Nelson Forests Limited v Three Tuis Limited

[2013] NZHC 856

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2010-422-0000841

[2013] NZHC 856

UNDER  Section 43 of the Forest and Rural Fires Act

1977

BETWEEN  NELSON FORESTS LIMITED First Plaintiff

ANDNEW ZEALAND FIRE SERVICE COMMISSION

Second Plaintiff

ANDWAIMEA RURAL FIRE COMMITTEE Third Plaintiff

ANDTHREE TUIS LIMITED First Defendant

ANDSTEPHEN GARNETT Second Defendant

ANDTOWER INSURANCE LIMITED Third Party

Hearing:         15 - 17 April 2013

Counsel:         P M Smith and S J O'Brien for First Plaintiff

B Scott and M On for Second and Third Plaintiffs
R Ord for Defendants

Judgment:      24 April 2013

JUDGMENT OF MILLER J

Judgment reissued under the slip rule (r 11.10 of the High Court Rules)

1      CIV-2010-442-000084  and  CIV-2010-442-000396  consolidated.     Minute  12  October  2010

Osborne AJ.

Introduction

[1]    2454 Tadmor-Glenhope Road is a picturesque rural property which adjoins the Kahurangi National Park south of Nelson.  It is the home of the second defendant, Stephen Garnett, and his partner, Tracey Lynch, and the site of several tourist cabins which they built and run as a bed and breakfast business through their company, Three Tuis Ltd.2

[2]    Guests  of  Three  Tuis,  Donna  and  Paul  Maddocks,  built  a  fire  in  the woodburner in their cabin on 24 November 2009, at about 3.30-4.00 pm.   The afternoon was not cold, but Mr Maddocks was feeling unwell and the couple had decided to stay in that evening.  They fed the fire, Mrs Maddocks replenishing the wood basket from a nearby woodshed, and last saw it burning when they went to bed about 1.00 am.  At about 2.00 pm on 26 November, some 36 hours after they last saw fire in the woodburner, Mr Garnett dumped the ashes of their fire by a scrub- covered bank at the edge of a mown lawn surrounding the cabin.

[3]    Two brothers, the Paynes, were working nearby with a logging crew on 26

November.   At about 3.45 pm they smelt then saw smoke from the Three Tuis property, and on driving there to investigate, found that a “serious” fire had taken hold about the bank and woodshed.  They alerted Mr Garnett, who was in the house, and the three men tried to fight the fire with the limited resources to hand, but it was obvious that, as Mr Garnett put it, all hope was gone.   Driven by a strong breeze from the south and encouraged by dry conditions, the fire spread 4.7 kilometres to the north, destroying a large forest owned by a neighbour, Nelson Forests Ltd, before the intensive efforts of the second and third plaintiffs, whom I will call the Fire

Service, controlled it some hours later.3

[4]    By  that  time  the  fire’s  cause  was  already  under  investigation.    Two  fire

investigators had Mr Garnett identify where he had dumped the ashes.   All four investigators called at trial now agree that the ashes caused the fire.

2      Three Tuis formerly owned the property, but the trustees of their family trusts now hold title.

3      I note that the fire also destroyed the home of Caroline Wade, a witness.

[5]    Mr Garnett does not agree.  He insists that he checked the ashes were cold; he now believes that he dumped them in a different place, on the lawn; and he suggests alternative  causes  most  of  which  involve  the  woodshed,  such  as  arson,  or spontaneous combustion, or light refraction through broken glass.  He says that when he first saw the fire it appeared to have started at the woodshed, before backburning up the bank to the ashes.

