Collins v Sydney Ports Corporation

Supreme Court of NSW|2011-06-21|Before: Harrison J

Background 4The emergency response jetty gangway was originally designed and installed at Port Botany for Sydney Ports in approximately 1992. In the years thereafter, and up until Mr Collins' accident, Australian Winch and Haulage carried out maintenance and repair work on the gangway upon requests from Sydney Ports from time to time. There was however no agreement requiring them to undertake regular maintenance or inspections. In about July or August 2000, Australian Winch and Haulage recommended an improvement to the system using an hydraulic ram. This would have wholly avoided the accident that befell Mr Collins if it had been implemented, but that did not occur.

Mr Collins' claim against Sydney Ports 5The version of Mr Collins' statement of claim current at the trial was the further amended statement of claim filed on 17 July 2009. It pleads a case in negligence and breach of contract against Sydney Ports particularised in manifold ways. It alleges that there was a failure to provide a safe place of work or a safe means of access to work. It alleges that Sydney Ports also caused or permitted modifications to the design of the gangway, counterweight and shackle without ensuring that they were safe or doing so without proper advice. There is an allegation that the use of a stainless steel shackle was unsuitable in the circumstances as it was subject to unpredictable corrosion from emersion in seawater. There was also no backup or failsafe system in place to prevent the accident in the event of a shackle failure. There was a series of particular complaints that alleged that the use of a stainless steel shackle was unsuitable and unsafe because of the particular grade of stainless steel from which the shackle was manufactured. It was alleged that Sydney Ports failed to maintain the shackle or regularly to inspect it for signs of wear and corrosion or to carry out a risk assessment of the gangway. Finally it was alleged that there was a failure to heed advice that one of the counterweights in the gangway system should be replaced with an hydraulic system. 6Mr Collins also alleges that Sydney Ports is liable for breach of statutory duty in that it failed to provide a safe means of access to every place at which he was required to work contrary to reg 73 of the Construction Safety Regulations . 7Sydney Ports denied that it was negligent as alleged. In answer to Mr Collins' claim generally it pleaded the following at paragraph 6A of its amended defence to the further amended statement of claim: "6A Further and in the alternative, in relation to the statement of claim as a whole, [Sydney Ports] says that the failure of the gangway as pleaded was the result of a defect in a shackle which defect was not capable of being found by any or any reasonable inspection by the first defendant."

Mr Collins' claim against Australian Winch and Haulage 8Mr Collins pleaded his case against Australian Winch and Haulage in the following way: "10. [Sydney Ports] contracted with [Australian Winch and Haulage] for it to inspect, maintain, and carry out necessary work from time to time, to the gangway system, including the shackle. 11. In or about 1998 [Australian Winch and Haulage] carried out work to the gangway system and shackle, part of which involved replacement of the shackle previously used, with a shackle made of stainless steel grade 316. [See transcript 26 June 2011 at 363-364 for judgment on application by Mr Collins to amend]. 12. On subsequent occasions in 1999, March 2000 and July 2000 [Australian Winch and Haulage] carried out further work on the gangway system and shackle, including replacement of the shackle that supported the counterweight. On these occasions the work included the reinstallation of the shackle, or the replacement of the shackle. On such occasions [Australian Winch and Haulage] either installed or reinstalled a shackle made of stainless steel grade CF-8M. 13. As at 23 July 2001 the shackle supporting the counterweight was made of stainless steel grade CF-8M." 9As a result of this, Mr Collins alleged that Australian Winch and Haulage breached its duty of care to him in the following ways: "(a) Effecting modifications to the design of the gangway, counterweight and shackle without ensuring such modifications were safe. (b) Failing to take appropriate advice before effecting modifications to the design of the gangway, counterweight and shackle. (c) Failing to take advice from a suitably qualified and experienced engineer on the appropriateness of the modifications effected to the design of the gangway, counterweight and shackle. (d) Relying on non 'proof' stainless steel shackles to support the counterweight when the said shackles would be subject to unpredictable corrosion and/or grain boundary and/or electrolytic corrosion in view of submersion in seawater. (e) Relying on stainless steel shackles in a lifting application. (g) Failing to heed previous similar occurrences of failed shackles. (h) Causing the use of a shackle to support the counterweight, when the shackle was unsuitable for that purpose. (i) Using a shackle to support the counterweight, which was made from a grade and type of stainless steel unsuitable for the purpose. (j) Failing to follow the original design specifications of the gangway, in particular the use of a galvanised steel shackle to support the counterweight. (l) Failing to implement the recommendation of a regular maintenance and inspection program of the gangway and associated structures, in particular underwater components, including the shackle that supported the counterweight. (m) Failing to ensure the shackle was suitable and safe to bear the load to which it was attached. (n) Using a non-load rated stainless steel shackle in a load bearing application. (o) Using a shackle in the particular application which was unsuitable as it had not been heat treated. (q) Failing to carry out an engineering assessment before modifying the design of the gangway, in particular the type of shackle used. (r) Failing to ensure the shackle had a sufficient load rating before using it to support the counterweight. (t) Failing to obtain a manufacturer's test certificate from the supplier, when arranging supply of the shackle. (u) Failing to carry out a risk assessment of the gangway." 10In response to these allegations Australian Winch and Haulage denied that it was negligent. It admitted that it carried out work on the gangway system, including the shackle, on the dates as alleged, but it denied that such work included the replacement or reinstallation of the shackle. However it admitted that as at 23 July 2001 the shackle supporting the counterweight was made of stainless steel grade CF-8M. The burden of Australian Winch and Haulage's response to the claims against it generally is to be found in paragraph 14A of its further amended defence to the further amended statement of claim, which is in these terms: "14A Further, in answer to the whole of [Mr Collins'] claim, [Australian Winch and Haulage] says that the failure of the shackle in place as at 23 July 2001 was due to the fact that the shackle was not annealed during the manufacturing process, which defect was not capable of being ascertained on reasonable inspection."

Australian Winch and Haulage's cross-claim against Sydney Ports 11Australian Winch and Haulage filed an amended cross-claim against Sydney Ports on 19 March 2010. It repeated the allegations of negligence pleaded against Sydney Ports by Mr Collins. The real burden of the cross-claim however was the allegation that in or around June 2000 Australian Winch and Haulage put forward a proposal to Sydney Ports for changing the gangway configuration which it said would have prevented the failure that ultimately occurred. That proposal involved the removal of the smaller counterweight and "the chain hoist that was causing the corrosion", and the use of an hydraulic ram. Sydney Ports advised Australian Winch and Haulage that it would not proceed with the proposal due to cost considerations. It alleged that the failure by Sydney Ports to adopt the proposal for changing the configuration of the gangway was negligent in the circumstances when Sydney Ports knew or ought to have known that there was a risk of the counterweight detaching. 12Australian Winch and Haulage also cross-claimed against Ronstan International Pty Ltd upon the basis that it was a deemed manufacturer of the shackle under the relevant provisions of the Trade Practices Act 1974 . Australian Winch and Haulage purchased the shackle from A Noble & Son Ltd, which company had earlier purchased it from Ronstan International. It was alleged that the shackle had been manufactured and described as marine grade or type 316 stainless steel when, in truth, it was not suitable for use in a marine environment. It was also alleged that the manufacturer had failed properly to anneal the stainless steel used in the shackle. In the events that occurred, however, the cross-claim against Ronstan International formed no part of the proceedings before me.

Sydney Ports' cross-claim against Australian Winch and Haulage 13Sydney Ports filed its amended second cross-claim on 18 January 2011. It also repeated the allegations made by Mr Collins in his further amended statement of claim. It went on to allege that Australian Winch and Haulage owed a duty to Sydney Ports to take all reasonable care in the provision of services and advice to it and that it was a term of a contract between them that it would do so. It alleged that generally and by reason of the design of the gangway, Sydney Ports relied upon Australian Winch and Haulage's expertise in relation to its maintenance, inspection, repair and modification. In particular, Sydney Ports alleged that Australian Winch and Haulage advised Sydney Ports on modifications to the system for attaching the counterweight CW2 to the gangway mechanism and advised Sydney Ports to replace some galvanised steel components including a shackle and eye supporting a submerged counterweight with stainless steel components. Australian Winch and Haulage advised on and supervised the installation of these modifications to the gangway mechanism, which differed from those originally designed and installed. Sydney Ports alleged that Australian Winch and Haulage advised it that stainless steel was an appropriate material for the shackle and related components and supplied the shackle that failed. Sydney Ports alleged that its staff specifically raised questions about whether stainless steel components recommended and supplied by Australian Winch and Haulage were appropriate and were told that they were. 14Australian Winch and Haulage relevantly denied these allegations. In response to the whole of the cross-claim it raised again the contention that the failure of the shackle in place as at 23 July 2001 was due to the fact that it was not annealed during the manufacturing process, which defect was not capable of being ascertained on reasonable inspection.

The liability issues 15Mr Collins contended that at least by the time the evidence had been completed, it had clearly emerged that the shackle that failed was manufactured from stainless steel grade CF-8M and that the mechanical cause of the detachment of the counterweight was due to crevice corrosion. There was in the circumstances no issue that the shackle was not fit for the purpose to which it was put, namely a load bearing application while immersed in seawater. The shackle supplied was not fit because it was fabricated from a material that would not perform the task. 16Mr Collins submitted that it was clear the experts agreed that, unlike grade 316 stainless steel, one could not expect stainless steel grade CF-8M to be solution annealed. Such a process, if it had been undertaken, would have rendered the shackle capable of performing the task. Mr Collins therefore contended in these circumstances that the real and only issue for determination arises from the defences specifically pleaded by Sydney Ports at paragraph 6A of its defence and by Australian Winch and Haulage at paragraph 14A of its defence. Mr Collins submitted that because the unannealed condition of a CF-8M stainless steel shackle was to be expected, it was not a defect . Accordingly, on this approach, it followed that the defences pleaded in these paragraphs could not succeed. 17Sydney Ports did not separately furnish a statement that identified discrete issues. Mr Parker of counsel, who appeared for Sydney Ports, conceded on the first day of the hearing that the shackle was not appropriate because it should have been solution annealed but was not. He said that Sydney Ports relied upon the expertise of Australian Winch and Haulage who manufactured and installed the gangway. 18Australian Winch and Haulage contended that the extent of its retainer by Sydney Ports to maintain the gangway was restricted or limited to doing so on a case by case basis. On at least one occasion prior to Mr Collins' accident, Australian Winch and Haulage had been engaged to replace the galvanised steel shackles on the gangway due to constant failures. Its advice and recommendation to Sydney Ports to redesign the gangway to include an hydraulic system to prevent the risk of the counterweight detaching was never implemented. 19With respect to the suitability of the shackle itself, Australian Winch and Haulage contended that the issue was whether the installation by it of a CF-8M grade stainless steel shackle was fit for the purpose following the continued failure of the galvanised steel shackle and whether the installation of the CF-8M grade stainless steel shackle would have affected the gangway design or function any differently to the galvanised steel shackle that it replaced. Australian Winch and Haulage suggested that a related issue was whether or not the installation of the CF-8M grade stainless steel shackle would have been more corrosion resistant or durable than one made from galvanised steel "but for the manufacturing defect" of the one it actually supplied. It acknowledged that the question of whether or not the supplied shackle suffered from a defect in its manufacture was an issue to be determined. 20Central to the way it put its case, Australian Winch and Haulage emphasised the issue of whether or not it could reasonably have detected or known that the shackle it supplied was defective and would therefore malfunction. It also raised the question of whether, if there was a defect, it "could have been avoided with the exercise of reasonable care in the manufacturing process". 21Finally, Australian Winch and Haulage promoted the alleged failure by Sydney Ports to maintain the gangway or to have effective maintenance programs to safeguard its equipment as a preservation and precautionary measure as an issue in the case.

Expert evidence - joint responses 22It is instructive at an early stage to examine the answers given by the parties' experts to a series of questions that they were asked to consider in conclave. Mr Collins retained Professor Yeomans and Australian Winch and Haulage retained Professor Young. Each is an eminent academic with expertise in metallurgy. The qualifications of each expert were not the subject of contest or challenge. The extent of agreement between them is therefore understandably very high. 23The experts met on 8 March 2011. They agreed that what caused the shackle to fail was the overload of the reduced section of the load bearing metal. This reduction was caused by intergranular corrosion from chromium carbide precipitation, which had initiated at crevices between the pin and the eye of the shackle. 24They were asked whether the cause of the failure was due to a defect in its manufacture. They were troubled that the word "defect" may have had implications that they did not appreciate. They did agree, however, that the shackle in question was deficient in the sense that it was not solution annealed as part of its manufacture. They also agreed that in the absence of solution annealing, the metal from which the shackle was manufactured was more susceptible to intergranular corrosion. 25The experts were particularly asked whether the factors that caused the shackle to fail could have been detected by visual inspection at any time between its installation and its failure. The experts' answer to that question was in these terms: "We agree that the lack of solution treatment would not of itself be evident on visual inspection. The question is whether the corrosion resulting from the lack of solution annealing would have been evident prior to failure. We further agree that close examination of the junction between the shackle eye and pin would have revealed the existence of corrosion. Such examination might have required retrieval of the shackle from beneath the water. Neither of us is qualified to comment specifically on what a diver may or may not be able to observe under water. [Professor Yeomans] is of the view that it is highly unlikely that this corrosion would be observable underwater, and that examination would therefore require that the shackle be examined above water. In addition, there would have been superficial corrosion (most likely resulting from intergranular attack) on the open surfaces of the shackle. Again, we are unqualified to state whether this would have been visible below water." 26The experts also agreed that it would not be possible to estimate for how long before the failure of the shackle any factors that might have caused the shackle to fail could have been detected by visual inspection. This is because the rate of accumulation of visible corrosion product cannot be predicted. They also agreed that a properly heat treated 316 shackle would be expected to have a service life when fully immersed in temperate seawater of at least several years. 27The experts were next asked whether the 316 stainless steel shackle was suitable for the purpose to which it was put. Their answer was in these terms: "We agree that appropriately heat treated Grade 316 stainless steel is suitable for resisting general pitting and intergranular corrosion in temperate seawater. In addition, it would be expected to provide good resistance against crevice corrosion. In addition to resisting corrosion, the principal purpose of the shackle was to sustain a mechanical load in connecting a counterweight to a chain. We agree that the Australian Standard AS 2741 (latest version 2002), "Shackles" does not include reference to stainless steels or cast products. [Professor Yeomans] concludes on this basis that the use of a cast stainless steel shackle was therefore inappropriate. [Professor Young] is uncertain as to whether the fact that this particular standard does not include stainless steel means that stainless steel is therefore not recommended in general." 28On the issue of whether or not a galvanised steel shackle would have been more durable than a grade 316 stainless steel shackle, the experts assumed that the hypothetical 316 grade steel to be considered in the question had been properly heat treated. In those circumstances they agreed that 316 stainless steel would have better long-term corrosion resistance than galvanised steel. On the specific question of whether the shackle that failed in this case was manufactured from grade 316 stainless steel, the experts were only prepared to say, "the shackle material generally meets the specifications for the cast version of grade 316 stainless steel". It was supplied in an "as-cast" condition. The experts agreed that an "as-cast" grade 316 stainless steel shackle would have been unfit for a load bearing application where it would be immersed in salt water. 29The experts were also each of the opinion, given the intended application of the shackle, that it should have been ordered in grade 316 stainless steel in either a solution annealed condition or grade 316L. Both solution annealing and low carbon grade 316L would have resisted intergranular corrosion. 30In the event that a galvanised steel shackle had been used, there would have been a loss of the zinc coating on open surfaces over time that would have been apparent from the visible onset of rusting of the underlying steel. More rapid loss of zinc within the crevice of the shackle-eye bolt assembly would not have been as readily visible. 31Finally, the experts agreed that the particular shackle that failed in this case was not load rated. The only apparent significance of that fact would appear to be that there could be no confidence in the mechanical (i.e. load-bearing) capacity of the shackle.

