Normoyle (t/as Liverpool Auto Sales) v Ducin P/L

Chicco v The Corporation of City of Woodville (1990) A Tort Rep 81-028 Wilkinson v Law Courts Ltd [2001] NSWCA 196 Nicol v Allyacht Spas Pty Limited (1988) 165 CLR 306 Ander Transport Pty Limited v Brambles Limited (2004) HCA 28 Shedlezki v Bronte Bakery Pty Limited (1970) 72 NSW 378 March v Stramare (EMH) Pty Limited (1991) 171 CLE 506 Ginty v Belmont Building Supplies Limited (1959) 1 All ER 414 Walton Stores Limited v Sydney City Council (1968) 2 NSWR 111 Ashby v Tolhurst (1937) 2 All ER 837 Appleton v Ritchie Taxi (1942) 3 D.L.R. 546 CASES CITED: WD & HO Wills (Australia) Limited v SRA (and Ors) (1998) 43 NSWLR 338 WGH Nominees Pty Limited v Tomblin (1985) 39 SASR 117 O'Day v O'Hara and Anor (Register Newspaper, 17 May 1895) Thomas National Transport (Melbourne) Pty Limited v May and Baker (Australia) Pty Limited (1966) 115 CLR 353 E A Lee and sons Pty Limited v Abood (1968) 89 WN (NSW) (Pt1) 430 Port Swetenham Authority v T w Woo and Co (1979) AC 580 Tottenham Investments Pty Limited v Carburettor Services Pty Limited (1994) A Tort Rep 81 - 292 James Buchanan and Co. Limited v Hay's Transport Services Limited (1972) Lloyd's Law Reports Vol.2 535 Morris v CW Martin and Sons (1966) 1 QB 716 Pitt Son and Badgery Limited v Proulefco (1984) 153 CLR 644 Wyong Shire Council v Shirt (1980) 146 CLR 40 TNT Australia Pty Limited v Christie & Ors [2003] NSWCA 47

PARTIES: Thomas Normoyle (also trading as Liverpool Auto Sales) - Plaintiff Ducin Pty Limited - Defendant

SOLICITORS: Rocklifts - Plaintiff McMahons - Defendant

1 The plaintiff, Thomas Normoyle, who at material times traded as Liverpool Auto Sales, seeks damages from the defendant, Ducin Pty Limited, in respect of damage occasioned to two VL Commodore Walkinshaw SS motor vehicles ("Walkinshaw(s)") when, on or about 30 December 2000, the vehicles were damaged by a fire which occurred at premises occupied by the defendant at 12 Centenary Avenue, Moorebank. The defendant traded as "Centenary Smash Repairs" which business was conducted at that address.

2 The plaintiff sues the defendant for negligence whilst keeping the vehicles as a bailee, on the basis that on all material and relevant times, the plaintiff delivered the vehicles to the defendant, the defendant had possession of the vehicles and because the defendant had a duty to take reasonable care of the vehicles and return the vehicles to the plaintiff on demand in the same order and condition as when delivered. It is alleged against the defendant that it did not take reasonable care of those vehicles and thus they were damaged. Further, and in the alternative, the plaintiff claims in respect of the same circumstances that the defendant was negligent in its care of the vehicles and as a consequence the vehicles were damaged, claiming failure to take adequate precautions to ensure the safety of the vehicles, exposing the vehicles to a risk of damage which could have been avoided with reasonable care, failing to take reasonable and effective measures to ensure a fire would not be started at the premises and other particulars set out in paragraph 10 in the Amended Statement of Claim. The loss claimed by the plaintiff in relation to each vehicle, setting aside disbursements, requires a finding as to the market value of the vehicles, less salvage value.

3 The defendant admitted that the defendant at all times occupied and had control of the premises where the damage occurred. The defendant in the course of the plaintiff's closing submissions, sought to withdraw this admission, but this application was refused. The defendant denied that there was a bailment as alleged by the plaintiff and denied any failure if there was a bailment to take reasonable care and any other breach of duty as alleged and denies further that it was negligent. The claims of the plaintiff for loss are not admitted. The defendant has produced evidence upon which it relies to suggest that the claimed value of the motor vehicles is excessive or exaggerated. The defendant has further particularised its denial of liability by asserting through its solicitor that the fire "was caused by an electrical fault and not due to any negligence (on its part)".

