(Re: Gynes) Eraring Energy v SC Cheadle Hulme Ltd

[2004] NSWDDT 23

Dust Diseases Tribunal

of New South Wales

CITATION:	(Re: Gynes) Eraring Energy v SC Cheadle Hulme Ltd & Ors [2004] NSWDDT 23
PARTIES:	Eraring Energy SC Cheadle Hulme Pty Ltd Wallaby Grip Limited Amaca Pty Limited
MATTER NUMBER(S):	70 of 2001/2
JUDGMENT OF:	Walker J at 1
CATCHWORDS:	:-
LEGISLATION CITED:
CASES CITED:
DATES OF HEARING:	22/04/2004 06/08/2004
DATE OF JUDGMENT:	09/24/2004
LEGAL REPRESENTATIVES:	CROSS CLAIMANT: Ms W Srathdee

JUDGMENT:

Background to Litigation

A brief history of these proceedings is as follows:

1. Arthur John Gynes contracted asbestos related diseases whilst employed by J.R.Pillars Pty Ltd as a fitter at the Tallawarra Power Station between 1955 and 1958. During that employment he was exposed to and inhaled asbestos dust and fibre while working on and near the construction and maintenance of the power station boilers.

2. The plaintiff sued his employer’s insurer TGI Australia Limited as first defendant and the power station occupier Eraring Energy as second defendant. The statement of claim was issued on 26 February 2001.

3. On 5 March 2002 the parties settled the primary claim filing terms of settlement and an order for judgment was made whereby the plaintiff received a verdict against both defendants for $80,000 and $ 50,000 costs.

4. On the 1 May 2002 Eraring Energy issued cross claims against the British Corporation Simon Carves Limited, (the designer and supplier of the boilers in question) and Wallaby Grip Limited and Amaca Pty Ltd (both manufacturers of asbestos products used in the construction of the boilers).

5. On the 30 June 2003 the third cross defendant Amaca Pty Limited settled the cross claim against it for a verdict in favour of the cross claimant of $ 22,750 plus $ 3250 costs.

6. On 22 April 2004 the second cross defendant Wallaby Grip Limited settled its cross claim against it for a verdict in favour of the cross claimant of $26,000 plus $17,000 costs.

7. On the 22 April 2004 the 1st Cross defendant being in default pursuant to the provisions of Part 17 of the Supreme Court Rules the cross claimant entered judgment pursuant to Part 17 Rule 5 for unliquidated damages and costs.

Introduction

8. Eraring Energy having had its payment to the plaintiff partly indemnified by contributions from the 2nd and 3rd Cross Defendants now seeks orders pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 apportioning the remaining $ 32,250 between the 1st cross defendant and itself.

9. The 1st Cross Defendant, having been duly served, failed to file an appearance or defence and does not appear before this Court which must deal with the apportionment assessment ex parte.

10. It is of interest to note that whilst the 1st Cross Defendant company has not been disposed to appear on this occasion it has submitted to the jurisdiction of Australian Courts in the past (see for example Henderson v Simon Engineering (Australia) Pty Ltd & Ors [1988] VR 867 (where Simon Carves Limited was first defendant ) and Shead v J.R Pillars Pty Ltd & ors ( which included S.C. Cheadle Hulme Limited as 4th Cross defendant Matter No. 43 of 1999.)

Effect of Default Judgment

11. The cross claimant has obtained judgment for unliquidated damages pursuant to Part 17 (5) of the Supreme Court Rules. Whilst damages remain to be assessed the doctrine of res judicata applies so far as the issue of liability is concerned. In other words the 1st Cross Defendant cannot be heard to dispute liability on the causes of action raised in the cross claim.

12. The cross claim pleaded three causes of action:

1. A claim for negligence based on breach of duty of care of the 1st cross defendant as a designer and manufacturer in accordance with the principles enunciated by the High Court in Voli v Inglewood Shire Council (1963)110 CLR 74.

2. A claim for negligence based on breach of duty of care of the 1st Cross Defendant as a manufacture and supplier as enunciated by the NSW Court of Appeal in Wren v CSR Limited (1997) 44NSWLR 463.

3. A claim for negligence based on breach of duty of care of the 1st Cross Defendant as a principal using the services of its agent and independent contractors who omitted to prescribe and provide a safe system of work as enunciated by the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16.

Cross Claimants Submissions on Preliminary Findings

13. The cross claimant submits that this Tribunal should make the following preliminary determinations necessary to support its ultimate submission on the appropriate apportionment of damages:-

1. Whether the plaintiff was employed by J.R Pillars Pty Ltd working on or near boilers No.1 to 4 at the Tallawarra Power Station during its construction between 1955 and 1958?

2. Whether the cross claimant assumed the rights and liabilities of the Electricity Commission of NSW (“Elcom”) as its successor in title?

3. Whether J.R.Pillars Pty Ltd was a sub-contractor to both Simon Carves Limited and \ or Simon Carves (Australia) Pty Ltd at all relevant times?

4. Whether Simon Carves (Australia) Pty Ltd was the agent of Simon Carves Limited in Australia at all relevant times?

5. Whether pursuant to contracts between Elcom and Simon Carves (Australia) Pty Limited, Simon Carves Limited designed, manufactured and supplied boilers and associated steam plant for the Tallawarra Power Station which were required to be sealed, packed and insulated with asbestos products?

6. Whether implicit in the design, manufacture and supply of the boilers and associated steam plant by Simon Carves Limited was its knowledge that in the use of such asbestos products in the processes of sealing packing and insulation asbestos dust and fibre would be liberated in circumstances in which a person such as the plaintiff would be exposed?