[6]    The plaintiffs sue Mr Garnett and Three Tuis under s 43 of the Forest and Rural Fires Act 1977,4 under which Nelson Forests may recover damage to property, and the Fire Service the costs of firefighting, from a person who caused a rural fire. They assert that liability under s 43 is strict; indeed, the Court of Appeal said as much in an interlocutory appeal in this very case.5    Mr Garnett denies causing the fire in fact.  In opening Mr Ord also suggested that if Mr Garnett did cause it, s 43 admits defences in law: some other cause may have intervened, and having regard to the precautions he took it was not reasonably predictable that the ashes would start a fire.  These defences were abandoned in closing, leaving only the issue of cause-in- fact.

[7]    The parties agree that Three Tuis is vicariously liable for Mr Garnett’s actions, and that the losses suffered by the first plaintiff and the second and third plaintiffs were $488,944.24 and $602,883.50 respectively.  If the plaintiffs succeed the third party, Tower Insurance, which abides the decision, will contribute $200,000 plus GST, leaving Mr Garnett and Three Tuis to pay the balance if they can.

The course of the hearing

[8]    The plaintiffs called 11 witnesses, including five experts, and the defendants

11,  including  two  experts.    Few of the  fact  witnesses  were  required  for  cross- examination, and the evidence of several, including the Maddocks, was admitted on

the  ground  that  they  were  unavailable.6      Those  who  gave  oral  evidence  were

4      The first plaintiff also sues in negligence.

5      Garnett v Tower Insurance Ltd [2011] NZCA 576 at [38].

6      The Maddocks, who live in Australia, were defence witnesses.  They could not easily reach a centre at which videoconferencing facilities were available.  On Mr Ord’s application I admitted

Mr Garnett, Ms Lynch, and Allan Payne.  The experts gave evidence as two panels. The first panel comprised the four fire investigators, and the second three experts in the behaviour of fires, specifically the question how long ashes from a woodburner might remain hot.  The defence called one expert in each panel.  Two of the experts also gave evidence separately about certain matters that might not have been appropriate for the panel setting.

[9]    After the hearing I refused Mr Ord’s application to call further evidence from the Maddocks.  The proposed evidence was not in affidavit form but amounted to speculation by counsel about what the witnesses might say.  Assuming the witnesses would adopt the evidence, it could have been called earlier, and for reasons which will become apparent it would not alter the result.

Who and what caused the fire?

[10]  The bare narrative in  the introduction  is agreed,  but  I must resolve some questions of fact: how much wood did the Maddocks burn, and what sort of wood was it; precisely where did Mr Garnett dump the ashes; what steps did he take to ensure they were cold; were they cold; where did the fire begin; and what, if not the ashes, might have caused the fire.

[11]  The woodburner is a small model with a firebox measuring 375mm by 332mm by 374mm.   Beside it stood a metal container about the size of a large laundry basket, which I infer was fairly full of firewood.  Donna Maddocks lit the fire using small pieces of wood in the basket and some light fuel, such as cones, that she gathered from the woodshed.   The couple used all of the wood in the basket, and later in the evening Mrs Maddocks returned to  the woodshed with a torch and gathered more firewood in her arms.  Two pieces may not have been used.

[12]  Mr Garnett stated when first interviewed that the wood burned was probably beech and manuka.  He later suggested that the Maddocks may have used pine, but

he could offer no reasonable support for that view.  I think he was correct the first

an affidavit which they swore jointly.  One witness, Caroline Wade, was hospitalised just before trial.

time: he knew what was in the woodshed and almost certainly filled the basket himself, and he spoke candidly then.  The point matters because beech and manuka are dense, so they burn slowly.  I also think it likely that when she refuelled the fire Mrs Maddocks took larger pieces of wood from the shed, although I accept she took only so many as she could carry without difficulty.

[13]  Christopher Millson, a rural fire investigator for the third plaintiff, arrived about 6.00 pm on 26 November, before the fire had been controlled, and David Noble, a fire investigator for Tower, visited separately, two days later.7    Each man spoke to Mr Garnett, who may have been under the impression that he was fully insured.  He told them that he had dumped ashes, pointing to what he said were the ashes concerned.  The ashes formed one of several piles of ash along a steep river

bank located about 10m across a mown lawn from the cabin.  Some of them were down the bank a little.  Scrub grew on the bank and mixed with long grass at the top. The  ashes  that  Mr  Garnett  identified  were  located  just  off  the  lawn,  in  or immediately adjacent to the scrub and long grass.