Clarification 32At all times up to and including the commencement of the hearing, the parties had proceeded upon the basis that the shackle that failed was grade 316 stainless steel. By the time the experts had given evidence before me it had become apparent that the correct description of the steel from which the shackle was manufactured was CF-8M stainless steel. This emerges from the following portions of the transcript: "HIS HONOUR:... Professor Yeomans and Professor Young, each of you has had the opportunity to listen to the debate. It is unusual for witnesses to do that because wisdom suggests that if we quarantine you from these type of disputes your opinions are unpoisoned by forensic flourish but, having heard the discussions, it seems to emerge from the evidence you have already given that, Professor Young, you take the view that hot working is an essential step in the process of producing 316 stainless steel, and Professor Yeomans', as I understand it, accepts that it may be part of the process but it is not essential. Is that a fair distillation of the positions you hold? WITNESS YOUNG: I certainly think that hot working is a necessary requirement for a material to be classified as 316. HIS HONOUR: And Professor Yeomans? WITNESS YEOMANS: I don't disagree with that. I think the confusion that perhaps has arisen here is that this shackle has been identified as a grade 316. It is in what is called the as cast condition and in fact it more meets the specification of a casting designation of stainless steel, which happens to be very similar to a designation that we can call 316. So there are casting designation of these alloys and there are wrought designations of these alloys. I don't disagree with that at all. HIS HONOUR: What do you mean by "casting" so that we understand? WITNESS YEOMANS: There are specification designations of alloy compositions, specific designations of those alloys for the material, if it is made as a cast material. HIS HONOUR: Meaning, that is what goes into the product. WITNESS YEOMANS: That's right, and often that is used in the final form of the product because it is not intended or able to be mechanically worked. There are cast products which are cast to a final shape. There are other products that are cast to an original shape and then worked to a final shape. That is the wrought process. HIS HONOUR: Is it possible, do I glean, to have a product, and I am asking you both this, to have a product that qualifies as 316 stainless steel, one of which may have been hot worked and another of which may not have been hot worked? WITNESS YOUNG: Can I offer my view, my opinion? HIS HONOUR: Yes. WITNESS YOUNG: I take the view that if it is called 316, then it has been hot worked or should have been. If it is a cast product, and we are talking now about a final product, then it should not be called 316 and, as my colleague says, there is an alternative designation for that material, in fact. It is CF 8M, in this case, which has essentially the same chemical composition on average as 316 but is not called 316 because it has not been hot worked, it has been cast, and that is why it is called CF 8M. WITNESS YEOMANS: I agree, I do agree." 33It follows that some references, for example, in transcript and expert reports, to grade 316 stainless steel need to be understood in the context of this development.

The lay evidence Mr Collins' non-expert evidence on liability 34Mr Collins provided a statement dated 12 May 2010. He said that the gangway was about 20 feet long and constructed of aluminium. The gangway had two counterweights, one weighing 720kg and another weighing 1500kg, attached to it by means of wires and shackles. These counterweights worked against each other to keep the gangway in the upright or stowed position, or in the down or operating position giving access to vessels at the wharf. The gangway is raised and lowered by means of an electrically operated chain block. He said that the equipment was owned by Sydney Ports and maintained by Australian Winch and Haulage. 35He said that on 23 July 2001 he started work at Port Botany at around 6.00am. He was employed by Sydney Ports as a Port Officer. At about 7.25am he walked across the gangway from the wharf to board a fire tug moored at the wharf in order to investigate a faulty deck light that had been reported to him. When he was about two-thirds of the way along the gangway it suddenly failed and he was thrown violently onto the wharf as the unrestrained gangway returned to its upright position. 36Mr Collins said that approximately one year prior to his accident the 720kg counterweight detached as a result of rust on either the wire or the shackle attaching it to the gangway. This caused the gangway violently to catapult from its down position to the upright position. No one was on the gangway at the time. Mr Collins submitted a defect report to the appropriate facility officer pointing out the potential dangers. The gangway was then repaired by Australian Winch and Haulage using stainless steel. 37Mr Collins spoke to Alan Chalker from Sydney Ports about this. Mr Chalker was in charge of gangway maintenance. Mr Collins was concerned about the use of stainless steel in that application. Mr Chalker telephoned Mr Collins and told him that it was "type 316 stainless steel" and was "marine grade". Mr Chalker told Mr Collins that "Australian Winch and Haulage [had] assured [him] that it is type 316 marine grade and perfectly safe". Mr Collins replied, "I am not convinced". 38Mr Collins said that he had no knowledge of what maintenance, if any, was done to the entire gangway apparatus during the twelve months following the rectification work and prior to his accident. Mr Collins was not relevantly cross-examined on the issue of liability. 39Mr Collins called Mark Morgenthal, a WorkCover inspector who investigated the incident. Mr Collins sought to tender a series of records of interview conducted by Mr Morgenthal with various employees of both Sydney Ports and Australian Winch and Haulage. Some considerable time was taken in the course of the case about this approach and upon the issue of whether or not any of these people had made admissions binding upon either of the defendants and favouring Mr Collins. Mr Morgenthal did not give evidence himself that directly bore upon the issues in the case. 40Mr Morgenthal interviewed Gregory Walkden. A portion of his record of interview was tendered and became Exhibit L. He had been employed as a leading hand fitter with Australian Winch and Haulage since 1993. He was principally experienced as a mechanical fitter. Mr Walkden told Mr Morgenthal that he had carried out repairs to the emergency response jetty gangway about three times over the years, whenever Sydney Ports required it. He said that he thought the stainless steel shackles were made from grade 316 stainless steel. None of the other admissions said to arise from his interview is particularly helpful in the determination of these proceedings in my view. 41Mr Morgenthal also interviewed William Apap. His record of interview was tendered and became Exhibit M. Mr Apap was employed by Australian Winch and Haulage as a foreman fitter. He commenced his employment in 1977. He told Mr Morgenthal that Australian Winch and Haulage manufactured the emergency response jetty gangway for Sydney Ports. He said that it continuously malfunctioned "through the erosion [ sic , corrosion] or whatever through the salt water". This led to a continuous process of repairs by Australian Winch and Haulage and the people who manufactured the hoist. He thought he had carried out repairs on the gangway about five or six times. He was unable to say what was the grade of the shackles used in the mechanism although he thought that the stainless steel shackles had a manufacturer's rating stamped on them. 42Mr Collins also tendered the Operation and Maintenance Manual for the gangway produced by Australian Winch and Haulage. Section 2 is headed "Maintenance" and is in these terms: "The system, as designed, requires very little maintenance. The few items which may need attention are the following:

The chain which runs through the chain hoist although it has been mechanically galvanised, should be kept oiled to prevent corrosion of the internal workings of the hoist.
In its present environment corrosion is the main problem and all switches should be checked periodically to ensure corrosion doesn't effect [ sic ] their functions. NOTE Following the accident with the gangway on the 29. 11. 92, the shackle on the end of the hoist chain (which failed during the accident) was replaced with a 'hammer-lock' type connection device which was coated with cold-galvanising paint. It is suggested that this component be inspected at regular intervals as its periodic replacement may be necessary." 43Mr Collins next called Damien Atkinson. He was employed by A Noble & Son Ltd and had been so employed for some 16 years. He was the sales manager for that company between 1998 and 2005. In the course of his work for the company he had contact with Australian Winch and Haulage as one of its customers. He dealt in particular with Brian Hemsworth, Ian Nichol and Ian D'Arth. 44Exhibits R and S were tendered by Mr Collins during the course of Mr Atkinson's evidence in chief. He was asked some questions about them. Exhibit R is an A Noble & Son Ltd purchase order dated 21 March 2000 directed to Ronstan 2000 Pty Ltd for a "KXS12 12mm S/S DEE SHACKLE" to be shipped or supplied to Australian Winch and Haulage. Exhibit S is an A Noble & Son Ltd invoice addressed to Australian Winch and Haulage apparently dated March 2000 to the attention of Ian Nichol for a "12mm S/S DEE SHACKLE". Mr Atkinson said that stainless steel shackles were not load rated and that they did not come from the manufacturer with a certificate as to their qualities. He said that between 1998 and 2000 his employer sold "as cast" stainless steel products but he did not think it sold annealed stainless steel products. 45Exhibit T was a four-page facsimile from Mr D'Arth to Mr Morgenthal dated 24 July 2002. The cover sheet attaches three documents, including what appears to be a copy of Exhibit S, and contains text which is in the following relevant terms: "Please find attached the following;- Purchase order information for the stainless shackles. From Nobles (not Ronstan as I suggested) The grade is 316 This was purchased in March 2000. We did work on the gantry in May 99, March 2000, and July 2000, so I cannot guarantee that these were the actual items in question. (It could be that the one in question could have been from an earlier supply, and the two on this purchase order replaced others elsewhere in the system, or numerous other variations). A copy of the inquiry sent to Delta Hydraulics to quote an hydraulic ram. This was part of our proposal to replace the smaller (moveable) counterweight with an hydraulic system to eliminate the moveable counterweight." 46Mr Morgenthal interviewed Mr D'Arth and certain questions and answers in that document were admitted in evidence and became Exhibit U. Mr D'Arth was employed by Australian Winch and Haulage as its engineering manager on 23 July 2001. He had worked for the company for seven years. Mr D'Arth has a Bachelor of Science degree in engineering and has had extensive experience in engineering related employment since 1978. 47He said that Australian Winch and Haulage were at the Sydney Ports emergency response jetty gangway having been "given a job of trying to overcome a problem, because of a shackle that failed and dropped the counterweight to the sea floor". Mr D'Arth agreed that alterations had been carried out to the gangway in 1998 because the shackle had broken and dropped the counterweight. Sydney Ports had asked for these changes. An investigation revealed that corrosion was the problem so various components were changed to stainless steel. That was a decision made by Australian Winch and Haulage alone upon the basis that stainless steel has better corrosion resistance than mild steel. The company relied upon its own knowledge in coming to that decision. He suspected that shackles would have been purchased from a chandler. In purchasing the shackles he did not obtain a manufacturer's test certificate as he did not believe it was necessary. He believed that the grade of the stainless steel was 316 but had no idea what heat treatment process the stainless steel shackles should have undergone in order to be suitable for a seawater application. He said, "It was marine shackle we were buying". He did not know the difference "off the top of [his] head" between stainless steel grades 316 and 316L. 48Mr Collins next called Mr Ian Taylor. He was employed by Ronstan International Pty Ltd. That company manufactures marine sailing boat products or sailing boat hardware as well as architectural systems and goods. Mr Taylor had an Associate Diploma of Mechanical Engineering. He had been employed by Ronstan International since 1993. 49Ronstan International manufactured its own range of shackles. He was asked about particular grades of stainlees steel in the shackles sold in 2000. His evidence was as follows: "CAMPBELL: As of 2000 did Ronstan supply grade 316 shackles? A. Around that time we did a rolling change of our shackles from 304 and switched to 316 of the stainless steel. McCULLOCH: I let the witness answer so it could be recorded. I object to the answer as being unresponsive. HIS HONOUR:I think you were asked that, quite apart from anything Ronstan manufactured, they purchased and passed on grade 316 shackles in 2000? A. Your Honour, is that a question directed to me? Q. Yes. A. We did have or do have a range of... McCULLOCH: Well, I object. HIS HONOUR: We're really interested in 2000. A. Yes. Q. Did Ronstan buy and on sell grade 316 shackles apparently manufactured by someone else in 2000? A. Your Honour, we supplied stainless steel shackles but I am unable to confirm what grade of stainless steel they were. They were sold as stainless steel shackles of a non-described grade but made by other people." 50Mr Taylor was shown Exhibit O, which contains a series of photographs of the offending shackle. He was asked about these photographs as follows: "Q. From looking at the photographs of the shackle, do you know what it is? A. This photograph appears to show a commodity grade of shackle, a stainless steel shackle which could have been sourced from Ronstan or could have been sourced from a range of suppliers of such other shackles which are made in Asia, I believe." 51He was finally asked the following question in chief: "Q. Did Ronstan have a product which it would recommend for use in a lifting application immersed in seawater? A. No. Ronstan did not have a shackle for that nature, no." 52Mr Parker of counsel, who appeared for Sydney Ports, then asked Mr Taylor the following: "Q. Did you sell over the counter annealed shackles in 2000 or prior? A. I am not aware that we did, not knowing fully what the processes were from external suppliers we might have used at the time. The standard Ronstan shackles were not annealed. Q. And when you say the standard Ronstan, are you talking about the ones that Ronstan made? A. Yes. Q. And could you guarantee to anybody that the ones that they did not make but supplied were annealed? A. I don't know. We couldn't comment otherwise on that.

