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.