi 93Mr Bedi, a former director of the second plaintiff, stated at paragraph 20 of his affidavit (Exhibit H) that: "Having regard to my experience in excess 39.5 years as a civil engineer, I understand what dewater is. It is the removal of water that has entered a construction site either before construction if commenced or during construction which interferes with the commencement of that construction or the continuation of it. The water may enter the site through the sub-soil from a water table or may simply enter the site if it is open to the weather by rain on the works. Usually dewatering is effected by use of a submersible pump where the water is pumped out of and away from the potential construction site or the construction site to allow for site access to commence or continue works on that site." 94The first defendant placed emphasis on Mr Bedi's acknowledgement that syphons (T 237) and pumps were used for removing water. The first defendant's witnesses: Mr McWalter 95The evidence of Mr McWalter set out in his affidavit of 11 June 2010 at paragraph 31 is that the word "dewatering" has many different interpretations. He considered its meaning would depend on the site, the person and the circumstances of the operation, and gave as an example removal of groundwater by spears. However, he considered that "dewatering" could also refer to the removal of water which runs into an excavation following torrential rain, a burst pipe, a flood or the like (at paragraph 30-34): "30. I refer to paragraph 10 above. From my experience, the sole purpose of syphon pumps is to remove water from one area and to redirect it to another area. As such I regard them as being dewatering equipment. From my experience as a Loss Adjuster, the common meaning of the term "dewatering operations" in the context of constructions is the removal of water to enable normal site working conditions to be maintained or restored. As such, I regarded the syphon pumps as being dewatering equipment and the act of removing water from the Kensington Pond as being a dewatering operation. 31. Dewatering, as I understand it has many different interpretations and will depend on the site, the person and the circumstances. 32. I have never however seen the term dewatering defined within an insurance policy. I believe it would be impossible to provide a single definition which would cover all eventualities. In my experience the term has to be applied to the particular circumstances in relation to the works which the Insured is undertaking. 33. For example geotechnical engineers will often refer to dewatering as being the removal of groundwater via spears or the like placed around an excavation. They are essentially referring to the prevention of water ingressing from the groundwater table into an excavation. 34. Dewatering can also refer to the removal of water which runs into an excavation, for example following torrential rain, a burst pipe, a flood or the like." Mr Paul Hiser 96The other lay witness called by the first defendant was Mr Paul Hiser. In Mr Hiser's affidavit (Exhibit 1, paragraph 20) he stated that the word "dewatering" had a commonly understood meaning in insurance policies for construction projects where there is removal of water from a particular area. 97Mr Hiser gave evidence that he increased the premium to present the risk to Vero for flood or inundation occurring at this work site (T 250). Mr Gracie went on to ask him: "Q. Well, can I suggest this to you, Mr Heiser [sic]? The one thing that that document evidences is that Mr Taylor thought there was a difference between overtopping cofferdams and dewatering, didn't he? A. There's no reference to - yes he did. Yes he did. Q. He didn't think dewatering would include overtopping of cofferdams but you told him otherwise. A. That's right. Q. You were willing to take that risk? A. Sorry, that risk-- Q. You were willing to take the risk, were you, that dewatering may not include overtopping the cofferdams? A. At the time I was, yes. Q. Did you have to refer that decision to anyone else? A. No, I did not. Q. Did you not think it prudent to put a definition of dewatering therefore into the endorsement or the policy? A. No, I didn't." (T 256-257) 98Mr Hiser gave the following evidence at T 262: "Q. Can I ask you to turn to the last paragraph in your affidavit, Mr Heiser, and in particular the last sentence? You say that: "Dewatering is something different to simply lowering the ground water table in a construction area which is process whereby the prevailing ground water level is lowered, generally pumping water out of the ground from in or around a construction area so as to allow construction work to take place." Where did you get that definition from? It's a very specific definition. It talks about ground water. Where did you get it from? A. My own knowledge of how - how construction projects are done. That's - I've defined that as lowering the ground water table, not dewatering. HER HONOUR Q. I'm sorry, when you say "from my own knowledge" it means you didn't look it up in a book or anything of that sort? A. No, I spent - I did an Associate Diploma in Civil Engineering and learnt it there, your Honour. Q. Yes, but that would mean you looked at book, wouldn't it? A. Yes, correct. Q. Well which book would that be? A. Oh that's a long time ago, your Honour. I can't remember which book it was, a civil engineering textbook. GRACIE Q. But do you agree that dewatering includes the lowering of the ground water table in a construction area or not? A. It's part of it, yes. Q. It does include it? A. It does include it. Q. And the point of difference that you take is that dewatering over and above that includes the removal of water from an area? A. Removal of any water from anywhere around the construction site within the site adjacent to it, beside it, behind it, under it, what have you. Q. Is it just the movement of water or do you actually have to remove it in the sense that you remove it to a point where that area is dry? A. You have to remove it to a point where you can continue building the works." 99From all of the above, it can be seen that "dewatering" is not the simple process described in dictionaries. This brings me to a consideration of the expert evidence on dewatering. Expert evidence concerning "dewatering" 100The first defendant called Mr Michael Thom, a geotechnical engineer and hydrogeologist. In his report (Exhibit 5), he states that: "Dewatering involves removing water from a site so that certain works can be performed both safely and expeditiously. The construction of the coffer dam was therefore part of a dewatering system as was any ancillary works needed to pass water around the site. These works would include diversion channels or drainage lines and, if necessary, pumps or syphons to keep the water below the top of the coffer dam. If the coffer dam had been overtopped the site would have become flooded so any works needed to prevent this happening would be included in the dewatering system." 101Pumping would be a normal part of this process (page 2 of the report) and syphons were just one method of directing water around the site, and would therefore be equipment which form part of a dewatering system. 102The cross-examination of Mr Thom was particularly helpful. His evidence, at T 327-330, was largely consistent with the view contended for by the plaintiffs: "Q. So have a look at "dewater" and then it talks about the lowering of groundwater, and then you go to the definition of "groundwater". Do you agree - let me know when you've done that. Do you agree that that is a narrower definition to the term "dewatering" as you use it? A. Very narrow, yes. Q. And do you agree that there could be a difference between civil engineering usage of the term "dewatering" and "groundwater"? A. There could be, yes. Q. And sorry, and geotechnical? A. Yes, there could be. Q. And can I ask also this in it's broadest sense. To the extent that you say the cofferdam was part of a dewatering system? A. Mm-hmm? Q. You could equally and quite appropriately also say it was part of a water diversion system, couldn't you? A. Yes. Q. And do the extent that you use the term "dewatering" in the way you do in your report, it could equally pertain to water diversion? A. Yes. Q. Did you have regard to the contract of works which my client, APS, were to do to see how the words "water diversion", "dewatering" or "flood control" was used in that contract? A. No. I was simply the - the - the definition was provided to me as to what was covered under the - the - the insurance policy. Q. When you say that, "Dewatering involves removing water from the site so that certain works can be performed" - and I think that is a recurring theme. You'd look at it under the section 2 dewatering. You can see it over in your response to Mr O'Neill's affidavit - you say "Dewatering is essentially the removal of water to allow construction to continue"? A. Yes. Q. That's correct, isn't it? A. Yes. Q. What construction work do you say was happening during the period of 1318 May when the inundation occurred? A. Well there was no construction occurring, from my knowledge at that stage, because the site was under water. Q. So this was not dewatering to enable construction to continue, was it? During that period? A. No. Q. Do you know how much rain fell in that period of the inundation? A. No. Q. You say that it's been described to you, and I presume it was in your letter of instruction - I haven't seen it - as torrential? A. Yeah, I gathered that from everybody's statements that it was very heavy rainfall. Q. You say that in your opinion reasonable storms should have been anticipated? A. Yes. Q. What if it was, to put it differently, and unreasonable or unforeseen-- HER HONOUR: Or torrential. GRACIE Q. --storm, torrential? A. Well torrential is not very well defined. It's - it's - it's a matter of risk if you're a contractor as to what risk you're prepared to take that the site will become inundated and you'll have to do dewatering during construction or put in extraordinary works. Q. Or it could be something different. It could be that the contractor is only obliged to perform the works to comply with the approval given by the principle? A. May - may well do, yes. Q. And that therefore may be a vastly different arrangement in terms of water diversion or dewatering? A. Yes. Q. Or flood control? A. Yes. Q. Because if you were to let's say design your cofferdam for a 1 in 500 year flood? A. Mm-hmm? Q. A tenderer would never get the job, would they? They'd be pricing themselves out of the bid? A. I can't answer that question. Q. But there is a degree at which you have to draw the line? A. Yes. Q. And it's all a question of extent of rainfall, isn't it? A. In - in all of these temporary works, yes. It's the contractor's risk. Q. Well, that could be why they have a policy of insurance. A. Yeah, yeah, yeah. Q. But-- A. Yes. Q. --it's also - and when you say contractor's risk, if the worker has been approved by the principal, then insofar as the contractor is concerned it's performed its obligation in building a cofferdam. A. I don't know what the responsibility was as far as approvals was concerned. Q. But if it had been approved and the work methodology been approved, then the question of the adequacy of the diversion is not really one that you can comment on-- A. No. Q. --because you haven't seen the contract? A. That's - that's correct. Q. And it could just be during that period of 13 to 18 May that the rainfall exceeded what you described as reasonable storms? A. Yes, possibly. Q. Would you agree with this: utilising the services of the New South Wales Fire Brigade to pump out Kensington Pond would not be part of a normal dewatering system, would it? A. No. Q. Just one final thing, in your experience, when contractors talk about building a cofferdam-- A. Mm-hmm. Q. --they refer to it as temporary works, don't they? A. Yes. Q. They don't refer to it as dewatering works, do they? A. That's all part of the same thing. Q. No, no, no, it's what they refer to it as. A. Yeah, they refer - they refer to it as temporary works, yes. Q. They don't refer to it as dewatering work, do they? A. No, not normally." 