Origin Energy LPG Ltd v BestCare Foods Ltd
[2012] NSWCA 407
•13 December 2012
Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Origin Energy LPG Ltd v BestCare Foods Ltd [2012] NSWCA 407 Hearing dates: 5 November 2012, 6 November 2012, 7 November 2012, 8 November 2012 Decision date: 13 December 2012 Before: Macfarlan JA at [1]
Hoeben JA at [2]
Ward JA at [221]Decision: Appeal dismissed.
Appellants to pay the respondents' costs of this part of the appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: TORTS - negligence - causation - expert evidence of cause of fire and explosion - whether OPSOs on second stage regulators tripped as a result of over-pressurisation - analysis of expert opinion - whether dryer Bourdon tube pressure gauge subject to over-pressurisation - expert opinion - testing of filter box - disagreement as to test results - did the dryer gas filter boxes fail because of over-pressurisation - expert evidence - whether findings of trial judge as to causation open on evidence - absence of expert evidence to support appellants' theory - torts - contributory negligence - explanation for why tank isolation valve not closed when site left unattended - contributory negligence not established. Legislation Cited: Civil Liability Act 2002
Trade Practices Act 1995 (Cth)Cases Cited: BestCare Foods Ltd & Anor v Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd) & Anor [2011] NSWSC 908
Council of the City of Greater Taree v Wells [2010] NSWCA 147; 174 LGERA 208Category: Principal judgment Parties: Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd - First Appellant
Origin Energy Retail Ltd - Second Appellant
BestCare Foods Ltd - First Respondent
BestCare Foods (Sales) Pty Ltd - Second RespondentRepresentation: Counsel:
Mr N Hutley SC/Mr E Romaniuk/Mr B Smith/Mr R Glover - Appellants
Mr ML Williams SC/Mr DS Weinberger/Mr SA Lawrence - Respondents
Solicitors:
Dibbs Barker - Appellants
McCabe Terrill - Respondents
File Number(s): 2012/223427 Decision under appeal
- Jurisdiction:
- 9111
- Citation:
- [2011] NSWSC 908
- Date of Decision:
- 2011-08-23 00:00:00
- Before:
- Nicholas J
- File Number(s):
- 2012/223427
Judgment
MACFARLAN JA: I agree with Hoeben JA.
HOEBEN JA:
Nature of Appeal
At about 7.55pm on 25 January 2003 a pet food factory at Gunnedah was destroyed by fire and a massive explosion. The factory was owned and operated by the respondents, BestCare Foods Ltd (BestCare) and BestCare Food (Sales) Pty Ltd (Sales). It was common ground that the explosion and fire resulted from the leakage of liquefied petroleum gas (LPG) into the factory which then ignited.
The respondents brought proceedings against the appellants on the basis that they had supplied and constructed the gas installation with related equipment which was used to supply LPG for use in the factory.
It was the respondents' case that the liability of the appellants arose out of their breach of common law, statutory and contractual duties of care in respect of the construction, maintenance and inspection of the gas installation. They also claimed relief under ss 71(1) and 74(1) Trade Practices Act 1995 (Cth) for breaches respectively of implied terms that the goods supplied were not of merchantable quality and that the services rendered were not reasonably fit for the purpose of operating a gas storage facility and for the provision of gas to the manufacturing business.
In a trial which lasted for 46 days between 18 October 2010 and 17 March 2011, the respondents were successful in establishing liability. The appellants have appealed. The appellants accept the existence of a duty of care and further accept that they breached that duty of care. The finding which they challenge is that any breach on their part caused the explosion and fire.
This appeal is restricted to the issue of liability, with particular focus on causation.
Factual Background
Between 1994 and June 2001, Bayer Australia Ltd (Bayer) carried on business as a pet food manufacturer at Gunnedah. Under a contract made 12 August 1994 with Bayer, Boral Gas (NSW) Pty Limited (Boral) supplied and constructed a gas installation with related equipment for the factory. The gas installation and related equipment remained the property of Boral and was used by Boral to supply LPG to Bayer for the operation of the factory.
On 29 June 2001 BestCare bought the factory from Bayer as an ongoing concern and commenced operations. At about that time, Origin Energy LPG Limited took over Boral's operations and became its successor in title to the installations. On or about 15 August 2001 Origin Energy Retail Ltd (Origin) entered into an agreement with BestCare for the supply of LPG, an arrangement which continued until the explosion on 25 January 2003. Boral and Origin are the appellants. To the extent that it was necessary to separate the appellants, Origin Energy LPG Ltd was referred to as "Boral" in the proceedings.
It was the respondents' case at trial that the gas leakage and subsequent explosion and fire were caused by the failure of the first stage regulator (FSR) by reason of the deterioration of internal components, namely the disc holder and sealing disc. The consequence was that the FSR failed to provide a proper seal against the high inward pressure of LPG flowing from the higher pressure storage tank and allowed gas, at high pressure, to flow downstream. In these circumstances the downstream line became over-pressurised, the filter-boxes on the dryer gas line were subjected to pressure beyond their capacity and fractured, thereby allowing gas to leak into the factory, where it ignited.
The respondents claimed that at the time of the installation of the gas system, the appellants wrongly failed to provide over-pressure protection to the FSR by means of an over-pressure shutoff device (OPSO), which would have operated to prevent over-pressurisation of the downstream line. An OPSO when activated shuts off the flow of gas at the inlet of the regulator. It was common ground that over-pressure protection must be provided where, as in this case, the inlet pressure to the FSR exceeded the pressure rating of downstream equipment. Its purpose was to ensure that the rated working pressure of this equipment was not exceeded. In this case the storage tank/inward pressure was 850 kPa and the downstream equipment was set to operate at a pressure of 140 kPa.
Further allegations made by the respondents were that the appellants wrongly failed to ensure that the gas installation was suitable and safe for use and failed to carry out regular inspections and maintenance which would have led to the discovery of the absence of an OPSO at the FSR and its installation.
At trial, the appellants denied liability on the basis that the respondents had failed to prove their case that the explosion and fire resulted from over-pressurisation and leakage through the dryer filters. The breaches of common law and statutory duties and contractual obligations were denied. The appellants' substantive case (which was called the "pressure wave theory") was that the FSR failed after and not before the explosion and that the explosion generated a pressure wave, which struck the FSR with such force as to damage its disc and disc holder, components necessary for its operation.
The appellants claimed that the respondents were guilty of contributory negligence in that they failed to isolate the LPG storage tank when the factory was closed down and unattended, and that they themselves wrongly failed to install over-pressure protection at the FSR.
At trial the primary judge rejected the "pressure wave theory". In the appeal, the appellants did not rely upon the theory. The appeal was focused on what the appellants said was the respondents' failure to prove the causation component of their case. The only aspect of contributory negligence pursued by the appellants was that the respondents had failed to isolate the LPG storage tank when the factory was closed down and unattended.
The LPG was stored on site in a 43,000 litre pressurised tank. The pressure in the tank was in the range of 850 kPa. The appliances used in the factory were not designed to withstand such a high pressure, nor were the gas lines leading from the tank to those appliances. Consequently, as is normally the case in installations using LPG stored under high pressure, a first stage pressure reducing regulator was fitted immediately after the tank. This was the FSR previously referred to. Its function was to regulate the pressure of gas flowing into the downstream (in the direction away from the tank) gas lines by reducing the pressure from a high upstream (towards the tank) pressure to a lower downstream pressure.