4 The plaintiff gave evidence, produced various reports arising from the investigation of the fire from the Police and New South Wales Fire Brigades and related photographs and called evidence from Don Alexander a "fire safety expert" as well as Gary Green a motor vehicle assessor and valuer. Apart from various documents the defendant called evidence from Dr Anthony Green, another fire safety expert, and Phillip Heydon, a vehicle assessor.

5 The plaintiff was as at 30 December 2000 the manager of the defendant's smash repair business, "Centenary Smash Repairs". He, in practical terms, controlled how the business operated. It had 12-14 employees. The defendant was a company of which the plaintiff's wife was the sole director and shareholder at the time of the fire. The plaintiff had formerly been a director of the company as had a person who I understand to be his brother. The plaintiff owned a business called "Liverpool Auto Sales" which conducted its business at a place other than Centenary Avenue. The plaintiff was the owner of a VL Commodore Walkinshaw SS motor vehicle registered number UNR-00L ("the first vehicle" or "UNR"). Through Liverpool Auto Sales, he was the owner and / or entitled to immediate possession of VL Commodore Walkinshaw SS motor vehicle registration number ABM-21R ("the second motor vehicle" or "ABM"). These were special edition Commodore sedans, manufactured by General Motors Holden in 1987 - 1989 of which only hundreds were manufactured. They were named after a Tom Walkinshaw, a famous British touring car driver.

6 The plaintiff was a "smash repairer" by trade and had conducted business himself as such for a number of years since he came to Australia from Northern Ireland in the early 1970's. Centenary Smash Repairs had conducted business at Centenary Drive since approximately 1986 or 1987. The land and premises where it conducted its business was owned by Tansis Pty Limited ("Tansis"), of which the plaintiff was a director and shareholder. There was no formal lease agreement between the defendant and Tansis in respect of the defendant's occupation of the premises.

7 The first vehicle was bought new by the plaintiff in about 1987-1988 for nearly $50,000. A number of improvements and changes were made to the vehicle. It was described by the plaintiff as being in "mint condition" at the time of the fire. It had travelled about 167,510 kilometres. Much of the work on the car had been performed by the plaintiff himself with his undoubted skills as a vehicle repairer. The second vehicle was bought in the early 1990's as a damaged vehicle for which he paid $14,000 and at the time of the fire had travelled approximately 90,000 kilometres. The commercial cost of restoring it was approximately $20,000 to $25,000. It was in almost mint condition. Both vehicles had various changes, modifications and improvements over a period of time. The defendant in submission conceded they were both in excellent condition. The first vehicle was usually kept at the plaintiff's home and was from time to time used by him to travel to and from his home and the business. It was to all intents and purposes the plaintiff's personal vehicle. He drove it from home at Leppington to Moorebank and return from time to time. The second vehicle was usually kept at the plaintiff's home or at the smash repair business premises but from time to time one of the employees would drive it back and forth from the business to his home or otherwise drive it around. The use of the second vehicle by staff was "random". That vehicle however spent much more time at Centenary Smash Repairs than the first vehicle. Both vehicles were occasionally used for weddings. Without being unkind to the plaintiff it would be fair to say that he was somewhat "paranoid" about the security of the vehicles and would not contemplate leaving either of the vehicles parked overnight in an open area, as opposed to a secure area such as his home garage or the workshop. The vehicles were at the time of the fire insured for an "agreed value" in each instance. Both vehicles were parked at the workshop at some time after Christmas 2000, the workshop being open to receive customers during the "Christmas break" when the fire occurred.