103The first defendant also sought to rely upon an affidavit of a Mr Pena. As already noted, his affidavit was excluded firstly for the failure to provide a reference to the Code of Conduct (a failure which was also noted to be the case in the expert evidence of Mr Thom), but secondly and more fundamentally, by reason of objections based on Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; (2001) 25 NSWCCR 218 and Dasreef Pty Ltd v Hawchar (2011) 9 DDCR 25; (2011) 243 CLR 588; (2011) 277 ALR 611; (2011) 85 ALJR 694; [2011] HCA 21 (see T 331-340). Mr Gracie did not take the objection in relation to the report of Mr Thom, where the material upon which his opinion was based was more clearly set out. However, it is arguable that the weight of evidence of an expert who has not acknowledged the Code may be subject to challenge and I note the purpose of the Code and its role in expert evidence before considering the impact of the expert evidence called by the first defendant in relation to use of the term "dewatering". Mr Thom's evidence favoured the position taken by the first plaintiff in any event. Conclusions concerning the expert and lay evidence as to "dewatering" 104Mr Thom agreed that wherever he used the term "dewatering", in the context of a system for dewatering, it could just as easily be described as water diversion. This is to conflate the concept of "dewatering" with moving water from one place to another. The concessions made by Mr Thom in cross-examination effectively acknowledge this. 105Under the insurance contract, "dewatering", "water diversion" and "flood protection" are each recognised. "Dewatering" work in this contract has, as each of the lay witnesses called by the plaintiffs have stated, a particular application in this contract which is quite different to water diversion. 106In addition, the plaintiffs were required under the contract to take the necessary steps for flood protection. Again, that is a progress that is quite different to dewatering. Again, this concept of flood protection has been conflated by the first defendant and its lay witnesses, particularly Mr McWalter, as amounting to dewatering. Conclusions concerning dewatering 107The interpretation of the word "dewatering" in terms of "dewatering equipment" and "dewatering operations" has been construed so broadly as to include any activity which involves water, including water diversion and attending to preventing flooding. Furthermore, it is at odds with the purpose for which the policy was intended to respond in the case of the temporary protection clause. Any construction of the term "dewatering" in the context of this policy needs to have regard to the commercial intention behind the clause for temporary protection of the Works. The construction of the term "dewatering" relied on by the first defendant cannot extend to flood control measures where the contract has expressly recognised distinctions between "dewatering", "flood control" and "water diversion". To the extent that the insurance contract has specifically excluded dewatering, it is limited to dewatering in the context of that contract. It should not be interpreted so as to expressly exclude the liability for the flood control measures referred to elsewhere in the contract. 108In his written submissions, Mr Gracie draws to my attention the fact that the high risk CR policy was originally costed at $16,000, which was adjusted by the loading of the risk from 0.61% of the contract sum ($385,580) to 2.5%, which loaded the premium onto the culvert works in recognition of the possible risk of what in fact happened, namely flooding. Yet this is the risk the first defendant now seeks to refuse cover. 109Having identified this risk, it is my construction of the contract that the percentage was increased to provide a premium for the risk which could have eventuated, namely the need for flood mitigation measures. The acknowledgement of this risk shows that it was considered to be distinguishable from "dewatering" which was excluded, and in circumstances where the "dewatering" referred to in the Kensington Culvert technical specifications, the APS work methodology and Mr Taylor's own internal workings, all note the difference between "dewatering" and the possibility of the cofferdam overtopping. Mr Gracie asks the rhetorical question (written submissions, paragraph 63) that one wonders what the risk being insured was; the plaintiffs contend that it must be the cost of water diversion and flood mitigation measures, these being the costs claimed by the plaintiffs but rejected by the first defendant. 110I conclude that there was no "dewatering" in the activities undertaken by the plaintiffs during the period of torrential rain, inundation and emergency damming works, including restoration works and emergency services, which were carried out to divert the floodwaters away from the ponds and public areas. These activities were water diversion and flood mitigation. They were not removing water from a substance; they were fighting a flood. This included all measures to avoid the overtopping of the cofferdam. 111Having made this finding, I now turn to the first defendant's primary submission (written submissions, paragraph 80) the plaintiffs' costs do not fall within the terms of any of the insuring clauses in Section 1 of the policy. Does the claim fall outside Section 1 of the policy? 112The first defendant submits that the plaintiffs' costs do not fall within the terms of the insuring clause applicable to Section 1 of the policy because they are not for "loss, destruction of or damage to property insured" within the meaning of the insuring clause. 113The first defendant submits (written submissions paragraphs 24ff) that the first defendant is only obliged to indemnify under the insuring clause in Section 1 for physical loss, physical destruction of, or physical damage to, the property insured. It is submitted that the costs in the schedule are not costs for the physical loss, destruction or damage, but costs associated with the removal of the water behind the cofferdam in the large Kensington Pond. They are not therefore costs incurred in rectifying, repairing, rebuilding or reinstating any physical loss, destruction or damage to any part of the property insured. 114The first defendant submits that the language under "BASIS OF SETTLEMENT - APPLICABLE TO SECTION 1" confirms that only actual physical loss, destruction or damage is insured against. Clause 2(a) refers to property which is "lost", "destroyed" or which requires "rebuilding". Clause 2(b) refers to property which is "damaged", or requires "repair" or "restoration". Clause 2 refers to the need to reinstate property to the same condition as existed immediately prior to the loss. In other words, where the item of property insured has not been lost, destroyed or damaged, but is saved by the exertions of the parties, there has been no physical loss, and the costs incurred in successfully preventing the disaster are not "costs of reinstatement". The first defendant further submits that the plaintiffs' costs do not fall within the temporary protection clause in Section 1 of the policy for the following reasons: (a)the plaintiffs' costs are not for work to "avoid further Loss, Destruction of or Damage to the Property Insured occurring" since no such loss, destruction or damage had previously occurred to the coffer dam; (b)the plaintiffs or any professionally qualified representative, had not deemed necessary the work to "avoid further Loss, Destruction of, or Damage to Property Insured occurring"; (c)the plaintiffs' costs are not "consequent upon" any physical loss, destruction or damage to the property insured being indemnified under the Policy. 115In particular, the first defendant submits that the plaintiffs' costs are not for work to "avoid further loss" within the temporary protection clause of the policy. The first defendant notes that the removal of water from behind the cofferdam would be argued to be "temporary protection" of the insured property but that since no loss, damage or destruction occurred, these costs are not costs for work to "avoid further loss, destruction of, or damage to the property insured occurring". The key word is "further" in that there must be loss occurring. 116The first defendant submits that the plaintiffs carried out this work for two dominant purposes, namely to avoid the possible failure of the cofferdam and to avoid the possible risk to third party properties or buildings south of the Centennial Park near the Randwick Race Course. Mr O'Neill admitted as such in his evidence, when he referred to these two reasons (T 110-114). In other words, because Mr O'Neill's purpose was to protect the surrounding buildings and prevent injury to persons, and was able to prevent damage occurring to the cofferdam, the costs of the work done are not insurable. 117I have set out below my reasons for rejection of this argument and to my acceptance of the analysis of McPherson JA in Mining Technologies Australia Pty Ltd, Re [1999] 1 Qd R 60; (1997) 10 ANZ Ins Cas 61-389. I now consider the first defendant's second submission as to why the plaintiffs' claim fall outside Section 1 of the policy. The first defendant's second argument concerning Section 1 of the policy 118The first defendant next submits that neither the plaintiffs, nor any professional qualified representatives for the plaintiffs, had deemed necessary the work to "avoid further loss, destruction of or damage to the property insured occurring" within the meaning of the temporary protection clause. This is because none of the plaintiffs formed an opinion that the work was necessary to avoid further loss, destruction of or damage to the property insured occurring. The work of pumping out the water in front of the cofferdam was not "necessary" to avoid loss, destruction or damage to the cofferdam but because of the risk of the cofferdam failing in the future, or the risk to surrounding properties. 119Mr O'Neill not only stated in his evidence that he had such an opinion, but was the catalyst for the meeting, the plans put in place and the decisions made. Mr Bedi said the same. It is not in dispute that he is a qualified representative. In addition, Mr O'Neill stated that he relied upon advice from DPWS and the police as to what to do. I am satisfied that the plaintiffs did form the opinion required. The first defendant's third argument concerning Section 1 of the policy 120The first defendant next submits that the plaintiffs costs are not "consequent upon" any physical loss, destruction of or damage to property insured because there was in fact no loss or destruction of the Works. The plaintiffs were able to successfully prevent any loss, destruction or damage to the property insured including the cofferdam. Because they were able to successfully save the cofferdam from damage, the costs of the work fell outside of the insurance policy, which was only activated if there was damage. While there were signs of "some seepage" (Mr O'Neill's evidence, T 100) or "trickles of water" which caused the Department to be so concerned that the Department of Parks and Wildlife Services ordered men away from the area (see the evidence of the DPWS supervisor, Mr Russell), the stability of the dam wall was not affected and it remain sound at all times. The work was in fact carried out to avoid potential future damage as well as to prevent some disaster occurring by reason of the flooding. 121This argument is essentially a restatement of the first defendant's first argument, and I reject it for the same reasons. The first defendant's fourth argument concerning Section 1 of the policy 122The first defendant's further submits that the plaintiffs' costs do not fall within the removal of debris clause in Section 1 of the policy because water is not a "substance" within the meaning of that term in the clause and the plaintiffs' costs were not "consequent upon" any physical loss, destruction of or damage to the property concerned. 123The ability of water to combine with soil to form mud, which is debris, and to cause damage, such as cofferdam destruction, means that it is a "substance" for the purpose of Section 1. I accordingly reject this argument. 124The next issue for determination is whether the contract is a "high risk civil engineering contract". Was this contract a "High Risk Civil Engineering Contract"? 125The definition of "High Risk Civil Engineering Contract" is found under "GENERAL DEFINITIONS - APPLICABLE TO SECTION 1 AND 2" and states: "1. HIGH RISK CIVIL ENGINEERING CONTRACT "High Risk Civil Engineering Contract" shall mean a Contract for flood mitigation, dams, weirs, tunnels, bridges, jetties, work under and over water, and similar type works. For the purposes of this definition, any Contract where part of the works including temporary works include a component of flood mitigation, dams, weirs, tunnels, bridges, jetties, work under and over water, and similar type works, which does not exceed 15% of the Contract Price at the time of Award, shall not be defined to be a High Risk Civil Engineering Contract." 