The Gunnedah factory manufactured dry pet food by two different methods: baking and extrusion. The extrusion operations and baking operations took place in different parts of the factory. The extrusion operations took place in a building referred to as the "extrusion plant", which included a boiler room. The baking operations were housed in a room to the north of the extrusion plant marked as the "biscuit baking room" in the diagram used at trial.
The explosion occurred at approximately 7.55pm on 25 January 2003 which was the Saturday of the Australia Day long weekend. The factory had operated on 24 January and baking operations had been shut down at around 9.30pm. Extrusion operations had been shut down earlier in the day. Although the factory did not operate on Saturday 25 January 2003, some employees worked at the factory that day packing finished product or doing paperwork. The last of those employees left the factory at around 1.30pm.
It was common ground that the initial explosion that occurred at the factory on 25 January 2003 was an LPG explosion. The size of the explosion, or sequence of explosions was not agreed.
LPG forms an explosive mixture in air at concentrations between 2.1 percent and 9.5 percent (by volume). A mixture containing a concentration below 2.1 percent or above 9.5 percent will not explode when exposed to an ignition source. An LPG/air mixture within that range will explode when exposed to an ignition source. LPG vapour is heavier than air and therefore any LPG escape will flow downwards and may accumulate in low-lying areas. Hydrocarbon gases in LPG are odourless so a stenching agent is added as a safety measure to give LPG its characteristic gas smell to aid in the quick detection of leaks.
The metric unit for the measurement of pressure is kilopascals (kPa). Ambient air pressure is normally around 100 kPa. The pressure of gas in a tank or pipeline is expressed in kilopascals above ambient air pressure. For example, the statement that tank pressure was 850kPa means that the pressure of gas inside the tank was 850 kPa above ambient air pressure (or around 950 kPa in absolute pressure).
At trial and in the appeal, considerable assistance was provided by a model and a schematic diagram which showed the layout of the gas installation at the Gunnedah factory. There were two other documents to which reference needs to be made:
(a) Exhibit U was a photo montage that showed the components of the 43,000 litre tank.
(b) Exhibit V was a photo montage that showed a number of pieces of equipment that were relevant to the competing theories about the cause of the explosion. The photographs in Exhibit V were positioned around the schematic diagram to which reference has already been made.
Regrettably, Exhibits U and V cannot be reproduced in this judgment. A copy of the schematic diagram, however, has been attached.
Starting at the 43,000 litre tank, the gas installation can be described as follows:
(i) Immediately under the tank was a valve or tap (item 1 on the diagram) referred to there as the "LP gas vapour outlet". If the tap were turned off, it stopped the flow of LPG out of the tank.
(ii) After the vapour outlet was the FSR.
(iii) Immediately downstream of the FSR was a Bourdon tube pressure gauge. This was the first of two Bourdon tube pressure gauges considered, referred to as the FSR Bourdon tube pressure gauge. The function of this gauge was to display the pressure of gas in the line. It is item 3 on the schematic diagram.
(iv) Downstream from the pressure valve was a filter box.
(v) Downstream from the filter box was a further manually operated isolation valve. This isolation valve is not shown in the schematic diagram. This valve was closed after the explosion.
(vi) Downstream from that isolation valve was a gas meter (to measure the volume of gas consumed).
(vii) After the gas meter there was a fork in the gas line, one branch of which led to the extrusion plant and the other to the baking operations in the biscuit baking room. There was a further isolation valve on the branch leading to the baking plant. The isolation valve is numbered six on the schematic diagram.
(viii) After leaving the enclosure around the LPG tank, both gas lines ran underground a distance of about 70 metres to the factory buildings.
(ix) Beginning with the line that ran to the extrusion plant, it served both the boiler and the extrusion dryer. The boiler was on ground level and the extrusion dryer was elevated on a mezzanine level, partly above the boiler. The dryer was a long box-shaped oven with doors down each side. It had two heated zones. The western end was designated zone 1 and the eastern end, zone 2. There was also a Bourdon tube pressure gauge fitted to the gas line serving the extrusion dryer, not shown in the schematic diagram. This was the second of the Bourdon tube pressure gauges referred to as the "dryer Bourdon tube pressure gauge".
(x) The line that ran to the baking plant served the baking oven, which was a long oven through which biscuits were conveyed and heated. It ran east-west inside and had three burners, each of which was served by a separate gas train.
I incorporate into this judgment pars [21] - [53] of the primary judgment (BestCare Foods Ltd & Anor v Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd) & Anor [2011] NSWSC 908) which were not in dispute in the appeal.
In order to understand the issues raised by the appeal, it is necessary to set out in some detail how the FSR operated. This was described by the primary judge as follows:
"54 The plaintiffs claimed that the fire and explosion were caused by the failure of the FSR. An understanding of the evidence requires an explanation of the operation of relevant components of the FSR namely, the disc holder, the sealing disc, and the seat ring.
55 The function of the FSR is to control the pressure at which LPG from the storage tank flows downstream. The LPG flows at high pressure into the FSR through an orifice within the seat ring. The disc forms part of the sealing surface within the FSR and is held in place against the seat ring by the disc holder. Any loss of its ability to seal against the seat ring could allow LPG to flow downstream through the second stage pipe work at an unregulated pressure.
56 When there is no demand for LPG for the downstream appliances, and the appliances are shut off, the FSR diaphragm causes the disc holder to push the disc against the seat ring to act as a seal to shut off the inward flow. When there is demand downstream the disc holder and disc are moved off the seat ring to allow LPG to flow in through the orifice to the outlet side of the regulator, and thence downstream at the set pressure.
57 The plaintiffs claim that the failure of the FSR was caused by the fracturing of the disc holder which then forced the disc onto the seat ring where it was damaged with the consequence that there was no complete seal against the seat ring. The FSR was then unable to regulate the pressure and, there being no OPSO, LPG flowed downstream at high pressure. In these circumstances, the dryer filters (the filters) were unable to withstand the over-pressure, and allowed gas to leak into the factory where it ignited.
58 The FSR is fitted with an orifice which is termed the seat ring. Its edge is rounded. The surface area of the end of the orifice forms an effective seal against the disc.
59 It is also necessary to understand the meaning of the term "wadding". Mr Arthur Donnelley (Ex AAG) explained:
"9.15 This is a term applied to the non-metallic sealing disc when a circular incision is made in the sealing face of the sealing disc by the disc having been forced onto the gas orifice inside the regulator. Such circular marks are common on regulator sealing discs which have been in service for a long time.
9.16 The term derives from a 'wad punch' which is a tubular punch with a sharp bevelled edge on its end and is commonly used in leatherwork or for punching holes in gasket material.
...
9.23 Wadding of the regulator sealing disc is the most common cause of downstream excess pressure problem."
And (Ex AAH):
"6. ... Wadding is an indentation on the sealing disc caused by the sealing disc repeatedly contacting the sealing ring. It has the effect of compromising the sealing ability of the disc ... Once wadding occurs it makes the disc more prone to accumulate dust and dirt particles and other foreign bodies thus further compromising the ability of the disc to seal ...
7. A wadded seal will cause, and in this case did cause, an overpressure situation downstream of the regulator ... when the gas demand ceases or the appliances are shut off the downstream pressure will continue to build up in the closed pipeline system ..." "
It is also necessary to say something more about some of the individual items on the schematic diagram.
The manual isolation valve (the LPG gas outlet on the schematic diagram), if activated, prevented downstream flow of gas. It was common ground that if this valve had been turned off at the time of the incident, a failure of the FSR would not have caused the explosion.
