HIS HONOUR: The defendant, Bankstown Airport Limited ("BAL") is the lessee of the Bankstown Airport. The Airport is owned by the Commonwealth of Australia. The plaintiff, Aerolink Air Services Pty Ltd ("Aerolink") carried on business from hangar 410 at Bankstown Airport, from about December 1999 (Ryan, [16], CB 37) to 28 February 2013 (ASC para 7 and Defence para 1). Aerolink occupied the hangar under various arrangements, the last of which was a month-to-month licence from BAL. That licence was terminated by at least 28 February 2013. Aerolink should have removed all its goods from the hangar by that date. It did not do so. On 5 March 2013 BAL agreed to allow Aerolink to access the site between the hours of 8.00am and 4.00pm to remove its remaining property.
At about 2.00pm on 6 March 2013 a fire broke out in a storeroom in the hangar. The fire caused extensive damage to Aerolink's goods that were still stored in the hangar. These included aeroplane parts, avionics and logbooks. Not all logbooks were destroyed. After an initial inspection with a representative of BAL, Mr Ryan, the director of Aerolink, was not permitted access to the hangar after the fire. There was concern that the area and any goods that might be salvageable were contaminated with asbestos. The remaining goods were disposed of by workmen engaged by BAL on or about 30 July 2014.
Aerolink claims that BAL was responsible for the fire and the damage or destruction to its goods. It also complains of the subsequent disposal of goods that might have survived the fire. On 13 October 2017 Beech-Jones J made an order by consent that the quantification of the loss and damage suffered by Aerolink is to be decided separately and after the trial of all other questions in the proceedings. Accordingly, this judgment deals with issues of liability only.
The first issue is the cause of the fire. Aerolink alleges that:
"19 As a matter of fact, the Fire was caused by:
(a) a floating earth within the electrical system of the Premises which permitted excessive electrical current to flow between the active and the earth conductors in the wall socket (General Purpose Outlet) of the storeroom of the Premises and other parts of the Premises instead of being broken by a circuit breaker;
(b) which in turn ignited and melted the plastic insulation covering the earth wire and/or the plastic of the General Purpose Outlet;
(ba) which ignited surrounding combustible material;
(c) following which fire spread throughout the Premises."
Aerolink claims that BAL was responsible for deficient electrical wiring in the premises which it says caused the fire.
BAL denies both responsibility for the electrical wiring and that an admitted deficiency in the electrical wiring caused the fire. The ultimate position taken by an expert retained by BAL to give evidence as to the cause of the fire, a Mr Gregory Kelly, was that neither any fault in the electrical wiring or connections in the premises, nor any fault in an electrical appliance, could have triggered the fire and that the fire must have been caused by the ignition of combustible materials in the storeroom, or flammable liquids, or the vapour from flammable liquids, arising from some other source such as a cigarette, or by such material being ignited by some other heat source such as the heat of a lamp.
An expert called by Aerolink, a Dr Anthony Green, considered that the fire investigation excluded this as an explanation of the cause of the fire. He considered that the source of the fire was ignition within a powerpoint or socket (called in the trade General Purpose Outlet ("GPO")) that led to a breakdown in insulation in the GPO and caused a fire to spread in the storeroom resulting in the combustion of flammable liquids in the storeroom.
The extent of disagreement between Mr Kelly and Dr Green, and the vehemence with which Mr Kelly expressed his disagreement with the opinions of Dr Green, was dismaying. I deal with their evidence below.
If the fire were not caused by an electrical fault, then Aerolink's claim for damages in respect of so much of its goods as was destroyed by the fire fails. It maintains a claim arising from the disposal by BAL of logbooks and the contents of filing cabinets that it says were salvageable.
If the cause of the fire were an electrical fault, the second issue is whether BAL was responsible for it. BAL relies upon terms of the subleases and licence agreements under which Aerolink occupied the premises. They varied from time to time, but in substance for many years before the fire, at least up to the expiry of the last licence agreement on 28 February 2013, the agreements provided that Aerolink occupied the premises at its own risk, that BAL gave no warranty as to the suitability of the premises for its purposes, and that if Aerolink wished to carry out electrical repair work it would need BAL's approval and would be required to do so at its own expense.
Aerolink pleads that BAL owed it a duty to take reasonable care to avoid foreseeable risk of harm to its property arising from its use of the premises. It pleads that it was reasonably foreseeable that the premises presented a significant risk of harm to its property, that risk being that an electrical fault could be an ignition source of a fire that could cause damage. Aerolink pleads that BAL was aware of various matters that showed electrical faults in the system for provision of power to the premises and failed to address those matters and breached its duty of care.
BAL says that the duty propounded is unknown to the law. BAL contends that even if the duty could otherwise arise, it was negated by the terms upon which Aerolink occupied its premises.
It was common ground that there was a fault in the electrical wiring at the hangar. The main earth connection from the meter board on the external wall of the hangar to ground was not connected. The position ultimately (although not initially) taken by Mr Kelly, was that this had no implication for the cause of the fire. His ultimate position was that the fire could not have originated from a fault either in an electrical appliance in the storeroom or from the electrical wiring in the building. He considered the absence of the main earth connection to be irrelevant to identifying the source or cause of the fire.
Aerolink relied on evidence of Dr Green. Counsel for the plaintiff summarised what he contended to be the effect of that evidence as follows:
"Dr Green's theory was (and remained) that a plasma arc [was] created [by] a partial short in the GPO between the active and earth (and/or the active and the neutral wires). This condition was made worse by the floating potential of the earth (which was connected to the neutral) in the MEN (Multiple Earth Neutral) system. This was based on Dr Green's observation of the oxidation of the earth and neutral conductors in the remnants of the GPO."
In Dr Green's opinion, the investigation of the fire scene ruled out the combustible material or flammable liquids stored in the storeroom as being the source of the fire. Mr Kelly took issue with those opinions.
Before dealing with the expert evidence and the submissions in relation to the source and cause of the fire I will outline relevant aspects of the history of Aerolink's occupation of the hangar and the terms on which it had occupation. BAL relies upon those terms as negating the existence of the duty of care alleged by Aerolink.
Initially, Aerolink occupied the hangar under rights granted to it by a sublessee from BAL, a Mr Hans Bannink, to whom Aerolink paid rent (Ryan [17] CB 37). From 1 August 2001 a director of Aerolink, Mr Daniel Ryan, sub-let the hangar from BAL. Aerolink continued to conduct its business from the hangar. There were disputes between Mr Ryan and BAL in relation to the payment of rent and in relation to the state of the repair of the hangar, including the state of electrical wiring.
Mr Ryan's sublease from BAL commenced on 1 August 2001. It included terms that:
1. no provision in the lease was to be taken as imposing any obligation on the Landlord to rebuild, reinstate or make the premises or the building fit for occupation (clause 7.4; CB 1/418);
2. Mr Ryan occupied the premises at his own risk (clause 15.1; CB 1/424);
3. Mr Ryan indemnified BAL against all claims arising from his use of the premises (clause 15.2(d); CB 1/425); and
4. neither BAL nor any person on its behalf had given any promise, representation, warranty or undertaking as to the suitability of the premises for any business to be carried on in the premises, or the facilities of the premises (clause 18.1).
On 5 December 2003 Aerolink asserted that Mr Campbell of BAL had made representations at the time the sublease was entered into that a number of things would be done. These included fixing the ceiling in a lunchroom. Mr Ryan complained that the situation was dangerous as the water was getting into the electrical wiring (CB 1/434).
On 21 December 2006 BAL commenced proceedings in the District Court against Mr Ryan claiming arrears of rent. On 12 February 2007 Aerolink complained to BAL that an undertaking had been given that rectification work would be done to the hangar, including rectification of lighting and wiring (CB 1/435). In his defence to BAL's claim in the District Court, Mr Ryan pleaded that it was a term of the lease agreement that BAL would perform and maintain repair and rectification work to the hangar and that it had failed to do so. He claimed that as a result of BAL's failure to carry out repair and rectification work, approximately 25 per cent of the hangar area was unusable (CB 1/202).
On 16 April 2007 Mr Ryan filed a cross-claim in the District Court proceedings. He alleged that it was a term of the sublease that the premises would be in a fit and proper condition and that BAL would carry out routine maintenance, maintaining the hangar as a viable commercial property (cross-claim para 5; CB 1/210). He alleged that BAL was required to carry out rectification work to electrical wiring (cross-claim para 10; CB 1/212). These allegations were denied.
On 24 August 2007 BAL and Mr Ryan, then the sublessee of the premises, entered into an agreement called "Heads of Agreement". The parties agreed that the sublease had been terminated (clause 2(c)). Mr Ryan agreed to pay approximately $196,000 within 14 days. BAL promised "... within a reasonable time, [to] commence the Works and ... proceed with those Works with diligence and without undue delay, in a professional and workmanlike manner" (clause 2(h)). BAL's obligation was subject to a maximum expenditure by it of $200,000 and the grant of relevant building and heritage approvals. The works the subject of that promise included electrical wiring and lighting. BAL agreed to install roof lighting and to "... check all wiring and replace any old, worn or dangerous wiring, conduit and power points. This will not necessarily be a complete re-wiring of the premises." (CB 1/231)
BAL discontinued its claim in the District Court on 26 October 2007. On 23 November 2007 Mr Ryan filed an amended cross-claim. The amended cross-claim did not plead any failure by BAL to comply with the terms of the heads of agreement made on 24 August 2007. Rather, it relevantly complained of failures by BAL to honour a representation said to have been made in July 2001 by BAL that BAL would repair the lighting and wiring to the premises. It also complained that faulty wiring was a breach of the sublease to Mr Ryan (CB 1/237, 240).
Mr Ryan's complaint based on alleged pre-contractual representations or the terms of the sublease to him was rejected. (Judgment 28 May 2010, CB 1/245-286). The District Court judgment was given on 28 May 2010.
On 8 November 2010 BAL and Aerolink entered into a sublease expressed to commence on 1 September 2010. Clause 29.1 of the sublease required BAL to repair roof leaks brought to its attention by Aerolink that were not caused by Aerolink. Clause 29.2 provided:
"29.2 No Warranty
(a) The Sub-Lessor does not warrant the state of repair of the Leased Premises or the Bankstown Airport Site, nor the Services in and to the Leased Premises and the Bankstown Airport Site.
(b) Subject to clause 29.1 and the Sub-Lessor's works being completed in accordance with clause 65, nothing in this Lease requires the Sub-Lessor to undertake any work in respect of the Leased Premises or the Bankstown Airport Site." (CB 2/559)
Clause 21.10 provided:
"21.10 Specific Works
If Item 16(1) of the Reference Schedule refers to Works to be constructed by the Sub-Lessee, then the Sub-Lessee must on or before the date specified in Item 16(b) of the Reference Schedule, lodge with the Sub-Lessor for approval, copies of the documents which it is required to provide to the Sub-Lessor under the Airports (Building Control) Regulations and under this Lease." (CB 2/547)
Clause 16(a) of the Reference Schedule provided:
"(a) Works to be constructed by the Sub-Lessee:
Make safe electrical circuits as determined by qualified electrician." (CB 2/597)
The combined effect of these clauses was that during the period of the sublease BAL had no obligation to repair the electrical wiring, as distinct from roof leaks. Rather, the parties agreed that any repairs to the electrical wiring would be carried out by Aerolink which was required to lodge necessary documents for BAL's approval for those repairs.
Aerolink did not seek BAL's approval to carry out repairs to the electrical wiring. The position taken by Mr Ryan was that notwithstanding the terms of the sublease he considered it remained BAL's obligation to carry out repairs to the electrical wiring on the basis of the earlier agreement made on 24 August 2007 between BAL and him that BAL would check all wiring and replace any old, worn or dangerous wiring, conduit and power points. Indeed, the statement of claim pleaded that the agreement made on 24 August 2007 between Mr Ryan and BAL was an agreement made between BAL and Aerolink. Aerolink pleaded that BAL was in breach of that agreement. That claim was not tenable. The agreement was not made between Aerolink and BAL. It was superseded by the sublease of 8 November 2010. This pleaded claim was not pressed.
