Thiess Pty Ltd v Dobbins Contracting Pty Ltd

[2016] NSWSC 265

Supreme Court

New South Wales

Medium Neutral Citation:

Thiess Pty Ltd v Dobbins Contracting Pty Ltd [2016] NSWSC 265

Hearing dates:

08/02/2016, 09/02/2016, 10/02/2016, 11/02/2016, 12/02/2016, 16/02/2016, 17/02/2016, 18/02/2016, 23/02/2016 and 24/02/2016

Date of orders:

17 March 2016

Decision date:

17 March 2016

Jurisdiction:

Equity - Technology and Construction List

Before:

McDougall J

Decision:

Judgment for second defendant on plaintiffs’ claim.

Catchwords:

NEGLIGENCE – duty of care – application of ss 5B and 5D of Civil Liability Act – whether Second Defendant owed duty of care to the Plaintiffs – where Second Defendant followed instructions of senior worker – where Second Defendant found to have exercised such duties with reasonable care and diligence – no breach of duty by Second Defendant – causation does not arise

 

CONTRACT – breach of contract – whether Second Defendant breached express or alleged implied terms of the contract – whether course of dealing existed to give effect to those terms – court held implied term of contract that Second Defendant would exercise reasonable care and skill in undertaking work under the contract – determination of breach of contract unnecessary as liability falls under ss 5B and 5D of Civil Liability Act

  BAILMENTS – bailment for reward – whether employees take constructive possession of excavator – in circumstances of the case bailment not made out – each employee was taking a necessary safety precaution, not asserting a possessory right

Legislation Cited:

Civil Liability Act 2002 (NSW)

Cases Cited:

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at [42]
Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association (Henry Kendall in the Court of Appeal) [1966] 1 WLR 287
Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31
HG v The Queen (1999) 197 CLR 414
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157

Category:

Principal judgment

Parties:

Thiess Pty Ltd (First Plaintiff)
Hunter Valley Earthmoving Co Pty Ltd (Second Plaintiff)
Dobbins Contracting Pty Ltd (First Defendant)
Daryl Stuart Bate (Second Defendant)

Representation:

Counsel:

 

A P Martin SC / A Zahra (Plaintiff)
R A Cavanagh SC / S J Walsh (Second Defendant)

    Solicitors:
Carter Newell Lawyers (Plaintiffs)
Thompson Cooper Lawyers Pty Ltd (Second Defendant)

File Number(s):

2011/241122

Judgment

1. On 30 August 2008, fire destroyed a Hitachi model EX550 excavator used by the second plaintiff (HVE) to conduct mining operations at the Liddell Coal Mine (the mine). It is common ground that the fire was caused by “hot work” – air arc gouging – carried out by a Mr Bradbury, a boilermaker employed by the first defendant (Dobbins). Mr Lance Bate (I shall adopt the parties’ usage, and refer to him as “Lance”), the son and an employee of the second defendant Mr Daryl Bate (Mr Bate), assisted Mr Bradbury in the performance of that work. HVE says that Mr Bradbury and Lance failed to exercise appropriate care in performing the work, and that Dobbins and Mr Bate are respectively liable.

2. The first plaintiff (Thiess) is a party because it was, at the time, the lessee of the excavator (for convenience, I will adopt its fleet designation and refer to it as EX1070) from a company known as Rock and Rubble (Existing) Pty Ltd (Rock and Rubble). Thiess and HVE say that, at the time of the fire, EX1070 had been subleased by the former to the latter.

3. The losses claimed fall into five categories:

1. costs of about $206,000.00 incurred by HVE in fighting the fire, and in dismantling and removing from the mine the remains of EX1070;

2. an amount of about $2.715 million, being the amount of a “termination payment” paid by Thiess to Rock and Rubble consequent on destruction of EX1070 less its salvage value of $300,000.00;

3. an amount of about $821,000.00 for expenses incurred in commissioning and bringing to the mine replacement excavators to do the work that EX1070 was scheduled to do;

4. an amount of about $6.228 million incurred in respect of additional operating costs said to have been attributable to the use of the replacement excavators in place of EX1070; and

5. an amount of about $122,000.00 claimed by Thiess in respect of loss of use of the termination payment.

4. The first head of loss is not contentious. The costs were incurred by HVE and there is no challenge to their quantification.

5. The second head of loss is claimed by Thiess or alternatively by HVE. There seems to be little doubt that upon the destruction of EX1070, Thiess was required to make the termination payment to Rock and Rubble, having regard to the terms of the lease. Nor is there any doubt that Thiess in fact paid the amount of the termination payment, and that it received (and has given credit for) the salvage value of EX1070. The claim is brought in the alternative by HVE, on the basis that under the sublease, it was required to, and did, reimburse Thiess for the amount of the termination payment.

6. The third head of loss is claimed by HVE only. HVE was the operator of the mine, under an operating services agreement made with the principal, Liddell Coal Operations Pty Limited (Liddell). HVE was required to meet production targets fixed under that agreement. It says that, to enable it to meet those production requirements, and acting reasonably in mitigation of losses that it might incur, it commissioned the replacement excavators and transported them to the mine, where (HVE says) they commenced to do the work that EX1070 would have done. There is no doubt that HVE incurred the costs claimed under this head. The only question is whether it is entitled to recover all those costs. That argument arises because (it is said) HVE received some ongoing benefit from the use of one of the replacement excavators, a Liebherr model 996 excavator known by its fleet number as EX0938.

7. The fourth head of loss is again one claimed by HVE only. HVE says that the replacement excavators cost substantially more per hour to operate than EX1070 did. Thus, it claims their additional operating costs, which it quantifies at about $6.228 million. The challenges to this aspect of the claim are numerous and detailed.

8. The final head of loss is one claimed by Thiess. It does not appear to be in dispute either in principle or as to its calculation.

9. Shortly before the hearing, the plaintiffs resolved their dispute with Dobbins. Dobbins has paid (or agreed to pay) the sum of $6 million in full settlement of all claims against it. There is no evidence as to how that payment had been calculated, or as to how it was applied between Thiess and HVE. The plaintiffs accept that they must give credit for this sum, in any computation of damages recoverable from Mr Bate. Precisely how that should be done is a matter in contention.

10. Although, by reason of the settlement, Dobbins took no part in the hearing, it remains nonetheless relevant because the defences raised by Mr Bate include “proportionate liability” defences under Part 4 of the Civil Liability Act2002 (NSW).

The real issues in dispute

11. At my direction, the active parties agreed on the real issues for decision. I set them out:

Liability

1   Which item of hot work carried out by Paul Bradbury (Bradbury) on 30 August 2008 caused the fire on the Hitachi EX5500 model excavator (designated EX1070) (Excavator). In particular, was it:

(a)   the first gouging operation to remove the accumulator bracket; or

(b)   the second gouging operation to remove a broken bolt from the manifold bracket.

2   What role did the Second Defendant play in the performance of the hot work which caused the fire?

3   What were the terms of the contract between the Second Plaintiff and the Second Defendant in respect of the work performed on 30 August 2008?

4   Did the Second Defendant breach his contract with the Second Plaintiff?

5   In respect of the work said by the Plaintiffs to have caused the loss:

(a)   what, if any, duty of care was owed by the Second Defendant to the Plaintiffs;

(b)   did the Second Defendant assume a responsibility (and if so, a responsibility to do what) towards the First and Second Plaintiffs; and

(c)    were each of the First and Second Plaintiffs in a position of vulnerability in relation to the performance of the work by the Second Defendant?

6   Were the losses sustained by:

(a)   the First Plaintiff;

(b)   the Second Plaintiff

reasonably foreseeable or within the reasonable contemplation of the Second Defendant?