126The plaintiffs submit that, in terms of construing the policy as a whole, the question arises as to whether the Endorsement attaches to, and forms part of, the construction policy and comes within the definition of a High Risk Civil Engineering Contract in excess of $500,000. 127The contract sum for the separable portion of the Works for the Kensington Culvert (part of Tender Addendum no. 8) the schedule of rates quantifies the value of the Kensington Culvert Works at a total tender price of $385,580. Based upon an estimated contract value of $2.7 million, 15% of the total contract value would be $405,000, which is in excess of the actual contract sum of $385,580 referrable for this component of the works in total. 128Construing the contract as a whole, the actual contract sum at the time of the award of the contract was, excluding GST, $2,662,957. 15% of this sum is $399,443.55; see the contract sum calculations behind Tab 4 of the affidavit of Mr O'Neill. 129The plaintiffs argue that since the high risk component of the work was only referrable to the culvert works (see the email of Mr Marsh to the DPWS and Colin Ging dated 4 December 2002), the Endorsement pertaining to high risk works does not apply and therefore neither does the dewatering exclusion contained in that Endorsement. 130The plaintiffs further argue (written submissions, paragraph 73) that in accordance with the definition of "High Risk Civil Engineering Contract", the only part of the works for flooding mitigation consisted of the cofferdam, not the Kensington Culvert Works at all. The amount referrable to the cofferdam construction was only a small sum, namely $14,443. This was clearly well within the 15% figure, as the component of contract works comprising temporary works including flood mitigation. It is submitted that on this basis alone the works could not be defined to be a high risk civil engineering contract within the meaning of that definition in the policy. If the Endorsement incorrectly purports to apply to a high risk civil engineering contract when the policy definition has established otherwise, when construing the policy as a whole, which the court must do, it is submitted that the court should not permit the insurer to rely upon an exclusion such as the dewatering exclusion contained within the policy. 131The first defendant submits that the Endorsement does attach to, and form part of, the policy, for two reasons. Firstly, the works contract was a high risk civil engineering contract. Secondly, even if I were to find that the works contract was not a high risk civil engineering contract, the Endorsement, on its proper construction, still attaches to, and forms part of, the policy. 132The works contract provides for work (including temporary work) which includes flood mitigation, work over or under water, and similar water control or diversion related works which exceed 15% of the contract price at the time of the award. It is submitted that this work must exceed $405,000, which is 15% of the total contract value. 133At paragraph 75 of the first defendant's submissions, a list is set out of the works which were the subject of this works contract, and I set this out in full: (a)removal of temporary diversion and pond water level lowering devices and sediment control devices in the sum of $29,900 (item 1.6) (Ex A, p.369); (b)removal and replacement of existing grate in the sum of $1,962 (item 8.1) (Ex A, p.371); (c)supply and fit adjustable outlet weir gate and surround in the sum of $7,848 (item 8.4) (Ex A, p.371); (d)repair existing inlet apron and frog hollow inlet in the sum of $1,570 (item 8.5) (Ex A, p.371); (e)establishment of temporary flow by-pass and lowering of pond water levels in the sum of $2,824 (item 10.1) (Ex A, p.371); (f)maintenance of temporary flow by-pass and lowering of pond water levels in the sum of $51,786 (item 10.2) (Ex A, p.371); (g)inspection, investigation and recording on condition of existing culverts between Randwick and Busby's Ponds and recommendations for rectification measures in the sum of $2,006 (item 10.3) (Ex A, p.371); (h)excavate trench, compact subgrade, lay pipe bedding, lay and joint subsoil drains, place and compact backfill in the sum of $30,188 (item 12.1) (Ex A, p.373); (i)excavate trench, compact subgrade, lay pipe bedding, lay and joint stormwater drains, place and compact backfill in the sum of $18,105 (item 12.2) (Ex A, p.373); (j)excavate, install, backfill and compact stormwater drainage inspection pits including covers in the sum of $7,848 (item 12.5) (Ex A, p.373); (k)connect stormwater outlet pipe to existing open stormwater drain and make good in the sum of $2,355 (item 12.4) (Ex A, p.373). 134The first defendant argues that as this work amounts to more than 15%, it is therefore within the definition of high risk civil engineering contract. 135The first defendant further submits that even if the works contract were not a high risk civil engineering contract, then on its proper construction, the Endorsement would still attach to, and form part of, the policy. The Endorsement refers, in subclause 1, to the contract as "being a High Risk Civil Engineering Project in excess of $500,000" and goes on to add the special conditions, including the dewatering clause. 136While the plaintiffs' argument is ingenious, the correct view must be that it is not possible to separate off the Kensington Culvert works, or any other portion of the contract, in this fashion. In practical terms, the whole of the project was endangered by the floods and work had to be done throughout the park. 137In addition, I accept the first defendant's alternate submission that even if the works contract were not a high risk civil engineering contract, the Endorsement still attaches to, and forms part of, the policy, and the dewatering exclusion would still apply. The fact that the works contract is not a high risk civil engineering contract is not a condition precedent to the Endorsement attaching to, and forming part of, the policy. 138This brings me to a consideration of the plaintiffs' argument that there was an implied term in respect of Section 2 of the policy concerning public liability for personal injury and property damage and that the dewatering exclusion does not apply for this reason. Was there an implied term? 139The plaintiffs further contend, in respect of Section 2 of the policy concerning public liability for personal injury and property damage, that the operation of an implied term means that the dewatering exclusion does not apply as a special condition to Section 2, when one has regard to clause 5 of the Endorsement which limits "dewatering" to Section 1. 140Section 2 of the policy provides insurance cover for "defence costs". These are defined to include "all expenses incurred by the Insured for the first aid rendered for injury to others and/or for temporary repairs and/or shoring up of property made necessary by an Occurrence indemnified under this Policy" (see Exhibit G, the affidavit of Mr R Kurland, Tab 3). 141The insured's liability in respect of defence costs is not to exceed 30% of the limit of liability of the schedule ($20 million) and there is excess under Section 2 of $25,000 for each and every occurrence. 142The submissions of the plaintiffs are that the urgent works undertaken to provide temporary repair and to shore up the cofferdam (including the provision of boulders, concrete, geofabric and other temporary constructions), as well as the borrowing of emergency syphon equipment, was not for work on the site, but for emergency work, and that this emergency work was not referrable to dewatering (this, however, is a circular argument since if the implied term applies, dewatering is irrelevant). 143This argument operates both as a sword and a shield. In addition to submitting that this implied term must prevail over any dewatering provision, which does not apply in any event to Section 2, the plaintiffs also rely upon the existence of this implied term to combat the argument of the first defendant that the obligation lay upon the insured to undertake at their own expense such immediate action as may be necessary to minimise the extent of person injury and/or property damage (see Exhibit G, Tab 3). The plaintiffs' submission in relation to this argument, as I have noted above, is that it is incompatible with the implied term and should be read down so that the express terms in clause 2 are compatible with the implied term. On a proper construction of the clause, it is submitted that the insured is only obliged to expend such money as may be necessary to minimise personal injury and/or property damage, and that such expense must be distinguishable from undertaking such actions at its cost. 144As I have indicated elsewhere in this judgment, I do not accept the first defendant's argument in relation to this issue, but since the existence of the implied term is referred to in both arguments, I have repeated the plaintiffs' submissions, insofar as they seek to rely upon an implied term, for completeness. The law relating to implied terms 145Both parties referred to three helpful decisions as to the principles concerning the construction of written agreements and the circumstances in which, in order to give business efficacy to a policy, there should be implied in it a particular term: The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 157 at [27]ff; Dyson (trading as Pharmacy Plus Tumut) v Pharmacy Board of New South Wales (2000) 50 NSWLR 523 at 532; [2000] NSWSC 981 and a Queensland decision Mining Technologies Australia Pty Ltd, Re [1999] 1 Qd R 60; (1997) 10 ANZ Ins Cas 61-389 (on appeal from Re Mining Technologies (Aust) Pty Ltd (Queensland Supreme Court, White J, 28 November 1996, unreported)). In addition, I note a recent helpful article by M Walton SC, "Where now ambiguity?" (2011) 35 Australian Bar Review 176, which contains a discussion of Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45, noting the continued applicability of Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; 41 ALR 367. 146The difficulties of the law relating to implied terms is highlighted by the differing views taken by the trial judge and the Court of Appeal in Re Mining Technologies (Aust) Pty Ltd, supra. The argument put by the insurer in relation to the facts of this case (a successful recovery of mining equipment buried when the roof of a tunnel fell in) was similar to the argument put forward here. The argument was that because the step taken had succeed, there was no loss within the meaning of the policy and the temporary entrapment of the insured chattels did not constitute "damage". The insured argued that there is a general obligation to minimise the loss against which the appellant might be obliged to provide indemnity. The decisions of White J was affirmed on appeal, but on different grounds; Davies JA held that there was an implied term, McPherson JA held that there was no implied term and Pincus JA dissented. 