In the case of Eastern Suburbs Leagues Limited v Royal & Sun Alliance Insurance Limited  QSC 413 the Supreme Court of Queensland considered a claim by an owner against an insurance company for damage arising as a result of flooding.
In that regard damage occurred as a result of water damage entering the roof but also as a result of water entering through the doors or under doors in various parts of the premises. The incident occurred at the time of a storm which caused a substantial amount of rain to fall and flow into the Norman Creek which broke its banks during the downpour. Norman Creek abuts Brisbane City Council land which is to the North and West of the plaintiff’s fields.
Maps showed that the area was approximately 0.6 of a metre lower than the floor level of the club and that water would enter the club when the level reached four metres above the highest depth. The witnesses provided water rushing down Sixth Avenue and Main Avenue and accumulating in the driveway of the car park in front of the main doors. Witnesses noticed the rain falling and pooling and rising up the wheels of vehicles in the car park. At that time it appeared that the fields which were between the creek and the premises did not have pooling of water and it did not appear that the water had come from the creek. Witnesses confirmed that the water had come from the street and they saw water running down from the hills filling the area in front of the club. The witness’ accounts were that the water was flowing towards Norman Creek as opposed to coming from it. Witnesses confirmed that there was very little water in the area between the premises and the creek and this water had come from the roadways. A witness however observed that the water in the field near the creek had been rising and was rising steadily. The witness saw at approximately 6.00pm water spreading onto the car park. He said the water was gradually spreading but was not a torrent of water.
At the time prior to the entry of water onto the premises the football field was completely covered and at the rear of the club the water was about ankle deep. The witnesses confirmed that the clear water met the water from the creek which was dirty water in the football field which then pushed the water back into the creek and not towards the premises. Witnesses recounted that the creek water had not got onto the football field and that the substantial majority of water had come from rainwater. These witness accounts suggest water from rainfall as opposed to creek flooding.
Both parties had experts and the experts provided the following:
- The experts used techniques including mathematical modeling, forming conclusions from eyewitness accounts and observable video.
- The plaintiff used a Dr Weeks, Hydrologist, and the defendant used Dr McIntosh, Hydrologist. In this regard in a matter such as this the evidence of a hydrologist is essential and it is important that you utilise a well renowned and well respected hydrologist
- The critical components for the experts however were whether the correct factoring in of data from a gauge upstream where the creek broke its banks together with a gauge downstream was likely to produce an unduly early time at which waters from the creek would flow towards the premises and cause inundation.
The Court however considered that even on the balance of probabilities they could not have reached a conclusion on the hydrological evidence alone. Accordingly, the hydrological expert evidence will simply be a factor which is considered by the Court. The other critical factors were the timing of the water and inundation of the water and the evidence of witnesses.
Further, the evidence of video and photographic evidence was also important in the Court’s determination. The early collation of this type of evidence is very important to improve prospects of success.
The witness evidence in that regard was that the water came up to halfway up the tyre of a taxi and then remained constant for a period of time and then rose quickly by some other cause. The Court considered that at that time the peak stormwater flow rate had passed which suggested that another influence was operating to cause the inundation. The Court looked at video evidence and the velocity of items travelling within the waters to also determine the cause of that inundation. These types of facts although minor will be of great assistance in the presentation of your case.
A complete assessment of all surrounding factual circumstances is essential for success eg flow of water, peak stormwater flow rate, velocity of water travel, time of highest rate of rainfall etc.
The Court also took evidence as to the highest rate of rainfall at the relevant times and whether the highest rate of rainfall occurred at the time when the water began to enter the club. In this regard the evidence of the witnesses was that the water began to enter the club at 6.10pm to 6.15pm and the highest rate of rainfall was at 5.20pm. Accordingly, there is a deficiency in time to which the rate of rainfall could be the main cause of water entering the club. The Court then considered the level of inundation and the peak inundation which occurred at 7.00pm. The Court when considering the peak uniform level had regard to the period of time it would have taken for water to travel from the creek to the premises or streets surrounding the premises.
In this regard the critical facts or components were as follows:
- The timing that water entered the club.
- The timing as to the highest rate of rainfall.
- The timing of peak inundation in creeks.
- The level of water or the contour levels of the site and the surrounding areas.
- The timing of water travel from the creek to the site and the surrounding areas.
- External evidence as to the water peaking at streets in surrounding areas.
- Velocity and direction of water travel prior to inundation.
- Peak stormwater flow rate.
The policy of insurance in this regard is one which is most likely similar to many policies. The policy provided that an exclusion to the policy was that the policy did not cover damage which was caused by or occasioned through flood. Flood was defined as being an inundation of normal dry land by water escaping from or released from the normal confines of a natural water course. The Court considered that the damage caused directly by entry of water into the premises was not a flood but that its entry was in turn caused by flood.