Q. If somebody was to ask for Ronstan to provide an annealed shackle, what would you do? A. As our products, Ronstan products are unannealed, we may get them annealed locally if necessary. But it's not a very common situation, so. Q. But you would have to go off and do something? A. Correct. It's a secondary process abnormal to the standard supplied product, so yeah." 53Brian Hemsworth is a director of Australian Winch and Haulage. He provided a statement dated 31 March 2011. It was tendered by Mr Collins and became Exhibit AC. Mr Hemsworth said in that statement that Australian Winch and Haulage is a firm of heavy engineers that designs and builds equipment for industry. Sinclair Knight Merz Pty Ltd was contracted by Sydney Ports to design the access gangway for Sydney Ports. Australian Winch and Haulage were not involved in that design process. It did however manufacture and install the system used to lower and raise the gangway that had been designed. 54Sydney Ports did not give a general retainer to Australian Winch and Haulage for the inspection, maintenance or repair of the gangway. It was never contracted to undertake regular or periodic inspections of that equipment. The company was only ever called in by Sydney Ports to address specific problems and issues when they arose. Ultimately Australian Winch and Haulage made a proposal to Sydney Ports to design a replacement system to obviate the constant need for repairs but that did not proceed. 55Mr Hemsworth said that the company could only buy commercially available components. He said that the stainless steel shackles that were chosen "were adequate to do the job". He said the defective shackle was a marine grade stainless steel known to him as a type 316 stainless steel. 56Paragraph 11 of Mr Hemsworth's statement was objected to and rejected by me. It was in the following form: "11. Sydney Ports Corporations were verbally advised by AWH of the risks of continuing to use the system in place every time we were called to fix a problem with it, hence why AWH proposed an upgrade to alleviate any possibility of an accident." 57I granted leave to ask questions of Mr Hemsworth in proper form to cover the rejected material. The following evidence was given by Mr Hemsworth pursuant to that leave: "Q. Now did you talk to any person, that is yourself, did you talk to any person about the subject matter of paragraph 11? When I say "any person", I mean any person at Sydney Ports Corporation, that's a yes or a no answer, either that or I don't understand the question? A. Yes. Q. You did. Now, firstly, how many conversations did you personally have with persons at Sydney Ports Corporation? A. I can't recall, but it would have been on one or two occasions. Q. And who was the person you spoke to at Sydney Ports Corporation? A. They had someone down at the wharf where this occurred and that's who we dealt with, it wasn't from someone from within the office in Sydney. Now I can't remember who that would be now. Q. Can you remember when you had the conversation or conversations with that person? A. Well, I attended the site on two or three occasions, as I recall, but we were called down there many more times and it was only when the thing continually failed that I took more of an interest and went down with my fitter. Q. What I am trying to get from you is your best recollection as to the date or approximate time that you went down there with your fitter, as you have put it? A. This is too far along for me to I could go through my diaries and find that sort of information but it is too long ago for me to remember. Q. Had you dealt with this person on other occasions? A. I can remember it wasn't always the same person, but I had dealt with it wasn't a different person each time though, most of the time it was the same person. But I didn't go to site every time. They just ring up and sort of they wanted to know that they knew what the cost was, they didn't want to spend this is why I know when we had to go down why I made an offer to fix it but they Q. Can I stop you. I don't think you are really answering my question. CAMPBELL: I would ask your Honour, with no disrespect to Mr Hemsworth, that your Honour disregard the answer. HIS HONOUR: Mr Hemsworth, when you say Sydney Ports were verbally advised by your company of the risks of continuing to use the system, did you give that advice? A. I did, because we didn't want to go and fix it all the time. Q. Hold on. You gave that advice? A. Yes. Q. What did you say? A. Well, it doesn't come in a couple of words, but the fact is as this thing continually kept on failing and, you know, there has got to be something the matter with it when something continues to fail, and when that does I take more of an interest in it, even though we didn't design it and that's when they said "Well, can you give us an idea of what this would cost?" CAMPBELL: Who was "they"? OBJECTION (PARKER) HIS HONOUR: Do you object to the answer or the question? PARKER: The question. The one that Mr Campbell was asking. Perhaps I'm early. CAMPBELL: You said "they" said something, who are you referring to when you use the plural, personal pronoun "they"? OBJECTION (PARKER) PARKER: The witness already said he can't remember who that was. HIS HONOUR: Is that right, I thought he said he spoke to one or two people but couldn't remember their name, is that right, Mr Hemsworth? WITNESS: The person who called us down there to go and make the repairs, whoever that person was on the day." 58Mr Hemsworth was thereafter generally cross-examined at some length by Mr Parker. Mr Hemsworth said Australian Winch and Haulage did a lot of marine work and had a reasonable knowledge of it for that reason. He said he had "a reasonable handle on doing things in salt water". He had been involved in that sort of thing since he left school. He gave the following evidence: "Q. Can you tell us what works you performed where items were submerged in salt water prior to 2001? A. Hundreds. Q. Hundreds. What were they, can you give us some examples? A. Well, I have worked for a dredging company when I left school and I still work for dredging companies now, so, you know, anchors, anchor chain, all sorts of things that go in water. I deal with the offshore oil industry now. Q. Now? A. And then. Q. What experience prior to 2001 did you have in respect to the effects of salt water on stainless steel? A. Stainless steel I tend to use 316 grade, I tend to use that on many, many things if they are going into salt water, yes." 59That was followed a little later by this evidence: "Q...Are you aware that there are different grades of shackles? A. Yes. Q. What grades are you aware of? A. Well, you know I am not using stainless steel shackles every day, but I do use shackles most days of my life and there is grade S and grade T and if it's large, I'm generally involved in large shackles, 50 or 100 ton, I look up a book for those, I make a selection. Q. Sticking with stainless steel, are you aware that there are different grades of stainless steel? A. No.

Q. You weren't aware in 2001 before that there were different grades of stainless steel? A. 316 is very commonly used in the yachting industry and Ronstan, who I believe were where the shackle came from, do shackles for yachts, all 316 shackles, and I have done a little bit of yachting in my time, I would go to Ronstan or to a local hardware and buy a Ronstan shackle, they are always used in a load application. Q. But not a 700 kilo load application? A. Yes, that's nothing. Q. A 316? A. Yes. Q. And in a load situation where they are submerged in salt water? A. Yes. Q. A 316, would that 316 be annealed or unannealed? A. I can't answer that question. Q. So you were, as it were, prepared to recommend to Sydney Ports that they use a grade 316 shackle? A. Provided it's protected from a dissimilar metal, yes, and it was." 60The subject matter then moved to annealing, as the following evidence reveals: "HIS HONOUR: Are you intending to ask him whether or not depending upon the application in 2000 he might choose an annealed shackle as opposed to an unannealed shackle? PARKER: I was going to ask a similar question. HIS HONOUR: Can you answer that, Mr Hemsworth? A. My analogy would be that, you know, in buying a shackle off Ronstan, and they are used on many yachts with many high loads, and I was in no different a circumstance and in my every day where I am using much larger shackles and I know they are heat treated and I would be of the assumption not that it's in the forefront of your mind but it would have been heat treated and acceptable to take the load that it was sized for. PARKER: Have you? A. I don't if I'm buying an 80 ton shackle I don't have to think that it's heat treated, I know it's heat treated. It's not as if I'm buying an 80 ton shackle or buying a 12 millimetre shackle or, as it was in this case, I think. Q. How do you know it's heat treated? A. I assumed that all shackles were heat treated because all shackles take load. There is no purpose of the shackle if it's not taking load. Q. I am not talking about taking load, I am talking about heat treatment, do you understand? A. Well, I am not manufacturing it, I'm buying a shackle. If I was making a shackle, yes, I would be very aware of what I was doing, but I was buying a shackle and, you know, if I walk into, in this case, Nobles, they have them sitting there in the foyer and I can take one off the shelf, I want a 316 grade shackle and that's all there is to it. Q. So you would be surprised to hear if you walked into Nobles or Ronstan and asked for a 316 shackle, that it wouldn't be annealed?

A. I would be surprised if it wasn't, yes." 61The evidence then came to this: "HIS HONOUR: Mr Hemsworth, you are being asked to assume there may be evidence that some shackles produced by Ronstan or Nobles up to 2000 were not heat annealed. What, if any, comment would you make about that? A. I would have assumed that having bought something, if it was a Ronstan product and their main business is yachting, that it would be load rated. PARKER: Load rated? A. Well, all shackles take load, you know. They are not there for they are there to tie yacht masts and they take load, if that's what you wanted, but I don't know how any shackle, even if it's on the safety shackle on pulling a trailer and there is a couple of little shackles there, I wouldn't have a clue whether, in retrospect, whether they are mild steel unannealed, but they take load.

Q. What is the effect of annealing on a stainless steel shackle, according to your understanding? A. In a general case it will bring the strength of the steel up. It depends, there is lots of different grades of stainless steel and what you do with it. Q. Annealing has nothing to do with preventing corrosion, according to your understanding? A. No. Q. It does not? HIS HONOUR: The answer to the question was, annealing has nothing to do with corrosion, according to his understanding. McCULLOCH: The witness disagreed. PARKER: Does annealing have anything to do with the prevention of corrosion, according to your understanding? A. No, but I am not a metallurgist. That is my feeling. If you wanted me to give a proper answer I would go away and study the answer before I gave you an exact answer. I do not normally make decisions like I am doing now without reference to checking my facts before. Q. As of 2000, you had no understanding that annealing prevented corrosion, is that correct? A. No. Q. You did not have any understanding? A. I do not have any difference in understanding to what I had then. My understanding, the corrosion, it does not make a difference, no. You are not changing the properties of the material. You are changing the hardness.

Q. It was not your concern as at 2000 as to whether a shackle was annealed or not? A. In relation to corrosion? Q. Yes. A. No, I do not believe whether you actually do or not affects the corrosion. It does not mean to say they will not eventually - it is 316, that is what they are used for." 62Mr Hemsworth was then directed to the topic of applications of steel products in salt water. He gave this evidence: "Q. Did the company have any standing instructions in respect of materials to be used in salt water? A. No. I have an engineering section that makes the decisions. I do not make all the decisions. I make, from the sales point of view I might give an indication of what I propose to do with something. Once we have an order, I have an engineering section that designs the equipment. I rely on my engineer. Q. It was one of those managing engineers, Mr D'Arth? A. That would be so. Q. You would expect him to have knowledge of the correct components to use, for example, in a highly corrosive situation? A. I cannot speak for him. He is my engineer. HIS HONOUR: The question was whether or not you would expect him to have had the knowledge? A. I have high expectations of him. I suppose that could be regarded as I should, yes." 63The following evidence should also be noted: "Q. You yourself visited Sydney Ports on a number of occasions? A. Two or three. Q. Because of, at times, a failure of the gangway? A. No, mainly because we were sick of going down there. They ring us, they want something done immediately and it is always - you are trying to give a service to a client, you have to pull people off other jobs, it is not always possible to get the same person down there each time. I went down there to get a better understanding and try to convince them they should fix it properly. Q. One of the things your engineering had to do was to supply the right components to Sydney Ports? A. Our job was following out their instructions. Q. They were relying upon your expertise in relation to the manufacture and installation of this gangway? A. We did not design the gangway. Q. Did I say design? I said, relying upon your expertise in the manufacture and installation in respect of this gangway? A. Manufacture and installation, yes. Q. From time to time they relied upon the company's expertise for the maintenance of this gangway? A. Yes. That is why I went down there, to tell them they had a problem and they should consider replacing it.

Q. To your knowledge Sydney Ports relied upon AWH's expertise in the supply of components when repairing the gangway? A. I cannot answer for Sydney Ports. If you want to call it expertise, I supply fitters for carrying out repairs. Q. Who were supposed to have the expertise to choose the right components to undertake repairs? A. I cannot answer that question. I send a fitter. I said it as plainly as I can. I get a fitter who works for me, I send them down there to follow instructions. Q. Sydney Ports did not tell you what components to use, did they? A. No. Q. Sydney Ports had no hands-on work in the manufacturing of this? A. No. Q. They were relying upon your company's expertise for the manufacture of this gangway? A. You are trying to say it was my expertise and that was what they thought they were getting. I do not know what they were asking for. They were asking for a fitter to do the repairs. Q. Who had expertise? A. I do not know. I cannot think what Sydney Ports wanted. They wanted someone to respond. Q. Someone who had the expertise to respond? A. I cannot answer. I am not Sydney Ports. I sent the best guy I had who was used to going down there. When I started to go down there it was because we could not always get someone to go down there exactly when they wanted. That is when I started to get involved, to tell them they should upgrade it so we were not down there all the time. HIS HONOUR: Would it be your reasonable expectation they expected the job would be done right? A. I think any company would." 64Mr Hemsworth was then asked some questions concerning what he had said at paragraph 10 of his statement as follows: "Q. And in paragraph 10 you're talking about the chosen component of the stainless steel shackles were adequate for the job. A. Yes. Q. And you're talking about the shackles chosen to install in Sydney Ports gangway? A. Yes. Q. And you say that they were adequate for the job? A. Yes. Q. Even though they failed? A. Yes. The reason they failed is because the whole design they did last longer than the galvanised steel ones. The galvanised steel and this is it's a comparative issue. The problem still existed where, if this was going to fix up all of their problems, why would I be there offering them a new proposal for $130,000 when a $4 shackle or something like that was going to fix their problem? It wasn't. It was going to extend the life frame a galvanised one. The galvanised one the water attacks the galvanising. It's all relative... Once the galvanising's gone, it's going to attack the steel. It doesn't attack stainless steel, whether it's annealed or otherwise, like it attacks steel. Q. Well, what I was going to suggest to you, sir, is that if it doesn't attack the steel, the corrosion would attack it; do you agree or disagree? A. On my experience, that would not be the case. It's the material content that makes the difference, not the annealing. Q. I was going to suggest to you A. But I'm not an expert." 65Mr Hemsworth's cross-examination effectively concluded with the following evidence: "HIS HONOUR: Well, I think what's being put to you is that, having regard to the application with which the 12 mm shackle was applied in the configuration in Sydney Ports in 2000, having regard to the weight it was lifting and the submerged position in which it was largely to reside, it should have been annealed. What do you say about that, from your knowledge as a not being a metallurgist or a similar expert. What do you say about that? A. Well, I may have assumed that it could have been annealed but without knowing what the rating of it was, that is and I'm not the one who made the decision for this in the first place. So you're asking me to make decisions of what I didn't I didn't make the selection.

Q. Given your knowledge of the gangway and its conditions, would you agree that it was unnecessary to have an annealed stainless steel shackle?

HIS HONOUR: Can you answer the question? A. Well, there's many items under the shackle in the water that take load that aren't annealed. The material that is the grade 304, which you may be aware of, and the 316 the material content of one shackle against the other is and 316 has got properties that are more suitable to saltwater conditions. And on that basis it's more suitable than a 304 grade, which is another grade of... PARKER: What I'm suggesting to you, sir, is the stainless steel shackle is only suitable if it's annealed. A. I can't answer the question.

Q. Can you answer that question? A. In regard to what the difference is between 316 and 316L? Q. Well, what I'm suggesting to you is that if you were using a stainless steel shackle on this gangway in the conditions that you're aware of, it should have either been annealed or 316L. Do you agree with that? A. We've bought a 316 grade shackle of Ronstan. You don't always ignore the other letters. I've bought a marine grade shackle and that's what we bought.