147Davies JA, who held that an implied term existed, concurred with the primary judge that a term should be implied to require indemnity. He put the issue as follows: "If that is the correct construction of cl7(d) and the way in which it would apply in that hypothetical situation, it could not possibly have been within the contemplation of the parties that where, as occurred here, the insured, by the exercise of reasonable care and the expenditure of $725,000, avoided loss, the insurer should not be liable to indemnify it to the same extent. Had they been asked, the parties would have immediately agreed that, in that event, loss was in fact avoided to the extent of $1.095M; and that the insurer was liable to the extent to which loss was not avoided, the cost of that avoidance, $725,000. In order to give business efficacy to the contract a term which complements cl7(d) should be implied. The implication of such a term would also, in my view, be reasonable for that reason. This could take the form of the addition of a further cl(3) in s1 of the policy in the following terms: "Where loss, damage or liability, which would otherwise have occurred, is avoided by the exercise of reasonable care, including the reasonable expenditure of money or performance of work, on the part of the insured or any person acting on the insured's behalf, that expenditure or the value of that work." Or possibly a clause in slightly modified terms, but having the same effect, could operate as a proviso to cl7(d). A clause in those terms would not be inconsistent with any express terms of the contract. It would not be inconsistent with cl(1) or cl(2) in s1 because those clauses are concerned with indemnity in respect of loss, damage or liability which has occurred. Nor is it, or the construction which I have reached of cl7(d), inconsistent with the clause dealing with partial loss under the heading "CLAIMS PROCEDURES" in the contract, which also appears to be concerned with loss of or damage to parts of machinery, which loss or damage has already occurred. Nor do I think that it is inconsistent with the exclusion, under the same heading, from liability for the cost of temporary repairs even where, as may occur in some cases, expenditure which avoids loss or damage may also be for temporary repairs, provided that the principal purpose and effect of the expenditure is to avoid loss or damage. And it would, as I have indicated, complement the exclusion in cl7(d) referred to earlier. Once a term such as this is implied in the contract it is plain that the respondent was entitled to be indemnified in respect of $725,000 as the learned primary Judge held." 148McPherson JA considered that the process of retrieving the trapped equipment was one of "repair" within the meaning of the partial loss provision of the policy and, accordingly, no implied term was necessary. His Honour noted at the commencement of his judgment that this was "a difficult case, which raises fundamental questions of insurance law." 149In practical terms, cases concerning implied terms, and whether they arise, tend to turn on their facts. In the course of the hearing, by reason of recent world events, I referred to what would have occurred if, by prevention of damage to a nuclear station, lives had been saved and surrounding properties undamaged. Clearly, taking a pragmatic view of insured risk, that must include steps taken by the insured to prevent damage when those steps are successful, just as such steps should be covered if the attempts are unsuccessful. The altruistic motives of the insured to save, for example, employee lives, or adjoining properties, should not be used to deflect liability for the steps taken by the insured, as I have noted elsewhere in this judgment. 150Accordingly, the plaintiffs' argument that an implied term (for which there would be no excess) fails, but this is because I am satisfied, as was McPherson JA, that the works carried out by the plaintiffs to prevent the destruction of the cofferdam were works falling within the scope of the insured risk. Conclusions concerning liability 151I am satisfied that the claims for costs brought by the plaintiffs falls within the policy of insurance issued by the first defendant. 152This brings me to the issue of quantum. The first defendant submits that if it is found to be liable to indemnify the plaintiffs under the terms of the policy, the terms of the Endorsement expressly limit the amount of that liability. In addition, submissions as to the quantum of individual amounts have been made in relation to a number of the claims. It has been different for me to deal with these claims due to the absence of submissions on the issue by the plaintiffs. Quantum 153The costs claimed are the costs as set out in spreadsheets 22A, 22B and 22C which are set out in the affidavits of both parties as follows: (1)Mr McWalter's affidavit of 11 June 2010 (Exhibit 4), in the form of spreadsheets appearing behind Tab 22A, 22B and 22C; and (2)The documents behind Tab 1 of the affidavit of Mr O'Neill of 23 April 2010. 154Both parties referred to the spreadsheets attached to the affidavit of Mr McWalter, but I found the most helpful summary to be the attachment to Mr O'Neill's affidavit, as it contained his comments, as explained by his affidavit evidence. 155The total amount excluded by Mr McWalter is $115,945 (see paragraph 93 of the plaintiff's written submissions). As already noted, this exclude the claim for indemnity for $118,500 in respect of the New South Wales Fire Brigade in spreadsheet 3, this being statute barred. The amount assessed as allowed totalled $67,904.93 and the maximum amount which the second plaintiff claims (depending upon the approach I take to the interpretation of the policy) is $183,850.22, plus interest from 1 July 2003. The first deduction which needs to be made is the excess which, for example, would leave a sum payable of $158,850.22 if the excess were $25,000. 156The first question is whether or not the Endorsement applies. If it applies, then any amounts payable under Section 1 would have an excess of $20,000 and if under section 2, the amount would be $25,000. 157The next question is whether or not the damage occurred as a result of "water damage" or storm, in which case the excess is $50,000. The plaintiff submits that this is a flood, which is a "peril" which is therefore to be regarded as "any other occurrence" under the Endorsement. As I have indicated, I am satisfied that the activities the plaintiffs were carrying out were fighting a flood, and the excess which applies is the "peril" excess. There was not in fact "water damage", because the plaintiffs were able to divert the water before damage of any real nature occurred. 158This brings me to a consideration of each of the three spreadsheets set out in the affidavits referred to above. This was not an easy task, for the following reasons: (a)Counsel for the plaintiffs sets out in the outline of his opening address that the claim in relation to dewatering was "easily quantifiable", adding that any issues in dispute could be dealt with "by reference to an appropriate expert or perhaps by agreement between the parties". Although I referred to the question of whether an expert would consider these issues during the hearing, this did not occur. Counsel for the first defendant in written submissions has provided me with eight pages of analysis of each of the sums claimed. When I pointed out to the counsel for the plaintiffs that he had not really dealt with quantum in his submissions, he responded that it was "very straightforward" (T 414 line 9) and did not answer the item-by-item analysis of the first defendant. I do have before me the evidence of Mr Bedi as well as the comments made by Mr O'Neill in his further affidavit of 23 April 2010. Mr O'Neill was only cross-examined about the first spreadsheet. I therefore have some factual material upon which to base any findings I make in relation to these items. I do not, however, have the benefit of submissions from the plaintiffs on these issues.It is not uncommon for a party to omit to deal with one or more factual issues in submissions. It places the trial judge in a difficult position if there are matters upon which submissions have not been made. It may also be unfair to the opponent, as the judge may take into account factors upon which the opponent has not had the opportunity to address. It is unwise for trial judges to comment, during a trial, about failure to cross-examine on a particular issue, or to tender a document, because the risk of perception that the trial judge has made up his or her mind about the importance of an issue: Jae Kyung Lee v Bob Chae-Sang Cha [2008] NSWCA 13. If parties both do not address the judge on an issue, as has occurred concerning the matters raised by the first defendant in paragraphs 255 - 256 of its written submissions, and in relation to many of the items in the second and third spreadsheet, the judge should be entitled to assume that the matter is not intended to be the subject of any ruling.Where objections have been taken by the first defendant to the payment of receipts for reasons of failure to provide an invoice, assertions of "doubling up" in relation to invoices and the like, and there has been no response in submissions by the plaintiffs I have dealt with these on the factual material before me, referring where appropriate to the notes of both parties on the spreadsheets, the evidence of Mr Bedi, the affidavit evidence of the parties and the factual matrix surrounding these events, conformably with Mr Gracie's reference to these during Mr O'Neill's cross-examination, as is noted elsewhere in this judgment. (b)While the first defendant's submissions on the issue of quantum were helpful, submissions as to whether or not the whole or a part of several of the items should be allowed appears to conflict with Mr McWalter's assessments. I have helpfully noted each of these and dealt with them as best I could. In addition, some of the items have been described in a manner inconsistent with what appears in the spreadsheet. For example, the first seven items relate to pumping equipment, not pipes. However, I have used commonsense in relation to each of these matters. It may be that differences I consider to be typographical errors are simply another way of describing the item. Fortunately, none of these matters are serious and may, if appropriate, be dealt with under the slip rule. However, the need for me to review all of these material in detail has added considerably to the time it has taken to prepare this judgment. (c)In addition, although set out in the section on liability, the first defendant's submissions (written submissions, paragraphs 255 and 256) concerning a purported limitation of quantum were not explained to me or referred to at all by either party during the trial or in submissions. Counsel for the first defendant went through his submissions in numerical order (see T 384-385) but skipped over this section without identifying any such Occurrence by reference to the spreadsheets. The relevant paragraphs of the first defendant's submissions state: "The First Defendant submits that if it is found that it is liable to indemnify any of the Plaintiffs' full costs and expenses for removal of debris within clause 3, under "MEMORANDUM - APPLICABLE TO SECTION 1" (which is contrary to its primary submission) such liability is limited to $500,000 for any one Occurrence pursuant to the terms of the Endorsement. Further, if it is found that the First Defendant is liable to indemnify any of the Plaintiffs for costs and expenses for temporary protection within clause 4(a) of "MEMORANDUM - APPLICABLE TO SECTION 1" (which is contrary to the primary submission), such liability is limited to $250,000 for any one Occurrence pursuant to the terms of the Endorsement." 