BestCare Foods Ltd & Anor v Origin Energy LPG Ltd - [2011] NSWSC 908 - NSWSC 2011 case summary — Zoe

NSWNSWSC

BestCare Foods Ltd & Anor v Origin Energy LPG Ltd

[2011] NSWSC 908

Supreme Court of NSW|2011-08-23|Before: Nicholas J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2011-08-23

Before

Nicholas J

Catchwords

(2009) 75 NSWLR 649 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 49
(1997) 188 CLR 159 John Pfeiffer Pty Ltd v Canny [1981] HCA 52
(1981) 148 CLR 281 Jones v Dunkel (1959) 101 CLR 298 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305
(2001) 52 NSWLR 705 McCann v Switzerland Insurance Australia Ltd [2000] HCA 65

Source

Original judgment source is linked above.

Catchwords

(2009) 75 NSWLR 649 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 49(1997) 188 CLR 159 John Pfeiffer Pty Ltd v Canny [1981] HCA 52(1981) 148 CLR 281 Jones v Dunkel (1959) 101 CLR 298 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305(2001) 52 NSWLR 705 McCann v Switzerland Insurance Australia Ltd [2000] HCA 65(2000) 203 CLR 579 McDonald t/as BE McDonald Transport v Girkaid Pty Ltd [2004] NSWCA 297 O'Connor v S P Bray Ltd [1937] HCA 18(1937) 56 CLR 464 Podreberserk v Australian Iron & Steel Pty Ltd [1985 HCA] 34(1985) 59 ALR 529 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28(1998) 194 CLR 355 Seltsam Pty Ltd v McGuinness [2000] NSWCA 29

Judgment (30 paragraphs)

[1]

td - first plaintiff BestCare Foods (Sales) Pty Ltd - second plaintiff Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd) - first defendant Origin Energy Retail Ltd - second defendant Representation: Counsel: M L Williams SC/D S Weinberger/S A Lawrance - plaintiffs J N Gleeson QC/B G Smith/R D Glover - defendants Solicitors: McCabe Terrill Lawyers - plaintiffs HWL Ebsworth Lawyers - defendants File Number(s): 05/270917

[3]

Introduction 4Between 1994 until the sale to BestCare in June 2001 Bayer Australia Ltd (Bayer) carried on business as a pet food manufacturer at the site. 5Under a contract made 12 August 1994 with Bayer, Boral Gas (NSW) Pty Ltd (Boral) supplied and constructed a gas installation with related equipment for the business which remained the property of Boral. Thereafter Boral supplied LPG to Bayer for the operation of the factory. 6On 29 June 2001 BestCare bought the plant from Bayer as an ongoing concern, and commenced operations there. At about this time Origin Energy LPG Ltd took over Boral's operations, and became its successor in title to the installations. It is the first defendant but it is convenient to refer to it as "Boral". On or about 15 August 2001 Origin entered into an agreement with BestCare for the supply of LPG, an arrangement which continued until the explosion on 25 January 2003. 7In essence, it is the plaintiffs' case that the liability of Boral arises out of its breach of common law and statutory duties of care in respect of the construction, maintenance, and inspection of the gas installation. As against Origin, it is claimed that liability arises from its breach of similar common law and statutory duties of care, and of contractual obligations of a substantially similar kind. The plaintiffs also claim relief against Origin under s 71(1) and s 74(1) Trade Practices Act 1975 (Cth) for breaches, respectively, of implied terms that the goods supplied were not of merchantable quality, and the services rendered were not reasonably fit for the purposes of being a gas storage facility and infrastructure providing gas to the pet food manufacturing business. 8The plaintiffs alleged that the gas leakage and subsequent fire and explosion were caused by the failure of the first stage regulator (FSR) by reason of the deterioration of internal components, namely the disc holder and sealing disc. The consequence was that the FSR failed to provide a proper seal against the high inlet pressure of LPG flowing from the high pressure storage tank, and allowed gas at high pressure to flow downstream. In these circumstances the downstream line became over-pressurised, the filter boxes on the dryer gas line were subjected to pressure beyond their capacity and fractured, thereby allowing gas to leak into the factory, where it ignited. It was claimed that at the time of the installation of the gas system the defendants wrongly failed to provide over-pressure protection to the FSR by means of an over-pressure shut off device (an OPSO) which would have operated to prevent over-pressurisation of the downstream line. (An OPSO is used as a safety device where protection against excess pressure is required. When activated it shuts off the flow of gas at the inlet of the regulator. It was common ground that over-pressure protection must be provided where, as in this case, the inlet pressure to the FSR exceeded the pressure rating of downstream equipment, its purpose being to ensure the rated working pressure of this equipment was not exceeded.) In this case the storage tank/inlet pressure was 850 kPa and the downstream equipment was set to operate at a pressure of 140 kPa. 9Additional allegations included the allegation that the defendants wrongly failed to ensure that the gas installation was suitable and safe for use, and failed to carry out regular inspections and maintenance, which would have led to the discovery, and rectification of, the absence of over-pressure protection at the FSR. 10The defendants denied liability on the basis that the plaintiffs had failed to prove their case that the cause and origin of the fire and explosion resulted from over-pressurisation and leakage through the dryer filters. The breaches of common law and statutory duties, and contractual obligations were denied. 11The defendants advanced an alternative case under what came to be called the pressure wave theory. In essence, the theory was that the FSR failed after, and not before, the explosion, and that the explosion generated a pressure wave which struck the FSR with such force as to damage its disc and disc holder, components necessary for its operation. 12The defendants also contended that the plaintiffs were guilty of contributory negligence in that they failed to isolate the LPG storage tank when the factory was closed down and unattended, and that they themselves wrongly failed to install over-pressure protection at the FSR.

[4]

Preliminary observations 13Some statistics: The hearing proceeded, with interruptions for 46 days, from 18 October 2010 until 17 March 2011. 24 witnesses gave evidence. The plaintiffs' exhibits included witness statements, experts' reports, photographs, site models, and various pieces of equipment, marked from Ex A to Ex AAAX. The defendants' 42 exhibits included witness statements, experts' reports, photographs and various pieces of equipment. The transcript of evidence and submissions contained 2894 pages. Oral submissions were heard over nine days. 14The factual and legal issues were many and complex, and presented the Court with a difficult task. I have kept in mind the principle that the primary function of a first instance judgment is to find facts and identify the crucial legal points and to advance reasons for deciding them in a particular way ( Customs and Excise Commissioners v A [2003] 2 All ER 736, per Schiemann LJ, p 754; approved by the Court of Appeal in Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58, pars 285, 286). Accordingly, I consider it to be neither necessary nor appropriate nor realistic in these reasons to deal with all of the issues and arguments raised by the parties. No utility would be served in repeating evidence and submissions on issues which were peripheral or would not affect the outcome. However, I read the written and oral evidence and submissions in their entirety, some many times. It would be erroneous to assume that matters not referred to were not considered in the course of reaching a conclusion. I have confined these reasons to those issues which were found to be crucial for the determination of the plaintiffs' claim. I was guided by the principles expressed in Digi-Tech (pars 282-291). 15The following is a description, so far is relevant, of the plant at the time of the explosion. It should be read with reference to the diagram of gas services, in Ex V. 16The factory included the building known as the extrusion plant, inside which were the boiler and the dryer. To the north was the bakery area. The three gas fired appliances on site were a hot air dryer, a boiler, and a biscuit baking oven. A large LPG storage tank was at the southern side of the site. From it LPG passed through the FSR and downstream into the lines which supplied these appliances. Immediately downstream of the FSR was a Bourdon pressure gauge. 17The extrusion building was described by Mr Michael Anthony Goldring, BestCare's operations director, as follows (Ex Z2, par 23): "Within the extrusion building, the boiler room was located at the far western end and was separated (at ground level) from the rest of the extrusion building by a wall with an access doorway but there was no door on this opening. Within the rest of the extrusion building, the extruder and drier were located at the west end of the extrusion building (on the other side of the wall from the boiler room). The extruder was at ground level and the drier was elevated. The western end of the drier was directly above the boiler room wall and could be clearly seen from within the boiler room as the boiler room protruded into the Extrusion Building at the southern end." 18A gas fuelled burner heated the boiler which was situated in the boiler room at the western end of the extrusion plant building. 19Immediately above the boiler, on the first floor level, the western end of the dryer was located. The dryer was a long box-shaped oven with doors down each side. It had two heated zones; the western end was designated zone 1, and the eastern end zone 2. Two gas trains provided gas to its burners. Each comprised a stop valve, a filter, and a second stage regulator with an OPSO. A Bourdon pressure gauge was attached to the western end of the dryer line. 20The bakery oven was a long oven through which biscuits were conveyed and heated. It ran east/west inside a building on the northern side of the site. It was serviced by three gas trains, each of which comprised a stop valve, a filter, and a second stage regulator with an OPSO.

[5]

Background 21The following history was common ground and, in any event, are findings made on the evidence. 22On 12 August 1994 Boral agreed with Bayer to supply and install at the site equipment which included a 43kl LPG storage tank, all gas regulators, and a gas service line from the LPG storage tank to the burner trains terminating with ball valves. It also agreed to supply LPG in bulk. On 14 October 1994 the Gunnedah Shire Council permitted construction of the storage tank and stand conditional upon the work being "... completed in accordance with Dangerous Goods Act and approved plans". 23On 30 January 1995 Mr M McKillop, on behalf of Boral's sub-contractor, issued a compliance certificate under the Dangerous Goods (Gas Installations) Regulations 1982 that the installation was in safe working order. It is common ground that, although required, an OPSO to the FSR was not provided. 24In February 2000 Origin Energy LPG Ltd was created through the demerger of Boral Ltd and Boral Energy Ltd. 25On 29 June 2001 BestCare acquired from Bayer the factory and plant at Gunnedah, and the pet food business of J & J Dry Pet Food Manufacturers Pty Ltd at Rouse Hill. The last mentioned became a wholly owned subsidiary of BestCare, changed its name to Bestcare Foods (Sales) Pty Ltd, and is the second plaintiff in these proceedings. 26On about 1 July 2001 BestCare commenced operations at the site. During July and August 2001, and thereafter, Origin supplied LPG to BestCare. 27On 18 July 2001 BestCare's manager, Mr Richard Sherlock, signed a contract with Origin for the supply of LPG, which was signed by Origin's sales manager on 15 August 2001. It was for a term of 12 months commencing 18 July 2001. Origin undertook to install equipment which was listed as the same as that specified in the contract of 12 August 1994 between Boral and Bayer (cl 2.1). Property and title to the equipment were to remain with Origin (cl 6.3). Origin undertook to carry out repairs and maintenance necessary to keep the equipment in reasonable working order and to provide for maintenance and inspection of the equipment (cl 7.1). Detailed reference to the contract provisions are made later in these reasons. 28In August 2001 BestCare began planning for the installation of a new biscuit baking oven. On about 11 September 2001 Mr Danny Oldman and Mr John Lowe, employees of Origin, inspected the site, discussed the gas line for supply of LPG to the new oven, and recommended a contractor, Mr Brian Torrens, for its installation. During September 2001 there were communications concerning requirements for the new gas line. 29Mr David Druitt, was a director of Rapat Australasia Pty Ltd which had been engaged by BestCare as project manager for the installation of the new biscuit baking oven. In August and September 2001 he had discussions on site with Messrs Oldman, Sheldon and Lowe in respect of the installation required for the bakery. 30On 28 September 2001 Mr Lowe rectified a fault in the vaporiser which allowed emission to the atmosphere of LPG from the storage tank. 31Mr Torrens, a licensed gasfitter, in October 2001 commenced the installation of a gas line with a second stage regulator, OPSO and fittings for the main boiler. After testing, it was left in working order. 32In May 2002 the installation of the new baking line was completed, and it commenced operations. 33On 23 May 2002, during a meeting on site with representatives from Origin (Messrs Oldman and Andrew Murray) discussed with Mr Goldring a proposal to renew BestCare's contract after July 2002. It was said that Origin would pay for any upgrade to the gas equipment on site. 34On 24 May 2002 Mr Oldman sent an email to Mr Shane Sheldon the defendants' project and installation engineer, questioning whether allowance had been made for various items in a quotation to be put to BestCare. It included: "3. 1 st stage reg current what is its capacity? Have you allowed for a new 1 st stage reg (OPSO)?" 35Thereafter negotiations continued between the parties. Origin continued to supply LPG to BestCare after expiry of the contract on 18 July 2002. 36On 16 August 2002 Mr Oldman sent an email to Mr Goldring seeking a response to the proposal and expressing concern that "... your demand is causing some stress to the regulators and pipe work currently in place". 37Mr James Kearney, a consulting steam engineer of 50 years experience, on 2 October 2002 carried out the annual service and safety inspection of the boiler. This included opening and closing the ball valve of the boiler gas line. He found nothing unusual about it, and found the boiler met all relevant safety requirements and passed the inspection. He said that the ball valve was shut when the handle was at right angles to the pipe, and open when the handle was in line with the pipe. He said he had never seen a diaphragm in a boiler regulator damaged. 38On 22 January 2003 Mr Goldring informed Mr Oldman that BestCare would be changing gas suppliers in the near future. 39At about 11am on 24 January 2003 the last delivery of LPG to the factory was made. Operations continued in the extrusion plant until about 2.30pm, and in the bakery until about 9.30pm when the burners on the baking ovens were turned off. These were the last LPG appliances to be turned off. 40On 25 January 2003 the factory was not operating, but a number of employees were working on site on various jobs. The last departed at about 1.30pm. At about 7.55pm an explosion destroyed the factory.

[6]

24 and 25 January 2003 41Evidence of relevant activities at the factory during 24 and 25 January 2003 was given by BestCare's employees of which the following is a summary. Evidence was also given by others of observations at the time of the explosion. Unless otherwise stated, I found they were truthful witnesses who gave their evidence as best as recollection allowed. I accept the evidence of each witness, and was not persuaded that it was undermined in cross-examination. 42Mr J F Heness was the factory manager. He said that if there was a door at the extrusion plant it was always open because the operator watched the boiler. He was not sure if there was a door in the doorway between the boiler room and the extruder, but remembered that the boiler could always be seen from the extruder. He agreed that on 25 January 2003 he did not know if a door was open or closed. The effect of his evidence was that whether or not there was a door, the doorway was always open. Mr Heness explained the shut down procedure for cleaning the oven and the extruder at the end of each week or when production was to cease. This required the boiler to be shut down which, in turn, involved turning off the gas and water to the boiler. He said that employees Kevin Thompson, Vaughn Eather, and Jim Hall were experienced in operating the extruder and the shut down process, and Mr Darren Guest was a learner. He said that when the factory was shut down the gas supply at the storage tank was never turned off, and there was no requirement to do so. He said that had there been such a requirement, it would have been shut off. 43In January 2003 Mr Vaughn Eather was employed as an extruder operator. He could not remember whether there was a door at the doorway between the boiler room and the extrusion room, but said that the doorway was always open. He described the procedure for cleaning the extruder when there was no more cooking to be done. This included shutting down the boiler by turning off the water and gas, and releasing all pressure and steam from inside the boiler. He demonstrated that he would turn off the ball valve by pulling the handle horizontal to the pipe. He said that at about 3pm 24 January 2003 he and Mr Hall were showing Mr Guest how to shut the boiler down. He said he was unsure who of them closed the ball valve, although in his Police statement of 27 January 2003 he said that he saw Mr Hall shut down the two gas valves by pulling a hand valve to the off position. Mr Eather accepted there was no restriction on going to the storage tank and shutting it off. He said he never shut it off. It was not put to him that he was aware of any requirement that it be shut off when the factory was not operating. 44Mr James Hall was an extruder operator. He said that when he started his shift at about 3.30pm 24 January 2003 the extruder had been shut down. He and Mr Eather then shut down the boiler. He said that Mr Guest was present as an onlooker under instruction as to how to shut down the boiler. He said that the boiler had been turned off correctly. He insisted that he had shut the gas line off by turning the ball valve handle to the horizontal, and that Mr Eather shut down the other appliances. He rejected the suggestion that it was Mr Eather, not him, who turned off the gas and, in my view, was unshaken in cross-examination. He described as standard the procedure to shut down the boiler, the first step of which was to shut off the gas from the valves. He had followed the procedure on numerous occasions. He ended his shift at 11.30pm and left the factory. When shown the ball valve, Ex D, he observed the handle was bent whereas it had been straight whenever he operated it. From a photograph taken by a WorkCover employee at 2.15pm, 27 January 2003 he observed that the position of the handle was slightly off the horizontal. He said that the handle was in the horizontal position when he left the ball valve. 45Mr Jamie Fordham worked in the bakery section. On 24 January 2003 he finished work and left the factory at about 11.30pm. At this time the gas to the baking oven had been turned off, no gas was getting to the oven, and there was no smell of gas. 46Dennis Wright was a technician employed at the factory. He said that on 25 January 2003 he was working at the factory until about lunchtime. At the time he saw no machinery operating, and did not detect any unusual noises or smells. 47Mr Michael Thompson in January 2003 was employed as a floor foreman. He said there was a door in the doorway between the extruder room and the boiler room but it was very rarely shut. It would have been very odd if it had been shut. He left the site at about 1.30pm 25 January 2003 after checking the factory, including the boiler room and extruder room, to make sure everything was turned off. He did not smell gas, there were no unusual sounds, and all was quiet. He was the last to leave. 48Mr Ronald Verning was employed in the baking section. He said that when he finished work and left the factory at about 11.30pm 24 January 2003 everything had been closed down, and he could not smell gas. He said that after hearing the explosion at about 7.55pm 25 January 2003 he went to the factory and checked the valves to the storage tank. He recalled turning off a number of valves at the warehouse side of the storage tank and another at its other end. He recollected that there was a door between the boiler room and the extruder room, and moving a wooden chock to enable him to sweep behind it. 49Mr Michael Jones' evidence, in a record of interview, was that on 25 January 2003 he was at his property about 400 metres from the site when, at about 2pm, he heard a rattling noise at the plant which continued until about 2.30pm. Just before sundown he heard an explosion and saw a fireball rising to about 50 metres in the air. 50Mr Dean Gollan's evidence, in a record of interview, was that on 25 January 2003 he was working at premises in Borthistle Road about 400 metres from the site when, at about 5.30pm, he noticed a strong smell of gas and later heard the explosion, and saw flames, at the factory. 51Mr Goldring said he frequently went to and from the boiler room and the extruder room, but did not believe there was a door between them. He said that in about July 2002 a fire occurred in the extrusion dryer. Following this event a procedure was established to regularly check for a build-up of fines within the dryer, and to carry out a complete clean out of the inside of the dryer at least once a week. He said there was a practice to turn gas off at the appliances to stop gas leaking into the factory when the appliances were not operating, but there was no practice to isolate the storage tank. He said he was unaware of any need or requirement to isolate the storage tank by turning the gas off when the factory was not operating or was unattended. He was not aware of the requirement of Australian Standard 1596. It was his understanding that the tank and all its components were the responsibility of the LPG supplier. He said that had he been aware that the law required the storage tank be shut down it would have been. He rejected the suggestion that the tank was not shut down because time would be lost in starting up again. 52Mr Brian Henderson and his wife Judith Henderson, on 25 January 2003 were on their property not far from the site. During the morning there was a smell of gas from the factory which became stronger by mid-day. At about 2pm they heard a loud bang, and a hissing sound for a few seconds. 53Evelyn Stamps a visitor to Gunnedah, was walking her dogs past the factory at about 7pm 25 January 2003. She was wearing a sleeveless top and shorts, and her arms, shoulders and legs were exposed. Her recollection is that she was lying on the ground, and on opening her eyes saw the fire and debris in the air. She suffered bruising and shock, but no burns, blisters or other harm from the heat of the explosion. She became hysterical afterwards. She was unable to recall her location at the time, or the circumstances in which she was blown to the ground.

