Dalton J
Background Facts
The Plaintiffs, Landel Pty Ltd and Fairfield Land Pty Ltd owned a shopping centre located in Townsville, Qld, insured under an Industrial Special Risks (ISR) insurance policy issued by the Defendant, Insurance Australia Ltd (IAL).
The policy specified that “In the event of any physical loss, destruction or damage… not otherwise excluded happening at the Situation to the Property Insured… the Insurer will, subject to the provisions of this Policy including the limitation on the Insurer’s liability, indemnify the Insured in accordance with the applicable Basis of Settlement”.[1] This policy was subject to “perils exclusions”, including “physical loss, destruction or damage occasioned by or happening through… flood, which shall mean the inundation of normally dry land by water overflowing from the normal confines of any natural watercourse or lake (whether or not altered or modified), reservoir, canal, or dam.”[2]
There were two incidents of flooding, the first occurred on 31 January 2019, wherein the roof of the shopping centre complex was damaged, while the loading dock drains at the back of the premises surcharged, allowing water to enter the shopping centre, causing damage. Subsequently on 03-04 February 2019, flood water rose to half a metre inside the shopping centre causing further flood damage.
The Defendant originally accepted that the events of 31 January 2019 were covered by the policy, however, only accepted a limited liability of $250,000 for the flood damages that occurred in the second event on 03-04 February 2019.
The Plaintiffs sued the Defendant claiming indemnity under the policy for the full cost of damages suffered from both events.[3] The second flooding event was the primary focus of proceedings, with the Plaintiffs contending that the physical circumstances of the flooding incident on 03-04 February 2019 did not fall within the definition of ‘flood’ as defined by the policy, and therefore that the $250,000 limit on the insurer’s liability is inapplicable.[4]
Key Issues
At trial, the cause of the inundation of the shopping centre on 03-04 February 2019 was the key focus, specifically whether the inundation was caused by water overflowing from a natural watercourse (as altered or modified) engaging the policy’s flood definition and limiting the insurer’s liability to $250,000, or whether it was caused by stormwater runoff from rainfall on the slopes of Mt Stuart which would fall outside the flood definition and entitle the Plaintiffs to full indemnity. The Plaintiffs relied on expert evidence presented by Dr John Macintosh, while the Defendant relied on expert evidence presented by Mr Ben Caddis and Dr Tom Connor.[5]
While there had been several days of monsoonal rain prior to the events of 03-04 February 2019, all experts were of the opinion that the inundation of the shopping centre was not caused by rainfall, but by the flow of water from some other area.[6]
Dr John Macintosh contended that the inundation of the shopping centre was caused by stormwater runoff from rainfall on Mt Stuart Catchment A1, which travelled north across both carriageways of Racecourse Road and entered the shopping centre via the northern table drain. If accepted, this water was not an overflow from a natural watercourse and therefore fell outside the policy’s flood definition, meaning the $250,000 cap on liability would not apply.
Mr Caddis and Dr Connor contended that the inundation was caused by overflows from Gordon Creek, swollen by Ross River overflows upstream, which sheeted west-to-east across the Gordon Creek floodplain on which the shopping centre had been built, with Drain A2 contributing and Lake 3 as a minor secondary water source. If accepted, this water was an overflow from a natural watercourse as altered or modified, falling within the definition of flood exclusion, capping the insurer’s liability at $250,000.
Dalton J took the opportunity in the circumstances where both parties had briefed experts and there were “significant issues”[7] with both reports to provide guidance to the profession on briefing experts.
Critique of the Expert Evidence
Dalton J was critical of the structure, reasoning, and presentation of Dr Macintosh’s reports, noting that the expert evidence presented by Dr Macintosh was “prolix and disorganised”[8] containing “significant contradictions, errors and gaps in reasoning”[9]. Dr Macintosh’s reports failed to:
- Clearly identify the facts and assumptions underpinning his opinions;
- Provide a logical explanation linking the observed facts to the conclusions reached; and
- Maintain internal consistency, with parts of the reports being contradictory or lacking evidentiary support.
Dalton J then also considered the expert evidence presented by Mr Ben Caddis and Dr Tom Connor for the Defendant.
The Defendant briefed two experts under “a peculiar arrangement”[10] where Mr Caddis produced an initial report on instructions from the insurer, rather than the insurer’s legal representation. Mr Caddis and Dr Connor were then retained orally to produce a written report by the insurer’s lawyers. Subsequently, Mr Caddis, Dr Connor, and the Defendant’s legal representation met on between five and ten occasions preceding the delivery of a written report.[11]
While there were initial concerns raised by the Plaintiffs regarding Mr Caddis’ independence, and whether Mr Caddis and Dr Connor were improperly retained, her Honour dismissed these concerns, as Mr Caddis and Dr Connor were both “responsive witnesses, who gave reasoned and logical explanations for their views both in writing and in the witness box.”[12] Her Honour was critical of the Defendant’s lawyers for convening joint meetings with both experts before written reports were produced, but did not find that Mr Caddis or Dr Connor were compromised by it; they had complied with the unusual instructions, and the substance of their opinions was reasoned and independent.