7. Whether as a result of exposure to asbestos dust and fibre in the course of his employment with J.R Pillars Pty Ltd, the plaintiff contracted asbestosis and asbestos-related pleural disease?

8. Whether Simon Carves Limited is a tortfeasor who, if sued by the plaintiff would have been liable for damages and is therefore liable to contribution pursuant to contribution pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946?

9. Whether in the course of its activities Simon Carves Limited by 1931 had acquired actual knowledge as to the dangers of inhalation of asbestos dust and fibre?

10. Whether Elcom from its inception in 1950 until 13 January 1970 did not have actual knowledge as to the danger of inhalation of asbestos dust and fibre, but had constructive knowledge?

11. Whether as at 14 January 1970 Elcom had actual knowledge of the damages of inhalation of asbestos dust and fibre?

Preliminary Findings

14. The cross claimant requests the Court to make findings on factual matters prior to addressing the apportionment issue. Some of those findings relate to material facts upon which the default judgment on liability was founded. However to avoid doubt I propose to make the determinations requested.

1. Plaintiffs Employment with J.R.Pillars Pty Ltd

15. The affidavit of Arthur Gynes sworn 5 March 2002 ( Exhibit 15 in Volume I) attests at paragraph 14 that he was employed as a fitter by J.R Pillars Pty Ltd between 1955 and 1958 working on boilers and economisers at the Tallawarra Power Station. There being no evidence to the contrary I find accordingly.

2. Cross Claimant Successor to Elcom as Occupier of Tallawarra Power Station.

16. The voluminous documentary evidence in Volumes I & II of the cross claimant exhibits show that the Electricity Commission of New South Wales ( Elcom) was the owner occupier of the Tallawarra Power Station between 1955 and 1958. See in particular Volume II exhibit 43 which is the contract between Elcom and Simon Carves Limited dated 18 April 1955.

17. The pleadings ( at [1.4] Note that pursuant to the provisions Schedule 7 Part 2 Section 3 of the Energy Services Corporations Act 1995 the cross claimant is deemed to have been the occupier and to have assumed all liabilities relating to the Tallawarra Power Station between 1955 and 1958. I find accordingly.

3. J.R Pillars Pty Ltd was a subcontractor to both Simon Carves Limited and Simon Carved ( Australia) Pty Limited Between 1955 and 1958.

18. The evidence concerning the relationships of JR Pillars and Simon Carves ( Australia) Pty Ltd is as follows:

· The plaintiff attests he was employed by JR Pillars Pty Ltd at the Tallawarra Power Station between 1955 and 1958

· J.R Pillars Pty Ltd was a subcontractor of Simon Carves ( Australia) Pty Ltd. The evidence supporting this proposition is a letter dated 25 March 1953 from Simon Carves ( Australia) Pty Limited to Elcom admitting that J.R Pillars Limited is their subcontractor.

· The affidavit of Walter Wilcockson dated 12 April 1996 indicating the relationship of Simon Carves and JR Pillars as head contractor and subcontractor at the Bunnerong and Mary Kathleen power stations in 1955.

· Correspondence between Simon Carves ( Australia) Pty Ltd and Elcom dated 15.6.55, 15.8.56 and 6.11.56,4.7.57 confirming the dominant role played by Simon Carves Limited in the construction of the boilers at Tallawarra Power Station.

· Photographs of officers of Simon Carves and J.R Pillars side by side at the Tallawarra Power Station ( Vol I Exhibit 20)

19. The cross claimant has succeeded in its claim that a principal and agent relationship existed between Simon Carves Limited and its wholly owned Australian subsidiary sufficient to establish the duty of care enunciated in Stevens v Brodribb.

20. I find on the balance of probabilities that J.R Pillars limited was a subcontractor to Simon Carves ( Australia) Pty Ltd and through it to its principal Simon Carves Limited at all relevant times.

4. Simon Carves Limited designed manufactured and supplied the boilers and associated steam plant at the Tallawarra Power Station.

21. The cross claimant presents volumes of evidence that go to establishing that Simon Carves Limited was the designer , manufacturer and supplier of the 4 boilers economisers and associated piping at the Tallawarra Power Station. Included in that evidence is:

· Memorandum of Elcom dated 5 February 1952 detailing financial and legal arrangements following the formal tender for the boilers, including the shipping from England of the boiler plan and associated structures

· Letter from British Electricity Authority to Agent General for NSW confirming Simon Carves Limited specification and costings were reasonable.

· Letter from Southern Electricity supply to Simon Carves limited dated 30 September 1949 noting the subsidiary Simon Carves ( Australia) Pty Limited was to carry out the contract work but insisting that any contract be signed with Simon Carves Limited.

· Extract from Minutes of Elcom dated 15 October 1953 approving making of contracts between Simon Carves Limited and Department of Public Works NSW dated 26 July 1949 indicating intention for the Australian subsidiary to perform work under direction of Simon Carves Limited manager Mr Morrison and requesting contract with Simon Carves Ltd to supply the boilers and associated equipment to be transferred to subsidiary subject to guarantee of Simon Carves Limited.

· Tender of Simon Carves ( Australia) Pty Ltd for spare parts to be manufactured by Simon Carves Limited dated 16 September 1954.

· Letter from Simon Carves ( Australia) Pty Ltd to Elcom indicating that 1st cross defendants Engineers will carry out acceptance tests on boilers in Australia.