The sublease of 8 November 2010 also included the following acknowledgment by Aerolink:
"30.4 Acknowledgment of condition of Leased Premises
The Sub-Lessee acknowledges that at the commencement of this Lease the Leased Premises the Sub-Lessor's Fixtures and fittings, and the Services and Facilities in the Leased Premises, are in good repair and working condition, except as specified in Item 18 in the Reference Schedule." (CB 2/560-561)
"Services" was defined to include electricity services and "the pipes, wires, ducting and other means of providing those services" (CB 2/516-517). Item 18 of the Reference Schedule did not include any relevant exception to the acknowledgment in Clause 30.4 that the supply of electrical services through the wiring was in good repair and working condition.
Clause 39.1 of the sublease provided that Aerolink agreed to indemnify BAL from and against any liability, loss, damage, expense or claim which BAL might incur in respect of or arising from damage to property occurring within the leased premises to the extent it was caused or contributed to by Aerolink's failure to comply with the obligations imposed under the sublease. Clause 40.2 of the sublease provided:
"40.2 Exclusion of Sub-Lessor's liability to Sub-Lessee
Subject to the Sub-Lessor complying with its obligations under clause 27.2 The Sub-Lessor is not liable to the Sub-Lessee and is excluded from liability for damage to the Sub-Lessee's plant, equipment and other property and for loss of profits whilst the Sub-Lessee is using and occupying the Leased Premises, including:
(a) through any defect in the construction or condition of the Building or the Leased Premises;
(b) through any defect in the construction or operation of Facilities or Services to the Leased Premises;
through fire, water or any other cause." (CB 2/571)
Clause 27.2 of the sublease did not provide for any relevant qualification to the exclusion of BAL's liability under clause 40.2.
By clause 63 Aerolink acknowledged that it would be liable for the cost of any upgrades required to services it required to the Leased Premises, including for the supply of electricity (CB 2/593). Mr Ryan did not give evidence of having sought any upgrade to the electrical wiring for the supply of electricity, notwithstanding his previous complaints. Annexure B to the sublease (incorporated through clause 64.3) (CB 2/594, 599) included a term that Aerolink acknowledged that:
"(a) the Leased Premises will be handed over by the Sub-Lessor in its existing (as is) condition and the Sub-Lessee hereby accepts the Leased Premises in such condition.
(b) any further works, extension or upgrade to the infrastructure or services to the Leased Premises required by the Sub-Lessee, including electricity supply, will be at the Sub-Lessee's own cost." (CB 2/599)
Had the fire occurred during the term of the sublease, Aerolink could not have complained that BAL was at fault for not having repaired the electrical wiring. After complaints about the electrical wiring had been raised by Mr Ryan, Aerolink entered into the sublease on terms that it, and not BAL, would be responsible for carrying out repairs to the electrical wiring and it acknowledged that BAL would not be liable for any damage that it might suffer arising from any faults to the electrical wiring.
The sublease of 8 November 2010 which was for a term of five years with a four-year option for renewal commencing from 1 September 2010 was terminated by BAL in or about October 2011 for Aerolink's failure to pay rent.
On 5 November 2010 Mr Andrew Wilson, a Senior Property Manager at BAL, had prepared a letter addressed to Mr Ryan of Aerolink confirming matters said to have been agreed at a site meeting said to have taken place on 1 September 2010, being the date of the commencement of the sublease. One of the matters said to have been agreed was that:
"● Switchboard - Aerolink agreed to install earth leakage units in the switchboard." (CB 2/495)
Mr Ryan denied that he had agreed that Aerolink should install earth leakage units in the switchboard. He deposed that at the meeting on 1 September 2010 he told Mr Wilson and other representatives of BAL who were at the meeting that he had had an electrician inspect the wiring in the hangar and in the internal switchboard and that the electrician had told him that the wiring was in such poor condition that it needed to be replaced and rewired. He deposed that he told Mr Wilson that "this was something that BAL was supposed to do under the agreement that we signed on 24 August 2007". He said that Mr Wilson responded by saying that "we are working towards having the wiring fixed". Mr Ryan deposed that he did not receive the letter from BAL of 5 November 2010 (CB 1/44-45).
Mr Wilson gave an affidavit for BAL that was not read. He was an available witness for BAL. I infer that he could not have given evidence that would have assisted BAL. I accept Mr Ryan's denial that the conversation to the effect set out in the letter of 5 November 2010 took place and his evidence that he did not receive the letter dated 5 November 2010. Nonetheless, the effect of the sublease was that Aerolink, and not BAL, was obliged to repair the electrical wiring if Aerolink wanted protection from substandard wiring. The sublease entered into on 8 November 2010 was entered into pursuant to a settlement deed under which Mr Ryan and BAL gave mutual releases.
Although Mr Ryan did not receive the letter of 5 November 2010, the letter shows that as early as 5 November 2010 there was a missing earth connection at the switchboard.
On 30 September 2011 BAL gave notice to Aerolink of alleged breaches of the sublease, including failure to pay rent and other moneys said to be payable under the sublease. BAL demanded that by 12 October 2011 Aerolink pay sums totalling $58,196.70, failing which it threatened to re-enter and forfeit the sublease (CB 2/604). On 11 October 2011 BAL served a further "breach notice" demanding payment of rent, operating expenses, management fees and service charges totalling $38,719.64 by 19 October 2011. Again, it threated to re-enter and forfeit the sublease if the sums demanded were not paid. (CB 2/608) At some point in about October 2011 BAL locked Aerolink out of the premises (CB 2/610).
On 9 November 2011 Aerolink and BAL entered into a licence agreement for Aerolink's occupation of the hangar. The licence was for a term of one month and thereafter to continue on a month-to-month basis until a new sublease was provided. Aerolink agreed to pay a monthly licence fee of $8,166.67 plus GST (CB 2/611). It was a term of the licence agreement that Aerolink must keep the hangar in good repair and remove its property from the hangar at the termination of the licence (CB 2/614). The licence agreement included the following term:
"Risk:
The Licensee occupies the Licensed Area at its own risk. The Licensor is excluded from liability/loss or damage, occurring to property or person (including that of any third party) during this Licence, for any claim, action arising from the Licensee's negligence or failure to comply with obligations under this Licence or the state of repair of the Hangar. The Licensee further indemnifies and agrees to hold harmless the Licensor against any claim, action, liability, loss or damage which the Licensor suffers incurs or is liable for arising out of or relating to the use of the licensed area by the Licensee its agents or employees." (CB 2/614)
On 29 November 2012 BAL gave notice that the licence would terminate on 11 January 2013 and required Aerolink to provide vacant possession by that date. (CB 2/625, 626) On 11 January 2013 Aerolink wrote to BAL advising that it was unable to remove all its possessions from the hangar by the deadline imposed and stated it would like to 1 March 2013 to vacate the premises (CB 630).
On 17 January 2013 BAL sent a further letter on the basis of which it agreed that Aerolink could continue to occupy the hangar up to 28 February 2013. This included payment of a licence fee and other charges. The letter included as a special condition of BAL's agreement to license Aerolink to continue to occupy the site up to 28 February 2013 the following term:
"Special Condition
The Licensee accepts the Licensed Area hereby licensed in its current state and condition and the Licensee shall make no claim upon the Licensor for any defect or other adverse affectation, which may flow, from the state or condition of the Licensed Premises." (CB 2/633)
It was a further condition of the licence that Aerolink keep the Licensed Area in good repair and remove its property from the Licensed Area of the termination of the licence. The letter included the same term as to "Risk" as was contained in the earlier licence agreement quoted at [42] above.
On 4 February 2013 Aerolink wrote to BAL in relation to BAL's letter of 17 January 2013. Mr Ryan declined to sign the licence agreement contained in the letter of 17 January 2013. He advised that Aerolink was "... on track to vacate the hangar by the 28th February 2013".
Mr Ryan deposed (affidavit [100], CB 49) that it was in late February 2013 that he began removing Aerolink's goods from various locations in the premises. He deposed that sometime after 28 February 2013 BAL agreed to let him have access to the premises between the hours of 8.00am - 4.00pm so that he could continue to remove Aerolink's property. On each occasion that he wished to enter the premises he had to call a representative of BAL and ask them to give him access. On 6 March 2013, the day of the fire, he and a Mr Darren Parkes were let into the premises by a representative of BAL so that they could continue to remove Aerolink's goods. The fire occurred that afternoon at about 2.30pm.
[3]
Wiring issues before the fire
Mr Ryan deposed that in June or July 2008 he observed tradespeople installing lighting to the hangar, but that those people did not undertake any repair work to the electrical wiring system itself. They did not replace any old, worn or dangerous wiring, conduits or powerpoints. Mr Ryan had a conversation with a Mr Wilson in which he asked Mr Wilson to replace the wiring. Mr Wilson said he would look into it. This was almost a year after the 24 August 2007 agreement.
In April 2010 Mr Ryan was advised by a friend and electrician, a Mr Cullis, that the entire hangar needed rewiring (para 71, CB 44). On or about 1 September 2010 he advised Mr Wilson and other representatives of BAL that he had been told that the wiring was in such poor condition that it needed to be replaced and rewired. He complained that that was something that BAL was supposed to do under the agreement signed on 24 August 2007. Mr Wilson said that BAL was working towards having the wiring fixed. Of course, on 8 November 2010 Mr Ryan released BAL from its obligations under the agreement of 24 August 2007 and by the sublease Aerolink assumed responsibility for carrying out any repairs it required to the wiring.
Mr Ryan continued to complain about the state of the wiring. On 24 January 2012 he wrote to BAL stating in reference to Item 2 in Sch 2 of the 24 August 2007 agreement that the electrical wiring was never looked at and in his opinion was dangerous. He referred to there having been two electrical fires in the roof due to electrical faults. The two fires in the roof occurred above an office occupied by "Airside Interiors". That office was adjacent to Aerolink's storeroom. (See also para 90(f) CB 48 and diagram at CB 400.)
Sometime in late 2012 Mr Ryan observed that two extension cables had suffered damage when he was using them to recharge batteries in the hangar. One of the extension cables had melted and the other had blown out of a socket. The extension cables had been plugged into power sockets on the northern side of the storeroom and the office within the hangar (Para 92, CB 48).
At about 6.00pm or 7.00pm on or around 26 February 2013 Mr Ryan was in the storeroom of the hangar removing parts. He noticed that fluorescent lights connected to power sockets on the east wall of the storeroom went out whilst a light that was on a light circuit stayed on (Para 102). He checked the fuses in an internal switchboard inside the premises, but could not determine whether any of the fuses had blown. He connected two temporary floodlights to the west wall of the storeroom and the office where power remained on. One was a mercury vapour lamp and the other a quartz halogen light. These lights were run off the power circuit. They were the only lights in the storeroom to the premises that worked between 26 February and the time of the fire on 6 March (Paras 105 and 107).
[4]
The fire and its investigation
At about 2.20pm on 6 March 2013 Mr Ryan was in the storeroom cataloguing and removing aeroplane parts. He noticed that the mercury vapour lamp went out. The quartz halogen light remained on. He turned the power to the vapour lamp off at the wall socket and checked to ensure that it was properly plugged in. It was. He turned the power on again but the vapour lamp remained off. He inspected the internal switchboard in the premises and noticed that no breaker units were tripped and no fuses were blown (paras 111 and 112). At about 2.30pm he noticed heavy black smoke coming out of the office adjacent to the storeroom. The halogen light remained on. He attempted to extinguish the fire using fire extinguishers but was unsuccessful. He called the fire brigade.
On 13 March 2013 Dr Tony Green, an expert witness later called by Aerolink, Mr Mark Pellegrino, employed by Greg Kelly & Associates, fire investigators, and Mr Andrew Gibson, a loss adjuster for BAL's insurer, examined the fire scene. A second examination took place on 28 March 2013 by Dr Green, Mr Pellegrino and Mr Greg Kelly of Greg Kelly & Associates. Mr Kelly was the expert witness retained by BAL.
