Aerolink Air Services Pty Ltd v Bankstown Airport Limited

1. [1]

   HIS HONOUR: The defendant, Bankstown Airport Limited (“BAL”) is the lessee of the Bankstown Airport. The Airport is owned by the Commonwealth of Australia. The plaintiff, Aerolink Air Services Pty Ltd (“Aerolink”) carried on business from hangar 410 at Bankstown Airport, from about December 1999 (Ryan, [16], CB 37) to 28 February 2013 (ASC para 7 and Defence para 1). Aerolink occupied the hangar under various arrangements, the last of which was a month-to-month licence from BAL. That licence was terminated by at least 28 February 2013. Aerolink should have removed all its goods from the hangar by that date. It did not do so. On 5 March 2013 BAL agreed to allow Aerolink to access the site between the hours of 8.00am and 4.00pm to remove its remaining property.

2. [2]

   At about 2.00pm on 6 March 2013 a fire broke out in a storeroom in the hangar. The fire caused extensive damage to Aerolink’s goods that were still stored in the hangar. These included aeroplane parts, avionics and logbooks. Not all logbooks were destroyed. After an initial inspection with a representative of BAL, Mr Ryan, the director of Aerolink, was not permitted access to the hangar after the fire. There was concern that the area and any goods that might be salvageable were contaminated with asbestos. The remaining goods were disposed of by workmen engaged by BAL on or about 30 July 2014.

3. [3]

   Aerolink claims that BAL was responsible for the fire and the damage or destruction to its goods. It also complains of the subsequent disposal of goods that might have survived the fire. On 13 October 2017 Beech-Jones J made an order by consent that the quantification of the loss and damage suffered by Aerolink is to be decided separately and after the trial of all other questions in the proceedings. Accordingly, this judgment deals with issues of liability only.

4. [4]

   The first issue is the cause of the fire. Aerolink alleges that:

5. [5]

   Aerolink claims that BAL was responsible for deficient electrical wiring in the premises which it says caused the fire.

6. [6]

   BAL denies both responsibility for the electrical wiring and that an admitted deficiency in the electrical wiring caused the fire. The ultimate position taken by an expert retained by BAL to give evidence as to the cause of the fire, a Mr Gregory Kelly, was that neither any fault in the electrical wiring or connections in the premises, nor any fault in an electrical appliance, could have triggered the fire and that the fire must have been caused by the ignition of combustible materials in the storeroom, or flammable liquids, or the vapour from flammable liquids, arising from some other source such as a cigarette, or by such material being ignited by some other heat source such as the heat of a lamp.

7. [7]

   An expert called by Aerolink, a Dr Anthony Green, considered that the fire investigation excluded this as an explanation of the cause of the fire. He considered that the source of the fire was ignition within a powerpoint or socket (called in the trade General Purpose Outlet (“GPO”)) that led to a breakdown in insulation in the GPO and caused a fire to spread in the storeroom resulting in the combustion of flammable liquids in the storeroom.

8. [8]

   The extent of disagreement between Mr Kelly and Dr Green, and the vehemence with which Mr Kelly expressed his disagreement with the opinions of Dr Green, was dismaying. I deal with their evidence below.

9. [9]

   If the fire were not caused by an electrical fault, then Aerolink’s claim for damages in respect of so much of its goods as was destroyed by the fire fails. It maintains a claim arising from the disposal by BAL of logbooks and the contents of filing cabinets that it says were salvageable.

10. [10]

    If the cause of the fire were an electrical fault, the second issue is whether BAL was responsible for it. BAL relies upon terms of the subleases and licence agreements under which Aerolink occupied the premises. They varied from time to time, but in substance for many years before the fire, at least up to the expiry of the last licence agreement on 28 February 2013, the agreements provided that Aerolink occupied the premises at its own risk, that BAL gave no warranty as to the suitability of the premises for its purposes, and that if Aerolink wished to carry out electrical repair work it would need BAL’s approval and would be required to do so at its own expense.

11. [11]

    Aerolink pleads that BAL owed it a duty to take reasonable care to avoid foreseeable risk of harm to its property arising from its use of the premises. It pleads that it was reasonably foreseeable that the premises presented a significant risk of harm to its property, that risk being that an electrical fault could be an ignition source of a fire that could cause damage. Aerolink pleads that BAL was aware of various matters that showed electrical faults in the system for provision of power to the premises and failed to address those matters and breached its duty of care.

12. [12]

    BAL says that the duty propounded is unknown to the law. BAL contends that even if the duty could otherwise arise, it was negated by the terms upon which Aerolink occupied its premises.

13. [13]

    It was common ground that there was a fault in the electrical wiring at the hangar. The main earth connection from the meter board on the external wall of the hangar to ground was not connected. The position ultimately (although not initially) taken by Mr Kelly, was that this had no implication for the cause of the fire. His ultimate position was that the fire could not have originated from a fault either in an electrical appliance in the storeroom or from the electrical wiring in the building. He considered the absence of the main earth connection to be irrelevant to identifying the source or cause of the fire.

14. [14]

    Aerolink relied on evidence of Dr Green. Counsel for the plaintiff summarised what he contended to be the effect of that evidence as follows:

15. [15]

    In Dr Green’s opinion, the investigation of the fire scene ruled out the combustible material or flammable liquids stored in the storeroom as being the source of the fire. Mr Kelly took issue with those opinions.

16. [16]

    Before dealing with the expert evidence and the submissions in relation to the source and cause of the fire I will outline relevant aspects of the history of Aerolink’s occupation of the hangar and the terms on which it had occupation. BAL relies upon those terms as negating the existence of the duty of care alleged by Aerolink.

17. [17]

    Initially, Aerolink occupied the hangar under rights granted to it by a sublessee from BAL, a Mr Hans Bannink, to whom Aerolink paid rent (Ryan [17] CB 37). From 1 August 2001 a director of Aerolink, Mr Daniel Ryan, sub-let the hangar from BAL. Aerolink continued to conduct its business from the hangar. There were disputes between Mr Ryan and BAL in relation to the payment of rent and in relation to the state of the repair of the hangar, including the state of electrical wiring.

18. [18]

    Mr Ryan’s sublease from BAL commenced on 1 August 2001. It included terms that:

19. [19]

    On 5 December 2003 Aerolink asserted that Mr Campbell of BAL had made representations at the time the sublease was entered into that a number of things would be done. These included fixing the ceiling in a lunchroom. Mr Ryan complained that the situation was dangerous as the water was getting into the electrical wiring (CB 1/434).

20. [20]

    On 21 December 2006 BAL commenced proceedings in the District Court against Mr Ryan claiming arrears of rent. On 12 February 2007 Aerolink complained to BAL that an undertaking had been given that rectification work would be done to the hangar, including rectification of lighting and wiring (CB 1/435). In his defence to BAL’s claim in the District Court, Mr Ryan pleaded that it was a term of the lease agreement that BAL would perform and maintain repair and rectification work to the hangar and that it had failed to do so. He claimed that as a result of BAL’s failure to carry out repair and rectification work, approximately 25 per cent of the hangar area was unusable (CB 1/202).

21. [21]

    On 16 April 2007 Mr Ryan filed a cross-claim in the District Court proceedings. He alleged that it was a term of the sublease that the premises would be in a fit and proper condition and that BAL would carry out routine maintenance, maintaining the hangar as a viable commercial property (cross-claim para 5; CB 1/210). He alleged that BAL was required to carry out rectification work to electrical wiring (cross-claim para 10; CB 1/212). These allegations were denied.

22. [22]

    On 24 August 2007 BAL and Mr Ryan, then the sublessee of the premises, entered into an agreement called “Heads of Agreement”. The parties agreed that the sublease had been terminated (clause 2(c)). Mr Ryan agreed to pay approximately $196,000 within 14 days. BAL promised “... within a reasonable time, [to] commence the Works and ... proceed with those Works with diligence and without undue delay, in a professional and workmanlike manner” (clause 2(h)). BAL’s obligation was subject to a maximum expenditure by it of $200,000 and the grant of relevant building and heritage approvals. The works the subject of that promise included electrical wiring and lighting. BAL agreed to install roof lighting and to “... check all wiring and replace any old, worn or dangerous wiring, conduit and power points. This will not necessarily be a complete re-wiring of the premises.” (CB 1/231)

23. [23]

    BAL discontinued its claim in the District Court on 26 October 2007. On 23 November 2007 Mr Ryan filed an amended cross-claim. The amended cross-claim did not plead any failure by BAL to comply with the terms of the heads of agreement made on 24 August 2007. Rather, it relevantly complained of failures by BAL to honour a representation said to have been made in July 2001 by BAL that BAL would repair the lighting and wiring to the premises. It also complained that faulty wiring was a breach of the sublease to Mr Ryan (CB 1/237, 240).

