Epsilon Insurance Broking Services Pty Ltd v Liberty Managing Agency Limited [2020] FCA 20 | Case summary

Background 1 The applicant is an underwriting agency that issued a Combined Business Liability Policy on behalf of Certain Underwriters at Lloyd's (as to 60%) and Berkley Insurance Company (as to 40%) to Ditchfield Contracting Pty Ltd and Ditchfield Contractors Pty Ltd (relevantly the former for the proceeding) for a period of insurance from 4pm local standard time 31 July 2016 to 4pm local standard time 31 July 2017. I will refer to this policy as the Epsilon policy, to the relevant insurers under it as the Epsilon insurers, and to the relevant insured as Ditchfield. 2 The claim before the Court is for contribution to which the Epsilon insurers are said to be entitled from four syndicates of insurers at Lloyd's represented by the four managing and underwriting agencies named as respondents. The insurers represented by the respondents provided cover to Ditchfield under a Management Liability Policy the wording being by the broker, Arthur J. Gallagher. The policy was referred to as the DUAL policy. (DUAL Australia Pty Ltd being the Australian underwriting agent which issued the policy.) I will refer to the insurers under this policy as the DUAL insurers. 3 The claim for contribution arises out of events in and after 3 September 2016. At the time, Ditchfield, a civil and mining contractor, was engaged by Newcastle City Council in the construction of a landfill cell at a Council waste management facility at Wallsend. 4 Ditchfield occupied a site where it kept and used plant and equipment including vehicles for the work in question. From time to time, the plant and equipment required refuelling with diesel fuel. In order to effect refuelling Ditchfield installed a 69,200 litre bulk fuel tank on the site to store the fuel. The procedure to refuel was to employ a tanker or fuel cart to take fuel around the site as needed. The fuel cart had diesel pumped to it from the tank by a hose as the fuel cart stood on a graded area, positioned above a spill grate that had a 1,350 litre capacity to catch and store any diesel that might spill during the transfer from the tank to the fuel cart. 5 On 3 September 2016, an employee of Ditchfield began pumping from the tank to the fuel cart. Carelessly, he left the pumping operation unattended while he attended to other duties. He forgot that the diesel was pumping. The fuel cart filled and overflowed; the spill grate filled and overflowed; and 1,586 litres of diesel escaped on to the ground. The diesel pooled in the refuelling area and then spread across the boundary of the waste management facility, entering the adjoining property owned by Newcastle Wallsend Coal Co Pty Ltd. It flowed across the adjoining property along the route of an electricity easement and down a drainage line to a creek. The flow path was some 200 metres to its eventual containment point. 6 Immediately upon realising what he had done, the employee notified his superior. The superior and a co-worker attended immediately, followed the spill path, and created a bund at the wire fence at the boundary of the adjoining property. They then continued to follow the spill on the adjoining property, digging another bund at the creek to contain the flow. An excavator was used to assist in creating the bunds, and to scrape up contaminated soil. The contaminated soil and liquid along the electricity easement and drainage line was removed by adding more soil to soak up the fuel and removing it with the excavator. 7 The excavated contaminated soil was stockpiled at the Ditchfield work site. 8 The fuel that overflowed into the spill gate was removed by a suction system. 9 In the following days various works were carried out by Ditchfield, or by third parties engaged by it, to clean up and remediate the spill path as follows: excavation and scraping clean the diesel spill path; excavation of the drainage line and creek down to the bund; removal and lawful disposal of the contaminated soil that had been removed from the diesel spill path, drainage line and creek; establishment of a rock lined swale drain in the excavated part of the creek that had been impacted by the diesel spill; and other works in the drainage line and creek to prevent further erosion and improve the environmental impact of stormwater runoff. 10 Ditchfield incurred the costs of taking the actions after discovery of the spill. 11 Ditchfield was charged by the Environmental Protection Agency (EPA) with a pollution offence, under s 120 of the Protection of the Environment Operations Act 1997 (NSW) (PEO Act). 12 A summons brought by the EPA was filed on 28 August 2017 in the Land and Environment Court of New South Wales. 