7   Did the Second Defendant breach his duty of care owed to the Plaintiffs?

8   Did a bailment for reward arise from the works carried out to the Excavator by Lance Bate (Lance) and Bradbury, including by their application of personal locks to the Excavator preventing its operation by others?

9 Having regard to s 5D of the Civil Liability Act (CLA), have the Plaintiffs proved:

(a)   factual causation; and

(b)   scope of liability causation?

10   Were any of the Plaintiffs guilty of contributory negligence by reason of:

Pleaded allegations of contributory negligence

(a)   the unavailability of sufficient or properly functioning water trucks and/or appropriate personnel to operate them; or

(b)   issues with the electrical isolator, electrical wiring or electrical power on the Excavator and any failings on the part of the Plaintiffs to adequately inspect or carry out repairs to those systems.

Non-pleaded allegations of contributory negligence

[* The Plaintiffs do not accept that these matters are issues in the case but the Second Defendant seeks to maintain them *]

(c)   * did HVE fail to comply with its obligations under AS1674.1, the Coal Mine Health & Safety Act 2002 and the Coal Mine Health & Safety Act Regulation 2006 and NBG25 Guideline for Safe Cutting & Welding in Mines;

(d)   * did HVE fail to ensure the safety of its plant and equipment by failing to properly implement and ensure that the hot work processes were carried out;

(e)   * what steps did HVE take to ensure that Lance Bate was competent and experienced to perform the task that it says Lance should have performed?

(f)   * what steps did HVE take to ensure that Lance was properly instructed in respect of the tasks that HVE says that he was required to perform?

(g)   * how did the absence of proper fire safety precautions existing at the time cause or contribute to the loss?

11   In the event that the:

(a)   First Defendant; and

(b)   Second Plaintiff

are found to be a concurrent wrongdoers within the meaning of Part 4 CLA, to what extent should the Second Defendant’s liability be limited pursuant to s 35 of that Act?

12 Having regard to the matters in 10 and 11 above, what is the amount the Court considers just for the purposes of s 35 CLA?

Damages

13   What amount are the Plaintiffs entitled to recover from the Second Defendant?

14   On what basis can HVE recover the lease termination payment it paid to Thiess?

15   Should the entitlement to damages by one or other of the Plaintiffs be reduced on account of any of the following matters:

(a)   the payment by HVE to Thiess of the termination payment some 5 months after Thiess had made that payment to Rock & Rubble;

(b)   an assessment of the lease termination payments having regard to the amount that HVE would have had to pay if not for the fire;

(c)   the correct methodology for assessing the claim for additional operating expenses as canvassed in the evidence of Messrs Hardiman, Ehlers and Robinson;

(d)   if the Plaintiffs have not established the factual assumptions on which they pursue their claim for additional operating costs, what is the basis on which any loss in relation to additional operating expenses is to be assessed?

(e)   whether it was reasonably necessary for HVE to use three replacement excavators to replace EX1070;

(f)   allegations that the Plaintiffs have enjoyed certain cost savings because of the destruction of the Excavator – in particular:

(i)   on account of the fact that a lease balloon payment was not made;

(ii)   whether or not dismantling costs would have been incurred at the end of the Excavator lease;

(iii)   whether the Plaintiffs made savings by not having to make future rent payments; and

(iv)   An allegation that the Second Plaintiff did not incur any additional operating costs but saved money by having to commission various other pieces of equipment following the destruction of the Excavator;

(g)   whether it is reasonable that the Second Defendant pay the additional operating expenses claimed in attempting to mitigate its loss caused by the loss of EX1070 having regard to the loss of profit that HVE would have sustained but for the mitigation.

The witnesses in the case

12. The plaintiffs called a number of witnesses of fact. Many of them were cross-examined. Some were not. In my view, each of the witnesses who was cross-examined sought to give honest evidence to the best of his ability. I accept each as a truthful witness whose evidence may be relied upon, subject to the fallibility of human memory. Of course, where a witness was not required for cross-examination, I accept his evidence according to its terms.

13. The witnesses called by the plaintiffs included Mr Searle and Mr Bradbury. Mr Searle was employed by HVE as a maintenance shift supervisor. His responsibilities included authorising and overseeing the performance of maintenance work. At the time in question, he was responsible for authorising the hot work that caused the fire. Mr Searle gave evidence, which I accept as frank and honest, to the effect that aspects of the performance of his work were less than satisfactory.

14. Mr Bradbury’s evidence in cross-examination diverged in one respect from his affidavit. I mention this only because Mr Martin of Senior Counsel, who appeared with Mr Zahra of Counsel for the plaintiffs, seized on this divergence to found a submission that Mr Bradbury’s recollection was imperfect. Having heard Mr Bradbury, and considering his evidence against the background of all the evidence, I am satisfied that, to the extent of the divergence between his oral evidence and his affidavit, the oral evidence should be preferred.

15. Mr Bate and Lance swore affidavits, which were served. None of those affidavits was read. There is no suggestion that either deponent was unable to give evidence. It is clear, and I find, that the decision not to call them was one made for tactical reasons.

16. I should note that both Mr Bradbury and Lance made a brief handwritten statement immediately after the fire. Mr Bradbury’s statement was signed. Lance’s was not. Nonetheless, given that there was no dispute that the statement purporting to be by Lance was made by him in his own handwriting, I see no reason to regard it as otherwise than authentic.

17. The plaintiffs and Mr Bate called expert evidence. That fell into two categories. One category dealt with the topic of the fire: its likely causes, and asserted deficiencies in the performance of the hot work. The other category of expert evidence dealt with the quantification of loss.

18. Much of the expert evidence, particularly in the former category, was unsatisfactory. To a large extent, that so-called expert evidence consisted of speculative statements, not involving the application of specialised knowledge to identified proved or assumed facts leading to the formation of an opinion relevant to the existence of a fact in issue. Further, in some cases at least (and I refer in particular to the evidence of Mr Alexander, whom the plaintiffs called), there was a distinct tendency to advocacy, manifested in part by non-responsive and argumentative replies given in the course of cross-examination, and in part by demeanour. Further, in at least one material respect, Mr Alexander misstated significantly the effect of a paragraph in Lance’s affidavit, and built on that to formulate a criticism of Lance’s actions.

19. At a more general level, many of the reports of the fire experts were conclusory, and deficient in reasoning. Thus, it was in many cases impossible to determine whether the opinions so expressed were based at all, let alone wholly or substantially, on the specialised knowledge of the witness. See Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at [42] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); see also HG v The Queen (1999) 197 CLR 414 at [39] to [44] (Gleeson CJ).

20. If one were to take the position advanced by Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85], the requirement to demonstrate a process of reasoning showing how the application of specialised knowledge to identified assumed facts leads logically to the ultimate opinion expressed, goes to admissibility. Alternatively, if one takes the view of Branson J in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 at [14], that goes to weight. It is not necessary to choose between those views, because at best, an unreasoned and conclusory expert opinion, of the kind unfortunately seen too often and seen in this case, is of little (if any) probative value.

21. Lawyers must play an active, and important, part in the preparation of statements of expert evidence. First of all, the lawyers for a party who proposes to rely on expert evidence must inform the expert of the assumed facts on which his or her opinion is to be based. To enable the opinion to have any value, the statement of assumed facts (and of course, those facts include documents) must be comprehensive.

22. Next, the lawyers should do what they can to ensure that the expert expresses his or her opinions in a way that demonstrates clearly the application of specialised knowledge to those assumed facts and the reasoning process that leads to the opinions expressed. Of course, it is a matter for the expert, and only the expert, to formulate those opinions, and to employ an appropriate reasoning process in doing so. However, if the expert’s statement of evidence is to be of any real utility, the lawyers who have retained the expert must do what they can to ensure that the reasoning process is adequately displayed. In this case, the lawyers for both the plaintiffs and Mr Bate appeared to be either ignorant of, or uncaring as to, their responsibilities in this regard.