· Deed of agreement between Simon Carves Limited and Department of Public Works dated 4 April 1949

· Contract 149 between Simon Carves ( Australia) Pty Ltd and Elcom dated 18 April.

· Letter forwarding 1st cross defendants contract drawings 9 August 1956.

22. The evidence before the Court clearly establishes that the 1st cross defendant was the designer manufacturer and supplier of the four boilers at the Tallawarra Power Station Lake Illawarra. It also makes it clear that whilst the contract for the construction of the boilers in Australia was eventually novated to the 1st cross defendant’s Australian subsidiary the parent company not only guaranteed the work but exercised its control over its subsidiary to ensure that the work met the specifications.

23. On the balance of probabilities I find that the 1st cross defendant designed manufactured and supplied the boilers and associated steam plant at the Tallawarra Power Station.

5. The 1st Cross defendant plans and specifications included the use asbestos products

24. The evidence establishes that the use of asbestos was integral to all aspects of Simon Carves Limited design work and patented boilers assembly. In particular I note the following evidence:

· Quotation for feed suction and delivery range dated 28 July 1955 including “insulation erection”.

· Quotation for blow down piping 28 July 1955 including “insulation erection”

· Letter of 4 August 1955 including “supply and erection of necessary insulation” on No.1 boiler 1 to 3 dated 1 November 1956.

· Specifications dated 21 June 1955 including “Asbestos Handhole and jointing”.

· Contract Drawings [I-154 to 155 and I 159-161] specifying asbestos insulation jointing and millboard to be used in construction of boilers and associated equipment.

· Plaintiffs affidavit showing extensive use of asbestos products on boilers

· Affidavit of Henry Pennell 6 December 2002 identifying James Hardie pipe-section used in preformed lagging work.

· Affidavit James Rogers sworn 6 December 2002 describing working for JR Pillars as asbestos lagger at Tallawarra Power station in 1955.

· Affidavit of Donald Shead 8 October 1999 describing work for JR Pillars at Tallawarra Power Station from 1952 to 1958 as an asbestos lagger.

· The text of the plans for the boilers in evidence includes many references to the use of the following asbestos products in the boiler construction for:-

- Packing gaps with asbestos rope
- asbestos insulation
- packing expansion joints with ¾ asbestos fibre filled rope lagging
- asbestos future filled rope lagging
- millboard ( an asbestos product)

· The plans and specification mention both the type and trade names of asbestos products to be used on specific parts of the boiler plant and equipment.

25. On the balance of probabilities I determine that the 1st Cross defendants designs and specifications required use of asbestos products in the construction of the Tallawarra Power Stations boilers and associated plant.

6. Knowledge of the 1st Cross Defendant that use of products containing asbestos would liberate asbestos fibre and dust in circumstances in which the plaintiff would be exposed and injured.

26. Proof of knowledge is required to establish liability in negligence and the cross claimant has judgment on that issue.

27. Proof of liability involved establishing:

1. The 1st cross defendant was responsible for or had assumed responsibility for the presence of asbestos dust and fibre at the Tallawarra Power Station and the circumstances that caused the plaintiff to inhale that dust and fibre.

2. The 1st cross defendant had either

(a) actual knowledge of the risk of injury or

(b) imputed knowledge of the risk of injury and

(c) recognised that the state of affairs at the Tallawarra Power Station constituted a risk of injury to the plaintiff.

28. The Court is required under s 5(2) of the Law Reform (Miscellaneous Provisions) Act 1945 to have regard to the extent of the parties responsibility for the damage; a concept that involves a comparison of relative culpability in causing the damage.

29. The cross claimant is anxious to establish that the relative blameworthiness of the 1st cross defendant was high because its knowledge was actual rather than imputed and it was perfectly aware of the dusty environment surrounding the boilers at the Power Station and the system of work that would bring workers such as Mr Gynes into contact with large quantities of asbestos dust and fibre and consequently the circumstances in which the risk of contracting asbestos related diseases may come home.

Personal Responsibility

30. The gravity of a corporations failure to act reasonably is to be found by weighing the culpability of natural persons be they members of the board or its servants and agents. The cross claimant points in particular to exhibit 10 in Volume 1 which is a letter from Simon Carves Limited to the Department of Public Works of NSW dated 26 July 1949 announcing the appointment a Mr Morrison as managing Director of its Australian subsidiary who would be responsible for carrying out the work at Tallawarra Power Station.

31. On reading the correspondence and contract between Simon Carves Limited and the NSW Government it is clear that in consideration of the 1st Cross defendants Australian subsidiary being allowed to take over the construction work on the boilers and plant at the Power Station Simon Carves Limited had to guarantee performance of that work. The appointment of Mr Morrison was one of the steps designed to reassure the NSW Government that the 1st Cross defendant would ensure quality control and contract delivery and goes

strongly to the issue of the 1st cross defendants assumption of responsibility for failure of its agent to act reasonably.

Circumstances at the Tallawarra Power Station

32. On considering all the evidence I have drawn on the balance of probabilities the following inferences of fact relevant to the issue of the 1st Cross defendants knowledge about the circumstances at the Tallawarra Power Station at the relevant times:

1. As a world leader in boiler design and construction the 1st cross defendant would have protected its reputation, commercial interests, and obligations under the Water Tube Boilermakers Agreement as well as its guarantee to the NSW government by ensuring that Mr Morrison or his successors would have kept the parent company fully informed about all the circumstances of the construction of the boilers at Tallawarra Power Station.