It was common ground that the FSR was not fitted with over-pressure protection. This is a safety device to prevent over-pressurisation of the downstream gas lines, in the event of a failure of the FSR. The manufacturer's instructions required that it be installed and it was not contentious that an appropriate form of over-pressure protection for this gas system was an OPSO. It was common ground that good practice and relevant Australian standards, as well as the manufacturer's instructions, required the installation of over-pressure protection on this gas system. It was also common ground that over-pressure protection was not installed.
The OPSO should have been installed downstream of the FSR. The OPSO would have operated such that if the FSR failed to regulate pressure so that the pressure of the gas downstream of the FSR exceeded the set pressure, the OPSO would be triggered and a barrier would be mechanically forced into the gas line ceasing all flow of gas downstream from that point.
Reference is made to a number of gas filters or "filter boxes". The function of a filter box is to remove impurities from gas flowing through it. An example of an impurity is a fragment of metal that comes away from the inside of the piping.
Working downstream from the tank, the first filter box was located immediately downstream from the FSR. When that filter box was opened and inspected after the explosion, it was found to contain part of the disc holder and one of the annular fragments of the sealing disc from the FSR.
The FSR Bourdon tube pressure gauge was immediately downstream from the FSR. The workings of the Bourdon tube pressure gauge contain a tube known as a "Bourdon tube", curved into a circular shape. Gas is able to enter the tube and distends the tube. The amount by which the tube is distended depends on the pressure of the gas, allowing the pressure to be measured. The Bourdon tube is designed to function elastically, i.e., after being distended by a higher pressure, it is designed to revert back to its original shape.
After the explosion, the needle on the FSR Bourdon tube pressure gauge was found to have gone full circle and was resting against the reverse side of the zero peg. When the gauge was opened, it was found that the Bourdon tube inside was bulged and/or bent out of its original shape.
The extrusion dryer was located on a mezzanine level within the extrusion building. It was a long, box-shaped oven. It had two burners that consumed LPG: a zone 1 burner and a zone 2 burner. Each burner was fed by a gas line that included (from upstream to downstream) a ball valve, a filter box and a regulator. Each of the two filter boxes was rated to withstand a pressure of 100 kPa.
The filter boxes were fitted immediately before the regulators. Each regulator had a built in OPSO. At the hearing the respondents argued that the filter boxes had been the source of the leak of gas into the factory before the explosion. The filter boxes were damaged in the explosion and thus it was not possible to test them. Pressure testing was carried out on a test filter. The results of that testing and the inferences to be drawn therefrom formed an important part of the appeal.
There was a Bourdon tube pressure gauge fitted to the gas line feeding the extrusion dryer known as the "dryer Bourdon tube pressure gauge". At trial and in the appeal, there was a dispute as to the state (bulged, deformed, bent or other) of the dryer Bourdon tube. The needle of the gauge was on the correct side of the zero peg but was displaced from the peg by 5 degrees.
As indicated, the baking plant contained a long oven through which biscuits were conveyed. The oven ran east-west and had three burners. Each of the burners in the baking oven was served by a gas train which included (from upstream to downstream) a valve, a filter box and a regulator. Each of the three regulators was fitted with a built-in OPSO. Two of the three filter boxes were rated to 240 kPa and the third was rated to 450 kPa. The gas trains for the baking oven are shown in the schematic diagram. After the explosion, the two lower rated OPSOs on the baking line were found to have tripped and there is a dispute as to the significance of this.
Evidence and Findings at Trial
At trial the expertise of almost all of the respondents' experts was challenged. That challenge was not maintained in the appeal. Because the evidence of these experts will be more closely examined in the context of the issues raised by the appeal, it is useful to identify them and their areas of expertise and to briefly summarise the effect of their evidence.
Mr Kerruish was an important witness for the respondents. He retired in March 2009 as a Senior Safety Inspector for WorkCover, NSW. In 1968 he was awarded a Certificate of Mechanical Engineering from Granville Technical College and in 1978 he obtained an unrestricted Gas Installer's Licence. In 1987 he was employed by the Department of Industrial Relations (later known as "WorkCover") as a Boiler Inspector. Subsequently, he was employed in advising and training on the design, operation and inspection of boilers, pressure vessels and pressure equipment. He gained experience in the investigation of accidents involving LPG and possible design failures in the design and installation of LPG plants and facilities in numerous locations. He said that his speciality was in gas boilers and pressure vessels. He did not claim any expertise in metallurgy or in the investigation of the origin of fires and explosions.
Mr Kerruish in his capacity as a WorkCover Inspector visited the site of the explosion on 3 February 2003 for about two weeks and then again on 8 July 2003. In his visits he inspected the damage in all parts of the factory and the site. On completion of his investigations, he formed the opinion that the source of the gas leak which caused the explosion was in the area of the extruder plant. He located the pipe work connecting the gas trains servicing the dryer and noticed that the second stage regulators were burnt and each gas train was substantially damaged, the train for zone 2 more so than for zone 1. These trains and the appliances were removed for testing. Since he considered that a possible cause of the over-pressurisation was the failure of the FSR, this also was removed for testing.
On 11 and 12 June 2003 Mr Kerruish tested the FSR at TestSafe and in his report of 25 September 2009 said:
"12.7 ... It then became obvious why the regulating of the outlet pressure of the FSR was not taking place. The rubber seat of the disc holder had been "wadded" and the central plug from the seat trapped in the orifice ....
12.8 A portion of the outer section of the rubber seat was found lodged in the outlet side of the regulator and similarly the aluminium disc holder had been shattered and only a portion of it remained in the regulator ...
12.9 The remaining piece of the disc holder, rubber seat and orifice containing the wadded piece of rubber seating were removed and secured ...
12.11 Visual examination of the fracture surfaces of the disc holder appeared to me to be a fatigue type failure due to repeated pressurisation and release. When the disc holder fractured, this allowed an increased force to be applied to the nitrile rubber disc which was already partially indented from repeated seating onto the orifice. When the extra force was applied, the central section wadded out and the seat, frozen through the throttling of gas past the fractured disc holder, failed in a tensile manner and fragmented. ...
12.13 This allowed me to positively establish that over-pressurisation of the downstream reticulation pipe work downstream of the FSR was caused by a failure of the disc holder in the FSR.
12.14 My primary opinion of the cause of the over-pressurisation was wadding (or cookie cutting) of the seat disc and associated stressing of the seat disc holder to the point where it eventually failed."
Mr Kerruish was of the opinion that while it was conceivable that a sudden over-pressure event could trigger the defining failure of the disc and seat disc, he noted that a sudden event was not necessary. He said in that same report:
"19.15 I do not agree that this explosion was as a result of a single over-pressure event. It is my opinion that this occurred as the result of gradual deterioration of the seat disc. That the final failure came about when the seated disc failed to regulate the downstream pressure and the resulting over-pressurisation led to the ultimate failure of the disc and disc housing".
Mr Kerruish was confirmed in that opinion as follows:
"19.9 The other reason that confirms my view that it was not a single over-pressure event, is that with 2.3 - 3.4 tonnes of LPG unaccounted for and the gas supply simply being cut from the reticulation system within 15 minutes of the explosion and fire, there is in my view no other explanation available to account for the tonnes of gas that were missing other than the FSR fatiguing to a point where it was no longer able to carry the load and fractured during the afternoon of 25 January 2003."
Mr Kerruish subsequently recovered missing pieces of the disc holder and disc from the filter located immediately downstream from the FSR which confirmed his view that the over-pressure event had come from the storage tank. Mr Kerruish carried out a number of tests on salvaged pieces of equipment, such as the Bourdon pressure gauges. He also tested a filter box similar to the zone 1 filter box.