24. [24]

    Mr Ryan’s complaint based on alleged pre-contractual representations or the terms of the sublease to him was rejected. (Judgment 28 May 2010, CB 1/245-286). The District Court judgment was given on 28 May 2010.

25. [25]

    On 8 November 2010 BAL and Aerolink entered into a sublease expressed to commence on 1 September 2010. Clause 29.1 of the sublease required BAL to repair roof leaks brought to its attention by Aerolink that were not caused by Aerolink. Clause 29.2 provided:

26. [26]

    Clause 21.10 provided:

27. [27]

    Clause 16(a) of the Reference Schedule provided:

28. [28]

    The combined effect of these clauses was that during the period of the sublease BAL had no obligation to repair the electrical wiring, as distinct from roof leaks. Rather, the parties agreed that any repairs to the electrical wiring would be carried out by Aerolink which was required to lodge necessary documents for BAL’s approval for those repairs.

29. [29]

    Aerolink did not seek BAL’s approval to carry out repairs to the electrical wiring. The position taken by Mr Ryan was that notwithstanding the terms of the sublease he considered it remained BAL’s obligation to carry out repairs to the electrical wiring on the basis of the earlier agreement made on 24 August 2007 between BAL and him that BAL would check all wiring and replace any old, worn or dangerous wiring, conduit and power points. Indeed, the statement of claim pleaded that the agreement made on 24 August 2007 between Mr Ryan and BAL was an agreement made between BAL and Aerolink. Aerolink pleaded that BAL was in breach of that agreement. That claim was not tenable. The agreement was not made between Aerolink and BAL. It was superseded by the sublease of 8 November 2010. This pleaded claim was not pressed.

30. [30]

    The sublease of 8 November 2010 also included the following acknowledgment by Aerolink:

31. [31]

    “Services” was defined to include electricity services and “the pipes, wires, ducting and other means of providing those services” (CB 2/516-517). Item 18 of the Reference Schedule did not include any relevant exception to the acknowledgment in Clause 30.4 that the supply of electrical services through the wiring was in good repair and working condition.

32. [32]

    Clause 39.1 of the sublease provided that Aerolink agreed to indemnify BAL from and against any liability, loss, damage, expense or claim which BAL might incur in respect of or arising from damage to property occurring within the leased premises to the extent it was caused or contributed to by Aerolink’s failure to comply with the obligations imposed under the sublease. Clause 40.2 of the sublease provided:

33. [33]

    Clause 27.2 of the sublease did not provide for any relevant qualification to the exclusion of BAL’s liability under clause 40.2.

34. [34]

    By clause 63 Aerolink acknowledged that it would be liable for the cost of any upgrades required to services it required to the Leased Premises, including for the supply of electricity (CB 2/593). Mr Ryan did not give evidence of having sought any upgrade to the electrical wiring for the supply of electricity, notwithstanding his previous complaints. Annexure B to the sublease (incorporated through clause 64.3) (CB 2/594, 599) included a term that Aerolink acknowledged that:

35. [35]

    Had the fire occurred during the term of the sublease, Aerolink could not have complained that BAL was at fault for not having repaired the electrical wiring. After complaints about the electrical wiring had been raised by Mr Ryan, Aerolink entered into the sublease on terms that it, and not BAL, would be responsible for carrying out repairs to the electrical wiring and it acknowledged that BAL would not be liable for any damage that it might suffer arising from any faults to the electrical wiring.

36. [36]

    The sublease of 8 November 2010 which was for a term of five years with a four-year option for renewal commencing from 1 September 2010 was terminated by BAL in or about October 2011 for Aerolink’s failure to pay rent.

37. [37]

    On 5 November 2010 Mr Andrew Wilson, a Senior Property Manager at BAL, had prepared a letter addressed to Mr Ryan of Aerolink confirming matters said to have been agreed at a site meeting said to have taken place on 1 September 2010, being the date of the commencement of the sublease. One of the matters said to have been agreed was that:

38. [38]

    Mr Ryan denied that he had agreed that Aerolink should install earth leakage units in the switchboard. He deposed that at the meeting on 1 September 2010 he told Mr Wilson and other representatives of BAL who were at the meeting that he had had an electrician inspect the wiring in the hangar and in the internal switchboard and that the electrician had told him that the wiring was in such poor condition that it needed to be replaced and rewired. He deposed that he told Mr Wilson that “this was something that BAL was supposed to do under the agreement that we signed on 24 August 2007”. He said that Mr Wilson responded by saying that “we are working towards having the wiring fixed”. Mr Ryan deposed that he did not receive the letter from BAL of 5 November 2010 (CB 1/44-45).

39. [39]

    Mr Wilson gave an affidavit for BAL that was not read. He was an available witness for BAL. I infer that he could not have given evidence that would have assisted BAL. I accept Mr Ryan’s denial that the conversation to the effect set out in the letter of 5 November 2010 took place and his evidence that he did not receive the letter dated 5 November 2010. Nonetheless, the effect of the sublease was that Aerolink, and not BAL, was obliged to repair the electrical wiring if Aerolink wanted protection from substandard wiring. The sublease entered into on 8 November 2010 was entered into pursuant to a settlement deed under which Mr Ryan and BAL gave mutual releases.

40. [40]

    Although Mr Ryan did not receive the letter of 5 November 2010, the letter shows that as early as 5 November 2010 there was a missing earth connection at the switchboard.

41. [41]

    On 30 September 2011 BAL gave notice to Aerolink of alleged breaches of the sublease, including failure to pay rent and other moneys said to be payable under the sublease. BAL demanded that by 12 October 2011 Aerolink pay sums totalling $58,196.70, failing which it threatened to re-enter and forfeit the sublease (CB 2/604). On 11 October 2011 BAL served a further “breach notice” demanding payment of rent, operating expenses, management fees and service charges totalling $38,719.64 by 19 October 2011. Again, it threated to re-enter and forfeit the sublease if the sums demanded were not paid. (CB 2/608) At some point in about October 2011 BAL locked Aerolink out of the premises (CB 2/610).

42. [42]

    On 9 November 2011 Aerolink and BAL entered into a licence agreement for Aerolink’s occupation of the hangar. The licence was for a term of one month and thereafter to continue on a month-to-month basis until a new sublease was provided. Aerolink agreed to pay a monthly licence fee of $8,166.67 plus GST (CB 2/611). It was a term of the licence agreement that Aerolink must keep the hangar in good repair and remove its property from the hangar at the termination of the licence (CB 2/614). The licence agreement included the following term:

43. [43]

    On 29 November 2012 BAL gave notice that the licence would terminate on 11 January 2013 and required Aerolink to provide vacant possession by that date. (CB 2/625, 626) On 11 January 2013 Aerolink wrote to BAL advising that it was unable to remove all its possessions from the hangar by the deadline imposed and stated it would like to 1 March 2013 to vacate the premises (CB 630).

44. [44]

    On 17 January 2013 BAL sent a further letter on the basis of which it agreed that Aerolink could continue to occupy the hangar up to 28 February 2013. This included payment of a licence fee and other charges. The letter included as a special condition of BAL’s agreement to license Aerolink to continue to occupy the site up to 28 February 2013 the following term:

45. [45]

    It was a further condition of the licence that Aerolink keep the Licensed Area in good repair and remove its property from the Licensed Area of the termination of the licence. The letter included the same term as to “Risk” as was contained in the earlier licence agreement quoted at [42] above.

46. [46]

    On 4 February 2013 Aerolink wrote to BAL in relation to BAL’s letter of 17 January 2013. Mr Ryan declined to sign the licence agreement contained in the letter of 17 January 2013. He advised that Aerolink was “... on track to vacate the hangar by the 28th February 2013”.

