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[2016] NSWSC 265

Thiess Pty Ltd v Dobbins Contracting Pty Ltd

Judgment for second defendant on plaintiffs’ claim.

Catchwords

NEGLIGENCE – duty of care – application of ss 5B and 5D of Civil Liability Act – whether Second Defendant owed duty of care to the Plaintiffs – where Second Defendant followed instructions of senior worker – where Second Defendant found to have exercised such duties with reasonable care and diligence – no breach of duty by Second Defendant – causation does not arise CONTRACT – breach of contract – whether Second Defendant breached express or alleged implied terms of the contract – whether course of dealing existed to give effect to those terms – court held implied term of contract that Second Defendant would exercise reasonable care and skill in undertaking work under the contract – determination of breach of contract unnecessary as liability falls under ss 5B and 5D of Civil Liability Act BAILMENTS – bailment for reward – whether employees take constructive possession of excavator – in circumstances of the case bailment not made out – each employee was taking a necessary safety precaution, not asserting a possessory right

Cases cited

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

Legislation cited

  • Civil Liability Act 2002 (NSW)

Judgment

  1. [1]

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

  2. [2]

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

  3. [3]

    The losses claimed fall into five categories:

    1. (1)

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

    2. (2)

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

    3. (3)

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

    4. (4)

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

    5. (5)

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

  4. [4]

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

  5. [5]

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

  6. [6]

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

  7. [7]

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

  8. [8]

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

  9. [9]

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

  10. [10]

    Although, by reason of the settlement, Dobbins took no part in the hearing, it remains nonetheless relevant because the defences raised by Mr Bate include “proportionate liability” defences under Part 4 of the Civil Liability Act 2002 (NSW).

The real issues in dispute

  1. [11]

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

The witnesses in the case

  1. [12]

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

  2. [13]

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

  3. [14]

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

  4. [15]

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

  5. [16]

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

  6. [17]

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

  7. [18]

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

  8. [19]

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

  9. [20]

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

  10. [21]

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

  11. [22]

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

  12. [23]

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

  13. [24]

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

Operation of the mine

  1. [25]

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

  2. [26]

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

  3. [27]

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

  4. [28]

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

  5. [29]

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

  6. [30]

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

  7. [31]

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

  8. [32]

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

  9. [33]

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

  10. [34]

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

Hot work and other technical matters

  1. [35]

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

  2. [36]

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

  3. [37]

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

  4. [38]

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

  5. [39]

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

  6. [40]

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

  7. [41]

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

  8. [42]

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

  9. [43]

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

  10. [44]

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

  11. [45]

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

  12. [46]

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

  13. [47]

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

  14. [48]

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

  15. [49]

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

  16. [50]

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

  17. [51]

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

First issues: cause of the fire

  1. [52]

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

  2. [53]

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

  3. [54]

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

  4. [55]

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

  5. [56]

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

  6. [57]

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

  7. [58]

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

  8. [59]

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

  9. [60]

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

  10. [61]

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

  11. [62]

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

  12. [63]

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

  13. [64]

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

  14. [65]

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

  15. [66]

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

  16. [67]

    Mr Munday’s opinion was:

  17. [68]

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

  18. [69]

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

  19. [70]

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

  20. [71]

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

  21. [72]

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

  22. [73]

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

  23. [74]

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

  24. [75]

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

  25. [76]

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

  26. [77]

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

Second issue: Lance’s role in the gouging operations

  1. [78]

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

  2. [79]

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

  3. [80]

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

  4. [81]

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

  5. [82]

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

  6. [83]

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

  7. [84]

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

  8. [85]

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

  9. [86]

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

    1. (1)

      the affidavit evidence of witnesses called by the plaintiffs;

    2. (2)

      the cross-examination of those witnesses; or

    3. (3)

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

  10. [87]

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

  11. [88]

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

  12. [89]

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

  13. [90]

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

  14. [91]

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

  15. [92]

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

  16. [93]

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

  17. [94]

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

  18. [95]

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

  19. [96]

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

  20. [97]

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

  21. [98]

    Mr Martin submitted that where a particular inference was available on the evidence, I could be more confident in drawing it against a party where that party could have given, but for unexplained reasons did not give, evidence on the topic. Of course, I accept that proposition at the level of principle. The question is whether it is really relevant in this case.