The results of this testing by Mr Kerruish formed the basis of much of the appellants' challenge to causation in this appeal. The details of that testing and the results obtained are set out at [112] hereof and the paragraphs following.
As was conceded in the appeal, the conclusion arrived at by Mr Kerruish from the testing of the filter box was incorrect. The lid on the zone 1 filter box had not suffered the same damage as the test unit. On the contrary, the lid on the zone 1 filter box had not deformed whereas that on the test unit had.
On 8 June 2004 Mr Kerruish examined the FSR Bourdon tube pressure gauge and the dryer Bourdon tube pressure gauge. The state of the FSR Bourdon tube pressure gauge has already been described. In relation to the dryer Bourdon tube pressure gauge, Mr Kerruish noted that as well as the needle being found to be offset by five degree from the zero position, the Bourdon tube was found to be out of true roundness. Mr Kerruish concluded that excessive pressure within the tube had caused it to yield and not return to its true circular shape. In the conclave of experts he said that he would have expected the second gauge to have suffered similar damage to the first, namely bulging of the Bourdon tube, but not necessarily.
Mr Kerruish examined the three second stage regulators from the baking oven. Apart from minor impact damage, the three gas trains for this oven did not show visual signs of fire damage. He observed that the nearest two regulators were rated to operate to a maximum of 240 kPa and had tripped, indicating that they had been subject to over-pressure. The third regulator, located at the furthest point along the gas train, was rated to operate to a maximum of 450 kPa. It had not tripped which indicated to him that once the escape of gas commenced at the point of least resistance, it was unlikely that the gas line pressure in this regulator reached 450 kPa.
His Honour summarised the opinion of Mr Kerruish as to the sequence of events as follows:
"80 ...
(1) LPG leaked through the FSR past the disc which caused pressure downstream to increase. This activated the OPSOs for the second stage regulators and stopped all flow past those regulators;
(2) the increased pressure caused the distortion of the disc holder which allowed pressure to increase at a greater rate downstream, which eventually caused the disc and disc holder to fail;
(3) the dryer filters, not being protected by OPSOs, suffered an increase in pressure beyond their rated pressure which caused their lids to bow allowing leakage of LPG through their O-ring seals into the plant below;
(4) upon failure of the FSR sealing assembly, full tank pressure, estimated at 850 kPa, was applied to a filter rated for only 100 kPa, and caused it to fail, allowing an uninterrupted flow of LPG from the storage tank into the factory." (Red 101B-K)
Another expert relied upon by the respondents was Mr Donnelley. Mr Donnelley was a licensed plumber, gas fitter and drainer and was granted an unrestricted LPG licence in 1965. He subsequently obtained an advanced town gas licence which qualified him to work on large industrial gas installations. He was experienced in the design and building of industrial gas fired appliances and in the installation of LPG storage systems for shire councils and service stations. He had many years' experience as an investigator into gas related accidents for police, loss adjusters and insurance companies, and for many years was a member of relevant professional associations. He died in August 2009 aged 72 and his evidence was contained in his reports of 9 April 2008 and 27 July 2009.
Mr Donnelley first visited the site on 29 January 2003 and over the next few weeks seven more times. He inspected several installations and appliances and tested the underground gas lines. He was present on 11 June 2003 with Mr Kerruish at the premises of TestSafe when the FSR was tested, dismantled and examined.
Mr Donnelley concluded that the LPG escape had emanated from either the zone 1 or zone 2 filters, or from both of them, in that gas would readily cascade down over the dryer to the boiler and in time could permeate throughout the site resulting in an explosion. The primary judge summarised Mr Donnelley's opinion as to the sequence of failure of the FSR as follows:
"94 ...
(1) the effect of wadding compromised the ability of the disc to properly seal against the inlet pressure, thus allowing slow leakage of LPG past the disc;
(2) the leakage caused over pressuring of the downstream pipe and fittings, which caused LPG to leak from the filter(s), rated at 100 kPa, into the factory;
(3) the explosion occurred when the leaked gas ignited;
(4) the filters fractured due to mechanical damage from the explosion. This created two open ends in the gas lines which caused a large flow of gas through, and a sudden excessive load on, the FSR;
(5) the massive flow of LPG towards the open ends of the gas line caused the fracture of the disc holder." (Red 104S-Q)
Another expert, retained by the respondents, was Dr Corderoy. He was a qualified mechanical and metallurgical engineer and fulltime consultant to Unisearch Pty Ltd at the University of New South Wales. He was unavailable to give oral evidence and his findings and opinions were not tested under cross-examination. He was retained to report to the coroner on the condition of equipment retrieved from the site, including the FSR, the filters and the Bourdon tube pressure gauges.
Dr Corderoy examined the components of the FSR and the filters with the assistance of scanning electron micro grafts and x-ray analyses. He concluded that the fire and explosion was a consequence of the failure of the FSR by reason of the fracture of the disc holder which was of insufficient toughness to withstand the repeated force of impact against the seat during the operation of the FSR. This resulted in the initial leakage of the LPG past the disc.
Mr Pearson was an expert called by the respondents. He was a senior fire and explosion investigator employed by TestSafe, Australia. He had been so employed for over 20 years, during which he gained extensive experience into the explosability of dust and gas explosions. He had investigated numerous incidents involving the causes of gas and dust fires and explosions. He did not claim any expertise in metallurgy, material science, the operation of LPG regulators or the mechanism of Bourdon tube pressure gauges.
He provided two reports and gave evidence at trial. He concluded that a failure of the FSR was the only credible way to produce high gas pressures in the LPG pipes within the plant.
Mr Pearson visited the site between 29 January 2003 and 20 March 2003 on several occasions. He found that the overall pattern of damage indicated the centre of the explosion to be somewhere inside the extrusion plant. This was accepted by the parties on the appeal. He said that there was evidence that the pipe work, including the dryer and bakery gas trains, had been subjected to high internal pressure. He concluded that the downstream line was subjected to high pressure and that the FSR might have failed progressively between the shutting down of the baking area at about 9pm on 24 January 2003 and the explosion 23 hours later.
He also concluded that the likely location of the LPG leak was from the zone 1 and zone 2 filters caused by over-pressurisation and their rating to withstand a pressure of only 100 kPa. He said that the likely failure of the FSR which caused the over-pressurisation, was that the sealing/regulating surface of the FSR became compromised and unable to seal completely which allowed excessive pressure to be applied to the filters, resulting in their failure. Under cross-examination he agreed that he relied upon information provided to him by Mr Donnelley and by Mr Kerruish in describing matters relating to the FSR, the gauges, the filters and OPSOs and to explain faults associated with them.
Professor Hoffman was called on behalf of the respondents.
Professor Hoffman obtained a doctorate in material science and engineering in 1994, and was the Head of the School of Material Science and Engineering at the University of New South Wales. His speciality was in the field of materials fracture and failure and the structural integrity of materials. As part of his scientific research he had worked with high pressure gases, but did not claim expertise in gas dynamics or combustion. There was no issue that Professor Hoffman was a world authority in his field.
The effect of the evidence of Professor Hoffman was summarised by the primary judge as follows:
"117 Professor Hoffman found that there had been intergranular failure of the disc holder which indicated that the metal from which it was made was brittle, and of a low fracture toughness. His view was that the disc holder was manufactured with inappropriate material, being a brittle alloy of low fracture toughness, and/or that in the manufacturing process the disc holder was subjected to inappropriate heat treatment which resulted in low fracture toughness. He said that the failure of the disc holder was caused by fatigue crack growth followed by fast fracture, a process which resulted from its defective manufacture.