8 The entire building in which the smash repair workshop was located was approximately 1800m² of concrete wall and metal desk roof construction on one estimate. The workshop was divided up into a panel beating area, offices and a spray painting area which was 300m² or slightly less in area. This section was built on or shortly after 1989 / 1990, when application was made to Liverpool City Council for building approval for this extension to the existing building. Inside the spray painting area was a free standing "painting booth" ("the booth") and a separate "paint mixing room" (the "mixing room"), which were discrete areas and structures, within the building. The plaintiff was not aware as to whether Council approval was requested for the booth, but that was left to the company that installed it. The spray painting area was divided from the panel beating area by a metal wall. I have been provided with a number of photographs and a handwritten plan, as well as a building approval application plan, which clearly show the physical layout of that part of the premises used for spray painting. The case was conducted by both parties on the basis that the relevant workshop area was the spray painting area. No evidence was produced particularising the layout of dimensions of the other areas of the business premises. The "paint mixing room" was in effect a metal garden shed that had been constructed inside the spray painting area. It had been built by the defendant or at the direction of the plaintiff or his employees. The booth was built by a commercial entity which apparently built the entire spray painting area extension, "Spray-Tech Industries". The plaintiff and other employees may have received some advice from the booth manufacturer in building the mixing room and it was a distance of approximately three metres from the painting booth. The booth was a structure in which cars were placed to be spray painted.

9 The mixing room was approximately 3 metres long x 2 metres wide and 2.5 metres high. It ran north south (approximately). It was fully enclosed with a metal door in the north western corner of it. The plaintiff did not think any particular skill was required to build it. Inside the mixing room were a number of shelves upon which were placed from time to time cans of paint, tints, thinners and solvents to be used for painting purposes eventually. The area within the shed was primarily used to mix paints. The shed was in a corner of the building adjacent to the southern and eastern walls of the major structure. Nearly all relevant flammable liquids for the propagation of the fire were in the south eastern corner of the building either within or immediately adjacent to the mixing room. Alongside the northern wall of the mixing shed on the outside were a number of clothes lockers facing towards an open area where a number of cars including one vehicle the subject of claim. There were other cars including the other vehicle the subject of claim, parked to the west of, or adjacent to the booth. A vehicle within the booth was completely destroyed by the fire.

10 Inside the mixing room the various cans of paint materials sat on shelves, one above the other along both walls of the mixing room, the eastern and western walls. Each shelf on the eastern wall at least was below a chain driven system of "mixing paddles" which was electrically operated. The control box for each line of paddles was located at the end of each shelf with "drive motors" for each shelf. It is a little unclear from the photographic evidence as to whether the shelves on the western wall had the same mixing systems. The electrical supply to the mixing system was usually on. This system of mixing may have been advised upon by the booth manufacturer but the plaintiff had "an idea of what he wanted". A computer server and monitor were positioned in the south west corner of the mixing room and sat on a desk or shelf approximately four feet off the floor. It provided data for finding the right mixture of tints to achieve a particular colour. It had been in the mixing room for a number of years. Within the paint mixing room there was no system or device for containment or extraction of flammable vapours, nor would it appear the perimeter or the roof of the paint mixing room was sealed against leakage of flammable vapours from the room. There is no evidence of any fire proofing of the shed or any fire suppressant or extinguishing system within it or outside of it. The capacity of the mixing room for cans of paint tints, solvents and thinners was assessed at about 700 litres by the fire safety expert retained by the plaintiff. There were no fire hydrants, fire hose reels or sprinkler systems within the building although there were several portable fire extinguishers, albeit clearly of little use in the circumstance that the fire commenced when the building was unoccupied.

11 The plaintiff gave evidence that he did not realise that the vehicles were in any potential danger from the consequences of an electrical short circuit. The computer was the source of a data base for mixing tints, replacing a card system. It did not operate any machinery in the mixing room. It could have been in the mixing room as a matter pf physical convenience. The compliance plate of a car gave the colour code for the car and the computer provided the formula. The plaintiff himself never turned the computer … "on or off", he left that to the spray painters. It usually was turned off at the server but not apparently at the power point. There was no evidence as to whether it was turned off at the server and / or monitor at the time of the fire.

12 The plaintiff understood that there would be "a certain amount of danger" if anything electrical was close to the paint in the mixing room. One concern in turning the computer off at the server was this potential danger but there was no evidence of a system to ensure this occurred. Apparently a "risk factor" person from the insurer for the building looked at the building and gave advice. Mr Normoyle did not receive advice from the paint supplier as to risks given the quantity of paint products and the presence of the computer, or as to keeping it at a distance from the paint products. As the flammable (and possible combustible) liquids were almost entirely retained within the mixing shed or the near environs, ie: within 2-3 metres, there was ample space to house or place the computer elsewhere in the spray painting workshop area.