The investigation revealed that the earth conductor, which should have been connected to an earth electrode in close proximity to the meter board or main switchboard located on the exterior of the premises, was not connected. In his first report, Mr Kelly said that this created an unsafe situation should an earth fault occur in the electrical wiring system or in regards to appliances that might be plugged into it. He said (CB 315):
"6.15 The main earth or any earth conductor not being connected would not cause a fire by itself. The earth conductor does not carry current in normal operation of the electrical appliances or circuits when installed correctly. The purpose of the earth is to provide a safety factor so that if 'live' electrical wiring or components come into contact with say the metal outside of an appliance, then when that appliance is properly earthed, the fault current between the active, current carrying conductors and the earth, will exceed the circuit breaker rating and cause it to trip or the fuse to blow.
6.16 Therefore the disconnection of the main earth does not in itself cause a fire hazard. Another failure needs to occur, which is then not detected because of the disconnection of the earth conductor and is allowed to continue. A fault can still occur in an appliance or circuit that is plugged in between the active and neutral conductors and potentially lead to a fire." (CB 1/315)
In his report of 11 April 2013 Mr Pellegrino said:
"6.8 ... I observed the remains of a double GPO hanging from the stud wall alongside and behind the metal shelving unit. The remains of the GPO receptacles displayed blue oxidisation to the earth receptacle. This physical damage may suggest a possible earth fault." (CB 1/383)
Mr Pellegrino also said:
"7.2 The electrical wiring throughout the hanger [sic] appeared to have been re-wired and upgraded at some stage. Of note is the previous damage to the tenant's extension leads, and the blue oxidation to the GPO earth receptacles positioned along the western wall inside the storeroom. This physical evidence is consistent with a possible earth fault. Further investigation of the electrical metering box identified that the earth cable was not connected to the earth stake below.
7.3 The absence of an earth cable increases the likelihood of an earth fault, which may have contributed to the cause of the fire." (CB 1/384)
Dr Green reported that the remains of the powerpoint that was to the south of the shelf containing the lamp showed copper oxidation on the earth connection that was suggestive of a short involving the earth. He said that such a short should have thrown the residual earth current (RCD) switches in the distribution box which did not occur. He observed that what he called the "building junction box" on the northeast corner of the hangar had all of the earth lines in the building collected together and linked to the neutral link as should be the case, but the earth was not linked to an earth stake (Paras 82 and 83, CB 1/99). Dr Green expressed the following opinion:
"107 The interview with Danny Ryan stated that a power loss had occurred 8 days previously when he was in the storeroom and the lights went out. In this event the power circuit RCDs had not tripped and he was unsure as to whether any fuses had blown. He plugged a ballasted mercury vapour lamp with a standard extension cord and plug into the west side wall power circuit which was still working. He also connected a halogen lamp with a standard extension cord and plug into this power circuit.
108 A few months previously he stated that two extension cables had suffered damage while recharging batteries in the hangar. These two cables were plugged into the power sockets in the northern side of the storeroom and office. One cable had melted and the other had blown out of the socket.
109 He also stated that there had been two previous fires in the offices of Airside Interiors when the lights in this office had failed on two occasions and caught fire.
110 This history is an indication that there were continuing problems with the electrical system prior to the fire. Because the incidents occurred using different equipment, it is unlikely that the equipment was the cause of the problem as this would only be expected if the same equipment had been involved. As the RCDs did not activate and fuses were not blown, the problem is not a simple earth leakage problem as this would have activated the RCD protecting the loads on the single phase in use.
111 The description of heating of the cable and the ejection of the plug is indicative of a high current being applied to the circuit. This has caused heating and shorting within one cable and a short circuit in the socket to which the other cable was attached. While it is not known whether the circuit breakers tripped or the fuses were blown in this case, the other incidents suggest that the fuses might have been overrated for the building. This often occurs in old installations where the circuits fall below modern practices and the standard requirements in AS3000.
112 On the day of the fire, according to Danny Ryan, the vapour lamp in the store room went out. In looking at the plug he presumably formed the view that the plug was not damaged and therefore the RCD had tripped or fuses had blown. Examination of these by him indicated that they had not tripped or blown.
113 Examination of the fire scene clearly indicates that a major fire had occurred in the storeroom (Figures 11 to 26), that fire damage elsewhere was consequential to this fire and that the fire had rapidly escalated. Danny Ryan describes this time as being about 5 minutes.
114 The power point into which the lamp that failed was plugged is shown in Figure 26. The close up shows copper residue on the earth pin indicating that there has been a short between the live and earth circuit that has occurred over a substantial time period. This is consistent with the earth leakage protection not having activated as stated by Danny Ryan.
115 The heating associated with this short circuit would have ignited the power switch casing and molten burning plastic would have dropped to ground level igniting other materials. The flammable liquids container that was plastic would have ruptured with consequential spread of fire across the store room.
116 RCDs work on the principle of measuring a change in the current produced between the live and neutral when an earth path occurs as shown in Figure 31. The fact that this device did not operate when there is clear evidence of an earth fault in the plug socket where the fire started strongly suggests that there was a problem with the wiring within the building prior to the fire.
117 Examination of wiring in the building junction box where the mains supply enters the building indicated that the earth wires were terminated in the building junction box and were linked to the neutral as they should have been but were not connected to ground in contravention of AS 3000. There is an earth stake at the water main (Figure 28) which is situated below the building junction box but there was no connection to the earth within the building junction box.
118 A consequence of this is the phases are not in balance within the building as shown in Figures 32 and 33. A load on one live phase can induce a current to flow in another phase in order to maintain a balanced system overall at the neutral point. This can lead to heating and shorting in any of the circuit wires within the building.
119 Because both the earth and neutral are floating rather than kept at ground, over voltage can occur that result in higher current flows. There are two major consequences of this. First the higher voltages can cause death when touched by someone as this action would exceed the normal current flow expected in a grounded system.
120 The electrical work that had been undertaken on the building prior to the fire did not comply with AS3000 and made the building dangerous for anyone using the electrical system within it including the risk of electrocution and fire." (CB 1/111-113)
Mr Kelly disagreed with some of the information provided by Dr Green (CB 1/350, enclosure 3 to Mr Kelly's report para 68). Mr Kelly said that residual current devices ("RCDs") had not been installed and therefore they were not tripped. He said that because Mr Ryan had stated that he was unsure if fuses had blown this indicated that potentially power was still applied as there were no RCDs to trip and Mr Ryan was not able to tell if rewireable fuses had been blown (CB 1/350, enclosure 3 para 68). This is consistent with Dr Green's ultimate opinion.
Mr Kelly said that the internal switchboard in the building was not fitted with any RCDs (enclosure 3, para 12, CB 1/340). Mr Kelly explained in oral evidence that an RCD is for the protection of people against electrocution. It does not sense overloads. It operates differently from a circuit-breaker. A circuit-breaker detects an overload current that then breaks the circuit. An RCD works on electromagnetism when the active and neutral wires create an electromagnetic field which is constantly evaluated inside the device (T198).
Mr Kelly's criticism of Dr Green's reference to non-activation of an RCD does adversely reflect on Dr Green's appreciation of the electrical installation, but does not adversely affect his overall conclusion that the cause of the fire was arcing in the GPO occasioned by a fault in the electrical system.
Mr Kelly disagreed with other comments of Dr Green in the opinion quoted at [58] above. In particular he disagreed with Dr Green's reference at [118] quoted at [58] above in regard to phases not being in balance with the result that a load on one live phase can induce a current to flow in another phase in order to maintain a balanced system overall at the neutral point that can in turn lead to heating and shorting in any of the circuit wires within the building. Mr Kelly said that no other comment could be made in regard to that opinion, except that it was "in every aspect wrong". He said that Dr Green had plagiarised a paper of a Mr Parmar and drawn inappropriate conclusions from it. I do not accept Mr Kelly's criticism that Dr Green had plagiarised another author's work.
Mr Kelly said that:
"83. There are several variables, which may have effected what occurred including the failure of one of the light fittings. The fact that the main earth on the building was missing does not in itself cause a fire. For decades up until 1970 lighting circuits in buildings did not require earth conductors. As Australia developed with more metallic framed light fitting become more decorative features, the Australian standards required earth conductors to be available at lighting points.
84. The split conduits installed on the offices within the hanger [sic], therefore exhibit a time and methodology that proceeded [sic] those requirements and I would expect, allowed for the lighting circuits when they were first installed within the offices not to have earth conductors at them. The fact that earthing conductors were not installed does not mean lighting circuits would catch fire. Some other fault has to exist however it is allowed to continue and therefore can develop from a failure of the active or live wire and neutral. The earth will only become relevant if a failure occurs between the active wire and the conductive parts of the body of an appliance or light fitting which will not cause the circuit protective device such as a fuse or circuit breaker to turn the circuit off." (CB 1/352-353)
It was common ground that the failure to install an earth conductor was in non-compliance with the wiring rules AS3000 or earlier wiring rules at the time of installation. In his first report of 26 June 2017 Mr Kelly accepted that the absence of an earth conduction may have contributed to the occurrence of the fire. He said:
"6.14 The fact the main earth was not installed, does not preclude a fire occurring from an appliance such as the light fitting that Mr Ryan had plugged in and turned on. It is also apparent that Mr Ryan had various flammable liquids installed in the area of origin, which have become involved in the fire. Whether vapours developing from those flammable liquids may have initially ignited, cannot be accurately reconstructed as they subsequently became involved anyway. What we do know is that the main earth was not connected and therefore all of the electrical system within the premises was not sufficiently earthed and not in compliance with Australian wiring rules and safety standards.
6.15 The main earth or any earth conductor not being connected would not cause a fire by itself. The earth conductor does not carry current in normal operation of the electrical appliances or circuits when installed correctly. The purpose of the earth is to provide a safety factor so that if 'live' electrical wiring or components come into contact with say the metal outside of an appliance, then when that appliance is properly earthed, the fault current between the active, current carrying conductors and the earth, will exceed the circuit breaker rating and cause it to trip or the fuse to blow.
6.16 Therefore the disconnection of the main earth does not in itself cause a fire hazard. Another failure needs to occur, which is then not detected because of the disconnection of the earth conductor and is allowed to continue. A fault can still occur in an appliance or circuit that is plugged in between the active and neutral conductors and potentially lead to a fire.
...
7.1 Part of this answer is set out in the answer to question 1 above. Certainly the main earth not being connected provided an unsafe condition, which if an earth fault developed, would not be detected by the circuit protection and allow that fault to develop and potentially could lead to fire. This potentially could lead to operating currents being exceeded and the breaking down of electrical cable insulation, which can link to fire development. This can happen as the wiring and components are tested and rated to work safely by the voltage, current and temperature limits they need to operate in. If any of the three values are exceeded, the insulation can be compromised that can lead to faults and potentially fire.
...
10.3 Dr Green has indicated in his opinion that the fire has probably developed as a result of an electrical fault, I have been asked to advise if I agree with his opinion. I agree to a point with Dr Green that an electrical fault is probably linked however the potential for the lights being used by the Plaintiff to either fail or ignite nearby combustible materials in the storeroom cannot be removed. The absence of the main earth certainly suggests any earth fault with an appliance such as the lights may have led to fire development. My agreement here, is limited to my opinion that given the history of the premises an electrical fault is probable however it may have developed in a light fitting that the plaintiff had plugged in at the time. ...
...