23. In the result, as will probably be apparent, it is my view that much of the evidence of the fire experts was of little assistance.

24. Those criticisms do not apply with the same force to the work done by the damages experts. Their statements set out the assumed facts on which they relied and, in a more or less cursory way, the reasoning process that they deployed, using their specialised knowledge, to move to the conclusions that they expressed.

Operation of the mine

25. The mine was an open cut mine. It comprised old open cut areas and old underground mines. The operating services agreement required HVE to mine and deliver Run of Mine (ROM) coal to Liddell’s coal processing plant. Before coal could be mined, it was necessary that overburden (frequently referred to as “waste”) be stripped to expose the coal seam. HVE’s production targets referred only to coal, and HVE was paid only for deliveries of ROM coal. HVE was therefore required (as a matter of commercial necessity rather than legal obligation) to plan its stripping and mining operations so that there was always exposed sufficient coal that could be mined and delivered.

26. The evidence suggests that some elements of the fleet of machinery used by HVE at the mine were switched from waste stripping to coal mining, and back again, as operational needs dictated. However, it was HVE’s case (supported by the evidence) that EX1070 had been devoted exclusively to waste stripping, and that but for the fire it would have been so used up until the expiry of the operating services agreement on 31 March 2010.

27. It was uncontroversial – at least at the level of principle – that, after and as a result of the fire, HVE had an urgent commercial need to replace the lost capacity of EX1070. Since machines such as EX1070 are not available “off the shelf”, it was (again at the level of principle) appropriate for HVE to deploy other machines to do the work that EX1070 would have done. In particular, the case for Mr Bate accepted that it was appropriate for HVE to incur the substantial cost of recommissioning EX0938, and transporting it to the mine.

25. EX1070 was a very large piece of machinery. Its body was about 12 metres long, 10 metres wide and 8.5 metres high. It had an operating mass of about 520 tonnes. Its bucket arm could reach about 20 metres. The bucket itself had a capacity of about 29m³ (equivalent to about 40 tonnes of black coal).

26. EX0938 was even larger than EX1070, and had an even greater bucket capacity. However, it was very much older. Indeed, EX0938 had been decommissioned. At the time of the fire, it was reposing at a mine site in the Bowen Basin, in Queensland. Thus, by reasons of its age and decrepitude, it was extremely expensive to recommission EX0938; and by reason of its vast bulk, it was extremely expensive to transport it (in several elements) from the Bowen Basin to the mine.

27. EX0938 arrived at the mine, and was put into service, in early December 2008. There were some initial mechanical and electrical problems. For convenience (and because it would make very little different to the computation of damages, save to facilitate that task), I take 1 January 2009 as being the date when EX0938 was available, in both a physical and a productive (or mechanical) sense, to replace EX1070 and to do the work that EX1070 should have been doing. Mr Cavanagh of Senior Counsel, who appeared with Mr Walsh of Counsel for Mr Bate, did not challenge this approach, and neither did Mr Martin.

28. The uncontroversial evidence of the general manager, sales, for Hitachi Australia was that in late 2008, excavators such as EX1070 were only manufactured (in Japan) against orders. He said that if a new Hitachi model 5500 excavator had been ordered at that time, it would not have been delivered until about January 2010, and that its cost would have been somewhere between $9.4 and $11.7 million exclusive of GST (the precise cost depending upon the time when the order was placed, and the exchange rate then prevailing). In the light of those facts, the decision to recommission EX0938 and transport it to the mine was clearly one reasonably taken by HVE. Mr Cavanagh did not criticise that as an inappropriate attempt to mitigate.

29. EX0938 was owned by Thiess, and made available by it to its wholly owned subsidiary HVE. HVE either paid or reimbursed Thiess for all the costs incurred in recommissioning EX0938 and transporting it to the mine. HVE also paid Thiess an hourly operating charge, intended to capture all the costs associated with its operation. Mr Cavanagh accepted that although these payments were effected by book entries between the two companies, they were, nonetheless, to be regarded as “real” payments.

30. Before EX0938 became available at the mine, HVE used two smaller excavators, known as EX0007 and EX1192. There were relatively small (and unchallenged) costs incurred in getting those machines to an operating state and bringing them to the mine.

31. As I understand it, Mr Cavanagh accepted that in principle, it was appropriate to use replacement excavators for the months (September to December 2008) before EX0938 became available. He did not however, accept that EX0007 and EX1192 should have been so used.

Hot work and other technical matters

35. Hot work is a generic but non-technical term employed to describe welding and other operations which generate heat and hot metal debris. In 2008, there was an Australian Standard, AS1674.1-1997 (AS1674) dealing with “Safety in Welding and Allied Processes”.

36. Excavators such as EX1070 are operated by hydraulic power. EX1070 had two large diesel motors. They pumped hydraulic fluid throughout the operating system of the excavator. That fluid, under pressure, was used to drive all the moving or operating parts of the excavator, including the tracks, the slew ring, and the arm and bucket.

37. The hydraulic system of EX1070 included a number of “accumulators”. They were, in substance, reservoirs that could hold hydraulic fluid under pressure. Hydraulic fluid was pumped into those accumulators by means of flexible hoses, and taken from them, again by flexible hoses, to drive whatever part of the excavator was serviced by the particular accumulator.

38. On the day in question, HVE directed Dobbins to carry out repairs to an accumulator bracket on EX1070. An accumulator bracket is a metal bracket that, as its name suggests, holds an accumulator secure to the body of the excavator. The particular bracket on EX1070 that was the subject of this work order had been damaged, and temporarily repaired.

39. Mr Bradbury was the employee of Dobbins who carried out the repair work. HVE directed Lance, who was a qualified fitter, to assist.

40. The accumulator in question was located within the slew ring of EX1070. The slew ring is located between the steel chassis (to use a perhaps inappropriate but convenient term) and the superstructure of the excavator. It consists of large diameter steel plates separated by roller bearings. The purpose of the slew ring is to enable the superstructure, including the arm, to move independently of the tracked chassis.

41. To access the area underneath the slew ring, it was necessary to crawl underneath the chassis cross-members. The slew ring itself was about 1.5 metres in diameter. The accumulator bracket that required repair was located within the area of the slew ring, at about shoulder height for Mr Bradbury.

42. Mr Bradbury and Lance decided to unshackle the accumulator from its bracket and to suspend it from the superstructure of the machine using a “come-along”, or chain block. Mr Bradbury decided to remove the damaged accumulator bracket. He did this by the process of air gouging.

43. Electric arc air gouging (to give it its full name) uses an electric arc welder to heat the metal being gouged to above its melting point. A stream of compressed air then is directed through one of the tips of the welder into the metal thus heated. The effect is to cut the metal. Not surprisingly, the process generates a shower of sparks, and globules of white hot molten metal, or “spatter”. It is obvious that if this process is carried out in a confined space where there is flammable material, the risk of fire is substantial.

44. Mr Bradbury said, and I accept, that to some extent the operator is able to control the direction of travel of the spatter by controlling the direction of the air current. However, the expert evidence of Professor Gray (which on this point I accept) was to the effect that there will always be some spatter thrown out in a random direction when air gouging is performed. I add that a video showing the process of air gouging, which the plaintiffs tendered and showed, confirms this aspect of Professor Gray’s evidence.

45. The area inside the slew ring of EX1070 contained a great quantity of flammable material. First of all, the slew ring required constant lubrication. When the excavator was in operation, grease and oil were pumped continually through the slew ring, to prevent it from seizing up. Second, there were many hydraulic hoses within the slew ring. Hydraulic fluid is a light mineral oil, and itself flammable. Third, Mr Bradbury’s evidence was that the operators of machines such as EX1070 use rags for cleaning, and that those rags, imbued with flammable material, are often dropped or left lying around on inaccessible parts of the machine. Finally (although this list should not be thought to be exhaustive), when an excavator is used to mine coal, there will be a coating of earth and coal dust on all greasy and oily parts.