13 The EPA had, soon after the incident, communicated with Ditchfield. On 9 September 2016, after it had inspected the spill site, the EPA wrote to Ditchfield enclosing a "Notice of Preventive Action", requiring immediate action. The notice recounted what the EPA believed to be the relevant facts. The notice was critical of the management of the fuel tank as follows: As a result of the observations made by the EPA during the inspections at the Premises and area of the Pollution Incident on 3 and 8 September 2016, the EPA considers that the management of the bulk fuel tank and sediment and erosion controls are not being carried out in an environmentally satisfactory manner in that: A) The bulk fuel tanker is positioned on the natural ground without appropriate environmental controls in place to prevent further potential spills of diesel fuel from leaving the Cell 9 Construction area and into the environment, potentially causing a pollution incident. B) Inadequate sediment and erosion controls exist in the area of the remediation and clean-up of the area of the Pollution Incident, including controls to prevent sediment from entering waters and potentially causing pollution. 14 The notice required work to be effected as follows: A) All above ground tanks containing material that is likely to cause environmental harm must be bunded or have an alternative spill containment system in place. Bunds must: a) Have walls and floors constructed of impervious materials; b) Be of sufficient capacity to contain 110% of the volume of the tank (or 110% volume of the largest tank where a group of tanks are installed); c) Have floors graded to a collection sump; and d) Not have a drain valve incorporated in the bund structure. or be constructed and operated in a manner that achieves the same environmental outcome; B) If a suitable spill containment system cannot be installed or operated as described above, then all above ground tanks containing material that is likely to cause environmental harm must be removed from the Premises. C) The drainage of water (including stormwater) from areas impacted by remediation works carried out in response to the Pollution Incident must be controlled and diverted through appropriate erosion and sediment control measures. D) Sediment and erosion control measures/structures must be installed and maintained at all times to prevent pollution of waters. 15 The letter under which the Preventive Notice was issued said nothing expressly about any charge. The text of the letter was as follows: Summerhill Waste Management Centre - Cell 9 Construction Area Notice of Preventive Action No. 1544598 I refer to the Pollution Incident which occurred at the Summerhill Waste Management Centre on 3 September 2016, where an estimated volume of 2,771 litres of diesel fuel was spilt from a bulk fuel tank operated by an employee of Ditchfield Contracting Pty Limited ("Ditchfield"). The Environment Protection Authority ("the EPA") understands that Newcastle City Council holds Environment Protection Licence 5897 ("the Licence'") to undertake the scheduled activity of Waste disposal (application to land) at 141 Minmi, Wallsend NSW ("the Premises"). The EPA also understands that Ditchfield is currently undertaking construction works at the Premises, known as the Cell 9 Construction, which is where the Pollution Incident occurred. Under the section 96 of Protection of the Environment Operations Act 1997 ("the Act") the EPA may issue a Prevention Notice where it reasonably suspects an activity has been or is being carried on in an environmentally unsatisfactory manner. The EPA has undertaken a number of inspections at the Premises where the Pollution Incident occurred and considers that activities undertaken by Ditchfield Contracting Pty Limited are being carried out in an unsatisfactory manner. As such the EPA is issuing Ditchfield Contracting Pty Limited with Notice of Preventive Action No. 1544598, which is enclosed. The Notice of Preventive Action requires Ditchfield to take immediate action. Significant penalties may be imposed for failing to comply with a prevention notice and may attract executive liability for a director or other person involved in the management of the corporation. Should you have any questions in relation to this matter please contact Karen Gallagher on [REDACTED] or provide a written response to waste.operations@epa.nsw.gov.au 16 On 9 November 2016, the EPA wrote to Ditchfield requiring the provision of records and information. The letter stated that the EPA was continuing its investigation into "matters relating to the contravention of the [PEO Act]". The notice identified the purpose for which the notice was issued and the matter to which the notice related as follows: PURPOSE(S) FOR WHICH THIS NOTICE IS BEING ISSUED: This notice is issued for the purpose of determining whether there has been compliance with, or a contravention of the Act, the associated regulations or any environment protection licence, notice, or requirement issued or made under this Act. The contravention being investigated is whether there was a contravention of s120 of the Act, being the pollution of waters occurring during or as a consequence of the Pollution Incident. MATTER(S) TO WHICH THIS NOTICE RELATES This notice is being issued in relation to the following matter: - The EPA reasonably suspects that the pollution of waters has occurred during or as a consequence of the Pollution Incident contravening section 120 of the Act. 17 On 1 December 2017, an employee of the broker (Arthur J. Gallagher) sent an email to DUAL Australia advising "of a possible new Pollution incident connected to the Insured". Further information was given to DUAL Australia later in December 2017. 