  22. [99]

    When one reads Lance’s statement as a whole (and not just the purple passages on which Mr Martin relied), the better view seems to me to be that Lance did in fact stand or crouch at the rear of the slew ring area, from where he could see Mr Bradbury and to about a foot above his head. The inference that Mr Martin submitted should be drawn would entail disregarding entirely Mr Bradbury’s evidence on the point, and preferring instead one of two inconsistent (or at least, scarcely consistent) statements from Lance’s handwritten statement.

  23. [100]

    For the reasons given, I do not accept Mr Martin’s attempts to explain away Mr Bradbury’s evidence. I see no reason to devalue or ignore that evidence. On the contrary, having observed closely as Mr Bradbury gave it (in the two passages that I have extracted), and considering it in the context of the whole of the evidence as to the second gouging operation, I find it both plausible and persuasive.

  24. [101]

    In short, I find that:

    1. (1)

      at Mr Bradbury’s request, Lance agreed to act as a fire spotter during the second gouging operation;

    2. (2)

      to perform those duties, Lance stood or crouched at the position he and Mr Bradbury had agreed was appropriate; and

    3. (3)

      in Mr Bradbury’s view (and he was a very experienced boilermaker), Lance “could see everything he needed to see from that position”.

  25. [102]

    Mr Bradbury was the team leader, as he agreed. He was the one who perceived the need for a fire spotter for the purposes of the second gouging operation. He asked Lance to perform that role. Lance agreed. It was for Mr Bradbury to direct Lance where to stand. Once it became apparent that the position initially chosen (on the metal grid above the slew ring) raised safety concerns that could not be dismissed as groundless, Mr Bradbury settled on the next best position. In standing there, Lance did exactly what was required of him by his team leader.

  26. [103]

    I should add that, if the submission that Lance agreed to act as a fire watcher (for the purposes of AS1674) was pressed, I would not accept it. The expression “fire watcher” is used in cl 3.5 of the Standard to denote “the fire watcher, where required”. By reference to cl 3.6 it is clear that the “assigned fire watcher” (to use the language of that clause) whose role is defined is the person nominated as such in the hot work permit (the subject of cl 3.5) who has, by signature, accepted that role.

  27. [104]

    Lance was not nominated in the hot work permit as an assigned fire watcher. He did not sign it, as that fire watcher or otherwise. There is no factual basis for regarding him as the assigned fire watcher for the purposes of the second gouging operation.

  28. [105]

    It may very well be, as Mr Martin submitted, that the duties of a fire spotter are in effect those of the assigned fire watcher set out in cl 3.6. However, the significant point is that Mr Bradbury asked Lance to “fire spot” during the performance of the second gouging operation, and Lance did so in the manner agreed. It is the agreement between Mr Bradbury and Lance, in the context it was made, that gives definition to the duty that Lance was required to perform. The Standard adds nothing.

Third issue: terms of the contract between HVE and Mr Bate

  1. [106]

    Over the four years or so leading up to 30 August 2008, HVE had contracted hundreds of items of work to Mr Bate. Sometimes those items of work were performed by Lance; sometimes by Mr Bate; sometimes by both. The practice appears to have been that someone from HVE would contact Mr Bate and tell him what work there was to be done, and how many people were required to do it. Whoever was to do the work would then report at the mine, and would be given instructions, by the supervisor on duty, as to the work to be done.

  2. [107]

    Mr Bate provided weekly invoices to HVE for work done. Those invoices contained a purchase order number, which had been given to Mr Bate by someone from HVE.

  3. [108]

    The purchase orders appear to have been issued monthly, and to contain details of all work done by Mr Bate (or his employees) during the month, together with details of the hours worked, the hourly rate and so on. HVE’s evidence was that those purchase orders were prepared cumulatively, as the month progressed.

  4. [109]

    HVE pleaded a contract made between it and Mr Bate on about 22 August 2008, under which Mr Bates agreed, in conjunction with Dobbins, to undertake the “Repair Works” (defined to comprise “the repair of an accumulator bracket on EX1070”). The contract was said to be partly in writing and partly implied.

  5. [110]

    The writing was pleaded to comprise HVE’s purchase order 1618038. The implied portion of the contract was pleaded, somewhat curiously, to comprise “[Mr] Bates’ conduct in attending the Mine on 30 August 2008, by his employee Lance, to purport to undertake the Repair Works”.