46. Lance cleaned down much of the area around the accumulator bracket. When Mr Bradbury arrived, he directed Lance to do some more cleaning. Lance complied with that direction.

47. Mr Bradbury “gouged off” the accumulator bracket, using the air gouging process that I have described. Lance then took the bracket out from under the slew ring, and placed it on the ground at the front of EX1070. Mr Bradbury then used a grinder to grind off some of the metal from which the bracket had been removed. It is common ground that this grinding operation was also “hot work”.

48. Once the bracket had been removed, Mr Bradbury or Lance noticed that a manifold located above the accumulator bracket (that is, above where the accumulator had been) was sitting crooked. The manifold appears to be part of the system that conveys hydraulic fluid under pressure into the accumulator. On inspection, Lance found that a bolt supporting the manifold had broken. Mr Bradbury or Lance decided that the bolt should be removed, as otherwise it would impede the reattachment of the accumulator once the bracket had been repaired.

49. Lance could not remove the bolt using the tools that he had. Accordingly, Mr Bradbury decided to gouge it off. This he did.

50. The first gouging operation (removal of the accumulator bracket) appears to have taken about 1 minute. The second gouging operation (removal of the manifold bolt) appears to have taken about 4 to 5 seconds (in each case, actual gouging time).

51. Mr Bradbury said, and I accept, that in the case of the first gouging operation, he was able to direct the airflow downwards. However, because the manifold bolt was above his head height, the airflow for the second gouging operation was directed upwards.

First issues: cause of the fire

The parties’ submissions

52. The plaintiffs contended that the more likely cause of the fire was the second gouging operation, or alternatively both it and the first gouging operation. Mr Bate contended that it was not possible to conclude whether the fire was caused by the first operation, the second operation, or both.

53. Mr Martin relied on the expert evidence. However, he submitted (perhaps realising the frail nature of the support that the expert evidence might provide), there were in any event several reasons (Mr Martin said six; in what follows, I summarise the six in three groups) why it was inherently more likely, on the balance of probabilities, that it was the second gouging operation that caused the fire.

54. First, he submitted, there had been a significant time lapse – of the order of 75 to 80 minutes – between the two operations. During that time, no signs of smouldering or fire had been noticed either by Mr Bradbury or by Lance (both of whom remained either in the slew ring area or adjacent to the excavator) or by two other witnesses who inspected the machine during that time. Those witnesses were Mr Teszke and Mr Jordan. Messrs Teszke and Jordan were employees of Sandvik Pty Ltd, a company that supplied fire protection services to HVE at the time. Messrs Teszke and Jordan inspected EX1070 to see whether it was possible to fit a “wash down system”.

55. Those two witnesses were not required for cross-examination. Each of them said, in substance, that when he attended the machine on 30 August 2008, he realised (by olfactory evidence) that welding operations had been carried out, but observed no smoke or other traces of smouldering or fire. They were present for about 10 to 15 minutes.

56. Next, Mr Martin submitted, the first gouging operation was inherently more likely to direct sparks and spatter downwards rather than upwards, whereas the second gouging operation was inherently more likely to direct them upwards rather than downwards. Those submissions are broadly correct, although as I have said I accept Professor Gray’s evidence that however the air current is directed, there will be some emission of spatter in all directions. Mr Martin submitted, again correctly, that there was no flammable material on the ground beneath the area where the operations had been performed, but there were very significant quantities of flammable material in the area above it.

57. Finally, Mr Martin submitted, Mr Bradbury had inspected the machine thoroughly after the second gouging operation, and had then noticed no traces of fire or smouldering. Mr Bradbury said in his affidavit that he remained at the excavator for about 15 minutes after the second gouging operation, and walked around it to make sure that there was no fire. In his oral evidence, he said that he stayed for more like 20 or 30 minutes. The handwritten statement that Lance prepared confirmed that they had stayed at the machine for some time after completion of the second gouging operation. By inference (from omission) at least, that statement suggests that neither of them detected any trace of fire or smouldering.

58. There is another witness who inspected EX1070 on the day of the fire. That witness is Mr Wilton, a diesel fitter by trade, who was required to inspect equipment used in the operation of the mine, and records relating to that equipment, to ensure that relevant legislative standards had been satisfied.

59. On 30 August 2008, Mr Wilton inspected a number of machines, including EX1070. From the evidence of Mr Bradbury and Lance (for the latter, coming from his handwritten statement), Mr Wilton appears to have arrived after the second gouging operation had been completed.

60. Mr Wilton inquired whether he could inspect the machine. Lance said that he could, but that he should not go under it “because we’ve got a hydraulic accumulator hanging on a chain block”. Mr Wilton then added his personal lock to the two that were already preventing operation of the machine. He carried out his inspection. In all, he was present for about 15 to 20 minutes.

61. Mr Wilton said that while he was present at the machine, he saw no sign of smoke or fire. He did say that he smelt what he thought to be burnt oil. He did not think this was unusual or unexpected, because he thought that it was the result of the welding work that, obviously enough, had been performed.

62. Mr Wilton left EX1070 at about 10:05am. He went to inspect another machine. Having completed that inspection, he returned to the workshop at about 10:40am. While on his way to the workshop, he observed smoke coming from the general region of EX1070 and heard emergency calls, to the effect that it was on fire.

63. Mr Cavanagh relied heavily on the evidence given by Professor Gray and another expert, Mr Salomonsson (both retained for Mr Bate). In essence, Professor Gray and Mr Salomonsson said that the process of air gouging produces a random discharge of sparks and spatter, notwithstanding that the bulk of them would follow the direction of the air flow. Professor Gray added that in his view the comparative difference between the times that the two operations took was significant, because the much greater duration of the first operation (speaking relatively) provided more opportunity for spatter to fly upwards and into the abundant flammable material above the accumulator.

64. Mr Cavanagh relied also on Professor Gray’s evidence, that a “smouldering wave” may persist for much longer than one to two hours – he said, up to five hours – before any detectable sign of smouldering or fire becomes apparent. Thus, Mr Cavanagh submitted, the lapse of time between and indeed after the two operations was not of itself significant.

65. Both counsel indulged in liberal citations of authority on the fact-finding process, and the approach that the Court should take to the question of “satisfaction on the balance of probabilities” as to a particular fact in issue. I do not propose to refer to those authorities. I mean no disrespect either to the courts whose decisions were cited or to counsel who cited them. On the view to which I have come, the first issue is to be answered by a common-sense analysis of the whole of the evidence, and the authorities to which counsel referred really add nothing of significance to that analysis.

Decision

66. I start with the proposition that I do not regard the evidence of the experts called for the plaintiffs, Mr Alexander and Mr Munday, as having any particular probative significance on this issue. Their opinions were adequately summarised in the amended joint report prepared after the first conclave. Mr Alexander said:

There is no evidence that the gouging that was carried out resulted in molten swarf being directed other than towards the ground below the work area. On balance of probabilities, the fire was, due to the discharge of molten swarf upwards into the oil/grease laden swing gear area annulus, as a consequence of the [second gouging operation].

67. Mr Munday’s opinion was:

In my opinion, the fire could have been caused by either phase of the hot works but is more likely to have resulted from the [second gouging operation].

68. The reports prepared by Messrs Alexander and Munday do not really add to the summaries of their opinions that I have set out. Mr Alexander’s opinion is no more than a statement of the obvious based on the assumed premise.