11.1 The missing main earth would compromise the safety of the electrical system in the sheds. This however would not cause a fault that caused the fire. If an earth fault developed in the wiring or something plugged into it, as the main earth was not connected, the circuit would not operate as designed and could lead to fire development." (CB 1/315, 316, 319)
Attached to Mr Kelly's report was a report of Mr Pellegrino written after his examination with Dr Green (CB 1/322 and 381). Mr Pellegrino stated:
"6.8 The next six tier-shelving unit to the north was constructed with metal shelf panels. I observed the remains of a light box, the light being used [by] Mr Ryan on the forth [sic] tier down from the top. I observed the remains of a double GPO hanging from the stud wall alongside and behind the metal shelving unit. The remains of the GPO receptacles displayed blue oxidisation to the earth receptacle. This physical damage may suggest a possible earth fault. I observed the remains of an electrical cable extending across the metal shelf along side the light. The electrical pins connected to the cable were hanging below the double GPO. I traced the fire-damaged cable that extended across the front of the light, over to the northern side of the shelf, and down to the ground. The [sic] Mr Ryan advised that a small extension lead was connected into that GPO and that the light on that shelf was connected into the extension lead.
6.9 I examined the light box that was being used as a temporary light at the rear end of the storeroom. Examining the light box it appeared to be some type of aviation light. Written on the side of the light was 115V. That suggests the light operates on 115V and not the 240 voltage Australian electrical systems run. Using the 115V light in a 240V supply system may have contributed to the fire. The top of the light was heavily damage[d]. The light could be [considered] a likely ignition source. Mr Green has collected the light on the tenant[']s behalf.
...
7.2 The electrical wiring throughout the hanger [sic] appeared to have been re-wired and upgraded at some stage. Of note is the previous damage to the tenant's extension leads, and the blue oxidation to the GPO earth receptacles positioned along the western wall inside the storeroom. This physical evidence is consistent with a possible earth fault. Further investigation of the electrical metering box identified that the earth cable was not connected to the earth stake below.
7.3 The absence of an earth cable increases the likelihood of an earth fault, which may have contributed to the cause of the fire. Why the main earth cable was missing is [a] possible line of inquiry, as the tenant suggested that work had been performed to the sub mains box alongside the building not long ago.
7.4 Consideration that the 115V light that was being used in a 240V supply system, along with the missing earth wire have likely contributed to the cause of fire. If a fault developed any earth fault would not have been identified by the circuit protection as there was no main earth connected to the building. The absence of the main earth is of grave concern." (CB 1/383-384)
Dr Green provided a report in response to Mr Kelly's report. Dr Green did not change his view and elaborated on certain points, especially concerning the GPO with photos attached and expressed further opinions as to the effects of the lack of earthing. He stated:
"4 The lack of earth protection allowed for the development of fire and also electrocution as an earth short can be persistent and any metal enclosures connected to the earth wire become live and can kill someone who then touches them.
5 The known fault that occurred in the street also raises a strong possibility that there was a floating neutral somewhere between the street pillar and the transformer. It would explain why a cluster of incidents had occurred. Imbalance in loads across the local network can induce stray currents within the hangar and a fault somewhere else can induce a voltage difference up to 415V, enough to cause heating in wiring and faults in equipment attached on a single phase.
6 The heat damage clearly evident on the mercury vapour lamp bulb and its enclosure makes it unlikely that this was a source of fire from a fault. Similarly with the halogen lamps.
7 The lamps would have been too far away to ignite flammable liquid which were contained in secure containers prior to the fire. The debris field as indicated in my first report is consistent with the containers rupturing as a result of fire rather than the other way around.
8 The likely source of the fire is the General Purpose Outlet (GPO) on the west wall of the storeroom south of the rack shelving on which the Mercury vapour lamp sat.
9 The evidence for this is the dark blue colour on pins indicative of oxidation from a plasma arc short rather than being in a fire plume as well as the pitting of the pins in the GPO (shown within the red circle in Figure 6).
10 An existing neutral fault between the transformer and street pillar would have led to the early breakdown in insulation in the GPO compared with normal use and may have placed a high voltage on the outlet at the time of the fire.
11 In the absence of a neutral fault occurring then it is very unlikely that the deterioration necessary in the insulation around the GPO in order to cause the arcing would have occurred as fire in these are not common events. It is therefore unlikely that Mr Ryan could have completed his move out of the premises without a fire occurring." (CB 1/151-152)
Dr Green rejected the possibility that the cause of the fire was heating of the bulb of the mercury vapour lamp that set fire to nearby flammable material. He said that the bulb was too far from the sealed containers holding the flammable material for this to happen and that the ignition of flammable vapours as Mr Kelly suggested as a possibility was not plausible. He also said that if the lamp had been the cause of the fire from an earth short, it was very unlikely that the bulb would have remained intact (CB 1/165). He summarised his opinion that there were three features that stood out in his examination of the scene, namely:
"a. There were several incidents preceding this fire involving heating of cables in different types of circuits (lighting and power circuits). This included two fires in the lighting circuits within the building and two incidents while charging batteries from the power circuits. Since my first report, the affidavit of Mr Smith indicates evidence of a fault in the transmission line in the street adjacent to Hangar 410 as an additional problem.
b. The missing earth to ground connection at the building junction box which does not conform to the wiring rules, AS3000.
c. The striking blue colour to receptacles of the GPO attached to the west wall of the storeroom outlet, south of the shelving containing the vapour lamp. This colour (azure blue in places) was unlike the green colours seen elsewhere as a result of the fire and indicated an extreme oxidation environment." (CB 1/162)
He added:
"60 The multiple incidents preceding the fire and lack of earth to ground at the building junction box suggested a problem with the transmission system into the building causing stray currents on circuits within the building which would have been exacerbated by the lack of an earth to ground connection at the building junction box rather than the shorts that typically cause fires." (CB 1/163)
Dr Green repeated his conclusions quoted at [66] above.
Dr Green and Mr Kelly provided a joint report following a conference on 10 May 2018. It was common ground that the main earth electrode connecting the earth and neutral links to ground at the external meter board was absent and would need to be there to comply with the electrical standard AS3000: 2007. Mr Kelly was of the opinion that the wiring pre-existed the standard AS3000: 2007 and should have been installed in accordance with the standard which preceded the AS3000: 2007 standard. That is to say, in Mr Kelly's opinion, and he had greater electrical expertise than Dr Green, the wiring had not been updated after 2007. Nonetheless, Mr Kelly said that the wiring should have complied with the earlier applicable standards that required connection of the earth link to the earth (CB 1/387).
In the joint report Mr Kelly opined that there was no increase in fire risk associated with non-compliance with the requirement that the main earth electrode connecting the earth and neutral links at the meter board be connected to the ground. He said:
"No fire risk is increased. The earthing conductors do not carry current in the normal operation of the electrical system. All of the earth conductors from the final sub-circuits i.e. power points (GPOs or socket outlets) or light fittings are permanently connected to the main earth. The MEN (Multiple Earth System) is facilitated by the connection of the main earth to the neutral link where the main Neutral cable is connected. In the case of an Earth fault where current then flows in the earth conductor, the current therefore flows to the neutral link and will cause the circuit protection to operate anyway, provided the fault is of sufficient current to turn it off. In an earth fault this should be almost instantaneous." (CB 1/389)
Mr Kelly elaborated on this opinion in his oral evidence. He said the hangar had a multiple earth neutral (MEN) connection, the effect of which was that the absence of the earth connection at the external meter box of the hangar would be compensated for by earth connections at other premises to which the electrical wiring of the hangar was connected through a transformer box. He provided a model to demonstrate this effect by showing connections between three premises. He explained the model as follows:
"WITNESS KELLY: What I've done is the main neutral coming out of the transformer, such as we do on the street, comes along the street and goes down to each neutral link in each meter box that we've already discussed, and then I have the earth wire, because at the transformer - and Dr Green's already said this - the transformer is often earth[ed]. So we have the earth coming down to an earth connection, that then from each of the subsequent buildings has an earth connection coming back and all joining together.
...
WITNESS KELLY: The earth connection coming back from earth bar, and then I've simulated it coming down to an earth right, an earth electrode, down there, there'll be an earth electrode at each building, there's no need to simulate that in each building, it performs the same purpose. But as the earth has resistance in it, because it's clay or whatever it's made up, the Australian standard calls that resistance isn't any higher than two homes. So as a result, I've put a one [ohm] resistor in each one to simulate that's there's a resisting path to earth.
...
So the earth wire that we know is missing in the - it's either in evidence, or will be in evidence, in this matter, still allows the MEN system to protect. So if there was a fault occurred at the GPO, at the power point as Dr Green suggests, he's suggesting that failed because the earth is not there. What I'm showing here is it still works.
To do that, I simply plug the power point in which gives us - or the power into the unit here; if I plug in my lighting and turn the circuit breaker on, we now have power coming from the street and coming down into the active link. This could be replaced in a normal meter box by the main switch turning things on and off. It then comes on to the circuit breaker, out of the circuit breaker when it's turned on, it puts power through to the power point.
If a fault occurs, then the MEN system, even with our earth missing here, will still operate because of the multiple earth neutral connections that bring the earth and the neutral which is a transformer [moulded] together, bring them at what's called same polarity and therefore this multiple earth - multiple earth neutral safety system that is in place in Australia will still operate to detect a fault. The best way for me to do that is to create a neutral, and by doing that, there can be no better sort than getting the two wires, the active and the earth, as Dr Green has suggested and put them together.
Dr Green's opinion is that a fault, a dead short between active and earth occurred at the back of the power point. So therefore from the back of the power point these two cables which are naturally separated by plastic, would have to short out, or the cables short out. If that occurs, I'm able to simulate that. If I put a terminal block outside the power point. So the three wires, the active, neutral and earth coming in simply go on to the back of the power point in those three terminations - I'm happy to remove that if necessary to show that's how I've done it.
Those three cables are now simulated in the same dimension. If I cut this cable, bare copper and place them between the earth conductor, and the active conductor, it turns off. If I then turn it back on, and we have a fault in the light fitting, and therefore we had a fault between active and neutral, which is not alleged, but could occur, it turns off. I don't have the earth connected on to that bar. I've left it out as it was at the hangar. This multiplicity in the safety system interacts to provide the safe working mechanism that this should operate. That's it." (T205-206)
Mr Kelly demonstrated how this model worked during the course of the explanation.
Mr Kelly explained that for the MEN system to work a wire would run from the hangar to the pillar in the street where three feeds came in with the neutral and that that neutral also fed the other premises which were independently earthed (T209). He had not carried out any inspection to ascertain whether the other premises had been independently earthed (T209.10). He believed that the other premises had been inspected and that there was photographic evidence to establish this.
There was no evidence to establish that assumption. After Mr Kelly gave evidence, Mr Ryan deposed to having inspected adjacent premises. He did not identify earth connections at those premises (Affidavit of Ryan of 3 August 2018). Mr Kelly's thesis was not consistent with his earlier acceptance that the absence of the earth connection at the external meter box may have contributed to the cause of the fire by not protecting against an electrical fault otherwise arising.
I regret to say that Mr Kelly failed to demonstrate the detachment and impartiality expected of an expert witness. This might be because of his contempt for Dr Green's opinions on matters involving electrical supply and electrical wiring. I readily accept that Mr Kelly had greater expertise than did Dr Green on those matters. But Mr Kelly's opinion changed over time. He adopted the role of an advocate. On 16 April 2013 he told BAL's insurer's loss assessor, Mr Gibson, that the fire might have been caused by the absence of the earth connection and the use of the light with incorrect voltage (Exhibit N; T275). He gave the following evidence in cross-examination:
"O'NEILL: So the opinion, that is, the fire might have been caused by the absence of earth and the use of light with incorrect voltage. Is that opinion something that you hold now?
WITNESS KELLY: Yes.
...
WITNESS KELLY: Well, absence of earth, no. But the use of light, yes.
O'NEILL: So the words, "Caused by the absence of earth," that's the part of that opinion that you don't agree with.
HIS HONOUR: Or you don't hold now.
...
WITNESS KELLY: Correct." (T275-276)
That view is not only inconsistent with the opinion expressed a few weeks after the fire, but is inconsistent with the opinions expressed in Mr Kelly's report of 26 June 2017.