2. In appointing Mr Morrison as a manager to supervise construction the 1st cross defendant, cognisant of its guarantee to the NSW Government, would have selected a man whose skills encompassed:-

· An understanding of the plans specifications and construction requirements of Simon Carves boilers including the use of asbestos to insulate the boilers economisers and associated plant and equipment.

· An understanding of the backgrounds and nature of the various tradesmen that would be required to work on the boilers particularly fitters and laggers including their education levels and their ignorance of the dangers of inhaling asbestos dust.

3. To ensure the work, including the work of subcontractors such as J.R. Pillars Pty Limited, met the required standards to protect Simon Carves Limiteds guarantee Mr Morrison and engineers supervised by him would have personally inspected the construction from time to time. In doing so they could not have but have helped notice:-

· The manner in which the laggers mixing cutting and working with asbestos created a dusty environment in the vicinity of the boilers described in the affidavits of Mr Gynes and others.

· The fact that workers and bystanders were inhaling air containing asbestos dust and fibre.

· The fact that there were no signs on the boilers or associated plant and equipment that advised the workers that asbestos dust and fibre was potentially dangerous to their health.

· The fact that no protective clothing, masks, exhaust equipment, ventilation, water dampening or other measures was provided to protect the workers from the effects of dust and fibre.

State of Knowledge of Simon Carves Limited of Dangers of Asbestos

33. This brings me to the question of the state of knowledge of Simon Carves Limited as to the dangers that use of asbestos products posed for the health of workers.

34. Some 55 years have elapsed since the 1st Cross defendant signed the contract with the NSW Government and direct oral evidence as to the knowledge of the board of Simon Carves Limited is no longer available to the cross claimant.

35. The cross claimant seeks to prove the issue of actual knowledge by reference to the following sources:-

· Statutes and Regulations of the United Kingdom Parliament relating to asbestos in force at the time.

· Reports of Commissions of Inquiry of the Home Office in 1929 and 1930.

· The evidence tendered in Babcock Australia Limited v Eraring Energy (No 2) (2001) 22 NSWCCR 141 admitted pursuant to the provisions of s 25(3) of the Dust Diseases Tribunal Act 1989. That evidence includes correspondence between the Home Office, Employers Associations and Trade Unions that preceded the enactment of the U.K. Factories Act of 1937 and Regulations under the Workmens Compensation Act 1925 and Regulations under the Factory and Workshop Act 1901.

· The 1st cross defendants role in the British cartel called the Water-Tube Boilermakers Association described in Re Water-Tube Boilermakers Associations Agreement (1959) 1 WCR 1118 and specifically the research capacity of that Association, its examination of asbestos jointing in 1954 and the requirement in the agreement for members to keep one another informed of significant developments in the industry.

· A history of Simon Carves Limited entitled “The Simon Engineering Group”.

36. The cross claimants submission is that when all this evidence is read together the inference that can be drawn by the Court is that by 1931 Simon Carves Limited had actual knowledge that exposure to asbestos dust and fibre caused or could cause partial or total disablement and death to workers.

Background History of Simon Carves

The evidence tendered reveals the following history:-

1. In the first half of the 20th Century Simon Carves limited was one of the giants of the water tube boiler making industry (see In Re- Water- Tube Boilermakers Associations Agreement [1959] 1WLR 1118 ( Vol 1.1)

2. Simon Carves Limited in 1933 formed with others the trade cartel known as the Water Tube Boilermakers Association (Vol 1.1 page 1121) Its staff regularly attended meetings of the association including technical and research committee meetings ( Vol 1.2)

3. By the mid 1940’s 98% of orders for boiler plant and steam raising equipment used in power stations were controlled by the cartel. By 1950 the cartel had a complete monopoly of power station work.

4. The Research Committee of the Association specifically examined asbestos jointing in 1954 ( Vol 1.2)

5. The boiler department of Simon Carves Limited operated from 1925. The company developed, patented and built furnaces for Electricity Boards at Warrington, Stockport Blackburn and Croydon ( Vol 1.3). From the 1940’s Simon Carves Limited exported boilers around the world to the USSR India, Iran and Australia.

6. Simon Carves Limited constructed a steam generating plant for the NSW Government at the Bunnerong Power Station in 1948 and contracted to construct the Tallawarra Power Station on 4 April 1949. ( see Vol 1.4)

7. In addition to designing furnaces and boilers Simon Carves Limited developed highly integrated systems for clients recognising the scientific control of work processes as of the utmost importance. The use of asbestos as an insulator was integral to its design works.

37. The evidence tendered reveals the following facts:

1.Simon Carves Limited established a presence in the Australian market after the second world war working in NSW and Victoria.

2. It contracted with the NSW Department of Public Works to manufacture, supply and build 2 boilers for the Tallawarra Power Station on 4 April 1949 ( Vol.6)

3. In July 1949 Simon Carves Limited asked the NSW Government to assign the construction side of its contract to its wholly owned Australian subsidiary Simon Carves (Australia) Pty Ltd. That request was granted subject to the parent company’s guarantee ( Vol 1, 6 and 8)

4. On 15 February 1951 a further contract was entered into for Simon Carves Ltd to manufacture and supply and its subsidiary to build 2 further boilers and associated plant at Tallawarra ( See Vol 1.6) That contract was guaranteed by Simon Carves Limited on 15 October 1953 ( Vol 1.9) Later further contracts were entered into for the supply of spare parts and maintenance of the boilers.