Q. Not knowing whether it was annealed or not. A. You don't ask every question when you're doing some of this. I asked for or it was asked for a 316 shackle and as in Nobles in the foyer they've got all these 316 grade shackles that have been used for yachting purposes and that's what we bought. Q. Not knowing whether it's annealed or not? A. We've not asked the question. I don't ask the question when I buy any other shackles either." 66It will become necessary later in these reasons to refer to some other documents tendered by Mr Collins. Sydney Ports' non-expert evidence on liability 67Sydney Ports neither called nor tendered any evidence in the case on the issue of liability at the suit of Mr Collins, choosing instead to rely upon the evidence called on this issue by him. Moreover, Sydney Ports called no evidence on any issues arising from either the cross-claim filed by it or the cross-claim filed by Australian Winch and Haulage. Australian Winch and Haulage's non-expert evidence on liability 68Australian Winch and Haulage first tendered paragraphs 5, 9 and 15 of a letter written by Sydney Ports to Mr Morgenthal dated 24 April 2004. The paragraphs are in the form of questions and answers as follows: "5. How did SPC asses that the stainless steel components used in the under water components in the sea water environment of ERG were the most suitable? [ First sentence objected to and not admitted ]. SPC understands that the shackle that [ sic ] was a marine grade stainless steel shackle. As a general matter. I would observe that I have discussed this matter internally, with an experienced mechanical engineer who has worked in marine environments for many years, and he has informed me that it was and is common practice to use marine grade stainless steel in marine environments such as the ERG was in and that there was no apparent basis for Sydney Ports to challenge AWH's selection of shackle. 9. Did SPC ask the engineering consultancy firm, AWH, to provide any advice about the lifting gear provided, such as chain and shackles, to determine if it complied with manuals, guards, codes of practice or Australian Standards? The ERG was not and is not a hoisting or a lifting device and, therefore, the applicability of hoisting and lifting codes and standards to the ERG is, in my opinion, irrelevant. However, at the time of the electrification of the winching arrangements, in 1992, it appears that AWH discussed manual override modifications with the supplier of the hoist and the significance of AS1418. I understand that no modifications were made that did not comply with AS1418. AWH were also asked to ensure that the electrification complied with AS3000. 15. At time of installation of the stainless steel components of the ERG did SPC consider any alternative mechanisms for lifting the ERG? Not to the knowledge of the current management of SPC...However, Sydney Ports' files indicate that at the time that the modifications were being developed to enable the ERG to be operated electrically and remotely, AWH (in their response to a tender managed for the Maritime Services Board by the designer) proposed a form of hydraulic operation as an alternative to an operation based on an electric chain hoist. The hydraulic option that AWH proposed did not conform to the request for tender and, furthermore, was not recommended by the designer of the ERG, Sinclair Knight." 69Australian Winch and Haulage next tendered a notice to produce served on Sydney Ports. It was said that the purpose of the tender was to establish that there was no system of inspection and maintenance before the accident and that after the accident one was brought into existence in a detailed way very promptly. The notice, in response to which nothing was produced, sought production of any document recording or referring to an inspection schedule, or to a regular maintenance schedule, for the Emergency Response Gangway created before 23 July 2001 and on or after 23 July 2001. 70Australian Winch and Haulage then tendered a series of admissions said to be contained in two records of interview between Mr Morgenthal and Mr Alan Chalker. The first document became exhibit 2D4 and was relevantly to the following effect. As at 23 July 2001 Sydney Ports employed Mr Chalker as a property maintenance officer. He had been in that role or its equivalent since 1993. His duties covered maintenance of plant and equipment at Port Botany, including the gangway between 1995 and June 1999. The gangway came under the responsibility of Garry Milburn after that time. 71Mr Chalker was present and was able to explain what was involved in what happened when Australian Winch and Haulage were called in to investigate the problem with the gangway when the counterweight attachment failed on 26 June 2000. Apart from that, Mr Chalker could not recall specifically any other incident when the shackles failed causing the gangway to fly up. He was not aware whether or not Sydney Ports had a contract in place with Australian Winch and Haulage for the maintenance of the gangway but was aware that that company would be called in from time to time if it required servicing or maintenance. 72When asked who authorised the change from galvanised steel shackles to a stainless steel shackle, Mr Chalker said that he would have discussed the change with his maintenance manager Bob Stock to whom he gave the details and to which no objection was raised. Mr Stock was a mechanical engineer. 73Questions 59 and 60 in Mr Chalker's first interview with Mr Morgenthal produced lengthy and important answers. Those and some other questions and answers are reproduced in full as follows: "Q59: What was the inspection procedure for the emergency response jetty gangway prior to the incidents that occurred during the year 2000? A: What would happen, I think I mentioned earlier, the greasing of the chain through the winch, from a previous incident, it was recommended that the chain be kept greased to provide a lubrication as it went through the hoist. Coincidentally Philip Collins was one of the guys that I had spoken to, who would help out to grease the chain. As part of my regular visits to the emergency response jetty I would inspect the wire rope, sheaves, and the general appearance of the gangway. I would be advised by the port officers as to any abnormality that may have occurred during the operation of the gangway. Sometimes I would receive a comment that during the lowering of the gangway onto the tug, the gangway would stop short of the tug and other words it would leave a foot gap, at other times it would hit the tug deck and the hoist would still be operating indicating that the stop sequence was out. Other separate comments, during the lifting of the gangway, on one occasion the gangway would jump abruptly about one metre and then continue on its course. These are some examples of fault reporting and I would immediately contact Australian Winch and Haulage to come out and investigate the cause of the incident. Q60: What was the inspection procedure after the incidence [ sic ] that occurred during the year 2000 leading up to the incident to Mr Collins on 23 July 2001? A: The same procedure as the previous question. If I noticed anything abnormal I would contact Australian Winch and Haulage. Australian Winch and Haulage would be called only when abnormality occurred. There was no set regime for the inspection of the underwater components. Australian Winch and Haulage come out frequently that it wasn't perceived that they be called in between those times. The equipment usually displays signs something is wrong, as it was not running as smooth as it should and that was the sign that something was wrong. Sometimes a failure may have occurred resulting that we called Australian Winch and Haulage and other times it seemed that the failure was imminent when we considered things out of the ordinary. Q61 Where [ sic ] any inspection procedures developed? A. No I did not have any and I would look at the equipment through experience and check it off in my mind. Q62 What report did you write on the faults of the gangway? A. No I did not." 74Mr Chalker said that no inspection procedures were developed. He said instead that he "would look at the equipment through experience and check it off in [his] mind". He never wrote a report on the faults of the gangway. Following Mr Collins' accident the gangway was redesigned. Mr Chalker understood that a safety mechanism had been built into its operation to prevent it from flying up if the counterweight was disconnected. 75The second document became Exhibit 2D5. Only three relevant questions and answers from it were tendered and they are as follows: "Q9: During the year 2000 the previous year to Mr Collins' accident when the underwater components failed on the lifting counterweight of the emergency response jetty gangway, was a redesign proposal made? A: I don't recall any redesign proposal in the year 2000. But in December 1998 I asked Australian Winch and Haulage to look at the redesign of the gangway to look if we could redesign it and improve it. They came up with an alternative using hydraulic rams above the deck in order to keep it above water where you can see it. I am not sure, in December 1998 is when they got back to me, or if I asked them. I think that is when I asked them. Q10: What initiated that proposal? A: Well just to the fact that we had various problems with the gangway over the years and I personally did not like the design of the gangway and wanted to see if there was [a] better system we could use. Q11: What types of problems? A: Well the problems, you have got invoices with the failures, we had failures quite often, different items, parts of the gangway, chain would break, shackles, the wire, winch, the chain going through the winch, the winch was chewing the chain, most of the problems were spotted before they became a safety problem. But because of these various failures I was inquiring if there was better system." 76Australian Winch and Haulage next tendered records of interview between Mr Morgenthal and three Sydney Ports employees. Taking into account objections to portions of the statements, the evidence from these gentlemen was as follows. 77Kevin Rae was employed by Sydney Ports as a shift master. He had worked for Sydney Ports for 18 years prior to 23 July 2001. His normal duties involved the day-to-day running of the shift, organising dangerous goods audits for the terminals, organising the crew's work on the day and the patrols. His duties required him to use the gangway "all the time". Prior to Mr Collins' accident the only inspection procedure for the gangway was a visual check. These visual inspections were carried out by "any one of us on that day". Mr Rae believed that following Mr Collins' accident the gangway had been totally rebuilt with new shackles, chains, wires and pulleys. 78Garry Milburn commenced employment with Sydney Ports on 3 January 1967 and was still employed by it on 23 July 2001 as a facility officer. He is qualified as a boilermaker in steel fabrication. He served his apprenticeship there before moving into management positions as leading hand, foreman, and then inspector foreman, which involved inspecting assets and arranging for their repair and maintenance. Since 1999 he had been involved in the maintenance, servicing and inspection of all Sydney Ports' lifting equipment and using accredited companies to carry out the tests. He did not get involved with the gangway as part of the lifting equipment. 79Prior to Mr Collins' accident but in the same year, Mr Milburn identified that it was a lifting operation that operated the gangway but left maintenance of it to the facility officer at Botany who had been maintaining it for some time prior to that. Presumably for that reason Mr Milburn had no knowledge of what risk management process was carried out on the gangway components when the components for the lifting counterweight were changed. He also knew nothing of any risk management process that was carried out on the hazards that may have threatened employees who used the gangway if the components failed. Mr Milburn did not know what proposal Australian Winch and Haulage considered for Sydney Ports regarding the lifting counterweight components when they failed in 2000. He had no knowledge of this ever having been reported to him. Mr Milburn also did not know what the inspection schedule for the underwater components of the gangway was. He did not carry out any underwater inspection of the lifting gear or underwater components of the gangway. 80Shane Hobday was the General Manager Port Services as at 23 July 2001. That gave him the responsibility for the marine services group and some facility officers. At the date of his interview he was the General Manager Marine Operations. He said that, from his reference to the file, Sydney Ports did not have any maintenance requirements specified by Australian Winch and Haulage for the underwater stainless components of the gangway. He said that there was no risk assessment of the gangway carried out by Sydney Ports. He said that a professional engineering consultancy firm designed the gangway. Mr Hobday also confirmed that Sydney Ports did not carry out any assessment to determine the potential risks or hazards to employees if component failures occurred with the gangway as it was not required by legislation. He said that Sydney Ports' way of managing the risk was to engage a professional engineering consultancy to carry out the gangway design. 81Following Mr Collins' accident the gangway was redesigned to prevent it from reverting unexpectedly to the vertical position. In addition, a regular maintenance schedule was now in place and inspections were being performed in accordance with that schedule. Mr Hobday thought that Sydney Ports could have checked the shackle that failed on a regular basis for evidence or signs of pitting by removing it and inspecting it. 82Australian Winch and Haulage then penultimately tendered the Sydney Ports incident/accident initial report relating to Mr Collins' accident. The relevant portion of that document was said to be the section headed "Further Investigation" under which appeared the following: "Regular inspections of gangways and ancillary equipment needs to be programmed and recorded and all parts where possible should be stamped and certificated and dated to ensure suitable for intended task." 83Australian Winch and Haulage finally tendered a drawing of the proposed gangway dated 19 August 1992. No reference to it by any party either in submissions or otherwise was made thereafter.