To determine whether the fire was caused or materially contributed to by a fault in the electrical wiring, it is necessary to consider the alternative explanations for the fire. Even if an electrical appliance contributed to the cause of the fire, such as, as was suggested, the use of the mercury vapour lamp said to have been operated at a United States voltage of approximately 110V rather than at an Australian voltage of 230V or 240V, a question would still arise as to whether the fire was materially contributed to by failure of the electrical wiring, including the absence of an earth connection at the meter box. BAL did not allege that Aerolink was guilty of contributory negligence by using the mercury vapour lamp.
Whereas Mr Kelly had greater expertise than Dr Green in matters of electrical supply and electrical wiring, Dr Green had greater expertise than Mr Kelly on the implications of the observed blue oxidisation on the GPO. In my reasons for admitting the evidence of Dr Green on objection as to his expertise, I said:
"15 The basis for Dr Green's opinion that the ignition point of the fire was at the general purpose outlet ("GPO"), or in lay terms, the power point or socket of the western wall of the storeroom, was that there was a dark blue colour on the pins, indicative of a plasma arc short, as well as pitting of pins in the GPO (second report, paras 9 and 77 to 78, in figures 4 and 6). In para 78 of his second report, Dr Green says:
'The darker blues require a high oxidation environment and high temperature to form. This is typical of a plasma arc in air. If the GPO was engulfed in a fire plume, the local oxygen concentration is low compared with air and the environment is likely to be a reducing atmosphere rather [than] an oxidative one. The result under these reducing conditions would be formation of copper oxides (red and black) not nitrates.'
16 In evidence given on the voir dire, Dr Green said that his PhD in chemistry had involved chemical spectroscopy that looked at plasma systems involving the disintegration of certain classes of chemical molecules. The studies involved creating a spark in a vacuum system and putting chemicals through the plasma that formed, and then analysing the result (T112). I am satisfied that Dr Green's training and expertise in chemistry and fire investigations qualified him, in any event, to provide the opinions he expressed as to plasma arcing in the GPO of the western wall of the storeroom, and that being the source of ignition."
Mr Kelly did not give evidence of similar qualifications.
Counsel for BAL put to Mr Kelly the way that Aerolink had pleaded the cause of the fire as follows:
"As a matter of fact the fire was caused by a floating earth within the electrical system of the premises, which permitted excessive electrical current to flow between the active and the earth conductors in the wall socket of the storeroom of the premises, and other parts of the premises, instead of being broken by a circuit breaker, which in turn ignited and melted the plastic insulation covering the earth wire, and or the plastic of the general purpose outlet, which ignited surrounded combustible material, following which fire spread throughout the premises." (T326)
Counsel asked Mr Kelly whether he had an opinion about that as a cause of the fire. Mr Kelly disagreed with it. When asked to give his reasons, Mr Kelly's reasons were to the effect that there was no evidence of plasma arcing which, had it occurred, would have developed such a melting of the copper components.
At the trial an enlarged photo of the GPO post-fire was shown to the parties. The experts disagreed as to what was revealed from the markings on the GPO.
Dr Green gave evidence that the dark blue colour is indicative of an oxidation reaction of nitrogen with the copper forming copper nitrate, which is dark blue in colour. This generally involves arcing and involvement of nitrogen either from the air or from the plastic associated with the insulation material within the GPO. This was consistent he said with the pitting in the U Bend of the terminal (T288).
Mr Kelly agreed that there was blue oxidisation to the earth receptacle which merely suggested a post-fire oxidation that occurs in a fire after the copper conductors or components are exposed to air once the insulation has burned away. He rejected the view expressed by Mr Pellegrino that the oxidisation suggested a possible earth fault. He stated that Mr Pellegrino had no electrical qualifications (T292.26). Mr Kelly repeated his criticism of Dr Green's identification of "copper oxide" on the earth terminal and said that in his opinion this was unlikely to have occurred (CB 341).
Dr Green responded that Mr Kelly had mistaken his report and that instead of copper oxide he had referred merely to oxidation which is not an oxide. Dr Green provided further detail that what was evidenced on the earth pin, being dark blue, is an oxidation through plasma where the electrons attack nitrogen and ionise nitrogen, and that can be either in the air or in the plastic associated with the insulation material within the GPO (T294). Dr Green provided an extensive chemical analysis for his view.
Mr Kelly said that if arcing as described by Dr Green had taken place the temperature achieved in the arcing process would have been in the order of 3000°C. That would have melted the copper conductors which had a melting point of 1082°C. Those copper conductors were not destroyed, but still connected to the terminals (CB 393 and 394). BAL submitted that Dr Green did not engage with the proposition that an event that involved temperatures almost three times the melting point of copper occurred without there being any evidence that the copper wires melted. That is not correct. Dr Green explained that:
"A plasma arc is a high temperature arc of ionised gas at a temperature of at least 3000°C. This is enough to ionise nitrogen that reacts with the copper, causing pitting and producing an azure blue colour salt. This colour was evident on the receptacles of the GPO and is different from the dark blue and greens of copper chlorides which comes from corrosion after the fire from the insulation. The temperature of the copper never reaches anything like the melting point of copper as Mr Kelly thinks, except where the pitting occurs. The reason for this is that copper has a high thermal conductance in the same way it has high electrical conductance, hence any heat from the plasma is conducted away from the surface and the surface temperature does not rise significantly. Most of the energy in the arc is in the form of ionised gases rather than being thermal in nature. If prolonged, it can heat the copper to a temperature where insulation will catch fire. This can drip resulting in fire spread."
I accept Dr Green's evidence on this point.
As noted above, Mr Kelly opined that heat from the mercury vapour lamp might have caused flammable liquids stored in adjacent containers in the vicinity of the storeroom to ignite. Dr Green rejected that opinion, partly on the basis of the distance between the lamp and the containers. Dr Green also said that the source of the heat was from outside the lamp, not from the inside of it. He said that if the heat were internal there would be a different effect on the base of the lamp (T307). I accept that opinion.
The lamp in question was from the United States and was rated for 110V rather than for the Australian standard of 240V. The lamp had been modified to 240V with a three-pronged lead (T95-96).
Mr Ryan gave evidence that when the mercury vapour lamp failed he pulled the plug out of the powerpoint, removed the plug from the wall and put the plug gently back in and turned the switch back on but saw no light. Dr Green said that this might not mean that the lamp was not working, but that the gas had to be cooled before it could be reignited.
Mr Kelly and Dr Green disagreed as to whether the damage to the vapour lamp showed that heat was being applied to the lamp from above or below the lamp, or from inside or outside the lamp. I accept Dr Green's evidence that the source of the heat was outside the lamp, not from the inside because if the heat were internal there would be a different effect on the base of the lamp.
In any event, even if the cause of the fault originated in the lamp, the fact that the main earth was disconnected contributed to the fire (Kelly, para 6.16 quoted at [55]).
Mr Kelly severely criticised Dr Green's hypothesis as to how the plasma arc could have formed at the GPO. He did not suggest that if plasma arcing occurred it was not due to some fault in the electrical wiring. Instead, he denied that what Dr Green observed was plasma arcing. For the reasons I have given, I have rejected Mr Kelly's opinion that plasma arcing did not occur. I am satisfied that it did and was the cause of the fire.
BAL submitted that the missing earth connection could not have been causative of the fire for two reasons. First, it addressed Aerolink's submission as to how it was that the fire originated. Aerolink submitted:
"Dr Green's theory was (and remained) that a plasma arc created a partial short in the GPO between the active and earth (and/or the active and the neutral wires). This condition was made worse by the floating potential of the earth (which was connected to the neutral) in the MEN system. This was based on Dr Green's observation of the oxidation of the earth and neutral conductors in the remnants of the GPO."
BAL submitted that nothing in that analysis implicated the missing earth connection. That is so. But it does not mean that the absence of the earth connection was not causative in the sense of being a material contributor to the fire. Mr Kelly said in his report that the disconnection of the main earth does not in itself cause a fire hazard, but if a failure occurs that is not detected because of the disconnection of the earth conductor, that can lead to fire.
The second ground on which BAL submitted that the absence of an earth connection was not causative was on the basis of the evidence given by Dr Green and Mr Kelly in conclave as follows:
"CHENEY: Both you and I think Dr Green yesterday - this is about transcript page 200, your Honour - explained - I think one of you explained and the other agreed - that the circuit breakers will typically operate to shut down the power when more than 16 amps is drawn by appliance plugged in the circuit that the particular circuit breaker protects?
WITNESS KELLY: That's correct.
CHENEY: And Dr Green, you recall that?
WITNESS GREEN: Yes.
CHENEY: If I could direct this question to both of you; assuming that there was a fault in the mercury vapour lamp that Mr Ryan explains he suddenly turned off when he was using it, causing him to turn off the switch at the outlet, remove the plug from the outlet, reinsert the plug into the outlet, turn on the switch with no joy, and assuming that he checked the circuit breaker and ascertained that it had not been tripped, as he's told his Honour; that follow from all of that, the current was still allowed to pass through circuit breaker in that circumstance to the lamp by the active wire. Correct?
WITNESS KELLY: Yes.
CHENEY: Do you agree with that, Dr Green?
WITNESS GREEN: Yes; in part anyway.
CHENEY: That would explain why an electrical fire could occur, notwithstanding the presence of the circuit breaker, and notwithstanding the presence of the MEN connections in the distribution board inside the hangar, and in the meter box outside the hangar, correct?
WITNESS KELLY: Yes sir.
CHENEY: Do you agree, Dr Green?
WITNESS GREEN: Yes.
CHENEY: ... If the fire was initiated by a fault in the mercury vapour lamp in circumstances that did not trigger the circuit breaker, then had there been an earth wire connected to the electrode on the earth stake in the ground below the meter box on 6 March 2013, that additional layer of electrical protection would not have been effective to have prevented the fire, correct?
WITNESS KELLY: That's correct.
WITNESS GREEN: Yes." (T322)
The significance of that evidence is diminished first by the fact that I have found that the fire did not originate in the lamp, but through plasma arcing at the GPO. Dr Green said that if the trigger for the fire were an arc fault at the GPO, that fault would have been prevented had there been earth protection on the circuitry in the building (T324.24). Mr Kelly disagreed, but his reason for disagreement addressed a different issue.
Mr Kelly dismissed Dr Green's reference to a "floating earth". BAL submitted that on the basis of Mr Kelly's evidence that description showed Dr Green's lack of expertise. Mr Kelly said there was no such thing as a floating earth, as distinct from a floating neutral.
But Dr Green was referring to an earth wire that was floating in the sense that it was not connected as it should have been, and therefore did not perform the intended function of an earth wire. That was clear from his reports and did not warrant Mr Kelly's scorn.
I accept Dr Green's evidence and Aerolink's submission as to the cause of the fire. The fire was caused by defective electrical wiring in the hangar and had its origin in plasma arcing in the GPO.
In final submissions, Mr O'Neill, who appeared for Aerolink, referred to some evidence that raised the possibility that there was also a problem with electrical supply external to the hangar. A file note of an investigator engaged by BAL's insurer of 28 March 2013 recorded Mr Kelly or someone under his supervision having ascertained that an electrical kiosk on a public footpath outside hangar 4 had apparently exploded some months before the fire and had been repaired with new cables, but with no cabling to complete an earth connection (Exhibit N). Mr O'Neill submitted that the obvious inference was that BAL retained control over electrical systems within the airport.
Aerolink's case was not that the fire was caused by faulty electrical installations in the airport outside the hangar. The terms of Aerolink's sublease and licence agreement would not afford BAL protection against such a claim, but no such claim was litigated.
It is possible, but speculative, that the earth connection to the meter board may have been disconnected during works described by Mr Ryan sometime between March 2012 and March 2013. He deposed that sometime in that year he received a phone call from a representative of BAL in which he was told that:
"To help with the supply of power to your hangar, next week we are installing a new external switchboard to it. Installation process will have little effect on you. The power might go off for about an hour while the external switchboard is being connected to the hangar."
Mr Ryan deposed that within a week of receiving that phone call he observed tradesmen digging up the ground of the north-eastern corner of the hangar with an excavator and digging a trench that led from the premises towards the road and laying a conduit with cabling in the trench. He deposed that the tradesmen installed a new external switchboard on the eastern wall of the premises and connected the conduit and cabling in the trench to that switchboard.