The plaintiff in this regard suggested that whatever the interaction between the stormwater and the creek water, the real cause of the inundation of the premises was the rain. It was the one in a hundred year storm which produced the manifestation of water bearing upon the premises.
The Court did not accept that proposition and had regard to the following:
- The plaintiff referred to a case of Petersen & Shadomill Pty Ltd v Union des Assurances de Paris IARD (1997) 9 ANZ Ins Cas 61-366. The Court in that regard noted that the policy provided that loss and damage caused by water was covered subject to an exclusion of loss and damage caused by flooding.
- The exception to flooding related to flooding from drains which was interpreted as meaning that loss or damage from that source alone was recoverable under the exception. The appellant in that case failed to prove that a significant part of water that inundated the premises had not come from elsewhere than a drain.
The Court noted the plaintiff in the present case submitted that it was a case of flooding by stormwater. The defendant relied upon Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 and the plaintiff suggested that it was distinguishable on the basis that there was no corresponding provision in the policy relating to the proviso or exception. The Court in Provisional Insurance held that loss was occasioned by or happened through the inundation of normally dry land by water escaping from a water course in circumstance whereby the reason of the inundation of normally dry land by water escaping from a water course other water was forced on the insured’s premises and caused the loss. The distinction to the present matter lay in the proviso because the direct cause of the loss would be the other water which entered the insured’s premises not the flood water. It was further suggested by the plaintiff that if the initial inundation was by stormwater and that in itself was sufficient to cause the damage it did not matter that the water escaping from the creek subsequently entered the clubhouse. In the Provincial Insurance cause Mahoney JA held “For the exclusion to apply it is not necessary that the precise water which escaped from the watercourse or canal be identified as having actually entered the insured’s premises. The exclusion is of loss or damage occasioned by or happening through the inundation of normally dry land by water escaping from a watercourse or canal …” Therefore on that basis the creek water need not of itself enter the premises but simply cause a build up of water which causes the damage. The Court also had regard to the following:
- Hams v CGU Insurance Limited  NSWSC 273 and Mercantile Mutual Insurance (Aust) Limited v Rowprint Services (Victoria) Pty Ltd  VSCA 147 where the Court had held the concept of “occasion through” implies that there is a consequential or casual relationship not necessarily a direct or proximate cause. The defendant’s submission in this regard was that as long as there was one proximate cause of damage then the defendant is entitled to rely on the excepted event and has no obligation to indemnify the insured. The defendant relied upon Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation Ltd  QR 57; Elilade Pty Ltd v Nonpareil Pty Ltd  FCA 909 and the Hams case (above). The insurer in the matter referred to a case of Prosser v AMP General Insurance Limited  NTSC 80 in which the Court found that the water had inundated the insured property with a combination of accumulated surface water and ground water dammed up by the flooding in the Katherine River. There was a number of effective causes of inundation and the conclusion of Angel J was “there being concurrent, effective or proximate causes one covered and the other excluded by the policy the defendant insurer is not liable on the policy (see also HIH Casualty & General Insurance v Waterwell Shipping  NSWSC 436.
The Court held that in their judgment the cause was an influx of water from the creek into the area where there was an existing pond of runoff stormwater which caused the water to rise to a level at which the inundation of the premises occurred. The Court did not accept the runoff stormwater and the creek water were treated as two discreet bodies of water. The Court in essence held that had it not been for the creek water the inundation would not have occurred.
Of course, the Court also found differences in the experts and the difference in the increase in flood levels by the differing methods of each expert. What is clear from the differences in experts is that it is important to instruct an expert who will consider all possibilities and all tests to determine an accurate reading. A dogmatic and narrow minded expert cannot be helpful in this type of matter as he/she will not assist in examining all possibilities, which a Court will consider.
Notwithstanding the suggestion as to the clarity of the water in the premises, the Court considered that any ponded area would have been substantially diluted by any contribution from creek water. Further, as the Court had established that one of the causes of the inundation was the creek water it is not necessary that the creek water be the only water in the premises. Accordingly, whilst it is a factual element that should be considered it will not always be a critical component which will allow you to succeed.
The Court considered that the objective evidence such as that of the video and evidence of relative levels in the area was fundamental to their decision, as was the elements of when the peak runoff would have occurred. The Court considered that clearly the only explanation was that the cause of the water entering the premises was by flooding from the creek.
The Court accepted the hypothesis that by the time the water began to rise the flow reversal had occurred and the water from the overflowing creek had contributed to the rise of the level in front of the club was supported by the video evidence and objects floating in a west to east direction.
It is difficult to identify a strict formula that can be applied in each instance and it is clear that the factual circumstances of each matter must be considered separately and specific advice obtained in respect of each matter. However quick action in respect of testing, eyewitness statements, the early introduction of an expert, the early obtaining of the water levels, inundation levels and runoff rates will ensure an early determination as to prospects.
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