[14]  Mr Garnett admits that he pointed to the pile of ashes, but he says that he was very distressed at the time and he now believes he was mistaken.  He explained that he never dumped ashes on the bank or the verge; hot ashes he always dumped in the river, and  cold ashes he sometimes dumped on the lawn itself.   He pointed in evidence to a grey streak shown in a scene photograph which he suggested was ash that he had dumped on the lawn. I accept that he was very upset, although he appeared coherent to the investigators, but I do not accept that he made a mistake. Other photographs tend to confirm that the grey streak was not ash, and neither Mr Millson nor Mr Noble, both of whom paid close attention to the area, observed any piles on the lawn, which would be an unusual place for anyone to dump them. Finally, I find implausible Mr Garnett’s evidence that the other piles of ash along the bank verge predated his occupation of the property, which began seven years earlier, in 2002.  Rather, I consider that he was in the habit of dumping ashes over the bank

when he thought it safe to do so.

7      The other fire expert investigators to give evidence were Russell Joseph, who was briefed by the first plaintiff ’s insurer, and Kenneth Legat, who was briefed by the defendants.  I acknowledge the valuable assistance of all of the experts.

[15]  I accept that the woodburner was probably clean when the Maddocks checked in, so the only ash dumped was that generated by their fire.  It is difficult to estimate how much ash that generated, but I accept the quantity was not large.  Mr Garnett’s evidence that it was only four to five small shovelfuls, enough to fill a standard bucket to about three inches depth, may understate the quantity somewhat.  I prefer Mr Millson’s evidence that the pile measured about 1.5 by 1 feet in area.  Given that the pile was dumped from a bucket, it probably was of uneven depth.

[16]  That brings me to the central dispute; whether the ashes were hot.  Mr Garnett explained that while he did not run his fingers through them to check their temperature, he could see and feel that the woodburner was cold and he carefully poured the ashes into his bucket using the shovel to ensure that they contained no embers or charcoal.   He saw fine ash only.   He also checked the ashes when he poured them onto the lawn.  I accept that he shovelled them into the bucket and must have looked at them, but I do not accept that he checked them closely for embers.  I reach that conclusion for several reasons.  First, he conceded when first interviewed that he had been in a hurry that day.  Second, he has since conducted experiments using the same woodburner and all produced large embers or charcoal, as did experiments conducted by others.  Third, while I thought Mr Garnett a decent man, he was not a reliable witness.  An adverse judgment will surely ruin him, and I think that knowledge led him first to convince himself that the ashes cannot have been the cause, then to speculate on any other cause however unlikely.  He sought to resile from statements that he made at the time of the fire, and he embellished earlier statements in ways that I found implausible.  For example, he stated for the first time at trial that the Maddocks left the damper on the woodburner open.  It is unlikely that he noted that inconsequential detail when cleaning the fire, nor is it especially likely that the Maddocks, who have a fireplace of their own, left the damper open when they went to bed.  They had not let the fire burn out, which suggests they wanted to retain  warmth  for  the  morning.     Fourth,  the  experts  agreed  that  ashes  in  a woodburner may remain hot for up to five days, and that conclusion did not depend on the position of the damper.  Finally and indisputably, these particular ashes were hot.   Mr Millson put his hand into the pile after Mr Garnett pointed to it on 26

November, finding the ashes so hot that he had to remove his hand at once.   The other piles were cold.