69. There is a passage in Mr Munday’s first report (at [5.13]) that suggests that in his view it was in fact likely that the first gouging operation would have projected spatter upwards as well as downwards. However, I accept, from the evidence of Professor Gray and Mr Salomonsson (and I think although it is not dispositive, Mr Munday), that it is more likely than not that some quantity of molten spatter would have been projected upwards during the first gouging operation, even though the greater part may have been projected downwards.

70. As I understand it, it is for that reason Mr Munday said that “the fire could have been caused by either phase of the hot works”.

71. As I have noted, Mr Munday identified the second gouging operation as the “more likely” cause of the fire. However, the only foundation for that conclusory assertion appears to be the observation in his second report that it was not “appropriate to differentiate… between the two pieces of hot work as more or less likely to be the ignition source for the fire, except in so far as the directionality of the spatter may indicate”.

72. I accept of course that “the directionality of the spatter” is an important matter to be considered. In some cases, no doubt, it may be dispositive. In this case there is no direct evidence of the extent to which spatter was directed other than downwards in the course of the first gouging operation. Lance was not present under the slew ring whilst that operation was performed. Mr Bradbury was. However, as he said, the extent and nature of the protective equipment that he wore prevented him from seeing anything other than what was directly in front of him. I take from his evidence that he was able to see the material being projected downwards, because that was where he was looking. He did not say that he observed no material being projected upwards. I do not think that he would have been able to do so.

73. The difference between the duration of the two operations therefore becomes significant. It is self-evident that, per second of operation, the second gouging operation would project more spatter upwards than downwards. However, there is no way to evaluate the comparative volumes of spatter that would have been directed upwards from each operation in total, particularly bearing in mind that the first operation lasted for some twelve to fifteen times longer than the second operation.

74. Professor Gray regarded the comparative durations of the two operations as significant. Mr Alexander derided this as a “simplistic” analysis. I do not think that it was. On the contrary, I think, Professor Gray’s analysis points out that it is not enough to consider the preponderant direction of travel of the spatter; what must be considered also is the overall volume of spatter travelling in the requisite direction (upwards) over the whole time that each operation was performed. Mr Alexander’s evidence did not identify, let alone attempt to analyse, this problem. Indeed, it may not be capable of reasoned analysis through to a conclusion, even on the balance of probabilities.

75. That really leaves, as the only significant indicator of cause, the lapse of time between the two operations, coupled with the absence of any observations of emissions from fire or smouldering over that period and for 15 to 30 minutes afterwards. In this respect, I prefer, and accept, Professor Gray’s evidence. It was backed up by research material, to which he referred in a supplementary report. In reality, the other experts made no attempt to rebut what Professor Gray said. Mr Alexander did say, and it may be accepted, that a smouldering fire may break out within an hour or so of the occurrence of the events that cause it. However, particularly taking into account Professor Gray’s evidence, there is no basis on which I could conclude that it is more likely than not that a smouldering fire of the kind which undoubtedly occurred in this case would have broken out during that period.

68. There was no evidence as to the “usual”, or “average”, time that would elapse before a smouldering wave could create detectable signs – smoke or flame – of smouldering or fire. Perhaps there is no such usual or average lapse of time. Perhaps (if there might be) it would depend crucially on the nature of the flammable material, the source of ignition, and other matters. Regardless, the expert evidence did not say that typically, or on average (within a range of values), a smouldering fire is likely to break out, in conditions similar to those in this case, within X to Y minutes of contact between ignition source and flammable material.

69. In the result, I conclude, on the evidence as a whole, that the plaintiffs have not established that it was more likely than not that the fire was caused either by the second gouging operation alone or by a combination of the first and second gouging operations. On the contrary, I conclude that it is impossible to say, on the balance of probabilities, whether the fire was caused by the first gouging operation, the second, or both.

Second issue: Lance’s role in the gouging operations

78. It was common ground that Lance had acted as a “fire spotter” for Mr Bradbury whilst Mr Bradbury performed the second gouging operation. The plaintiffs said that Lance had also acted as a fire spotter for Mr Bradbury during the first gouging operation. However, Mr Bradbury in cross-examination said, contrary to what he had said in his affidavit, that Lance had not acted as a fire spotter during the first operation. Since the account that Mr Bradbury gave in cross-examination was consistent with what was actually happening at the time, and is in my view consistent with the probabilities, viewed objectively, I find that Lance did not act as a fire spotter during the first gouging operation. In the end, I think, Mr Martin accepted this.

79. Accordingly, the dispute between the parties turns on what Lance was asked to do, and did (and how he did it) during the second gouging operation.

The parties’ submissions

80. Mr Martin submitted that Lance offered to “spot” for Mr Bradbury and that Lance must be taken to have known what fire spotting was and why it was important. Mr Martin referred to the trade qualifications that Lance had obtained by August 2008: in particular, to a unit Lance had studied relating to “Routine Manual Metal Arc Welding”. That unit dealt with a number of things including, as one would expect, safe welding practices. Those practices included identification of hazards that the performance of manual metal arc welding posed, and safety precautions to be taken.

81. Mr Martin submitted, although with declining enthusiasm as his submissions proceeded, that in offering to act as a fire spotter, Lance had assumed the role of a “fire watcher” for the purposes of AS1674. Thus, Mr Martin submitted, Lance was required to perform the tasks or duties assigned to fire watchers by cl 3.6 of that Standard (and also to comply with the requirements of cl 3.7(c)).

82. Mr Martin accepted that Lance and Mr Bradbury had agreed on the position that Lance should take to perform his duty as a fire spotter. However, Mr Martin submitted, Lance had not remained in that position, but had moved to a position from which he could not see what was going on. Thus, Mr Martin submitted, Lance had been negligent in the performance of his duty as a fire spotter because he had not positioned himself where directed, and had not been able to observe the direction of travel of spatter during the second gouging operation.

83. Mr Cavanagh submitted that, once Lance and Mr Bradbury had agreed where Lance should position himself, Lance stayed there, and did observe the works to the extent that he was able. Thus, Mr Cavanagh submitted, Lance had performed the duty required of him by Mr Bradbury. In circumstances where Mr Bradbury agreed that he was the “team leader” for the purposes of the gouging operations, Mr Cavanagh submitted that Lance had done all that was required of him.

Decision

84. I start with the observation that Mr Bradbury gave detailed evidence as to the performance of the gouging operations. The only evidence from Lance as to what happened, and what his role was (or roles were) is found in his handwritten statement.

85. I do not accept Mr Martin’s submission that Lance volunteered to fire spot. That is inconsistent with Mr Bradbury’s evidence. Mr Bradbury said that, once the decision was taken to gouge off the manifold bolt, he asked Lance to fire spot. At that time, Lance had packed up and was about to go, as Mr Bradbury agreed (T179.49). Lance agreed to fire spot. He went to get a fire extinguisher from Mr Bradbury’s vehicle. That fire extinguisher was defective, so Lance got one from his own vehicle.

86. To my mind, the complete sequence of events is set out sufficiently and accurately in the closing written submissions for Mr Bate. The account given in those submissions (at [21]) is drawn entirely from:

1. the affidavit evidence of witnesses called by the plaintiffs;

2. the cross-examination of those witnesses; or

3. contemporaneous documents, including the handwritten statements of Mr Bradbury and Lance.