[7]

Investigation into cause of the fire and explosion 54The plaintiffs claimed that the fire and explosion were caused by the failure of the FSR. An understanding of the evidence requires an explanation of the operation of relevant components of the FSR namely, the disc holder, the sealing disc, and the seat ring. 55The function of the FSR is to control the pressure at which LPG from the storage tank flows downstream. The LPG flows at high pressure into the FSR through an orifice within the seat ring. The disc forms part of the sealing surface within the FSR and is held in place against the seat ring by the disc holder. Any loss of its ability to seal against the seat ring could allow LPG to flow downstream through the second stage pipe work at an unregulated pressure. 56When there is no demand for LPG for the downstream appliances, and the appliances are shut off, the FSR diaphragm causes the disc holder to push the disc against the seat ring to act as a seal to shut off the inward flow. When there is demand downstream the disc holder and disc are moved off the seat ring to allow LPG to flow in through the orifice to the outlet side of the regulator, and thence downstream at the set pressure. 57The plaintiffs claim that the failure of the FSR was caused by the fracturing of the disc holder which then forced the disc onto the seat ring where it was damaged with the consequence that there was no complete seal against the seat ring. The FSR was then unable to regulate the pressure and, there being no OPSO, LPG flowed downstream at high pressure. In these circumstances, the dryer filters (the filters) were unable to withstand the over-pressure, and allowed gas to leak into the factory where it ignited. 58The FSR is fitted with an orifice which is termed the seat ring. Its edge is rounded. The surface area of the end of the orifice forms an effective seal against the disc. 59It is also necessary to understand the meaning of the term "wadding". Mr Arthur Donnelley (Ex AAG) explained: "9.15 This is a term applied to the non-metallic sealing disc when a circular incision is made in the sealing face of the sealing disc by the disc having been forced onto the gas orifice inside the regulator. Such circular marks are common on regulator sealing discs which have been in service for a long time. 9.16 The term derives from a 'wad punch' which is a tubular punch with a sharp beveled edge on its end and is commonly used in leather work or for punching holes in gasket material. ... 9.23 Wadding of the regulator sealing disc is the most common cause of downstream excess pressure problem." And (Ex AAH): "6. ... Wadding is an indentation on the sealing disc caused by the sealing disc repeatedly contacting the sealing ring. It has the effect of compromising the sealing ability of the disc ... Once wadding occurs it makes the disc more prone to accumulate dust and dirt particles and other foreign bodies thus further compromising the ability of the disc to seal ... 7. A wadded seal with cause, and in this case did cause, an overpressure situation downstream of the regulator ... when the gas demand ceases or the appliances are shut off the downstream pressure will continue to build up in the closed pipeline system ..." 60The following is a summary of the plaintiffs' evidence as to the investigations and results. Necessarily it is limited to that which I considered to be significant.

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Mr Alan Kerruish 61Mr Alan Kerruish retired in March 2009 as a senior safety inspector for WorkCover, New South Wales. In 1968 he was awarded a certificate of mechanical engineering from Granville Technical College. In about 1978 he obtained an unrestricted gas installer's licence. In 1987 he was employed by the Department of Industrial Relations (later known as WorkCover) as a boiler inspector. Subsequently he was employed in advising and training on the design, operation, and inspection of boilers, pressure vessels and pressure equipment. He gained experience, inter alia, in the investigation of accidents involving LPG and possible design failures, and in the design and installation of LPG plants and facilities in numerous locations, including for local councils and corporations. He said his speciality was in gas boilers and pressure vessels. He has been a member of professional bodies and associations. 62He did not claim expertise in metallurgy, or in the investigations of the origins of fires and explosions. 63His reports of 11 June 2003, 17 July 2003, 5 January 2004, 11 June 2004, 25 September 2009, and 21 June 2010 were admitted subject to objection as Ex AAE. He was cross-examined extensively. 64The defendants objected to the entirety of Mr Kerruish's reports with the exception of certain paragraphs of the report of 25 September 2009 which related to his training and experience, and to the application of various codes to LPG installation. In short, it was put that the reports dealt with the investigation and determination of the origin and cause of the explosion in support of his opinion that the ultimate cause of the explosion was the failure of the FSR. The substantial ground for objection was his lack of expertise or specialised knowledge in such investigations, and in the determination of the origins of fires and explosions. Reliance was also placed on what was said to be his lack of expertise as to dust and dust explosions, and in metallurgy and material science. In particular, it was put that he lacked the qualifications or experience for admission of evidence of his opinions as to the means of failure of the disc and disc holder of the FSR, and of the dryer filters. 65In my opinion the objection should not be upheld. I admit Ex AAE. The evidence establishes that Mr Kerruish has had a lifetime of actual experience in the design and operation of gas pressure vessels, boilers, and LPG installations, including mechanisms integral to these installations, such as regulators and OPSOs, and attached appliances. His evidence was of his observations which went to the cause and circumstances of the leakage of LPG into the factory which resulted in the fire and explosion. I am satisfied that his opinions on these matters as stated in the reports were wholly based on his specialist knowledge, and attract the application of s 79(1) Evidence Act 1995. 66The evidence meets the requirements for admissibility summarised in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, par 85. To the extent that it appears his evidence is unsupported by his specialist knowledge it will be of diminished weight. 67Alternatively, I am satisfied that because Mr Kerruish is well-qualified by experience to speak of the failure of the FSR and its effect upon the operation of the LPG installation, and consequential flow of gas through it at high pressure, and leakage into the factory, his evidence on these matters is admissible under the principles explained by Barwick CJ in Weal v Bottom (1966-1967) 40 ALJR 436. 68Mr Kerruish's task as a WorkCover specialist inspector was to determine the most likely cause of the explosion and to identify possible means to prevent similar future occurrences. He first visited the site on 3 February 2003 for about two weeks, and again on about 8 July 2003. 69On his first visit he inspected the damage in all parts of the factory and the site. He came to the view that the boiler had been properly shut down and the ball valve had been closed. On completion of the investigations he developed the opinion that the source of the gas leak which caused the explosion was in the area of the extruder. He found the pipe work connecting the gas trains servicing the dryer, and noticed the second stage regulators were burnt, and each gas train was substantially damaged, the train for zone 2 more so than for zone 1. These trains and the appliances were removed for testing. As he considered that a possible cause of the over-pressurisation was the failure of the FSR, this also was removed for testing. 70On 11 June and 12 June 2003 Mr Kerruish tested the FSR at TestSafe, Londonderry and reported (report 25 September 2009): "12.7 The union connecting the diaphragm body to the regulator body was disconnected and the two halves parted. It then became obvious why the regulating of the outlet pressure of the FSR was not taking place. The rubber seat of the disc holder had been 'wadded' and the central plug from the seat trapped in the orifice ... 12.8 A portion of the outer section of the rubber seat was found lodged in the outlet side of the regulator and similarly the aluminium disc holder had been shattered and only a portion of it remained in the regulator ... 12.9 The remaining piece of the disc holder, rubber seat and orifice containing the wadded piece of rubber seating were removed and secured. ... 12.11 Visual examination of the fracture surfaces of the disc holder appeared to me to be a fatigue type failure due to repeated pressurisation and release. When the disc holder fractured this allowed an increased force to be applied to the nitrile rubber disc which was already partially indented from repeated seating onto the orifice. When the extra force was applied, the central section wadded out and the seat, frozen through the throttling of gas past the fractured disc holder, failed in a tensile manner and fragmented. ... 12.13 This allowed me to positively establish that over pressurisation of the downstream reticulation pipe work downstream of the FSR was caused by a failure of the disc holder in the FSR. 12.14 My primary opinion of the cause of the over pressurisation was wadding (or cookie cutting) of the seat disc and associated stressing of the seat disc holder to the point where it eventually failed. ... 12.20 ... I observed evidence of seat indentation over a long period of time. The effect of this indentation is that it compromises the disc seat and can lead to an overpressure situation by gas leaking past the damaged seat disc. ... 12.24 ... it is my view from my observation of the seat disc in particular that the integrity of the seat disc had been compromised which enabled the leaking of gas past the seat disc and to the down stream side. It was my view that this is what occurred on the afternoon of 25 January 2003 and which lead to the complete failure of the FSR prior to the explosion." 71In reply to Mr Cox's report of 11 May 2009 (Ex 26) he said: "19.3 In response to paragraph 16 of Mr Cox's first report I agree with Mr Cox that repeated operation of the FSR may have caused the initiation and growth of fatigue cracks in the seat disc. Fatigue cracking is a time dependant phenomenon and I do not agree that the failure of the FSR was not as result of these developing fatigue cracks over time. 19.4 The fatigue cracks are directly related to the failure of the FSR. What happens is that fatigue cracks slowly develop over time until they reach a point of failure. The ultimate event which can accelerate the failure due to fatigue cracking can be a sudden impact of the seat disc against the orifice. However, a sudden event is not necessary. It is not unlike any fatigue cracking- for example rocks weathering on a cliff face, or removing a lid from an old jam tin; the principal is the same in that stress cracking occurs until a point is reached where the mechanical strength of the remaining solid material cannot sustain the load placed on it. ... 19.8 In response to Mr Cox's summary at 5.6 of his first report, I agree with his conclusion that the FSR failed as a result of the seat disc being forced onto the orifice. Whilst it is conceivable that an over pressure event could trigger the defining failure, it has to be remembered that from the perspective of the inlet side of the regulator there is constantly an over pressure event occurring to that inlet side of the regulator. Having regard to the metallurgical evidence of Mr Cox it is clear that there was pre-existing fatigue cracks to the seat disc and disc holder and it is to be expected that eventually the seat disc and disc holder could not withstand the inlet pressure. 19.9 The other reason that confirms my view that it was not a single over pressure event, is that with 2.3 - 3.4 tonnes of LPG unaccounted for and the gas supply being shut off from the reticulation system within 15 minutes of the explosion and fire, there is in my view no other explanation available to account for the tonnes of gas that were missing other than the FSR fatiguing to a point where it was no longer able to carry the load and fractured during the afternoon of 25 January 2003. ... 19.11 Mr Cox's explanation fails on the basis that his suggested single over pressure event is quite simply too late; there is just not enough time after the explosion to discharge 2.3 - 3.4 tonnes of LPG from the vessel. ... 19.15 I do not agree that this explosion was as a result of a single over pressure event. It is my opinion that this occurred as a result of gradual deterioration of the seat disc. The final failure came about when the seat disc failed to regulate the downstream pressure and the resulting over pressurisation lead to the ultimate failure of the disc and disc housing." 72Mr Kerruish subsequently recovered missing pieces of the disc holder and disc from the filter located immediately downstream from the FSR, which confirmed his view that the over-pressure event had come from the storage tank. 73On 22 December 2003 Mr Kerruish, with Mr David Pearson, of TestSafe, pressure tested the second stage regulators which supplied the boiler and the dryer ovens. No mechanical damage to the regulators or their OPSOs was noted. He found (report 25 September 2009): "14.10 However, this was not the end of the matter as the line filter fitted immediately prior to the second stage regulator of Zone 2 was completely shattered and the filter to Zone 1 was split into two pieces. 14.11 The importance of the filters being located before the second stage regulators is that they were not protected by the OPSO tripping on the second stage regulators when the over pressure situation occurred. It also suggested to me that the over pressure situation had reached the second stage regulators prior to the explosion. 14.12 The OPSOs would only have tripped on the second stage regulators as a result of over pressure situation at the outlet of the second stage regulator prior to the explosion. Once the filter boxes fractured as they did any gas pressure would have escaped through those fractures and the OPSO's could not have tripped as the pressure at the outlet side of the second stage regulators would have been reduced to zero. 14.13 In my view, the fact that the OPSOs had tripped indicates that an overpressure had been sensed at the outlet of the second stage regulators prior to explosion. 14.14 The same reasoning applies to the OPSOs of the second stage regulators to the baking ovens. They would only have tripped as a result of an overpressure situation prior to the explosion." 74Mr Kerruish then investigated the possibility of either or both the zone 1 and zone 2 filters as a source of the leakage. He said (report 5 January 2004): "It is not possible to test the filter boxes on the dryer for leakage as the filters are not intact. The main body is in two parts for the unit fitted to the Zone 1 burner train (see photograph 10) and the unit fitted to the Zone 2 train has been shattered and the cover and some pieces are missing (see photograph 11). It cannot be determined, by the available examination methods, whether the damage to this filter was caused by a mechanical blow resulting from the explosion or by a rupture due to excessive internal pressure prior to the explosion. A possible way to establish the cause of this filter box's failure is to allow a metallurgist to examine the fracture surfaces. If it can be shown that an excess internal pressure rupture caused the damage to the filter, then this becomes the most probable source of a large-scale gas leakage into the factory building. Had this filter housing ruptured due to excess internal pressure it would allow gas at around 500kPa to freely discharge through a 40mm pipe." 75He subjected an identical unit to pressure testing. He said (report 25 September 2009): "16.14 The pressure was raised in increments. At 400kPa a significant leak was observed on the left hand side of the inlet port of the filter box between the cover and the body (photograph 10). At 690kPa, a much more significant leak developed on the right hand side between the cover and the body. Then at 975kPa the box lid had distorted to such a position under the pressure contained within the box that the sealing 'O' ring between the cover and the body blew out completely allowing unrestrained discharge from the filter box. 16.15 When the filter box was removed from the test apparatus and examined, it showed that the left hand side and the right hand side of the lid had distorted to an extent that retention of pressure was not possible. 16.16 Comparing this with the one filter box that had its lid intact from the BestCare site, it showed that the lid on the filter box from the site had suffered identical damage to the test unit. 16.17 The conclusion that I drew from this, is that the filter box from the site and similarly the identical one which had been shattered had been subject to a pressure far in excess of 100kPa, the pressure that it had been rated for, and a pressure of a significant magnitude to physically and permanently distort the filter box lids. 16.18 The gas leak could have had two possible sources, either the 'O' ring seal of the filter box lids had been extruded out of its sealing face or a complete fracture of the filter boxes had occurred. Either way this enabled me to conclude that the filter boxes fitted to the dryer were the ultimate source of gas leakage into the factory." 76Mr Kerruish also tested the boiler main burner regulator and the boiler pilot regulator for defects, and to ascertain whether they were a possible source of leakage of LPG. He found that the periphery of the diaphragm of the main burner regulator OPSO, and its O-ring had been damaged by heat. The only leak source found was at the O-ring seal, caused by the heating of the unit in the fire. His view was that neither regulator nor OPSO was a source for the leakage of LPG into the factory prior to the explosion. 77In his report of 17 July 2003 Mr Kerruish recorded findings on inspection of the storage tank. Relevantly, he found it to have a nominal capacity of 43 kl, and that the amount of LPG removed from the vessel was 14.88 tonnes. 78On 8 June 2004 Mr Kerruish examined the Bourdon tube pressure gauge downstream of the FSR (the first gauge), and an identical gauge from the dryer gas drain (the second gauge). As for the first gauge, the indicator needle was found to be against the underside of the zero peg. The Bourdon tube within the gauge casing had a significant bulge which indicated this gauge had been subjected to a pressure greatly in excess of 250 kPa for which it was designed. As for the second gauge, the needle was found to be off set 25 kPa from the zero position. The Bourdon tube was found to be out of true roundness which indicated that excessive pressure within the tube had caused it to yield and not return to its true circular shape. In the conclave of experts he said he would have expected the second gauge to have suffered similar damage to the first, namely bulging of the Bourdon tube, but not necessarily. 79Mr Kerruish also examined the three second stage regulators from the baking (biscuit) oven. Apart from minor impact damage the three gas trains for this oven did not show visual signs of fire damage. He observed that the nearest two regulators were rated to operate at a maximum of 240 kPa, and had tripped, indicating that they had been subject to over-pressure. The third regulator located at the furthest point along the gas train was rated to operate at a maximum of 450 kPa. It had not tripped, which indicated that once the escape of gas commenced at the point of least resistance it was unlikely that the line pressure at this regulator reached 454 kPa. 80Mr Kerruish's opinion as to the sequence of events may be summarised as follows: (1)LPG leaked through the FSR past the disc which caused pressure downstream to increase. This activated the OPSOs for the second stage regulators and stopped all flow past those regulators; (2)the increased pressure caused the distortion of the disc holder which allowed pressure to increase at a greater rate downstream, which eventually caused the disc and disc holder to fail; (3)the dryer filters, not being protected by OPSOs, suffered an increase in pressure beyond their rated pressure which caused their lids to bow allowing leakage of LPG through their O-ring seals into the plant below; (4)upon failure of the FSR sealing assembly, full tank pressure, estimated at 850 kPa, was applied to a filter rated for only 100 kPa, and caused it to fail, allowing an uninterrupted flow of LPG from the storage tank into the factory. 81He said that had the supply valve from the storage tank been turned off when the factory shut down no gas would have entered the pipeline and the explosion would not have occurred. 82Mr Kerruish was cross-examined as to his assertion that the zone 1 filter was deformed in the same manner as the tested unit. He pointed to the distortion of the lid in the centre of the filter which showed that the lid was not sitting flush with the lower portion of the unit (T p 1472). He said that this distortion was caused by excess pressure forcing the O-ring through the gap. i.e. the pressure from within caused it to bow and the LPG to leak out through the gap. 83As for the zone 2 filter, in the conclave he agreed (Ex 42, q 14.4) that it was not possible to determine whether its lid was deformed prior to the explosion in the same manner as the tested unit was deformed, but adhered to his view that it failed from over-pressurisation of the second stage pipe work. He said, in effect, his conclusion was based on all the evidence he collected and tests carried out, relying on 50 years experience in the industry (T p 1467). 84He accepted that his opinion that the disc failed before the disc holder failed was based on speculation. 85In cross-examination Mr Kerruish adhered to the view that over-pressurisation prior to the explosion caused the second stage regulator OPSOs for the dryer and bakery to trip. He rejected the proposition that this was caused by the violence of the explosion. 86With regard to the Bourdon tube pressure gauges Mr Kerruish was pressed to explain why, if the FSR failed and caused over-pressurisation, there was no bulge in the second gauge's Bourdon tube although the gauges were identical. He maintained his view that both gauges were subject to over-pressurisation, and did not accept that the zero offset in the second gauge was caused otherwise. In his opinion, the position of its needle indicated excessive pressure within the Bourdon tube which caused it to yield and lose true roundness.