159I will next consider each of the items in the spreadsheets in numerical order. Spreadsheet 22A 160The claims in spreadsheet 22A are as follows: (1)Items 1-6: The costs for these items relate to the provision of pumps, including delivery and commission. These are erroneously referred to in the first defendant's submissions as "pipes" (paragraph 266(a) of the first defendant's written submissions), but on checking with paragraph 86(1) of Mr McWalter's affidavit, it is clear that these are pumps and not pipes. They were used for dewatering of Kensington Pond. They should therefore, conformably with my findings that dewatering does not include these activities, be included. (2)Item 7: Excavator was used to move pumps which had to be relocated. Again, "pumps" are called "pipes" by the first defendant in written submissions. They were dewatering costs and are therefore included. This submission is rejected for the same reason as (1) above. (3)Items 8-10: Syphons (3 units), delivery costs and vacuum pump for syphons - The vacuum pump was used to create the vacuum in the syphons. The syphons were used to move the water away from the lakes and cofferdam into alternative stormwater drains. They had to be brought from as far away as Narrabri. Conformably with my finding that this work did not amount to dewatering, these costs should be allowed. (4)Item 11: Steel road plates (10 plates for 35 days) - Mr Bedi gave evidence about the use of these steel road plates (items 11, 12 and 13) as follows: "Q. These steel road plates were necessary to strength the haul road to where the cofferdam was situated, isn't that correct? A. Yeah. Q. That road had become boggy due to the excessive rainfall, do you agree with that? A. Yeah. I - and I'm using the heavy equipment there. Q. So the heavy plant that was utilising these steel road plates were bringing in materials including the siphons, the floodlights and material that was used to protect the cofferdam. A. Indeed. Q. I want to suggest to you that half of the traffic on this haul road containing the steel road plates was being used for the purposes of conveying pumps, floodlights and material to assist in respect of removing water from the large Kensington Pond, isn't that correct? A. Sorry, the plates were - plates were installed to facilitate to continue the work there, whatever was needed to be done. Q. I want to suggest about half of the vehicles that were travelling on this haul road with the use of the steel road plates was conveying either materials or equipment that would be used for the purposes of removing water from the large Kensington Pond. A. Well, sir, I - I don't know how can you say it is half, but 50% or - sorry - 50% or 10%, I don't know. But these plates were installed, whatever was needed to be done, and we had to carry and we had to use that one, either worker had to work or truck was to go or heavy plant was to go, we use those plates. Q. I want to suggest to you that 50% of the vehicles that were travelling down that haul road that had the steel road plates placed on that haul road were being used for the purposes of removing-- A. Well, sir - sir, I was not there so I couldn't tell you 50% or 10%. But the question is that we had to install those plates to keep the work in progress, you know." (T 213) Mr O'Neill was cross-examined globally about items 11-15 and said (at T 145-146): "Q. Mr O'Neill I want to suggest to you this haul road which had the steel road plates referred to in items 11 through to 15 of the schedule that that road was used at least 50% of the time in relation to conveying items of equipment for the purposes of enabling this pumping operation of water being removed from the large Kensington Pond to the council's stormwater drainage system. A. No. Q. You say a percentage less than 50%? A. Yes. Q. What do you say percentage wise was used? A. You make asking me to make an assessment? Q. I don't want you to guess, please, Mr O'Neill. I don't want you to guess. If you are unable to answer the question A. I'm unable to to ascertain the percentage would be the best correct answer. A small percentage." Mr O'Neill evidence indicates the artificial nature of the 50% assessment by Mr McWalter. As other statements made by Mr O'Neill in cross-examination show, this was a recurrent complaint he made. It is a complaint of considerable force in relation to many of the items, particularly those, such as the use of trucks and floodlights, which relate only indirectly to pumping water out. However, it is not necessary for me to determine this issue on this basis, and indeed, I have not received any submissions about how to deal with this evidence, other than the parties restating their "all or nothing" positions about the estimates they made before trial. Consequently, I have adopted the same approach as that taken by the parties, and dealt with it as if the sole complaint is whether or not it was a dewatering expense. 50% of this item was allowed by the first defendant on the basis that 50% was used for dewatering. Conformably with my findings that the work carried out does not amount to dewatering, the whole amount should be allowed. (5)Item 12: Steel road plates - This cost relates essentially to hoisting and loading at the yard, delivery and unloading at sites. The cost has not been paid as the invoice has never been provided and it is asserted (written submissions, page 39) that the item has "not been properly proven". The explanation is that the Kanes Hire separate invoice has been misplaced. Mr O'Neill notes that the charge delivery is noted on the hire invoice as provided as a separate cost, although the invoice is missing. The correct approach for the court when written documentation is lacking is helpfully described by Bray CJ in Taylor Woodrow International Ltd v Minister of Health (1978) 19 SASR 1, where Bray CJ sets out the circumstances in which recovery may occur when invoices are not available (see also Dorter & Sharkey, Building and Construction Contracts in Australia (2nd ed) at [9.390]). (6)Item 13: Steel road plates machine hire - Only 50% of this item was allowed by reason of the use of this machine for purposes regarded by the first defendant as dewatering. Conformably with my findings that this work does not amount to dewatering, the whole of this amount should be allowed. (7)Items 14 and 15: Steel road plates, machine hire to hoist and load the plates for return and to transport them - These are referred to in the Kanes Hire invoice cost but the actual invoices are not available. For the same reasons as set out in (5) above, I propose to allow these expenses. (8)Items 16 and 17: Floodlights - Mr Bedi gave evidence about the installation of floodlights as follows: "Q. If I could move on to items 16 and 17 which related to the floodlights. The floodlights were used on site for 24 hours a day during this period, weren't they? A. No, sir, you wouldn't use the floodlights 24 hours, you need it only in the night when you - when you need them. Q. You're correct. They were only turned on at night but they were located on site for 24 hours a day. A. Yeah, when you hire, you hire for the whole day. Q. The floodlights were located around the-- A. Kensington Pond. Q. The Kensington Pond. A. Yeah. Where - where the cofferdam - where we had to build the Kensington culvert. Q. That 50% of the use of the floodlights was dedicated to work, I want to suggest to you, relating to the removal of water from the Kensington Pond. A. I'm sorry, were you - during the night it was a hundred per cent, and during the day 0%. But the rental cost is - it goes to that activity." (T 213-214) Mr O'Neill also gave evidence concerning floodlights: "Q. If you look at item 16, the floodlights I think as you've indicated were used for nighttime activities also to ascertain the various levels of the ponds? A. Yes. Q. I take it the focus of attention was the large Kensington Pond during this period of night, wasn't it? A. Yes. Q. I want to suggest to you that these floodlights were for the purposes of ascertaining what the levels were of that particular pond during this period. A. Yes. ... Q. In fact item 16 and 17 related to the floodlights, and I want to suggest to you that 50% of the use of the floodlights related to the removal of water from the large Kensington Pond to the outside counsel drainage system, wasn't it? A. I said - I said no to that. Q. What percentage use was related to the removal of water then? A. I can't make an assessment. The lighting was needed all the time at night time." (T 146-147) Only 50% was allowed for this item by reason of the claim that a percentage of their use related to having lights when dewatering was carried on. Independently of any findings I have made in relation to dewatering, this amount should have been reimbursed in full, particularly item 17, the delivery and return of floodlights, an expense which would have been incurred whether or not the equipment was used for an uninsured purpose. In addition, the complaint that the invoice has been misplaced is not a good or sufficient reason for refusal to pay. National Hire contract 237043 required work around the clock and the delivery and return expenses are unrelated to the amount of time spent in any alleged "dewatering" activities. It was inappropriate of the insurance company to have refused payment of this sum, given the high level of danger of the work and the applicability of occupational health and safety legislation. (9)Items 18 and 19: Diesel generator and delivery - Mr Bedi gave evidence concerning the installation of diesel generators as follows: "Q. Then the item 18 and 19 relate to the diesel generators. Do you see that? A. Yes, sir. Q. They were used to power the floodlights, weren't they? A. Yes. Q. Were they also used to power any of the pumps? A. Yes. Q. I want to suggest to you that at least 50% of the use of the generators related to removal of water from the Kensington Pond. A. Sir, you know, I mean, it will - it will be very hypothetical thing to say 50%, 10%, I can't tell you, I do not know the consumption of the - the - the fuel consumption of those pumps are the generators - well, for those things I can't tell you." (T 214) Mr O'Neill similarly disagreed with the 50% estimate put by the first defendant. He gave the following evidence at T 147: "Q. If you look at items 18 and 19, these are diesel generators. A. Yes. Q. Were both of those generators used for the purposes of supplying electricity for the floodlights? A. The lights for the site amenities, site office. Q. I want to suggest to you that 50% of the time used by the diesel generators was spent in providing energy to the floodlights? A. No. Q. You disagree with it. A. I disagree that 50% would've been used for the floodlights. Q. I want to suggest to you 50% of the energy provided by the diesel generators was used in relation to enabling the excess water to be removed from the large Kensington Pond. A. No. Q. What percentage do you say of the generator was used for that purpose? A. Very, very little, if any." This amount should be allowed in full and not at 50% as set out in the schedule. Extra generators were needed to power not only the pumps and the lights but to cope with any other potential equipment breakdown and the generators needed to be kept on the site not only until there was certainty that the flood would not be repeated (as set out in the schedule) but as a commonsense measure because of the potential for danger or injury if there was an electrical blackout. The dangers of electrical malfunction in situations where there is water were not referred to in evidence, and while I have been careful not to use general knowledge, or refer to legislative provisions such as occupational health and safety regulations. However, commonsense about safety standards would dictate that there would be a need for caution in an emergency situation in a public area. Once again, the cost of delivery was a cost which would have been incurred whether or not dewatering was carried out. It was inappropriate of the insurance company to have refused to pay this amount in full. (10)Items 20 and 21: Crushed concrete (12 loads) and recycling of crushed concrete and brick - According to written submissions of the first defendant (page 40), these items were not allowed for because invoices were not provided. Mr Bedi was not cross-examined about the explanation for missing invoice, but he gave evidence about the need for the transport of crushed concrete and for its recycling as follows: "Q. If you look at item 21, that involved recycled crushed concrete and brick. Do you see that? A. Yeah. Q. What was the purpose of that material? A. I - I think it was to - we needed some granular material or crushed brick ..(not transcribable).. or crushed concrete for, you know, restoring the road where we had ready - where we had - we had ..(not transcribable).. coming to the Kensington Pond, you know, after removing the - where the road was to be resorted, we had to bring it to the - to - to where road - where it is ..