87. As Mr Cavanagh submitted, the facts stated were not in the main contentious (see at [90] below for the exceptions). In those circumstances, and because I think that Mr Cavanagh’s summary is both accurate and comprehensive, I shall set out those paragraphs, without their footnotes and with some non-substantial amendments:

21   Assuming for the rest of these submissions the Court accepts, contrary to the Second Defendant’s position, that the gouging of the manifold bolt caused the fire, then there is no dispute as to the role played by Bate. The sequence of events was as follows:

(i)    Lance Bate was a Plant Technician/Fitter employed by his father Daryl Bate and Lance regularly worked at the mine on weekends as required by HVE;

(ii)    Mr Fogarty allocated the First Defendant and Lance to repair the accumulator bracket on Excavator 1070;

(iii)    Geoff Yeoman acted as the unofficial welding supervisor for HVE. Mr Yeoman’s role was to identify the tradesmen required to carry out the welding or boilermaking maintenance work and to provide a job packet to the tradesman to undertake the job;

(iv)    Mr Yeoman arranged for the First Defendant to undertake the work;

(v)    Mr Yeoman did not arrange for Lance Bate to do any work;

(vi)    Mr Yeoman prepared the document package and allocated the work to Mr Bradbury (Mr Yeoman does not recall whether he spoke to Lance or even escorted him to the excavator on the morning of the fire);

(vii)    Mr Searle did not speak to Lance or Daryl Bate;

(viii)    Mr Bradbury completed the risk assessment foreman [sic] task permit without going to the place where the work was to be performed;

(ix)    Mr Bradbury presented the risk assessment and the task permit to Searle;

(x)    Mr Searle reviewed the documents to comply with his    

obligations to ensure that the documents were appropriately completed;

(xi)    Mr Searle signed off on the documents;

(xii)    Mr Yeoman escorted Mr Bradbury to the excavator;

(xiii)    when Mr Bradbury arrived at the excavator he met Lance. He knew of him but had not previously worked with him;

(xiv)    Mr Bradbury did not show the risk assessment form to Lance or discuss anything about it with him;

(xv)    when Mr Bradbury arrived Lance was under the excavator doing some scraping around the accumulator bracket;

(xvi)    at some stage before Mr Bradbury undertook the arc gouging of the accumulator bracket he may have asked Lance to do some further cleaning in that area [I have found that Mr Bradbury did do so] but he was satisfied that the area was safe and clean for him to perform his arc gouging on when he commenced arc gouging;

(xvii)    Mr Bradbury did not ask Lance to act as the fire spotter whilst he did the arc gouging of the accumulator bracket and Lance did not act as the fire spotter whilst Mr Bradbury did the arc gouging of the accumulator bracket;

(xviii)    Mr Bradbury and Lance agreed that it would be necessary to remove the manifold bolt so that the bracket could be put back in place and the tank could be reattached;

(xix)    Mr Bradbury decided to gouge off the nut;

(xx)    Mr Bradbury said to Lance “Before you go could you fire spot for me?”

(xxi)    Mr Bradbury agreed that Lance was heading off before he asked him to fire spot;

(xxii)    Lance went to get the fire extinguisher from Mr Bradbury’s truck (supporting the proposition that Lance had not been asked to or had previously acted as fire spotter in respect of the accumulator bracket as Mr Bradbury agreed that it would have been necessary to have a fire extinguisher to act as a fire spotter);

(xxiii)    Mr Bradbury’s fire extinguisher did not work so Lance got the fire extinguisher out of his father’s truck;

(xxiv)    Mr Bradbury asked Lance to get up on the grid and spot from there. Lance said he did not want to do that because he would be too close to the heat and fumes. He expressed personal safety concerns;

(xxv)    Mr Bradbury then determined the next best position to stand and asked Lance to stand at ground level behind him and, as far as he knew, that is where he stood, that is, Lance stood where he was asked to stand;

(xxvi)    Mr Bradbury checked from where Lance was standing to make sure that Lance could see everything that Mr Bradbury believed he needed to see and was satisfied that he could see everything that he needed to see from the position where

Lance was standing;

(xxvii)    Mr Bradbury’s evidence at T212-213 as to where Lance was standing (in fact he was probably crouching) is consistent with the comments of Lance in his unsigned contemporaneous statement. In the end it does not matter precisely where Lance was standing because Mr Bradbury was satisfied that it was an

appropriate place to stand and Mr Bradbury’s evidence as to what Lance could see from that position is entirely consistent with what Lance says in his unsigned statement as to what he could see. Mr Bradbury acknowledged in cross-examination that Lance could not see all the way up into the shelf of the slew ring and that Lance could see just about to head height or slightly above;

(xxviii)    Lance says in his unsigned statement “I could see about a foot above Paul’s head”. This is precisely what Mr Bradbury believed Lance could see from the position where he was standing. He confirmed that Lance was standing where Mr Bradbury wanted him to stand;

(xxix)    Mr Bradbury cut the manifold bolt. After doing so he remained under the machine for about 15 minutes to make sure there were no areas of smoking or smouldering. Lance stayed under the excavator with him. Lance checked that everything looked okay; no smouldering;

(xxx)    after removing the nut and remaining under the slew ring to observe the immediate area for signs of fire, Mr Bradbury did some more grinding to tidy up the mounting plate;

(xxxi)    Mr Bradbury stayed under the excavator for 15 to 20 minutes after removing    the bolt from the manifold bracket, inspecting the work area and cleaning up the mounting plate. After this Mr Wilton arrived at the excavator. Mr Wilton went up onto the excavator and carried out an inspection for his own purposes;

(xxxii)    before Lance and Mr Bradbury left the excavator, Mr Bradbury went back underneath the slew ring to make a final inspection and also went onto the top side of the machine again and looked at the area from above through the mesh grid. He saw nothing that would have given him cause for concern that a fire

might start on the excavator.

88. That summary does not refer to Messrs Teszke and Jordan. However, it is common ground that they did inspect EX1070, as summarised at [54], [55] above.

89. I should make it clear that the inferences and conclusions to be drawn from the facts were in some respects contentious. I shall deal with the parties’ contentions as to the appropriate inference and conclusions.

90. The only contentious propositions were those stated at sub-paras (xxvi) and (xxvii). Mr Martin submitted, based on Lance’s handwritten statement, that in fact Lance had moved away from the slew ring area to the rear of the machine, to a position from which he could not see what Mr Bradbury was doing. Mr Martin submitted that Mr Bradbury’s evidence should not be regarded as conclusive on this point because, since Mr Bradbury was kitted up in his protective equipment, he could not see anything but the work he was doing, and would not in fact have known if Lance had moved from the position assigned to him.

91. Mr Martin placed heavy reliance on what Lance had said in his handwritten statement. I set out the whole of the relevant passage (but without adopting Lance’s idiosyncratic spelling):

There was a broken bolt through a manifold above the accumulator. Paul was going to cut the nut off from behind the manifold. I decided to spot for him with a fire extinguisher. I got the fire extinguisher from my dad’s (Daryl) 4X4. Paul’s [extinguisher] was unserviceable. Paul stood at the front of the circle hole towards the bucket. I sat behind the circle hole at the back of the machine on the ground to watch Paul. The cutting was just above Paul’s head height. He had all the correct PPE [Personal Protective Equipment] on. As he was cutting the sparks were coming downwards and over Paul. Due to being underneath the cutting I did not see any sparks go upwards to next level. I did not have a great view of top of the hole but I could see about a foot above Paul’s head. Once he had finished cutting I crawled under machine with fire EXT, and everything looked okay. No smouldering. We both exited out from underneath.

92. I do not think that it is so clear as Mr Martin submitted, from this passage of Lance’s handwritten statement, that Lance had moved from the position agreed with Mr Bradbury. I accept that Lance’s version placed Mr Bradbury “at the front of the circle hole towards the bucket” and himself “behind the circle hole at the back of the machine on the ground” (the “circle hole” is the area of the slew ring). However (as Mr Alexander said), if Lance had sat completely outside the area of the slew ring, he could not have observed at all what Mr Bradbury was doing.