  6. [111]

    The pleading next set out what were said to be express terms of the contract. The only pleaded express term relating to the quality of the works or the required standard of performance was said to be that stated in cl 3(f) of the terms and conditions said to have been set out on the purchase order. That clause required that:

  7. [112]

    HVE pleaded an implied term of the contract:

  8. [113]

    Mr Bates’ List Response admitted the engagement and admitted receipt of the purchase order, but did not admit that the purchase order formed part of the contract between him and HVE. He also put in issue that the purchase order “in its original form expressly referred to the Repair Works…”.

  9. [114]

    Mr Bate admitted that the express terms set out on the purchase order included those pleaded, but did not admit that they were terms of the contract made between him and HVE.

  10. [115]

    Mr Bate did not admit the implied term alleged by HVE.

  11. [116]

    There are a couple of points to make about the pleaded case. The first is that, on the evidence, the purchase order was issued after the instruction was given to Mr Bate (or Lance) to undertake the “Repair Works”. There was no pleading or evidence that the purchase order or the terms written on it were expressly accepted by Mr Bate as having contractual effect. In those circumstances, the purchase order could only have contractual effect if, through the course of dealing between HVE and Mr Bate over the previous years, it had become incorporated into the contract. See Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31.

  12. [117]

    If the written terms had contractual effect by that mechanism then, as the analysis of Diplock LJ in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association (Henry Kendall in the Court of Appeal) [1966] 1 WLR 287 at 340 shows, there would be an oral contract, which by the course of dealing between the parties must be taken to incorporate the terms of a document (relating to their contracts) regularly sent by the one to the other as a matter of practice. His Lordship said:

  13. [118]

    Accordingly, in final submissions, Mr Martin advanced an argument that the consistent course of dealings between HVE and Mr Bate, over the four or so years leading up to 30 August 2008, should be taken to have the result that the terms of the purchase order were incorporated into the particular contract with which I am concerned. There was no express pleading of a course of dealing, although it could be said that most of the material facts are scattered throughout the pleading. Mr Cavanagh objected to the point’s being taken in final submissions.

  14. [119]

    However, it is not necessary to resolve this dispute. As it turned out, the only reason for relying on the terms of the purchase orders was to found an argument that, through a clause in the terms and conditions which required observance of any relevant Australian Standard, the provisions of AS1674 dealing with hot work became binding as a matter of contract. In final submissions, Mr Martin made it clear that he did not rely on any such case. That was wise, in circumstances where:

    1. (1)

      no such contractual obligation had been expressly pleaded;

    2. (2)

      the pleaded term (as to quality of service) said to be relevant was the implied term set out at [112] above; and

    3. (3)

      even if the contract did include an express obligation in the terms of cl 3(f) (see at [111] above), HVE could not succeed on that basis if it failed to prove breach of the implied term (see at [132] below).

  15. [120]

    Leaving aside the issue of the suggested contractual import of AS1674, Mr Martin submitted that there was an implied term of the kind pleaded. That, he submitted, was a term that Mr Bate “would perform the services that he was required to provide with reasonable care and skill”. That term, Mr Martin submitted, required Mr Bate:

  16. [121]

    Mr Cavanagh did not devote much time to the contractual issue (apart from submitting that HVE should not be permitted to rely on the “course of dealing” argument, or on contractual obligations said thereby to be applicable). He took that position because, in his submission, the question of liability, whether in contract or in tort, was governed by ss 5B and 5D of the Civil Liability Act, and it was there that the real debate was to be conducted.

  17. [122]

    There is no doubt that HVE contracted with Mr Bate for the latter to perform certain works. Accepting that there is a dispute as to the precise works to be undertaken, and an irrelevant dispute as to incorporation of terms into that contract by a course of dealing, it seems to me to be relatively plain that, absent any term to the contrary, there would be implied into that contract a term of the kind for which Mr Martin contended (see at [120]) above. Thus, I conclude that there was an implied term of the contract between HVE and Mr Bate that Mr Bate (or his employee) would use reasonable care and skill in undertaking the work the subject of that contract.

  18. [123]

    HVE contended that the scope of works was, as shown on the purchase order:

  19. [124]

    Mr Searle said that a Mr Fogarty, another maintenance shift supervisor employed by HVE at the time, told him that the accumulator bracket repair had been allocated to Lance and Dobbins. Mr Fogarty said that he did not engage Lance to do that work. Mr Yeoman, who appears to have had a role in the allocation of work to various contractors, and who (so Mr Fogarty told Mr Searle) had allocated the job to Lance, said that he did not do so.