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Mr Arthur Donnelley 87Mr Arthur Donnelley died in August 2009, aged 72 years. His evidence was contained in his reports of 9 April 2008 and 27 July 2009, Ex AAG and Ex AAH respectively. They were admitted subject to objection. 88He joined his family firm, A W Donnelley Pty Ltd, industrial gas fitters and plumbers, as an apprentice plumber in 1957. He became a licensed plumber, gas fitter, and drainer and was granted an unrestricted LPG licence in 1965. He subsequently obtained an advanced towns gas licence which qualified him to work on large industrial gas installations. Mr Donnelley was experienced in the design and building of industrial gas fired appliances, and in the installation of LPG storage systems for shire councils and service stations. He had many years experience as an investigator into gas related accidents for police, loss adjusters, and insurance companies, and for many years was a member of relevant professional associations. 89Objection was taken to his reports on the ground that he lacked the necessary specialist knowledge to support his opinions as to the origin and cause of the explosion, and the cause of failure of the FSR, and of the filters. His expertise in the design and installation of gas systems was accepted. For the same reasons for admitting Mr Kerruish's reports, I am satisfied that Mr Donnelley was well qualified to express an opinion as to the cause and circumstances in which LPG leaked into the factory, and as to the mechanism and operation of the FSR. His evidence meets the requirements for admissibility explained in Makita and Weal and, accordingly, is admitted. Where his evidence appears to extend beyond his specialist knowledge it will be of diminished weight, if any. 90Mr Donnelley said he first visited the site on 29 January 2003 and seven times thereafter over the next few weeks. He inspected the several installations and appliances, and tested the underground gas lines. He was present on 11 June 2003 with Mr Alan Kerruish at the premises of TestSafe, Londonderry, when the FSR was tested, dismantled and examined. 91He said that the wadding effect had punched right through the disc, something he had never seen before. He said that wadding of the disc is the most common cause of excess pressure downstream. His opinion was that the wadding had begun between six to twelve months before actual failure. He observed that the disc holder was fractured, and a piece had been recovered from the downstream pipe work. 92As a result of his on site investigations, he concluded that LPG had escaped inside the extruder building, from a high level above the elevated dryer. He then searched for the device in the elevated dryer gas trains which had the lowest pressure rating. He noticed the filters were fractured, and had a pressure rating of 100 kPa. 93On 11 August 2003 he carried out a pressure test on a filter similar to the dryer filters. He also became aware of pressure testing of similar filters at TestSafe by Mr David Pearson and Mr Kerruish. He concluded that the gas escape emanated from either or both filters, from which gas would readily cascade down over the dryer to the boiler and, in time, could permeate throughout the site resulting in an explosion. 94In summary, Mr Donnelley's view as to the sequence of failure of the FSR was: (1)the effect of wadding compromised the ability of the disc to properly seal against the inlet pressure, thus allowing slow leakage of LPG past the disc; (2)the leakage caused over pressuring of the downstream pipe and fittings, which caused LPG to leak from the filter(s), rated at 100 kPa, into the factory; (3)the explosion occurred when the leaked gas ignited; (4)the filters fractured due to mechanical damage from the explosion. This created two open ends in the gas lines which caused a large flow of gas through, and a sudden excessive load on, the FSR; (5)the massive flow of LPG towards the open ends of the gas line caused the fracture of the disc holder. 95He said (Ex AAH): "64. ... if the FSR simply allowed a slow leakage past the sealing disc, which is my view, then the pressure in the gas line could take some time, possibly minutes, to fully pressurise the downstream gas lines. I would describe this as a first stage failure of the FSR. This would only apply if the first stage regulator completely failed in one single step. Based on my years of experience with these regulators, in my opinion the regulator allowed gas to pass to the downstream side and thus caused a build up of pressure in the downstream pipework. The dryer filter/s began to leak thus causing a build up of free gas in the buildings. This free gas found an ignition source and an explosion occurred. In my opinion, the failure of the first stage regulator occurred in two stages.

The gas leaked past the sealing disc thus over pressurising the downstream pipe and fittings. The dryer filters began to leak gas. Uncontained LP Gas permeated throughout the area and was finally ignited.
The explosion occurred and the filters were fractured by mechanical damage. This created two open ends in the gas lines causing a large flow of gas through the first stage regulator which caused a sudden excessive load on the regulator. The first stage regulator components failed, including the fracture of the Sealing disc holder, due to the massive flow of gas toward the open ends of the gas line." 96He disagreed with Mr Cox's proposition that minor damage to the seat ring would not permit leakage past the disc. He said (Ex AAH): "79. Mr Cox says that minor physical damage of the seat ring would not have permitted the leakage of LPG past the sealing disc. I disagree. Based on my extensive experience in serving regulators of this type, I have found that an OPSO trip can be caused by dust alone on the sealing disc. Considering the degree of damage sighted by Mr Cox I do not agree that that would not allow gas past the seal." 97He said that a reasonably competent supplier of the gas installation would have provided an OPSO at the FSR and had this been done the failure of the FSR would have caused a shut down of the system, and prevented the fire and explosion. 98With regard to the boiler ball valve handle, Mr Donnelley did not accept that the photographs established its position prior to the explosion. His view was that it could have been moved by impact from flying debris.

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Mr R David Pearson 101Mr Pearson is the senior fire and explosion investigator employed by TestSafe, Australia. He has been so employed for over 20 years during which he has gained extensive experience into the explosability of dust, and dust explosions. He has investigated numerous incidents involving the causes of gas and dust fires and explosions. He claims no expertise in metallurgy, material science, the operation of LPG regulators, or the mechanism of Bourdon tube pressure gauges. 102His evidence included two reports of January 2004 (Ex AT and Ex AU), a report of June 2004 (Ex AV), and a report of July 2004 (Ex AW). He was cross-examined extensively. 103It was accepted that Mr Pearson has specialist knowledge in fire and explosion investigation. Objection was taken to s 9, Ex AW in which he expressed the conclusion that the second stage pipe work had been over-pressurised prior to the explosion. The ground was that the admissibility of his opinion depended upon proof of the assumption stated in s 4.1 in respect of the Bourdon tube pressure gauges, the damage to the disc and disc holder, the activation of the second stage regulator OPSOs, and the damage to the filters. It was put that as Mr Pearson had relied on the work and views of others, including Mr Kerruish, proof of the assumptions required evidence other than his. I admit Mr Pearson's evidence. The weight to be given to it will depend upon the extent to which the matters he relied upon are proven. 104In Ex AU, Mr Pearson reported on visual examination of the disc, disc holder, and seat ring of the FSR. He described and photographed the recovered fragments of these components. He noted that although the wadded out centre of the disc had lodged inside the seat ring, it did not form a seal, and would have allowed gas to flow through. He noted the base and sides of the disc holder had fractured. He inferred, inter alia, from the incision made by the seat ring into the disc, and the nature of the fractures of the disc holder, that there may have been a considerable amount of force exerted by the disc and disc holder assembly onto the seat ring. He listed a number of possible modes of failure of the FSR which he described as unclear and speculative. He said (p 16): "One other mode of failure may be as a result of the rupture of the LPG pipes, which was associated with the large explosion. This could have caused much higher gas velocities through the regulator than would occur during normal operation. This may apply a high load upon the "Disc" + "Disc Holder" assembly causing damage. The "Disc" may have been subject to gradual wear and/or incision leading, in the right circumstances, to ultimate catastrophic failure. The extent to which these or other mechanisms actually occurred, their sequence, timing and how they may have interacted is unclear at this stage." 105His conclusion was that a failure of the FSR was the only credible way to produce high gas pressures in the LPG pipes within the plant. 106Mr Pearson's report, Ex AV, recorded his observations of the nature and extent of the damage at the site during several visits between 29 January 2003 and 20 March 2003. He understood the LPG supply to the boiler had been shut off prior to the explosion. He found that the overall pattern of damage indicated the centre of the explosion to be somewhere inside the extrusion plant. He said there was evidence that the pipe work including the dryer and bakery gas trains, had been subjected to high internal pressure and that the explosion could only have been due to an ignition of propane. 107In his final report, Ex AW, Mr Pearson analysed available evidence including results of testing of various appliances by Mr Kerruish and others, observations at the scene, and the statements of the witnesses, Mr and Mrs Giffen, Mr and Mrs Henderson, and Ms Stamps. From the examinations and testing of the Bourdon tube pressure gauges, the disc and disc holder of the FSR, the OPSOs for the second stage regulators, and the filters, the conclusion was that the downstream line was subject to high pressure, and that the FSR may have failed progressively between the shutting down of the bakery area at about 9pm 24 January 2003 and the explosion 23 hours later. Mr Pearson concluded from the Hendersons' statements that the sound they heard on the Saturday afternoon may have been the failure of a filter under pressure. 108The report included his estimates of the amount of LPG leaked into the factory (about 2 tonnes), and of the diameter of the fire ball (about 45 metres) with regard to the lack of injury to Ms Stamps. 109In summary, he concluded that the likely location of the LPG leak was from the filters, caused by over-pressurisation and their rating to withstand a pressure of only 100 kPa. He said that the failure of the FSR, which caused the over-pressurisation, was the likelihood that the sealing/regulating surface of the FSR became compromised and unable to seal completely which allowed excessive pressure to be applied to the filters, resulting in their failure. 110He said that there was insufficient damage within the extrusion area to indicate a blast pressure of 80 kPa and that a pressure of 800 kPa was impossible. He said, based on observations of witnesses and himself, it was unlikely there was an ignition in the boiler room. To the hypothesis that LPG leaked through the main burner regulator OPSO, he said that any evidence of a hole in the diaphragm had been lost though fire damage. 111Under cross-examination, Mr Pearson acknowledged that he relied upon information provided by Mr Donnelley and Mr Kerruish in describing matters relating to the FSR, the gauges, the filters, and OPSOs, and to explain faults associated with them. He relied on these persons on the issue of whether over-pressurisation had damaged these items. He agreed that he did not observe the zone 1 filter and the test unit to be similarly damaged. 112He agreed that had the isolation valve been turned off at the tank, the explosion would have been avoided.

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Professor Mark Hoffman 113Professor Hoffman obtained a doctorate in material science and engineering in 1994, and is Head of the School of Material Science and Engineering at the University of New South Wales. His speciality is in the field of materials fracture and failure and the structural integrity of materials. As part of his scientific research he has worked with high pressure gases, but does not claim expertise in gas dynamics or combustion. 114His evidence included reports of 31 March 2008 (Ex AAJ), 21 September 2009 (Ex AAK), and 21 June 2010 (Ex AAL) on which he was cross-examined. 115The defendants, through Mr Simon Cox, acknowledged Prof Hoffman as a specialist in fracture mechanics, failure analysis, materials engineering, and to be a world authority in his field. They accepted his qualifications to express opinions on the failure of the FSR, the damage to the Bourdon tube pressure gauges, and the cause of failure of the filters. They contended that, to the extent that he expressed opinions as to the cause of the explosion, his evidence should be rejected or given no weight on the ground that he lacked the necessary specialist knowledge. The evidence indicates that he lacks specialist knowledge and experience in the investigation of the causes of explosion. However, I admit the reports, and will take the objection into account when assessing the weight, if any, to be given to Prof Hoffman's evidence on a particular issue. 116He observed the plaintiffs' equipment at the TestSafe laboratories on 31 October 2007 and 21 July 2009, and referred to the microscope images provided by Dr Corderoy and Mr Cox. The following is a summary of his evidence. 117Professor Hoffman found that there had been intergranular failure of the disc holder which indicated that the metal from which it was made was brittle, and of a low fracture toughness. His view was that the disc holder was manufactured with inappropriate material, being a brittle alloy of low fracture toughness, and/or that in the manufacturing process the disc holder was subjected to inappropriate heat treatment which resulted in low fracture toughness. He said that the failure of the disc holder was caused by fatigue crack growth followed by fast fracture, a process which resulted from its defective manufacture. 118He observed that the disc had been punched out by the sharp edge on the seat ring, or wadded, which caused it to split; and that the first Bourdon tube pressure gauge had been overloaded and its needle pushed to the stop position; and that the filter boxes had failed as a result of brittle fracture of the aluminium boxes. 119In his opinion, the operation of the FSR propagated fatigue cracking of the disc holder, and a subsequent fast fracture occurred which caused it to fail. As a result the FSR was unable to operate properly with the result that it pushed the disc with high pressure into the seat ring, leading to the failure of the disc. This would have led to an incomplete seal on the seat ring, meaning that the FSR would then seek to increase pressure via the disc holder. The incomplete seal allowed gas at high pressure to flow downstream. The components downstream were unable to structurally withstand the unregulated high pressure which led to their failure and the leakage of LPG which, assumedly, caused the fire. 120In particular, he said (Ex AAL): "28 The failure of the disc holder was not of a nature which would have meant that it would be unable to exert pressure; central axis loading would still have occurred leading to the observed wadding. It is seen that the sealing disc itself failed in an asymmetric fashion. This is consistent with the asymmetric loading by the failed disc holder. As the failed piece is to one side and the central loading point of the sealing disc remains in place, then the observed wadding would have occurred, but that the failure of the outer sections and radial cracking of the sealing disc would be asymmetric as observed. ... 31 The SEM evidence presented by Mr Cox therefore supports the hypothesis that fatigue occurred in the disc holder over at least 100s of cycles which lead to failure at one side. This then led to uneven loading of the sealing disc which most probably caused the seal to be incomplete and allow high pressure gas to flow past this section of the regulator. This led to overloading of the sealing disc accompanied by opening and closing in the orders of 10s of time in an uneven manner which precipitated its complete failure. 32 The SEM evidence also shows that the diagrams 1 -8 presented by Mr Cox are an incorrect representation as they show the crack to be concentric whereas the SEM images show that it was not so, propagating more on one side than another, consistent with uneven support from the failed disc holder." He said (par 33) that the asymmetric nature of the secondary radial cracking of the disc indicated that at that stage it was not symmetrically held. 121In his report of 21 September 2009 (Ex AAK) he found that the zone 1 and zone 2 filter boxes had failed as a result of brittle fracture of the aluminium boxes within which the filter material had melted. He said: "26. I believe that it was highly probable that the Zone 2 filter box failed through over-pressure and possible explosion. The reasons for this observation are as follows. Pressure testing of a similar filter box by Kerruish (11 June 2004) revealed that overpressure resulted in a blow out of the o-ring seal between the lid and housing at the side of the filter box. The failed pressure gauge indicated that comparable pressures had been observed in the gas train. Following the explosion, pieces of the Zone 2 filter box, corresponding to the location of the o-ring blow out observed by Kerruish, were unable to be recovered. This is consistent with them breaking into many small pieces as the result of an explosive failure, originating from the same location as the o-ring blowout in Kerruish's test, which may have been caused solely by high gas pressure or accompanied by ignition." 122In his report of 21 June 2010 (Ex AAL) Prof Hoffman adhered to his proposition that the zone 2 filter box could have failed through over-pressure and possible explosion. He apparently accepted Mr Kerruish's testing procedure for the zone 1 filter box and the results thereof, and expressed the view that there was a high probability that the filter box failed, from which flammable gas leaked, and that leakage prior to its failure was the most likely scenario. 123He was not cross-examined on his evidence on the filters. 124When cross-examined on his opinion that the disc holder lacked sufficient fracture toughness necessary for its use he confirmed his conclusion that the observed intergranular fractures indicated inappropriate heat treatment in the manufacturing process. 125Under cross-examination he adhered to his opinion that it was not possible for the disc to fail whilst the disc holder base supported it. He disagreed with the proposition that fatigue cracking of the annular portions of the disc could only occur whilst the disc holder was intact. He said that the disc suffered fatigue cracking, or tensile failure, after the disc holder failed. He consistently rejected the proposition that the disc failed before the disc holder. He explained that the rim of the disc holder exerts a compressive stress upon the disc which stops it failing, but once the disc holder fails, the constraint on the disc is lost leading to an inability to seal against the flow of LPG. He maintained his view that part of the rim of the disc holder was missing before the disc failed. 126Overall, Prof Hoffman was unshaken in cross-examination, and his answers appeared to have been accepted without further pursuit.

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Mr Simon Cox 127Mr Cox is a forensic consultant. His evidence included reports of 11 May 2009 (Ex 26), 2 July 2009 (Ex 27), 24 September 2009 (Ex 28), 14 March 2010 (Ex 29, 30), 20 July 2010 (Ex 31), 13 August 2010 (Ex 32), and 9 November 2010 (Ex 33, 34), on which he was cross-examined. 128He was initially retained by the defendants to assess whether the failure of the FSR resulted from long term deterioration and wadding, and to advise as to the cause of failure of the filters. He was requested to consider the reports and findings of Messrs Donnelley, Pearson, Kerruish and Dr Corderoy. On 20 April 2009 he attended the TestSafe laboratory with Messrs Donnelley and Kerruish, and examined equipment recovered from the site. With Mr Donnelley, he examined components of the FSR using a scanning electron microscope (SEM). 129In his report of 11 May 2009 (Ex 26), Mr Cox concluded (par 32) that the FSR failed as a result of the disc being forced into the seat ring by a single over-pressure event rather than gradual deterioration by the process of wadding. He thought that had wadding occurred over an extended period, as suggested by Mr Donnelley, the fatigue cracks evident on the sealing surface of the disc would have extended through the thickness of the disc rather than for a distance of less than 30 per cent of its thickness, as observed during examination. In other words, his view was that the failure of the disc and/or FSR resulted from sudden brittle overload of the disc rather than fatigue failure. 130He also determined (par 38) that the filter boxes failed as a result of mechanical stress generated by the explosion(s) rather than over-pressurisation due to prior failure of the FSR as suggested by Mr Donnelley, or excessive internal pressure, as suggested by Dr Corderoy. 131Mr Cox's report of 2 July 2009 (Ex 27) responded to the reports referred to. He proceeded on the basis that Mr Pearson and Mr Donnelley had accurately recorded their observations, and that the video and photographs were accurate evidence of the scene of the explosion(s). In his opinion the explosion occurred in the boiler and boiler room which initiated a dust explosion (probably in the mega mill) which cascaded throughout the plant and caused the majority of the damage to both plant and building. 132On 28 May 2009 Mr Cox examined components of the boiler and dryer gas train. With regard to the main ball valve he observed soot protection patterns caused by the stop on the handle, and a mark on the ball of the valve said to be caused by heat damage to lubricant on its sealing surface. He said (par 31) "... Taken collectively, this evidence indicated to me that the ball valve was not in the fully closed position immediately after the explosion which raises the likelihood that it was also in this position immediately prior to the explosion(s)". 133Following examination of the main burner regulator and OPSO, he concluded (par 37) that it was leaking prior to the explosion and the flame front from the explosion lit back to the OPSO vent. His view was (par 43) "... that LPG was able to leak into the boiler room prior to the explosion, via the part open ball valve on the main burner gas train and the failed diaphragm in the main burner regulator OPSO". 134He rejected the proposition that the fracture of the disc caused the FSR to fail because (par 68): "... Had such a mechanism applied, I would have expected there to be more extensive fatigue cracking extending through a greater proportion of the fracture surface than was observed. On the contrary, it was apparent that fatigue cracks did not extend around the entire sealing surface and also did not extend for greater than 30 per cent of the thickness of the disc." He went on to say: "69 The next alternative is that a pressure wave and flame front from the boiler and/or dust explosion propagated through the damaged pipework to the first stage regulator. In order for this to occur, the gas concentration inside the pipe would need to have been within the flammable limits. Lohrer et al (2007) established that the peak pressure generated under such conditions in propane/air explosions depends upon the value of L/D (where L is the length of the pipe and D is its diameter) with the pressure trending to a constant value of 330 kPa for large values of L/D. Eckhoff (2003) also cited work on various dust explosions involving the effectiveness of vent pipes which showed results namely a constant pressure of 300 kPa for large values of L/D. 70 Other studies have looked at the acceleration of pressure waves ahead of a flame front due to compression of the gas with detonation being achieved in some instances and creating pressures in the order of 800kPa. However, Lunn (2001) cited work on pipes with 25, 50 and 100 mm connected to an enclosure containing an explosible dust mixture in which the pressure at the end of a 40 m vent pipe was measured. In this work, the pressure recorded for 25 mm and 50 mm diameter did not exceed the enclosure pressure while the pressure for the 100 mm diameter pipe reached values well in excess of the enclosure pressure. On this basis, I would not expect the pressure inside the 50 mm gas line from the first stage regulator to have exceeded the blast pressure of the explosion but probably been more in the order of the 300 kPa described in the work cited by Eckhoff (2003) 71 Considering the mechanical advantage associated with the mechanism of the regulator, it was calculated that the application of a pressure of 300 kPa to the diaphragm on the downstream side of the regulator would cause a load of 1500 N to be applied to the sealing disc which is sufficient for it to have suffered an overload failure in the manner observed in the presence of some pre-cracking. The occurrence of such a failure mechanism was also supported by the failure of the pressure gauge located immediately downstream of the first stage regulator which is described in Mr Donnelley's report as having exceeded its maximum pressure of 275 kPa." 135His conclusions were (par 77): "77 ...