The external switchboard to which Mr Ryan referred appears to have been the switchboard adjacent to which the earth connection had, at some time, been disconnected.
It was established that the tradesmen involved in this exercise were independent contractors engaged by BAL. There was no evidence that they had disconnected the earth connection, but even if they had, Aerolink did not submit that BAL could be vicariously liable for their negligence.
In any event, it appears from the letter prepared by Mr Wilson dated 5 November 2010 (at [37] above) that the absence of earth leakage units at the switchboard pre-dated the work done in 2012 or 2013.
[5]
BAL not liable in negligence
As I have found that the fire was caused by defective electrical wiring in the hangar, the first question is whether BAL owed a duty of care to Aerolink to take reasonable care to avoid foreseeable risks of harm to Aerolink's property arising from its use of the hangar. Aerolink pleaded a duty of care in those terms (amended statement of claim, para 20). It alleged that the duty was implied by operation of law and arose from facts pleaded in the amended statement of claim.
Aerolink pleaded that prior to the fire it was reasonably foreseeable that the premises in their then state presented a significant risk of harm to Aerolink's property, that risk being that an electrical fault could be an ignition source of a fire that could cause damage. That can be accepted. Aerolink pleaded that prior to the fire BAL was aware that:
"(a) the Premises were not properly grounded by an earth stake to the building meter;
(b) the earth lines in the Premises' electrical distribution box and meter were not connected to an earth stake;
(c) the Premises did not comply with AS3000 electrical wiring rules;
(d) repair work purportedly performed at the Premises pursuant to the Heads of Agreement dated 24 August 2007 between the defendant and Ryan (24 August 2007 Agreement) did not comply with applicable standards;
(e) there was no formal quality assurance system in place for repairs;
(f) there was no on-site fire brigade to quickly respond to industrial fires;
(g) the cause of the Power Loss had not yet been addressed;
(h) there had been two earlier fires at the Premises in the six to twelve month period preceding the Fire; and
(i) the Premises' electrical system was unsafe, including containing:
(i) melted electrical cables;
(ii) power points that contained pins from blown out sockets." (Amended Statement of Claim, para 21)
Aerolink pleaded that BAL failed to address those matters and thereby breached the duty of care that it alleged was owed to it.
But this way of framing the cause of action in negligence has no regard to the fact that Aerolink's occupation of the hangar from 1 September 2010 pursuant to the sublease with BAL, and thereafter its occupation of the premises pursuant to the licence agreement made on 9 November 2011, was on the basis that the parties agreed that BAL would not be liable for the defective state of the premises.
It is true that on 24 August 2007 BAL had agreed with Mr Ryan to review the electrical wiring and replace any old, worn or dangerous wiring, conduit or power points (see [22] above). But Mr Ryan did not enforce that term. The effect of the sublease was that Aerolink, and not BAL, was responsible for carrying out repairs to electrical wiring. Aerolink acknowledged that BAL would not be liable for any damage that it might suffer arising from faults to the electrical wiring. After the sublease was terminated Aerolink occupied the hangar under a licence under which it agreed that BAL would have no liability for any damage occurring to its property during the licence for any claim arising from the state of repair of the hangar (at [42] above). Aerolink agreed that it occupied the hangar at its own risk.
That licence was terminated on 11 January 2013. Aerolink's continued occupation of the hangar up to 28 February 2013 was on the basis that it took the hangar in its current state and condition and would make no claim upon BAL for any defect or adverse affectation which might flow from the condition of the hangar (at [44] above). Again, Aerolink acknowledged that it occupied the hangar at its own risk and that BAL would have no liability arising from the state of repair of the hangar.
After 28 February 2013 Aerolink occupied the hangar on sufferance. Mr Ryan was allowed to have access to the premises between 8.00 am and 4.00 pm so that he could finish removing Aerolink's property, something he had promised to do by the end of February.
Aerolink submitted that at the time of the fire BAL was the occupier of the hangar in which Aerolink's goods were stored and that BAL owed Aerolink a duty of care under general principles of negligence (Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479; [1987] HCA 7). It submitted that BAL as occupier owed a duty of care to Aerolink as an entrant and submitted that BAL had a power of control being its power to consent to Aerolink's entry and the power to safeguard Aerolink against injury or loss from defects in the occupied premises (Northern Sandblasting Pty Ltd v Harris (1987) 188 CLR 313 at 335-336; [1997] HCA 39 per Brennan CJ). It also submitted that if the relationship were one of landlord and tenant or a relationship analogous thereto, BAL's duty as landlord was to be determined by reference to foreseeable risk of harm and what a reasonable person would do in response to that risk (citing Loose Fit Pty Ltd v Marshbaum [2011] NSWCA 372 at [84], [86] and [87] and Aldred v Stelcad Pty Ltd [2015] NSWCA 201 at [38]).
I was not referred to any decision on all fours with the present case. Northern Sandblasting Pty Ltd v Harris and Jones v Bartlett (2000) 205 CLR 166; [2000] HCA 56 concerned claims for damages for physical injury suffered by a child of the tenant of residential premises who was injured by reason of the defective state, or allegedly defective state, of the premises.
In Northern Sandblasting Pty Ltd v Harris the High Court rejected Cavalier v Pope [1906] AC 428 in which the House of Lords had held that the owner of a dilapidated house who had promised the tenant to carry out repairs was not liable to the tenant's wife who was injured when she fell through the defective flooring that the owner (through his agent) had promised to repair. The general principle was said to be that a landlord who lets a house in a dangerous state is not liable to the tenant's customers or guests for accidents happening during the term of the lease because there is no law against letting a tumbledown house and the tenant's remedy, if any, is upon his contract (Robins v Jones (1863) 15 CB (NS) 221).
In Northern Sandblasting Pty Ltd v Harris a child of the tenant was electrocuted as a result of defective work of an electrical contractor that had been engaged by the landlord. A majority of the High Court held that the landlord was liable for breach of its duty of care, but there was no consensus on the grounds upon which the landlord was found to be liable. The plaintiff's injury was suffered as a result of two electrical defects as described by Gaudron J in Jones v Bartlett as follows:
"85 The injuries sustained by the tenants' daughter in Northern Sandblasting were the result of the combination of two electrical defects. One, a defective connection of the earth wire at the power box, was present at the beginning of the tenancy and would have been discovered if an inspection had been undertaken by an electrician before the tenancy commenced. The other was defective wiring associated with the kitchen stove. The landlord had arranged for the stove to be repaired by an apparently competent electrician, but the repairs were done negligently." (Footnotes omitted.)
In Northern Sandblasting Pty Ltd v Harris Toohey and McHugh JJ held that the landlord was liable for the defective repairs carried out by the electrician engaged by the landlord holding that the landlord had a non-delegable duty with respect to those repairs it had undertaken to carry out (at 349-355 per Toohey J, 363-368, 370 per McHugh J).
Brennan CJ held that the landlord owed a duty to his or her tenants and to those who occupied the property to use reasonable care and skill to protect against defects in the premises at the time when the tenant was let into possession that rendered them unsafe (at 340). Gaudron J considered that where premises are leased for residential purposes the relationship between the landlord and those who constitute the tenant's household gives rise to a duty on the part of the landlord to take reasonable care for the latter's safety by putting and keeping the premises in a safe state of repair (at 358). Her Honour acknowledged that "it may be, however, that in a given case, the lease limits or excludes recovery by the tenant for breach of that duty" (at 358).
Jones v Bartlett also concerned physical injury to a member of the tenant's family who suffered from what was alleged to be a defect in the premises. The plaintiff suffered injury when he accidentally walked into an internal glass door. The glass in the door was not annealed glass and it shattered. The glass was not in accordance with safety standards for new doors applicable at the time of entry into the lease, but was in compliance with standards applicable when the building was constructed. The plaintiff's claim failed.
These cases are remote from the present case, as was noted in Loose Fit Pty Ltd v Marshbaum and in Aldred v Stelcad Pty Ltd. It was noted that in Jones v Bartlett Gummow and Hayne JJ said (at [169]) that both Jones v Bartlett and Northern Sandblasting Pty Ltd v Harris were concerned with the letting for residential purposes and that what is required in respect of premises let for commercial or educational or other purposes may well differ. In Jones v Bartlett Gummow and Hayne JJ said (at [168]):
"168 The starting point is to consider the relationship between the landlord and tenant. In Northern Sandblasting, in a passage with which Gummow J agreed, Dawson J said of the duty of care between the landlord and a guest lawfully upon the premises that it was:
'that which arises under the ordinary principles of the law of negligence, namely, a duty to take reasonable care to avoid foreseeable risk of injury to the respondent. The nature and extent of the duty in the particular instance depends upon the circumstances of the case.'" (Footnote omitted.)
In Aldred v Stelcad Pty Ltd Emmett JA summarised the relevant legal principles as follows:
"38 The duty of care of a landlord is that which arises under the ordinary principles of the law of negligence. That is to say, the duty of a landlord is to take reasonable care to avoid foreseeable risk of injury to a person who enters onto the demised premises. The nature and extent of the duty and its practical content in a particular case is governed by the circumstances of the case. In the absence of a contract supporting a higher duty, the duty of a landlord in relation to the safety of premises does not in general require the landlord to commission experts to inspect premises to look for latent defects. Nor does a landlord have a duty to make premises as safe as reasonable care can make them. In general terms, the duty of a landlord is to be determined by reference to foreseeable risk of harm and what a reasonable person would do in response to that risk.
39 The nature and scope of the duty that is owed may differ as between landlord and tenant, on the one hand, and landlord and other persons, on the other. The latter is likely to be less stringent than the former. Further, the reasonableness of steps to be taken will be affected by the terms of the lease, including the level at which the rental is pitched, the obligations of the parties allocated inter se and any specification of limited purposes to which the premises may be put.
...
43 One difference between residential and commercial premises is that a lessee of the former may have a comparatively limited capacity to rectify defects in the premises. Moreover, because leases of commercial premises encompass a very wide range of situations, from small retail leases to large trading operations, it can be particularly difficult to articulate generalisations about such premises without considering the circumstances of the individual case.
44 The relevant duty is owed not only to tenants but to other entrants on the demised premises. Nevertheless, the duty of the landlord to such other entrants will in many cases be narrower than that owed to them by an occupier of the premises, such as a tenant. As between an occupier-tenant, on the one hand, and the landlord, on the other, of commercial premises, liability for injuries sustained by an entrant onto the demised premises will primarily rest with the occupier-tenant, because the tenant is generally in possession and has control of the demised premises and can determine who enters and under what conditions. However, everything must depend on the particular circumstances of each case." (Footnotes omitted.)
These cases all concerned a landlord's liability for injuries suffered by an entrant to occupy leasehold premises. Aerolink also relied upon Drive-Yourself Lessey's Pty Ltd v Burnside (1958) SR (NSW) 390. There, the plaintiff was the owner of a motor vehicle which it had hired to a driver. The driver had parked the car in an area to which he was directed in the Ku-ring-gai Chase. This was a dangerous area. The car was damaged when a rock became detached from the cliff against which it was parked. Only the car was damaged. The jury found that the Ku-ring-gai Chase Trust, which had management of the car park, failed to warn the driver of the danger of parking the car in the area, that this failure was unreasonable and that no reasonable care was taken by the defendants to prevent injury to persons or property arising from the dangerous condition of the cliff (at 401).
In 1958 the liability of an occupier of land for physical injury to an entrant to the land was governed by different principles according to whether the entrant was an invitee, licensee or trespasser. In Tinsley v Dudley [1951] 2 KB 18 Lord Evershed MR and Danckwerts J held that the principle stated by Willis J in Indermaur v Dames (1866) LR 1 CP 274 that an occupier is liable for the consequences of personal injury suffered by an invitee if the occupier fails to use reasonable care to prevent damage from unusual danger of which he knows or ought to know, did not extend to damage to the entrant's goods, save to the extent that such damage was ancillary to personal injury.