The experts' concurrent oral evidence 84The final day of evidence in the proceedings was concerned with the concurrent evidence of Professors Yeomans and Young. As already indicated, these experts had produced a series of answers to specified questions for consideration in their pre-trial conclave. I drew this to the attention of the parties in the following way: "HIS HONOUR: ... We have an experts' report from joint experts. Their qualifications are not in issue. They've produced a joint report. Can we just, before we get to what you agree might be areas of probable examination, show me where they disagree, because I will let you know, if I am of the view that there's been a pre-trial conference and production of a report in adversary litigation on questions referred to them, and there's no inherent confusion from the answers, in terms of the questions, there's no disagreement between them, I might take some convincing as to why they should be cross-examined at all." 85A discussion ensued. The extent to which the oral examination of the experts was beneficial was thereafter hopefully limited to matters of disagreement that remained between them and terminological and definitional points that possibly required clarification, despite their general agreement, having regard to the technical nature of the metallurgical issues involved. In short, the experts each indicated that there were certain matters post-conclave that they wanted an opportunity to clarify. Counsel also accepted that the extent of any agreement between the experts was subject to the limitation that the questions that they were asked to consider may not, upon further and more informed reflection, have been as well directed as they might otherwise have been, with the obvious consequence that the utility of the answers was potentially reduced. 86Professor Young was asked to describe the process for the manufacturing and production of grade 316 stainless steel. He gave this answer: "WITNESS YOUNG: ... The process commences with melting the constituent elements required, and then the appropriate proportions to meet the specified composition of the 316 stainless steel, and this is set out in the standards. This melt, which is at a very high temperature, is then cast into a suitable mould, or machine, to form a bulk shape. This might be an ingot. It might be a billet. It is a large, solid object which is of no real use at the retail level. At that stage it would be described as as cast 316, but it does not yet meet the requirements of the definition of 316 stainless steel. From that stage it would be reheated to a high temperature, not enough to melt it, so it's still solid, but then mechanically worked into a more useable shape, such as a rod or a bar or even a wire. This product this process, I'm sorry, of hot working alters the mechanical properties of the material, and alters its microstructure. It does not change its average composition. At the conclusion of that process, and after cooling to room temperature, the product would be as, still incomplete. It would need to be solution annealed. That is, reheated again to a relatively high temperature, not mechanically shaped as part of the solution annealing process, and then cooled quite quickly. In addition well, that is the way to produce 316 stainless steel. 316 stainless steel is, by definition, a material of stated composition which has been subjected to hot working of some sort, and has been solution annealed." 87Professor Yeomans was asked for his opinion and responded as follows: "WITNESS YEOMANS: I'm in broad agreement with what has been said, as a process to manufacture a component from grade 316 stainless. I think the comment I would to make is it is primarily the alloyed composition that identifies the grade of the material. So the first stage that was described, which is the melting in the liquid state and the mixing of the primary component, that would ultimately determine that the material meets the specification, the broad chemical specification of a grade 316 stainless. The steps that were then followed, as has been pointed out, would include working of that billet form into another shape, mechanical working, either by drawing or rolling, if that was the required outcome or shape of the product to be manufactured. But there are still those applications where 316 could be cast into its final form. Large components don't necessarily have to then be mechanically worked into a final shape, and I might cite the example of a large casting for a bollard on a wharf, for example, which holds, you know, boats in place. That is a final shape that's manufactured by casting. It's not worked to that point. So, I agree, that working is a form of operation to produce other shapes, but casting is still a method by which you can produce a final shape in the material. The other question of then solution annealing I would agree with, that having cast the material to its final shape the usual practice would be to solution anneal the material, to overcome the subsequent problems that do occur with differential concentrations of the material, and the loss of the chromium by chrome carbide precipitation. And the loss of that chromium from the material is ultimately the reason for the intergranular corrosive attack, so that's the only variation that I would make to the description that it is possible to cast a material to its final form and not necessarily mechanically work it. But then having done that I would expect that it would have been solution annealed to overcome some of these alloyed inconsistencies." 88It will be apparent that both experts referred to the process of solution annealing in their answers as part of the method concerned with manufacturing grade 316 stainless steel. Despite that fact, Professor Yeomans was then asked whether he accepted that, in order to qualify by definition as 316 stainless steel, solution annealing was an integral part of the process. This was his response: "WITNESS YEOMANS: That is a very difficult question to answer, because when we look at the specifications for 316, which are set out in various national and international standards, to my knowledge it does not specifically require that, to meet the designation of 316, that the material be solution annealed." 89Professor Yeomans agreed that solution annealing was a method by which grade 316 stainless steel could acquire enhanced corrosion resistance although it was not the only method by which that could be achieved. 90Professor Young was anxious to disagree in part with Professor Yeomans, as the following response from him indicates: "WITNESS YOUNG: Yes. I need to disagree, I'm afraid, here. With the, I want to insist that hot working is a necessary part of what constitutes the definition of 316 stainless steel. 316 stainless steel is, by definition, a wrought the technical term is wrought, meaning hot worked. It is thereby distinguished from cast grades, which might have very similar chemical, or identical chemical composition, but which have not been subjected to hot working. They are not wrought grades. 316 and, indeed, a whole family of wrought stainless steels are defined in that way. They are wrought. They have certain compositions, and they have certain mechanical properties. These two are specified. Not just chemistry specifies stainless steel. Its mechanical properties are laid down in standards, and if I could comment also on the need for solution annealing. There is specified, in some standards at any rate there is an Australian standard for wrought stainless steels which is no longer in use because stainless steel is not manufactured in this country any more. But when it was this standard specified that the product shall be solution annealed by heating, and it specifies the temperature range, and then rapidly cooled, and that was a required part of the process as laid down in the Australian standard of the day." 91A vigorous discussion then ensued involving all counsel, which ultimately led to the passage of transcript that I have extracted above under the sub-heading "Clarification". In due course Mr Campbell raised the following matters with the experts: "CAMPBELL: Gentlemen, there are a great variety of grades of stainless steel, is that correct? WITNESS YOUNG: Yes, certainly. WITNESS YEOMANS: Most certainly. CAMPBELL: Each of them will have a different corrosion resistance from another, is that correct? WITNESS YOUNG: Well, some of them are very similar. There are so many, there are literally hundreds of grades. I don't know how to come up with a general response to your question. CAMPBELL: Professor Yeomans? WITNESS YEOMANS: I would agree. Many of the grades are similar to others, in a family if you would like to consider, but there are certainly grades which have recognised improved corrosion resistance and are therefore used for different applications." 92There was further evidence later, which clarified the absence of any dispute concerning the actual makeup of the shackle that failed. This emerges from the following passage of the evidence: "HIS HONOUR: I don't want to spend hours and hours on these things. I don't think there can be definitional problem. Is there agreement at the bar table about what the shackle was manufactured from or is there a dispute? I am not talking about the process. CAMPBELL: I think there is agreement to the composition. McCULLOCH: We say it is CF-8M. PARKER: That's not the composition. There is a difference between the chemical composition and the process. My friend is trying to confuse the two. HIS HONOUR: I think I am across the difference between the chemical combination and the process, and there can be combinations of processes and chemical make up of the base material. For better or worse, I am happy to have the question answered. CAMPBELL: Gentlemen? Professor Young, first. WITNESS YOUNG: No, I don't agree. As I understand the statement here, the possibility exists in the writer's mind that the shackle was manufactured from the wrought grade 316 and that is incorrect. It was not made from wrought 316. The writer also offers the possibility, I am confused about what "and/or" means also, but offering the possibility of the equivalent cast grade CF-8M, and I do agree that is the material from which this shackle was made . CAMPBELL: Professor Yeomans? WITNESS YEOMANS: I agree with that . The designation CF-8M probably more closely acknowledges or identifies what the material was originally manufactured from as a cast material. The fact is in its chemistry it is very similar to that, the 316, and I think that is part of the reason that leads to this use of the broad description of it as 316 because the chemistry is virtually equivalent and we have come to use 316 in a more generic sense to describe what it is." [Emphasis added] 93The experts were asked some questions that raised the issue of whether or not the shackle was, or may have been, "defective" or had suffered from a "defect". Each expressed difficulties with that concept in the context of the questions they were directed to consider in conclave and in the preparation of their joint report. Inevitably this also came up during their concurrent evidence as the following passage of the evidence reveals: "WITNESS YEOMANS: That was a significant point of discussion with us in the preparation of our report, and our interpretation, or what was implied by the use of the word defect. And we did come to on an agreement, that the shackle, as it was presented to us and used, was not necessarily defective, because that would imply that there was some, there was a defect in the shackle which prevented it from being used in a particular application. We chose the word "deficient" because the shackle was clearly not solution annealed, but that doesn't necessarily make it defective. It just means that it was deficient in its manufacture for another potential application. So it was a careful choice of words, and understanding what defect was to be applied in this case. CAMPBELL: Professor Young, do you agree? WITNESS YOUNG: Yes and no, I'm sorry. CAMPBELL: What about the yes part first? WITNESS YOUNG: We did agree to avoid arguing about what defect meant, the word defect meant, because I think that we had different concepts of what constituted a defect. And we could agree, however, which was the aim of this meeting, to reach areas of agreement, as I understood it. We could agree that the product was deficient. Now, in my mind that is equivalent to a manufacturing defect.

CAMPBELL: I didn't mean to cut you off. And if it looked like I'm cutting you off please stop me, because I'm just trying to keep the process moving. When, Professor Young, you used the expression "deficient" is it fair to say you meant deficient for this application? That is, submerged in sea water in a low bearing use? A. No, I mean deficient, it wasn't heated treated. Sorry, it was not solution annealed, and let me use that expression instead. It was, therefore, going to corrode, and the whole point of any stainless steel is to resist corrosion. This would have corroded in rainwater. It was deficient." 94There was no issue in the proceedings that corrosion at some rate was inevitable with respect to submerged applications of shackles such as the one concerned. The experts gave evidence about this in general agreement as follows: "CAMPBELL: Even a type 316 stainless steel of the rod grade which has been solution annealed, will eventually succumb to the effects of see water in a submerged application, is that correct? WITNESS YOUNG: Eventually, yes. WITNESS YEOMANS: Eventually. CAMPBELL: And the rate at which it will succumb could not be entirely predicted, is that correct? WITNESS YOUNG: I am not sure what you mean by "entirely". You mean precisely or accurately? CAMPBELL: I mean precisely or accurately. WITNESS YOUNG: I'm sorry, I'm just thinking. I agree that one cannot, with great precision, predict the rate of corrosion, however one can predict, in general terms, the rate of corrosion. And there are compendia of data that one can go to that give ranges of corrosion rates. For example, in sea water, entitled "Sea Water," the expected rate of corrosion, according to the textbooks, for 316 stainless steel is of the order of five micrometres loss from the surface per year. This is a very slow rate. But one could not expect, one cannot expect that the rate would be precisely five micrometres per year. It might be six, it might be three. So in that sense I agree with you, but in the larger sense I maintain that it is possible to make a reasonable prediction of the rate. CAMPBELL: Professor Yeomans? WITNESS YEOMANS: I agree with that entirely. The data that is gathered is taken from particular corrosion sites around the world, and they don't necessarily reflect exactly the corrosion situation in another location, so there is data to give a broad indication for corrosion rate, but it is not really appropriate to then extrapolate that to a predicted life based upon a single published value of corrosion rate. Q. And whether you choose a galvanised steel shackle or a grade 316 stainless steel shackle as the material for this job of which we're speaking here, you would need to, from time to time, inspect it. That's correct, is it not? WITNESS YOUNG: Yes I agree. CAMPBELL: Professor Yeomans? WITNESS YEOMANS: Agree." 95Mr Parker later took the experts to the topic of heat treatment and solution annealing. The evidence that emerged was instructive and is as follows: "PARKER: We've heard about heat treatment and we've heard about solution annealing. WITNESS YOUNG: Yes. PARKER: They are two different things, or not? WITNESS YEOMANS: No, they're not. WITNESS YOUNG: They're not. HIS HONOUR: One is a subcategory of the other, isn't it? WITNESS YEOMANS: Yes, exactly right. A heat treatment is a thermal treatment, solution treatment. Solution annealing is one form of heat treatment. PARKER: And if you bought a component which you do not know whether it was annealed or not, assuming for a start that it wasn't annealed, you could then put it through the annealing solution process; is that right? WITNESS YOUNG: That would be an unusual thing to do. Normally one buys a finished component intending to use it without further processing. PARKER: I appreciate that. WITNESS YOUNG: Could I just add I hope I'm answering your question, I'm trying to. If when one buys a component one specifies, for example, that it is 316 stainless steel, then you have the right to expect that it is delivered to you as 316 stainless steel, that is to say, it has been mechanically worked and solution annealed ." [Emphasis added]

Consideration and disposition - liability 96It is common ground that the original galvanised steel shackle failed continually and had to be replaced. It was replaced by a CF-8M grade stainless steel shackle installed by Australian Winch and Haulage, which also failed. However, the replacement was not suitable for the task to which it was put and should never have been used. This is because it had not been manufactured from steel that had been solution annealed, a process that would have rendered it fit for the intended submarine purpose. There was agreement among the parties that from a metallurgical point of view there was no such thing as an appropriate 316 or CF-8M shackle for use by Sydney Ports in this case unless it had been hot worked and solution annealed. The question for me to determine, therefore, is who, if anyone, is responsible for Mr Collins' injuries, loss and damage having regard to the fact that just such a shackle was installed in the circumstances?

Mr Collins' contentions: Sydney Ports 97Mr Collins submitted that the nature and scope of Sydney Ports' duty was beyond question: TNT Australia Pty Ltd v Christie [2003] NSWCA 47; (2003) 65 NSWLR 1 at [45] - [62]. 98So far as any breach was concerned, Mr Collins submitted that that there was a clear failure to provide a safe place of work or a safe means of access to work. Sydney Ports also caused or permitted modifications to the design of the gangway, counterweight and shackle without ensuring that they were safe or doing so without proper advice. A CF-8M stainless steel shackle was unsuitable in the circumstances as it was subject to unpredictable corrosion from emersion in seawater. There was also no backup or failsafe system in place to prevent the accident in the event of a shackle failure. Mr Collins submitted that the use of a stainless steel shackle was unsuitable and unsafe because of the particular grade of stainless steel from which the shackle was manufactured. Sydney Ports failed to maintain the shackle or regularly to inspect it for signs of wear and corrosion or to carry out a risk assessment of the gangway. Sydney Ports failed to heed advice that one of the counterweights in the gangway system should be replaced with an hydraulic system. 99Mr Collins contended in essence that Sydney Ports had no defence to his claim beyond the defence pleaded in paragraph 6A of the amended defence to the effect that the failure of the gangway as pleaded was the result of a defect in a shackle which defect was not capable of being found by any or any reasonable inspection by Sydney Ports. Mr Collins submitted first that Sydney Ports bore the onus of establishing that defence and had failed to do so, and secondly that in any event it had not been established by the evidence that the shackle suffered from a "defect" as that term is usually understood but was in fact a perfectly good shackle that had been incorrectly employed for the task at hand. 100Mr Collins alleged that Sydney Ports were in breach of certain specified statutory obligations. Sydney Ports did not contest this. That emerges from a concession made by counsel for Sydney Ports on 20 June 2011 during the course of submissions when I noted the following: "HIS HONOUR: I have noted that you accept that the statutory provision applies unless I hear from you otherwise." 101Mr Collins provided detailed written submissions on the question of breach of statutory duty to which Sydney Ports did not respond.

Sydney Ports' response 102Sydney Ports' written submissions did not address these contentions. This would appear to be for at least two reasons. First, although liability to the plaintiff was not admitted, the case for Sydney Ports was effectively conducted with an eye to its cross-claim against Australian Winch and Haulage and the defence of that company's cross-claim against it. Secondly, and in a related sense, any finding of negligence on the part of Australian Winch and Haulage in most cases potentially inculpated Sydney Ports simultaneously by reason of its inability to avoid liability by relying upon the delegation of tasks to Australian Winch and Haulage. It was in this last context that I inquired of senior counsel for Mr Collins in the following terms during final submissions: "HIS HONOUR: ...Which are the particulars of negligence of the first defendant that you say bespeak fault on its part, as opposed to fault attributable to it as the bearer of a non-delegable duty flowing from something done allegedly by the second defendant? Which are the ones referable to fault on the first defendant's part that aren't dependent upon the demonstration of a breach by the second defendant?

I just want to make sure I understand it completely. Do you say that if I go to the particulars of negligence of the first defendant, none of them brings forth a factual state of affairs that is independent of the second defendant? In other words, is there a particular or are there particulars of negligence alleged against the first defendant that inculpate the first defendant, in the absence of anything attributable as fault to the second defendant?" 103In the course of the discussion that ensued, some particulars of negligence that arguably did not involve a corresponding allegation of fault on the part of Australian Winch and Haulage were nominated. However, the burden of Mr Collins' approach to the liability of Sydney Ports was efficiently summarised by Mr Campbell SC during addresses in these words: "We have said in our written submissions that equally if we focus on the selection, procurement and supply or selection, procurement and installation of the shackle if every box in that series is ticked in favour of the second defendant then for the reasons explained by the House of Lords in Davie [the first defendant] probably walks as well because after all that was the case of an employer who had got something that, as it turns out, should have been properly worked in its manufacturing process but was not." 104In his written submissions, Mr Collins acknowledged and accepted in terms that the liability of Sydney Ports was "solely based upon the negligence of Australian Winch and Haulage". (It will be apparent from what appears later in these reasons that I do not agree with that concession). Mr Collins submitted that if he suffered loss or damage as the result of a failure by Australian Winch and Haulage to exercise reasonable care, Sydney Ports was nonetheless liable in the circumstances of this case by the necessary application of well known principles, helpfully reiterated by Mason P in TNT Australia Pty Ltd v Christie at [47] as follows "[47] ... in the realm of negligence, (a) a non-delegable duty of care will (like a duty based on vicarious liability) be imposed on categories of persons regardless of personal fault on their part in the circumstances giving rise to the plaintiff's injury; but (b) the plaintiff must prove that damage was caused by lack of reasonable care on the part of someone (not necessarily the defendant) within the scope of the relevant duty of care." 105Sydney Ports did not argue to the contrary before me.