The explosion(s) which severely damaged the Bestcare Foods Ltd factory was seated in the extrusion plant building
The major damage to the factory was caused by a dust explosion which propagated throughout the plant
The dust explosion was preceded by a gas explosion in the boiler and boiler room
The likely source of gas for the explosion in the boiler and boiler room was a failure of the diaphragm in the main burner regulator OPSO for the boiler
An explosible gas mixture would not have occurred within the boiler and boiler room if the main burner regulator OPSO had been vented outside the building
The likely ignition source for the gas explosion was one of the water heaters, the control cabinet or some other unidentified electrical appliance in the boiler room
The risk management system which was in place at the Bestcare Foods Ltd factory was inadequate in terms of its ability to prevent the propagation of the dust explosion throughout the plant
Failure of the first stage regulator sealing disc was caused ... by the propagation of a pressure wave along the supply pipe immediately following the explosion(s) ...". 136His report of 14 March 2010 (Ex 29) was in reply to evidence of Prof Hoffman and Prof Masri. 137He disputed (par 24) Prof Hoffman's view that the disc holder failed when a fatigue crack reached a critical link and overload fracture occurred under loads imposed during normal operating conditions. His view was that a stress in excess of that generated by the normal operating pressure on the downstream side of the FSR would be required for the disc holder to have failed in the manner observed at the time, and the evidence showed the disc failed before the disc holder, contrary to the professor's view that the disc holder failed first. 138Mr Cox also remarked (par 31) that Prof Hoffman had misunderstood the concept of a pressure wave driven through the pipe work to the FSR by pressure generated by the explosion. 139He noted that the diaphragm of the OPSO for the main burner regulator had been damaged by fire and mishandling since the accident, to such an extent that it may have masked evidence of a pre-incident failure. 140Mr Cox maintained (par 50) that the pressure required at the FSR to cause the observed damage was only 300 kPa, thus a back pressure wave from the explosion could have caused the damage even with significant decay over the length of the pipe. 141Mr Cox's report of 14 March 2010 (Ex 30) replied to evidence of Mr Kerruish, Mr Donnelley, and Mr Pearson as to their methodology in investigating, and reaching conclusions about, the cause of the explosion. 142He criticised (par 184) Mr Kerruish's reliance on witness statements to conclude that the boiler gas supply train was isolated at the ball valve. He said (par 185) that in his opinion: "... the statements from the people responsible for isolating the boiler at the ball valve are not as reliable as the photographic evidence of the ball valve being partially open after explosion. Similarly the statements concerning the failure to smell gas by other employees working in a different part of the plant are also not strong empirical evidence noting that Mr Henderson stated that he smelled gas that morning." 143He also criticised (par 193) Mr Kerruish's hypothesis that the Bourdon pressure gauge near the FSR indicated the release of unregulated gas downstream prior to the explosion. He said that its examination provided no direct evidence as to when over-pressurisation occurred, or of the magnitude of pressure which caused it to fail. He said it was equally likely that pressure in excess of 250 kPa could have been supplied by a pressure wave caused by the explosion (par 194) "... both circumstances had the potential to damage the pressure gauge in the manner observed". As the dryer gauge did not show a pressure bulge he thought that its damage "... may equally have been caused by mechanical forces during the explosion(s) as an over-pressure event prior to the explosion" (par 196). 144With regard to the disc Mr Cox said: "273 ... The objective scientific evidence obtained by SEM examination of the fracture surfaces and sealing surface of the annular portions of the sealing disc confirm that there were two fracture zones, with the second (more substantial) fracture zone associated with a single overload event initiating from the first fracture zone which was caused by fatigue. It also confirmed that the sealing surfaces of the sealing disc were intact and had not been impaired by the existing fatigue cracking inside the area of the sealing edge of the sealing surface. This objective, verifiable scientific evidence which was collected in Mr Donnelley's presence and which has been made available disproves the hypothesis that the sealing surface of the sealing disc was "indented" or "wadded" prior to the explosion in a way which allowed gas to leak past the regulator." 145He confirmed (par 285) his view that the FSR failed as a result of a pressure wave following the explosion. He explained (par 286) that the scientific basis for this view was the same as "... that for shock tube experiments which are used in a variety of aerospace and fluid dynamics research applications", and the development of shock tube technology. He concluded: "288 In summary, it is my view that the hypotheses formulated by Mr Donnelly, Mr Kerruish and Mr Pearson that there was a release of unregulated gas downstream of the first stage regulator prior to the explosion(s) due to the failure of the first stage regulator to regulate pressure due to wadding is inconclusive in that the evidence relied upon by them to formulate the hypothesis could equally have been created by the explosion(s)." 146Based on his analysis of the evidence he concluded (par 351) that there was a failure of the main burner regulator OPSO for the boiler from which gas leaked into the boiler room, ignited, and caused an explosion. He held that the filters and the FSR were damaged by the explosion, and did not cause the explosion. 147Mr Cox's report of 20 July 2010 (Ex 31) was of his examination on 17 June 2010 at TestSafe of the filters and the gauges. His view was that the zone 1 filter box lid had not become deformed as a result of excessive internal pressure as claimed. A similar exercise for the zone 2 filter could not be undertaken as the lid had become detached and was not available for examination. 148He found that the bulge in the Bourdon tube of the first gauge had been subjected to excessive internal pressure, but there was no evidence of similar bulging in the Bourdon tube of the second gauge. He said, in effect, that it was incorrect to conclude that the condition of the filters and gauges supported the theory of over-pressurisation of the gas lines. 149His report of 13 August 2010 (Ex 32) replied to Mr Kerruish's report of 21 June 2010, and his reports of 9 November 2010 (Ex 33, 34) replied to reports of Prof Masri and Prof Hoffman respectively. It is unnecessary to summarise them. 150The evidence of Mr Cox in cross-examination included the following. 151He agreed that the only possible explanations for the failure of the FSR were either it was damaged by a pressure wave from the explosion which caused the disc to fail, or that it had failed causing over-pressurisation downstream, leakage of LPG, and, ultimately, the fire and explosion. He accepted that on the available evidence the only other theory to explain the failure of the FSR was that put forward by the plaintiffs. 152He agreed that the success of the pressure wave theory depended upon proof of several critical assumptions, and failed if any one was not established. The assumptions included that the main burner ball valve was left open before the explosion; the orange door between the boiler room and the extruder room was closed; there was a failure of the diaphragm of the main boiler regulator OPSO through which LPG leaked; that leakage continued for a period of about six hours; that following ignition and explosion a pressure wave entered the pipe system at some point; that LPG compressed by the pressure wave passed into the FSR; that the disc failed and broke into three pieces after which the disc holder failed. 153He agreed that although it was a critical assumption that the pressure wave entered the pipe work through an opening of 50 mm diameter, its point of entry remained a matter of speculation. 154Concerning the ball valve, Mr Cox said that although he had read the statements of employees who said the ball valve had been closed, he rejected them in favour of the photographic evidence. He did not consider the possibility that it had been knocked open in the explosion. He agreed it was open to conclude that the handle and valve were knocked in the explosion. 155As for the ball valve handle, he agreed that it would require significant force to bend it as it now is. He was unable to say whether it was bent prior to, or in, the explosion, and could not exclude the possibility that it had been bent by force from the explosion. He said that to accept probability required evidence, such as witness marks on objects which may have struck the handle, the existence of which was unknown. He based his conclusion that the ball valve was open prior to the explosion on soot protection patterns observed on the ball valve. 156As for the main burner regulator OPSO he asserted that LPG leaked through a hole in a part of the diaphragm which had been fire damaged, and was missing. He was unable to identify the location, size, or nature of any fault, and agreed that the question of whether or not in fact there was a fault remains one of speculation or guesswork. He agreed, in terms, that the failure of the diaphragm was speculation. He said (T p 2301, l 4 - l 13): "Q. And you recognise that dealing with the pressure wave theory has taken up the greater part of the hearing time in this case, don't you? A. It's taken up a large part of the hearing time, yes. Q. And so far it's built entirely on speculation in a number of areas, isn't it? A. Insofar as the point of entry is concerned, yes. Q. And insofar as the critical matters of the failure of the diaphragm is built on speculation? A. The overall theory, the overall pressure wave theory that's correct." 157As to the assumption that the boiler room door was closed, he agreed it was critical for the success of his theory. He had found no evidentiary support for his understanding or assumption that the door was closed, and the only evidence he could glean from the photographs related to the disappearance of the eastern wall of the boiler room. He had proceeded only on an instruction that it was closed. He said his method of inquiry did not involve consideration of witnesses statements, and explained (T p 2306, l 13- l 28): "Q. Is your position Mr Cox, that if witnesses said the door was closed you would put in in [sic] your statement but if witnesses said the door was open you would leave it out of the statement? A. I always prefer to reach my hypothesis or formulate my hypothesis on the basis of physical evidence. ... Q. Could you complete your answer please? A. I always prefer to formulate my hypothesis on physical evidence. If there are items that are put forward by witnesses I may or may not include them in my report but the hypothesis are formulated on the basis of physical evidence and then that evidence is tested that's the scientific method." 158He was unable to say whether gas leaked from the zone 2 filter because the lid and fixings were not available for testing. 159He agreed the disc holder was made from a brittle material. 160Mr Cox disagreed with Prof Hoffman's view of the process of failure of the disc holder and disc. He maintained that the disc failed from sheer overload failure following a period of fatigue. He agreed that the disc holder and disc were deteriorating, and it was inevitable that either or both would fail at some time, although when was unknown. 161He accepted that without identification of the point of entry, the diameter of the opening could not be established, and agreed that absent proof of these matters determination of the force of the pressure wave at the FSR was a matter of speculation. 162He said he had no experience in relation to the operation of FSRs. His only expertise was based on a schematic diagram of the working of an FSR. He agreed he had no experience in fluid dynamics, aerospace, shock tube technology, the design of Bourdon tube pressure gauges, the design and installation of gas systems, and in the design and operation of boilers. He agreed that his views were based on a review of evidence many years after the event, and that it was far preferable to have examined the scene first hand rather than to rely on photographs and statements. 163He acknowledged Prof Hoffman as a specialist in fracture mechanics, failure analysis, and materials engineering, and a world authority in his field. He recognised Mr Kerruish and Mr Donnelley as experts in the design and installation of gas systems, and Mr Pearson to be a highly qualified expert in fire and explosions. 164The defendants relied heavily upon Mr Cox's evidence in challenging the plaintiffs' case, which included propounding the pressure wave theory as the probable explanation for the failure of the FSR after the explosion. It is appropriate at this point to state my findings about him as a witness, and the weight to be given to his evidence. 165The pressure wave theory was advanced as the only possible alternative explanation for the failure of the FSR i.e. a pressure wave generated by the explosion struck the FSR with such force as to damage it. However, in cross-examination, and to questions from the bench, Mr Cox conceded that some of the critical assumptions remained matters of speculation e.g. the point of entry to the pipe work which was relevant to the determination of the force of the pressure wave at the FSR, and whether the diaphragm of the main burner regulator OPSO failed and allowed leakage of LPG. Mr Cox did not appear to have investigated, or have had regard to, relevant evidence available from witnesses and/or their statements as to the possibility that the boiler valve was shut off when the factory was closed down, or whether there was a door to the boiler room and, if so, was it open or closed. 166Mr Cox's reliance on the results of each of Messrs Lohrer, Eckhoff, and Lunn referred to in pars 69, 70 (Ex 27) was trenchantly criticised by Prof David Fletcher. He said that this material was irrelevant to the theory developed by Mr Cox, and said it was wholly unscientific to rely on these results as he did, and would justify failing a student who did so. Furthermore, although he asserted (pars 286, 287, Ex 30) that the scientific basis for attributing the FSR's failure to a pressure wave was shock tube technology, Mr Cox conceded he had no experience in this field. 167The scope of Mr Cox's investigations and inquiries, appears to have been limited to analyses of reports of investigators soon after the explosion, photographs, and examination of equipment recovered from the site. Curiously, it did not involve inquiries of employees engaged in the closing down procedure on 24 and 25 January 2003, being those of the kind which a forensic consultant/investigator might be expected to make in the search for evidentiary support for his conclusions. 168My overall impression of Mr Cox's evidence was that he ventured opinions on numerous issues without the necessary factual basis, qualifications, and experience to do so, and demonstrated an absence of scientific rigour in propounding the pressure wave theory as the probable cause of failure of the FSR. As this case showed, Mr Cox propounded a theory which was doomed to dissolve when subjected to objective analysis and scrutiny. It is difficult not to accept that had the theory been tested before it was tendered, its weaknesses would soon have been exposed. I was left entirely unconvinced of its fundamental soundness. 169In my assessment, Mr Cox's readiness to advance opinions which lacked support served to undermine any standing he might have had as a credible and reliable witness on matters about which there was a contest, including, in particular, his challenges to the plaintiffs' witnesses on the failure of the FSR, over-pressurisation, and the cause of the fire and explosion.

[14]

The cause of the fire and explosion 170It is common ground that the fire and explosion resulted from the leakage of LPG into the factory. The crucial issue is the cause of the leakage. It is realistic to consider this question with regard to Mr Cox's concession that if the pressure wave theory was not accepted the only other explanation for the failure of the FSR, on the available evidence, was that advanced by the plaintiffs. 171For reasons later given I reject the defendants' pressure wave case. I proceed to consider whether the plaintiffs have proved, on the balance of probabilities, that the leakage of LPG from the filters was the product of over-pressurisation caused by the failure of the FSR. 172Operations in the factory ceased by about 9.30pm 24 January 2003, when the burners on the baking ovens were turned off. The last employee, Mr Michael Thompson, left the site at about 1.30pm 25 January 2003. Before leaving he checked the factory to ensure everything was turned off. He did not smell gas. All was quiet. 173There was an issue whether the ball valve on the gas train for the main burner on the boiler was closed when the factory was closed down. The evidence of Mr Hall and Mr Eather, which I accept, was that on 24 January 2003, they and Mr Guest carried out the procedure to shut down the boiler, the first step of which was to shut off the gas by closing the ball valve. Both said that the ball valve was closed by turning the handle to the horizontal position. Mr Hall said this was done by him, and the handle was straight, not bent, when he operated it. Mr Eather, in cross-examination, said he was unsure whether it was closed by Mr Hall or Mr Guest, although in his statement of 27 January 2003 he said that he saw it was Mr Hall. Their evidence is consistent with the unchallenged evidence, including that of Mr Heness and Mr Goldring, that its closure was part of the procedure for the shutting down and cleaning of the extruder. It is also consistent with evidence that, although LPG contains a stenching agent, no smell of gas was detected. 174Against this, the defendants relied on Mr Cox's opinion based on his observation of the ball valve and handle on 28 May 2009. He said he observed soot protection patterns and a mark on the ball of the valve said to be caused by heat damage to lubricant on its sealing surface which indicated that the ball valve was not in the fully closed position immediately after the explosion, and raised the likelihood that it was also in this position immediately prior to the explosion. In cross-examination he agreed it was open to conclude that the handle and valve were knocked in the explosion, a possibility he had not considered. In my opinion, taken at its highest, his evidence provides no plausible contradiction to that of Mr Hall and Mr Eather. 175The evidence supports the findings, which I make, that the boiler valve was closed by turning the handle to the horizontal, and the high probability is that this was done by Mr Hall. Accordingly, I find that when the factory was closed down on 25 January 2003 the ball valve on the gas train leading to the main burner on the boiler was closed. 176Another issue was whether the orange door between the boiler room and the extruder room was open or closed when the factory closed down. The evidence of Messrs Heness, Eather, Thompson, Verning and Goldring, taken overall, supports the finding, which I make, that the door was probably always open. 177Mr Cox accepted that his understanding or assumption that the door was closed prior to the explosion, lacked evidentiary support, and he had made no inquiry of witnesses. His evidence must be rejected in favour of that of the employees familiar with the site at the time. 178Accordingly, I find that when the factory was closed down on 25 January 2003 the orange door between the boiler room and the extruder room was open.