13 At approximately 9:59pm on 30 December 2000 a fire ignited inside the premises of Centenary Smash Repairs. The ignition of the fire caused the alarm system to operate and at about 10:15pm representatives of the NSW Fire Brigades responded to the alarm, finding on arrival the rear area of the factory to be well alight. Fire fighters forced entry into the building and extinguished the fire which was essentially located in the south east corner of the building within and in the vicinity of the paint mixing room. In the paint section of the building there were a number of motor vehicles parked, some of which suffering substantial damage, including the two vehicles owned by the plaintiff. ABM was more severely damaged than the other vehicle. Mr Normoyle attended upon the premises to inspect the damage. The damage to other vehicles is not relevant to this matter. The physical evidence, reflected in various photographs tendered in this Court and the observations of the attending representatives of the Fire Brigade and the NSW Police Service demonstrates clearly that the fire commenced in the paint mixing room and that the most intense heat was along the southern wall of that room, in fact causing the crank case on a compressor between the mixing room and the southern wall of the factory to melt away. Apart from what is self evident from the photographs taken shortly after the fire was extinguished, there were a large number of indicia showing the fire at its most intense in the southern area of the mixing room in the corner where the computer had been located. The fire spread to a spray painting booth approximately three metres to the west, the motor vehicle inside that booth was completely destroyed as earlier noted. There was no evidence of forced entry into the premises. The author of the NSW Police "log" stated: "This is one of the few fires that I am satisfied to attribute to an electrical fault, most likely a fault in the monitor of the computer's (sic). There was no other source of ignition in the point of origin".

14 The Fire Brigade investigator detected "elect(ric) fault to mixing computer system in paint mixing room". The investigator observed the metal panelling of the mixing booth in the corner where the computer was located was burnt back to the metal but all other panels showed some paint on the metal panelling remaining. The investigator concluded that the ignition of the fire within the mixing room caused the fire, accelerated by the flammable or combustible fluids present to spread beyond the mixing booth. No serious attempt was made to challenge this investigator's primary finding. No objection has been made to the investigation reports. That the reports were not in a form that complies with District Court Rules for "expert reports" was a point taken half heartedly by the defendant in submission but is, in reality, of no moment. Despite some prevarication and other prognostication by the defendant's fire safety expert his essential analysis assumed the fire occurred within the mixing room. He had little reason to second guess the investigators' findings.

15 The two vehicles the subject of claim were subsequently "written off" by their insurer and then sold at auction. A schedule of the proceeds of these sales is produced. The two experts in "fire safety" and the related issue of storage and handling of flammable liquids, Mr Don Alexander (for the plaintiff) and Dr Anthony Green (for the defendant), have relevant academic qualifications and experience. Although Dr Green was more academically qualified, Mr Alexander had more relevant practical experience of the industry and the issues relevant to the case.

16 It was suggested through the cross examination of Mr Alexander, that having regard to the photographic evidence there were possibilities that the fire started either at a power point within the mixing shed, away from the computer, outside the mixing booth, in the vicinity of clothing lockers located near one of the plaintiff's damaged cars or on or near the power point on the southern wall near a compressor. Notwithstanding the photographic evidence relied upon to maintain these points and Mr Alexander's concessions as to some of these possibilities, the clearly demonstrated increased intensity of the fire within the shed in the south western corner, on the other side of the mixing shed from the lockers and the views of Mr Alexander and that of the investigators highlight the unlikelihood of the ignition occurring outside the shed or in the north east corner of the shed in the vicinity of the power point.

17 To the extent Dr Green sought to assert other possible causes in his report for the fire, I do not accept his hypotheses established in likelihood. On the totality of all evidence, including the opinions of those who attended upon the fire (which the retained experts did not) and the physical evidence, I conclude that it is more likely the fire started in the computer (server or monitor), or by some electrical short circuit in the computer system, within the mixing shed. Although such an occurrence would be less likely if the computer was "flame proofed" as explained by Dr Anthony Green, on the photographic evidence, the totality of opinion as to how the fire started and the damage to the computer itself, this was unlikely. Although there is no direct evidence, it is reasonable to conclude either the monitor or the server or both were left "on" and / or that the power from the power point was left on. The electrical short circuit clearly led quickly to a fire having regard to firstly the presence of fumes or vapours present within the mixing shed from the various inflammable liquids present and secondly, from the presence of those same flammable liquids in position for the mixing system or for storage within the shed. Once the contents of a few tins or cans were ignited the fire was well underway causing both fire and smoke damage within the spray painting area particularly in the vicinity of the mixing shed and the booth.