In Drive-Yourself Lessey's Pty Ltd v Burnside Street CJ and Owen J refused to follow Tinsley v Dudley in this respect, noting other authority not referred to in that case, in particular Parnaby v Lancaster Canal Co (1839) 11 A & E 223; 113 ER 400 (cited with approval in Indermaur v Dames) that where property is itself brought onto premises by the invitation of the occupier, then the principle in Indermaur v Dames applied equally to the preservation of that property as it did to the preservation of the safety of an individual invitee (per Street CJ at 399; per Owen J at 402-403).
Herron J (as his Honour then was) held that the defendants were liable on the wider principle of negligence in Donoghue v Stevenson [1932] AC 562 (at [409]).
The result of Drive-Yourself Lessey's Pty Ltd v Burnside was that the owner of the motor vehicle was entitled to recover from the trustees of the Ku-ring-gai Chase, who had the care, control and maintenance of the car park, whereby through the negligence of their employee the car was damaged as a result of the employee's direction that the car be parked under a cliff face that was known to be dangerous.
Aerolink submitted that at the time of the fire BAL was the occupier of the premises and owed a duty under the general law to take reasonable care to avoid a foreseeable risk of injury to Aerolink's goods (Drive-Yourself Lessey's Pty Ltd v Burnside) on the same general principles as would have applied had Mr Ryan suffered compensable physical injury. The electrical wiring was known to be defective.
But for the terms of the sub-lease and licence under which Aerolink occupied the hangar from 1 September 2010 to 28 February 2013, I would agree that the general principles of negligence requiring a landlord to take reasonable care to avoid foreseeable risk of injury to the tenant or damage to the tenant's property would render BAL liable for the damage to Aerolink's goods suffered from the fire caused by the defective wiring in the hangar.
But the terms of the sub-lease and the licence agreement show that BAL did not assume, but to the contrary, disclaimed any such duty. Aerolink acknowledged that it would be responsible for the electrical wiring of the hangar. Whatever the position might have been had Mr Ryan suffered compensable injury, Aerolink could not have sued for damages for the loss of its property in the face of the express contractual stipulations. Does it make a difference that the fire occurred six days after the termination of the licence agreement when Aerolink continued its occupation of the premises on sufferance having previously advised that it was on track to vacate the hangar by 28 February 2013 (at [44])?
BAL submitted that the contractual licence continued to bind the parties month-to-month. I do not agree. The contractual licence was validly terminated by BAL with effect from 28 February 2013. Nor do I accept that a licence on the same terms as the contractual licence can be implied or inferred after 28 February 2013. BAL submitted by reference to CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [120]-[125] that an implied contract following upon the expiry of an express fixed term contract could be inferred.
In contrast to the position in CSR Ltd v Adecco (Australia) Pty Ltd in this case the parties did not continue to act as though the contractual licence still bound them after the term expired (at [125]). Instead, BAL permitted Aerolink to continue to occupy the hangar for the limited purpose of completing the removal of its goods and only on the basis that it have access for limited hours and on the premises being opened for it by an employee of BAL.
Aerolink still had a licence to occupy the hangar to complete the removal of its goods, but that was not a licence on the same terms as had previously applied. It had no obligation to pay a licence fee.
Nonetheless, at no time after entry into the sub-lease, did BAL assume any responsibility to put the electrical wiring into a reasonable state of repair. It was known that the electrical wiring was in disrepair.
Aerolink submitted that a duty of care arose by application of principles set out by Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [102] and [103] and in particular:
1. the foreseeable and serious harm to which Aerolink was exposed;
2. BAL's almost total control over the electrical installation to the exclusion of the plaintiff;
3. the vulnerability of Aerolink to harm in circumstances where it could take no rectification steps on BAL's installation; and
4. the relationship between the parties and its close analogue to that of occupant and entrant and/or landlord and tenant.
I do not agree. I accept that Aerolink was exposed to foreseeable and serious risk of harm. But that was a risk of harm that Aerolink had earlier contractually agreed to assume.
Nor is it correct that BAL had almost total control over the electrical installation to Aerolink's exclusion. To the contrary, cl 63 of the sub-lease of 8 November 2010 had contained an acknowledgment that Aerolink would be liable for the cost of any upgrades required to services to the hangar, including the supply of electricity (at [34] above). Mr Ryan did not seek to have the electrical wiring re-wired. Such rewiring would have been at Aerolink's cost. There was no evidence that BAL would have resisted any such application.
Because BAL did not assume but instead disclaimed any responsibility for the electrical wiring in the hangar and Aerolink occupied the hangar on that basis, and because Aerolink was only in occupation of the hangar after 28 February on sufferance owing to its failure to vacate when required to do so, I do not accept that BAL owed the duty of care alleged by Aerolink.
[6]
Bailment
Aerolink pleaded that after the termination of the sub-lease in or around October 2011 its property was in the possession of BAL at the hangar and that BAL was the bailee of Aerolink's goods. Aerolink pleaded that BAL owed it a duty to keep its property safe and to take reasonable steps to prevent any loss of the property. It pleaded that BAL breached that duty by failing to return Aerolink's property safely and failing to undertake reasonable steps to make the electrical wiring safe and to avoid the foreseeable risk of fire.
In final submissions Aerolink accepted that a relationship of bailment did not arise from termination of the sub-lease in October 2011. Instead, it submitted that BAL became bailee of its goods on termination of the contractual licence. It submitted that on the expiry of the licence the contractual restrictions on the duty that would otherwise have been owed by BAL to it were removed and the position was restored to what it would have been had there been no contract. It accepted that the bailment for which it contended was gratuitous, but argued that nonetheless the onus was on BAL to show that BAL's failure safely to deliver the goods to Aerolink was not due to its negligence.
I do not accept that prior to the fire BAL was the bailee of Aerolink's goods stored in the hangar. Although Aerolink's contractual licence to occupy the hangar had been terminated as at 28 February 2013, BAL allowed Aerolink to have access to the premises between the hours of 8.00 am to 4.00 pm so that Mr Ryan could continue to remove Aerolink's property.
It was a condition of the contractual licence that:
"... At the termination of this Licence, the Licensee must remove its property from the Licensed Area and make good any damage caused in the removal and yield up the Licensed Area in the same condition as at the Commencement Date of this Licence. If the Licensee fails to do so, the Licensor may arrange for removal and recover such costs from the licensee as a debt immediately payable." (CB 614)
BAL did not seek to enforce this condition. I do not accept that on termination of the contractual licence there was an actual or constructive delivery of Aerolink's goods to BAL, let alone any acceptance of the goods or assumption of responsibility for them. The relationship between BAL and Aerolink remained one of licensor and licensee, albeit that the nature of the licence changed after 28 February 2013 (Ashby v Tolhurst [1937] 2 KB 242 at 255-6; Withers, Evans Ltd (Trustee of) v Sterling Circuits Inc and Sunlife Assurance Company of Canada (1988) 47 DLR (4th) 614 at [12]-[13]; WD and HO Wills (Aust) Ltd v State Rail Authority of New South Wales (1998) 43 NSWLR 338 at 353; Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159 at [36]-[37]; Rolfe v Investec Bank (Australia) Ltd [2014] VSCA 38 at [61]).
If a bailment relationship had come into existence on 1 March 2013 I accept that that relationship itself could have been the source of a duty on the part of BAL to take such care for the goods as a reasonable man would take of his own goods having regard to all the circumstances (WGH Nominees Pty Ltd v Tomblin (1985) 39 SASR 117). One of those important circumstances is that the bailment would be gratuitous. Whilst the standard of care required of a gratuitous bailee is no longer expressed as the avoidance of gross negligence (cp Coggs v Bernard (1703) 2 Ld Raym 909; (1703) 92 ER 107 at 913, 110), I do not accept that the standard of care required would have required BAL immediately to set about correcting the faulty electrical wiring when, to Aerolink's knowledge, BAL had since 2010 resisted the assumption of any such obligation and where the goods were only on its premises because Aerolink had defaulted in complying with its obligation to remove the goods by the end of February, and had not honoured its representation of 4 February 2013 that it was on track to vacate the hangar by 28 February 2013.
[7]
Bailment post-fire
After the fire BAL did become the bailee of such of Aerolink's goods as may have survived the fire. Mr Ryan was allowed to inspect the premises with a representative of BAL on 8 March 2013, but after that date he was not permitted access to the hangar. Mr Ryan deposed that when he attended the hangar on 8 March 2013, which he did in the company of a safety officer from BAL, a Mr Craig Smith, he was asked to wear a safety suit for the inspection due to, amongst other things, damaged asbestos fibres which were present in the premises following the fire. He observed that many of aeroplane parts were melted and fire damaged. On 11 March he attempted to enter the hangar with Dr Green, but was stopped from doing so by one of BAL's representatives.
On 7 March 2013 Swaab Attorneys, acting for Mr Ryan, wrote to the general manager of BAL. They advised that Mr Ryan would be engaging an expert to assist with determining the cause of the fire and observed that it was important that any contact that any person or object had with the premises did not impact on the ability of the expert, or any other party, to determine the cause of the fire. They asked that until the expert had inspected the premises, all persons refrain from coming into contact, or causing any object to come into contact, with those parts of the premises that had been affected by the fire (CB 3/1145).
On 11 March 2013 solicitors for BAL, Bruce and Stewart, replied in terms which included the following:
"... We are instructed that BAL will not permit any further access to the premises by your client. As your client has also had ample time to vacate the premises (and indeed indicated that it was 'on track' to vacate the hangar by 28 February 2013 as mutually agreed by the parties), any items remaining within the premises are considered rubbish dumped on site 663 and will be treated by our client accordingly."
This was an astonishing assertion to make in respect of any of Aerolink's salvageable goods, but clearly evinced an acceptance by BAL of custody and control of any surviving goods and responsibility for their disposal.
Aerolink's goods that were now held by BAL as bailee were required to be delivered to Aerolink when that could be safely done, or otherwise disposed of in accordance with the Uncollected Goods Act 1995 (NSW). If the value of the goods were over $5,000 it would have been necessary for BAL to obtain an order from the Local Court authorising it to dispose of the goods if Aerolink failed to take delivery of them. Aerolink's failure to remove its goods before 28 February did not justify BAL's treating the goods as if they belonged to it or had no owner.
Mr Ryan deposed that in late March 2013 he became concerned about loss that Aerolink would suffer if he could not recover aircraft logbooks which were in the premises, even though the aircraft relating to those logbooks had not been damaged. He was not sure whether or not the logbooks had been destroyed in the fire. He said that if they were in any way salvageable he wanted to retrieve them. In December 2013, having taken advice, he was resigned to the fact that any aircraft parts that had been in the hangar that would have been affected by heat would be unusable, but he was concerned to retrieve any logbooks that were salvageable that may have related to aircraft or their parts that had been removed from the hangar before the fire. He deposed that it was a requirement of the Civil Aviation Safety Authority ("CASA") that every aircraft carry logbooks, and that the logbook set out the aircraft's maintenance program, a record of the time that parts had been used for and a record of how long certain parts could continue to be used before they had to be replaced or overhauled, and that such logbooks had to be made available to CASA on their request. He deposed to the amount of detail contained in aircraft logbooks and that if a logbook is lost or destroyed, it is necessary for a licensed engineer to recreate the logbook. He deposed that this requires disassembly of each part of the aircraft, research on the modification status of each part, and numerous other matters of detail which would be required to recreate logbooks for an aircraft.
Mr Ryan deposed that because he was concerned about the aircraft logbooks, he contacted BAL's representatives by telephone in order to retrieve the logbooks and paperwork and other items from the hangar. He deposed that he was informed that he could not enter the premises and retrieve the aircraft logbooks and other goods because the hangar presented a work, health and safety issue because of the damaged asbestos inside it (Affidavit [136]; CB 1/55). He was not cross-examined on that evidence.
On 18 December 2013 Mr Ryan sent an email to a Ms Burnicle of BAL as follows:
"Dear Melanie,
How are we going with getting a date for access into this hangar?