[17]  While the experts agreed that ashes may remain hot for much longer than 34 hours, they diverged somewhat on how long ashes were likely to retain heat in this particular woodburner following a fire like that built by the Maddocks.  Mr Garnett ran several experiments of his own, some using very hot fires, and Mr Shanahan conducted two experiments, one of which was observed by Charles Fleischmann, an associate professor in fire engineering at the University of Canterbury who was briefed by the plaintiffs.  In none of these experiments did the ashes retain heat after

34 hours, and in some of them they were extinct much sooner than that.   In one experiment Mr Shanahan did find the ashes a little hotter than room temperature after 30 hours.   I accept the findings, but I also accept Professor Fleischmann’s opinion that they do not justify probabilistic reasoning about the ashes dumped on 26

November  2009.    It  is  extremely  difficult  to  replicate  the  Maddocks’  fire:  the quantity of fuel can only be estimated; the mix of firewood and log size cannot be known; their handling of the fire throughout the evening is unknown too; and temperature and relative humidity (moisture in the air) affect a fire significantly.  An experiment conducted in a different woodburner by William O’Donoghue, a senior specialist fire investigator for the Fire Service, established that heat retention can vary dramatically with some of these variables.   So the expert evidence does not cause me to doubt the direct evidence that the ashes from the Maddocks’ fire were hot enough to ignite the vegetation next to which Mr Garnett dumped them.

[18]  The experts agreed that the fire began at the pile of ashes and burned away from it in a V pattern.  They based that conclusion on fire burn indicators pointing to the ashes – that is, physical evidence on the ground and surviving vegetation of the direction and height of the fire - and the absence of any other fire sources nearby.  I need not review the evidence.   It is persuasive and it was not challenged in any meaningful way.

[19]  Mr Garnett did propose alternative causes, mostly relating to the woodshed, which he identified for three reasons: when he first arrived on the scene the shed was burning furiously, so it may have been the first place to catch fire, it held fuel, in the form not only of firewood but also paper and kindling and petrol; and around it lay broken glass which might, he suggested, have refracted sunlight to as to ignite the fuel.

[20]  The experts accepted none of these causes.  I found all of them implausible, and arson the least plausible of all.  Mr Ord invited me to accept that an arsonist who lit a fire at Tahunanui just before 5.00 pm on 26 November may have done so after lighting this fire, which was in a remote location an hour’s drive away.  Absent some connection between the arsonist and this area – none is suggested - that is nothing more than idle speculation.  The others were only marginally more likely, the best of them being the suggestion that broken glass at the woodshed may have refracted sunlight so as to ignite something there.  Glass was present, but there is no evidence at all that it was a likely cause of fire, and there is compelling evidence, in the form of fire burn indicators, that the fire burned toward the woodshed, not away from it. The experts agreed on that point.  As noted, Mr Garnett pointed to the vigorous fire in the shed when he arrived.  He also suggested that the bank was not burning, or was obscured by smoke.  But when he arrived the fire was well established.  Allan Payne, who arrived shortly before him, deposed that the whole bank was alight, and he formed the impression that the fire had burned toward the woodshed.

[21]  Mr Garnett also suggested that a solar-powered garden light next to a toe toe plant some metres away from the pile of ashes may have caused the fire through refraction onto vegetation or the ashes.  There was a conflict of evidence about the light; some photographs taken soon after the fire do not depict it, while others do. Be that as it may, there is no evidence at all that this light might cause a fire.  Mr Ord could only point to one internet account of a quite different garden light having done so.  And finally, the experts agree that although the toe toe burned, the fire came at it from the opposite side.

[22]  The plaintiffs have proved on the balance of probabilities that Mr Garnett dumped hot ashes on the verge of the bank, and so caused the fire when the ashes ignited the adjoining vegetation.