Control by Simon Carves Limited over Australian Subsidiary

38. The evidence tendered reveals the following facts:

1. When Simon Carves (Australia) Pty Ltd was founded in June 1949 Simon Carves Limited placed it under the management of Mr H.J Morrison (Vol I.10)

2. The boilers used in power stations installed by the Australian subsidiary were designed manufactured and supplied to it by Simon Carves Limited. Moreover the spare and replacement parts for the boilers were also designed manufactured and supplied by Simon Carves Limited (Vol 1 12 and 13)

3. The acceptance testing of the boilers was conducted by an Engineer sent to Australia by Simon Carves Limited who had recently carried out similar tests in the UK ( Vol 1.14)

Simon Carves Limited’s Specification of the use of Asbestos in the boilers and plant.

39 A volume of evidence was adduced from contract documents quotations plans drawings specifications as well as affidavit evidence which established that Simon Carves Limited required the use of a great deal of asbestos to insulate its gigantic power station boilers and associated plant.

Actual Knowledge of Dangers of Asbestos

40. The cross claimant relies upon circumstantial evidence concerning events occurring as long as 75 years ago and having proved those circumstances asks the court to draw inferences on the probabilities concerning the state of the 1st cross defendants knowledge of the dangers of asbestos dust and fibre to humans.

41. To discharge its evidential onus of making out a prima facie case sufficient to support its allegations the cross claimant relies heavily on events surrounding the Merewether Price Report published by the Home Office in 1930 and the correspondence between the Home Office, Trade Unions and regional and peak Engineering Employers Associations that took place between 1930 and 1931 as the United Kingdom Parliament enacted a framework of industrial laws and regulations that were designed to protect workers involved in the mixing and manipulation of asbestos from the health dangers revealed in the report by requiring the use of protective equipment and safe systems of work.

42. It also relies upon the findings of Judge Curtis in Babcock Australian Limited v Eraring Energy No 2 (2001) 22 NSWCCR 141 that the 1st Cross Defendant’s fellow member of the Water-Tube Boilermakers Association Babcock International Limited had actual knowledge of the dangers to workers in power stations from asbestos inferred from the circumstances-previously described and asks this court to draw the inference that because of the requirements in the terms of the Associations agreement it is inconceivable that the 1st cross defendants would not have learned the facts that constituted Babcock Internationals actual knowledge.

43. Before I make a determination on the inferences of fact I am asked to make I should first refer to the law I am required to apply. In Holloway v McFeeters [1956] 94 CLR 470 at 480 the High Court said

“ Inferences from actual facts that are proved are just as much as part of the evidence as those facts themselves. In a civil cause you need only circumstances raising a more probable inference in favour of what is alleged…… where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference; they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is a mere matter of conjecture- see Lord Robson Richard Evans & Co Ltd v Astley (1911) AC 647 at 687”

44. The cross claimant refers the court to the decision of the New South Wales Court of Appeal in Fabre v Arenales (1992) 27 NSWLR 427 on the question of the courts powers to draw inferences. In particular reference is made to the judgment of Mahoney J.A at page 444 where he said:

45. “the psychological process by which facts are found, in life as well as in court is often intuitive rather than the result of a conscious rational process. But it is legitimate and indeed necessary to test a finding of fact arrived at in that way at least, if it be made by inference, by considering whether it is unacceptable because it is illogical irrational or the like”

46. This Court, as an expert Tribunal, is aware that since about the turn of the 20th Century the authorities in Great Britain had been aware that exposure of humans to asbestos was dangerous to their health ( eg The report of the Chief Inspector of Factories in 1898 on the effects of asbestos dust and the Parliamentary Inquiry of 1906)

47. The cross claimant does not attempt to sheet home actual knowledge before 1931 and relies upon the industrial history recounted by my learned colleague His Honour Judge Curtis at [70] to [91] In Babcock Australia Ltd v Eraring Energy ( supra) to lay the foundation for its argument that members of the Water-Tube Boilermakers Association, which included the 1st cross defendant were well aware of the following events occurring in the United Kingdom in the early 1930’s:

1. The publication by the Home Office in 1930 of the Merewether and Price Report upon the effects of asbestos on the lungs of workers in the asbestos industry.

2. The publication by the Home Office in 1931 of the draft “Asbestos Industry (Asbestosis) Scheme” which was eventually promulgated on 30 April 1931 and applied to engineering works involved in the mixing and manipulation of asbestos. ( subject to exclusion of works where only occasional mixing took place).

48. It is the cross claimants submission that this Tribunal should find that it is inconceivable that Simon Carves Limited, a company which undoubtedly shared membership with Babcock International limited of Water-Tube Boilermakers Association, would not have been aware of the Merewether Price Report and the correspondence between the Home Office and the Engineering and Allied Employers National Federation as well as regional engineering trades and employers associations regarding the Industry Schemes impact upon on engineering company’s using asbestos in their products.

49. Similarly, the cross claimant submits that it is inconceivable that one of the largest boilermaking corporations in the world with significant research capacity would not have been aware of the imposition of liability on engineering concerns under the Workmen’s Compensation Acts which impacted upon their insurance liability particular as the implications of the scheme was discussed by the Home Office with the peak engineering employers associations.

50. Again it is submitted that for the same reasons it is inconceivable that Simon Carves Limited given its place in the boilermaking industry would not have been aware of the negotiations between the Home Office and the National and Regional Engineering Employers Associations concerning the regulations under the Factory and Workshop Act 1901 or the introduction of the amendments to s 47 of the same Act in 1937. S 47 provided:

“ In every factory in which in connection with any process carried out there is given off any dust or fire or other impurity of such a character and to such an extent as to be likely to be injurious or offensive to the person employed or any substantial quantity of dust of any kind all practical reasons shall be taken to protect the persons employed against inhalation of the dust or other impurity”.