(not transcribable).. for the vehicles and plant. Q. Wasn't that material used for the purposes of sighting the siphon pumps? A. Sighting the siphon pump? Q. Acting as a base for the siphons. A. That possibility is there too, sir. But I can't tell you exactly where this material was used." (T 214) Mr O'Neill was also asked about item 21: "Q. Item 21. A. 21, yes. Q. That material was used in sighting of the siphons, was it not? A. Amongst other things, yes. Q. I want to suggest to you 50% of the recycled crushed concrete was used for that purpose. A. No. Q. What percentage was used for that purpose, can you say, Mr O'Neill? A. A small percentage. Q. Can you quantify it? A. No." (T 147) The crushed concrete was necessary to strengthen the cofferdam face (see the notes to item 20). There is reference to the need for this material in the diaries. Invoices 67 and 69 exist for item 21, but clearly do not include delivery. According to the notes for reasons for refusal (see page 12 under the heading "Reasons for refusal") states that 75 percentage of $1,090.90 should be allowed, and the amount allowed was $818,18. Rather confusingly, the first defendant's written submissions state: "The costs in respect of item 21 related to the recycling of crushed concrete and brick. This amount includes GST and only 50% should be allowed: [86(xvii)] - I J McWalter's affidavit 11/6/10 (Ex 4)." The reasons for this inconsistency were not explored in submissions or during the trial. I see no reason why 100% should not be allowed in relation to item 21 as well as to item 20. (11)Items 22-24: Kobelco excavator, Kingston Plant Hire (Cat 120 Grader) and VTN Komatsu & Cat 325L - This amount was refused on the basis that there was "no detail given as to what this machine was being used for or the dates on which it was being used". This is incorrect. As Mr O'Neill sets out in his comments, the wash away of all access at road and haul roads as well as the fact that most of the area where the men were working was underwater or completely saturated meant that everything had to be moved by a machine with high clearance and four wheel drive performance. This was the reason for hiring a seven tonne excavator. Mr O'Neill was not cross-examined about this. Similarly, he was not cross-examined about the Kensington plant hire, which was hired for the same reasons or the Komatsu (which had a long reach, as well as being able to be used when vehicles could not negotiate the Works due to the water saturation (item 24)).The matters about which Mr O'Neill was cross-examined concerning these invoices were as follows: "Q. The invoice referred to in item 24, Mr O'Neill, can be found at page 696. A. Yes. Q. You agree with me that the only amounts that can be properly made in relation to this invoice are in respect of the period from 12 May through to 21 May. A. Yes. Q. That is, you see at page 696, there is a bracket or parenthesis around that particular part of the invoice. A. Yes. Q. So the other parts of the invoice that isn't so bracketed should not form part of your claim. A. I'm not sure. Q. The other amounts outside that period of 12 May, the 21 May 2003, don't relate to the removal of water from the large Kensington Pond, does it? A. I don't know the answer to that question without going through the sequence." (T 149) Mr Gracie pointed out, in the absence of the witness (T 149-150), that Mr O'Neill had in fact done this in his answers to the spreadsheet, as attached to his own affidavit, and that there was no need for him to go through the exercise again in the witness box. After the parties adjourned to discuss the problem, the cross-examination proceeded nevertheless; however, where applicable, I have had regard to Mr O'Neill's answers on the spreadsheet. It is, however, another example of the undesirability of such matters being dealt with in court when it would have been easier to have these costs assessed by a referee, who would have asked these questions if he needed assistance, unlike a judge, who cannot do so.An additional objection not set out in the reasons for refusal is that if the Grader (item 23) was used to maintain the haul roads "then this must have related to dewatering" (first defendant's written submissions, page 41) and only 50% should be allowed for this reason. Even if I have erred in relation to my findings as to dewatering, I consider that the full amount for hire of this equipment was necessary. This was not equipment which was used for the purpose of dewatering, but used for the purpose of safely negotiating flooded roads and other public areas. Mr Bedi gave evidence about these matters as follows: "Q. Then if I could move on to item 22 which is the excavator. Was the excavator used in relation to maintaining the haul road into the culvert area? A. Could you repeat the question, sir? Q. Was the excavator referred to in item 22 used to maintain the haul road which went into the culvert area? A. Sir, when - when the excavator is there, I - I didn't make the diary to - to see what it was doing, it was there, so whatever was needed to be done by the excavator, we use that. Q. An excavator did do maintenance work in relation to the haul road at this time, didn't it? A. No, there was no maintenance work at that time. We were trying to do - do the work within our scope of work. ... Q. Mr Bedi, if I could ask you about item number 24, the Komatsu Caterpillar, do you see that? A. Yes, sir. ... Q. I want to suggest to you that that Caterpillar was used for work relating to the removal of water from the Kensington Pond for the period from the 12 to 21 May 2003? A. Yes Q. And that the hire - I withdraw that - the use of that particular item of plant outside that period that I gave you was unrelated to the removal of water from the Kensington Pond? A. Could you repeat your question? Q. You'll see that the Caterpillar was used for periods outside the 12 to 21 May, do you see that? A. Yeah, from 12th to 21st. Q. Yes, but I want to ask you for the periods outside the 12th to the 21st. I want to suggest to you that the Caterpillar was used - the use of the Caterpillar during the periods outside the 12th to the 21st had nothing to do with the removal of water from the Kensington Pond, do you agree with that? A. I think so." (T 214-218) Doing the best I can with these diffuse grounds for refusal to pay, it appears to me that the use of this equipment, insofar as it relates to dewatering, should be allowed, conformably with my findings on this issue, and the remaining objections of the first defendant should be rejected on the basis that Mr O'Neill's explanation on the spreadsheet should be preferred to the more artificial assessments of Mr McWalter. Complaints about missing invoices are not accepted, for the same reasons dealt with elsewhere in this judgment. (12)Item 25: Two trucks - It was put to Mr Bedi (T 218-219) that these two trucks were used during the period from 12 May to 20 May 2003 in relation to work relating to the removal of the water from Kensington Pond. He agreed that the use of these trucks outside this period had nothing to do with the removal of water from Kensington Pond (T 219). Mr O'Neill gave the following evidence concerning the use of trucks: "Q. Those trucks were used in relation to doing work concerning the removal of water during the period from 12 May to 20 May 2003 I suggest? A. No. You don't use trucks to move water. Q. The trucks were used for the purposes of conveying equipment and material that was used in the process of removing water from the Kensington Pond wasn't it? A. I understand these to be dump trucks which wouldn't be used for conveying equipment, they'd be used for conveying rock or concrete or some material like that." (T 153) However, according to Mr McWalter's notes in the spreadsheet, the cost in relation to these trucks were rejected on the basis that "no verification has been provided" and the amount has not been proven. This is quite different to the matters about which these witnesses were cross-examined. Yet Mr McWalter's objections are the basis upon which I am asked to reject this claim. Contrary to Mr McWalter's original complaint, there is no doubt that the trucks were retained, and there is an invoice for $1,650 for their use between 12 and 20 May. The amount claimed is $5,280. If the use of these trucks relates to dewatering to any extent, this should be claimable consistent with my findings as to dewatering. If the complaint is lack of "verification", I reject it. (13)Item 26: Bedi - Priestman plant - This was a long reach excavator that was used for work in the same way as the Komatsu. Mr McWalter initially rejected the claim for the Komatsu (see the notes to item 24) and in his affidavit, Mr McWalter states that he stands by his original assessment (paragraph 86(xx), page 21). As noted above, the submission now made seems to be that 50% of this amount should be allowed, although the reasons for this have not been explained (see the first defendant's written submissions, paragraph (r), page 41). The submissions in relation to item 26 is that: "Although no detail has been provided for what this plant was used for or the dates used, only 50% should be allowed: [86(xxii)] - I J McWalter's affidavit 11/6/10 (Ex 4)." However, Mr McWalter notes at paragraph 86(xxii) that: "I note that O'Neill now agrees with our assessment of $1,500". The work undertaken was the same as the Komatsu (item 24) for which I have noted inconsistent claims that either nothing, or 50%, should be allowed (with no reason explained: see submission (r) on page 41). Mr McWalter notes that he would allow 50% "till further detail provided" and states that the second plaintiff agrees with this. It was put to Mr Bedi (T 219) that this plant was used in relation to the removal of water from Kensington Pond, and that about half of the use was related to the removal of the water from the Kensington Pond by use of this equipment. This is sufficient information as to what this plant was used for as well as the dates used. (14)Items 27 and 28: Fuel for pumps and fuel for the small vacuum pump for syphons - Mr Bedi confirmed in his evidence (T 219) that this was fuel for pumps used in the removal of water. In the schedule, both were excluded as dewatering costs. Conformably with my finding that these were not dewatering costs, these costs should be allowed in full. (15)Item 29: Geofabric - This item was not excluded. (16)Item 30: Sundry heavy timbers, pump hardstands and culvert blocking - This material was used to shore up the cofferdam face, according to Mr O'Neill's notes. Mr O'Neill gave the following evidence concerning this item: "Q. Item number 30. A. 30. Q. Sundry, heavy timbers, pump hard stands and culvert blocking? A. Yes. Q. That material was used for the purpose of the work involved in removing the water from the large Kensington Pond wasn't it? A. Not necessarily. Q. Do you know for a fact or not? A. I suspect that some of it may have been used there. Some of it was probably used on the main ponds themselves where we also had to do work. Q. I want to suggest to you that that material half of the time was used for the purposes of the work involved in removing water from the Kensington Pond? A. No. Q. What percentage of the time was that material used for? A. I expect a small percentage of the time, if at all." (T 155) Mr Bedi's evidence was that these items were for the purpose of work relating to the removal of water from the Kensington Pond. Notwithstanding this apparent concession by Mr Bedi, the first defendant submits that only 50% should be allowed. However, conformably with my findings concerning the first defendant's submissions as to dewatering, the whole amount should be allowed. (17)Item 31: Steel star posts for barricading - According to Mr O'Neill, this was put on the face of the cofferdam to prevent erosion of the new loose materials and to stiffen and strengthen the face of the cofferdam against erosion. Mr O'Neill had the following to say when cross-examined: "Q. Similarly, the next item, 31-- A. Yes. Q. --steel star posts for barricading support of geo textile and other ground support? A. Yes. Q. What was the purpose of these items? A. Geo textile and ground support probably for strengthening of the face of the cofferdam. Q. I want to suggest to you that 50% of the use of that material related to the work concerning the removal of water from the cofferdam? A. No, that's only an assessment by this Mr McWalter, not by us." (T 155) Mr McWalter considered that part of this was to support the syphon pumps and allowed only 50%: see also Mr Bedi's evidence (T 220). Conformably with my findings concerning dewatering, the whole of this amount should be allowed. (18)Items 32 and 33: Supply and delivery of concrete and concrete pumping - Mr O'Neill was cross-examined about item 32: "Q. Go to page 704 please, exhibit A, volume 2. A. Yes. Q. That's a Booral invoice which I think is NC86 to 206, the first invoice referred to in item 32? Do you have that? A. I have an invoice here, yeah. Q. It of course includes - the final amount is inclusive of GST, that is the 577? A. Yes. Q. And similarly with the other invoices that we see issued by Booral from 70 - all through to 706 is it not? A. Yes. Q. And 50% of that material was used in relation to work relating to the removal of water from the large Kensington Pond wasn't it? A. No. Q. This material was used partly for that purpose wasn't it? A. It was used for strengthening the wall of the dam, protecting the wall of the culvert." (T 156) Only 50% of these costs were allowed on the first defendant's definition of dewatering. The whole of these amounts should be allowed. (19)Items 34 and 35: Rocks