47. [47]

    Mr Ryan deposed (affidavit [100], CB 49) that it was in late February 2013 that he began removing Aerolink’s goods from various locations in the premises. He deposed that sometime after 28 February 2013 BAL agreed to let him have access to the premises between the hours of 8.00am – 4.00pm so that he could continue to remove Aerolink’s property. On each occasion that he wished to enter the premises he had to call a representative of BAL and ask them to give him access. On 6 March 2013, the day of the fire, he and a Mr Darren Parkes were let into the premises by a representative of BAL so that they could continue to remove Aerolink’s goods. The fire occurred that afternoon at about 2.30pm.

Wiring issues before the fire

1. [48]

   Mr Ryan deposed that in June or July 2008 he observed tradespeople installing lighting to the hangar, but that those people did not undertake any repair work to the electrical wiring system itself. They did not replace any old, worn or dangerous wiring, conduits or powerpoints. Mr Ryan had a conversation with a Mr Wilson in which he asked Mr Wilson to replace the wiring. Mr Wilson said he would look into it. This was almost a year after the 24 August 2007 agreement.

2. [49]

   In April 2010 Mr Ryan was advised by a friend and electrician, a Mr Cullis, that the entire hangar needed rewiring (para 71, CB 44). On or about 1 September 2010 he advised Mr Wilson and other representatives of BAL that he had been told that the wiring was in such poor condition that it needed to be replaced and rewired. He complained that that was something that BAL was supposed to do under the agreement signed on 24 August 2007. Mr Wilson said that BAL was working towards having the wiring fixed. Of course, on 8 November 2010 Mr Ryan released BAL from its obligations under the agreement of 24 August 2007 and by the sublease Aerolink assumed responsibility for carrying out any repairs it required to the wiring.

3. [50]

   Mr Ryan continued to complain about the state of the wiring. On 24 January 2012 he wrote to BAL stating in reference to Item 2 in Sch 2 of the 24 August 2007 agreement that the electrical wiring was never looked at and in his opinion was dangerous. He referred to there having been two electrical fires in the roof due to electrical faults. The two fires in the roof occurred above an office occupied by “Airside Interiors”. That office was adjacent to Aerolink’s storeroom. (See also para 90(f) CB 48 and diagram at CB 400.)

4. [51]

   Sometime in late 2012 Mr Ryan observed that two extension cables had suffered damage when he was using them to recharge batteries in the hangar. One of the extension cables had melted and the other had blown out of a socket. The extension cables had been plugged into power sockets on the northern side of the storeroom and the office within the hangar (Para 92, CB 48).

5. [52]

   At about 6.00pm or 7.00pm on or around 26 February 2013 Mr Ryan was in the storeroom of the hangar removing parts. He noticed that fluorescent lights connected to power sockets on the east wall of the storeroom went out whilst a light that was on a light circuit stayed on (Para 102). He checked the fuses in an internal switchboard inside the premises, but could not determine whether any of the fuses had blown. He connected two temporary floodlights to the west wall of the storeroom and the office where power remained on. One was a mercury vapour lamp and the other a quartz halogen light. These lights were run off the power circuit. They were the only lights in the storeroom to the premises that worked between 26 February and the time of the fire on 6 March (Paras 105 and 107).

The fire and its investigation

1. [53]

   At about 2.20pm on 6 March 2013 Mr Ryan was in the storeroom cataloguing and removing aeroplane parts. He noticed that the mercury vapour lamp went out. The quartz halogen light remained on. He turned the power to the vapour lamp off at the wall socket and checked to ensure that it was properly plugged in. It was. He turned the power on again but the vapour lamp remained off. He inspected the internal switchboard in the premises and noticed that no breaker units were tripped and no fuses were blown (paras 111 and 112). At about 2.30pm he noticed heavy black smoke coming out of the office adjacent to the storeroom. The halogen light remained on. He attempted to extinguish the fire using fire extinguishers but was unsuccessful. He called the fire brigade.

2. [54]

   On 13 March 2013 Dr Tony Green, an expert witness later called by Aerolink, Mr Mark Pellegrino, employed by Greg Kelly & Associates, fire investigators, and Mr Andrew Gibson, a loss adjuster for BAL’s insurer, examined the fire scene. A second examination took place on 28 March 2013 by Dr Green, Mr Pellegrino and Mr Greg Kelly of Greg Kelly & Associates. Mr Kelly was the expert witness retained by BAL.

3. [55]

   The investigation revealed that the earth conductor, which should have been connected to an earth electrode in close proximity to the meter board or main switchboard located on the exterior of the premises, was not connected. In his first report, Mr Kelly said that this created an unsafe situation should an earth fault occur in the electrical wiring system or in regards to appliances that might be plugged into it. He said (CB 315):

4. [56]

   In his report of 11 April 2013 Mr Pellegrino said:

5. [57]

   Mr Pellegrino also said:

6. [58]

   Dr Green reported that the remains of the powerpoint that was to the south of the shelf containing the lamp showed copper oxidation on the earth connection that was suggestive of a short involving the earth. He said that such a short should have thrown the residual earth current (RCD) switches in the distribution box which did not occur. He observed that what he called the “building junction box” on the northeast corner of the hangar had all of the earth lines in the building collected together and linked to the neutral link as should be the case, but the earth was not linked to an earth stake (Paras 82 and 83, CB 1/99). Dr Green expressed the following opinion:

7. [59]

   Mr Kelly disagreed with some of the information provided by Dr Green (CB 1/350, enclosure 3 to Mr Kelly’s report para 68). Mr Kelly said that residual current devices (“RCDs”) had not been installed and therefore they were not tripped. He said that because Mr Ryan had stated that he was unsure if fuses had blown this indicated that potentially power was still applied as there were no RCDs to trip and Mr Ryan was not able to tell if rewireable fuses had been blown (CB 1/350, enclosure 3 para 68). This is consistent with Dr Green’s ultimate opinion.

8. [60]

   Mr Kelly said that the internal switchboard in the building was not fitted with any RCDs (enclosure 3, para 12, CB 1/340). Mr Kelly explained in oral evidence that an RCD is for the protection of people against electrocution. It does not sense overloads. It operates differently from a circuit-breaker. A circuit-breaker detects an overload current that then breaks the circuit. An RCD works on electromagnetism when the active and neutral wires create an electromagnetic field which is constantly evaluated inside the device (T198).

9. [61]

   Mr Kelly’s criticism of Dr Green’s reference to non-activation of an RCD does adversely reflect on Dr Green’s appreciation of the electrical installation, but does not adversely affect his overall conclusion that the cause of the fire was arcing in the GPO occasioned by a fault in the electrical system.

10. [62]

    Mr Kelly disagreed with other comments of Dr Green in the opinion quoted at [58] above. In particular he disagreed with Dr Green’s reference at [118] quoted at [58] above in regard to phases not being in balance with the result that a load on one live phase can induce a current to flow in another phase in order to maintain a balanced system overall at the neutral point that can in turn lead to heating and shorting in any of the circuit wires within the building. Mr Kelly said that no other comment could be made in regard to that opinion, except that it was “in every aspect wrong”. He said that Dr Green had plagiarised a paper of a Mr Parmar and drawn inappropriate conclusions from it. I do not accept Mr Kelly’s criticism that Dr Green had plagiarised another author’s work.

11. [63]

    Mr Kelly said that:

12. [64]

    It was common ground that the failure to install an earth conductor was in non-compliance with the wiring rules AS3000 or earlier wiring rules at the time of installation. In his first report of 26 June 2017 Mr Kelly accepted that the absence of an earth conduction may have contributed to the occurrence of the fire. He said:

13. [65]

    Attached to Mr Kelly’s report was a report of Mr Pellegrino written after his examination with Dr Green (CB 1/322 and 381). Mr Pellegrino stated:

14. [66]

    Dr Green provided a report in response to Mr Kelly’s report. Dr Green did not change his view and elaborated on certain points, especially concerning the GPO with photos attached and expressed further opinions as to the effects of the lack of earthing. He stated:

15. [67]

    Dr Green rejected the possibility that the cause of the fire was heating of the bulb of the mercury vapour lamp that set fire to nearby flammable material. He said that the bulb was too far from the sealed containers holding the flammable material for this to happen and that the ignition of flammable vapours as Mr Kelly suggested as a possibility was not plausible. He also said that if the lamp had been the cause of the fire from an earth short, it was very unlikely that the bulb would have remained intact (CB 1/165). He summarised his opinion that there were three features that stood out in his examination of the scene, namely:

16. [68]

    Dr Green repeated his conclusions quoted at [66] above.