Sydney Ports' liability to Mr Collins 106I am satisfied that Sydney Ports breached its duty of care to Mr Collins in several ways. It clearly failed to provide him with a safe place of work or a safe means of access to work. The gangway had previously failed and Sydney Ports were aware of what caused it to fail. Mr Collins gave uncontradicted evidence of how the gangway had violently catapulted a year before his accident when the counterweight detached. Sydney Ports was, or should have been, aware of the potentially serious consequences that someone in the position of Mr Collins might suffer if the events that befell him were to occur. Significant among the breaches alleged is the fact that Sydney Ports took no step to ensure that the gangway was covered or protected by a mechanism that anticipated the possibility of failure and which operated as a backup or failsafe in the event that the principal cause of failure eluded discovery upon proper inspection. Nor did Sydney Ports properly inspect or maintain the gangway system in any event. There is no evidence that the recommendations in the Operation and Maintenance Manual for regular inspection and periodic replacement were ever followed, except in response to periodic failures. This was clearly inadequate. 107The practical work needed to repair the gangway from time to time was assigned to Australian Winch and Haulage. The evidence makes it clear that that organisation attended the port regularly on maintenance and repair excursions on behalf of Sydney Ports. Australian Winch and Haulage completed the installation of the shackle that failed in 2000. In my view it became liable to Mr Collins for the consequences of its breach of duty to him (for reasons appearing below). Sydney Ports is legally liable to Mr Collins for the breaches of its non-delegable duty arising out of the negligent acts and omissions of Australian Winch and Haulage. 108Nor does paragraph 6A of Sydney Ports' defence assist it. There are a number of problems with it. I am not satisfied that the stainless steel shackle was defective in the relevant sense. This is discussed in more detail below in the context of paragraph 14A of Australian Winch and Haulage's defence. For present purposes it is sufficient to note that the particular shackle that was employed was grade CF-8M, not grade 316, and failed as a result of the use to which it should never have been put. It did not fail because it did not correspond to the expected or anticipated characteristics of a grade 316 shackle that would have been suitable but was not as the result of some latent defect. It is also artificial to speak in terms of Sydney Ports' inability to discover the so-called defect on prior inspection as it wholly delegated the task of sourcing, selecting, purchasing and installing the shackle to Australian Winch and Haulage. In the circumstances, Sydney Ports' ability successfully to invoke paragraph 6A of its defence is coextensive with Australian Winch and Haulage's ability to rely upon the corresponding paragraph in its defence.

Mr Collins' contentions: Australian Winch and Haulage 109Mr Collins submitted that it was unarguable that Australian Winch and Haulage had procured or supplied a shackle that was suitable for the purpose of bearing a load while fully immersed over time in seawater. Mr Collins contended that he had established a breach of duty on the part of Australian Winch and Haulage merely by establishing that the company had supplied a shackle that was deficient or unsuitable for such an application. 110Principal among Mr Collins' contentions was that Australian Winch and Haulage failed to specify a shackle at the point of purchase that qualified as one capable of performing the intended task because it had been manufactured from a suitable material. In this case that meant that the shackle should have been solution annealed. Mr Collins contended that there was no evidence that Australian Winch and Haulage specified such a shackle when it was purchased. Instead, the shackle was purchased by reference to the description of a " 12mm s/s 'D' shackle ". There is nothing upon the A Noble & Son Ltd purchase order or the corresponding invoice that suggests that the shackle was grade 316 stainless steel or indeed any particular grade at all. There is no satisfactory evidence to suggest that Australian Winch and Haulage specified a shackle that had been solution annealed or that was sold to it by way of a description that entitled it to expect that the shackle had been solution annealed. 111It was contended by Mr Collins that Mr Hemsworth's evidence contained in paragraph 10 of his statement, that "the defective shackle was a marine grade stainless which is known to me as a Type 316 stainless steel", is no more than an unsupported assertion and in any event it is simply wrong. Mr Collins submitted that it was otherwise clear from Mr Hemsworth's evidence that his company purchased the shackle without inquiring and therefore without knowing whether it was solution annealed or described in a way that would have permitted Australian Winch and Haulage reliably to expect that it was. Far from not complying with its description, the shackle complied completely with the description on the purchase order and invoice but that description completely begged the question that Australian Winch and Haulage should have asked. In summary, Australian Winch and Haulage simply decided to use a stainless steel shackle without considering which grade of stainless steel was appropriate. 112Mr Collins' position emerged in the course of the following dialogue between me and Mr Campbell SC: "HIS HONOUR: Mr McCulloch's case is that 316 was supplied and that to the extent there might have been any misapprehension about the true characteristics of 316 AWH's ability to pick it up on the passing of the product meant that it was not liable because it was latent. CAMPBELL: Yes. HIS HONOUR: But you accept that if they ordered it in an appropriate way, a product that gives rise to the inference that they thought they were getting 316 but they did not, then they are not at fault? CAMPBELL: Yes, your Honour, I accept that. HIS HONOUR: I don't think there is anything controversial about that. I just wanted to make sure we were on the same page. CAMPBELL: Yes, your Honour. I don't want to repeat myself but your Honour has a point but you don't prove you ordered by saying we knew we needed it. You have to prove you ordered it." 113Mr Collins submitted that because Australian Winch and Haulage could not affirmatively identify, even by a mere preponderance of evidence, the type of shackle that it ordered or its particular characteristics, paragraph 14A of its defence must fail.

Australian Winch and Haulage's response 114Australian Winch and Haulage submitted that the evidence established that when it installed the shackle it believed it had sought and obtained a grade 316 stainless steel shackle. This was said to be clear from the statements obtained by Mr Morgenthal in his interviews with Mr D'Arth, Mr Walkden and Mr Hemsworth. Mr D'Arth said he "believed" that the grade was 316. Mr Walkden "thought" that the grade was 316. Mr Hemsworth said the shackle was "a marine grade stainless steel which [was] known to [him] as a type 316 stainless steel". Mr D'Arth's facsimile dated 24 July 2002 to Mr Morgenthal says "the grade is 316". 115Australian Winch and Haulage placed some considerable emphasis upon the fact that it was Mr Collins who in fact tendered this evidence without objection and none of the deponents was challenged on the issue: see Ali v Nationwide News Pty Ltd [2008] NSWCA 183 at [112]. It was submitted that in line with authorities such as Paric v John Holland Constructions Pty Ltd [1984] 2 NSWLR 505 at 507G, I could be more comfortable in accepting this evidence as establishing that Australian Winch and Haulage sought a grade 316 shackle from A Noble & Son Ltd. 116The purchase order and the invoice were said to establish only that A Noble & Son Ltd ordered a KXS12 shackle from Ronstan. The number was, however, a Nobles product number. Mr Taylor from Ronstan was not personally involved in the transaction and could not give any relevant evidence of what transpired between Nobles and Ronstan concerning it. Mr Atkinson from Nobles was involved in the transaction and was called by Mr Collins, but he gave no evidence of precisely what the product described as KXS12 was, or what transpired between Australian Winch and Haulage and Nobles or Nobles and Ronstan. He did not explain how Nobles could order a Nobles part number from Ronstan. No catalogue or other written description of the part was tendered. Australian Winch and Haulage therefore submitted that the evidence of Messrs D'Arth, Walkden and Hemsworth and Mr D'Arth's facsimile remained uncontradicted. 117It is obviously inherent in these contentions that a grade 316 shackle would have been a suitable choice for the shackle required to perform successfully in the application in this case. The evidence of the experts essentially disclosed that an item described as grade 316 should be comprised of the appropriate proportions of the constituent ingredients, cast into a bulk shape, reheated and mechanically worked ("hot worked") into a more usable shape and solution annealed. Professor Yeomans left open the possibility that grade 316 could be cast and used in large shapes without being hot worked but later indicated that hot working was a necessary part of the process and that a cast item would be described as CF-8M. He also indicated that solution annealing would be "usual practice". It appears in these circumstances to be uncontroversial, and I accept, that a product sold as grade 316 ought to have been hot worked, not merely cast, and solution annealed. 118Australian Winch and Haulage submitted that a grade 316 stainless steel shackle would have been an appropriate choice from the perspective of corrosion resistance. It would have had better long term corrosion resistance than galvanised steel. A solution annealed shackle would have sufficed for the intended application. The experts agreed that the shackle was "deficient" because it was not solution annealed and such a deficiency was incapable of detection upon visual inspection alone. Microscopic testing would have been required for this purpose. 119In the circumstances, Australian Winch and Haulage contended for the following findings of fact. First, that it was engaged by Sydney Ports on a case by case basis to deal with specific repairs and maintenance from time to time. Secondly, Sydney Ports was itself on notice of serious ongoing problems with the gangway, including the potential for a shackle to fail causing the gangway to catapult into the vertical position. Thirdly, Sydney Ports chose not to revise the whole system with the introduction of an hydraulic ram as suggested by Australian Winch and Haulage in July or August of 2000. Fourthly, Sydney Ports either requested, or Australian Winch and Haulage offered, the use of a longer lasting shackle to increase the time between repairs in which case Australian Winch and Haulage suggested the use of grade 316 stainless steel and Sydney Ports agreed. Fifthly, Australian Winch and Haulage ordered a grade 316 shackle from A Noble & Son Ltd. Sixthly, a grade 316 stainless steel shackle ought to have been solution annealed. Seventhly, grade 316 would have been an improvement upon galvanised steel from the perspective of corrosion resistance. Eighthly, the shackle received by Australian Winch and Haulage was not grade 316 stainless steel but was CF-8M and had not been solution annealed. Ninthly, the shackle failed due to its load bearing sections being compromised by intergranular corrosion, which would not have occurred as quickly in a grade 316 stainless steel shackle. Finally, the shackle was capable of supporting the requisite load before significant intergranular corrosion developed.

Australian Winch and Haulage's liability to Mr Collins 120It will be apparent that of the findings for which Australian Winch and Haulage contends, two are controversial. The first is the question of whether or not it "suggested" the use of grade 316 stainless steel to Sydney Ports. The second is whether it ordered a grade 316 shackle from A Noble & Son Ltd. As already indicated, Mr Collins accepts that if Australian Winch and Haulage did at least the second of those things, it has no liability to him. 121The duty of care owed by Australian Winch and Haulage to Mr Collins arises from the works it performed. There was no other relevant relationship between them: see Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 at 85; Drummond and Rosen Pty Ltd v Easey & Ors [2009] NSWCA 74 at [60]; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 at 371-372. The duty of the contractor in the position of Australian Winch and Haulage, as identified in Voli , is to "take reasonable care, skill and diligence in the performance of the work he undertakes". In the present case the work that was undertaken was the selection and installation of a shackle that was an improvement, in terms of corrosion resistance, on the previously installed galvanised shackle. The duty owed can only have been a duty to exercise reasonable care in the selection of a grade of shackle that was reasonably fit for the intended purpose, and in its installation. There can have been no duty to "ensure" that it was so. The duty can only have been to exercise the standard of care expected of a reasonable engineering firm. 122Australian Winch and Haulage was an intermediate supplier, and purchased the shackle from a respectable supplier: see Davie v New Merton Board Mills Ltd [1959] AC 604 at 625, 642 and 645. It contended that the shackle was "defective" because it had not been solution annealed, and that such defect was latent, in the sense that it was not capable of detection upon reasonable inspection. The effect of the expert evidence is that a buyer is entitled to assume or to expect that a grade 316 shackle has been solution annealed. Correspondingly, Australian Winch and Haulage only owed a duty to do something about a latent defect if it had reason to know of it: see McPherson's Ltd v Eaton & Ors [2005] NSWCA 435; (2005) 65 NSWLR 187 at [22] - [23] as follows: "[22] But most distributor situations involve no more than omission by the distributor to disclose or warn about some inherent quality of the product distributed. The present case is an example. Unless one posits a general duty of care and concludes that the distributor's conduct was reasonable in the circumstances, something more is required for these situations before a duty of care can be found, essentially for the reason adverted to by Professor Stapleton in her Sainsbury's example. It offends common morality to find a distributor liable for nothing more than selling a dangerous product, at least if the danger of the product (generally, or in the particular case) is not known or within the "reason to know" category as regards the distributor... [23] The difference between "ought to know" and "has reason to know" is more than semantic in the present context. It is the law's endeavour to identify the limited content/scope/extent of the relevant duty in circumstances like the present. The formulation "has reason to know" appears to capture the appropriate scope of duty, at least outside the situation of the distributor whose own activities have contributed to the harmful potential of the product..." 123Australian Winch and Haulage contended that it discharged any duty of care that it owed to Mr Collins by ordering a grade 316 stainless steel shackle. That necessarily throws up for consideration the two controversial findings sought by Australian Winch and Haulage to which I earlier referred. It bears the onus of establishing the matters pleaded in paragraph 14A of its defence. It seeks to do so by relying upon what Messrs D'Arth, Walkden and Hemsworth have said and upon what Mr D'Arth has written. That is to be compared with the terms of the purchase order and invoice and must also be considered in the light of the circumstances that existed when and in which the statements to Mr Morgenthal were made. 124The evidence of Mr D'Arth that he "believed" that the grade was 316 is not supported by any documents or conversation to which he is able to point to support it. The mere statement of a belief is inherently weaker than a statement of knowledge, especially when unaccompanied by any foundation for the belief. The particular expression of belief was also offered after the incident that gives rise to the proceedings and in the context of an investigation into an accident for which his then employer was potentially responsible. The only document that he thought he might be able to produce to establish the matter was the purchase order. It is relevantly silent. He had no idea what the heat treatment process was that the shackle should have undergone in order to be suitable for a seawater application. He does not nominate the source of his belief that the grade of stainless steel was 316. 125Mr Walkden thought the stainless steel shackles were made from grade 316 stainless steel. In the same way as Mr D'Arth, he gave no source for his thought. He apparently relied on no documents and he referred to no conversations. He was also employed by Australian Winch and Haulage when he offered his opinion and in the context of an investigation into the cause of a serious accident. 126Mr Hemsworth also did not provide a basis for his statement that the shackle was type 316. I have extracted some of his cross-examination at length. I have reviewed the whole of his evidence before me in detail as well. I am unable to detect any part of Mr Hemsworth's evidence that could be treated as clear and reliable evidence that the shackle ordered by Australian Winch and Haulage was grade 316. I have no doubt that Mr Hemsworth is hopeful that it was but the whole tone and content of his evidence does not give me any comfort that anything he said about the grade of stainless steel of the shackle that he purchased was reliable. He knew nothing of whether the shackle should have been solution annealed and yet for present purposes that is the significant characteristic of grade 316 stainless steel. Without intending to be critical of Mr Hemsworth, I am not satisfied that whenever he expressed the view that the shackle that his company ordered was grade 316 he had in fact any actual idea about the matter one way or the other. His evidence "we've bought a grade 316 shackle of [ sic , off] Ronstan" is unconvincing. There is no single piece of objective corroborating evidence to support his statement and no basis in his evidence for how it is that he feels able to express the opinion. Indeed, the burden of his evidence is generally, and understandably, to the effect that he was not involved at a hands-on level and necessarily left it to others in his organisation to make the selection. Unfortunately, his evidence that "I asked for or it was asked for a 316 shackle" is not supported by anyone that worked for Australian Winch and Haulage who was able to confirm what was specified at the time the order was placed. The documents raised at the time of the transaction do not support it and no amount of uninformed assertion about it establishes the fact. 127It follows that I am not prepared to find that Australian Winch and Haulage ordered a grade 316 shackle from A Noble & Son Ltd. It also follows from that that Australian Winch and Haulage is not entitled to rely upon a defence that the failure of the shackle in place as at 23 July 2001 was due to the fact that it was not solution annealed during the manufacturing process, which defect was not capable of being ascertained on reasonable inspection. The analysis by Mason P in McPherson's Ltd v Eaton & Ors referred to earlier cannot avail Australian Winch and Haulage in the circumstances of this case. It has not in my view established that it ordered or specifically purchased a grade 316 stainless steel shackle, which would have relieved it of the obligation further to inquire or to inspect in order to ascertain whether the item purchased came up to specification. 128In McPherson's Ltd v Eaton & Ors at [17], Mason P expressed the view that: "[i]t is both feasible and just to impose a particular content on the distributor's duty of care, confining it to one requiring reasonable care in the avoidance of personal injury by reference to what the distributor knows or has reason to know". 129In this case Australian Winch and Haulage did no more than purchase a so-called marine grade shackle and cannot therefore assume to itself the benefit of a confident expectation or understanding that it had been solution annealed. The so-called latency of the "defect" is of no consequence, and therefore cannot avail the company, unless the correct item was ordered in the first place. It was not. Contrary to its contention, I find that Australian Winch and Haulage failed to discharge any duty of care that it owed to Mr Collins by ordering a grade 316 stainless steel shackle because I am not satisfied that it did so. The matter would be different if Australian Winch and Haulage had specified grade 316 stainless steel and had thought that it was purchasing a shackle of that type when in fact some lesser grade of stainless steel shackle was supplied or the shackle was of the correct grade but in truth suffered from some undiscoverable or latent defect. That is the case that Australian Winch and Haulage pleads in its defence and which it sought to make out and upon which, if established, it could succeed. The precondition to the establishment of that case is proof that it ordered a grade 316 stainless steel shackle. As I have said, I find that it did not do so. 130Australian Winch and Haulage would have discharged its duty of care to Mr Collins if it had ordered a grade 316 stainless steel shackle. In terms of s 5B of the Civil Liability Act 2002 , the risk in the circumstances presented by its failure to do so was overwhelmingly foreseeable. Counterweight support linkages had failed previously and these failures were notorious. The risk was clearly not insignificant. Even though the likelihood of the event occurring whilst the gangway was in use in the horizontal position was probably quite low, the nature of the injury that a user of the gangway at the time might potentially suffer if catapulted from it without warning was very serious. In combination these factors produce a conclusion that the risk was not insignificant. 131The reasonable response to that risk was the sourcing and selection of a grade 316 stainless steel shackle for use in the repairs to the gangway and to purchase it from an apparently reputable supplier. It is not in contest that the selection of a grade 316 shackle would have been appropriate. It represented a significant improvement in terms of corrosion resistance and longevity over the galvanised shackle that it replaced.