118 He observed that the disc had been punched out by the sharp edge on the seat ring, or wadded, which caused it to split; and that the first Bourdon tube pressure gauge had been overloaded and its needle pushed to the stop position; and that the filter boxes had failed as a result of brittle fracture of the aluminium boxes.
119 In his opinion, the operation of the FSR propagated fatigue cracking of the disc holder, and a subsequent fast fracture occurred which caused it to fail. As a result the FSR was unable to operate properly with the result that it pushed the disc with high pressure into the seat ring, leading to the failure of the disc. This would have led to an incomplete seal on the seat ring, meaning that the FSR would then seek to increase pressure via the disc holder. The incomplete seal allowed gas at high pressure to flow downstream. The components downstream were unable to structurally withstand the unregulated high pressure which led to their failure and the leakage of LPG which, assumedly, caused the fire." (Red 110V-111P)
Because of his unchallenged and acknowledged expertise in the field of materials fracture and failure, the evidence of Professor Hoffman in relation to the zone 1and zone 2 filter boxes was of considerable importance. An issue in the appeal was an apparent conflict between the opinion expressed in his reports and what he said at the conclave of experts. This is a matter which will be explored further when the specific issues raised by the appeal are dealt with.
Certainly in his report of 21 June 2010 Professor Hoffman adhered to the proposition that the zone 2 filter box could have failed through over- pressure and possible explosion. Apparently relying upon the test results obtained by Mr Kerruish, Professor Hoffman expressed the opinion that there was a high probability that the zone 2 filter box failed, from which flammable gas leaked and that leakage prior to its failure was the most likely scenario. One of the difficulties in the appeal is that Professor Hoffman was not cross-examined with respect to his evidence concerning the filter boxes.
Professor Masri provided reports and attended the conclave of experts. He was a Professor of Mechanical Engineering in the School of Aerospace Mechanical and Mechatronic Engineering, as well as Associate Dean for Research in the Faculty of Engineering and Information Technologies at the University of Sydney. One of his specialities was thermal engineering, including combustion. He had published extensively in the field of turbulent combustion, including research in deflagrations.
His reports were relevant to the amount of gas needed to produce an explosion of the size observed by witnesses. He was also expert in the flow of LPG.
Mr Cox was a chartered engineer who practised as a forensic consultant with expertise in metallurgy. He was the only expert relied upon by the appellants at trial. He did not commence his investigations until 2009. He did not visit the factory. He did, however, visit the TestSafe laboratory in April 2009 with Messrs Donnelley and Kerruish and examined equipment recovered from the site, including the components of the FSR.
He disagreed with the conclusions of Professor Hoffman and Mr Kerruish. It was he who put forward the pressure wave theory as an alternative to the respondents' explanation of how the explosion occurred. He accepted in cross-examination that on the available evidence if the pressure wave theory were rejected, the only other theory to explain the failure of the FSR was that put forward by the respondents, i.e., the FSR had failed causing over-pressurisation downstream, leakage of LPG and ultimately the explosion and fire.
Mr Cox agreed that he had no experience in relation to the operation of FSRs. He agreed that he had no experience in fluid dynamics, aerospace shock tube technology, the design of Bourdon tube pressure gauges, the design and installation of gas systems and in the design and operation of boilers. He accepted that his opinions were based on a review of evidence many years after the event and that it would have been far preferable to have examined the accident scene firsthand rather than to rely upon photographs and statements.
His Honour's conclusions with respect to Mr Cox were:
"168 My overall impression of Mr Cox's evidence was that he ventured opinions on numerous issues without the necessary factual basis, qualifications, and experience to do so, and demonstrated an absence of scientific rigour in propounding the pressure wave theory as the probable cause of failure of the FSR. As this case showed, Mr Cox propounded a theory which was doomed to dissolve when subjected to objective analysis and scrutiny. It is difficult not to accept that had the theory been tested before it was tendered, its weaknesses would soon have been exposed. I was left entirely unconvinced of its fundamental soundness.
169 In my assessment, Mr Cox's readiness to advance opinions which lacked support served to undermine any standing he might have had as a credible and reliable witness on matters about which there was a contest, including, in particular, his challenges to the plaintiffs' witnesses on the failure of the FSR, over-pressurisation, and the cause of the fire and explosion." (Red 124J-S)
His Honour summarised the respondents' case at trial (which largely remained the same on appeal) as follows:
"182 The plaintiffs' case is that, when considered as a whole, the evidence supports the finding that the FSR failed prior to the explosion. On examination it was found that it was unable to effectively seal off the inflow of gas from the storage tank at 850 kPa, and regulate the pressure at which it flowed downstream. The common view of their witnesses was that the dryer filters, which were located before and, hence, unprotected by, the second stage regulator OPSOs and with a pressure rating of 100 kPa, yielded to high pressure and allowed leakage into the factory, and subsequent ignition. Consistent with this was the evidence that those OPSOs with an inlet pressure rating of 240 kPa had tripped, indicating that LPG at high pressure had reached the second stage regulator prior to the explosion. Consistent also was the condition of the first Bourdon tube pressure gauge as found by Mr Kerruish, which indicated to him that it had been subjected to a pressure greatly in excess of 250 kPa for which it was designed. The condition of the second gauge provided a similar indication." (Red 127M-V)
The crucial findings made by his Honour and which were criticised in a number of respects in the appeal were:
"Determination
194 In my assessment the defendants failed to negate the evidence as to the filters, second stage regulator OPSOs, and the Bourdon tube pressure gauges which supported the views of the plaintiffs' experts that over-pressurisation resulted from the failure of the FSR prior to explosion.
195 It is unnecessary to resolve the dispute between Mr Kerruish and Mr Cox as to the right conclusion after testing the zone 1 filter. Assuming, without deciding, that Mr Cox's evidence should be preferred, without more there remains open the inference that there was leaking through the zone 2 filter. Indeed, the probability of leakage from either filter before the explosion is not inconsistent with the fracture of the filter boxes by the explosion. Relevant also is the rating of the filters at 100 kPa, and the fact they were unprotected by the second stage regulator OPSOs.
196 In any event, Prof Hoffman's unchallenged opinion that it was highly probable that the zone 2 filter box failed through over-pressurisation and possible explosion is sufficient for the finding that this happened. I am satisfied that, taken with the totality of his evidence, his answer in the conclave that he had not considered the cause of failure of the zone 2 filter box was mistaken, and should not be understood as an abandonment of the views expressed in his reports of 21 September 2009 (Ex AAK), and 21 June 2010 (Ex AAL).
197 The defendants demonstrated the possibility that OPSOs may be tripped by mechanical shocks. Nevertheless, in this case, Mr Kerruish adhered to his opinion that it was over-pressurisation, not the violence of the explosion, which caused the relevant OPSOs to trip. His was an explanation he was well qualified to give, and which I accept. It is strengthened by the evidence that the zone 3 regulator OPSO, with a pressure rating of 450 kPa had not tripped. I am satisfied on the probabilities that over-pressurisation tripped the second stage regulator OPSOs prior to the explosion.
198 The evidence concerning the Bourdon tube pressure gauges, in my opinion, founds the inference that they were subject to over-pressurisation before explosion. The defendants established no alternative explanation for their condition, and left the question open. Mr Kerruish's conclusions in respect of both gauges were based on his examination of them, coupled with his experience of LPG systems and installations. I accept them. I prefer his evidence to that of Mr Cox, who agreed that he lacked similar experience.