17. [69]

    Dr Green and Mr Kelly provided a joint report following a conference on 10 May 2018. It was common ground that the main earth electrode connecting the earth and neutral links to ground at the external meter board was absent and would need to be there to comply with the electrical standard AS3000: 2007. Mr Kelly was of the opinion that the wiring pre-existed the standard AS3000: 2007 and should have been installed in accordance with the standard which preceded the AS3000: 2007 standard. That is to say, in Mr Kelly’s opinion, and he had greater electrical expertise than Dr Green, the wiring had not been updated after 2007. Nonetheless, Mr Kelly said that the wiring should have complied with the earlier applicable standards that required connection of the earth link to the earth (CB 1/387).

18. [70]

    In the joint report Mr Kelly opined that there was no increase in fire risk associated with non-compliance with the requirement that the main earth electrode connecting the earth and neutral links at the meter board be connected to the ground. He said:

19. [71]

    Mr Kelly elaborated on this opinion in his oral evidence. He said the hangar had a multiple earth neutral (MEN) connection, the effect of which was that the absence of the earth connection at the external meter box of the hangar would be compensated for by earth connections at other premises to which the electrical wiring of the hangar was connected through a transformer box. He provided a model to demonstrate this effect by showing connections between three premises. He explained the model as follows:

20. [72]

    Mr Kelly demonstrated how this model worked during the course of the explanation.

21. [73]

    Mr Kelly explained that for the MEN system to work a wire would run from the hangar to the pillar in the street where three feeds came in with the neutral and that that neutral also fed the other premises which were independently earthed (T209). He had not carried out any inspection to ascertain whether the other premises had been independently earthed (T209.10). He believed that the other premises had been inspected and that there was photographic evidence to establish this.

22. [74]

    There was no evidence to establish that assumption. After Mr Kelly gave evidence, Mr Ryan deposed to having inspected adjacent premises. He did not identify earth connections at those premises (Affidavit of Ryan of 3 August 2018). Mr Kelly’s thesis was not consistent with his earlier acceptance that the absence of the earth connection at the external meter box may have contributed to the cause of the fire by not protecting against an electrical fault otherwise arising.

23. [75]

    I regret to say that Mr Kelly failed to demonstrate the detachment and impartiality expected of an expert witness. This might be because of his contempt for Dr Green’s opinions on matters involving electrical supply and electrical wiring. I readily accept that Mr Kelly had greater expertise than did Dr Green on those matters. But Mr Kelly’s opinion changed over time. He adopted the role of an advocate. On 16 April 2013 he told BAL’s insurer’s loss assessor, Mr Gibson, that the fire might have been caused by the absence of the earth connection and the use of the light with incorrect voltage (Exhibit N; T275). He gave the following evidence in cross-examination:

24. [76]

    That view is not only inconsistent with the opinion expressed a few weeks after the fire, but is inconsistent with the opinions expressed in Mr Kelly’s report of 26 June 2017.

25. [77]

    To determine whether the fire was caused or materially contributed to by a fault in the electrical wiring, it is necessary to consider the alternative explanations for the fire. Even if an electrical appliance contributed to the cause of the fire, such as, as was suggested, the use of the mercury vapour lamp said to have been operated at a United States voltage of approximately 110V rather than at an Australian voltage of 230V or 240V, a question would still arise as to whether the fire was materially contributed to by failure of the electrical wiring, including the absence of an earth connection at the meter box. BAL did not allege that Aerolink was guilty of contributory negligence by using the mercury vapour lamp.

26. [78]

    Whereas Mr Kelly had greater expertise than Dr Green in matters of electrical supply and electrical wiring, Dr Green had greater expertise than Mr Kelly on the implications of the observed blue oxidisation on the GPO. In my reasons for admitting the evidence of Dr Green on objection as to his expertise, I said:

27. [79]

    Mr Kelly did not give evidence of similar qualifications.

28. [80]

    Counsel for BAL put to Mr Kelly the way that Aerolink had pleaded the cause of the fire as follows:

29. [81]

    Counsel asked Mr Kelly whether he had an opinion about that as a cause of the fire. Mr Kelly disagreed with it. When asked to give his reasons, Mr Kelly’s reasons were to the effect that there was no evidence of plasma arcing which, had it occurred, would have developed such a melting of the copper components.

30. [82]

    At the trial an enlarged photo of the GPO post-fire was shown to the parties. The experts disagreed as to what was revealed from the markings on the GPO.

31. [83]

    Dr Green gave evidence that the dark blue colour is indicative of an oxidation reaction of nitrogen with the copper forming copper nitrate, which is dark blue in colour. This generally involves arcing and involvement of nitrogen either from the air or from the plastic associated with the insulation material within the GPO. This was consistent he said with the pitting in the U Bend of the terminal (T288).

32. [84]

    Mr Kelly agreed that there was blue oxidisation to the earth receptacle which merely suggested a post-fire oxidation that occurs in a fire after the copper conductors or components are exposed to air once the insulation has burned away. He rejected the view expressed by Mr Pellegrino that the oxidisation suggested a possible earth fault. He stated that Mr Pellegrino had no electrical qualifications (T292.26). Mr Kelly repeated his criticism of Dr Green’s identification of “copper oxide” on the earth terminal and said that in his opinion this was unlikely to have occurred (CB 341).

33. [85]

    Dr Green responded that Mr Kelly had mistaken his report and that instead of copper oxide he had referred merely to oxidation which is not an oxide. Dr Green provided further detail that what was evidenced on the earth pin, being dark blue, is an oxidation through plasma where the electrons attack nitrogen and ionise nitrogen, and that can be either in the air or in the plastic associated with the insulation material within the GPO (T294). Dr Green provided an extensive chemical analysis for his view.

34. [86]

    Mr Kelly said that if arcing as described by Dr Green had taken place the temperature achieved in the arcing process would have been in the order of 3000°C. That would have melted the copper conductors which had a melting point of 1082°C. Those copper conductors were not destroyed, but still connected to the terminals (CB 393 and 394). BAL submitted that Dr Green did not engage with the proposition that an event that involved temperatures almost three times the melting point of copper occurred without there being any evidence that the copper wires melted. That is not correct. Dr Green explained that:

35. [87]

    I accept Dr Green’s evidence on this point.

36. [88]

    As noted above, Mr Kelly opined that heat from the mercury vapour lamp might have caused flammable liquids stored in adjacent containers in the vicinity of the storeroom to ignite. Dr Green rejected that opinion, partly on the basis of the distance between the lamp and the containers. Dr Green also said that the source of the heat was from outside the lamp, not from the inside of it. He said that if the heat were internal there would be a different effect on the base of the lamp (T307). I accept that opinion.

37. [89]

    The lamp in question was from the United States and was rated for 110V rather than for the Australian standard of 240V. The lamp had been modified to 240V with a three-pronged lead (T95-96).

38. [90]

    Mr Ryan gave evidence that when the mercury vapour lamp failed he pulled the plug out of the powerpoint, removed the plug from the wall and put the plug gently back in and turned the switch back on but saw no light. Dr Green said that this might not mean that the lamp was not working, but that the gas had to be cooled before it could be reignited.

39. [91]

    Mr Kelly and Dr Green disagreed as to whether the damage to the vapour lamp showed that heat was being applied to the lamp from above or below the lamp, or from inside or outside the lamp. I accept Dr Green’s evidence that the source of the heat was outside the lamp, not from the inside because if the heat were internal there would be a different effect on the base of the lamp.

40. [92]

    In any event, even if the cause of the fault originated in the lamp, the fact that the main earth was disconnected contributed to the fire (Kelly, para 6.16 quoted at [55]).

41. [93]

    Mr Kelly severely criticised Dr Green’s hypothesis as to how the plasma arc could have formed at the GPO. He did not suggest that if plasma arcing occurred it was not due to some fault in the electrical wiring. Instead, he denied that what Dr Green observed was plasma arcing. For the reasons I have given, I have rejected Mr Kelly’s opinion that plasma arcing did not occur. I am satisfied that it did and was the cause of the fire.