93. Lance said that although he “did not have a great view of top of the hole”, he “could see about a foot above Paul’s head”. As Mr Cavanagh submitted, that is entirely consistent with Mr Bradbury’s evidence at T213.10. For convenience, I set out the entire passage of evidence in which that reference is found (T212.32-213.23):

Q.    I touched on this briefly before, Mr Bradbury but I just want to be clear on what you're saying. When you instructed Lance to stand at ground level behind you, remember that?

A.    Yes.

Q.    This is while you were cutting the manifold bolt, you were satisfied that was the best position for him to stand other than being on the metal grid?

A.    Yes.

Q.    I think you've already agreed with me, you went to the position where he was standing to make sure that was an appropriate place to stand, didn't you?

A.    Yes.

Q.    You were satisfied that Lance could see what he needed to see as far as your understanding of what he was required to do from that position, is that right?

A.    Yes.

Q.    When you went to the position where you instructed Lance to stand you would have observed that Lance could not see all the way up into the shelf of the slew ring, wouldn't you?

A.    Yes.

Q.    You didn't consider it necessary at the time for Lance to be required to see all the way up into the shelf of the slew ring, did you?

A.    No.

Q.    You knew that all Lance could see was just about to your head height or slightly above, didn't you?

A.    Yes.

Q.    If you go to paragraph 112, "I formed the view that he had a clear view of the spot where I was cutting and the area around it", you see that?

A.    Yes.

Q.    You formed that view actually from standing where Lance was standing, that is you made your own assessment of what Lance needed to see?

A.    Yes.

Q.    When you refer to a clear view you refer to the clear view, as far as you were concerned, a clear view of everything he needed to see?

A.    Yes.

94. The reference to “touching on that topic briefly” is a reference to Mr Bradbury’s evidence at T181.33-182.34:

Q.   You understood that he [Lance] was, in effect, saying, I don't want to stand there because I have safety concerns, yes?

A.    Yes.

Q.    You accepted that at the time?

A.    I accepted that.

Q.    You went for the next best position as far as you could judge?

A.    Yes.

Q.    Then you said, "Well stand behind me"?

A.    Yes.

Q.    Is that right, at ground level; is that right?

A.    Yes.

Q.    Then as far as you knew, that's where he stood?

A.    Yes.

Q.    Did you check before you commended your arc gouging work on the manifold bolt what Lance could see from where he would be standing; that is what he could see of you and the work being performed?

A.    Yes.

Q.    You were satisfied that he could see everything he needed to see from that position, weren't you?

A.    Yes.

Q.    You had personal protective equipment, didn't you; that is you had a could you describe what you had?

A.    I had a covering over my head, like with the eyes exposed, it's like a leather cape over the top of your head.

Q.    Why did you need that?

A.    Protect you from the falling molten or metal; it's part of your standard PPE for doing that type of work. I also had a respirator on my face to protect me from the fumes around the area where I was working. Also I had a helmet, gloves, a leather jacket, and some protecting over my shoes.

Q.    It would be hazardous, wouldn't it, for someone without all that sort of protective equipment to stand, as it were, touching you, exposing themselves to all that sort of fumes, sparks and things like that; do you agree with that?

A.    Yes, to a certain degree.

Q.    That's why you had the protective equipment, isn't it?

A.    Yeah, because I'm closer to the work area and actually performing that work.

Q.    The first thing you would recognise as someone experienced in the work, that anyone else, if they're assisting with the work without personal protective equipment shouldn't be standing too close to where they're going to be exposed to that sort of danger, do you agree with that?

A.    That's correct.

95. Mr Martin’s submissions, as to the limits of Mr Bradbury’s ability to see where Lance was standing and whether Lance had moved, might have had more force if they had been based on evidence given by Mr Bradbury. However, Mr Bradbury’s evidence is clear. He and Lance arranged where Lance should stand, and so far as Mr Bradbury was concerned, Lance did in fact stand there. In this context, it is to be noted that the second gouging operation took only 4 to 5 seconds. The proposition underlying Mr Martin’s submission is in effect that during that time Lance crawled out of the way and crawled back in again. It is however unlikely that he could have done this in the space of 4 or 5 seconds. And I am quite certain that if, when Mr Bradbury finished the second gouging operation, he saw that Lance was not standing in the agreed position, he would have said so.

96. In any event, so it seems to me, Lance’s statement is not clear as to where he had been standing (or crouching). At one point, he said that he sat behind the circle hole at the back of the machine on the ground. A few lines later, however, he said that he was “underneath the cutting” – that was the reason why he could not see the direction of travel of the sparks. Given that the slew ring is about 1.5 metres in diameter, Lance could only have been “underneath the cutting” if he were standing (or crouching) close to Mr Bradbury whilst Mr Bradbury performed the second gouging operation.

97. On one reading of this part of Lance’s statement, he left the fire extinguisher outside the area of the slew ring, and went to get it and “crawled” back with it, once Mr Bradbury had gouged off the manifold bolt. That may explain the apparent inconsistencies in Lance’s account of where he was positioned for the four or five seconds that Mr Bradbury took to do that work.

185. Thus, when Mr Bradbury or Lance saw that the manifold bolt would impede the reattachment of the accumulator to its repaired bracket, they were correct to recognise that the work entrusted to them required that the bolt be removed.

186. I do not see how the argument presently under consideration could run if Lance had been able to remove the bolt using his own tools. If it could not run in those circumstances, I do not see how it can run where, because those tools could not undertake the task of removal, a different process of removal was chosen.

187. In any event, if I may say so, Mr Martin’s argument seems to me to ignore the realities of the situation. Because neither Mr Bradbury nor Mr Searle had inspected the work site before the safety assessment was completed and approved, neither could have known whether sparks and spatter from the hot work would travel upwards, downwards or horizontally. It was necessary for the process of risk assessment to accommodate this uncertainty. Because neither looked at the work site before completing and approving this risk assessment, that assessment should have taken into account as a real possibility the prospect that spatter might travel upwards and into the grease-laden area of the slew ring.

188. In those circumstances, I conclude that the particulars of contributory negligence set out in paras (c) and (d) have been made out.

189. As to paras (e) and (f), I accept Mr Martin’s submissions. Such material as HVE had available to it suggested that Lance was competent to do the work required of him as a fitter, and competent to assist Mr Bradbury, to the extent required, in the hot work. HVE was entitled to assume that Mr Bradbury would properly instruct Lance, to the extent that he did ask Lance to assist him in the hot work. And in the absence of evidence from Lance (or Mr Bate) to controvert that conclusion, I conclude that those paragraphs have not been made good.

Issues 11 and 12: apportionment

197. On my findings as to Mr Bate’s liability this issue goes nowhere. Since he has no liability, there is no need to consider the operation of s 35 of the Civil Liability Act. Nor is it possible to do so, unless some clear and precise counterfactual position is assumed.

Issue 13: recovery

198. On my findings, the plaintiffs are not entitled to recover anything from Mr Bate.

Issue 14: the lease termination payment

199. Although this issue does not arise on my findings, I will deal with it briefly. Under the lease from Rock and Rubble to Thiess, Thiess was required to pay Rock and Rubble the termination payment that in fact it did pay.

200. The lease from Rock and Rubble to Thiess permitted subletting in some circumstances, where the proposed sublessee was a “Permitted Assignee” as defined. HVE fell within that category. In essence, that sublease either should be, or should be taken to be, on the terms of the head lease, making any necessary adjustments. Although the right to sublease was qualified in certain ways, it is clear that Rock and Rubble knew that HVE would use and operate EX1070, and in my view equally clear that it approved informally, if not formally, of that’s happening.

201. To my mind, the proper inference from the facts is that the terms of the sublease should be taken to incorporate the applicable terms of the head lease. On that basis, HVE had a back to back obligation to pay the termination payment to Thiess in the event that Thiess became liable to pay it to Rock and Rubble.