199 The common thread through the theories of the plaintiffs' experts is that the immediate cause of the failure of the FSR was the failure of the disc to effect a seal against the inflow of LPG. The evidence established that this is what happened. To reach this conclusion it is not necessary to identify the precise cause of the failure of the disc, and the point at which the disc holder fractured. Nevertheless Prof Hoffman's evidence supports the finding, which I make, that it was highly probable that the fracture of the disc holder led to the failure of the disc, thence the unregulated flow of gas downstream. I also find that the fracture of the disc holder was caused by the defective manufacturing process as explained by Prof Hoffman.
200 It was admitted that the failure of the FSR caused over-pressurisation downstream. The evidence, taken in combination, just as a cable is made up of strands, firmly established, in my opinion, that over-pressurisation caused LPG to leak from the filters to cause the fire and explosion. Contrary to the defendants' contention, the possibility of alternative explanations for the condition in which the filters, OPSOs, gauges, and the FSR was found after the event neither contradicts nor diminishes the evidence in support of this conclusion. The defendants' strategy of doubt-mongering was not enough to undermine the plaintiffs' case, or to overcome Mr Cox's concession that if the pressure wave theory failed, the only available explanation was that advanced by the plaintiffs.
201 For these reasons I find that it was the failure of the FSR for which no over-pressure protection had been provided which caused the fire and explosion. The defendants admitted that the over-pressurisation and leakage of gas from the failure of the FSR would have been prevented by the installation of an OPSO." (Red 131M-133N)
There were issues raised at trial as to the nature and the content of any duty of care owed by the appellants to the respondents and as to the terms of the contracts between them. The meaning and application of exclusion clauses in those contracts was also a matter of contest. None of those issues was pursued in the appeal.
Apart from the issue of causation, the only other issue pursued by the appellants in the appeal was contributory negligence. The single ground relied upon was:
"The plaintiffs failed in their common law and/or contractual duty to isolate the storage tank when the factory was closed down and left unattended on 25 January 2003."
At trial, the appellants submitted that the duty to isolate the tank when the factory was unattended arose from the inherently dangerous nature of the installation, the requirements of clause 10.2.10 AS 1596-2002 and the respondents' contractual obligations to comply with basic safety requirements. Clause 10.2.10 of the Australian Standard provided:
"When a site is unattended by trained staff, the tank is not in use and not fitted with an automatic shut-down system, the tank isolation valve shall be kept closed."
On the appeal, the requirement that the respondents comply with contractual obligations was not pursued.
At trial, the primary judge resolved the contributory negligence issue as follows:
"317 To succeed in the claim of contributory negligence, the defendants must prove that the plaintiffs had been contributorily negligent in failing to take precautions against the risk of such harm (s 5R(1)). In deciding what a reasonable person in the plaintiffs' position would have done, and whether he exercised reasonable care in the circumstances, it is necessary to take into account the evidence of the plaintiffs' knowledge, understanding, and actions, shortly prior to the accident (Council of City of Greater Taree (par 108)). In my opinion the relevant risk of harm against which precautions might have been taken was over-pressurisation downstream from the failure of the FSR, which would have been prevented by the installation of an OPSO. Accordingly I do not accept that failure to isolate the tank was a failure to take a precaution against the risk of harm which is capable of establishing negligent conduct on the part of the plaintiffs. It follows that the defendants' claim on this ground should be dismissed.
318 Nevertheless, it is appropriate to consider the issue that isolation of the tank was a precaution to be taken by the plaintiffs against the risk of the harm.
319 On the question of knowledge, I accept the evidence of Mr Heness and Mr Goldring as truthful. I find that neither knew of the requirement of cl 10.2.10 of AS 1596-2002, or of similar information. I also infer that it was improbable that anyone else employed by the plaintiffs had this knowledge. It follows that the defendants have failed to prove that the plaintiffs knew of any instruction or information that the tank should be isolated when the factory was closed down.
...
321 In my opinion, the defendants have utterly failed to prove that it was negligent of the plaintiffs, or either of them, to have closed down the factory on 25 January 2003 without isolating the tank. To the contrary, I find that in the circumstances it was reasonable for the plaintiffs to have closed down the factory without isolating the tank, doubtless on the assumption that there was no risk of harm and/or it was safe to do so. It follows that the defendants have established no basis for apportionment under s 5S. Accordingly, their claim on this ground is rejected." (Red 75U-177M)
THE APPEAL
The OPSOs on the Second Stage Regulators
As indicated, there were two OPSOs fitted to each of the second stage regulators on the dryer. There was an OPSO on the boiler, which it was agreed had been tripped by mechanical means because the boiler was, at the relevant time, isolated. Finally, there were three OPSOs on the baking oven; one fitted to each second stage regulator. His Honour's findings at [197] and the submissions of the parties were directed to the three OPSOs on the baking oven.
The findings made by his Honour in relation to those three OPSOs were:
"197 The defendants demonstrated the possibility that OPSOs may be tripped by mechanical shocks. Nevertheless, in this case, Mr Kerruish adhered to his opinion that it was over-pressurisation, not the violence of the explosion, which caused the relevant OPSOs to trip. His was an explanation he was well qualified to give, and which I accept. It is strengthened by the evidence that the zone 3 regulator OPSO, with a pressure rating of 450 kPa had not tripped. I am satisfied on the probabilities that over-pressurisation tripped the second stage regulator OPSOs prior to the explosion." (Red 132G-K)
The appellants submitted that the findings made by the primary judge at [197] were not open to him. They submitted that once it was established (as his Honour accepted) that the OPSOs on the second stage regulators might be tripped by mechanical shock, there was no logical basis for rejecting that possibility and preferring over-pressurisation. The issue was one of scientific fact and could not be resolved by a credit finding in favour of Mr Kerruish.
In support of those submissions, the appellants referred to the evidence of Mr Kerruish to the effect that he had examined the OPSOs in situ to ensure that the removal process did not result in an accidental tripping and that even movement in the back of a vehicle during transport could have that effect. The mechanical shock relied upon by the appellants was the explosion which would have exerted forces significantly greater than those involved in removing the OPSOs and transporting them.
In further support of this challenge, the appellants relied on the non-controversial fact that the OPSO on the boiler had tripped in circumstances where it was clear over-pressurisation could not have been involved. (That is because the manual isolation valve on the boiler gas train had been closed prior to the explosion.) They submitted that this made it clear that substantial forces were in play, sufficient to trip the OPSOs on the baking oven.
The appellants submitted that had over-pressurisation accounted for the tripping of the first two OPSOs rated to 240 kPa, it did not explain why the third OPSO rated to 450 kPa did not trip. They submitted that if over-pressurisation to 850 kPa had occurred, this should have tripped the third OPSO and its failure to trip counted against over-pressurisation having occurred.
The appellants submitted that there was an issue between Mr Donnelley and Mr Kerruish as to the rating of the second stage OPSOs on the baking oven. The ratings attributed to them by Mr Kerruish (set out above) were based on labels which were affixed to the regulators. The ratings attributed to them by Mr Donnelley (of 870 kPa each) were based on the ratings in the manufacturer's pamphlet. Although his Honour implicitly accepted the assessment of Mr Kerruish, the appellants complained that he did not explain why.
This issue was potentially important in that if Mr Donnelley were correct in rating the OPSOs at 870 kPa, over-pressurisation to 850 kPa would not have caused them to trip and it was much more likely that mechanical shock had done so.