18 Within the mixing shed there clearly were a large number of cans of paint and other related products for automotive purposes. This was assumed by both experts who gave evidence. In fact Dr Anthony Green, retained by the defendant, although he raised the issue of the limits for "combustible" as opposed to "flammable" liquids ie: automotive paint products, conceded as his oral evidence made clear that the physical evidence showed cans of "flammable liquids". The direct evidence from Mr Normoyle was that the system in the mixing room was set up by an automotive paint supply company which also set up and supplied the computer system. At any given time he believed there would be varying quantities of paint products in the various cans. The quantity would also vary according to demand at work. Given the photographic evidence shows the shelving was almost full of paint products cans or tins, although the extent to which they each were full cannot be established, the capacity of the mixing room was for the experts the critical issue in their assessment.

19 The quantity of flammable liquids present was a matter of some dispute between Mr Alexander and Dr Green. Mr Alexander was of the opinion that the capacity of the paint mixing room was about 700 litres, and all the "contents" of the room, paint tins, base colours, solvents and thinners were all flammable and gave off flammable vapours at room temperature when not sealed. He also observed that there were approximately 280 litres of "flammable liquids" stored directly against the wall of the mixing room, the various containers of those liquids shown in the photographs of the sequelae of the fire. He not unreasonably conceded that the amount of flammable liquids present at the time of the fire would depend upon the extent to which the various containers were full of such flammable liquids and whether there was a relevant container of flammable liquids present at each of the paddles, admitting of different sized tins for different paddles in the system.

20 Dr Green was of the opinion that the "total capacity of tins (in the shed was) about 380 litre(s) +/- 20 litres". The margin of error of his estimate relates to the possibility of smaller or greater sized tins in a particular area. He was of the opinion that the quantity estimate by Mr Alexander of liquids against the wall outside the mixing room was a "gross over estimate", based upon the photographs. He was of the opinion that the total volume in the area outside the mixing room between it and the booth appeared to be about 120 litres. Both men claim to have undertaken the task of counting, from the photographic evidence, each of the individual containers of flammable liquid, shown in the various photographs of the interior and exterior of the shed, although as transpired Mr Alexander was the more impressive on the assertion of his examination of the photographs of the physical evidence. Dr Green agreed in cross examination that there was about "600 (sic) litres of paint" (ie: automotive paint products) within an area of 280m², being the area of the paint shop. Most, if not all of that, clearly was in the south eastern corner of the building.

21 The plaintiff was not much assistance as to his recollection of what was in the mixing room, other than what is referred to above, save that he doubted that many positions under a relevant paddle were empty. The photographic evidence of the sequelae of the fire confirms that even though some of the shelves had collapsed they appear very full of cans or tins. My close examination of the photographs showing the cans in the mixing room leads me to favour Mr Alexander's estimations rather than Dr Green's, subject to some diminution for empty spaces and smaller cans.

22 The experts were also in dispute as to how the relevant flammable liquids could be classified. Mr Alexander was of the opinion that all the contents of the mixing room could be classified as "Class 3" dangerous goods (flammable liquids). This is a reference to a classification under the Australian Dangerous Goods Code. Class 3 "dangerous goods" give off flammable vapours at normal ambient room temperature. Class 3 dangerous goods or flammable liquids are divided up into categories respectively identified as PGI, PGII and PGIII. In the Australian Dangerous Goods Code, to further assist with the identification of Dangerous Goods and their particular hazards, the Class 3 goods are assigned to a "Packing Group" (PG) which represents the level of danger to persons. Packing Group I (or PGI) represents "great danger", PGII represents "medium danger" and PGIII, "minor danger". These terms reflect their flashpoints. Mr Alexander said from his research and experience the vast majority of automotive paints, tints, thinners and solvents were either PG I or PG II. Combustible Goods are those which have flashpoints above 61C and are categorised as C1 and C2.