I have spoken to Hans Aeberli from Embraer, and he is basically of the same opinion as Gary Arnold from CASA. In light of their opinions I think it is a waste of time for us to try and salvage anything, we are just going to clean up the residue from the fire and take it to the tip.
Regards
Danny Ryan"
Mr Ryan deposed that in sending that email he had intended to refer only to damaged spare parts and not to aircraft logbooks and paperwork. The email does not say so. Rather, he advised that he thought it a waste of time to try and salvage "anything".
Nonetheless, BAL did not take Mr Ryan's email as authority to dispose of everything in the hangar without further recourse to him. Ms Burnicle responded later on 18 December 2013 as follows:
"Hello Mr Ryan
Thank you for your email below.
I acknowledge your right to retrieve any items that belong to you in the hangar, but the difficulty continues to be how to manage the issue of persons inside the hangar and the Work Health and Safety concerns that arise, especially as you have recently mentioned using machinery during any salvage operation. I admit this is a problem which I have yet to solve, hence the delay in my reply.
If you do not wish to attempt to salvage anything in particular from the Site, BAL will attend to any clean up as part of its repair works. That way the clean up is managed in an environmentally responsible way, by persons qualified to conduct clean up of fire damaged sites.
I am happy to inform you of when the clean up will take place so that you can be present (albeit outside the hangar) to ascertain if there is anything that can be salvaged. Again, we can each have our insurers arrange for any assessor etc to be present to document what comes out of the hangar if that would put your mind at rest about what is in there.
I apologise for the delay, as I mentioned above, my main concern is to ensure that nobody sustains any injury or further damage going into that hangar. I am sure you will agree that whatever is in there is not worth risking anybody's life for.
Can you please confirm you are happy for BAL to attend to clean up of the site, and whether you and/or your insurer's representative wish to be present (but outside the hangar) at the time of clean up.
Regards
Melanie" (CB 675)
Mr Ryan deposed that after receiving that email he telephoned Ms Burnicle and there was a conversation to the following effect:
"I said: 'I am happy with the proposal in your email of 18 December 2013. Please let me know when the clean up takes place because I would like to salvage Aerolink's property, including any spare parts which are salvageable, log books, service and history records and so on.'
She said: 'Ok Danny, I will let you know when the clean up takes place.'"
On 14 January 2014 Ms Burnicle advised a Mr Andrew Gibson, a loss adjuster with BAL's insurer:
"I'm just waiting on Mr Ryan (the former tenant) to advise whether he is going to abandon his salvage operation. I looked through the site myself and confirmed there does not appear to be much able to be salvaged, save for some logbooks and the contents of a couple of filing cabinets. I'm not willing to let Mr Ryan in there with machinery (as he has suggested), given the nature of the damage to the office area." (Exhibit U)
This is some evidence that the logbooks and the contents of the filing cabinets were salvageable.
Mr Ryan deposed that in the first six months of 2014 he made at least three or four calls to staff at BAL to enquire about the retrieval of Aerolink's goods from the hangar. He said that on each occasion he was informed he would get an opportunity to retrieve goods from the premises and that it would not be long before that occurred.
On or about 30 July 2014 Mr Ryan observed workmen removing goods from the hangar and placing them into a vehicle. He saw that everything in the hangar had been removed. He was told by one of the workmen that they were taking all of the "stuff" to the tip. He sent an email to Ms Burnicle on 31 July 2014 as follows:
"Dear Melanie,
I thought we had an understanding that we would be able to retrieve our property from the hangar when the clean-up started and you would give notice of when that was to take place. I passed the hangar yesterday and to my surprise the clean-up was well underway and all remnants of my parts and paperwork records were gone. I don't think the insurance company is going to be happy.
Danny Ryan" (CB 677)
Ms Burnicle did not contradict Mr Ryan's understanding of their arrangement. On 3 September 2014 Ms Burnicle responded to Mr Ryan's solicitor, Ms Georgina King, as follows:
"It appears that no items were salvageable from the hangar due to potential asbestos contamination from the fire. As discussed below BAL's primary concern was to ensure that the clean-up was dealt with safely.
Our builder has confirmed with the demolition contractor that all the materials left in the hangar were treated as asbestos contaminated materials and disposed of at the waste management facility at Kemps Creek."
This statement was second or third-hand hearsay. No evidence was called by the demolition contractor as to the state of the materials removed. The email is some evidence that the logbooks and other material removed were contaminated with asbestos materials (there being no order made or sought under s 136 of the Evidence Act 1995 (NSW) limiting the use to which the email could be put). The email, if correct, does not justify BAL's arranging for the removal of the goods without Aerolink's consent and without complying with the arrangements that had been made between Mr Ryan and Ms Burnicle. Whether the logbooks and records kept in filing cabinets were asbestos contaminated materials may be relevant to the assessment of the damages suffered by Aerolink as a result of the removal of the materials in breach of BAL's duty as bailee. It does not justify the removal of those materials without Aerolink's consent and in the absence of an order for disposal from the Local Court or (subject to the monetary value of the goods) the giving of notice of BAL's intention to dispose of the goods under Pt 3 of the Uncollected Goods Act.
Mr Ryan was not challenged on his evidence of his conversation with Ms Burnicle of 19 December 2013 in which she told him that she would let him know when the clean-up was to take place in case he could salvage any property. Ms Burnicle did not give evidence. BAL gave no evidence as to why Mr Ryan was not advised of when the clean-up was to take place. No notice of intention to dispose of the goods left in the hangar was given to Aerolink.
Aerolink's claim arising from the disposal of logbooks after the fire is independent of its claim for the destruction or damage to its goods by the fire. This is not reflected in Aerolink's pleading. Aerolink does not plead that after the fire BAL assumed control of the goods in the hangar that did not perish in the fire. It did not plead the assurance given by BAL through Ms Burnicle that Aerolink would be told when the clean-up was to occur. It did not plead the removal of Aerolink's goods from the premises on 30 July 2014. Although the material facts of this part of Aerolink's claim were not pleaded, the claim was nonetheless brought under the general rubric of the plea of bailment and was run at the trial. BAL did not claim to have been taken by surprise. It was fairly on notice of the claim that was clearly raised in Mr Ryan's principal affidavit and was also articulated in Aerolink's outline of opening submissions.
[8]
Contributory Negligence
BAL pleaded that the fire was caused or contributed to by the negligence of Aerolink and Mr Ryan in failing to have the electrical wiring inspected, failing to make the electrical circuit safe, failing to keep the licensed area in good repair and failing to install appropriate earth leakage units in the switchboard or at all, and also by storing property in the premises in a way that inhibited the ability of any contractor to access the necessary part of the premises to conduct testing or repairs, storing combustible material in a manner that was unsafe, and not taking due care of the premises.
Although these allegations would be material to the defence of the claim that BAL was liable in damages in the tort of negligence for loss suffered from the fire, they are not material to the claim that BAL breached its duty as bailee in its disposal of the logbooks or material contained in Aerolink's filing cabinets in July 2014. BAL's duties as bailee arose after the fire as a result of its decision to take control of the goods stored in the hangar. Its breach of duty in arranging for the removal of the goods that survived the fire without Aerolink's consent or compliance with the Uncollected Goods Act was not caused or contributed to by the pleaded acts of contributory negligence on the part of Aerolink and Mr Ryan.
In final submissions BAL also contended that Aerolink and Mr Ryan were negligent in not making copies of the logbooks and storing copies of the logbooks offsite. This was not a pleaded act of contributory negligence, but no objection was taken by Aerolink on that score. Mr Ryan gave evidence that the logbooks were valuable and essential because if Aerolink did not have the record of the engine and its components, including, for example, its maintenance, then such parts could not be used and new components would have to be fitted. It was put to Mr Ryan that because the logbook was such an important document for his business it would be prudent to maintain a copy of a logbook offsite. Mr Ryan said he did not know of anybody who maintained a copy of logbooks offsite (T99). There was no evidence that that was a usual industry practice, assuming it could be adopted. Mr Ryan accepted it would be possible to have kept a photocopy of the logbooks (T101).
Mr Ryan said that entries in the logbooks could only be made by a licensed engineer or airframe fitter (T104). It was not the practice in the industry for photocopies of a logbook to be kept.
I accept Mr Ryan's evidence that it was not industry practice to keep a photocopy of a logbook offsite. Mr Ryan acknowledged that with the benefit of hindsight it would have been of advantage if another copy of the logbooks had been kept, but said that was not the practice (T100). I do not accept that Aerolink or Mr Ryan was negligent in not making photocopies of the logbooks and storing the photocopies offsite.
Moreover, such a precaution would be a precaution to attempt to mitigate loss that would otherwise arise from the destruction of the logbooks by fire. BAL's liability arises only in respect of its disposal of the logbooks that survived the fire. No submissions were made as to whether contributory negligence would be an available defence to the action in bailment that arises independently of both tort and contract (Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 241; [1971] HCA 26). The closest analogue is to the tort of conversion. If liability in bailment is sui generis, as Windeyer J said in Hobbs v Petersham Transport Co Pty Ltd, then it may be doubted that s 9 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) would apply as the damage would not have been suffered partly as a result of the "wrong" of the defendant, having regard to the definition of "wrong" in s 8. Section 8 provides that "wrong" in Pt 3 of the Act means an act or omission that:
"(a) gives rise to a liability in tort in respect of which a defence of contributory negligence is available at common law, or
(b) amounts to a breach of a contractual duty of care that is concurrent and coextensive with a duty of care in tort."
It is far from clear that Div 8 of Pt 1A of the Civil Liability Act 2002 (NSW) would have the effect that contributory negligence could be a defence to a claim in bailment (or conversion), either as a complete defence or by way of reducing damages, if it is not a defence at common law.
No submissions were made as to whether contributory negligence could be a defence to a claim in bailment or conversion. I express no view on that question. It suffices to say that it has not been shown that the photocopying of logbooks and storing photocopies offsite, as a precaution against a complete loss of records by fire, was a precaution Aerolink should have taken if acting reasonably. Further, the failure to take that precaution had no causal significance to the loss and destruction of such of the records as survived. The absence of that causal connection would not justify the reduction of damages on account of contributory negligence if such a defence would in any event be available.
[9]
Indemnity
BAL relied upon the clause headed "Risk" in the licence agreement quoted at [42] above. Even if that clause survived termination of the licence, no part of that clause is applicable to Aerolink's claim in bailment for the destruction of its logbooks, or any other material that might have been contained in filing cabinets as a result of their removal. When those goods were removed, Aerolink was not occupying the Licensed Area. BAL's liability does not arise from Aerolink's negligence or failure to comply with obligations under the licence or the state of repair of the hangar. The indemnity in the last clause is also inapplicable because the loss or damage for which BAL is liable does not arise out of or relate to the use of the Licensed Area by Aerolink, its agents or employees. BAL's liability arises in arranging for the removal and destruction of Aerolink's goods.
[10]
Summary and orders
There was no evidence that any of Aerolink's goods, except logbooks and filing cabinets and the contents thereof, survived the fire. I conclude that Aerolink has established that BAL is liable to it for damages for and consequent upon the removal on or about 30 July 2014 of such of its logbooks, filing cabinets and any other material contained in its filing cabinets that survived the fire, but its claim should otherwise be dismissed. The matter will have to be referred for a new or further hearing for assessment of damages.
I will hear the parties on costs. Aerolink has succeeded on one of its claims but has failed on its principal claim. However, Aerolink succeeded on a substantial issue at trial as to the cause of the fire which, prima facie, was a separable and perhaps dominant issue in respect of which substantial costs would have been incurred. I will make directions for the parties to provide written submissions on costs.
For these reasons I make the following order:
1. Give judgment for the plaintiff for damages to be assessed in respect of the loss of such of the plaintiff's logbooks, filing cabinets and any other material contained in its filing cabinets that were removed on or about 30 July 2014 at the defendant's direction from the hangar at Bankstown Airport that had formerly been occupied by the plaintiff.
[11]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 27 September 2019