The appellants submitted that contrary to his Honour's finding, the post explosion "non-tripped" state of the third OPSO could not strengthen the conclusion of Mr Kerruish that over-pressurisation had caused the first two OPSOs to trip. On the contrary, it was a difficulty which stood in the way of an acceptance of his conclusion and needed to be explained. They submitted that his Honour had not resolved that issue.
The explanation given by Mr Kerruish under cross-examination was that the over-pressurisation had been in excess of 240 kPa, but not more than 450 kPa, with the consequence that the third OPSO did not trip. He explained that this occurred because the third OPSO was the furthest away on the gas line and that the gradual over-pressurisation of the gas line from the slow failure of the sealing disc in the FSR, caused the zone 1 and zone 2 filter boxes to leak before the third OPSO was exposed to a level of over-pressurisation above 450 kPa. By way of an alternative explanation, Mr Kerruish said that devices such as OPSOs could often withstand pressures greater than their rated maximum.
Although the theory of Mr Kerruish as to gradual over-pressurisation was contrary to that expressed by Professor Hoffman, it was consistent with the opinions of Mr Donnelley and Mr Pearson. While his Honour preferred the opinion of Professor Hoffman on that question, he did not reject the other approach. The gradual increase in pressure theory was well and truly in play.
It was open to the appellants to challenge the conclusion of his Honour on this issue on the basis that it did not explain why the third OPSO did not trip. However, the alternative theory put forward by the appellants that mechanical shock tripped the first two OPSOs did not explain why that mechanical shock did not also trip the third OPSO. This is particularly so since the evidence of Mr Kerruish relied upon by the appellants on this issue indicated that it would not take a great deal of mechanical shock to trip such devices.
While the issue was essentially a scientific one, there was a part to be played by his Honour's assessment of Mr Kerruish. His evidence was based on a lifetime of actual experience in the design and operation of LPG installations, including regulators and OPSOs. He had held an unrestricted gas installer's licence for over 30 years. His Honour was, therefore, entitled to give his opinion considerable weight, particularly when the only opinion to the contrary was that of Mr Cox.
That having been said, I have concluded that there is force in the appellants' criticism of this finding by his Honour. If for other reasons it was open to his Honour to find that the respondents had established their case on causation, then the tripping of the first two OPSOs on the second stage regulators would support that conclusion. As an independent piece of evidence, however, they do not take that matter forward and provide little assistance to the position of either the appellants or the respondents.
The Bourdon Tube Pressure Gauges
The appellants submitted that the finding by the primary judge at [198] was not open to him on the evidence:
"198 The evidence concerning the Bourdon tube pressure gauges, in my opinion, founds the inference that they were subject to over-pressurisation before explosion. The [appellants] established no alternative explanation for their condition, and left the question open. Mr Kerruish's conclusions in respect of both gauges were based on his examination of them, coupled with his experience of LPG systems and installations. I accept them. I prefer his evidence to that of Mr Cox, who agreed that he lacked similar experience." (Red 132M-Q)
The appellants' main criticism of his Honour's conclusion on this issue was that his Honour did not take into account all of the evidence, in particular that of Professor Hoffman, and that his Honour misunderstood the effect of the evidence as to the Bourdon tube pressure gauges.
It was the respondents' case that both the FSR Bourdon tube pressure gauge and the dryer Bourdon tube pressure gauge had been subject to over-pressurisation and that this supported a failure of the FSR before the explosion, otherwise there was no explanation for that over-pressurisation. The appellants submitted that what his Honour did not take into account was that the condition of the two Bourdon tube pressure gauges after the explosion was quite different.
It was common ground that the FSR Bourdon tube pressure gauge was damaged by over-pressurisation. That was the accepted explanation for the position of the needle below the zero peg and for the bulging of the Bourdon tube. The damage to the dryer Bourdon tube pressure gauge was different. There was no bulging of the Bourdon tube and the needle was displaced about five degrees from the zero peg. The dryer Bourdon tube was also slightly "out of true roundness".
It was the evidence of Professor Hoffman at the conclave of experts that "if the Bourdon tube pressure gauge located adjacent to the dryer was subjected to the same degree of over-pressurisation as the Bourdon tube pressure gauge located immediately downstream of the first stage regulator it would have suffered similar damage namely, bulging of the Bourdon tube". (Conclave Q.15.4) (Blue 1494S-T)
The appellants submitted that his Honour had not taken that evidence into account. They submitted that rather than assist the respondents, the condition of the Bourdon tube pressure gauges suggested that over-pressurisation had not occurred before the explosion. This was because it was common ground that if the FSR had failed and caused the second stage pipework to be over-pressurised, both Bourdon tube pressure gauges would have been subjected to the same maximum pressure. (Conclave Q15.3) (Blue 1494N-P)
The only expert who supported the "pressure wave theory" was Mr Cox. In his evidence, he accepted that if his theory were wrong then on the available evidence the alternative theory must be correct. While that concession did not absolve the respondents from proving their case, it meant that if the pressure wave theory were rejected, all of the expert evidence supported the alternative theory.
The trial judge rejected the pressure wave theory. In the appeal, the appellants did not challenge that finding and abandoned any reliance upon the theory. What they sought to do was to identify pieces of evidence and by reference to that evidence persuade the Court that the respondents had not made out their case on causation. There was no expert evidence to support that approach in a comprehensive way, i.e. there was no expert who had in a holistic way, incorporated that evidence into a theory which explained how the accident occurred.
Even Mr Cox, whose measurements of the tested gas filter box and the zone 1 filter box formed the basis of the appellants' challenge to his Honour's findings as to causation, was not able to identify any theory of causation other than the "pressure wave theory" or the respondents' alternative.
What the Court was confronted with was a legal construct, which challenged an important finding, but which offered no cohesive alternative theory, i.e. no alternative theory of causation which explained all the pieces of evidence which had been carefully examined by experts over 46 days of hearing and which was set out in over 1000 pages of expert reports. The best that the appellants could come up with was that there must have been a gas leak at a location other than the zone 1 and zone 2 filters which had allowed gas to escape in sufficient quantities to cause the fireball and explosion. No attempt was made (nor could it be made since this was an approach not followed at trial) to identify where such a leak had occurred, why it had occurred at that time and if it had occurred at this unknown location, what the downstream and upstream effects would have been. That latter consideration was necessary to test the theory of an alternative source of the gas leak by reference to other pieces of evidence.
Nothing of that kind could be done on an appeal. What was done was to focus on three particular pieces of equipment, i.e. the zone 1 and zone 2 filters, the Bourdon tube pressure gauges and the OPSOs on the second stage regulators to establish that their condition did not support the respondents' theory of causation and in the case of the filter boxes, that it positively disproved it. No attempt was made to explain how if the appellants' interpretation of the evidence were accepted, the explosion occurred. This was a problem for the appellants and justified the criticism by the respondents that the whole focus of the appeal was too narrow and failed to take into account the totality of the evidence.
The position of the respondents on appeal was the same as that which they had adopted at trial. Their theory of causation depended upon the FSR failing before the explosion. While there were differences between their experts as to the precise sequence of events leading to the explosion, there was unanimity on the fundamental proposition that the downstream gas trains had become over-pressurised, leading to a failure of the zone 1 and zone 2 filters. Given the extent of the destruction, not every aspect of that theory could be proved, but there was a general consistency in all of the evidence and, as the primary judge found, those pieces of evidence taken together, operated as the strands of a cable leading to the necessary state of persuasion which allowed him to find in favour of the respondents.