51. The cross claimants submission requires this Tribunal to determine as a matter of inference that because of the 1st cross defendants size, corporate resources dominant position in the boiler making market and membership of its cartel which included Babcock International Limited ( a company found by Judge Curtis to have at the relevant time actual knowledge of the dangers of asbestos used in power station boiler construction) that the 1st Cross defendant also knew by 1931 that exposure to asbestos caused or could cause partial or total disablement and death to workers.

52. Taking all the evidence into consideration and applying common sense I have drawn the inference that it is more probable than not that the 1st cross defendant had actual knowledge in 1931 that exposure to asbestos was extremely dangerous to workers and was likely to cause partial disablement or death. My reasons are as follows:

· Simon Carves Limited since 1933 was a member of a cartel that prior to the events in this case had captured 100 per cent of the market for the manufacture and supply of boilers in the United Kingdom. The evidence makes it clear that the cartel had a well resourced research and scientific capacity. The objects of the Associations agreement required exchange of information and views between members. It is inconceivable that such an economically powerful corporate entity would not have been aware of the sweeping changes legislated in 1931 by the United Kingdom Parliament to protect workers coming into contact with asbestos products including workers in the engineering industry or the scientific evidence upon which those laws were based. The fact that the objects of the Associations agreement involved acting on behalf of the industry in discussions and negotiations with the United Kingdom and other Governments strongly reinforces this point. It is also of interest to note that Clause 14 of the Constitution of the Association insisted that where a member had subsidiaries it could control that steps should be taken to ensure the subsidiary did not act contrary to the agreement.

· The findings of fact by Judge Curtis in Babcock Australia Limited v Eraring Energy ( No 2) establish that Babcock International Limited a leading member of the Boiler- Tube Makers Association knew in 1931:-

(i) That the manipulation of asbestos in the process of insulating boilers and furnaces was dangerous to the health of workers engaged upon that work and that even occasional exposure should not exceed 8 hours in any one week.

(ii) That workers employed to insulate boilers and furnaces were exposed to those dangers.

(iii) Through its membership of the North West Engineering and Allied Employers Association and the Engineering & Allied Employers National Federation; of the Meredith-Price Reports findings and recommendations and was privy to correspondence and negotiations between the Home Office and those organisations concerning the Asbestos Industry ( Asbestosis) Scheme and the amendments to the Workmen’s Compensation and Factories Acts and regulations.

(iv) Of technical periodicals including “Mechanical Engineering” which published articles stating asbestos dust may produce injury to the respiratory system and the need to take precautions to protect workers health.

Judge Curtis further found:

(i) That Babcock International Limited knew in 1948 of papers which confirmed the amended acts and regulations applied to their sites and that claims procedures had been implemented for industrial diseases.

(ii) In 1949 that the legal department of Babcock International Limited was aware that the amended laws and regulations applied to its engineering works.

(iii) In 1950 of an internal paper which discussed the practical application of the new regulations to their sites.

(iv) In 1954 of an internal paper discussing the use of dangerous materials and the need for proper safeguards and observance of the Acts and Regulations.

· Given the nature of the agreement entered into by the cartel that required exchange of knowledge and research it is inconceivable that the 1st cross defendant as a member of the cartel would not have shared the knowledge of Babcocks about the dangers of asbestos to workers and the implications of the new laws for the manufacturers of boilers using those products. This is particularly so given the cost implications involved to workmen’s compensation insurance and the provision of safety equipment and dust extraction systems.

· There is no direct evidence that Simon Carves Limited was aware of the correspondence between the Home Office and the National and Regional Employers Associations of engineering company’s in Britain in 1930 and 1931 concerning the Meredith Price report, the regulations to the Factory’s and Workmen’s Compensation legislation and s 47 of the Factory’s and Workshop Act 1901. However as one of the 6 largest manufacturers and suppliers of boilers in the United Kingdom it is highly unlikely that such a prominent player in the boilermaking industry would not be a member of both the regional and national employer organisations protecting the commercial interests of engineers of boilers as was Babcock International Limited. As such a member it would have been fully apprised of the Home Offices reasons for changing laws to protect workers in the engineering industry from exposure to asbestos. Further it would also be aware of the implications for its workmen’s compensation insurance of the new regulations as well as the financial implications of the range of protective measures concerning workers coming in contact with asbestos.

· Simon Carves Limited was designing manufacturing and constructing gigantic boilers for power stations. Those boilers were insulated with massive quantities of asbestos as part of the design requirements and specifications of Simon Carves Limited. Again it is inconceivable that Simon Carves Limited would not have been aware of Government reports and changes to the law that related to workers using asbestos products in the engineering industry given the industrial and financial implications of those changes.

53. Judge Curtis found in Babcock Australia Ltd Eraring Energy (No 2) (Supra) at [121] that as early as 1933 the reluctance of workers to wear respirators was discussed in trade journals. Beazley JA said in Bendix Mintex Pty Ltd v Barnes (1997) 42 NSW LR 307 at 329:

“ Asbestos has been a well known hazard in industry for at least 60 years, Numerous studies and papers had been published from the 1920’s onwards in respect of its dangers”

54. I take the view that a large corporation such as the 1st cross defendant with a well financed research facility of its own as well as access to the impressive research section of the Water Tube-Boilermakers Association could not have been ignorant of all those studies especially since some of them originated in the United Kingdom.