42. [94]

    BAL submitted that the missing earth connection could not have been causative of the fire for two reasons. First, it addressed Aerolink’s submission as to how it was that the fire originated. Aerolink submitted:

43. [95]

    BAL submitted that nothing in that analysis implicated the missing earth connection. That is so. But it does not mean that the absence of the earth connection was not causative in the sense of being a material contributor to the fire. Mr Kelly said in his report that the disconnection of the main earth does not in itself cause a fire hazard, but if a failure occurs that is not detected because of the disconnection of the earth conductor, that can lead to fire.

44. [96]

    The second ground on which BAL submitted that the absence of an earth connection was not causative was on the basis of the evidence given by Dr Green and Mr Kelly in conclave as follows:

45. [97]

    The significance of that evidence is diminished first by the fact that I have found that the fire did not originate in the lamp, but through plasma arcing at the GPO. Dr Green said that if the trigger for the fire were an arc fault at the GPO, that fault would have been prevented had there been earth protection on the circuitry in the building (T324.24). Mr Kelly disagreed, but his reason for disagreement addressed a different issue.

46. [98]

    Mr Kelly dismissed Dr Green’s reference to a “floating earth”. BAL submitted that on the basis of Mr Kelly’s evidence that description showed Dr Green’s lack of expertise. Mr Kelly said there was no such thing as a floating earth, as distinct from a floating neutral.

47. [99]

    But Dr Green was referring to an earth wire that was floating in the sense that it was not connected as it should have been, and therefore did not perform the intended function of an earth wire. That was clear from his reports and did not warrant Mr Kelly’s scorn.

48. [100]

    I accept Dr Green’s evidence and Aerolink’s submission as to the cause of the fire. The fire was caused by defective electrical wiring in the hangar and had its origin in plasma arcing in the GPO.

49. [101]

    In final submissions, Mr O’Neill, who appeared for Aerolink, referred to some evidence that raised the possibility that there was also a problem with electrical supply external to the hangar. A file note of an investigator engaged by BAL’s insurer of 28 March 2013 recorded Mr Kelly or someone under his supervision having ascertained that an electrical kiosk on a public footpath outside hangar 4 had apparently exploded some months before the fire and had been repaired with new cables, but with no cabling to complete an earth connection (Exhibit N). Mr O’Neill submitted that the obvious inference was that BAL retained control over electrical systems within the airport.

50. [102]

    Aerolink’s case was not that the fire was caused by faulty electrical installations in the airport outside the hangar. The terms of Aerolink’s sublease and licence agreement would not afford BAL protection against such a claim, but no such claim was litigated.

51. [103]

    It is possible, but speculative, that the earth connection to the meter board may have been disconnected during works described by Mr Ryan sometime between March 2012 and March 2013. He deposed that sometime in that year he received a phone call from a representative of BAL in which he was told that:

52. [104]

    Mr Ryan deposed that within a week of receiving that phone call he observed tradesmen digging up the ground of the north-eastern corner of the hangar with an excavator and digging a trench that led from the premises towards the road and laying a conduit with cabling in the trench. He deposed that the tradesmen installed a new external switchboard on the eastern wall of the premises and connected the conduit and cabling in the trench to that switchboard.

53. [105]

    The external switchboard to which Mr Ryan referred appears to have been the switchboard adjacent to which the earth connection had, at some time, been disconnected.

54. [106]

    It was established that the tradesmen involved in this exercise were independent contractors engaged by BAL. There was no evidence that they had disconnected the earth connection, but even if they had, Aerolink did not submit that BAL could be vicariously liable for their negligence.

55. [107]

    In any event, it appears from the letter prepared by Mr Wilson dated 5 November 2010 (at [37] above) that the absence of earth leakage units at the switchboard pre-dated the work done in 2012 or 2013.

BAL not liable in negligence

1. [108]

   As I have found that the fire was caused by defective electrical wiring in the hangar, the first question is whether BAL owed a duty of care to Aerolink to take reasonable care to avoid foreseeable risks of harm to Aerolink’s property arising from its use of the hangar. Aerolink pleaded a duty of care in those terms (amended statement of claim, para 20). It alleged that the duty was implied by operation of law and arose from facts pleaded in the amended statement of claim.

2. [109]

   Aerolink pleaded that prior to the fire it was reasonably foreseeable that the premises in their then state presented a significant risk of harm to Aerolink’s property, that risk being that an electrical fault could be an ignition source of a fire that could cause damage. That can be accepted. Aerolink pleaded that prior to the fire BAL was aware that:

3. [110]

   Aerolink pleaded that BAL failed to address those matters and thereby breached the duty of care that it alleged was owed to it.

4. [111]

   But this way of framing the cause of action in negligence has no regard to the fact that Aerolink’s occupation of the hangar from 1 September 2010 pursuant to the sublease with BAL, and thereafter its occupation of the premises pursuant to the licence agreement made on 9 November 2011, was on the basis that the parties agreed that BAL would not be liable for the defective state of the premises.

5. [112]

   It is true that on 24 August 2007 BAL had agreed with Mr Ryan to review the electrical wiring and replace any old, worn or dangerous wiring, conduit or power points (see [22] above). But Mr Ryan did not enforce that term. The effect of the sublease was that Aerolink, and not BAL, was responsible for carrying out repairs to electrical wiring. Aerolink acknowledged that BAL would not be liable for any damage that it might suffer arising from faults to the electrical wiring. After the sublease was terminated Aerolink occupied the hangar under a licence under which it agreed that BAL would have no liability for any damage occurring to its property during the licence for any claim arising from the state of repair of the hangar (at [42] above). Aerolink agreed that it occupied the hangar at its own risk.

6. [113]

   That licence was terminated on 11 January 2013. Aerolink’s continued occupation of the hangar up to 28 February 2013 was on the basis that it took the hangar in its current state and condition and would make no claim upon BAL for any defect or adverse affectation which might flow from the condition of the hangar (at [44] above). Again, Aerolink acknowledged that it occupied the hangar at its own risk and that BAL would have no liability arising from the state of repair of the hangar.

7. [114]

   After 28 February 2013 Aerolink occupied the hangar on sufferance. Mr Ryan was allowed to have access to the premises between 8.00 am and 4.00 pm so that he could finish removing Aerolink’s property, something he had promised to do by the end of February.

8. [115]

   Aerolink submitted that at the time of the fire BAL was the occupier of the hangar in which Aerolink’s goods were stored and that BAL owed Aerolink a duty of care under general principles of negligence (Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479; [1987] HCA 7). It submitted that BAL as occupier owed a duty of care to Aerolink as an entrant and submitted that BAL had a power of control being its power to consent to Aerolink’s entry and the power to safeguard Aerolink against injury or loss from defects in the occupied premises (Northern Sandblasting Pty Ltd v Harris (1987) 188 CLR 313 at 335-336; [1997] HCA 39 per Brennan CJ). It also submitted that if the relationship were one of landlord and tenant or a relationship analogous thereto, BAL’s duty as landlord was to be determined by reference to foreseeable risk of harm and what a reasonable person would do in response to that risk (citing Loose Fit Pty Ltd v Marshbaum [2011] NSWCA 372 at [84], [86] and [87] and Aldred v Stelcad Pty Ltd [2015] NSWCA 201 at [38]).

9. [116]

   I was not referred to any decision on all fours with the present case. Northern Sandblasting Pty Ltd v Harris and Jones v Bartlett (2000) 205 CLR 166; [2000] HCA 56 concerned claims for damages for physical injury suffered by a child of the tenant of residential premises who was injured by reason of the defective state, or allegedly defective state, of the premises.

10. [117]

    In Northern Sandblasting Pty Ltd v Harris the High Court rejected Cavalier v Pope [1906] AC 428 in which the House of Lords had held that the owner of a dilapidated house who had promised the tenant to carry out repairs was not liable to the tenant’s wife who was injured when she fell through the defective flooring that the owner (through his agent) had promised to repair. The general principle was said to be that a landlord who lets a house in a dangerous state is not liable to the tenant’s customers or guests for accidents happening during the term of the lease because there is no law against letting a tumbledown house and the tenant’s remedy, if any, is upon his contract (Robins v Jones (1863) 15 CB (NS) 221).