  20. [125]

    Somewhat confusingly, Lance said in his handwritten statement that Mr Fogarty told him what he was to do on the day in question and that thereafter Mr Yeoman “took me down and showed what was to be done” on EX1070.

  21. [126]

    There is no doubt that HVE, through one or more of Messrs Fogarty, Searle and Yeoman, instructed Dobbins to undertake the repair of the accumulator bracket. Although the precise sequence of instructions is unclear, I infer that one or other (or perhaps more than one) of those persons also in effect instructed Lance to assist Mr Bradbury – the personification of Dobbins onsite on that day – in the accumulator bracket repair.

  22. [127]

    In those circumstances, I conclude that it was Dobbins that had responsibility for the repair, and that Lance (in the absence of specific directions from HVE) was required to assist Mr Bradbury, and to do whatever it was in that role that Mr Bradbury reasonably required. I deal at [188] to [194] below with what detailed items of work were comprised within “the repair”.

Fifth issue: common law duty of care

  1. [128]

    It may be assumed that Mr Bate owed Thiess and HVE a common law duty of care in respect of the works to be performed on 30 August 2008, coextensive with the implied contractual duty that I have found he owed HVE.

  2. [129]

    Issue 5 refers to matters that may be relevant in considering whether Mr Bate owed a common law duty of care to avert pure economic loss (for example, the reference to “vulnerability”). I do not know why those matters are relevant. Both Thiess and HVE had a possessory interest in EX1070. Their claim is one for injury to their possessory interest, and reasonably foreseeable consequential loss flowing from that injury. It is not a claim for pure economic loss. Indeed, I think, by the end of submissions, that was common ground.

Fourth and seventh Issues: breach of duty (contractual or common law duty of care)

  1. [130]

    As I have indicated, Mr Cavanagh submitted that the question of breach of duty was to be dealt with by reference to s 5B of the Civil Liability Act. Mr Martin accepted that this was so. In the circumstances of this case, the effect of s 5A of the Civil Liability Act is that Part 1A of that Act, in which those sections are found, applies whether the claim is brought in tort, contract, under statute or otherwise.

  2. [131]

    I set out s 5B:

  3. [132]

    The pleaded case, as to breach of contract, asserted breach of the term as to fitness for purpose set out in cl 3(f) (see at [111] above). It asserted, further, a breach of the implied term. The particulars of breach were the same for each term. Mr Martin did not suggest that HVE could succeed on the basis of breach of the clause 3(f) term if it failed on breach of the implied term.

  4. [133]

    The question of breach really depends on precise identification of the duties that Lance was asked to perform. It follows from what I have said on this topic, that if those services were rendered with reasonable care and skill, there could be no breach of the implied term. Further, in those circumstances, there could be no independent reason for suggesting that there would be a breach of the cl 3(f) term of fitness for purpose (if it were open to HVE to rely on that term in the absence of any pleading of incorporation by a course of dealing).

  5. [134]

    The particulars of breach of contract are set out at [37] of the plaintiffs’ Amended Technology & Construction List Statement (ATCLS). Those particulars, which are numerous, read as follows:

  6. [135]

    It is convenient to note at this point that the particulars of breach of the alleged common law duty of care (set out in ATCLS [44]) are not materially different. The question of breach was addressed without reference to such differences as there may be between the two formulations. In those circumstances, I do not propose to take up space in these reasons by setting out the particulars of breach of the alleged duty of care. The nature of the alleged breaches is sufficiently described in the particulars of breach of contract that I have just set out.

  7. [136]

    Mr Martin’s written opening submissions at [25], whilst maintaining reliance on all the particulars of breach and negligence set out in the ATCLS, condensed them into three fundamental elements. He said that Lance failed properly or appropriately:

    1. (1)

      to clean the work area to ensure that any flammable material was removed, or alternatively protected in some way;

    2. (2)

      to fire spot while Mr Bradbury was undertaking the hot work, including from the position that Mr Bradbury nominated; and

    3. (3)

      to carry out a fire watch following completion of the gouging work.