55. It follows from the above findings that by 1931 the 1st Cross defendant knew:

· Of the existence of the disease asbestosis and of the advice of the Home Office that exposure to asbestos products could cause that disease.

· That mixing and manipulating asbestos could cause asbestosis

· That the U.K Government had implemented a scheme to protect workers in engineering company’s which used asbestos products from contracting asbestosis.

· That Government regulations required the use of protective masks and other safe systems of work such as dust extractors and dampening in workplaces where asbestos dust and fibre was being generated.

56. In regard to the knowledge of Elcom the cross claimant relies upon the judgment of Judge Curtis in ( Re-Royal) Babcock Australia Limited v Eraring Energy and Babcock International Limited matter no DDT 17 of 1992/1 where at paragraph 119 His Honour said

“the submission of BAL in support of a contention that Elcom owed a duty of care to BAL were premised on my finding that Elcom had actual knowledge of the dangers faced by Mr Royal. I am unable to make such a finding”.

57. The forensic problem for the cross claimant is the decision of my learned colleague Judge Johns in Nichols v Pacific Power 26 November 1997 Matter No DDT 104/97. There Judge Johns considered a memorandum dated 28 August 1958 signed by a Mr Andrew Jones, a Scientific Officer with the NSW Department of Health, which suggested that he had sent to an un-named Industrial Officer certain reports on the effect asbestos dust on workers in the 1950’s. Judge Johns found on the basis of this evidence that Elcom was aware in the early 1950’s of the danger of development of asbestosis from exposure to asbestos dust.

58. The Cross Claimant submits that there is no evidence that the original memorandum of 28 August 1958 was ever received by Elcom and that the copy in its discovered documents was a copy of a carbon copy and did not come into Elcoms possession until 1977 under cover of a memorandum dated 8 February 1977 signed “Trev Jones” (SLOD document B69 tendered in Royal as Exhibit PPX21). In Royal (Transcript 29 May 2001 at page 22) Judge Cutis questioned Mr.Jones as to the two documents:

Q. Do you have any recollection whether it was with that letter that you sent this report?
A. Yes, it would have been, yes.

59. This confirms that the copy tendered as PX28 in Nichols was not received by Elcom until 1977.”

60. The contents of these Jones reports and their imputation of knowledge to the Crown and Elcom were live issues aired in Royal ( period up to 1957) and Hay (period up to 1961). No findings of actual knowledge against Elcom in the period up to 1961 were made by Judge Curtis in either case.

61. On the present state of the evidence I am constrained to adopt the conclusion of Judge Curtis. I note that the Court of Appeal reviewed Judge Curtis’ decision in Babcock declaring that Elcom was not a representative of the Crown in matters of health and indeed not a representative other than in matters regarding the supply of electricity.

62. The documents discovered by Elcom reveals the following facts concerning its knowledge of the risks of exposure to asbestos:

· On the 27 February 1964 it issued guidelines as to the wearing of masks when stripping and lagging.

· A memo dated 7 February 1964 from Elcoms Deputy Chief Engineer suggests a belief that wet lagging was not a problem and the dust from dry lagging was a nuisance rather than disease causing dust.

· Elcoms library contained a book published in the 1950’s mentioning asbestos disease but the date of acquisition is not recorded. The first borrowing was noted in 1972.

· A circular from the Dust Diseases Board notes new regulations promulgated on 1 July 1968 concerning the handling of asbestos materials. It does not directly refer to the dangers of asbestos.

· On 16 October 1968 Elcom received correspondence from Trade Unions expressing concern for the health of asbestos laggers. Elcom responded by seeking its medical officers advice.

· On 31 October 1968 Elcom safety officer responded to the unions letter denying health problems from the asbestos used but recommending filter type respirators when asbestos was mixed sawn or broken.

· Elcoms record indicate that its safety officer had extracts from the medical journal of Australia entitled “the many faces of asbestos disease in Australia” dated 22 November 1969.

· On 2 December 1969 Elcom wrote to the Agent General for NSW in London seeking information on the use of blue asbestos in power stations. The Agent General advised on 14 January 1970 that asbestos causes serious complaints in humans. It is at this point that Elcom concedes actual knowledge.

63. Taking all the evidence into consideration on the balance of probabilities I determine that Elcom did not have actual knowledge of the health dangers of asbestos until late 1969 when after the problem was brought to its attention by the unions in 1968 it obtained the article in the Australian Medical Journal.

The s 5 )(I) (a) Apportionment
The Relevant Law

64. Section 5 (2) of the Law Reform ( Miscellaneous Provisions) At 1946 provides:-

“ In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that persons responsibility for the damage”.

65. The phrase “responsibility for the damage” requires the Court to compare the parties relative culpability in causing the damage. In Macquarie Pathology Service Limited v Sullivan ( Unreported Court of Appeal 8 March 1995). Justice Clark said:

“ The making of an apportionment ( involves) a comparison of culpability and of the acts of the parties causing damage. To put it another way, the court is concerned with considering relative blameworthiness and the relevant causal potency of the negligence of each party”.

66. In Gibson v SIFC & Ors * Unreported 2 June 1998 DDT 89 of 1096) Judge Curtis pointed out that Justice Clarke was using the word “blameworthiness” to refer to the extent of departure from a reasonable standard of care.

67. The damage suffered by the plaintiff was asbestosis; asbestos related pleural disease and calcified pleural plaques resulting in shortness of breath a chronic cough and lethargy.