23 Dr Green gave evidence that automotive paint products are generally PGII or PGIII categories and this his research showed that the "majority", (50-60%) of such products were PGIII. His research was based on enquiries of two manufacturer's web sites the details of which he had little detailed memory in evidence. His oral evidence did not reveal that this investigation identified any C1 or C2 (water based acrylic paints) supplied for automotive paints. One would doubt that a water based paint served any major purpose in the industry. In the absence of any specific evidence from Mr Normoyle on this matter I believe it is reasonable to conclude that the greater likelihood was that the mixing room and adjacent area between the mixing room and paint booth contained Class 3 flammable liquids, of which possibly 50% were PG III. In the absence of more detailed evidence as to the differences in practical terms between PGII and PGIII products beyond the presence of organic hydrocarbons (PGII) or organic esters (PGIII) one could not reasonably conclude that what was present in another workshop could determine the situation in the mixing room of Centenary Smash Repairs as at 30 December 2000, it may only provide a guide, as much as visiting a manufacturer's website. Even on Dr Green's evidence the probability was that 50% of the flammable liquids could be PG II.

24 The plaintiff seeks to establish a breach of duty of care reasonably foreseeable by the defendant by establishing breaches of the Building Code of Australia and / or breaches of Australian Standards, AS1940, AS2430 and AS3000. AS1940 is to be considered in the context of the Australian Dangerous Goods Code.

25 Breaches of Australian Standards by the defendant do not prima facie establish negligence or at least a breach of duty of care by it.

26 In Chicco v The Corporation of the City of Woodville (1990) Aust. Torts Reports, 81-028 (at 67-893), the Full Bench of the South Australian Supreme Court considered the applicability of Australian Standards. King CJ said: "Publications containing safety standards approved by the Standards Association of Australia were admitted by consent. These standards do not have legal force, except of course, to the extent that the may be given such force by a particular statute. They had no legal force in the circumstances of the present case. It is permissible for an expert on safety to have recourse to such published standards, if he sees fit, as on one of the sources he informs himself as to matters relating to the subject he is expert. But the standards, of themselves, have no legal or evidentiary force".

27 In that appeal the Court was considering matters relating to the safety of a "flying fox" particularity by reference to Standards Australia's publication on "Supervised Adventure Playgrounds". Justice Cox noted that the way the matter was conducted at first instance it appeared that "the Standards Australia booklets had a particular authority of their own". Justice Millhouse was of the view that the Standard should not have been admitted and that such a "Standard" is not evidence, noting however that the Standard sets out recommendations for "guidance only". He further pointed out that the relevant Standard was not applicable to the case, because the Council reserve in which the accident occurred was not an "Adventure Playground".

28 Here there is no issue raised at the admissibility of the evidence of the various Australian Standards, both parties have relied upon them. Mr Alexander points to multiple breaches to support his opinions, Dr Green sees no or, possibly minor breaches (at worst). Breach of a Standard may be relevant with other evidence to an assessment of whether the alleged breach of the duty of care was reasonably foreseeable but no more. They clearly do not have legal or evidentiary force on their own. Reference was made to Wilkinson v Law Courts Ltd [2001] NSW CA 196, in submission but there it was common ground that the Australian Standard referred to in the evidence was irrelevant to the facts (at [15]).

29 I do not propose to dwell on the alleged breaches of the Building Code of Australia, because there is insufficient evidence, not withstanding the Development Application produced in Court, to determine that the construction of the paint mixing room or any related structure was not subject to Local Government approval or that relevant inspection was not undertaken by the Local Council. The evidence merely establishes that Council approval was sought to build the 1989 / 1990 extension, and the builder of the extension built the spray booth and was expected to get relevant approval for that, if in fact it was required. In any event, it appears clear from the available evidence that the relevant structure, the paint mixing room, was constructed a number of years before the fire at about the time of the construction of the booth and thus the findings on any relevant inspection at the time of construction of the extension to the building would most likely be of little assistance to this matter. The claimed breaches of the Occupational Health and Safety Act are, in the absence of any more particular evidence or particular reference to the Act, not directly established, nor relevantly pleaded.