  8. [137]

    In the course of his final submissions, Mr Martin developed an alternative theory of breach (and causation). That was presumably done in response to the evidence of Mr Bradbury, which was to the effect that:

    1. (1)

      Lance had not been asked to fire spot for the first gouging operation, and had not done so;

    2. (2)

      Lance had not been asked to undertake any cleaning operations before Mr Bradbury undertook the second gouging operation;

    3. (3)

      Lance and Mr Bradbury agreed on the position from which Lance was to fire spot for the second gouging operation, and Lance did in fact stand there; and

    4. (4)

      Mr Bradbury and Lance conducted a number of inspections of EX1070, both in the time between the two gouging operations and for 15 minutes (or, Mr Bradbury said in his oral evidence, somewhat longer) after the second gouging operation: a time that Mr Bradbury thought was sufficient.

  9. [138]

    The alternative theory that Mr Martin developed was that, unbeknown to Mr Bradbury, Lance had moved away from the position agreed between them as that from which he should carry out his fire spotting duty during the second gouging operation, to a position from which he could not properly observe what was happening. That was said to amount to a breach of contract and of the common law duty of care.

  10. [139]

    As to causation, Mr Martin submitted that by undertaking to stand where he did, Lance represented to Mr Bradbury that he would fire spot from that position, and thereby induced Mr Bradbury to proceed with the second gouging operation. Mr Martin submitted that if Lance had told Mr Bradbury he was not going to stay in the agreed position, but intended to move to some other position from which he could not properly see what was happening, Mr Bradbury would not have undertaken the second gouging operation. If the second gouging operation were the sole cause of the fire, Mr Martin submitted that the alleged breach and failure to warn permitted Mr Bradbury to undertake that operation when otherwise he would not have done so, and thus they were causally relevant.

  11. [140]

    Mr Cavanagh objected to Mr Martin’s being allowed to run that argument. He submitted, correctly, that there was no mention of it in the pleadings or particulars. Were it necessary to do so, I would accept Mr Cavanagh’s submission. However, it is not necessary to take this matter further, since:

    1. (1)

      the plaintiffs have not proved that Lance did move from the agreed position; and

    2. (2)

      the plaintiffs have not proved that the second gouging operation was the sole cause of the fire.

  12. [141]

    Mr Cavanagh submitted that Lance had done what Mr Bradbury had asked him to do, and that Mr Bradbury, as the team leader, was the person responsible for deciding (and who did decide) the amount of inspection that should be required after the second gouging operation had been completed.

  13. [142]

    It was common ground, as I have noted, that s 5B governs the inquiry as to breach of duty. However, since that point, having been acknowledged, really does not dictate the outcome of the analysis (because each side structured its submissions by reference to the facts), it is not necessary to comment further, nor to summarise this aspect of the parties’ submissions.

  14. [143]

    Again, Counsel in their submissions referred to numerous decided cases. Again, without intending to be disrespectful, I do not find it necessary to refer to those cases.

  15. [144]

    I start by observing that, in terms of s 5B:

    1. (1)

      the risk of harm by fire was foreseeable – this follows simply because the works were hot works, creating sparks and motten spatter, carried out in a confined area richly endowed with flammable material;

    2. (2)

      that risk could not be said to have been insignificant (I do not think that Mr Cavanagh contended otherwise); and

    3. (3)

      a reasonable person in Lance’s position would have taken precautions against that risk.

  16. [145]

    The real question, having regard to the work that Lance was asked to do (both by HVE and by Mr Bradbury), is: what were the precautions that he was required to take, in the context of the work then done on that day?

  17. [146]

    First of all, Lance was directed to clean down part of the slew ring area, before any hot work was undertaken. He did so. When Mr Bradbury arrived, he directed Lance to clean down a further area. Lance did so. Lance was not directed to undertake any cleaning work before the second gouging operation. There can be no suggestion that Lance failed to follow Mr Bradbury’s direction in relation to cleaning.

  18. [147]

    The next point to note is that, as I have found, Lance was not asked to fire spot for the first gouging operation.

  19. [148]

    The third point is that Mr Bradbury, an extremely experienced welder and the person effectively directing the accumulator bracket repair, did not think that it was necessary to put a fire blanket or some other protection over flammable material in the slew ring area. Nor did Mr Searle, the very experienced maintenance supervisor who signed off on the hot work permit. Why should Lance, a fitter only recently qualified at the time, have come to a different view? To my mind, there is no reason why he should have done so.

  20. [149]

    Even assuming, on the basis of the trade courses Lance had undertaken, that he had some basic familiarity with metal arc welding and with relevant safety precautions, his job was to do what he was told, and do it carefully. Mr Bradbury was the person with the primary responsibility of designing the safety precautions. Mr Searle was the person with the responsibility of checking and certifying as to, among other things, the sufficiency of those precautions. Lance’s role was to assist Mr Bradbury in such ways as Mr Bradbury might properly direct him to do.