Issue 15: particular damages questions

202. Again, these questions do not require resolution. Again, however, I shall indicate briefly my conclusions on the individual paragraphs and subparagraphs.

Paragraph (a)

203. If, as I think is correct, the effect of the payment by HVE to Thiess of the amount of the termination payment was to indemnify Thiess for that payment, Thiess would not have been entitled to recover that amount again from Mr Bate. The practical significance of that is diminished, given what I have just said: namely, that HVE would have been entitled to do so.

Paragraph (b)

204. Effectively, the lease termination payment compensated Rock and Rubble for the loss of the future payments of rent that it would have received under the lease. In those circumstances, I see no reason for requiring HVE (or, for that matter, Thiess) to give credit for those future payments. True it is that neither had to make the payments (Thiess to Rock and Rubble, or HVE to Thiess) in the future. But that future liability was in effect subsumed into the obligation that in my view each had to make the termination payment.

​​Paragraph (c)

205. In my view, the correct approach to calculation of the increased operating cost is, in principle, that for which the plaintiffs contend. That approach:

1. calculates the number of hours that, the plaintiffs say, the replacement excavators operated doing the work that EX1070 would have done;

2. calculates the total operating cost of those replacement excavators for those hours;

3. calculates the total operating cost of EX1070 for operating that same number of hours; and

4. by subtracting (3) from (2), calculates the loss accordingly.

Paragraph (d)

206. It is correct to say that the plaintiffs did not establish some of the assumptions on which their experts relied in their calculations of loss. However, the way in which those assumptions were framed, and the approach taken to the calculation of loss, means that the divergences can be accommodated in any necessary calculation of loss. The divergences are not such as to invalidate the entire model.

Paragraph (e)

207. In my view, it was reasonable for HVE to use EX0007 and EX1192 to do the work (or some of it) that EX1070 would have done, in the months of September to December 2008. I accept that there were other, more efficient, excavators that could have been deployed. However, the loss of EX1070 had a significant adverse impact on “total material movement” (waste stripping and coal mining considered together: see below at [212]). HVE had contractual delivery obligations. In my view it has not been shown that, for the four months with which I am presently concerned, it was unreasonable for HVE to use EX0007 and EX1192 to strip waste.

208. However, by January 2009 EX0938 had been recommissioned and was fully functional. It had a capacity slightly greater than EX1070, and was capable of doing all the work that EX1070 would have done.

209. In my view, it was not reasonable for HVE to continue to use EX0007 or EX1192 as a replacement for EX1070 after December 2008. Not only was EX0938 available, and a capable substitute, HVE’s records show that over 2009, EX0938 was operated for a little more than half of its available operating hours (that is to say hours of work over the working hours of the mine, leaving aside time for scheduled maintenance, stoppages and the like). HVE did not demonstrate why it was necessary to use the smaller, less efficient and (proportionately) more expensive excavators, EX0007 and EX1192, instead of utilising EX0938 for more of its available operating hours.

210. I should note, in respect of this and the preceding and following paragraphs of issue 15, that, contrary to the assumptions the plaintiffs’ experts were asked to make, all three “replacement excavators” – EX0007, EX1192 and EX0938 – worked on coal mining as well as waste stripping, although (HVE said) EX1070 would only have been used for waste stripping. That divergence from the assumed state of affairs does not invalidate the model, in circumstances where the hours claimed for each machine are only those documented as having been referable to waste removal.

211. If however the reason why EX0007 and EX1192 were used during 2009 to strip waste was that EX0938 was working on coal mining, then the divergence from the assumed state of affairs would become relevant. The experts were asked to assume, and it was HVE’s evidence, that from September 2008 up until the termination of the operating services agreement, EX1070 would have worked solely on waste stripping. If the continued deployment of EX0007 and EX1192 on waste removal during 2009 was the result of the deployment of EX0938 on coal mining, then the divergence from the assumption would have a serious – perhaps fatal – impact on the calculations of loss in respect of increased operating cost.

212. In the course of the oral evidence, the plaintiffs’ witnesses introduced the concept of “total material movement”. As I understand it, this was intended to justify the shuffling of the machines back and forth between waste and coal. The underlying proposition was that the loss of EX1070 had an adverse impact on the ability of HVE to move total quantities of material. That may be correct, at least at the level of principle. However, the plaintiffs did not frame this aspect of their claim by reference to loss of overall capacity. They framed it specifically by reference to loss of EX1070 in the operation of waste removal in a particular pit. Further, the evidence as to total material movement did not demonstrate (for example) that there was an adverse impact on HVE’s overall conduct of its mining operations.

Paragraph (f)

213. The arguments relating to alleged savings, in respect of the lease balloon payment and future rent payments, fail. As to the former: the plaintiffs’ evidence demonstrates, and I find, that at the expiry of the lease for EX1070, Thiess would have entered into a new lease, and thereby avoided the obligation to make a balloon payment. Thus, on the evidence, I find that the lease balloon payment would not have been made.

214. As to the alleged savings in rental payments, there are two answers. I have referred to one already: the effective transmutation of those obligations into the obligation to make the termination payment. The second answer is that the future operating costs calculated for the replacement excavators took into account what were effectively payments of “rent”, or charges for use, by HVE to Thiess. To remove the equivalent from the calculation of the notional operating costs of EX1070 would be to distort, and render invalid, the comparison of the two costs figures.

215. As to the saving of dismantling costs, again, because I find that Thiess would have entered into a further lease for EX1070, those costs would not have been incurred.

216. The argument that HVE effectively saved money appears to depend on the proposition that, but for the fire, EX1070 would have worked for many more hours than did the replacement excavators, and would have stripped very much more overburden at a lower overall unit cost. The answer to this is that the efficient conduct of mining operations required HVE to strip only as much overburden as was needed to enable it to mine coal and meet its production targets. There was no reason, contractual or commercial, for HVE to strip any more overburden. There was a very good reason why it would not do so: namely, that it would incur very substantial costs in doing so, and would not be compensated for those costs (because it was paid only for delivery of coal, not for removal of overburden).

Paragraph (g)

217. The argument propounded for Mr Bate is in substance that since the delivery of ROM coal was not very profitable, it was unreasonable for HVE to incur (as it claims) many millions of dollars in extra expenses leading to the production and delivery of that not particularly profitable coal.

218. The answer is simple. Even though everyone appears to have known that the operating services agreement would come to an end on 31 March 2010, nonetheless, whilst it subsisted, HVE was required to perform it. Simply not to do so would put it in breach and may have led to termination of the contract. In any event, failing to do so when there were alternatives available may very well have had a significant detrimental effect on HVE’s reputation, and thus on its ability (and that of its parent, Thiess) to win future business.

Credit for the sum paid by Dobbins

219. I referred at [9] above to a dispute as to how the payment of $6 million by Dobbins should be dealt with in any computation of damages payable by Mr Bate. Of course, that question is entirely moot since I have concluded that Mr Bate has no liability to pay anything. For that reason, and bearing in mind that the resolution of the question would not require a decision on any disputed question of fact, I shall not deal with this dispute.

Conclusion and orders

220. The plaintiffs’ case against the second defendant fails. There should be judgment with costs for the second defendant on the plaintiffs’ claim against it.

221. If any party contends for some different order as to costs, it should serve and submit to my Associate by 25 March 2016, a draft of the costs orders that it seeks, any evidence on which it relies in support of those orders, and submissions no longer than 5 pages setting out why it is entitled to those orders. The other party should serve and submit to my Associate, by 8 April 2016, any evidence on which it relies in opposition to the orders sought and no more than 5 pages of written submissions in support of that opposition. I will deal with any such dispute “on the papers”.

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Decision last updated: 17 March 2016