11. [118]

    In Northern Sandblasting Pty Ltd v Harris a child of the tenant was electrocuted as a result of defective work of an electrical contractor that had been engaged by the landlord. A majority of the High Court held that the landlord was liable for breach of its duty of care, but there was no consensus on the grounds upon which the landlord was found to be liable. The plaintiff’s injury was suffered as a result of two electrical defects as described by Gaudron J in Jones v Bartlett as follows:

12. [119]

    In Northern Sandblasting Pty Ltd v Harris Toohey and McHugh JJ held that the landlord was liable for the defective repairs carried out by the electrician engaged by the landlord holding that the landlord had a non-delegable duty with respect to those repairs it had undertaken to carry out (at 349-355 per Toohey J, 363-368, 370 per McHugh J).

13. [120]

    Brennan CJ held that the landlord owed a duty to his or her tenants and to those who occupied the property to use reasonable care and skill to protect against defects in the premises at the time when the tenant was let into possession that rendered them unsafe (at 340). Gaudron J considered that where premises are leased for residential purposes the relationship between the landlord and those who constitute the tenant’s household gives rise to a duty on the part of the landlord to take reasonable care for the latter’s safety by putting and keeping the premises in a safe state of repair (at 358). Her Honour acknowledged that “it may be, however, that in a given case, the lease limits or excludes recovery by the tenant for breach of that duty” (at 358).

14. [121]

    Jones v Bartlett also concerned physical injury to a member of the tenant’s family who suffered from what was alleged to be a defect in the premises. The plaintiff suffered injury when he accidentally walked into an internal glass door. The glass in the door was not annealed glass and it shattered. The glass was not in accordance with safety standards for new doors applicable at the time of entry into the lease, but was in compliance with standards applicable when the building was constructed. The plaintiff’s claim failed.

15. [122]

    These cases are remote from the present case, as was noted in Loose Fit Pty Ltd v Marshbaum and in Aldred v Stelcad Pty Ltd. It was noted that in Jones v Bartlett Gummow and Hayne JJ said (at [169]) that both Jones v Bartlett and Northern Sandblasting Pty Ltd v Harris were concerned with the letting for residential purposes and that what is required in respect of premises let for commercial or educational or other purposes may well differ. In Jones v Bartlett Gummow and Hayne JJ said (at [168]):

16. [123]

    In Aldred v Stelcad Pty Ltd Emmett JA summarised the relevant legal principles as follows:

17. [124]

    These cases all concerned a landlord’s liability for injuries suffered by an entrant to occupy leasehold premises. Aerolink also relied upon Drive-Yourself Lessey’s Pty Ltd v Burnside (1958) SR (NSW) 390. There, the plaintiff was the owner of a motor vehicle which it had hired to a driver. The driver had parked the car in an area to which he was directed in the Ku-ring-gai Chase. This was a dangerous area. The car was damaged when a rock became detached from the cliff against which it was parked. Only the car was damaged. The jury found that the Ku-ring-gai Chase Trust, which had management of the car park, failed to warn the driver of the danger of parking the car in the area, that this failure was unreasonable and that no reasonable care was taken by the defendants to prevent injury to persons or property arising from the dangerous condition of the cliff (at 401).

18. [125]

    In 1958 the liability of an occupier of land for physical injury to an entrant to the land was governed by different principles according to whether the entrant was an invitee, licensee or trespasser. In Tinsley v Dudley [1951] 2 KB 18 Lord Evershed MR and Danckwerts J held that the principle stated by Willis J in Indermaur v Dames (1866) LR 1 CP 274 that an occupier is liable for the consequences of personal injury suffered by an invitee if the occupier fails to use reasonable care to prevent damage from unusual danger of which he knows or ought to know, did not extend to damage to the entrant’s goods, save to the extent that such damage was ancillary to personal injury.

19. [126]

    In Drive-Yourself Lessey’s Pty Ltd v Burnside Street CJ and Owen J refused to follow Tinsley v Dudley in this respect, noting other authority not referred to in that case, in particular Parnaby v Lancaster Canal Co (1839) 11 A & E 223; 113 ER 400 (cited with approval in Indermaur v Dames) that where property is itself brought onto premises by the invitation of the occupier, then the principle in Indermaur v Dames applied equally to the preservation of that property as it did to the preservation of the safety of an individual invitee (per Street CJ at 399; per Owen J at 402-403).

20. [127]

    Herron J (as his Honour then was) held that the defendants were liable on the wider principle of negligence in Donoghue v Stevenson [1932] AC 562 (at [409]).

21. [128]

    The result of Drive-Yourself Lessey’s Pty Ltd v Burnside was that the owner of the motor vehicle was entitled to recover from the trustees of the Ku-ring-gai Chase, who had the care, control and maintenance of the car park, whereby through the negligence of their employee the car was damaged as a result of the employee’s direction that the car be parked under a cliff face that was known to be dangerous.

22. [129]

    Aerolink submitted that at the time of the fire BAL was the occupier of the premises and owed a duty under the general law to take reasonable care to avoid a foreseeable risk of injury to Aerolink’s goods (Drive-Yourself Lessey’s Pty Ltd v Burnside) on the same general principles as would have applied had Mr Ryan suffered compensable physical injury. The electrical wiring was known to be defective.

23. [130]

    But for the terms of the sub-lease and licence under which Aerolink occupied the hangar from 1 September 2010 to 28 February 2013, I would agree that the general principles of negligence requiring a landlord to take reasonable care to avoid foreseeable risk of injury to the tenant or damage to the tenant’s property would render BAL liable for the damage to Aerolink’s goods suffered from the fire caused by the defective wiring in the hangar.

24. [131]

    But the terms of the sub-lease and the licence agreement show that BAL did not assume, but to the contrary, disclaimed any such duty. Aerolink acknowledged that it would be responsible for the electrical wiring of the hangar. Whatever the position might have been had Mr Ryan suffered compensable injury, Aerolink could not have sued for damages for the loss of its property in the face of the express contractual stipulations. Does it make a difference that the fire occurred six days after the termination of the licence agreement when Aerolink continued its occupation of the premises on sufferance having previously advised that it was on track to vacate the hangar by 28 February 2013 (at [44])?

25. [132]

    BAL submitted that the contractual licence continued to bind the parties month-to-month. I do not agree. The contractual licence was validly terminated by BAL with effect from 28 February 2013. Nor do I accept that a licence on the same terms as the contractual licence can be implied or inferred after 28 February 2013. BAL submitted by reference to CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [120]-[125] that an implied contract following upon the expiry of an express fixed term contract could be inferred.

26. [133]

    In contrast to the position in CSR Ltd v Adecco (Australia) Pty Ltd in this case the parties did not continue to act as though the contractual licence still bound them after the term expired (at [125]). Instead, BAL permitted Aerolink to continue to occupy the hangar for the limited purpose of completing the removal of its goods and only on the basis that it have access for limited hours and on the premises being opened for it by an employee of BAL.

27. [134]

    Aerolink still had a licence to occupy the hangar to complete the removal of its goods, but that was not a licence on the same terms as had previously applied. It had no obligation to pay a licence fee.

28. [135]

    Nonetheless, at no time after entry into the sub-lease, did BAL assume any responsibility to put the electrical wiring into a reasonable state of repair. It was known that the electrical wiring was in disrepair.

29. [136]

    Aerolink submitted that a duty of care arose by application of principles set out by Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [102] and [103] and in particular:

30. [137]

    I do not agree. I accept that Aerolink was exposed to foreseeable and serious risk of harm. But that was a risk of harm that Aerolink had earlier contractually agreed to assume.

31. [138]

    Nor is it correct that BAL had almost total control over the electrical installation to Aerolink’s exclusion. To the contrary, cl 63 of the sub-lease of 8 November 2010 had contained an acknowledgment that Aerolink would be liable for the cost of any upgrades required to services to the hangar, including the supply of electricity (at [34] above). Mr Ryan did not seek to have the electrical wiring re-wired. Such rewiring would have been at Aerolink’s cost. There was no evidence that BAL would have resisted any such application.

32. [139]

    Because BAL did not assume but instead disclaimed any responsibility for the electrical wiring in the hangar and Aerolink occupied the hangar on that basis, and because Aerolink was only in occupation of the hangar after 28 February on sufferance owing to its failure to vacate when required to do so, I do not accept that BAL owed the duty of care alleged by Aerolink.