Decision
- The reliability, quality, and structure of the expert evidence was critical to the determination of the cause of the flooding, and whether the inundation of water on 03-04 February 2019 fell within the policy’s definition of ‘flood’. Her Honour provided commentary on best practices for expert witnesses.
- The Plaintiffs’ expert evidence was ultimately rejected in favour of the evidence presented by the Defendant’s experts. Dr Macintosh’s evidence was unreliable and poorly reasoned, such that counsel for the Plaintiffs had largely abandoned Dr Macintosh’s evidence at trial, referring to it as a “plausible theory”. [13]
- The Court accepted the Defendant’s expert evidence that the proximate cause of the flooding was water overflowing from a nearby creek onto the floodplain where the shopping centre was located, meeting the definition of ‘flood’ as defined by the policy of insurance, upholding that the insurer was liable only for the cost of the flood damage up to $250,000.
Implications
The judgment in this case provides significant guidance for both lawyers and experts on the requirements and preparation of expert evidence. While this case concerned flood causation in an insurance dispute, the principles apply directly to medico-legal practice, such as Independent Medical Examinations.
- An expert’s reasoning must be traceable from identified facts and assumptions to the conclusions reached. If a medico-legal report does not clearly set out the measurements taken or fails to adequately set out the facts relied upon, the report will be less persuasive and may not hold up to cross-examination.
- Lawyers must not ‘coach’ expert witnesses or influence the substance of an expert report so that it favours their client. It is, however, permissible and desirable for lawyers to be involved in the editing of expert reports so that the material and opinions presented are meaningful, accessible, and comprehensible. Where a report contains errors, gaps in reasoning, or internal contradictions, these should be drawn to the expert’s attention so they can be remedied if possible before trial. As drafts are disclosable, any influence from the lawyers will be obvious to other parties to the litigation.[14]
- It is the responsibility of the lawyer to carefully define questions upon which the expert opinion is sought, so that the expert opinion obtained is relevant to the legal issues and facts in the circumstances of the case.[15]
- Conferences between lawyers and experts prior to trial are important to ensure that the expert’s opinion is comprehensible and rational for use at trial, but also to evaluate the strength of the case sought to be advanced.[16] These discussions should be disciplined and purposeful. However, where more than one expert witness has been retained, these witnesses should never discuss their evidence with each other, especially prior to those experts having committed their views to writing.[17]
- An expert witness should not be retained to critique or adjudicate between reports of other experts, which is not the role of an expert witness.[18] The testing of an expert’s reasoning is done through cross-examination at trial. Where a second expert is retained, they should be briefed to form their own independent opinion.
- The practice of lawyers obtaining a preliminary oral opinion from an expert before being formally retained is common practice and permitted by the Uniform Civil Procedure Rules.[19] Once a decision to retain the specialist has been made, however, written instructions should follow promptly. Allowing substantial work to proceed on oral instructions alone risks the appearance of impropriety, even where none exists.
- Rule 423 UCPR generally limits a party in a proceeding to only produce one expert opinion. However, where expert opinion is critical to the determination of liability in a dispute between parties, and where the area of an expert opinion is not commonly encountered by the Courts, a Judge may grant leave for multiple reports on the same topic.[20]
- The presentation and demeanour of the expert when presenting evidence at trial matters. Dalton J expressly noted that the expert for the Plaintiffs was “discursive and non-responsive” and “showed strong emotional attachment to his ideas”, while the experts for the Defendant were “responsive witnesses, who gave reasoned and logical explanations”.[21] A medico-legal expert who cannot maintain composure under cross-examination, or who treats challenges to their reasoning as personal attacks, may undermine the weight their opinion carries.
[1] Landel Pty Ltd & Anor v Insurance Australia Ltd [2021] QSC 247, [14].
[2] Ibid [16].
[3] Ibid [6].
[4] Ibid [5].
[5] Ibid [18].
[6] Ibid [43].
[7] Ibid [18].
[8] Ibid [20].
[9] Ibid [21].
[10] Ibid [23].
[11] Ibid [26].
[12] Ibid [37].
[13] Ibid [22].
[14] Ibid [19].
[15] Ibid [34].
[16] Ibid [22].
[17] Ibid [26].
[18] Ibid [33].
[19] Ibid [25], footnote 7.
[20] Ibid [28].
[21] Ibid [37].