[15]

The FSR issue 179The plaintiffs relied upon the investigations and findings of Messrs Donnelley, Kerruish, Pearson and Prof Hoffman, a summary of which is earlier given. 180The defendants admitted that after the explosion the FSR was unable to regulate pressure. They also admitted that if it was in that state prior to the explosion, there would have been an increase in pressure in the downstream gas lines that the dryer filters would not have been able to withstand. 181There can be no doubt that the cause of the failure of the FSR was that the disc was unable to effect a complete seal against the inward flow of LPG. However, the defendants denied that this resulted in over-pressurisation of the second stage pipe work, and leakage from the filter(s) prior to the explosion. 182The plaintiffs' case is that, when considered as a whole, the evidence supports the finding that the FSR failed prior to the explosion. On examination it was found that it was unable to effectively seal off the inflow of gas from the storage tank at 850 kPa, and regulate the pressure at which it flowed downstream. The common view of their witnesses was that the dryer filters, which were located before and, hence, unprotected by, the second stage regulator OPSOs and with a pressure rating of 100 kPa, yielded to high pressure and allowed leakage into the factory, and subsequent ignition. Consistent with this was the evidence that those OPSOs with an inlet pressure rating of 240 kPa had tripped, indicating that LPG at high pressure had reached the second stage regulator prior to the explosion. Consistent also was the condition of the first Bourdon tube pressure gauge as found by Mr Kerruish, which indicated to him that it had been subjected to a pressure greatly in excess of 250 kPa for which it was designed. The condition of the second gauge provided a similar indication. 183It is impractical to repeat the lengthy and detailed analyses contained in the defendants' submissions. What follows is my attempt to capture only their essence. 184The defendants submitted that proof of causation of the event required proof to the requisite standard of the mechanism of the FSR's failure. It was put that as the plaintiffs' experts advanced competing and inconsistent theories as to failure, the evidence raised no more than competing possibilities and left the court to choose between guesses. Accordingly, it was put that the plaintiffs had failed to discharge the onus of proof on this issue as no proper foundation for the court to find the relevant facts had been established ( Jones v Dunkel (1959) 101 CLR 298, p 304, per Dixon CJ; Seltsam Pty Ltd v McGuinness [2000] NSWCA 29, pars 84-87; (2000) NSWLR 262, per Spigelman CJ). 185It was put that the plaintiffs must fail unless it is established that (a) the second stage pipe work was over-pressurised prior to the explosion as a result of the failure of the FSR, and (b) as a result of that over-pressurisation LPG leaked through the filters. It was put that the physical evidence of the zone 1 filter and the dryer Bourdon tube pressure gauge supported the defendants' case of no over-pressurisation and leakage. There followed the challenge to the proposition that the evidence as to the filters, the Bourdon tube pressure gauges, the activation of the OPSOs on the second stage regulators, and the failure of the FSR indicated over-pressurisation of the second stage pipe work prior to the explosion. 186With regard to the filter boxes, it was submitted that there was no support for the inference that either was over-pressurised, or leaked LPG into the factory prior to the explosion. The submissions contained a detailed review of the evidence of Mr Kerruish and Mr Cox concerning measurements of the zone 1 filter box, and comparisons with the samples tested by Mr Kerruish. It was put that Mr Cox's evidence, and the concessions of Mr Kerruish in cross-examination, showed that there had been no deformation of the lids by over-pressurisation which would allow leakage of LPG, and that the filter boxes had been damaged by the explosion. The submission was based on evidence in relation to the zone 1 filter. As the zone 2 filter box had been almost destroyed, Mr Cox was unable to express any view as to whether or not LPG leaked from it. 187As for the OPSOs, it was submitted that the evidence did not support the inference that over-pressurisation caused them to trip or activate prior to the explosion. It was put that the available inference was that activation was caused by mechanical shock. It was put that Mr Kerruish's testing established only that the OPSOs had activated, but not that this was a result of over-pressurisation. Reliance was placed on Mr Cox's evidence, and Mr Kerruish's answers in cross-examination, that OPSOs could be tripped by shock from debris or by the mechanical shock of an explosion. The submission included detailed criticism of Mr Kerruish's testing exercise to support the argument that it provided inadequate support for his opinion. 188As for the pressure gauges, it was accepted that the FSR gauge was damaged by over-pressurisation when the FSR failed, as evidenced by the bulging of the Bourdon tube. It was contended that this did not assist the plaintiffs as it was consistent with failure of the FSR either before or after the explosion. 189It was put that had the FSR failed prior to the explosion, according to Mr Cox and Prof Hoffman, the dryer Bourdon tube pressure gauge would have suffered similar bulging of the tube. It was put that Mr Kerruish's conclusion that both gauges showed the same damage where the dryer gauge showed no pressure bulge and only a 25 kPa offset was not reasonably open to him, and was inconsistent with his answer in the conclave that its Bourdon tube showed no evidence of bulging. Reference was made to Mr Cox's conclusions (Ex 31, p 2271) that the alteration of the diameter of the Bourdon tube by 0.4 mm "... would (not) necessarily indicate excessive pressure with the Bourdon Tube, as alleged by Mr Kerruish ...", and that the offset of the needle was indicative, not of over-pressurisation, but of mechanical damage to the mechanism in the explosion. 190Thus it was put that the fact that the tube did not suffer any bulging was objective evidence that the second stage pipe work was not over-pressurised as alleged i.e. as there was no bulge in the dryer gauge the FSR could not have failed prior to the explosion. Furthermore, it was put that Mr Kerruish's evidence concerning the dryer gauge should be given no weight given his lack of qualifications in metallurgy and material science, and no testing had been done to support his theory. It was put that Mr Cox should be preferred on this issue. 191With regard to the failure of the FSR, the submission was that determination of whether it failed before or after the explosion depended upon proof of the precise means of failure. It was put that as the plaintiffs' experts proposed competing and inconsistent theories as to how the FSR failed, there was no proof, to the requisite standard, of the factual basis from which failure before explosion could be inferred. 192A contrast was made between Mr Donnelley's sequence that the disc failed to seal, after which the explosion resulted in over-pressurisation which fractured the disc holder; and Mr Kerruish's sequence that the disc failed to seal, resulting in over-pressurisation which caused the distortion and fracture of the disc holder and disc, failure of the filter box lids, ignition and explosion; and Prof Hoffman's sequence that the disc holder failed, not from over-pressurisation, but from fatigue failure, followed by the failure of the disc and over-pressurisation downstream. Reliance was also placed on Mr Pearson's preliminary view that it was possible that the disc holder and disc assembly were damaged by higher than normal gas velocities through the FSR after explosion. It was also put that these theories should be rejected in light of Mr Cox's opinion that the disc had failed before the disc holder and there would not have been a significant leak past the disc and seat ring. 193In summary, the submission was that the plaintiffs had failed to prove there was leaking from the filters caused by over-pressurisation. Defendants' senior counsel said (T p 2593, l 10-l 21): "That is the completion of our submissions in relation to the plaintiff's theory from which, as we have said several times to your Honour, proves conclusively, we say, that there is no pressurisation in the downstream pipework and, therefore, the plaintiff's theory fails. That is, the Bourdon and pipes of the dryer was not overpressurised and that is a vessel, that is what it is there for. The filters did not leak, the OPSO didn't fail because of damage, and how the first stage regulator failed is a question in the air. When it failed is also undecided but we say it must have failed as a result of the explosion, not caused the explosion. HIS HONOUR: So therefore the plaintiff has failed to prove its case. GLEESON: Absolutely, yes, your Honour."

[16]

Determination 194In my assessment the defendants failed to negate the evidence as to the filters, second stage regulator OPSOs, and the Bourdon tube pressure gauges which supported the views of the plaintiffs' experts that over-pressurisation resulted from the failure of the FSR prior to explosion. 195It is unnecessary to resolve the dispute between Mr Kerruish and Mr Cox as to the right conclusion after testing the zone 1 filter. Assuming, without deciding, that Mr Cox's evidence should be preferred, without more there remains open the inference that there was leaking through the zone 2 filter. Indeed, the probability of leakage from either filter before the explosion is not inconsistent with the fracture of the filter boxes by the explosion. Relevant also is the rating of the filters at 100 kPa, and the fact they were unprotected by the second stage regulator OPSOs. 196In any event, Prof Hoffman's unchallenged opinion that it was highly probable that the zone 2 filter box failed through over-pressurisation and possible explosion is sufficient for the finding that this happened. I am satisfied that, taken with the totality of his evidence, his answer in the conclave that he had not considered the cause of failure of the zone 2 filter box was mistaken, and should not be understood as an abandonment of the views expressed in his reports of 21 September 2009 (Ex AAK), and 21 June 2010 (Ex AAL). 197The defendants demonstrated the possibility that OPSOs may be tripped by mechanical shocks. Nevertheless, in this case, Mr Kerruish adhered to his opinion that it was over-pressurisation, not the violence of the explosion, which caused the relevant OPSOs to trip. His was an explanation he was well qualified to give, and which I accept. It is strengthened by the evidence that the zone 3 regulator OPSO, with a pressure rating of 450 kPa had not tripped. I am satisfied on the probabilities that over-pressurisation tripped the second stage regulator OPSOs prior to the explosion. 198The evidence concerning the Bourdon tube pressure gauges, in my opinion, founds the inference that they were subject to over-pressurisation before explosion. The defendants established no alternative explanation for their condition, and left the question open. Mr Kerruish's conclusions in respect of both gauges were based on his examination of them, coupled with his experience of LPG systems and installations. I accept them. I prefer his evidence to that of Mr Cox, who agreed that he lacked similar experience. 199The common thread through the theories of the plaintiffs' experts is that the immediate cause of the failure of the FSR was the failure of the disc to effect a seal against the inflow of LPG. The evidence established that this is what happened. To reach this conclusion it is not necessary to identify the precise cause of the failure of the disc, and the point at which the disc holder fractured. Nevertheless Prof Hoffman's evidence supports the finding, which I make, that it was highly probable that the fracture of the disc holder led to the failure of the disc, thence the unregulated flow of gas downstream. I also find that the fracture of the disc holder was caused by the defective manufacturing process as explained by Prof Hoffman. 200It was admitted that the failure of the FSR caused over-pressurisation downstream. The evidence, taken in combination, just as a cable is made up of strands, firmly established, in my opinion, that over-pressurisation caused LPG to leak from the filters to cause the fire and explosion. Contrary to the defendants' contention, the possibility of alternative explanations for the condition in which the filters, OPSOs, gauges, and the FSR was found after the event neither contradicts nor diminishes the evidence in support of this conclusion. The defendants' strategy of doubt-mongering was not enough to undermine the plaintiffs' case, or to overcome Mr Cox's concession that if the pressure wave theory failed, the only available explanation was that advanced by the plaintiffs. 201For these reasons I find that it was the failure of the FSR for which no over-pressure protection had been provided which caused the fire and explosion. The defendants admitted that the over-pressurisation and leakage of gas from the failure of the FSR would have been prevented by the installation of an OPSO.

[17]

The pressure wave theory 202As earlier mentioned, I reject the defendants' case based on the pressure wave theory. The case was advanced as the true explanation for the cause of failure of the FSR. The theory was that the FSR failed after, and not before, the explosion, and that the explosion generated a pressure wave which struck the FSR with such force as to damage the disc and disc holder. 203Mr Cox was the proponent. A summary of his evidence of its evolution is in par 134 and par 135 above, which includes his conclusions that: "77 ...* the likely source of gas for the explosion in the boiler and boiler room was a failure of the diaphragm in the main burner regulator OPSO for the boiler ...

failure of the first stage regulator sealing disc was caused ... by the propagation of a pressure wave along the supply pipe immediately following the explosion(s) ..." 204The defendants failed to prove several critical assumptions upon which the theory depended. One such was that the main burner ball valve was left open before the explosion. I have found that the ball valve was closed when the factory was closed down on 25 January 2003 (par 175). Another was that the orange door between the boiler room and the extruder room was closed before the explosion. I have found that it was open (par 176). The assumption that the diaphragm of the main burner regulator OPSO failed so as to allow leakage of LPG was not proved, but left as a matter of speculation. 205Similarly unproven and speculative was the point of entry of the pressure wave (if any) to the pipe work, and hence its diameter. Mr Cox agreed that absent proof of these matters determination of the force of the pressure wave at the FSR was a matter of speculation. The calculations of Prof Fletcher and Prof Masri as to the force with which the hypothetical pressure wave struck the FSR were based on assumptions that the point of entry was an opening of 50 mm diameter at "time zero", and the length of pipe work through which it travelled was about 77 metres. It was uncontroversial that as the point of entry was unknown, the distance to be travelled was also unknown. It follows, in my opinion, that the exercises embarked upon by these experts were ultimately shown to be academic, and probative of nothing. 206In my opinion, these considerations are sufficient to justify the conclusion that the defendants utterly failed to prove that the failure of the FSR disc was caused by the propagation of a pressure wave along the supply pipe immediately following the explosion. 207It follows that it is unnecessary to review the evidence of Prof Fletcher and Prof Masri which was principally concerned with attenuation of the hypothetical pressure wave, and the calculation of its pressure at the FSR, or to attempt to resolve the differences between them.

[18]

The claim in negligence 208The plaintiffs claimed that Boral breached its common law duty of care in relation to the supply and installation of the gas installation and equipment for the operation of the factory and plant at Gunnedah. In the fourth further amended commercial list statement it was alleged the duty of care was to: "9(a) supply and install the equipment in compliance with the applicable Australian Standards, Codes, Acts and Regulations; (b) supply and install over-pressure protection to the first stage regulator; (c) ensure that the equipment was fit for its proper purpose and safe to use; (d) examine the equipment to satisfy itself that the equipment complies with the applicable Standards, Codes and Regulations; and (e) carry out routine checks of the equipment." 209It was also alleged (par 9A) there was a duty of care to install over-pressure protection to the FSR, and (par 9B) that such over-pressure protection was not installed. 210It was alleged (par 10) that Boral breached its duty of care in that it: "(a) Failed to supply and install the equipment in compliance with AG 601-1992 as amended from time to time ("AG601"), a Code which applied as at the date of the Bayer contract (Clause 4.2.1 and 4.6.1); (aa) Failed to supply and install equipment in compliance with AS1596-1989 as amended from time to time ("AS1596"), a Standard which applied as at the date of the Bayer contract; (b) Failed to supply and install over-pressure protection to the first stage regulator (clause 3.11.3 of AS1596); (c) Failed to ensure that the equipment was fit for its proper purpose and safe to use; Particulars to sub-paragraph 10(c) The equipment was not fit for its proper purpose and safe to use because: (i) The disc holder within the first stage regulator was manufactured from a brittle alloy having a low fracture toughness, which was inappropriate for that item. (ii) The first stage regulator was not fitted with over-pressure protection. (d) Failed to examine the equipment before the initial delivery of LPG to satisfy itself that the equipment complied with AS1596 (clause 8.1.7); (e) Failed to carry out routine checks of the equipment including in accordance with AS1596 (clause 8.2.7); (f) Failed to set up and implement operating and maintenance procedures; and (g) Failed to comply with its statutory obligations particularised in paragraphs 11-12C below; as a result of which propane leaked from the equipment, subsequently ignited (the incident) and caused loss and damage (the damage) ." 211Causes of the explosion were alleged to have been the manufacture of the disc holder from a brittle alloy, and the absence of over-pressure protection on the FSR. 212The following is a reminder of the relevant background. 213Between about 1994 and July 2001 the factory was owned and operated by Bayer for the production of animal feed. On 12 August 1994 Boral agreed with Bayer to supply and install at the site equipment which included a 43kl LPG storage tank, all gas regulators, and a gas service line from the LPG storage tank to the burner trains terminating with more valves. It also agreed to supply LPG in bulk. Clause 5(b) of the agreement provided that the equipment (defined in Schedule 2) remained the property of Boral and it might be used by Bayer subject to compliance with conditions which included: "(iii) He permits access at all reasonable times to the Seller and its agents to the Equipment for the purposes of inspection and maintenance during the course of this Agreement, and of removal upon termination of this Agreement..." 214The parties agreed that the equipment, as defined, included the FSR. It was also agreed that (i) Boral owned the equipment which extended to, and included, the ball valve on the dryer gas train, and the ball valve on the boiler; and (ii) no over-pressure protection for the FSR had been installed. 215The agreement was for a term of 5 years. Installation was completed on about 13 January 1995. 216In February 2000 Origin Energy LPG Limited was created through the demerger of Boral Ltd and Boral Energy Ltd. 217On 29 June 2001 BestCare acquired from Bayer the factory and plant at Gunnedah. On 1 July 2001 BestCare and its wholly owned subsidiary, Sales, commenced operations. Thereafter Origin supplied LPG to BestCare. 218On 15 August 2001 Origin signed the contract with BestCare under which it agreed to supply LPG. Although the contract expired on 18 July 2001 Origin continued to supply LPG to BestCare until 24 January 2003. 219In May 2002 the installation of a new baking line was completed, and it commenced operation. On 23 May 2002 Mr Goldring's proposal to renew BestCare's contract after July 2002 was discussed on site with representatives from Origin. It was said that Origin would pay for any upgrade to the gas equipment on site. 220Relevant codes and standards are:

Dangerous Goods (Gas Installations) Regulation 1982 (DGIR 1982), cl 10(2) provided: "A person shall not carry out work upon an installation specified in Column 1 of the Table to this clause, or upon a flue associated with the installation, otherwise than in acordance [sic] with the provisions, relating to the installation, of the code or codes specified opposite the installation in Column 2 of that Table. It was common ground that the provision applied to the installation by Boral, and the specified codes included Australian Standard AS1596-1989 and the Gas Installation Code AG601.
AS1596-1989, cl 3.11.3 provided: "3.11.3 Over-pressure protection. Over-pressure protection shall be provided where the inlet pressure to a regulator exceeds the pressure rating of any downstream components or equipment, including the next downstream regulator Over-pressure protection, such as an over-pressure relief or shut-off device shall be fitted where the inlet pressure to a downstream appliance regulator exceeds 7 kPa and - (a) where the regulator inlet pressure exceeds the pressure rating of downstream equipment; or (b) where the regulator outlet pressure is less than 70% of the inlet pressure. The over-pressure protection device shall limit the pressure downstream of the regulator to the lesser of the following pressures- (i) The rated working pressure of the downstream equipment; or (ii) 35% above the normal operating pressure. A shut-off device shall not open to permit gas flow until it has been manually reset." The inlet pressure of the FSR was 1750 kPa. It was common ground that downstream components had pressure ratings well below that pressure, thus over-pressure protection was required.
AG601-1992, cl 4.2.1 provided: "All piping and components upstream of and including any gas pressure regulator shall have a rated working pressure of not less than: (a) 100% of the inlet pressure to the next upstream regulator; or (b) the setting of any over-pressure protection fitted to the next upstream regulator."
Separately, AG601-1992, cl 4.6.1 provided: " Over-pressure protection required Over-pressure protection shall be provided where the inlet pressure to a consumer piping gas pressure regulator exceeds the rated working pressure of equipment up to and including the next downstream regulator, The over-pressure protection shall ensure the rated working pressure of all downstream equipment is not exceeded."
Dangerous Goods Regulation 1978 (DGR 1978), cl 24 provided: " 24. A person shall not sell or supply any equipment for use with any dangerous goods unless - (a) it is suitable and safe for use with those goods; and (b) where this Regulation prescribes requirements in relation to such equipment when so used, the equipment conforms to those requirements." 221The defendants made the following admissions:
Boral had installed, and owned, the equipment which extended to, and included, the ball valve on the dryer gas train, and the ball valve on the boiler.
Good gas fitting practice required the fitting of over-pressure protection and compliance with the relevant standards.