  21. [150]

    The fourth point is that although Mr Bradbury and Lance agreed that the manifold bolt should be removed, it was Mr Bradbury who decided that the nut should be gouged off. He made that decision when it became apparent that Lance could not remove the bolt with the tools that he had with him.

  22. [151]

    The fifth point is that Mr Bradbury did not direct Lance to undertake any further cleaning activities, or to take any other precautions (such as the use of a fire blanket) before undertaking the second gouging operation.

  23. [152]

    The sixth point is that Mr Bradbury was the expert in air gouging. Lance was not. Mr Bradbury was the person to decide what if any precautions against fire should be taken, having regard to what he knew and ought reasonably to expect to happen during the process of gouging off the manifold bolt.

  24. [153]

    The seventh point (following from the fifth) is that on the evidence, the only task that Mr Bradbury asked Lance to perform, in respect of the second gouging operation, was to fire spot.

  25. [154]

    It is of course correct to say, as Mr Martin submitted, that Mr Bradbury directed Lance to fire spot from the metal grid on the superstructure on the excavator, apparently above the position where the second gouging operation was to take place. Lance refused to do so, citing safety concerns. Mr Bradbury accepted this. No one suggested that Lance’s concerns were fictitious, or unreasonable, or irrelevant. Mr Searle agreed that if an employee had legitimate safety concerns about doing a particular act, he should not be asked to do that act: at least, unless those concerns could be allayed. Mr Searle agreed that, on a work site such as the mine, the safety of workers was the paramount concern.

  26. [155]

    Mr Bradbury and Lance then agreed on an alternative position that Lance should assume, to carry out his duty as a fire spotter. Mr Bradbury’s evidence (which I have set out extensively already) confirms that from this position, Lance could see all that he needed to see. Specifically, Mr Bradbury confirmed that in his view at the time, it was not necessary that Lance should be able to see right up inside the slew ring, to the “shelf” on its upper surface.

  27. [156]

    Mr Bradbury, as the team leader, was the person whose responsibility it was to be satisfied that a sufficient watch had been kept after completion of the second gouging operation and before leaving the excavator. Mr Bradbury was satisfied that the fifteen minute period that he allocated was appropriate. He had nominated that period, after completion of the hot work, in his safety assessment. Mr Searle had signed off on that assessment, obviously accepting that the proposed time was indeed appropriate. Why should Lance be required to second-guess those two very experienced men?

  28. [157]

    I find that it was for Mr Bradbury, as the senior and experienced operator and the team leader, to direct Lance as to Lance’s role. I find, for reasons that will be clear from what I have said already, that Lance did what was asked of him, and did it with reasonable care. To the extent that there were deficiencies in the fire spotting operation, those deficiencies were inherent in the way that Mr Bradbury decided to undertake the second gouging operation, and in the directions that he gave Lance.

  29. [158]

    As to the allegation of failure to clean (which is only relevant in respect of the second gouging operation) there is no evidence that Mr Bradbury turned his mind to the need for cleaning, let alone that he directed Lance to do it.

  30. [159]

    As to the allegation of failure to fire spot from an appropriate position, I find, for the reasons I have given, that:

    1. (1)

      Lance did fire spot from the position that he agreed with Mr Bradbury; and

    2. (2)

      Mr Bradbury was satisfied that this was an appropriate position from which to perform that activity.

  31. [160]

    As to the allegation of failure to keep an insufficient watch after completion of the second gouging operation, I find that this was Mr Bradbury’s decision, and one in which effectively Mr Searle had concurred.

  32. [161]

    I accept of course that Mr Searle’s concurrence was in respect of the first gouging operation (more accurately, in respect of Mr Bradbury’s proposal to remain in attendance for 15 minutes after completion of the removal of the accumulator bracket). However, given the way that Mr Searle approached his assessment of the safety requirements of the job, there is no reason to think that he would have come to any different view had Mr Bradbury (for example) contacted Mr Searle and told him that the manifold bolt also should be removed. Nor is there any reason to think that a watch for 15 minutes might be adequate for the first gouging operation but not for the second.

  33. [162]

    In short, I find that Lance performed the duties assigned to or asked of him, and performed them with appropriate diligence and care.