18 Ditchfield pleaded guilty to the charge and was sentenced on 14 June 2018. In sentencing Ditchfield the Court: a. exercised power under s 250(1)(e) of the PEO Act to order Ditchfield to pay $105,000 to the Environmental Trust established under the Environmental Trust Act 1998 (NSW) for general environmental purposes; b. exercised power under s 250(1)(a) of the PEO Act to order Ditchfield to take specified action to publicise the offence; and c. pursuant to s 257B of the Criminal Procedure Act 1986 (NSW), ordered Ditchfield to pay to the registrar of the Court, for payment to the prosecutor, the prosecutor's costs in such amount as may be determined under s 257G of that Act. 19 In the sentencing judgment (Environment Protection Authority v Ditchfield [2018] NSWLEC 90), Preston CJ said the following at [57]-[61]: 57 Ditchfield has expressed genuine remorse for the offence. Ditchfield's early plea of guilty is consistent with it being remorseful. Ditchfield has accepted responsibility for its actions and has acknowledged and made reparation for the harm caused to the environment by its actions: see s 21A(3)(i) of the Sentencing Act and Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; [2006] NSWLEC 419 at [203]-[214]. 58 First, Ditchfield took action immediately upon noticing the spill of diesel. It promptly notified the Council, which in turn notified the EPA. Ditchfield employees promptly dug an earth bund in the creek to contain the flow of diesel. They worked on the day of the spill and in the following days to remove the contaminated soil and to remediate the environment harmed by the spill. 59 Secondly, Ditchfield cooperated with the Council and the EPA in the investigation, clean up and remediation of the spill. Ditchfield cooperated by: reporting the spill to the Council on the day of the spill; voluntarily and promptly cleaning up the spill and ensuring the independent validation of the clean up efforts; voluntarily allowing, accompanying and assisting EPA officers during their inspections of the site; providing, in a timely manner, the requested responses to all statutory notices for information and records, including making five staff available for interviews and providing documents and information; being frank, open and cooperative in its dealings with the EPA during the course of the investigation; waiving strict compliance with the disclosure provisions under Pt 5 Div 2A of the Criminal Procedure Act 1986; and agreeing to a Statement of Agreed Facts for the purposes of sentencing. 60 Thirdly, Ditchfield has taken action subsequently to implement precautions to prevent reoccurrence of the spill. Within four days of the offence, Ditchfield revised its safe work method statement for refuelling the Fuel Cart from the Fuel Farm. Also within four days, Ditchfield changed the software of the fuel dispensing equipment at the Fuel Farm so that dispensing pumps automatically shut down after dispensing 1,000 litres of diesel. Within seven days, Ditchfield emptied, decommissioned and removed the Fuel Farm. Thereafter, Ditchfield implemented alternative fuelling arrangements involving bringing a Fuel Cart from offsite to refuel plant and equipment. 61 Fourthly, the Managing Director of Ditchfield, Mr Warren Ditchfield, gave evidence by affidavit and attended the sentence hearing. Ditchfield's Regional Manager also attended the sentence hearing. Mr Ditchfield said, on behalf of Ditchfield, that he sincerely apologised for committing the offence, Ditchfield "takes its environmental responsibilities very seriously and are very disappointed that the incident has occurred" and the incident is "not up the high standards we expect of ourselves and we deeply regret that it occurred". Mr Ditchfield noted the actions that Ditchfield took to clean up the spill and to remediate the environment harmed and to minimise the possibility that such an incident could happen again. 20 In April 2018, Epsilon, on behalf of the Epsilon insurers, confirmed through its solicitors that the Epsilon policy responded to Ditchfield's claim for what were referred to as "mitigation costs arising from the incident on 3 September 2016". These are the costs for the work described at [6]-[9] above. The sum of $262,666.95 has been paid to Ditchfield by the Epsilon insurers in this regard. 21 Notwithstanding the fact that Ditchfield notified DUAL Australia outside the time provided for in the DUAL policy (see the judgment on jurisdiction Epsilon Insurance Broking Services Pty Ltd v Liberty Managing Agency Ltd [2019] FCA 990 at [8]-[14]) the DUAL insurers granted indemnity to Ditchfield under the DUAL policy for (a) the costs of defending the charge brought by the EPA; (b) the EPA's costs of the action; and (c) the order for payment (referred by DUAL Australia in correspondence as a "fine") imposed by the Land and Environment Court.