Causation 132Questions of causation are to be determined having regard to ss 5D and 5E of the Civil Liability Act in the case of Australian Winch and Haulage, and in accordance with the common law in the case of Sydney Ports. 133Mr Collins contended that no issue of significance arose in this case on the question of causation. The selection and supply by Australian Winch and Haulage of a shackle that was unsuitable and unfit, or more accurately, its failure to specify a shackle that was suitable, for its intended use in a load bearing application in a highly corrosive submarine environment was a necessary condition of its failure as early as 23 July 2001. The selection and supply of a grade 316 stainless steel shackle would have lasted several years in that environment and in that application. Even though more susceptible to corrosion generally, a load rated galvanised steel shackle would have had a similarly safe working life. None of the suitable alternatives would have been subject to crevice corrosion and the particular mode of failure that led to the accident would not have occurred. 134Mr Collins submitted that but for the selection and supply of an unsuitable shackle, his injuries would not have been sustained. Accordingly, given the nature of the work undertaken by Australian Winch and Haulage it is therefore appropriate for the scope of its duty to extend to the harm so caused: s 5D(1)(b). Mr Collins further contended that s 5D(4) was readily satisfied by reason of the fact that Australian Winch and Haulage undertook the work in question. What occurred was the very type of thing likely to happen if reasonable care was not taken by it. Responsibility for the harm should be imposed upon it. 135Australian Winch and Haulage's submissions on causation were very brief. It submitted that factual causation would not be made out in relation to any argument that a load rated shackle ought to have been used. It emphasised that there was no evidence that a load rated shackle would not have corroded or would have corroded any slower than the non-solution annealed CF-8M shackle that was used in fact. It submitted that the shackle did not fail due to any inherent inability to sustain the required load, so that no finding was available that the failure to have a load rated shackle was a necessary condition of the occurrence of the harm. 136As the experts have agreed, a grade 316 stainless steel shackle would have resisted intergranular corrosion - the cause of the failure and thus of the accident. But for the failure to specify and install a grade 316 stainless steel shackle in this case the accident would not have occurred. The identified breaches of duty caused the loss and damage sustained by Mr Collins in the accident that followed.

Conclusions on liability 137It follows that I am satisfied that each of Sydney Ports and Australian Winch and Haulage has breached its duty of care to Mr Collins and is liable for his loss and damage.

Cross-claims 138Mr Collins submitted that the question of apportionment of liability between Sydney Ports and Australian Winch and Haulage should proceed upon the basis that Sydney Ports' liability is one imposed regardless of personal fault on its part so that it is entitled to either a complete indemnity or an apportionment calculated so as to produce a result approaching it. With the exception of a submission promoting a finding that Sydney Ports should alternatively be exempted from liability to make a contribution pursuant to s 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 , referred to below, Mr Collins was otherwise silent on the issue. 139In contrast, Australian Winch and Haulage sought to address the issue in the context of the respective cross-claims between the defendants. Australian Winch and Haulage's cross-claim against Sydney Ports 140The first submission was that there was no doubt that Sydney Ports breached its non-delegable duty of care to Mr Collins. It will be recalled that Sydney Ports did not have any maintenance requirements specified by Australian Winch and Haulage for the underwater stainless steel components of the emergency response jetty gangway. Moreover, and in spite of that fact and with knowledge of the repeated failures of the gangway, Sydney Ports undertook no risk assessment and did not implement any regular inspection or maintenance regime. The effect of the evidence is that Sydney Ports simply waited until something went wrong, presumably in the hope that it did not create a safety issue, at which time it would then call Australian Winch and Haulage to remedy the particular fault. 141Mr Hobday admitted that the corrosion evident on the shackle at the time of the failure could have been detected upon inspection. The need for a regular and recorded inspection system was apparent to Mr Heath, the marine supervisor for Sydney Ports on the day of Mr Collins' accident, as recorded by him in the Sydney Ports incident/accident initial report relating to Mr Collins' accident. Sydney Ports implemented a system of inspection shortly following the incident. The clear inference is said to be that such a system was reasonably practicable before the accident and the potential for safety problems if the equipment was not regularly inspected and properly maintained was obvious. 142It will be recalled that Mr Chalker said "that we had various problems with the gangway over the years and I personally did not like the design of the gangway and wanted to see if there was [a] better system we could use". Mr Hemsworth was concerned at the constant need to arrange for his employees to attend the site on short notice and recommended the hydraulic system that was never implemented. Sydney Ports pleaded the cost of that proposal as the only reason for not pursuing it. There was no evidence from Sydney Ports on this issue, despite the clear foreseeability of the risk of serious injury to employees if the gangway suddenly returned to the vertical position as it had done approximately one year prior to Mr Collins' accident. However, Mr Chalker told Mr Morgenthal that the gangway was later redesigned to include a safety mechanism to prevent it flying up if the counterweight became disconnected. There was no evidence that this was not a reasonably practical alternative prior to the accident or that cost precluded it being implemented earlier: see Nelson v John Lysaght Pty Ltd [1975] HCA 9; (1975) 132 CLR 201 at 214. 143Australian Winch and Haulage maintained in these circumstances that Sydney Ports had done nothing in the face of a clear understanding of the propensity of the gangway to fail in a potentially dangerous and harmful way beyond rejecting Australian Winch and Haulage's suggestion that a better system be implemented. 144Sydney Ports agreed to the change from galvanised steel shackles to stainless steel shackles although its own mechanical engineer, experienced in marine environments, saw no apparent basis for the decision to do so. Australian Winch and Haulage submitted that if that were a basis upon which to find that it was liable to Mr Collins, then it was a shared basis with Sydney Ports. 145In summary, Sydney Ports took no steps at all to avoid the foreseeable risk of harm to Mr Collins. Sydney Ports were expressly on notice of the risk and must have been aware of the corresponding potential for serious injury. Sydney Ports' cross-claim against Australian Winch and Haulage 146Apart from a repetition and reliance upon the particulars of negligence alleged by Mr Collins, Sydney Ports raised the following allegations against Australian Winch and Haulage in the cross-claim: (b) AWH designed and carried out modifications to the gangway with a mechanism and components which were unsafe. (c) AWH designed and carried out modifications to the gangway with a mechanism and components such that in the event of failure of a hoist or other component, the platform returned to the stowed (vertical) position. (d) AWH failed to design or carry out modifications to the gangway with a mechanism and components which in the event of failure of a component would not return to the stowed (vertical) position or otherwise move suddenly. (e) AWH failed to design or advise SPC in respect of the installation of a fail safe brake in the winch enuring the gangway would not fall or move in the event of failure. (f) AWH failed to advise of the risks associated with the said modifications and of the consequences of any failure of the mechanism or components of the gangway. (g) AWH advised SPC to modify the gangway and to utilise stainless steel components which were inappropriate in the circumstances. (h) AWH carried out modifications to the gangway and the hoist or hoist tackle which were inappropriate. (i) AWH utilised stainless steel components which were inappropriate in the circumstances. (j) AWH failed to advise or properly advise SPC on the correct type and grade of stainless steel components to be used in that application. (k) AWH failed to implement or advise on any or any appropriate maintenance program for the gangway. (l) AWH exposed users of the gangway and in particular Collins to a risk of injury that was foreseeable and could have been avoided. (m) AWH failed to design the gangway modifications to comply with s 17A Construction Safety Act and regs 73, 74 and 75 of the Construction Safety Regulations. 147Particular (j) was ultimately not pressed. Australian Winch and Haulage submitted that there was no evidence to support particulars (c), (d) or (e) and that particular (f) was not made out on the evidence, which evidence established that Sydney Ports was well aware of the risk of failure of the components, including in particular the risk that the gangway could unexpectedly return to the vertical position. There was no evidence of a request for advice on a maintenance program as suggested by particular (k). 148At paragraph 85 of its written submissions, Australian Winch and Haulage produced this response to Sydney Ports' cross-claim: "85. Essentially, if AWH is to be liable on the cross-claim to SPC, it can only be on the basis that the submissions set out above relating to the scope of AWH's duty, or its discharge of that duty by seeking to obtain a 316 shackle, have been rejected. The other allegations by SPC against AWH simply have no foundation in the evidence, and in some instances run contrary to the evidence." 149As I have found, Australian Winch and Haulage breached its duty to exercise reasonable care in the selection of a grade of shackle that was reasonably fit for the intended purpose, and in its installation. It did not source or supply a grade 316 shackle, in breach of the duty that it had to take reasonable care having regard to its obligations in the circumstances. That liability also gives rise to a liability on the cross-claim, as the submissions on behalf of Australian Winch and Haulage so presciently indicate.

Apportionment 150In Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492 at 493-4, the High Court said this: "A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v. Macgregor (Owners) [1943] AC 197, at p 201. Such a finding, if made by a judge, is not lightly reviewed... 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] VicRp 15; [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." 151Australian Winch and Haulage contended that its failure to source a grade 316 stainless steel shackle could at most amount to no more than "momentary inadvertence" in a retail acquisition setting, quite distinct and different from its selection and installation. In weighing up the relative seriousness of that breach, Australian Winch and Haulage submitted that I would find that it was not on notice of the propensity of the gangway to catapult into the stowed position due to component failure. 152In comparison to that, Sydney Ports essentially did nothing. It had no system of inspection or maintenance in place. It did not respond to Australian Winch and Haulage's suggestion to install an hydraulic system and there is no evidence that it investigated other failsafe measures such as the one that now operates. In all, it was submitted that Sydney Ports' failures were objectively very serious. Australian Winch and Haulage therefore submitted that in the circumstances I could comfortably find that Sydney Ports' relative culpability was considerably higher than its own and that Sydney Ports should bear the substantial burden of the legal responsibility for Mr Collins' injuries. It suggested an apportionment according to a ratio of 90:10 in its favour. 153Sydney Ports' oral and written submissions contained no instructive reference at all to the question of apportionment between the defendants on the cross-claims. 154In terms "not of principle or positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations", the respective roles of the two parties are adorned with stark differences. Sydney Ports was Mr Collins' employer, in effective control of the gangway that failed and responsible for it and for its upkeep and maintenance. The gangway had failed before, so that the degree of vigilance that one might have expected would be assigned to it would have been high. The fact that the gangway was not regularly inspected or methodically maintained by Sydney Ports is a clear fact that emerges from the evidence. It is hardly controversial that Sydney Ports took a reactive approach to the gangway and its maintenance, with bursts of energy and interest only regularly produced in response to a problem. That had the unfortunate and inevitable consequence that a failure sooner or later was predictable, if not inevitable, but was in any event preventable. 155Australian Winch and Haulage was regularly involved in dealing with the problems with the gangway for Sydney Ports. Mr Hemsworth's evidence was eloquent testament to at least his impatience with constant and urgent calls from Sydney Ports for the provision of labour and resources to deal with problems as they arose. Whatever else can be said about that, however, the replacement of components that failed with an alternative component likely to improve the performance of the gangway and either reduce the incidence of failures, or extend the time between them, carried with it the certain obligation to specify the appropriate grade of stainless steel shackle that was intended to perform in this way. I have found that a grade 316 shackle was not sourced or specified or supplied and that the provision of a CF-8M shackle was no less than an accident waiting to happen. I do not accept that the role of Australian Winch and Haulage in these circumstances amounted to no more than momentary inadvertence. The performance of the shackle was central to the performance of the gangway and could not lightly be minimised in importance. 156In accordance with s 5(2) of the Law Reform (Miscellaneous Provisions) Act , "the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage". In my opinion, a just and equitable apportionment of Mr Collins' damages as between Sydney Ports and Australian Winch and Haulage is 65 percent to the former and 35 percent to the latter.