and boulders (1200 tonnes), and broken brick and crusher run (700 tonnes) - These items were not the subject of cross-examination of Mr Bedi. They were rejected on the basis that there were no invoice to support these amounts. Mr O'Neill's spreadsheet notes that these materials were used to create banks and support the cofferdam to create access for machines to go over the site because of the waterlogged state of the park. I propose to allow these amounts. This work would have been necessary whatever the definition of dewatering. (20)Item 36: Safety equipment and personal protective equipment - Although not referred to in submissions, it was put to Mr Bedi that the cost of this equipment fell within the contractor's margin (T 221 lines 4-5). Mr Bedi replied: "A. Sir, on the construction side you have got mostly, you know, boots with steel toes so that people toes doesn't get hurt, but you don't require rubber boots, you know, or raincoats. You don't require as part of normal - when you are working in normal conditions, you know." (T 221 lines 6-9) Mr O'Neill was also asked about item 36: "Q. If you go down to item 36, the safety equipment and personal protective equipment included wet weather gear? A. Yes. Q. I want to suggest to you that these items would be considered part of the normal plant consumables and would be within your margin? A. No. Q. You disagree? A. Yes. Q. But these are additional items are they? A. Yes." (T 157) I accept Mr O'Neill and Mr Bedi's evidence. I note, in addition, Mr O'Neill states in his comments (Tab 26, page 651) that safety equipment was necessary because there was 24 hours attendance at the site. He was prepared to concede that some of these may be part of normal plant consumables and to reduce his claim to 50%. He has accordingly noted the amount claimed as $700. I consider this to be a reasonable compromise. An allowance of $0 on the part of the insurer is, in my view, unreasonable. Similarly, any claim that these items have some "residual value" is impossible to deal with in the absence of evidence as to what that "residual value" would be. Accordingly, I propose to accept the amount claimed in relate to this by the plaintiffs in the sum of $700. (21)Items 37-48: Labour costs - As these items relate to labour costs, it is convenient to deal with them together. Mr Bedi was cross-examined about these items at T 221 where it was put to him that these costs related to the removal of water from the Kensington Pond. It was put to Mr Bedi that item 43, which is the expense of site hoisting to install and removal steel road plates was a cost which had already been claimed under items 11-15. The relevant cross-examination is as follows: "Q. What I want to suggest to you that the item in relation to the removal of the steel road plates, item 43 in the spreadsheet, is already picked up and claimed in respect of the tax invoice that you have in front of you at page 152, in respect of the item pick up charge? A. Sir, this pick up cost of $50 is for the hiring contractor for him to come and pick it up, nothing to do with us, but they have given us the invoice $50 cost for their truck to come and pick it up. Q. Yes? A. And our handling cost of these plates, once they're delivered ..(not transcribable).. all the handling cost is ours. So it has got that $50. That's got nothing to do with - with - with the - with this what you are trying to reference to me. Q. Then, if you could then move onto item 45, which is the placing and commissioning of flood lights, and I want to suggest to you that this item has already been claimed for in items 16 and 17 of the spreadsheet? A. I don't ..(not transcribable).. Q. Yes? A. Has been - in which item, sir, you tell me? Q. It's been claimed in respect of items 16 and 17. A. Well, sir, you see, once - once these lights or whatever, the plant or equipment is delivered on site, thereafter all the handling, commissioning, handling, decommissioning is - is other cost, it has got nothing to do with the - with the supplier or the rental company. Q. Could you go to tab 22 of exhibit B? The first page is the hire contract between National Hire and your company, and then the tax invoice is the next page. Sir, you disagree with the proposition that the cost in relation to placing commissioning of the floodlights is included in that tax invoice. A. No. Q. If you then go to item number 46 which relates to the place and commissioning of the diesel generator. Is your answer the same that that was not part of the initial charge by the hirer? A. Yes. Q. Then in respect of item 47, you've claimed 380 hours for spotter labour, allowing one man for machine 50% at normal time and 50% at overtime rates at an average cost of $45 per hour. A. Yeah. Yeah. Q. I want to suggest to you that the appropriate rate should have been allowing for a period during 15 to 21 May 2003 being seven days at 10 hours per day at a rate of $45 per hour. A. Sir-- Q. I want to suggest to you that that was a reasonable cost for that item of labour being supplied in item 47. A. You disagree with the - with the quantity. Q. Yes, with the number of hours that have been charged, I want to suggest to you it shouldn't be 380 hours, it should be reduced to simply seven days at 10 hours per day, that's 70 hours at a rate of $45 per hour. A. But, sir, when people are working 24 hour a day, then you don't allow 10 hours." (T 222-223) I note that Mr O'Neill was not cross-examined about many of the items in the spreadsheet; for example, the next item to be cross-examined about after item 36 was item 47 relating to labour costs (T 157): "Q. So do you agree with Mr McWalter's assessment that this item should be restricted just to the seven days from 15 to 21 May? A. At one man per machine there were a number of machines operating so are you saying it be restricted to one man for one seven days or ten men for seven days? What are you trying to say? Q. I'm suggesting to you it should be restricted just to the seven day period from 15 to 21 May. A. But this this is based on one man per machine, which may equate to 380 man hours. If there's 10 men on one machine for ten hours that's whatever number 100 hours, you know, I I don't know we had this claim from the subcontractor who had put together the claim. Q. All right, then A. You can't assume it was one man would have worked for nine and a half weeks. That's not what happened. Which is what Mr McWalter is trying to infer, I think. Q. Well, how many men do you say worked? A. I don't know the number." (T 158) However, Mr O'Neill in his notes sets out that these are not only obvious costs but are separate to other cost in that the plates were used over a number of areas in the park, requiring floodlights in separate areas which in turn required separate generators and machinery. I accept the explanation of Mr Bedi and Mr O'Neill. These are separate costs and should not have been rejected. In relation to item 48 (traffic management), Mr Bedi gave evidence as follows: "Q. Can I move on then to item 48 which is traffic management? I want to suggest to you you've claimed 160 hours and I want to suggest to you that the reasonable amount taken in relation to that work was 80 hours. A. Well, sir - well, sir, traffic management is not carried out during the night, it's only during the day time. Q. What I want to suggest to you, 160 hours is unreasonably high, and a reasonable period concerning traffic management would be 80 man hours on the basis that-- A. Sir, sir, how do you justify time - time - look, because I was not there and you were not there, how can you justify that it is not right? Q. I'm suggesting to you that 160 hours is unreasonably high and that a reasonable amount of time for traffic management is 80 hours. A. Well, sir, it - it depends - it depends upon the ..(not transcribable).. intensity of the traffic, not just my assumption or your assumption. ... Q. Mr Bedi, what was the margin that your company charged in respect of its cost relating to this job? A. Sir, I - I can't tell you anything unless I see my old estimate, you know, but it - you know, the margin of profit, it depends upon how much work we have got and what - what is available in the market, you know. Q. Firstly - I'll go back one step - I take it there was a margin charged by your company in relation to the work performed in respect of this job. A. How much - how-- Q. No, I'm not asking how much. There was a margin charged. You wouldn't have done it for nothing, would you? A. No, no, nobody does anything for nothing. ... Q. Mr Bedi, you charged a margin. A. Yeah, yeah, yeah, no, yeah. Q. There was a profit margin in this job for you, wasn't there? A. Well, sir, you know, I don't want to go back and - and - and talk about to a different matter, but there was a time I could charge up to 35%, but one day I have got no work, I might be working on 10% so - and probably here we charge 10%. Q. What I'm suggesting to you, that margin that you charged took into account all overheads that you would be otherwise incurring on performing on the job. A. Well, sir, question is that if the - if this event has not eventuated, then our margin or anything would not have changed, but since the workload increase, the pressure increase, we have to employ - we have to employ extra resources and all those things, so that's why our margin was, you know, it was up, you know." (T 223-226) Mr O'Neill was also asked about item 48: "Q. Thank you. In item 48 Mr McWalter has also consider that to be overstated. You've charged 160 hours and he's suggested 80 hours would be the reasonable number of man hours in relation to traffic management to the emergency site. That's a reasonable estimate of the hours worked, isn't it? The 80 hours? A. No. Q. Why do you disagree with that? A. We earlier talked about 24 hour a day work during some of that period. Mr McWalter seems to think we only worked during the eight hour day, which would have been very unlikely in that emergency. ... MARTIN Q. There was hardly any traffic at midnight, was there, during A. If you've got trucks going in and out of Centennial Park they don't like them running around without someone watching them." The cross-examination of Mr O'Neill ended at Item 48 in the first spreadsheet, which has made my assessment of items in the other two spreadsheets difficult.Mr O'Neill states in his comments concerning this item that the site had to be opened 24 hours a day and these hours were necessary. Road around the site were flooded and water was being pumped onto public places which required management. This is a reasonable expense and it should be allowed. (22)Items 49-52: Overheads - Mr McWalter stated in his notes concerning this section (and his footnote to item 56) that a total margin of 10% on all allowable items to allow for overhead profit and margins should be permitted even though the contract rate stated 18%. I shall deal with each of them in turn. Item 49 (contractor site establishment such as sheds, ablutions, phone and fax) - Mr Bedi explained as follows: "Q. Sir, I want to suggest to you that items such as item 49 maintaining the site establishment including site sheds-- A. Yeah. Q. --was a matter that was included in your profit margin on the job. A. No, sir, we had to establish site on the Kensington - Kensington Pond site too, because I didn't have that initially. We had - we had about a kilometre away from the Kensington culvert in the - in the middle of the Centennial Park, we had our site establishment there, we had office, we had lunch - lunch - lunch rooms and other things, so we had to establish on the - on the Kensington site as well." (T 226) (23)Items 53 and 54: Consultants - The cost for item 53 relate to the cost for Rider Hunt who were engaged to assist in the preparation and assessment of the claim merits and quantum, according to the notes set out in the spreadsheet. The cost in item 54 are for independent loss assessor, Richard Kurland. I do not have the benefit of any submissions in relation to these items by the plaintiffs. Mr O'Neill's comments consist of stating that these costs were incurred as a result of refusal of the indemnity under the policy and that they should be reimbursed. In practical terms, whether recoverable under the insurance policy or in the form of costs in relation to the preparation of this claim, these costs would be claimable. I note that no challenge has been made to the quantum of the costs; the objection taken is essentially and simply that these