Sixth issue: reasonable foreseeability of loss

  1. [163]

    Once it is realised that the case is not one of pure economic loss, this issue may be disposed of very simply. That may be done without reference to the skimpy submissions put on it.

  2. [164]

    In my view, it is self-evident that losses in each of the five categories identified at [3] above, and elaborated at [4] to [8] above, were reasonably foreseeable as losses that might flow from a breach of any relevant contractual duty, or any common law duty of care, in the circumstances of this case. Indeed, on the basis that the case was one of physical damage to property and loss consequential upon that physical damage, I do not think that Mr Cavanagh sought to submit otherwise.

Eighth issue: bailment

  1. [165]

    The bailment case is somewhat unusual. It is based on the fact that people who perform maintenance work on machinery such as EX1070 are given “locks” to enable them to isolate the starting mechanism of the machine. In this context, a lock is a device, apparently similar to a padlock, which is physically attached to the machine and which physically prevents the starter mechanism from being activated. The reasons why maintenance workers are required to “lock on” (as the phrase is) are obvious.

  2. [166]

    Each of Mr Bradbury and Lance had such a lock. Each locked onto EX1070: Lance first, because he was the first there; and Mr Bradbury later. Each thus independently prevented anyone else from activating the starter mechanism.

  3. [167]

    Mr Martin submitted that in those circumstances, each of Dobbins and Mr Bate, through their respective employees Mr Bradbury and Lance, was a bailee for reward of EX1070. He submitted that, when each employee locked onto EX1070, the respective employer became a bailee for reward because it thereby took constructive possession of the excavator.

  4. [168]

    Mr Cavanagh submitted that no bailment could arise in those circumstances. He noted that there was no case, reported or otherwise, which supported the proposition that a bailment could arise in those circumstances.

  5. [169]

    I accept that, by locking onto the machine, each of Lance and Mr Bradbury prevented it from being operated. I do not accept that, thereby, they took possession of the machine in such a way as to constitute a bailment of it to their respective employers.

  6. [170]

    It is of course clear that someone who undertakes work on a machine may be a bailee of it. An obvious example arises where a motor vehicle is delivered to a mechanic for maintenance or repair. Likewise, I accept that in some circumstances a bailment may be effected through a constructive transfer of possession.

  7. [171]

    However, this is not a case where the machine was delivered either to Dobbins or to Mr Bate. On the contrary, their employees were, so to speak, delivered to the machine. By locking onto the machine, each employee was taking an obvious and necessary safety precaution. The act of locking on could not be regarded, even constructively, as a taking of possession, let alone as an ouster of the superior rights of possession vested in HVE and Thiess. To my mind, this is so a fortiori where the repairs were undertaken at the direction and under the (indirect) supervision of HVE.

  8. [172]

    True it is that when Mr Wilton came to inspect EX1070, after completion of the second gouging operation, Lance told him not to go under the machine to the slew ring area. However, in doing so, Lance was taking steps to ensure Mr Wilton’s safety. He was not asserting any kind of possessory right, or power of control, over the machine.

  9. [173]

    I conclude that there was no bailment. Thus, the question of reversed onus of proof does not arise.

Ninth issue: causation

  1. [174]

    On the findings to which I have come, the question of causation does not arise. I see no utility in addressing this question, since causation cannot be divorced from the identification of the negligent act that is said to have caused the loss. Put in less Delphic terms, it is necessary to identify the precise acts of negligence before assessing their causal effect.

Tenth issue: contributory negligence

  1. [175]

    Although the issue as stated divides the allegations of contributory negligence into “pleaded” and “non-pleaded”, the position is that all the allegations have been pleaded. The contentious issues (c) to (g) were added by amendment made, without opposition, at the commencement of the hearing.

  2. [176]

    Mr Martin submitted, in my view correctly, that although the allegations of contributory negligence were pleaded against each plaintiff, they could only be relevant to HVE.

  3. [177]

    Mr Martin submitted, again correctly, that the allegations summarised in paras (a), (b) and (g) were not sustained on the evidence.

  4. [178]

    As to paras (c) and (d), Mr Martin submitted that the second gouging operation – the removal of the manifold bolt – was outside the scope of work that HVE gave to Dobbins and Mr Bate. Thus, he submitted, any deficiency in the risk assessment undertaken by HVE, and any failure to implement safe hot work practices, was irrelevant.