Exemption 157As earlier indicated, Mr Collins sought to argue that Sydney Ports should be held to be exempt from liability to make a contribution in accordance with s 5(2) of the Act which provides in part that "the court shall have power to exempt any person from liability to make contribution". The scope of this power is yet authoritatively to be determined. In Amaca Pty Ltd v New South Wales [2003] HCA 44; (2003) Aust Torts Reports 81 at [20], the High Court unanimously considered, without deciding, the point in the following terms: "[20] Secondly, and no less fundamentally, the assumption which the trial judge made about the State's liability was an insufficient basis for deciding what order should be made in the contribution claim against the State. The making of assumptions and the acceptance of concessions for the purpose of litigation is sometimes an appropriate and efficient way to proceed. It may allow a court to sever irrelevant or immaterial questions to permit it to concentrate on those issues that are legally essential to the decision. However, this was not a case where such a shortcut could be taken. What was assumed was that the State had breached a duty of care which it owed the injured plaintiff. But neither the duty nor the breach was identified with any particularity. Without identifying the duty owed, and the breach or breaches committed, it was not, and is not, possible to identify the extent of that party's responsibility for the damage. Nor is it possible to say that that party should be exempted from liability despite it having breached a duty which it owed the plaintiff. (It is unnecessary to consider whether, or in what circumstances, it would be proper to exempt a negligent party from liability to contribute. It may be that the power to exempt is engaged only where the party to be exempted was not at fault but found liable for some form of strict liability. That question was not argued and need not be decided.)" 158Mr Collins contended that, for the reasons discussed by Mason P in Christie , the employer's non-delegable duty when it arises without personal fault on its part is a form of strict liability. However, it will be apparent that in my view the liability of Sydney Ports does not arise only in circumstances suggesting the absence of fault on its part, despite the (perhaps understandable) reasons why Sydney Ports might wish to advance such a proposition. I do not consider that this is a case in which I should exercise a power to exempt Sydney Ports from making the contribution that I have determined.

Damages 159The quantum of Mr Collins' damages as between him and Australian Winch and Haulage has been agreed at $1.65M, subject to the application of s 151Z(2) and the calculation of a sum in respect of funds management. However, Mr Collins' written submissions contain an express request indicating that, as the outcome of Sydney Ports' recovery action against Australian Winch and Haulage may affect the quantum of Mr Collins' damages in light of s 151Z(2)(e) and (e1) of the Workers Compensation Act , Mr Collins wished to be heard following publication of my reasons for judgment upon the issue of how these provisions should apply in the context of this case. 160As between Mr Collins and Sydney Ports, damages are not agreed in full but some of the components of Mr Collins' claim are agreed. These are as follows: Past loss of wages - $613,250 Future loss of wages - $135,184 Fox v Percy - $20,000 Loss of employer's superannuation contributions - $82,327 161I am informed by counsel that there is no agreement about either the entitlement to or the amount of interest on past economic loss pursuant to the provisions of s 151M of the Workers Compensation Act , and that counsel for both Mr Collins and Sydney Ports will wish to address me on those issues at the appropriate time. 162Subject to those matters, there remain in addition three further outstanding issues between Mr Collins and Sydney Ports. First, should the work injury damages otherwise assessed as representing Mr Collins' loss in monetary terms be reduced because he retains a residual earning capacity that may be productive of income? Secondly, should interest on past damages be reduced by reference to the receipt of income protection benefits paid under a salary continuance scheme administered by an insurance provider? Thirdly, is an allowance for funds management recoverable as work injury damages? 163With respect to the first issue, Mr Collins contended that he has been conclusively assessed as having a degree of permanent impairment of 60 percent. This is apparent from a Workers Compensation Commission Medical Assessment Certificate dated 7 February 2007 tendered by Mr Collins. He submitted that even though the Court of Appeal in Brown v Lewis [2006] NSWCA 87; (2006) 65 NSWLR 587 at [23] said that "[e]xtreme caution is required before anything relevant or useful could be extrapolated from a certificate under s 61(2) [of the Motor Accidents Compensation Act 1999 ] for the purpose of calculating economic loss", the same could not be said of the equivalent certificate in a work injury damages case. However, I have not had the benefit of extensive argument on this issue and it is not necessary for my decision in this case. This is because the evidence independently of the MAC assessment of the degree of permanent impairment relating to Mr Collins otherwise satisfies me that he retains no residual earning capacity in the open labour market. 164In Nominal Defendant v Livaja [2011] NSWCA 121 at [65], the Court said this: "[65] There are distinctions to be drawn between injury and impairment or disability consequent upon injury, and between impairment or disability and diminished earning capacity. Because an individual has a physical and mental ability to undertake certain tasks, it does not necessarily follow that he has a significant residual earning capacity. Earning capacity must be measured by reference to the individual, when viewed with all his or her characteristics, in the labour market. When a person in middle age has spent all his or her life in a skilled or semi-skilled occupation which, as a result of injury, is no longer available, the identification of occupations which are theoretically available is only part of the task. There must also be a practical assessment of the likelihood of the individual obtaining employment in some such occupation..." 165In this case, Mr Collins has sustained serious and ongoing orthopaedic and brain injuries. One consequence of these injuries was that Sydney Ports, his employer for 13 years, came to the view that it was unable to provide him with further employment. It wrote to Mr Collins on 14 May 2003 in terms that included the following: "Further to the discussion between you, Pat Catanach and myself on Friday 2 May 2003, I wish to confirm that there is no appropriate role for you in Marine Operations. This is based on the medical advice received from your Medical Specialists which advises that you have reached maximum capacity and therefore are unable to return to a Port Officer's role." 166Mr Collins' mental incapacities are referred to below. They are disabling and taken alone effectively place Mr Collins beyond any realistic expectation of obtaining or retaining work of any sort. However, this picture is only confirmed when Mr Collins' orthopaedic capacities are factored into the equation. He sustained a complicated fracture of the pelvic ring with a central fracture dislocation of his left hip joint. He sustained bilateral fractures of both pubic rami and diastasis of the pubic symphysis. He suffered a lumbar spine injury with an annular tear of the L5-S1 disc and a small herniation. He also suffered a rotator cuff injury to his left shoulder. 167When reviewed by Dr Iain Rodger, a rehabilitation specialist, in April 2003, Mr Collins was still complaining of constant pains related to his back, left hip and left knee. He could not stand for more than five minutes without an aggravation of pain. He could sit for three hours but needed to change position. He walked with a stick outdoors. He had significant cognitive difficulties and was unable to concentrate, plan or organise. He often needed prompting to change his clothes. He was now reckless with money and had made some serious mistakes in family business dealings. He could no longer do maintenance work around the house and even had problems operating the DVD and the video player. He would return from shopping with the wrong items. He was unable to mow the lawn or sail his boat. 168Dr David O'Keefe, an orthopaedic surgeon, assessed him on 28 May 2010 as permanently incapacitated for work as a direct result of his accident. The doctor said he "could really only do sedentary work but I would doubt he would even be able to manage that in view of his head injury and cognitive impairment". 169From a practical assessment, the likelihood of Mr Collins obtaining employment in some theoretically available form of employment is nil. Mr Collins retains no relevant residual earning capacity of any kind. 170With respect to the second issue, the final calculation of interest depends upon the ultimate determination of any damages payable. However, a point of principle arises concerning the question of whether the decision in Haines v Bendall [1991] HCA15; (1991) 172 CLR 60 applies to the income protection benefits so far received by Mr Collins. In Haines the High Court held that workers compensation payments received pending determination of the plaintiff's damages proceedings should be deducted from the damages for the purpose of calculating pre-judgment interest because the workers compensation served the same purpose as the damages award. In that case, the plaintiff was a teacher and the compensation and damages were payable by the State. 171In the present case, the benefit is of a kind not brought to account in the assessment of damages: see Redding v Lee; Evans v Muller [1983] HCA 16; (1983) 151 CLR 117; National Insurance Co of New Zealand v Espagne [1961] HCA 15; (1961) 105 CLR 569; Zheng v Cai [2009] HCA 52; (2009) 239 CLR 466. In Espagne at 599-600, Windeyer J stated the principle in the following terms: "Is there a governing principle in all these cases? So far as any rules can be extracted, I think they may be stated, generally speaking, as follows: In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause. Nevertheless it is not, I think possible, to enunciate an exhaustive rule for all parts of this vexed topic. And the questions that arise can never be determined in the abstract. Each must depend on the terms of the particular contract, pension scheme, charitable benefaction or statute governing the benefit conferred." [Emphasis added] 172Mr Collins contended that if no deduction were to be made from the damages on account of these benefits it would be inconsistent with principle to make a deduction for the purposes of calculating interest. The benefit received does not serve the same purpose as the damages. There was no vocal contradictor of Mr Collins' propositions. 173The thrust of Mr Collins' submission is that as a matter of accounting logic, the benefit received must be characterised in the same way when awarding or calculating damages as when awarding or calculating interest on the same damages. The two approaches must be consistent. Put another way, a defendant who becomes liable to pay damages, who is not entitled to require the plaintiff to set off against that liability any benefit received as a pension or similar, cannot require the plaintiff to bring that benefit to account in favour of the defendant for the purposes of calculating interest on the damages. The proposition strikes me as wholly uncontroversial. As I have observed, the absence of any submission from Sydney Ports to the contrary only serves to reaffirm my view. 174So far as the third issue is concerned, it is clear that a significant portion of Mr Collins' impaired earning capacity is directly related to, and is the result of, his traumatic brain injury. As a result, he requires assistance in the management of a large sum of money. So much emerges from the report of Jennifer Batchelor, a clinical neuropsychologist, dated 30 September 2010, in which she gives the following opinion: "The results of the current assessment revealed definite evidence of acquired cognitive abnormality. On measures of working memory, speed of information processing, new learning, retention, planning and reasoning, Mr Collins returned scores that were markedly reduced relative to expectations. Specifically, he demonstrated very significant difficulty in holding information in mind, in processing material at speed, in learning new information, in retaining material over time, in planning his responses, in realising effective problem solving strategies, in inhibiting inappropriate responses and in effecting change in his behaviour. Although his responses on a mood inventory were suggestive of elevated depression and anxiety, the information relayed on interview would suggest that his emotional distress is largely a reaction to the cognitive and behavioural changes of which he is aware. In my opinion, it is unlikely that his cognitive deficits are purely secondary to emotional distress. There was no evidence of poor or incomplete effort contributing to the degree of deficit evident on testing." 175In Baghdadi v P & M Quality Smallgoods Pty Ltd [2008] NSWSC 566, Patten AJ held that in the case of a brain damaged plaintiff, fund management damages were covered by s 151G of the Workers Compensation Act as damages for economic loss due to loss of earnings or earning capacity. At [10] his Honour said this: "[10] It has been agreed that Omar Baghdadi is entitled to $1.23 million for management of his verdict. In my view, a proportion suggested at 10 per cent should be allowed of that sum, in the notional assessment of damages to Kaybron. The question is whether it falls within the expression "damages for past economic loss due to loss of earnings" and "damages for future economic loss due to the deprivation or impairment of earning capacity" as those expressions appear in section 151G. The phrase "due to" is wide. It is perhaps a matter of expression but, given that the legislature must have contemplated the situation of a very seriously injured plaintiff, I think the expression is wide enough to encompass funds management where the negligence of the employer creates the need for the management, as occurred in this case." 176Section 151G is in these terms: " 151G Only damages for past and future loss of earnings may be awarded (1) The only damages that may be awarded are: (a) damages for past economic loss due to loss of earnings, and (b) damages for future economic loss due to the deprivation or impairment of earning capacity. (2)..." 177Since I reserved my decision in June last year, the Court of Appeal has had cause to deal with this issue. In Workers Compensation Nominal Insurer v Luke (by his tutor Luke) [2011] NSWCA 251 at [4], Campbell JA said this: "[4] It will often happen that, before being injured, a plaintiff was not in the fortunate position of having a substantial lump sum from which investment income could be earned. Even so, if a plaintiff is injured in a way that results in him or her becoming mentally incapable, or less capable, of earning money by investment, that plaintiff's earning capacity has, in that respect, been lost or reduced. Such a plaintiff sustains a "future economic loss" if the plaintiff has less money through having to pay an expense. An expense of funds management is "due to the deprivation or impairment of earning capacity" if it is caused by the plaintiff being unable, or less able, to earn money for himself or herself through investment." 178At [21] - [25], Handley AJA dealt with this issue in the following terms: "[21]...the ordinary meaning of loss includes an expense paid or incurred. As Campbell JA said during argument, loss involves a comparison, and an expense that would not otherwise have been paid or incurred is a form of loss. [22] The construction of s 151G must be considered in the light of s 151, enacted in 1989, which provides: This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides. [23] The cost of fund management was a well recognized component of an injured plaintiff's future economic loss prior to the 2001 amendments: Nominal Defendant v Gardikiotis [1996] HCA 53; 186 CLR 49. Those amendments, and s 151G in particular, did not "expressly provide" for that right to be taken away. However s 151G was enacted after s 151 and if the sections are inconsistent the later would have full effect, even if the inconsistency only arose by necessary implication: Rose v Hvric [1963] HCA 13; 108 CLR 353, 357. Section 151G does not, in terms, deny recovery for this form of future economic loss and there is no necessary implication to that effect. [24] The deprivation of the plaintiff's earning capacity created, or caused, a need for fund management with its attendant cost which did not exist while his earning capacity was intact and he was receiving wages. It can also be said that the award of a substantial lump sum, which he would never have otherwise possessed, created or caused that need. In either case the loss was "due to" the deprivation of the plaintiff's earning capacity. [25] In my judgment therefore the plaintiff is entitled to an appropriate award for the cost of managing his lump sum." 179It follows that the apparent controversy that prompted Mr Collins' submissions on this topic has been resolved. Mr Collins is not prevented from recovering funds management costs by reason of the terms of s 151G.

Conclusion 180I have determined that the defendants are liable to Mr Collins and I have assessed their respective contributions in accordance with the cross-claims. There will be a verdict for the plaintiff. At the request of the parties I have not proceeded to calculate either the damages payable by each defendant by reference to the operation of s 151Z of the Workers Compensation Act , or interest that may be payable to Mr Collins on any damages to which he has become entitled. I am led to believe that the calculation of a sum for funds management will be agreed. Accordingly I will stand this matter over for further submissions and argument, if required, at some date suitable to the parties and to the Court to be arranged in consultation with my Associate.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 February 2012

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