costs do not fall within the ambit of the insurance policy. Doing the best I can in the absence of more detailed submissions on behalf of the first defendant, and in the absence of any submissions on behalf of the plaintiffs, I propose to allow these costs, on the basis that if they are not covered by the insurance policy, then they would be claimable as costs in relation to this litigation in any event. (24)Items 55 and 56: Head office overheads - The objection to this is on the basis of quantum. A claim was originally made at 8% of the head contract ($2.7 million) on a projection of a duration of 26 weeks, and the duration effectively lasted a period of four weeks. In Mr Martin SC's brief summary of the three categories into which the disbursement clam fell (T 386), this was one of several alternative objections which was simply not referred to. In the written submissions, there is a reference to the costs in respect of item 55 relating to head office overheads as being included in the total margin of 10% for overheads profits and margins (see paragraphs 86(l)(i) and (l)(ii) of the affidavit of Mr McWalter of 11 June 2010). The reason for refusal given for item 55 by Mr McWalter in the schedule is "see comments with respect to item 56". These were costs which were claimed in relation to an emergency lasting for a period of four weeks. It is a substantial claim. Clearly, there must be a total margin of some kind to allow for these events. In the absence of more clearly articulated objections, I propose to allow the claim. (25)GST: GST totalling $25,925.01 is referred to in the spreadsheet. At page 44 of the first defendant's submissions, it is submitted that the claim for GST was not a recoverable item and should not be allowed (see reference to paragraph 86(l)(iii) of the affidavit of Mr McWalter, which refers to this item).An example of the an amount claimed inclusive of GST appears at T 148-149: "Q. I want to suggest to you that that's invoice number 67 referred to in item 21 in the document at tab 24, page 628. A. It's one of the invoices relating to that item possibly. Q. Well, it's invoice number 67. Do you see that? A. Yes. Yes. Q. It's been issued by Building Recyclers (NSW) Pty Ltd. Do you see that? A. Yes. Yes. Q. I want to suggest to you that's the invoice that's referred to-- A. Yes. Q. --in spreadsheet number 1 of item 21. Do you agree with that? A. It certainly looks like that, yes. Q. Do you agree that the final amount of $600 includes GST? A. I don't see it saying that anywhere. Q. Well, it's a total amount, isn't it, of $600. A. Yeah - well-- Q. Just look at the invoice please, Mr O'Neill. A. Total - sorry, yes, it says total including GST, correct Q. I want to suggest to you that that total is inclusive of GST. A. Yes, I agree now. Sorry, I didn't notice-- Q. The same applies to invoice number 69, two pages earlier at 688. A. Yes. Q. That total of $600 is inclusive of GST isn't it? A. Yes. " During the course of the hearing, I drew the attention of the parties to Gagner Pty Ltd t/as Indochine Cafe v Canturi Corp Pty Ltd (2009) 262 ALR 691; (2009) 236 FLR 401; (2009) 77 ATR 157; [2009] NSWCA 413 at [147] where the Court of Appeal held: "[147] I accept that the consequence of these provisions is that, even though the Respondent might pay out an amount of GST in connection with the goods and services which it acquired for the purpose of making good the damage to its premises, it would be able to recover that amount back, either in the form of a reduction of the net amount it must remit to the Commissioner for the quarter in which the payment was made, or as a refund. Thus the amount of GST component of any payments it made for making good the premises would not ultimately be a loss that it suffered. Given the compensatory purpose of the damages award, it was wrong to include that component in the award of damages." I did not receive any submissions as to whether or not this principle was applicable. I propose to exclude claims for GST. Accordingly, when preparing the schedule of damages payable, the parties should note that the first defendant will be entitled to a credit for this sum. Spreadsheet 22B 161This brings me to a consideration of the claims in spreadsheet 22B (Tab 22B to the affidavit of Mr McWalter). 162By way of general comment, I note the challenge to the evidence of Mr Bedi, to whom it was put (T 227 line 31-32) that he was unable to comment upon the reasonableness of any of the items made in spreadsheet 22B because he was not there. Mr Bedi replied that he was fully involved and that it was not the case that he did not know what had actually happened. Mr Bedi had a clear recollection of some matters, but in relation to others, such as the work carried out in item 5 of this spreadsheet, had no recollection. Accordingly, where he has been able to recollect, I have taken this into account, but where he has not, I have had real difficulty. Another difficulty that I had, as noted above, is the fact that Mr O'Neill was not cross-examined in relation to this spreadsheet (see T 158). 163I shall deal with each of the eight items and the GST individually as follows: (1)Item 1: Clean and remove ply blocking from culvert pipes - The objection is to the rate of $50 per hour rather than $40 per hour. Mr Bedi was cross-examined at T 227-228 as follows: "Q. If you deal with item 1, which was clean and remove ply blocking from culvert pipes to allow outflow of water from Busby and Randwick Pond. Do you see that? A. Yeah. Q. What's been allowed is four hours at $40 per hour as the reasonable amount in relation to that item of work. A. Four hours, $50 an hour is $200. That's what is written in this column. Q. That's your charge. What I want to suggest to you, Mr Bedi, is that four hours at $40 per hour was a reasonable amount for that item of work. A. Sir, if you're happy with $40, it doesn't make much difference. Q. I want to suggest to you $40 an hour was a reasonable rate for that item of work. A. Sorry, it depends - what time of the day when you want the worker is working and what conditions." (2)Item 2: Repair access road - These costs are allowed in full. (3)Item 3: Restore and fix Busby Pond banks - This was the subject of challenge on the basis that only two days should be allowed for work in this area. Mr Bedi said in his evidence: "Q. Mr Bedi, if you could please go down to item 3, which relates to restore and fix Busby bank ponds, bank B. Were you present when that work was being performed? A. I did mention to you that I was not there all the time. But I - whenever I go, then I go through the whole site and see what has been done, what has - but I can't pinpoint - yes, I was there or not there. But the work was done. Q. Do you know bank B? A. Yes, I know bank B. It is - it is - Busby Pond's banks were divided into various lots, lot A, B, C, whatever. Q. Bank B is the shortest bank, isn't it? A. Yeah. Q. I want to suggest to you that two days was a reasonable period for work performed on bank B as stated in item 3. A. Mm. Q. You agree with that. A. Yeah." Mr Bedi has agreed that two days is reasonable and accordingly the first defendant's estimate on this item should be allowed. (4)Item 4: Remove and adjust laid turf - Again the objection is to the amount of time for this work to be carried out. Mr Bedi had considerable difficulty with this question and eventually said he did not know (T 234). Mr O'Neill was not cross-examined on his notes. I propose to allow for the sum claimed by the plaintiffs. (5)Item 5: Rebuilding Bank A - I accept Mr O'Neill's comments in his notes and allow this item. (6)Item 6: Rebuilding Bank K - The insurer allowed 2.5 days (20 hours) for this, noting that there was no mention in the site diaries of any work to this item. Mr Bedi was unable to remember. Mr O'Neill's notes should be accepted and this sum allowed in full. (7)Item 7: Contractor's overhead - I note that a maximum of 10% has been allowed and that GST would not be payable as this would be recoverable as an input tax credit. Given the Court of Appeal's decision in Gagner Pty Ltd t/as Indochine Cafe v Canturi Corp Pty Ltd, supra, this appears to be correct and I accept the first defendant's submissions on this issue. (8)Item 8: Margin and profit risk 8-10% - see item 7 above. Mr Gracie has not addressed me on this issue and I accept the first defendant's submissions on this item. (9)GST: Conformably with my rulings as set out above, I have not allowed for this sum. Spreadsheet 22C 164This spreadsheet is contained in Tab 22C to the affidavit of Mr McWalter of 11 June 2010. Once again, I note that Mr O'Neill was not cross-examined in relation to items appearing on this spreadsheet. 165I will deal with each item separately as follows: (1)Item 1: New South Wales Fire Brigade pumping charges - This claim is no longer pressed (T 9 lines 38-40). (2)Item 2: Centennial Parklands costs - These costs are for John Gan of the Department of Commerce, Mark Russell of the Department of Commerce and Colin Ging & Partners. They were rejected on the basis that most of these costs relate to dewatering and, in addition, in relation to Mr Ging's invoice, that it involved discussing insurance claims and preventative measures for future incidents, which are not recoverable under the policy. An allowance of $6,000 was made. This claim should be allowed in full. (3)Item 3: APS costs, project manager - The first defendant in written submissions submits that an allowance should be made for attendance on the main subcontractor, for which a margin including site overheads profits and attendance of 6% in relation to all other costs, but excluding the subcontractor's margin, should be allowed, for the reasons set out in paragraph 88 of Mr McWalter's affidavit. Mr O'Neill was not asked about this. I prefer to accept Mr O'Neill's estimates, subject to any adjustment for GST (on which I accept the first defendant's submissions) and allow this claim in full. (4)Item 4: Costs of Mr Lidbury - The same submission is made in relation to the costs of Mr Lidbury, and I make the same findings. (5)Item 5: Contract Manager costs - The same submission was made in relation to these costs, and I again make the same findings. (6)Items 6 and 7: APS 6" pumps and APS truck hire for movement of the pumps - No allowance was made for these two items on the basis that these related to dewatering. Conformably with my previous findings, these costs should be allowed. (7)Item 8: APS site amenities and delay - I make the same findings as items 6 and 7, as I accept Mr O'Neill's evidence. (8)Item 9: Extra APS attendance and administration delay to contract - These costs, which are a substantial amount, are for delivery costs which the first defendant argues are not recoverable under the policy. An allowance should be made for the attendance of the main subcontractor (which the first defendant acknowledges as $3,201.98) but the full claim is challenged. These are matters on which I would have benefited from hearing Mr O'Neill cross-examined. It propose to allow these items. Conclusions concerning quantum 166Although the plaintiffs have essentially conducted the case on quantum on the basis that if the plaintiffs' arguments are allowed in relation to dewatering all costs claimed should be payable, this is not in fact the case. I have accepted the first defendant's submissions in relation to GST and in relation to some of the labour charges. I have rejected the first defendant's objections to lack of documentation. The orders I have made allow for the parties to bring in short minutes of order reflecting the total of damages in accordance with the findings set out above in relation to each of the three spreadsheets, with an appropriate adjustment for the premium payment, together with interest if this is able to be mathematically agreed. I have granted liberty to restore in relation to issues concerning interest. Orders 167I make orders as follows: (1)Judgment for the first plaintiff (Australian Prestressing Services Pty Ltd). (2)The parties are to bring in short minutes of order reflecting the agreed quantum of the sums claimed in accordance with the itemised amounts set out at paragraphs 160-165 of this judgment, together with interest if mathematically agreed. (3)Liberty to restore in relation to interest. (4)First defendant to pay plaintiffs' costs. (5)Liberty to restore in relation to costs. (6)Exhibits retained for 28 days. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 January 2013