While it is true that his Honour, having reviewed the evidence and submissions, set out his conclusions without fully analysing all of the competing pieces of evidence, that exercise has been able to be carried out by this Court. The result of the Court's analysis is to support his Honour's ultimate conclusion.
While the measurements of Mr Cox of the zone 1 filter box and of the filter box which was tested cast some doubts on the zone 1 and zone 2 filter boxes being the source of the gas leak, they do not for the reasons identified, invalidate that proposition.
The evidence concerning the Bourdon tube pressure gauges and the OPSOs on the second stage regulators, looked at in isolation is at best neutral and does not positively persuade one way or the other. Importantly, however, the evidence in relation to those pieces of machinery is not inconsistent with the respondents' theory.
Although the evidence concerning the "missing gas" is not without its difficulties, on balance, it favours a failure of the FSR before the explosion.
Once the three specific challenges by the appellants to his Honour's conclusions are shown to not invalidate them, the positive evidence in support of his Honour's conclusions is overwhelming. All of the expert evidence, including that of Mr Cox, supports the fundamentals required to substantiate the respondents' theory of causation. There is no rival theory of causation. It follows that the appellants' challenge to his Honour's findings as to primary liability must fail.
Contributory Negligence
As indicated, the appellants only relied upon one particular of contributory negligence, i.e. that the plaintiffs failed in their common law duty to isolate the storage tank when the factory was closed down and left unattended on 24 January 2003.
Section 5R of the Civil Liability Act 2002 (CLA) applies:
"(1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm.
(2) For that purpose:
(a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and
(b) the matter is to be determined on the basis of what that person knew or ought to have known at the time."
It was common ground that the tank isolation valve was not closed when the site was unattended on 24 January 2003. Mr Heness was the factory manager. His evidence was that there was never a requirement to close the isolation valve at the tank and that the respondent had never done so. Under cross-examination he agreed that if required, it could have been done but it would delay start up and be impractical. He agreed that there was nothing to stop the respondents isolating the gas tank had they wanted to on 24 January 2003 (T.186).
Mr Goldring was a director of each of the respondents. It was his evidence that gas was turned off at the individual appliances, but not at the gas tank. His evidence at the coronial inquiry, which he confirmed at trial, was:
"Q. Did anyone turn off the gas supply then?
A. No.
Q. That you know of?
A. No, not to my knowledge, no. It wasn't a regular practice, sorry. We certainly turned the gas off at the appliances otherwise gas would continue to leak into the plant. But there, there wasn't a standard practice to turn off the gas at the tank, in fact the tank was out of bounds to our people." (T.629.38)
Other evidence given by Mr Goldring was:
"Q. But that risk could have been avoided, couldn't it, if you had a procedure to turn the gas off at the tank, isn't that right?
A. I don't know about that, I wasn't aware of any need to turn the gas off at the tank.
Q. Mr Goldring, common sense would tell you that if you are not going to be in the factory for a couple of days and you have a 43,000 litre gas tank, the proper procedure would be to turn the gas off at the tank, wouldn't you agree?
A. No, I don't agree. I considered it really to be like electricity or water. You don't turn those off at the mains when you leave the factory.
Q. So you see 43,000 litres of gas in much the same way as water?
A. Or electricity, yes. They are utilities.
Q. But if you light 43 gallons of water it won't blow up, will it?
A. No, it can leak into the factory and cause problems. Light power electricity can cause major problems as well." (T.630.41-631.7)
"Q. You see Mr Goldring, you didn't shut down the tank or isolate it when you were shutting down the factory because it caused a problem in starting up, isn't that the reason?
A. I think that's something that was passed onto me from the factory manager, he talked about that. I wasn't familiar with that.
Q. Do you agree with me?
A. I don't really know, that's information I was given by the factory manager at some stage.
Q. You don't really know?
A. No, I don't know. I didn't have experience. The other factories I worked at we carried out the same sort of philosophy, we never shut down the tank." (T.633.37-48)
His Honour resolved the question of contributory negligence at [317] - [321] (see [75] hereof). Not only did his Honour find as a fact that neither Mr Heness nor Mr Goldring, nor anyone else in the respondents' employ, was aware of a requirement under the Australian Standard to isolate the gas tank when the factory was unattended, he found that no-one from the appellants had provided that information to them. His Honour found that the likely explanation was that under the contract between Origin and BestCare the responsibility for keeping the equipment safe was undertaken by Origin.
The appellants submitted that the primary judge erred in his approach to contributory negligence in that he focused on the actual knowledge of the respondents, rather than upon what a reasonable person in the position of the respondents would have done in relation to the isolation of the tank. In other words, his Honour had not addressed the correct legal question. The appellants submitted that had his Honour done so, he would have concluded that, because of the inherently dangerous nature of the installation, a reasonable factory operator in the position of the respondents would have isolated the tank. This was particularly so when all that was required to do so was the closing of an isolation valve.
As the terms of s 5R(2)(b) CLA make clear, actual knowledge has a part to play in the assessment of contributory negligence. The combination of the statutory requirement and of the common law was considered in Council of the City of Greater Taree v Wells [2010] NSWCA 147; 174 LGERA 208 where Basten JA said:
"107 The assessment of the plaintiff's conduct involves a quite different exercise. A critical difference between the assessment of negligence and the assessment of contributory negligence is that the purpose of the latter assessment is to allow for an apportionment of responsibility for the injury by a reduction in the damages recoverable by the plaintiff "to such extent as the Court thinks just and equitable having regard to the claimant's share in the responsibility for the damage": Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9(1). That is a different exercise from the determination of whether or not the defendant has been negligent.
108 A further important difference in approach in assessing the negligence of the defendant, as against the contributory negligence of the respondent, involves the degree of precision by which the activity, including relevant states of knowledge and understanding, is to be identified. ... With respect to the plaintiff, the focus of the evidence is often quite different. Although the ultimate question is what a reasonable person in [the plaintiff's] position would have known and done, it is inevitable that the evidence will focus upon the knowledge, understanding and actions of the plaintiff himself, shortly prior to the accident, in part to determine whether he exercised reasonable care, but also to assess what would be reasonable care in the specific circumstances."
As s 5R and that extract from the judgment of Basten JA in Wells indicate, the correct legal question is whether a reasonable person in the position of the respondents, i.e. having the knowledge which the respondents had or ought to have had, was negligent. In this case, the factual finding of his Honour was that the respondents did not have actual knowledge of the need to isolate the tank. The only inquiry is whether they ought to have had such knowledge.
There was no expert or other evidence as to what persons operating a factory such as this should have done with respect to isolating a gas tank. There was an Australian Standard but it had only come into effect in 2002 and only applied to installations which commenced operation after 10 May 2002. The only evidence as to a general practice came from Mr Golding when he said:
"The other factories I worked out we carried out the same sort of philosophy, we never shut down the tank."
Neither that evidence nor any other evidence supported the proposition that the respondents ought to have known that the tank should have been isolated during a shut down.
On that state of the evidence, I am not satisfied that a reasonable person with the knowledge of the respondents, and in their position, would have isolated the tank before the shut down on 24 January 2003. This is particularly so when Origin, the entity responsible for the safe operation of the installation, had not provided any information or advice to that effect. His Honour was correct to reject the appellants' defence of contributory negligence.
CONCLUSION
The orders which I propose are that the appeal is dismissed and that the appellants pay the respondents' costs of this part of the appeal.
WARD JA: I agree with Hoeben JA.
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Decision last updated: 13 December 2012
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