68. In cases involving multiple torts the common law draws a distinction between joint and concurrent tortfeasors. Joint tortfeasors are liable for the same tort and the same damage while concurrent tortfeasors are liable for the same damage but different torts.

69. The damage suffered by the plaintiff was the result of concurrent tortious acts committed by the cross claimant as the owner occupier of the plaintiffs workplace and by the 1st cross defendant as the designer manufacturer and supplier of the boilers containing asbestos and controller of the system of work that allowed asbestos dust and fibre to be liberated into that workplace.

70. Concurrent tortfeasors are jointly and severally liable where the causal interaction of their torts produces a single indivisible result such as the disease mesothelioma. However it is well established that the disease asbestosis has an aetiology which involves the cumulative effects of myriad episodes of lung tissue damage caused by inhaled asbestos over a prolonged period, the pathological response in each episode to the asbestos being inflammation, repair and scaring of the lungs. In other words the damage is not one and indivisible ( see Ross v Meggitt Overseas ltd (1999) 18 NSWCCR 324. In this case however, from a temporal point of view, the torts of the parties both covered the entire period of the plaintiffs employment and it is not possible to point to any identifiable part of the plaintiffs injury that occurred as the result of the separate acts of either the cross claimant or the 1st cross defendant.

Culpability of 1st Cross Defendant and Cross Claimant

71. The 1st cross defendants liability is founded on multiple departures from the duty imposed upon it by the common law. It has been found liable for breach of its duties of care as a designer, manufacturer, supplier and controller of the working environment involving the construction and maintenance of the gigantic boilers at the Tallawarra Power Station.

72. Further I have found that the 1st cross defendant had actual knowledge of the dangers of asbestos to humans at the time it committed it torts. The importance of actual knowledge of a risk and the magnitude of that knowledge has been emphasised by the High Court (see Woollock Street Investments Pty Ltd v CGD Pty Ltd (2004) 205 ALR 522 at [87] and Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59. My point is that if actual knowledge is important in imposing a duty of care then it is also important when it comes to assessing the extent of the departure from that duty of care.

73. The 1st cross defendant knew at all relevant times that its design specifications required that those huge boilers would have to be insulated with massive amount of asbestos and that the work processes involved in construction and maintenance required the breaking mixing and manipulation of asbestos.

74. The 1st cross defendant knew since 1931 that the dust created in the use of asbestos products was seriously injurious to the health of human beings and in some cases lethal.

75. The 1st Cross Defendant, since 1931, was aware of industrial law and regulations enacted in the United Kingdom that required engineering concerns to take measures such as the provision of masks, respirators and dust extractors and dampening to protect workers from inhaling asbestos dust and fibre.

76. The 1st Defendant was aware, (because of its experience in building power station boilers generally and because its agent and wholly owned Australian subsidiary through its manager Mr Morrison and engineers at the Power Station had a presence at the station and a brief to maintain quality control on the work of subcontractors such as Mr Gynes employer) of the dusty environment created by the use of asbestos in insulating the boilers and associated plant and equipment.

77. The 1st defendant was aware that it had provided no warning to the NSW Government, Elcom, J.R Pillars Pty Ltd or workers on the site that inhaling asbestos dust and fibre was likely to cause serious disability or death.

78. Despite this knowledge the 1st cross defendant did nothing to obviate the danger by designing and instituting a safe system of work. The 1st cross defendant had superior knowledge to the cross claimant not only of the toxicity of asbestos but of systems of work in constructing power station boilers around the world as well as the strict control it exercised over its Australian Subsidiary responsible for the boiler construction and was in the best position to warn of the dangers and implement a safe system of work.

79. Elcom as the owner of the power station was also in a position to insist on a safe system of work and appropriate warnings to workers on the site. On the other hand, I have found on the evidence before me that Elcom at the relevant time had only imputed knowledge of the dangers of asbestos to the health of workers. That knowledge did not become actual until many years after Mr Gynes ceased work at the power station. Elcom was a client of the 1st cross defendant and not subject to the same duties as the 1st Cross Defendant.

80. On the question of a comparison of the causal potency, the evidence before me is also relevant in this assessment of relative blame worthiness because the evidence is that not only did the 1st Cross defendant specify the use of asbestos products in the construction of its boilers but in pre-fabricating parts of the boilers and spare parts in the United Kingdom asbestos products were incorporated. On the other hand Elcom played no role in the supply of asbestos products.

81. Taking all the evidence into consideration concerning the relative blameworthiness of the 1st cross defendant when compared with the cross claimant I determine that liability should be apportioned 75 per cent to the 1st cross defendant and 25 per cent to Eraring Energy.

Calculation of Liability

82. The cross claimants residual liability under the verdict secured by the plaintiff is $31,250. That sum should be apportioned as follows:

Eraring Energy 25 per cent or : $ 7,812.50
S.C Cheadle Hulme Limited 75 per cent or: $ 23,437.50

Calculation of Interest

83. The cross claimant interest paid from the date of payment of the verdict (30.4.02) to judgment ( 24.9.04). The Calculation using the relevant interest rates under the Supreme Court table is as follows:

$23,437.50 x 9 % pa x 879 days = % 5,079.84

ORDERS

84. I make the following orders:-

1. S.C Cheadle Hulme Limited is to pay Eraring Energy $23,437.50

2. S.C Cheadle Hulme Limited pay Eraring Energy’s costs together with interest in the sum of $5,079.84.

M\s W. Strathdee of counsel instructed by Solicitors appeared for the Cross Claimant.