[19]

Determination 226The approach to be taken in assessing whether a duty of care arose in the circumstances of a particular case was considered in Caltex Refineries (QLD) Pty Limited v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649 in which Allsop P (Simpson J agreeing) said: "[102] ...If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the "salient features" or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury. [103] These salient features include: (a) the foreseeability of harm; (b) the nature of the harm alleged; (c) the degree and nature of control able to be exercised by the defendant to avoid harm; (d) the degree of vulnerability of the plaintiff to harm from the defendant's conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself; (e) the degree of reliance by the plaintiff upon the defendant; (f) any assumption of responsibility by the defendant; (g) the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant; (h) the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff; (i) the nature of the activity undertaken by the defendant; (j) the nature or the degree of the hazard or danger liable to be caused by the defendant's conduct or the activity or substance controlled by the defendant; (k) knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff; (l) any potential indeterminacy of liability; (m) the nature and consequences of any action that can be taken to avoid the harm to the plaintiff; (n) the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one's own interests; (o) the existence of conflicting duties arising from other principles of law or statute; (p) consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and (q) the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law. [104] There is no suggestion in the cases that it is compulsory in any given case to make findings about all of these features. Nor should the list be seen as exhaustive. Rather, it provides a non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content." (See also Basten JA, par 172.) 227The existence of a statutory duty, without more, is not determinative either of the existence of a coordinate common law duty or of its breach ( Sibley v Kais (1967) 118 CLR 424, pp 427-428; Caltex Refineries par 120). It is, however, a salient factor to be taken into account in deciding whether there is a duty, and its scope and content. Failure to comply with a statutory regulation may be relied upon as evidence of negligence ( O'Connor v S P Bray Ltd [1937] HCA 18; (1937) 56 CLR 464, p 477-478). 228The foreword to AS 1596 - 1989 includes the following: "Safety is the fundamental objective of this Standard, and fire safety is the most important single issue ... The prevention of gas escapes i.e. containment, is considered the single most important aspect of fire safety. If gas remains contained, there can be no fire risk. If an escape can be terminated quickly and preferable [sic] automatically, the risk of ignition and the consequences of it are minimised. Thus the engineering of the containment and valving provisions is considered vital to fire safety. Loss of containment can result from accidental impact of some sort, breakdown of seals and gaskets because of long-term deterioration, or rapid breakdown because of fire ... Equipment deterioration is a management matter. Operating and maintenance procedures must be set up in the first place, must be implemented, and must not be allowed to lapse subsequently ... Therefore the engineering of the installation constitutes the most significant and most effective element in fire safety considerations. Fire safety is achieved principally by mechanical means i.e. a system of valves which control all outflow of LPG whether liquid or vapour, and can shut down the system, preferably automatically should an incident occur ..." 229It is recognised that the purpose of DGR 1978 was to regulate the keeping, handling, and use of dangerous goods in order, inter alia, to reduce the risk of damage by fire or explosion and that, therefore, its regulations are directed to the interests of the safety of members of the public or a class of them ( McDonald t/as BE McDonald Transport v Girkaid Pty Ltd [2004] NSWCA 297, par 173 per McColl JA). 230In this case, the risk of harm from the failure of the FSR was over-pressurisation downstream capable of causing a fire and an explosion in the factory. The reasonable method of prevention of such risk was by provision of over-pressure protection by means of an OPSO device for the FSR, in accordance with the relevant standards as required by good gas fitting practice and cl 10(2) of DGIR 1982. Relevantly, also, cl 24 of DGR 1978 required Boral not to supply the equipment for use with LPG unless it was suitable and safe for such use. In my opinion the equipment supplied and installed by Boral was unsuitable and unsafe for use with LPG without an OPSO for the FSR and, accordingly, Boral was also in breach of cl 24. 231Had an OPSO been installed it would have prevented the over-pressurisation and leakage of gas from the failed FSR. I have found that a cause of the failure of the FSR was the defective manufacture of the disc holder. Its failure where there was no OPSO led to the fire and explosion. The defective condition of the disc holder rendered the FSR unsuitable and unsafe for use as a component of the installation. In my opinion, the provision of the FSR in this condition also constituted a breach of cl 24 by Boral. 232These considerations, including the admissions, lead to the conclusion that Boral was under a general duty to protect the safety of those affected by the use and operation of the equipment. The class of those to whom the duty was owed is wide. It was the intention of the legislature to protect it. Boral's liability arose from its duty in and about the provision and installation of the equipment. It extended to operators and users after Bayer, irrespective of the identity of subsequent owners of the equipment. In my opinion the plaintiffs, as operators and users of the equipment for the purpose of their business, were squarely in the first rank of the class to whom a duty of care was owed. 233At one stage the defendants appeared to submit that the claim of the second plaintiff, Sales, should be denied because it was for the recovery of pure economic loss. However, Sales' case is for damages for financial loss consequential upon damage to property i.e. the destruction of the factory by which it operated, thus any such loss is recoverable by it ( Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529; Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159). The submission is rejected. 234Taken overall, Boral owed a duty of care at common law to operators and users of the equipment, including the plaintiffs, to ensure that the installation provided was safe to operate. In providing a defective FSR without an OPSO, it negligently failed to discharge that duty thereby causing the destruction of the factory and consequential loss to the plaintiffs. The plaintiffs are entitled to a verdict against Boral on this count for damages to be determined.

[20]

The statutory duty claims 235The plaintiffs claimed that Boral's conduct in breach of cl 10(2) of DGIR 1982 and cl 24 DGR 1978 gave rise to private causes of action in their favour. 236In John Pfeiffer Pty Ltd v Canny [1981] HCA 52; (1981) 148 CLR 281, p 231 Mason J said: "Ordinarily a duty imposed by statute to take measures for the safety of others involves a correlative private right, unless from the nature of the provision or from the scope of the legislation a contrary intention appears ..." 237I have earlier referred to the conclusion that the regulations under DGR 1978 are directed to the interests of the safety of members of the public or a class of them ( McDonald , par 173). The conclusion also applies to cl 10 of DGIR 1982. In McDonald , McColl JA proceeded to say: "174 However, the question whether a statutory duty confers a correlative private right of action also turns on whether the statute imposes a duty to take 'a specific precaution' ( O'Connor v S P Bray Ltd ) or 'measures for the safety of others' ( John Pfeiffer Pty Ltd v Canny )." 238The defendants admitted that a private cause of action arose from the breach by Boral of cl 10 of DGIR 1982. 239The plaintiffs claimed, and the evidence established, that the FSR was not safe for use in that (i) the brittle alloy of the disc holder rendered it liable to fracture and to fail, and thereby allow LPG to escape downstream, and (ii) it was not fitted with over-pressure protection which would prevent the over-pressurisation of, and leakage from, the downstream pipes. Accordingly, I hold that Boral was in breach of cl 24 of DGR 1978. 240The defendants denied a private right of action arose from a breach of cl 24 of DGR 1978 on the ground that the provision lacked the requisite specificity as to the precaution or measures to be taken by the person who sells or supplies the relevant equipment. In my opinion, the denial is without substance. As a matter of construction, the provision in clear terms identifies the measures to be taken for the safety of others by prohibiting the sale or supply of equipment unless it is suitable and safe for use, and unless it conforms with applicable prescribed requirements. It follows, in my opinion, that a private cause of action arises from breach of cl 24. 241I have earlier held that the plaintiffs are within the class of persons the legislature intended to protect by these provisions. The statutory duties imposed conferred a correlative private right of action against Boral. 242In my opinion Boral's breaches of cl 10(2) of DGIR 1982 and of cl 24 of DGR 1978 caused loss and damage to the plaintiffs of the kind the provisions were intended to prevent. The plaintiffs are entitled to a verdict against Boral for damages caused by the breaches of their statutory duties.

[21]

The contract claim 243BestCare claims that Origin breached its contract for the supply, inspection, and maintenance of the equipment made on 15 August 2001 (the contract). In the fourth further amended commercial list statement it was alleged that the contract contained the following express or implied terms: "16(a) The installation of the equipment at the premises would comply with the applicable Standards, Codes, Acts and Regulations; (b) To the extent the equipment had previously been installed, the equipment would be upgraded so as to comply with the applicable Standards, Codes, Acts and Regulations; (c) That the equipment would be fit for its proper purpose and safe to use; (d) Origin Retail would examine the equipment to satisfy itself and ensure that the equipment complies with the applicable Standards, Codes, Acts and Regulations; and (e) Origin Retail would carry out routine checks of the equipment; and (f) Origin Retail would comply with its statutory obligations and Codes and Standards in connection with the equipment." 244It was alleged (par 18) that under cl 4.2.1(b) and cl 4.6.1 AG 601 it was required that the FSR be fitted with over-pressure protection. 245It was pleaded (par 19) that Origin breached its obligations in that: "19(a) The first stage regulator was not fitted with over pressure protection in accordance with clauses 4.2.1(b) and 4.6.1 of AG 601 or at all; (b) The equipment was not fit for its proper purpose and was not safe to use; (c) It failed to examine the equipment and carry out routine checks of the equipment; (d) The first stage regulator was not fitted with over pressure protection in accordance with clause 3.11.3 of AS 1596 or at all; (e) It failed to carry out (or properly carry out) pre-delivery checks in accordance with clause 8.1.7 of AS1596:1989 and subsequent pre-delivery checks in accordance with clause 10.2.5 of AS1596:2002; (f) It failed to establish appropriate (or any) operating procedure, maintenance, procedures, testing, inspection and monitoring of the equipment, its repair and general upkeep, and training procedures ...; (g) It failed to prepare and implement a routine check procedure of the equipment in accordance with clause 8.2.7 of AS1596:1989 ...; (h) It failed to make the equipment safe and notify Bestcare Foods and Bestcare Sales of the absence of over-pressure protection in accordance with clause 2.10 of AG601-2002 in circumstances where Origin Retail was aware of the absence of over-pressure protection; and (i) It failed to comply with its (specified) statutory obligations ..." 246In par 20 it was alleged, in effect, that the breaches resulted in the explosion caused by the defective manufacture of the disc holder and the absence of over-pressure protection on the FSR. Further particulars were: "Further, had the Defendants carried out pre-delivery checks, established appropriate operating procedures, maintenance procedures, testing, inspection and monitoring of the equipment or prepared and implemented a routine check procedure of the equipment, then the absence of over-pressure protection and/or the wadding of the sealing disc and/or the brittleness of the disc holder and/or the physical damage to the seat ring would have been discovered and rectified." 247It was also pleaded: "21. It was an express term of the BestCare contract that Origin Retail would carry out all repairs and maintenance necessary to keep the equipment in reasonable working order. 22. Further, it was an express, or alternatively, an implied term of the BestCare contract that Origin Retail would maintain and inspect the equipment including according to AS 1596 (as amended from time to time). 23. Pursuant to AS 1596, Origin Retail was required to establish and implement operating and maintenance procedures in respect of the equipment, including the first stage regulator. 24. Origin Retail breached its obligations pleaded in paragraphs 21-23 above in that it: (a) Failed to carry out all repairs and maintenance necessary to keep the equipment in reasonable working order; (b) Failed to establish and implement operating and maintenance procedures in respect of the equipment; (c) Failed to maintain and inspect the equipment; (d) Contravened AS1596:1989 (as amended from time to time) including clauses 8.1.7 and 8.2.7; ... (f) Contravened AG601:2002 (clause 2.10). 25 By virtue of the matters pleaded in paragraph 24 above, the incident occurred and caused the damage." 248Under the contract, Origin undertook to install the equipment specified in the schedule, and to supply and deliver LPG into the equipment (cl 2.1). Although the contract expired on 18 July 2002, Origin continued to supply LPG to BestCare until 24 January 2003. 249It was common ground that the equipment was that which Boral had already installed for Bayer, and extended to, and included, the ball valve on the dryer gas train, and the ball valve on the boiler. The parties proceeded on the basis that the contract related to the use of the equipment by BestCare in its operations at the factory. 250Relevantly, the contract provided: " 2.3 The Customer shall purchase all of its LPG requirements from Origin Energy ... ... 4. Safety 4.1 The customer shall: 4.1.1 Ensure that each of the Customer's employees, contractors and customers and every other person purchasing or receiving from the Customer LPG is adequately warned and instructed as to the known dangerous qualities of LPG and safe handling procedures, 4.1.2 obtain as a condition of sale or other disposal by the Customer to any third party a written acknowledgement from the third party that it is aware of the hazardous nature of LPG, 4.1.3 at all times handle LPG and the Equipment in a safe and proper manner and take all reasonable precautions to prevent misuse and damage, 4.1.4 comply with the requirements of all laws and orders or directions of statutory authorities and Origin Energy in relation to the handling and storage of LPG and access to the Equipment, 4.1.5 ensure that all of its servants and agents who handle LPG and who access the Equipment are fully trained to do so in a safe and proper manner and are informed of and fully understand all applicable laws and regulations, 4.1.6 not access the Equipment if any part of it is not or appears to the Customer not to be in good working order; and ... 4.1.8 only access the Equipment for the dispensing of LPG purchased from Origin Energy; 4.1.9 not allow any LPG not belonging to Origin Energy to be stored in the Equipment; and ..." 6 Risk in and Title to the Equipment ... 6.3 All property and title in the Equipment shall remain with Origin Energy and risk in the Equipment shall pass to the Customer at the time of installation. ... 6.6 The Customer shall not make any alteration to the Equipment or allow any attachment to be affixed or used in the operation of the Equipment without the prior written consent of Origin Energy. 7 Maintenance 7.1 Origin Energy shall carry out all repairs and maintenance necessary to keep the Equipment in reasonable working order and Origin Energy shall provide for maintenance and inspection of the Equipment. ... 7.3 Origin Energy may at all reasonable times enter the Premises for the purpose of inspecting, replacing and maintaining the Equipment. ... 11 Warranties and Conditions 11. All express and implied terms, conditions and warranties which otherwise might apply to or arise out of the supply of LPG are excluded except as provided in the Agreement and in any law which cannot lawfully be excluded or modified by agreement between the parties including, without limitation, the Trade Practices Act 1974 (Commonwealth). 11.2 The liability of Origin Energy for breach of this Agreement is limited to any one or more of the following as determined by Origin Energy in its absolute discretion. 11.2.1 In respect of the Equipment; replacing, repairing or installing equivalent Equipment (as the case may be); or 11.2.2 In respect of LPG delivering replacement LPG. 11.3 Notwithstanding anything contained in this Agreement, Origin Energy shall be under no liability to the Customer for any loss (including but not limited to loss of profits and consequential loss) or for damage to persons or property or for death or injury caused by any improper or unsafe condition of the Equipment installed on the Premises by Origin Energy or by any act or omission (excluding negligent acts or omissions) of Origin Energy or by the Customer's [sic] in relation to the LPG or the Equipment or by any negligent act or omission of the Customer, its servants or agents. 16 Termination or Expiry ... 16.1.2 the Customer shall allow Origin Energy to enter the Premises to recover the Equipment and LPG." 251The contract is to be considered against the background of the following statutes, codes and standards: (1)AS 1596-1989 cl 3.11.3; AG 601-1992 cl 4.2.1(b) and cl 4.6.1 required the provision of over-pressure protection. The terms are set out in par 220 above. (2)AS 1596-1989 provided: " 8.1.7 Initial delivery check . Before the initial delivery of LPG to a new installation, the LPG supplier or the authorized person shall sight the relevant statutory approvals and certificates and the installer's test certificates, and shall visually examine the installation, to satisfy himself as far as is reasonably possible that the installation complies with the requirements of this Standard. ... 8.2.7 Scheduled checks . A routine check procedure shall be prepared to each installation, appropriate to that installation. Such a procedure shall cover all operating valves and systems, instruments, safety valve protective caps and discharge provisions, and fire protection equipment. Tank-emptying provisions are excluded. In particular, emergency shut-off valves shall be operated at intervals not exceeding 1 month, from each available operation point. A pumping and supplementary fire pro-tection system shall be tested at intervals of not exceeding 1 week. A record of tests and inspections shall be kept." (3)AS 1596-2002 " 10.2.5 Subsequent pre-delivery checks . Prior to delivery, all components forming part of the delivery system shall be checked to ensure that they are in serviceable condition. If they are not, delivery should be refused." (4)Dangerous Goods (General) Regulation 1999 (DGR 1999) " 22 Equipment for use with dangerous goods A person must not sell or supply equipment for use with dangerous goods unless: (a) it is suitable and safe for use with them, and (b) if this Regulation prescribes requirements in relation to such equipment when so used, the equipment conforms to those requirements. Contravention of this clause is an offence and is punishable in accordance with clause 340." (5)Dangerous Goods (Gas Installation) Regulation 1998 (DGIR 1998) " 8 Gasfitting work to comply with certain standards (1) A person must not carry out gasfitting work on a gas installation specified in Column 1 of the Table to this clause otherwise than in accordance with the relevant provisions of the standards or codes specified opposite the installation in Column 2 of that Table. Contravention of this subclause is an offence and is punishable in accordance with clause 33." It was accepted that this provision applied to the installation, and the specified codes included AS 1596 and AG 601. The defendants admitted breach of cl 8 in failing to install over-pressure protection, which gave rise to a private cause of action in favour of BestCare. (6)Occupational Health and Safety Regulation 2001 (OHSR) provided: " 124 Hirer or lessor to identify hazards (1) A person who hires or leases plant to another person must identify any foreseeable hazard that may arise from the condition of the plant and that has the potential to harm the health or safety of any person during the installation, erection, commissioning, use, repair, dismantling, storage or disposal of the plant at a place of work or, in the case of plant affecting public safety, at any other place at which the plant is located. (2) Without limiting subclause (1), the person hiring or leasing the plant must ensure that: (a) the plant is inspected regularly and, at a minimum, once between each hiring and leasing, and (b) inspections of the plant are carried out having regard to procedures: (i) recommended by the designer and manufacturer, or (ii) developed by a competent person. ... 128 Maintenance, repair, testing and cleaning of plant - particular risk control measures (1) A person who hires or leases plant to another person must ensure that: (a) maintenance and cleaning are carried out having regard to procedures: (i) recommended by the designer and manufacturer, or (ii) developed by a competent person, and (b) all safety features of the plant (including, in the case of plant intended to be used on or near electrical conductors, all insulation, earthing and controls) and all warning devices for the plant are maintained and tested, and ... (d) maintenance, repair, cleaning and, if necessary, testing is carried out by a competent person, and ... 132 Hirer or lessor to provide information (1) A person who hires or leases plant to another person must provide other persons who have responsibilities under this Regulation with all available information about the plant that is necessary to enable the other persons to fulfil their responsibilities with respect to the following: (a) identifying hazards, (b) assessing risks arising from those hazards, (c) eliminating or controlling those risks, (d) providing information. (2) Without limiting subclause (1), a person who hires or leases plant to another person must ensure that the person is provided with relevant health and safety information about the plant including, if appropriate, information about the commissioning, installation, use, testing, de-commissioning and dismantling of the plant." The defendants admitted that a breach of these provisions of the OHSR by Origin would give rise to a private cause of action in favour of the plaintiffs. 252The plaintiffs' claims that Origin acted in breach of express and implied terms of the contract are summarised as follows: (1) It was alleged that in failing to inspect, or to provide for inspection of, the FSR, and in failing to install over-pressure protection for the FSR, Origin failed to carry out repairs and maintenance necessary to keep the FSR, and the equipment as a whole, in reasonable working order in breach of: (a) Clause 7.1; and (b) An implied term that Origin would carry out routine checks of the equipment, including the FSR. (2) In failing to provide over-pressure protection for the FSR and/or in providing a defective FSR, Origin was in breach of implied terms that: (a) the equipment would be fit and safe for the purpose for which it was supplied, and (b) in supplying the equipment, including the FSR, to BestCare, it would exercise due care and skill. (3) In failing to fit over-pressure protection for the FSR, Origin was in breach of an implied term that the installation of the equipment, including the FSR, would comply with the applicable standards, codes, and legislation. (4) Origin breached its obligations under implied terms that: (a) it would prepare a routine check procedure as prescribed by cl 8.2.7 of AS 1596; (b) it would comply with the requirements of cl 22 of DGR 1999; and (c) It would comply with the requirements of cl 124, cl 128, and cl 132 OHSR. 253The defendants denied the existence of any implied term as alleged, alternatively, claimed that any implied term was excluded under cl 11.1 except those implied under the Trade Practices Act 1974 (Cth). 254Some incidents of the contract may be noted. The rights and obligations of the parties relating to the supply, delivery, and use of LPG are distinguished from those relating to the installation and maintenance of the equipment. Property and title in the equipment remains with Origin, and no alteration may be made, or attachment used in its operation, by BestCare without Origin's prior written consent (cl 6.3, cl 6.6). BestCare is obliged to purchase all of its LPG requirements from Origin (cl 2.3) and shall only access the equipment for dispensing LPG so purchased, and shall not allow any other LPG to be stored in the equipment (cl 4.1.8, cl 4.1.9). 255What were described as "the known dangerous qualities" and the "hazardous nature" of LPG were addressed in cl 4.1.1 and cl 4.1.2, under which BestCare was required to warn third parties of these qualities, and instruct as to safe handling procedures. 256Before dealing with the issues of implied terms and breaches thereof it is convenient to consider whether, as the defendants submitted, cl 11.1 excluded all terms which may be legally excluded which would otherwise be implied as a matter of fact, or by law or legislation and, in particular those claimed by the plaintiff. The submission was put without elaboration. 257In Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500, p 510 it was held that: "... the interpretation of an exclusion clause in a commercial contract is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract and, where appropriate, and construing the clause contra proferentem in the case of ambiguity. The same principle applies to the construction of limitation clauses." 258The question is whether the express term (cl 7.1) and the implied terms proposed by the plaintiffs are provisions of the contract "... which otherwise might apply to or arise out of the supply of LPG". Read in context, the words plainly refer to the supply by Origin of LPG sold and delivered to BestCare under the contract. Origin was obliged to deliver LPG into the equipment and, once delivered, property and title to it remained with Origin until it was "dispensed" for BestCare's use (cl 5.1). It is only for the dispensing of LPG obtained from Origin that BestCare might access the equipment, and an access fee was payable (cl 20.7). 259Analysis of the contract demonstrates the clear distinction made between rights and obligations concerning the delivery and use of LPG and those concerning the installation and maintenance of the equipment. In my opinion the words in cl 11.1 "... the supply of LPG", in context, refer to the provision or delivery of LPG into the equipment. Accordingly, the exclusion applies only to terms, conditions and warranties, which apply to or arise out of that activity. Clause 7.1, and the proposed implied terms, are concerned with the provision, inspection and maintenance of the equipment to ensure that it is kept in reasonable working order, and is safe and suitable for use. In my opinion, these terms fall within a class to which cl 11.1 has no application. The defendants submission on this issue is rejected.