Bailment

1. [140]

   Aerolink pleaded that after the termination of the sub-lease in or around October 2011 its property was in the possession of BAL at the hangar and that BAL was the bailee of Aerolink’s goods. Aerolink pleaded that BAL owed it a duty to keep its property safe and to take reasonable steps to prevent any loss of the property. It pleaded that BAL breached that duty by failing to return Aerolink’s property safely and failing to undertake reasonable steps to make the electrical wiring safe and to avoid the foreseeable risk of fire.

2. [141]

   In final submissions Aerolink accepted that a relationship of bailment did not arise from termination of the sub-lease in October 2011. Instead, it submitted that BAL became bailee of its goods on termination of the contractual licence. It submitted that on the expiry of the licence the contractual restrictions on the duty that would otherwise have been owed by BAL to it were removed and the position was restored to what it would have been had there been no contract. It accepted that the bailment for which it contended was gratuitous, but argued that nonetheless the onus was on BAL to show that BAL’s failure safely to deliver the goods to Aerolink was not due to its negligence.

3. [142]

   I do not accept that prior to the fire BAL was the bailee of Aerolink’s goods stored in the hangar. Although Aerolink’s contractual licence to occupy the hangar had been terminated as at 28 February 2013, BAL allowed Aerolink to have access to the premises between the hours of 8.00 am to 4.00 pm so that Mr Ryan could continue to remove Aerolink’s property.

4. [143]

   It was a condition of the contractual licence that:

5. [144]

   BAL did not seek to enforce this condition. I do not accept that on termination of the contractual licence there was an actual or constructive delivery of Aerolink’s goods to BAL, let alone any acceptance of the goods or assumption of responsibility for them. The relationship between BAL and Aerolink remained one of licensor and licensee, albeit that the nature of the licence changed after 28 February 2013 (Ashby v Tolhurst [1937] 2 KB 242 at 255-6; Withers, Evans Ltd (Trustee of) v Sterling Circuits Inc and Sunlife Assurance Company of Canada (1988) 47 DLR (4th) 614 at [12]-[13]; WD and HO Wills (Aust) Ltd v State Rail Authority of New South Wales (1998) 43 NSWLR 338 at 353; Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159 at [36]-[37]; Rolfe v Investec Bank (Australia) Ltd [2014] VSCA 38 at [61]).

6. [145]

   If a bailment relationship had come into existence on 1 March 2013 I accept that that relationship itself could have been the source of a duty on the part of BAL to take such care for the goods as a reasonable man would take of his own goods having regard to all the circumstances (WGH Nominees Pty Ltd v Tomblin (1985) 39 SASR 117). One of those important circumstances is that the bailment would be gratuitous. Whilst the standard of care required of a gratuitous bailee is no longer expressed as the avoidance of gross negligence (cp Coggs v Bernard (1703) 2 Ld Raym 909; (1703) 92 ER 107 at 913, 110), I do not accept that the standard of care required would have required BAL immediately to set about correcting the faulty electrical wiring when, to Aerolink’s knowledge, BAL had since 2010 resisted the assumption of any such obligation and where the goods were only on its premises because Aerolink had defaulted in complying with its obligation to remove the goods by the end of February, and had not honoured its representation of 4 February 2013 that it was on track to vacate the hangar by 28 February 2013.

Bailment post-fire

1. [146]

   After the fire BAL did become the bailee of such of Aerolink’s goods as may have survived the fire. Mr Ryan was allowed to inspect the premises with a representative of BAL on 8 March 2013, but after that date he was not permitted access to the hangar. Mr Ryan deposed that when he attended the hangar on 8 March 2013, which he did in the company of a safety officer from BAL, a Mr Craig Smith, he was asked to wear a safety suit for the inspection due to, amongst other things, damaged asbestos fibres which were present in the premises following the fire. He observed that many of aeroplane parts were melted and fire damaged. On 11 March he attempted to enter the hangar with Dr Green, but was stopped from doing so by one of BAL’s representatives.

2. [147]

   On 7 March 2013 Swaab Attorneys, acting for Mr Ryan, wrote to the general manager of BAL. They advised that Mr Ryan would be engaging an expert to assist with determining the cause of the fire and observed that it was important that any contact that any person or object had with the premises did not impact on the ability of the expert, or any other party, to determine the cause of the fire. They asked that until the expert had inspected the premises, all persons refrain from coming into contact, or causing any object to come into contact, with those parts of the premises that had been affected by the fire (CB 3/1145).

3. [148]

   On 11 March 2013 solicitors for BAL, Bruce and Stewart, replied in terms which included the following:

4. [149]

   This was an astonishing assertion to make in respect of any of Aerolink’s salvageable goods, but clearly evinced an acceptance by BAL of custody and control of any surviving goods and responsibility for their disposal.

5. [150]

   Aerolink’s goods that were now held by BAL as bailee were required to be delivered to Aerolink when that could be safely done, or otherwise disposed of in accordance with the Uncollected Goods Act 1995 (NSW). If the value of the goods were over $5,000 it would have been necessary for BAL to obtain an order from the Local Court authorising it to dispose of the goods if Aerolink failed to take delivery of them. Aerolink’s failure to remove its goods before 28 February did not justify BAL’s treating the goods as if they belonged to it or had no owner.

6. [151]

   Mr Ryan deposed that in late March 2013 he became concerned about loss that Aerolink would suffer if he could not recover aircraft logbooks which were in the premises, even though the aircraft relating to those logbooks had not been damaged. He was not sure whether or not the logbooks had been destroyed in the fire. He said that if they were in any way salvageable he wanted to retrieve them. In December 2013, having taken advice, he was resigned to the fact that any aircraft parts that had been in the hangar that would have been affected by heat would be unusable, but he was concerned to retrieve any logbooks that were salvageable that may have related to aircraft or their parts that had been removed from the hangar before the fire. He deposed that it was a requirement of the Civil Aviation Safety Authority (“CASA”) that every aircraft carry logbooks, and that the logbook set out the aircraft’s maintenance program, a record of the time that parts had been used for and a record of how long certain parts could continue to be used before they had to be replaced or overhauled, and that such logbooks had to be made available to CASA on their request. He deposed to the amount of detail contained in aircraft logbooks and that if a logbook is lost or destroyed, it is necessary for a licensed engineer to recreate the logbook. He deposed that this requires disassembly of each part of the aircraft, research on the modification status of each part, and numerous other matters of detail which would be required to recreate logbooks for an aircraft.

7. [152]

   Mr Ryan deposed that because he was concerned about the aircraft logbooks, he contacted BAL’s representatives by telephone in order to retrieve the logbooks and paperwork and other items from the hangar. He deposed that he was informed that he could not enter the premises and retrieve the aircraft logbooks and other goods because the hangar presented a work, health and safety issue because of the damaged asbestos inside it (Affidavit [136]; CB 1/55). He was not cross-examined on that evidence.

8. [153]

   On 18 December 2013 Mr Ryan sent an email to a Ms Burnicle of BAL as follows:

9. [154]

   Mr Ryan deposed that in sending that email he had intended to refer only to damaged spare parts and not to aircraft logbooks and paperwork. The email does not say so. Rather, he advised that he thought it a waste of time to try and salvage “anything”.

10. [155]

    Nonetheless, BAL did not take Mr Ryan’s email as authority to dispose of everything in the hangar without further recourse to him. Ms Burnicle responded later on 18 December 2013 as follows:

11. [156]

    Mr Ryan deposed that after receiving that email he telephoned Ms Burnicle and there was a conversation to the following effect:

12. [157]

    On 14 January 2014 Ms Burnicle advised a Mr Andrew Gibson, a loss adjuster with BAL’s insurer:

13. [158]

    This is some evidence that the logbooks and the contents of the filing cabinets were salvageable.

14. [159]

    Mr Ryan deposed that in the first six months of 2014 he made at least three or four calls to staff at BAL to enquire about the retrieval of Aerolink’s goods from the hangar. He said that on each occasion he was informed he would get an opportunity to retrieve goods from the premises and that it would not be long before that occurred.