  5. [179]

    As to paras (e) and (f), Mr Martin submitted that having regard to Lance’s qualifications, HVE was entitled to think that he was qualified to assist in the hot work to be performed by Mr Bradbury. Further, Mr Martin submitted, HVE was entitled to think that Mr Bradbury would give adequate directions to Lance as to the precise duties he was required to perform.

  6. [180]

    Mr Cavanagh’s submissions focussed on the inadequacy of the risk assessment undertaken by Mr Bradbury and signed off by Mr Searle. Since the evidence on that is clear and all one way, it is not necessary to say anything more about those submissions.

  7. [181]

    Mr Cavanagh submitted that the scope of the task given to Dobbins and Mr Bate should not be limited in the way for which Mr Martin contended. He referred to the terms of HVE’s work order (an internal document apparently generated so that the repair could be authorised, allocated and in due course paid for) and to the terms of the purchase order.

  8. [182]

    The former document gave a “Full Description” of the task as:

  9. [183]

    The latter document, as I have noted, described Mr Bates’ role as being:

  10. [184]

    In those circumstances, Mr Cavanagh submitted the work to be done clearly comprised all that was necessary to effect the repair.

  11. [185]

    The evidence does not make out paras (a) and paras (b). Further, in the absence of any detailed examination of what the “proper fire safety precautions” might be (or should have been), I do not think that para (g) is made out.

  12. [186]

    As to paras (c) and (d) the documentary evidence and the cross-examination of Messrs Searle and Bradbury in respect of it demonstrate an utterly inadequate approach to the very important task of assessment of the dangers inherent in the work and the safety precautions required. Each of the witnesses effectively accepted this.

  13. [187]

    I have no doubt that a proper and thorough assessment would have recognised the very real risk of fire. Such an assessment would also have recognised that simply cleaning down the area around the site of the hot works would be insufficient, and that some sort of insulation or blanketing should have been used. That is particularly so in respect of the second gouging operation – the removal of the manifold bolt. Since the necessity for that bolt to be removed was not apparent until the accumulator bracket had been removed, the assessment undertaken before hot work started did not deal with it.

  14. [188]

    That leads to Mr Martin’s point, namely that the work requested did not extend to the removal of the manifold bolt. I do not agree.

  15. [189]

    It is obvious that, between them, Dobbins and Mr Bate were required to repair the damaged accumulator bracket, and to do whatever might be necessary to effect that. That is apparent from the terms of the work order.

  16. [190]

    As everyone appears to agree, repair of the accumulator bracket required that it be removed. That in turn required, as a practical matter and perhaps a very important safety measure, that the accumulator be unbolted from the bracket, and securely fastened to some part of the excavator, out of harm’s way, until the repair was completed. That step seems to have required that the accumulator be disconnected from its manifold. The next step of the work required the repair and (once the repair was completed) reattachment of the accumulator bracket itself. Once all that had been done, the final step required the accumulator to be rebolted to its bracket and reattached to its manifold.

  17. [191]

    It seems to me to be artificial to say that a repair job which necessarily entailed removal of the accumulator and accumulator bracket could be regarded as “complete” even though the accumulator had not been put back in place and rendered capable of functioning. If all that Mr Bradbury and Lance had done was to repair the accumulator bracket and weld it back onto the machine, leaving the accumulator itself detached from its manifold and suspended in mid-air, EX1070 could not be operated. It is obvious that the role of Lance, as a fitter, included not only assisting Mr Bradbury as directed but also removing, supporting and in due course reattaching the accumulator, and reconnecting it to its manifold.

  18. [192]

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

  19. [193]

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

  20. [194]

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

  21. [195]

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

  22. [196]

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

Issues 11 and 12: apportionment

  1. [197]

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

Issue 13: recovery

  1. [198]

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

Issue 14: the lease termination payment

  1. [199]

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

  2. [200]

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

  3. [201]

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

Issue 15: particular damages questions

  1. [202]

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

  2. [203]

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

  3. [204]

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

  4. [205]

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

    1. (1)

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

    2. (2)

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

    3. (3)

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

    4. (4)

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

  5. [206]

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

  6. [207]

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

  7. [208]

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

  8. [209]

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

  9. [210]

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

  10. [211]

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

  11. [212]

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

  12. [213]

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

  13. [214]

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

  14. [215]

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

  15. [216]

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

  16. [217]

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

  17. [218]

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

  18. [219]

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

Conclusion and orders

  1. [220]

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

  2. [221]

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

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.