[22]

Contract terms and breaches 260Clause 7.1 provided: "Origin Energy shall carry out all repairs and maintenance necessary to keep the Equipment in reasonable working order and Origin Energy shall provide for maintenance and inspection of the Equipment." 261To facilitate performance of this obligation, it was agreed that Origin might enter the premises at all reasonable times (cl 7.3). The effect of these and other provisions was that Origin was entrusted with responsibility for remedying defects in the equipment and keeping it in good working order (cl 4.1.6, cl 4.1.7, cl 6.3, cl 6.6). Mindful of the mandatory obligations imposed under the statutes and standards, it cannot have been the intention of the parties that the requirements of cl 7.1 might be taken lightly. 262There was no evidence that Origin carried out what was required by cl 7.1 other than inspecting the storage tank from time to time. Given the importance of compliance, it is reasonable to expect that if there was available evidence as to performance of these obligations, Origin would have called it. The absence of such evidence, and the fact that the equipment was left without over-pressure protection for the FSR whilst the contract was on foot, is powerful support for the inference, which I make, that Origin failed to provide for maintenance and inspection, and failed to carry out repairs and maintenance necessary to keep the equipment in reasonable working order. It is unarguable that performance required the fitting of an OPSO for the FSR. This it failed to do. 263Accordingly, Origin's failure constituted a breach of cl 7.1, which resulted in the fire and explosion. Origin is therefore liable to BestCare on this count for consequential damages. 264On the question of implied terms, in Gemmell Power Farming Co Ltd v Nies (1935) 35 SR(NSW) 469, p 475 Jordan CJ said: "As a general rule, when one person, for value, supplies a chattel to another to be used for an agreed or stated purpose, or for a purpose indicated by the nature of the chattel, he impliedly promises, in the absence of some provision to the contrary, that it is reasonably fit for such use: G. H. Myers & Co . v. Brent Cross Service Co. ([1934] 1 K.B. 46 at 50-55). This rule applies to a contract of hiring: Sutton v. Temple (12 M. & W. 52 at 60) ; Vogan & Co. v. Oulton, (79 L.T. 384 at 385); to a contract to do work and supply materials : G. H. Myers & Co. v. Brent Cross Service Co. (supra), and to a contract to supply power : Bentley Bros. v. Metcalfe & Co. ([1906] 2 K.B. 548). It applies to a contract for the sale of a chattel if the contract comes within the exceptions mentioned in s. 19 of the Sale of Goods Act, 1923, but not otherwise: Myers' Case ([1934] 1 K.B. 46 at 54). The fact that a defect which causes unfitness is latent, and could not have been discovered by inspection, however careful, does not exempt from the obligation of the implied promise: Vogan v. Oulton (79 L.T. 384 at 385); Morelli v. Fitch and Gibbons ([1928] 2 K.B. 636 at 643-4); Myers' Case ([1934] 1 K.B. 46 at 50-53)." 265The distinction between a contractual term implied as a matter of law rather than as the assumed intention of the parties was explained by McHugh, Gummow JJ in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, p 448: "It is that ... terms implied by the application of what one might call the business efficacy test are terms unique to the particular contract in question, depending upon the form of the contract, the express terms and the surrounding circumstances. By contrast, terms implied by law are, in general, implied in all contracts of a particular class or which answer a given description." They continued (p 450): "Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined. Hence, the reference in the decisions to 'necessity' ... This notion of 'necessity' has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law." 266With regard to terms implied under the business efficacy test, the conditions necessary to ground their implication were said by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 49; (1982) 149 CLR 337, p 347 to have been: "... summarized by the majority in B.P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 52 ALJR 20, at p 26: '(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.'" 267BestCare claimed an implied term that Origin would carry out routine checks of the equipment, including the FSR. The claim is rejected. The language of cl 7.1 is wide enough to require the carrying out of routine checks of the equipment. In my opinion business efficacy does not justify the implication of a separate term to like effect. 268The other terms claimed to be implied were terms that the equipment would be fit and safe for the purpose for which it was supplied; that in supplying the equipment, including the FSR, Origin would exercise due care and skill; that the installation of the equipment, including the FSR, would comply with the applicable standards, codes and statutes, specifically cl 8.2.7 of AS 1596, cl 22 of DGR 1999, and cl 124, cl 128, and cl 132 OHSR. 269The contract governed the supply by Origin of LPG, a commodity described therein as dangerous and hazardous, which was to be dispensed and used by BestCare with equipment owned, installed, and to be kept in reasonable working order by, Origin. What BestCare contracted for was the use of equipment which would be safe to operate with LPG. It is evident from other terms of the contract (e.g. cl 4.1.6, cl 4.1.7, cl 6.6, cl 7.1, cl 7.3) that BestCare would be relying on Origin not to allow the equipment to become dangerous through lack of inspection and maintenance. In my opinion, the contract was of the kind which would include terms implied by law, alternatively, as a matter of fact to the effect that the equipment was, and would be, kept fit, safe, and suitable for use with LPG, and would not be or become a potential source of danger when in operation. 270The contractual relationship was such that it goes without saying that the terms as claimed by the plaintiffs and specified in par 252 above were included in the contract by implication, and I so find. It is self-evident that each was necessary for the prevention of injury and danger without which the contract, from BestCare's viewpoint, would be rendered nugatory. In any event, the terms reflect the requirements of the background statutes and standards. It may be assumed that this background would have been taken into account by both parties when making the contract, and that they intended that it would be performed with regard to the relevant provisions. I find it unquestionable that the common intention of the parties was that the equipment would be fit and safe for BestCare's use, that Origin would use reasonable care and skill in providing and maintaining it, and that Origin would comply with applicable statutes and standards. Accordingly, I hold that the contract contained these implied terms claimed by BestCare. 271The finding of breach of cl 7.1 is sufficient in a general sense to support the finding of breach of each of the implied terms of the contract. Clause 132 OHSR required Origin to provide BestCare with all available information necessary, inter alia, for the identification of hazards and for the elimination or control of risks arising from those hazards. As it failed to do so, it was in breach of this provision and therefore of the implied term requiring compliance with applicable statutes and standards. Furthermore, in my opinion the evidence established that Origin: (1) provided a defective FSR, and failed to provide over-pressure protection for it; (2) failed to carry out, and provide for, routine checks and inspections; (3) failed to maintain the equipment in reasonable and safe order; and (4) failed to comply with applicable statutes and standards. These failures taken together, or separately, constituted breaches of the implied terms, which resulted in the fire and explosion. On these counts, also, Origin is liable to BestCare for consequential damages. 272In light of this conclusion I have declined to determine the issues concerning the application of s 74 Trade Practices Act 1975 (Cth). To do so would only prolong these reasons without affecting the outcome of BestCare's claims under the contract.

[23]

The issues under cl 11.3 and cl 11.2 273Origin denied all liability, tortious and contractual, for any loss or damage to BestCare pursuant to the application of cl 11.3. Alternatively, it was put that the effect of cl 11.2 provided a cap on liability. 274Clause 11.3 provides: "11.3 Notwithstanding anything contained in this Agreement, Origin Energy shall be under no liability to the Customer for any loss (including but not limited to loss of profits and consequential loss) or for damage to persons or property or for death or injury caused by any improper or unsafe condition of the Equipment installed on the Premises by Origin Energy or by any act or omission (excluding negligent acts or omissions) of Origin Energy or by the Customer's [sic] in relation to the LPG or the Equipment or by any negligent act or omission of the Customer, its servants or agents." 275The defendants submitted that its effect is to exclude liability to BestCare for any loss by any improper or unsafe condition of the equipment installed on the premises by Origin. The submission, as I understood it, was that any liability of Origin for making the equipment unsafe was excluded. It was put that it excludes any act or omission which rendered the condition of the equipment improper or unsafe and, because the essence of the plaintiffs' pleaded case against Origin on all counts was for loss arising out of the unsafe condition of the equipment, the clause operated to relieve Origin from any liability for such loss. 276The issue turns on the construction of cl 11.3. The applicable principle was stated in Darlington Futures Ltd, p 510. The proper approach to the construction of a commercial contract is that it should be given a business-like interpretation. Its interpretation requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579, p 589). As with other instruments, preference is given to a construction supplying a congruent operation to the various components of the whole ( Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, p 381-382; Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522, p 528-529; HCA 17 pars 15-16). The contract in this case consists of the expressed terms in the document and the implied terms which I have found, and is to be construed accordingly. 277I have adumbrated above the contractual intention of the parties, and objects intended to be secured by the contract. Clause 11.3 provides an exclusion of liability to the Customer in respect of claims made by a third party. It extends to: "... any loss (including but not limited to loss of profits and commercial loss) or for damage to persons or property or for death or injury caused by any improper or unsafe condition of the Equipment installed on the Premises by Origin Energy or by any act or omission (excluding negligent acts or omissions) of Origin Energy or by the Customers' in relation to the LPG or the Equipment or by any negligent act or omission of the Customer, its servants or agents." 278The words in parenthesis expressly preserve Origin's liability for its negligent acts or omissions in contrast to words which extend the exclusion to cover any loss caused by "... any negligent act or omission of the Customer, its servants or agents". So understood, cl 11.3 is consistent with the objects and common intention which is identifiable from the express and implied terms of the contract read as a whole. 279It can scarcely be supposed that the parties intended to limit or exclude Origin's liability to BestCare for loss arising from the negligent installation, provision, or maintenance of equipment which Origin, in express terms, undertook to keep in reasonable working order. In my opinion, the meaning advanced by the defendants is utterly inconsistent with, and would preclude, giving a congruent operation to the contract's other components. It is also contrary to the natural and ordinary meaning of the very words of cl 11.3. Accordingly, in my opinion, the meaning and effect of cl 11.3 for which the defendants contended must be rejected. 280I turn now to the submission that the effect of cl 11.2 provided a cap on liability. Clause 11.2 provides: "11.2 The liability of Origin Energy for breach of this Agreement is limited to any one or more of the following as determined by Origin Energy in its absolute discretion. 11.2.1 In respect of the Equipment: replacing, repairing or installing equivalent Equipment (as the case may be); or 11.2.2 In respect of LPG delivering replacement LPG." 281It was put that the provision limits Origin's liability for breach to damages for the cost of replacement of the equipment or LPG, but no such claim was made in these proceedings. Accordingly, as BestCare's claim is for damages outside these categories, Origin's liability for their recovery is excluded. 282The issue turns on the construction of cl 11.2 having regard to the context, and the contract as a whole. The clause gives Origin, where it is in breach of the contract, the discretion to determine the remedial action to be taken in respect of the equipment or in respect of LPG, as the case may be. It may be assumed that in so agreeing, the parties had in mind the kind of breach, and its consequence, for which the specified remedy would be adequate and appropriate for determination by Origin. Such an approach is consistent with giving cl 11.2 a business-like construction. In my opinion, the plaintiffs correctly submitted (written submissions par 313): "... the word 'breach' in clause 11.2 should be construed as referring to a breach of the Agreement that is capable of being remedied in one of the ways set out in sub-clauses 11.2.1 and 11.2.2. It cannot have been the case, objectively, that the parties intended clause 11.2 to have a literal operation and apply to every possible 'breach' of the Agreement ... ' breach' in clause 11.2 should be construed as referring to a breach capable of being remedied in one of the ways set out in clause 11.2." 283In my opinion, the defendants' argument was based on a misconception of the contract as a whole, and the meaning of cl 11.2 within it. Clause 11.2 has no application in the circumstances of this case, and provides no limitation to Origin's liability to BestCare under the contract, or otherwise.

[25]

The claim in negligence 285The plaintiffs claim that Origin breached its common law duty of care in relation to the provision, maintenance, and repair of the equipment. In the fourth further amended commercial list statement it was alleged the duty of care was to: "26(a) supply and install the equipment in compliance with AG 601; (b) upgrade the equipment to the extent it had previously been installed so that it complied with AG 601; (c) supply and install over-pressure protection to the first stage regulator; (d) warn BestCare Foods and BestCare Sales that the first stage regulator was not fitted with over-pressure protection to the first stage regulator; (e) ensure that the equipment was fit for its proper purpose and safe to use; (f) inspect and maintain the equipment with due skill and care; and (g) comply with AS 1596:1989 including clauses 8.1.7 and 8.2.7 ..." and "27C(a) not to supply the equipment for use with dangerous goods unless it is suitable and safe for use with them (clause 22 Dangerous Goods (General) Regulation 1999); (b) to check that the equipment complied with clause 8 of the Dangerous Goods (Gas Installation) Regulation 1998; ... (d) to maintain, repair, clean and test the equipment including safety features thereon (clause 128 Occupational Health and Safety Regulation 2001); ... (f) to provide BestCare Foods and BestCare Sales with all available information about the plant and the equipment to enable BestCare Foods and BestCare Sales to, inter alia, identify hazards and eliminate and control risks (clause 132 Occupational Health and Safety Regulation 2001); ... (h) to identify any foreseeable hazard that may arise from the condition of the plant and that has the potential to harm the health or safety of any person during the use of the plant as a place of work (clause 124 of the Occupational Health and Safety Regulation 2001); (i) to inspect the plant regularly and, at a minimum, once between each hiring and leasing (namely about July 2001) and to carry out such inspections having regards to procedures recommended by the designer and manufacturer or developed by a competent person (clause 124 of the Occupational Health and Safety Regulation 2001)." 286It was also alleged (par 27A) there was a duty of care to install over-pressure protection to the FSR. 287It was alleged (par 27B) that Origin did not install over-pressure protection to the FSR. It was also alleged (par 27) that Origin breached its duty of care in that it breached its contractual obligations as pleaded in pars 19 and 24 (see pars 245, 247 above, respectively). It was also alleged (par 27D) that Origin breached its duty of care in that it failed to comply with its statutory obligations as pleaded in par 27C. 288As in the claims against Boral, the causes of the explosion were alleged to have been the manufacture of the disc holder from a brittle alloy, and the absence of over-pressure protection on the FSR. The further particulars under the contract claim which related to operating and maintenance procedure, and inspection and maintenance of the equipment (see par 245 above) were also relied upon. 289Relevant factors to be taken into account in deciding whether Origin owed a duty of care to the plaintiffs, or either of them, and its scope and content, are substantially similar to those relevant to the case against Boral. It is unnecessary to recite them all, other than to refer particularly to the terms of the contract (pars 250, 252 above), and to the statutes and standards (par 251 above). In addition, it is convenient to collate the admissions relevant to the case against Origin, which are:

At all relevant times Origin was the owner of the equipment.
Good gas fitting practice required the fitting of over-pressure protection and compliance with the relevant standards.
The manufacturer's instructions required that the FSR be fitted with over-pressure protection.
No over-pressure protection for the FSR had been installed.
The common law duty of care required the installation of over-pressure protection for the FSR.
Origin breached cl 8 of DGIR 1998 by failing to install over-pressure protection.
Breach of cl 8 of DGIR 1998 gave rise to a private cause of action in favour of BestCare but not in favour of Sales.
Provision of an OPSO was necessary for the safe operation of the installation to prevent any danger caused by a failure of the FSR.
If there had been a failure of the FSR, the installation of an OPSO would have prevented resultant over-pressurisation and leakage of LPG.
After the explosion, the FSR was unable to regulate pressure. If the FSR was in that state prior to the explosion, there would have been an increase in pressure in the downstream gas lines which the dryer filters would not be able to withstand.
Breach of either of cl 124, cl 128, or cl 132 OHSR by Origin would give rise to a private cause of action in favour of BestCare. 290Clause 8 of DGIR 1998 was in similar terms to cl 10(2) of DGIR 1982 which applied to the claim against Boral. Similar, too, are the terms of cl 22 of DGR 1999 and cl 24 of DGR 1978, the latter also relevant to the claim against Boral. 291The defendants denied Origin owed a common law duty or statutory duty of care to Sales. 292On this issue it is relevant that the relationship was a continuing one from the time Origin supplied the equipment under the contract with BestCare for use with LPG. Given the known dangerous and hazardous quality of LPG to which the contract referred, it was incumbent on Origin to ensure that the equipment which it supplied and owned was inspected and maintained so that it was safe to operate. In addition to the very terms of the contract there was ample evidence to support the finding, which I make without descending into detail, that BestCare and, inferentially, Sales relied upon it to do so. It is impossible to accept that had any reasonable inspection and maintenance procedure been undertaken the absence of an OPSO for the FSR would not have been discovered and remedied. Whether or not a reasonable inspection procedure would have revealed the defective condition of the disc holder is of little moment. The photographic evidence of the equipment demonstrates that any reasonable visual inspection by a competent and qualified person would have revealed the absence of an OPSO for the FSR with the attendant risk of danger should the FSR fail. 293In the case against Boral, I held Boral owed a duty of care to operators and users of the equipment, including the plaintiffs, to ensure that the installation provided was safe to operate. By parity of reasoning with regard to the factors relevant to their relationship, I find that Origin owed a similar duty of care to both plaintiffs. The scope and content of this duty and what was required to discharge it corresponded in large measure with Origin's obligations under the contract. In addition, in my opinion, the duty to provide an OPSO to prevent damage downstream from failure of the FSR existed irrespective of the cause of its failure, or whether the defective condition of the FSR would have been observable under a reasonable inspection regime. 294Under the contract claim I have found Origin was in breach of terms which required the exercise of reasonable care and skill in providing and maintaining the equipment in reasonable working order so that it was safe to operate. The findings which led to that conclusion also establish, by the same process of reasoning, that Origin negligently failed to discharge its common law duty of care which it owed to the plaintiffs thereby causing the destruction of the factory and consequential loss to them. The plaintiffs are entitled to a verdict against Origin on this count for damages to be determined.