15. [160]

    On or about 30 July 2014 Mr Ryan observed workmen removing goods from the hangar and placing them into a vehicle. He saw that everything in the hangar had been removed. He was told by one of the workmen that they were taking all of the “stuff” to the tip. He sent an email to Ms Burnicle on 31 July 2014 as follows:

16. [161]

    Ms Burnicle did not contradict Mr Ryan’s understanding of their arrangement. On 3 September 2014 Ms Burnicle responded to Mr Ryan’s solicitor, Ms Georgina King, as follows:

17. [162]

    This statement was second or third-hand hearsay. No evidence was called by the demolition contractor as to the state of the materials removed. The email is some evidence that the logbooks and other material removed were contaminated with asbestos materials (there being no order made or sought under s 136 of the Evidence Act 1995 (NSW) limiting the use to which the email could be put). The email, if correct, does not justify BAL’s arranging for the removal of the goods without Aerolink’s consent and without complying with the arrangements that had been made between Mr Ryan and Ms Burnicle. Whether the logbooks and records kept in filing cabinets were asbestos contaminated materials may be relevant to the assessment of the damages suffered by Aerolink as a result of the removal of the materials in breach of BAL’s duty as bailee. It does not justify the removal of those materials without Aerolink’s consent and in the absence of an order for disposal from the Local Court or (subject to the monetary value of the goods) the giving of notice of BAL’s intention to dispose of the goods under Pt 3 of the Uncollected Goods Act.

18. [163]

    Mr Ryan was not challenged on his evidence of his conversation with Ms Burnicle of 19 December 2013 in which she told him that she would let him know when the clean-up was to take place in case he could salvage any property. Ms Burnicle did not give evidence. BAL gave no evidence as to why Mr Ryan was not advised of when the clean-up was to take place. No notice of intention to dispose of the goods left in the hangar was given to Aerolink.

19. [164]

    Aerolink’s claim arising from the disposal of logbooks after the fire is independent of its claim for the destruction or damage to its goods by the fire. This is not reflected in Aerolink’s pleading. Aerolink does not plead that after the fire BAL assumed control of the goods in the hangar that did not perish in the fire. It did not plead the assurance given by BAL through Ms Burnicle that Aerolink would be told when the clean-up was to occur. It did not plead the removal of Aerolink’s goods from the premises on 30 July 2014. Although the material facts of this part of Aerolink’s claim were not pleaded, the claim was nonetheless brought under the general rubric of the plea of bailment and was run at the trial. BAL did not claim to have been taken by surprise. It was fairly on notice of the claim that was clearly raised in Mr Ryan’s principal affidavit and was also articulated in Aerolink’s outline of opening submissions.

Contributory Negligence

1. [165]

   BAL pleaded that the fire was caused or contributed to by the negligence of Aerolink and Mr Ryan in failing to have the electrical wiring inspected, failing to make the electrical circuit safe, failing to keep the licensed area in good repair and failing to install appropriate earth leakage units in the switchboard or at all, and also by storing property in the premises in a way that inhibited the ability of any contractor to access the necessary part of the premises to conduct testing or repairs, storing combustible material in a manner that was unsafe, and not taking due care of the premises.

2. [166]

   Although these allegations would be material to the defence of the claim that BAL was liable in damages in the tort of negligence for loss suffered from the fire, they are not material to the claim that BAL breached its duty as bailee in its disposal of the logbooks or material contained in Aerolink’s filing cabinets in July 2014. BAL’s duties as bailee arose after the fire as a result of its decision to take control of the goods stored in the hangar. Its breach of duty in arranging for the removal of the goods that survived the fire without Aerolink’s consent or compliance with the Uncollected Goods Act was not caused or contributed to by the pleaded acts of contributory negligence on the part of Aerolink and Mr Ryan.

3. [167]

   In final submissions BAL also contended that Aerolink and Mr Ryan were negligent in not making copies of the logbooks and storing copies of the logbooks offsite. This was not a pleaded act of contributory negligence, but no objection was taken by Aerolink on that score. Mr Ryan gave evidence that the logbooks were valuable and essential because if Aerolink did not have the record of the engine and its components, including, for example, its maintenance, then such parts could not be used and new components would have to be fitted. It was put to Mr Ryan that because the logbook was such an important document for his business it would be prudent to maintain a copy of a logbook offsite. Mr Ryan said he did not know of anybody who maintained a copy of logbooks offsite (T99). There was no evidence that that was a usual industry practice, assuming it could be adopted. Mr Ryan accepted it would be possible to have kept a photocopy of the logbooks (T101).

4. [168]

   Mr Ryan said that entries in the logbooks could only be made by a licensed engineer or airframe fitter (T104). It was not the practice in the industry for photocopies of a logbook to be kept.

5. [169]

   I accept Mr Ryan’s evidence that it was not industry practice to keep a photocopy of a logbook offsite. Mr Ryan acknowledged that with the benefit of hindsight it would have been of advantage if another copy of the logbooks had been kept, but said that was not the practice (T100). I do not accept that Aerolink or Mr Ryan was negligent in not making photocopies of the logbooks and storing the photocopies offsite.

6. [170]

   Moreover, such a precaution would be a precaution to attempt to mitigate loss that would otherwise arise from the destruction of the logbooks by fire. BAL’s liability arises only in respect of its disposal of the logbooks that survived the fire. No submissions were made as to whether contributory negligence would be an available defence to the action in bailment that arises independently of both tort and contract (Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 241; [1971] HCA 26). The closest analogue is to the tort of conversion. If liability in bailment is sui generis, as Windeyer J said in Hobbs v Petersham Transport Co Pty Ltd, then it may be doubted that s 9 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) would apply as the damage would not have been suffered partly as a result of the “wrong” of the defendant, having regard to the definition of “wrong” in s 8. Section 8 provides that “wrong” in Pt 3 of the Act means an act or omission that:

7. [171]

   It is far from clear that Div 8 of Pt 1A of the Civil Liability Act 2002 (NSW) would have the effect that contributory negligence could be a defence to a claim in bailment (or conversion), either as a complete defence or by way of reducing damages, if it is not a defence at common law.

8. [172]

   No submissions were made as to whether contributory negligence could be a defence to a claim in bailment or conversion. I express no view on that question. It suffices to say that it has not been shown that the photocopying of logbooks and storing photocopies offsite, as a precaution against a complete loss of records by fire, was a precaution Aerolink should have taken if acting reasonably. Further, the failure to take that precaution had no causal significance to the loss and destruction of such of the records as survived. The absence of that causal connection would not justify the reduction of damages on account of contributory negligence if such a defence would in any event be available.

Indemnity

1. [173]

   BAL relied upon the clause headed “Risk” in the licence agreement quoted at [42] above. Even if that clause survived termination of the licence, no part of that clause is applicable to Aerolink’s claim in bailment for the destruction of its logbooks, or any other material that might have been contained in filing cabinets as a result of their removal. When those goods were removed, Aerolink was not occupying the Licensed Area. BAL’s liability does not arise from Aerolink’s negligence or failure to comply with obligations under the licence or the state of repair of the hangar. The indemnity in the last clause is also inapplicable because the loss or damage for which BAL is liable does not arise out of or relate to the use of the Licensed Area by Aerolink, its agents or employees. BAL’s liability arises in arranging for the removal and destruction of Aerolink’s goods.

Summary and orders

1. [174]

   There was no evidence that any of Aerolink’s goods, except logbooks and filing cabinets and the contents thereof, survived the fire. I conclude that Aerolink has established that BAL is liable to it for damages for and consequent upon the removal on or about 30 July 2014 of such of its logbooks, filing cabinets and any other material contained in its filing cabinets that survived the fire, but its claim should otherwise be dismissed. The matter will have to be referred for a new or further hearing for assessment of damages.

2. [175]

   I will hear the parties on costs. Aerolink has succeeded on one of its claims but has failed on its principal claim. However, Aerolink succeeded on a substantial issue at trial as to the cause of the fire which, prima facie, was a separable and perhaps dominant issue in respect of which substantial costs would have been incurred. I will make directions for the parties to provide written submissions on costs.

3. [176]

   For these reasons I make the following order:

   1. (1)

      Give judgment for the plaintiff for damages to be assessed in respect of the loss of such of the plaintiff’s logbooks, filing cabinets and any other material contained in its filing cabinets that were removed on or about 30 July 2014 at the defendant’s direction from the hangar at Bankstown Airport that had formerly been occupied by the plaintiff.