[23]  It will be apparent from my findings that Mr Garnett did not take reasonable precautions to ensure the ashes were extinct before dumping them amongst combustible material.  By way of confirmation, I make several points.  Mr Garnett had read the manual for the woodburner which advised that ashes can remain hot for five  days,  and  he  conceded  that  for  all  he  knew  the  Maddocks  had  used  the

woodburner on the 25th.  He is an experienced bushman, and I accept his evidence and that of Ms Lynch that he was conscious of fire risks.  They had chosen not to insure the Three Tuis business because of the cost, relying instead on safety precautions.   But although he looked at the ashes and thought they were cold, he neither ran his fingers through them thoroughly, nor soaked them in water, nor left them in a steel bucket for the five days recommended by the manufacturer.8     A visual inspection offered no substitute for these reasonable precautions.

The cause of action under s 43 of the Forest and Rural Fires Act 1977

[24] I accept, following Tucker v New Zealand Fire Service Commission9 and Environmental Agency v Empress Car Co (Abertillery) Ltd,10 that liability under s 43 is strict.  The harm need not be foreseeable.  However, the defendant is not liable where the harm, although produced by his or her actions, was an extraordinary

consequence, not a normal fact of life.

[25]  Mr Ord accepted in closing that liability follows under s 43 if Mr Garnett caused the fire by dumping hot ashes.  The concession was inescapable.  Mr Garnett having acted in that way, it cannot possibly be said that the fire was an extraordinary consequence, such that he should not be taken to have caused it at all.  In Tucker, in which the fire authorities failed in their claim, a pair of wheel rims on a heavy trailer struck sparks from a road after the tyres burst as the defendant was driving, igniting roadside vegetation.  By contrast, this case features no succession of events of which only one, an action not in itself intrinsically likely to cause fire, was directly attributable to Mr Garnett.   The connection between his actions and the fire was immediate.

[26]  I conclude that both defendants are liable to the plaintiffs under s 43.  There will be judgment accordingly.

8      I note that in its publicity material, which Mr Garnett likely had not seen, the Fire Service recommends a shorter period, three days.

9      Tucker v New Zealand Fire Service Commission [2003] NZAR 270 (HC).

10     Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 (HL).

The cause of action in negligence

[27]  I  do  not  understand  the  defendants  to  dispute  that  both  defendants  owed Nelson Forests, their neighbour, a duty of care when dealing with the ashes, or that its  losses  were  reasonably  foreseeable.    Liability  follows  inexorably  from  my findings of fact.   Nelson Forests will have judgment accordingly, against both defendants.

Quantum

[28]  The loss suffered by Nelson Forests is $488,944.24.  It will have interest from

26 November 2009, the date of the loss, at 8.5 per cent per annum until 30 June 2011 and thereafter at five per cent per annum until the date of judgment.  I note that the Judicature (Prescribed Rate of Interest) Order 2011 applies to every judgment given on or after 1 July 2011, even if commenced before that date.  However, it was held of essentially identical language in a previous Order in Council that the prescribed

rate does not apply retrospectively.11

[29]  The amount payable to the second and third plaintiffs respectively for fire suppression is $571,593.81 and $31,289.69, with interest at five percent per annum (the rate sought) from 26 December 2009 until judgment.  The explanation for this division of the total Fire Service claim is that while the third plaintiff incurred the costs initially, it claimed from the Rural Fire Fighting Fund operated by the second plaintiff, which has reimbursed it for almost everything.

Tower’s position

[30]  I was not asked to enter judgment for the defendants against Tower, and I do not understand that it will be necessary to do so.  There will be leave to apply, in case some difficulty arises.

Costs

11     Takaro Properties v Rowling [1987] 2 NZLR 700 (PC).

[31]  Three Tuis is not legally aided but Mr Garnett is.  Counsel for the plaintiffs both asked me to reserve costs.   I do so, but they should not take that as encouragement.  So far as Three Tuis is concerned, it may help counsel if I intimate that I am disposed to award costs on a 2B basis with provision for one counsel.  Any applications must be made within eight weeks of the date of this judgment.

Miller J

Solicitors:

Fortune Manning, Auckland for First Plaintiff

Chapman Tripp, Wellington for Second and Third Plaintiff