[27]

The contributory negligence claim 302The defendants claimed that the plaintiffs, in breach of their duties, contributed to the cause of the fire and explosion, and by reason of their contributory negligence the defendants are entitled to a reduction in damages of 80 per cent under s 5S Civil Liability Act 2002. The grounds for the claim were: (1)the plaintiffs failed in their common law and/or contractual duty to isolate the storage tank when the factory was closed down and left unattended on 25 January 2003; and (2)that after the addition of the second gas line to the bakery in 2002, the plaintiffs failed to ensure that the gas installation, including the equipment, was inspected by a qualified person to ascertain, inter alia, whether or not there was over pressure protection for the FSR. 303Relevantly, the Civil Liability Act 2002 provides: "5R Standard of contributory negligence (1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm. (2) For that purpose: (a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and (b) the matter is to be determined on the basis of what that person knew or ought to have known at the time. 5S Contributory negligence can defeat claim In determining the extent of a reduction in damages by reason of contributory negligence, a court may determine a reduction of 100% if the court thinks it just and equitable to do so, with the result that the claim for damages is defeated." 304With regard to the first ground, the defendants contended that the duty to isolate the tank when the factory was unattended arose from the inherently dangerous nature of the installation, the requirement of cl 10.2.10 AS1596-2002, and the defendants' contractual obligations to comply with basic safety requirements. It was put that had the tank been isolated the fire and explosion could not have occurred. 305AS1596-2002 applied to installations commenced after its publication date and, unless specifically indicated, did not apply to existing installations (cl 1.1.2). The standard was published on 10 May 2002. Section 10 prescribed procedures for the operation and upkeep of an LPG gas installation as distinct from its construction (cl 10.1). Clause 10.2.10 provided: "When a site is unattended by trained staff, the tank is not in use and not fitted with an automatic shut-down system, the tank isolation valve shall be kept closed." 306The contractual provisions relied upon were: "4 Safety 4.1 The customer shall: 4.1.1 ensure that each of the Customer's employees, contractors and customers and every other person purchasing or receiving from the Customer LPG is adequately warned and instructed as to the known dangerous qualities of LPG and safe handling procedures, ... 4.1.3 at all times handle LPG and the Equipment in a safe and proper manner and take all reasonable precautions to prevent misuse and damage, 4.1.4 comply with the requirements of all laws and orders or directions of statutory authorities and Origin Energy in relation to the handling and storage of LPG and access to the Equipment." 307It was common ground that the tank isolation valve was not closed when the site was unattended. The defendants relied upon the evidence of Mr Heness, BestCare's factory manager, that the tank was never isolated when the factory was regularly shut down, that there was no restriction on access to the tank, and that it was open to isolate the tank if he wanted to do so. They also relied upon Mr Goldring's evidence was that the tank was never shut down. 308The defendants argued that it was the plaintiffs' system not to isolate the tank although it was a straightforward task to do so, and the reason for not doing so was because it could slow down the start-up process of the factory. It was put that isolation of the tank was the simplest and most effective way of avoiding the accident. 309For the plaintiffs it was submitted that cl 10.2.10 did not apply to the installation which included the tank. This was because, having been installed by Boral in 1994, it was an installation in existence prior to publication of the standard on 10 May 2002. 310On the issue of knowledge relevant to the application of s 5R(2)(b) it was submitted that there was no evidence that Mr Goldring, or anyone else on behalf of the plaintiffs, knew or ought to have known that the tank should have been isolated, or that over-pressure protection for the FSR should have been installed. It was put that, in breach of its duty under cl 128 and cl 132 OHSR Origin had given BestCare neither instruction to shut off the gas supply to the factory when it was unattended, nor information that applicable codes and standards required this to be done. The proposition was supported by reference to the evidence of Mr Lowe, Origin's operations supervisor, that he was unaware of any instruction about isolating the tank been given to BestCare. 311The plaintiffs drew attention to Mr Heness' evidence in cross-examination that although it was impractical to shut the gas off, there was never a requirement to do so. He said that if there was such a requirement, the gas supply at the tank would have been shut off. It was pointed out that it was not put to Mr Heness that he knew of any requirement or information on the question. Attention was also drawn to Mr Goldring's evidence in cross-examination that he was not aware of any need to turn the gas off at the tank, or of the requirement of the standard. As to responsibility he said (T p 631, l 29 - l 34): "Q. 43,000 litres of gas on your premises, would you agree you had an obligation to be aware of all relevant standards, regulations or acts relating to the safe handling of that product? A. No, I was under the impression that we were being supplied with gas by our supplier and the tank and all its components was his responsibility. Our responsibility started once the gas was supplied to us ..." And (T p 632, l 4 - l 7): "Q. Never knew it. Is that because you didn't make yourself aware of the standards or obligations that might be on you in relation to this tank? A. No. It's because we understood that the responsibility for high pressure gas was that of the supplier." 312Mr Goldring denied that the reason the gas was not shut down was because time would be lost in starting up, and he said (T p 634, l 16) "... If I had been aware that the law required it to be shut down it would have been shut down". 313The principles were recently reviewed in Council of the City of Greater Taree v Wells [2010] NSWCA 147 in which it was held (par 81) that in cases governed by the Civil Liability Act 2002 a question whether a person is contributorily negligent is governed, relevantly, by s 5R and s 5S. "Contributory negligence is determined objectively from the facts and circumstances of a case, which includes what the plaintiff knew or ought to have known at the time: s 5R(2)(b); Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552 at [16]" (par 83). 314Basten JA explained the difference between the exercise involved in the assessment of the defendants' conduct and that involved in the assessment of the plaintiffs' conduct. He said: "107 The assessment of the plaintiff's conduct involves a quite different exercise. A critical difference between the assessment of negligence and the assessment of contributory negligence is that the purpose of the latter assessment is to allow for an apportionment of responsibility for the injury by a reduction in the damages recoverable by the plaintiff "to such extent as the Court thinks just and equitable having regard to the claimant's share in the responsibility for the damage": Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9(1). That is a different exercise from the determination of whether or not the defendant has been negligent. 108 A further important difference in approach in assessing the negligence of the defendant, as against the contributory negligence of the respondent, involves the degree of precision by which the activity, including relevant states of knowledge and understanding, is to be identified ... With respect to the plaintiff, the focus of the evidence is often quite different. Although the ultimate question is what a reasonable person in (the plaintiff's) position would have known and done, it is inevitable that the evidence will focus upon the knowledge, understanding and actions of the plaintiff himself, shortly prior to the accident, in part to determine whether he exercised reasonable care, but also to assess what would be reasonable care in the specific circumstances." 315In Podreberserk v Australian Iron & Steel Pty Ltd [1985 HCA] 34; (1985) 59 ALR 529 the High Court, in dealing with questions of apportionment between parties, stated: "10 The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, i.e. of the degree of departure from the standard of care of the reasonable man (Pennington v. Norris [1956] HCA 26; (1956) 96 CLR 10, at p 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v. Gypsum Mines Ltd. [1953] UKHL 4; (1953) AC 663, at p 682; Smith v. McIntyre (1958) Tas.SR 36, at pp 42-49 and Broadhurst v. Millman (1976) VR 208, at p 219 and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance."

[28]

Determination 316The fire and explosion which resulted in the destruction of the factory was caused by the failure of the FSR for which no over-pressure protection had been provided. Origin negligently failed to prevent the risk of such harm in that it failed to provide an OPSO for the FSR. 317To succeed in the claim of contributory negligence, the defendants must prove that the plaintiffs had been contributorily negligent in failing to take precautions against the risk of such harm (s 5R(1)). In deciding what a reasonable person in the plaintiffs' position would have done, and whether he exercised reasonable care in the circumstances, it is necessary to take into account the evidence of the plaintiffs' knowledge, understanding, and actions, shortly prior to the accident ( Council of City of Greater Taree (par 108)). In my opinion the relevant risk of harm against which precautions might have been taken was over-pressurisation downstream from the failure of the FSR, which would have been prevented by the installation of an OPSO. Accordingly I do not accept that failure to isolate the tank was a failure to take a precaution against the risk of harm which is capable of establishing negligent conduct on the part of the plaintiffs. It follows that the defendants' claim on this ground should be dismissed. 318Nevertheless, it is appropriate to consider the issue that isolation of the tank was a precaution to be taken by the plaintiffs against the risk of the harm. 319On the question of knowledge, I accept the evidence of Mr Heness and Mr Goldring as truthful. I find that neither knew of the requirement of cl 10.2.10 of AS 1596-2002, or of similar information. I also infer that it was improbable that anyone else employed by the plaintiffs had this knowledge. It follows that the defendants have failed to prove that the plaintiffs knew of any instruction or information that the tank should be isolated when the factory was closed down. 320The contractual relationship has been referred to in detail already. From the terms of the contract it is self-evident that responsibility for keeping the equipment safe for BestCare's use was undertaken by Origin. The contract evidences the parties' intention to ensure BestCare's dependence upon Origin for maintenance and repairs, including alterations and attachments (e.g. cl 6.6, cl 7.1). It was envisaged that Origin would make requirements and give directions in relation to the handling and storage of LPG and access to the equipment with which BestCare must comply (cl 4.1.4). In these circumstances it is not unreasonable to infer as a possible explanation for Origin's failure to give information about, inter alia, the isolation of the tank that it took the view there was no need for the plaintiffs to know what, if anything, was required to be done to ensure the safe operation of the equipment. Furthermore, in support of this ground the defendants did not attempt to prove that the plaintiffs knew or ought to have known of the risk of harm arising from failure of the FSR without an OPSO which could have been prevented by the isolation of the tank. The findings which established Origin's conduct in breach of its contractual obligations and common law and statutory duties support the finding, which I make, that Origin was wholly responsible for the damage and harm suffered by the plaintiffs. 321In my opinion, the defendants have utterly failed to prove that it was negligent of the plaintiffs, or either of them, to have closed down the factory on 25 January 2003 without isolating the tank. To the contrary, I find that in the circumstances it was reasonable for the plaintiffs to have closed down the factory without isolating the tank, doubtless on the assumption that there was no risk of harm and/or it was safe to do so. It follows that the defendants have established no basis for apportionment under s 5S. Accordingly, their claim on this ground is rejected. 322With regard to the second ground, the defendants contended that after completion of the second gas line to the bakery the plaintiffs negligently failed to inspect the whole installation and, had this been done, the absence of an OPSO for the FSR would have been discovered, and an OPSO should have been installed. It was claimed that in the course of carrying out the gas fitting work for the second gas line the plaintiffs breached cl 7, cl 8, and cl 9 of DGIR 1998. 323Clause 7 prohibits the carrying out of any kind of gas fitting work unless the person who carries out the work is qualified as specified. Clause 8 requires compliance with the standards which require provision of over-pressure protection (these are set out in par 220 above). 324Relevantly, cl 9 provides: "9 Testing for patent defects Immediately after the completion of gasfitting work on a gas installation, the person responsible for the carrying out of the work: ... (b) in the case of work comprising the alteration, extension or repair of an existing gas installation: (i) must inspect such part of the installation as has been altered, extended or repaired, and (ii) must inspect all gas containers, gas regulators and gas appliances connected to such part of the installation as has been altered, extended or repaired, and (iii) must test the whole installation for patent defects." 325Evidence relevant to this ground was given by Mr Goldring and Mr Torrens. I accept it. 326Mr Goldring said that Mr Torrens carried out the gas fitting work for BestCare which was work necessary for the connection of the new bakery oven to the existing installation. The installation of the second gas line was completed in May 2002. Mr Torrens' evidence was that he was a licensed gas fitter, and the work was carried out by his company, Vimcrest Pty Ltd. He said that neither he nor the company were engaged to carry out work on the FSR, or to provide any advice relating to the gas installation and any over-pressure protection system. 327The defendants submitted that cl 7 was breached because Mr Torrens was not qualified as required. They also submitted that upon completion of the second gas line the plaintiffs were required under cl 9(b)(iii) to test the whole installation, which included the FSR, for patent defects but, in breach, did not do so. It was argued that had the whole installation been tested the absence of over-pressure protection for the FSR would have been discovered, a situation which, under the standards, the plaintiffs should have rectified by providing an OPSO. It was put that in failing to test and, ultimately, to install an OPSO for the FSR, the plaintiffs were contributorily negligent. The defendants submitted (T p 2660, l 10-l 18): "So that, the absence or failure to have over pressure protection at the time of the explosion was a concurrent breach of duty by both Origin and by the plaintiffs, in that they had both done gasfitting work on the installation. By doing so, they both become subject to a non-delegable duty of over pressure protection at or after the first stage regulator. To the extent to which the absence of over pressure protection, that that causally contributed to the explosion occurring, both the defendant and the plaintiffs were involved in the same fault. The same submission is made, that the breach of the common law duty, there was also a breach of the contractual obligation to act safely." 328In essence, as I understood it, the defendants were saying that upon completion of the fitting of the second gas line in May 2002, the plaintiffs negligently failed to install the OPSO, which was the precaution to be taken against the risk of harm. 329In response, the plaintiffs submitted, inter alia, that the defendants had failed to prove culpability on this ground. It was put that there was no evidentiary basis for finding the plaintiffs knew or ought to have known of the requirements of cl 7, cl 8, and cl 9 of DGIR 1998. They referred to the defendants' failure to put to Mr Goldring in cross-examination that he knew of these requirements, or that he should have ensured that Mr Torrens caused inspection to be made of the whole installation after completion, or that he knew or ought to have known there was no OPSO for the FSR, or that one should have been installed. The plaintiffs also referred to similar failures in the cross-examination of Mr Torrens, in particular, that it was not put to him that he should have arranged inspection of the whole installation. Reminder was made of the failure of Origin to provide the plaintiffs with relevant information e.g. as required by cl 132 OHSR. 330I have held that Origin was wholly responsible for the damage resulting from the fire and explosion. The matters ventilated by the defendants on this ground do not justify any qualification of that conclusion. The failure complained of by the defendants was non-inspection in May 2002. The damage caused by their negligence happened on 25 January 2003. In their submissions the defendants overlooked the fact that throughout this period Origin's contractual obligations for inspection and maintenance, and its overriding responsibility for the safe operation of the equipment, continued. Furthermore, it was not established that the plaintiffs knew or ought to have known of any requirements for inspection, or that the risk of harm could have been prevented by the process of inspection and rectification postulated. These considerations are sufficient to dispose of the question of culpability in the plaintiffs' favour. 331Accordingly, the defendants' claim for apportionment on this ground is rejected.

After the explosion, the FSR was unable to regulate pressure. If the FSR was in that state prior to the explosion, there would have been an increase in pressure in the downstream gas lines which the dryer filters would not be able to withstand. 222The defendants denied that Boral owed either a common law or statutory duty of care to either plaintiff. They accepted that it owed a common law duty, and a statutory duty under cl 10(2) of DGIR 1982, to Bayer. They also accepted that breach of cl 10(2) for non compliance with the relevant standards gave rise to a private cause of action to persons entitled to the protection afforded by cl 10(2). 223However, the defendants denied liability to the plaintiffs on the basis that the plaintiffs were outside the class to which a duty of care was owed either at common law or under statute. Their case was that, at all material times, the installation was owned by Boral and, later Origin, and the plaintiffs' entitlement to use it arose only under the contract with Origin of 15 August 2001. Alternatively, it was contended that if either duty existed it extended only to BestCare as purchaser of the site. 224Principally, it was put that Boral owed no duty of care to BestCare as the incoming owner of the factory because there was no contract between them in respect of the installation. Reliance was placed on the fact that by the time Bayer sold the factory to BestCare, Origin had succeeded Boral as the owner of the installation, and retained ownership until the time of the explosion. As I understood it, the argument was that at all material times the installation was owned by Boral and, later, Origin. There was never any arrangement between Boral and BestCare which entitled BestCare to use the installation. BestCare became entitled to use the installation only under its agreement with Origin, then the owner. Accordingly, there never was a relationship under which Boral owed a duty of care to the plaintiffs. 225Defendants' counsel put (T p 2632, l 39 - l 44): "In those circumstances where Boral never dealt with the plaintiffs, the defendants' submission is that they were not a class of people to whom Boral ever owed a duty of care because it was not reasonably foreseeable that an incoming purchaser would be entitled to use the equipment. And if an incoming purchaser wished to use the equipment that would involve a new relationship which would be subject to a contract."

BestCare Foods Ltd & Anor v Origin Energy LPG Ltd

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Judgment (30 paragraphs)

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Cases Cited (35)