The DUAL policy 34 The DUAL policy was a little more complex. There were five coverage parts under section 1 of the policy dealing with "Management Liability" for: (a) wrongful acts or employment practices by directors and officers in insuring clauses 1.1 and 1.2(a); (b) wrongful acts by the company in insuring clause 1.2(b); (c) employment practice breaches by the company in insuring clause 1.2(c); (d) direct financial loss sustained by the company through crime in insuring clause 1.2(d); and (e) tax audit costs for the company in insuring clause 1.2(e). 35 The relevant part of the policy was the second part - wrongful acts by the company under insuring clause 1.2(b), together with Additional Benefits under section 2 of the policy including in particular: cl 2.1 "Official Investigations and Inquiries", cl 2.3 "Statutory Liability" and cl 2.4 "Pollution Cover." 36 Insuring clause 1.2(b) was in the following terms: We agree to pay on behalf of the company: … b) all loss on account of any claim against the company for a wrongful act by the company; 37 The emboldened words were defined, relevantly to include Ditchfield (as the company), the negligent act of the employee (as a wrongful act). The word "loss" was defined in an amending endorsement, relevantly, to mean as follows (the capitalised words being otherwise defined): LOSS means, for the purpose of Insuring Clauses 1.1 and 1.2 (a) - (c), damages, compensation, settlements to which WE have consented, claimant costs and DEFENCE COSTS which a person or entity becomes legally obliged to pay on account of a CLAIM. However, LOSS does not include: a) fines or penalties (whether civil or criminal) imposed by law, punitive, aggravated, exemplary or multiple damages, or matters uninsurable under the laws governing this POLICY; or b) taxes; or c) costs incurred by the COMPANY to modify any building or property, or to provide any service, in order to make such building or property, or make any service more accessible or accommodating to any disabled person; or d) costs incurred by the COMPANY in connection with any educational, corrective, sensitivity or other programme, policy or seminar relating to any EMPLOYMENT PRACTICES BREACH; or e) any amount payable by the INSURED under any warranty, guarantee, debt or for fees payable to a third party for good or services supplied to the INSURED (including but not limited to amounts which the INSURED is required to refund or repay); or f) any damages ordered or settlement agreed to in connection with any dispute arising from the agreed sale or purchase agreement for a TRANSACTION; or g) DEFENCE COSTS or any other cost or expense where there is no other covered LOSS, but for CLAIMS for non-pecuniary relief. 38 The same endorsement contained the definition of "defence costs", as follows: DEFENCE COSTS means that part of LOSS consisting of reasonable costs, charges, fees and expenses, incurred with OUR prior written consent (such consent not to be unreasonably withheld), in defending, investigating, settling or appealing any CLAIM covered by this POLICY. DEFENCE COSTS does not include: a) wages, salaries, fees or costs of time or other remuneration of any INSURED or EMPLOYEES; or b) profit, costs or office overheads of any COMPANY; or c) travel costs incurred by the INSURED; or d) other administration costs; or e) costs and expenses in defending a CLAIM where no other LOSS is covered by the POLICY, unless Additional Benefit 2.1 Official INVESTIGATIONS, Additional Benefit 2.2 Occupational Health & Safety Defence Costs, Additional Benefit 2.4 Pollution and/or Additional Benefit 2.26 Copyright Defence Costs is operative. 39 The word "claim" was defined by cl 9.5 as meaning: a) A suit, summons, statement of claim, writ or similar, proceeding, cross-claim or counter-claim, written demand, brought by a third party for monetary compensation or damages or non pecuniary relief, or actions solely for declatory or injunctive relief or other legal remedy; or b) A criminal proceeding against an insured person commenced by summons, charge or equivalent document, including but not limited to a Court Attendance Notice; or c) Any formal administrative or regulatory proceeding, including an arbitration, mediation, conciliation or alternative dispute resolution proceeding, alleging a wrongful act; and d) A civil proceeding, or a written demand, by an employee for compensation or damages alleging an employment practice breach. For the purpose of Additional Benefit 2.3 Statutory Liability only claim shall also mean the receipt by an insured of a formal written notice or process which asserts a breach of an Act. 40 Under section 2 various Additional Benefits were included in the cover, including relevantly, cl 2.1 Official Investigation and Inquiries, cl 2.3 Statutory Liability and cl 2.4 Pollution Cover. 41 Before setting out the terms of these Additional Benefits, it is necessary to recognise and address the terms of the General Exclusions in Section 4 of the policy. The chapeau to section 4 is clear: The exclusions in this Section apply to Insuring Clauses 1.1 - 1.2 c) and 1.2 e) and the Additional Benefits relating to those Insuring Clauses. We will not cover the insured for or in connection with: Clause 4.4 makes clear when read with the chapeau that the policy is not one that covers bodily injury or property damage: any claim for bodily injury, sickness, mental anguish or emotional distress or disturbance, disease or death of any person howsoever caused or damage to or destruction of any tangible property, including loss of use thereof. This Exclusion shall not apply to any claim in respect of mental anguish or emotional distress or disturbance alleging an employment practice breach or third party claim alleging such mental anguish or emotional distress or disturbance. Clause 4.5 makes clear when read with the chapeau that pollution is not covered: any claim arising from or in any way connected with: a) the actual, alleged or threatened discharge, dispersal, release or escape of pollutants into or upon land, the atmosphere or any water course or body of water, whether such discharge, dispersal, release or escape is intentional or accidental; or b) any direction or request to test for, monitor, clean up, remove, contain, treat, detoxify or neutralise pollutants. 42 Some further definitions need to be set out. The definition of the word "claim" has already been set out above. The words and phrase, "Investigation", "Pollutants" and "Statutory Liability" were defined in cll 9.26, 9.37 and 9.42, respectively, as follows: 9.26 Investigation means where the insured receives a written notice from an official body that: a) requires, invites or directs them to attend before or produce documents to, or answer questions by or attend interviews with, an official body; or b) identifies them as a target of the investigating official body for a hearing, examination, investigation or inquiry into the company, or an insured person in their capacity as such. Investigation does not include a routine regulatory supervision, inspection or compliance review or hearing, investigation or examination or inquiry which focuses on an industry rather than the insured. … 9.37 Pollutants means any substance, solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to smoke, vapor, soot, fumes, acids, alkalis, chemicals, toxic mould, fibres, spores, fungi, germs, dust, liquids or gases, or waste materials. Waste materials include but are not limited to recycled, reconditioned or reclaimed materials. Pollutants shall also mean any other air emission, odour, waste water, oil or oil products, infectious or medical waste, and noise. … 9.42 Statutory Liability means: a) civil fines and civil penalties awarded against an insured for breach of an Act, and b) pecuniary penalties awarded in criminal proceedings, but solely in respect of accidental and unintentional: i) breaches by an insured of any Commonwealth, State or Territory occupational or workplace health and safety legislation; and ii) breaches by an insured resulting in the discharge, dispersal, release or escape of pollutants. 43 The three Additional Benefits of "Official Investigations and Inquiries", "Statutory Liability" and "Pollution Cover" were defined in cll 2.1, 2.3 and 2.4, as follows: 2.1 Official Investigations and Inquiries We agree to pay defence costs in connection with the attendance by an insured for examination at any investigation in relation to the affairs of the company or any other examination of an insured person by virtue of his/her position as such. We will only do this if the notice of the investigation is first received by the insured and notified to us during the period of insurance, or discovery period if applicable. For the purpose of this Additional Benefit only, Exclusions 4.4 Bodily Injury / Property Damage and 4.5 Pollution Cover do not apply. 2.3 Statutory Liability Under Insuring Clauses 1.1, 1.2(a) and 1.2(b) only, we agree to pay on behalf of the insured as loss all statutory liability and defence costs on account of any claim, if we are not legally prohibited from doing so. We are not liable to make any payment under this Additional Benefit for statutory liability or defence costs in any way whatsoever in connection with: a) alleged violation of any law in relation to air traffic; b) alleged violation of any law in relation to vehicle or marine traffic, except to the extent it results directly from the undertaking of the business of the company; c) actual or alleged plagiarism, misappropriation, infringement or violation of copyright, patent, trademark, intellectual property rights, trade secret, unfair trade practices or business competition or any consumer protection Act, including but not limited to any Fair Trading Acts, Trade Practices Act 1974 (Cth), and Competition and Consumer Act (2010) and any similar law of any state, territory or jurisdiction and any amendment, consolidation or re-enactment of any of those Acts; d) contract of service, or any intended contract of service, with any current, former or prospective employee. For the purpose of this Additional Benefit only, we shall not be liable for, or to pay as loss: a) any amounts payable as compensation, damages, including any exemplary or punitive damages or the multiplied part ; b) the cost or payment of any compliance, remedial, reparation, restitution, or enforcement orders; c) any tax (including any fine or penalty resulting from the failure to pay any tax), rate, duty, or interest thereon or any amount on account of such tax, rate, duty or interest; d) any economic loss, consequential or otherwise; e) any other monetary payment, penalty or fine, the insurance of which is prohibited by the law where the claim is brought; f) fines or penalties ordered in any criminal proceeding, other than as described in the definition of statutory liability; g) any penalty awarded outside the jurisdiction or laws of Australia or New Zealand; h) any amount in connection with alleged breaches of the Privacy Act 1998. For the purpose of this Additional Benefit only: i) the reference in clauses 9.30 (a) loss and 5.1(d) of the policy to fines and penalties shall not apply to the extent that this Additional Benefit operates; and ii) Exclusions 4.4 Bodily Injury / Property Damage and 4.5 Pollution Cover do not apply. If any claim by an insured under this Additional Benefit 2.3 is in respect of a claim to which Additional Benefit 2.2 Occupational Health & Safety Defence Costs or Additional Benefit 2.4 Pollution Cover responds, then the cover under this Additional Benefit 2.3 in respect of such claim shall be limited solely to statutory liability and shall not include defence costs. 2.4 Pollution Cover We agree to pay: a) defence costs in respect of any claim made against an insured in connection with pollutants; and b) for or on behalf of the insured all loss on account of any claim in respect of pollutants made by any shareholder of the company either directly or derivatively alleging damage to the company or its shareholders. For the purpose of this Additional Benefit only, Exclusions 4.4 Bodily Injury / Property Damage and 4.5 Pollution do not apply to the cover under this Additional Benefit 2.4. 44 It is necessary to set out one final provision of the DUAL policy, given the arguments of the applicant. Under section 10 of the policy dealing with "Claims Conditions" and cl 10.2 provided for co-operation, as follows: 10.2 Co-operation The insured shall, at its own cost, frankly and honestly provide us with all information and assistance required by us and/or lawyers and investigators and others appointed by us in relation to any claim or loss. Any unreasonable failure to comply with this obligation shall entitle us to deny liability under the policy in whole or part. The insured shall, at its own cost, do all things reasonably practicable to minimise the insured's liability in respect of any claim or loss. If the wrongful act or conduct is a continuing one, the insured shall promptly take, at its expense, all reasonable steps to prevent its continuation. 45 Finally, it should be noted that in the introductory part of section 1 of the policy, it was stated that: The headings and sub headings contained in this policy document are used for convenience only and do not form part of the terms of this policy. 46 From these provisions the following propositions appear to be tolerably plain from wording that is tolerably clear. First, before one comes to the various Additional Benefits, whatever might be the reach of "loss" as defined for the purposes of cover under cl 1.2(b) that cover was cut or carved back by General Exclusions 4.4 and 4.5, to exclude from cover (cf the discussion by Meagher JA of the role of exclusions in narrowing cover, referring to the observations of Viscount Sumner in Lake v Simmons [1927] AC 487 at 507, in Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162 at [22]) for loss for or in connection with [see chapeau to exclusions 4.4 and 4.5] … any claim for … damage to … any tangible property … [see exclusion 4.4] (and) … any claim arising from or in any way connected with the actual … discharge, dispersal, release or escape of pollutants into or upon land … or any water course or body of water, whether such discharge, dispersal, release or escape is intentional or accidental [see exclusion 4.5(a)] or any direction or request to … clean up, remove, contain … or neutralise pollutants [see exclusion 4.5(b)]. 47 From the above, there could be no doubt that, subject to any extension of cover by the Additional Benefits there was no cover under the DUAL policy for the loss represented by the expenses of dealing directly with the property damage caused by the negligent release of diesel fuel as a pollutant. 48 One then moves to the Additional Benefits. The applicant emphasises under cl 2.3 the clause "we agree to pay… as loss", that is as loss defined by the amending endorsement, as set out above. It was submitted that by the addition of the Statutory Liability Additional Benefit there was resurrected or resuscitated what falls into the definition of "loss" and that exclusions 4.4 and 4.5 do not now apply at all. 49 This construction does not withstand a straightforward reading of the policy. The Statutory Liability that is to be treated as loss is set out in cl 9.42 (see [42] above): civil fines and civil penalties, and pecuniary penalties awarded in criminal proceedings in respect of accidental and unintentional breaches by an insured resulting in the discharge, dispersal, release, or escape of pollutants. There is no resuscitation or resurrection of some property damage cover which may have been within the definition of loss until clearly excluded by cl 4.4. What is plainly added by Additional Benefit 2.3 is cover for the fines or penalties (civil or criminal) which might otherwise be "for or in connection" with a claim for damage to tangible property excluded by cl 4.4. Lest there be any doubt about this, the plain words of cl 2.3 make this clear: there it is stated: "For the purpose of this Additional Benefit only, we shall not be liable for, or to pay as loss" and there follow sub-cll (a), (b), (d), (f) which I do not repeat. 50 Further, it is clear from the last paragraph of cl 2.3 that defence costs are not payable under cl 2.3 if Pollution Cover under cl 2.4 responds, as it does. 51 The benefits under Pollution Cover in cl 2.4 are likewise limited to (a) and (b) as set out at [43] above. Thus, relevantly here, defence costs, as defined in the amending endorsement were payable. 52 The Official Investigation and Inquiries cover in cl 2.1 also extends cover to defence costs of or in connection with investigations. 53 It is difficult to see how the plain words of the DUAL policy could permit the conclusion that cover is extended to meet any liability for damage to property of others, however such liability may rise. 54 The essence of the first argument of the applicant is that the Additional Benefits when engaged made the exclusions from cover by exclusions 4.4 and 4.5 inoperative. With such exclusions inoperative there is said to be cover for the prevention, mitigation or rectification of property damage as "loss". 55 A second argument, or a reinforcement of this first argument, involved reliance on the co-operation clause in cl 10.2. It was submitted that the steps taken by Ditchfield to prevent, mitigate or rectify property damage were capable of minimising liability for compensation to others. This it was said imposed upon the insured an obligation to indemnify the insured, even in the absence of a "suing and labouring clause". Reference was made to, and reliance placed upon, the entitlement to recover expenses to minimise a loss even in the absence of a suing and labouring clause and notwithstanding s 84(4) of the Marine Insurance Act 1903 (Cth) as discussed in Fenton v The Queensland Insurance Company Limited (1915) 11 Tas LR 125 and Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd [1964] 1 Lloyd's Rep 348. 56 Both arguments should be rejected. Both Fenton and Emperor Goldmining concerned activity to minimise loss that was covered by the policy. Here there was no cover for liability for property damage. The attempt to fashion from the words of the policy some coverage for liability for property damage by reason of the Additional Benefit is untenable. There was, however, cover for Statutory Liability. The action which cl 10.2 anticipated or dealt with, especially that contained in the second and third paragraphs, could extend to the type of action taken between 3 and 9 September 2016 to minimise any likely fine or penalty and the costs associated with the prosecution or defence of same. That much can be accepted. 57 That, however, does not lead to indemnity for such action. The words of cl 10.2 are clear: "at its own cost" and "at its expense" mean what they say. They are not limited to, or to be construed as, a timing question - pay at its own cost in the sense of in the first instance. There is no coverage otherwise. The provision is found in a section of the policy dealing with conditions, and the clause deals with the behaviour of the insured. There could be no argument that the types of action envisaged by the first paragraph in cl 10.2 would or could ever be to the insurer's account by way of indemnity. Why would "at its own cost" or like expression mean something different in the second and third paragraphs to the first: That is "at its own cost or expense in the first instance, there being indemnity in respect thereof" in the second and third paragraphs, but "at its own cost" in the first paragraph? 58 The cover under the Statutory Liability Additional Benefit is limited to fines and penalties. The obligation of the insured in cl 10.2 is plain. No orthodox process of construction or implication can operate in the face of cl 10.2 to extend or imply cover to steps to remediate property damage that may go towards minimisation of any fine, penalty or defence costs. In this respect, I would agree with and apply the approach of Meagher JA to the largely similar argument of the insured in Vero Insurance Ltd v Australian Prestressing Services Pty Ltd [2013] NSWCA 181 at [24]-[27] and [50]-[56] including his Honour's reference to Yorkshire Water Services Ltd v Sun Alliance & London Insurance Plc [1997] 2 Lloyd's Rep 21 at 30 and 33, and his Honour's distinguishing of Guardian Assurance Co Ltd v Underwood Constructions Pty Ltd (1974) 48 ALJR 307 at 309 and Re Mining Technologies Australia Pty Ltd [1999] 1 Qld R 60. (I also refer to Yorkshire Water generally at 31-33.) 59 There was a third argument of Epsilon to the effect that the moneys expended in taking the steps referred to in [6]-[9] above were "defence costs". In my view, the proposition is untenable. As a matter of language they were not "costs, charges, fees [or] expenses… incurred… in defending, investigating, settling or appealing any claim". Not only do they not meet any of these descriptions, but also when the sums were expended no claim had been made. 60 There was some debate in argument about the point at which the correspondence and material from the EPA constituted a claim, including by reference to non-pecuniary relief, or a charge. I do not think this debate crystallises into any relevant aspect of the controversy. The DUAL insurers accepted that a claim was made, albeit out of time, and dealt with it by reference to s 54 of the Insurance Contracts Act 1984 (Cth). The precise nature or terms of the claim and when it crystallised for the application of cover under the Additional Benefits under cll 2.3 and 2.4 is not of any moment. 61 For the above reasons, the DUAL policy does not respond to indemnify Ditchfield for the costs and expenses of the action taken after 3 September 2016 and described at [6]-[9] above. 62 The second question posed should be answered, "no"; the first question posed should be answered, "unnecessary to answer"; and within 14 days the parties should prepare short minutes which to the extent possible finalise the matter. Given the answer to (b), it would appear that the originating application should be dismissed with costs. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.

Epsilon Insurance Broking Services Pty Ltd v Liberty Managing Agency Limited

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