30 The critical matters advanced on behalf of the plaintiff are the alleged breaches of Australian Standards, in the context of the Australian Dangerous Goods Code (ADGC). The Code is relevant in so far as it has a classification system which has been adopted by Australian Standards so as to maintain a consistent system of classification and labelling of dangerous goods. AS1940 is concerned with the "Storage and handling of flammable and combustible liquids". It provides some "technical guidance" on risk of particular goods. Section 1 (S.1) of the Standard is applicable to the storage and handling of liquids that are listed under Class III of the ADGC, setting out requirements for the design, construction and operation of premises for industrial commercial or rural use where flammable and combustible liquids are present. S.2 of the Standard sets out requirements for what are described as "Minor Storage". This sets limits upon the amount of flammable liquids that may be stored in particular premises. Quantities in excess of the limits are "Major Storage" which require special construction and other features of storage set out in S.3 and S.4. The limits for minor storage in factories and workshops are in respect of Class 3 PGI or PGII flammable liquids 250 litres in any 500m² area and in respect of PGI III flammable liquids 500 litres in any 500m² area, with pro rata distributions for lessor areas. This interpretation of the Schedule is the most consistent with the terms and scheme of that Schedule.

31 Mr Alexander estimated that there was a quantity greater than 800 litres stored within the paint mixing room and environs and that the quantity for "minor storage" had been subsequently exceeded, not taking into account other flammable liquids which were either stored or kept immediately proximate to the outside wall of the paint mixing room. Further, as the quantities of flammable liquids exceeded the limits of minor storage the structure of the paint mixing room and related parts of the building did not comply with relevant Australian Standards, including the failure to use suitable fire resisting cupboards, the failure to remove ignition sources of electrical equipment such as computers and to keep them outside the relevant separation distances, the failure to separate potential hazards, the absence of a ventilation system and a number of inadequacies of construction, either set out in S.3 of this Standard or in S.4, recommending the absence of fire resistant construction of the paint mixing walls, roof and door and the absence of electrical installation that was "intrinsically safe" for the purposes of the paint mixing area and the removal of ignition sources sufficient distance, at least 8 metres, from the paint mixing room, amongst other matters. Summarising the position on the material available it was the opinion of the plaintiff's expert that: "With respect to AS1940, the paint mixing room involved in the incident was deficient in many ways and does (sic) not reflect suitable, or any consideration of the standards required by the community in operations handling and storage of flammable liquids".

32 Reference was also made by Mr Alexander to AS2430 "Classification Hazardous Areas" which involves consideration of means of protecting the ignition of vapours from "Class 3 Flammable Liquids", that is liquids that give of vapours under normal ambient temperatures. Relevantly under this Standard the paint mixing room would be classified as Zone 1 subject to "vapour evolution", that is an area where flammable gases were present and likely to occur during normal operations. The external area to the paint mixing room was regarded as a "Zone 2 area" under the Standard, that is an area where flammable gases are not likely to occur during normal operations and if they did would only exist for a short period only. These zoning criteria require the selection of electrical equipment that is "intrinsically safe" and would not be likely to cause ignition within the various zones. Mr Alexander's opinions as to zoning were substantially supported by Dr Green. AS3000 to which Mr Alexander referred relates to Standards for "Electrical Wiring", which has a Section relating to electrical wiring in hazardous areas and states that the wiring should be "carried out in a manner that does not reduce the protection afforded by the electrical equipment design".

33 Mr Alexander's review of the circumstances as he understands them surrounding the storage of the relevant flammable liquids and the relevant Acts and Australian Standards lead to the identification of 12 "deficiencies" either in relation to the level of "fire safety", the construction of paint mixing room itself, its interior and its relationship to other objects or structures within the factory, the quantities of flammable liquids, the use of electrical equipment and the relevant electrical wiring and other matters that would minimise the risk of ignition or subsequent conflagration. The failure to relevantly have in place either fire safety measures or features in the construction and distribution of plant and equipment that complied with Australian Standards, described as "Minimum Standards of Safety" for the design, construction and use of the paint mixing room, in his opinion, "increased the likelihood of the fire" and "increased the impact of the fire (which) was not effectively contained". His conclusions at Section 11 of his report encapsulate or bring together his specific findings.

34 Dr Anthony Green, proceeded on the assumption, shared by Mr Alexander, that the "spray paint extension" in which the fire proceeded was approximately of an area of approximately 280m². On the basis of his assessment of the quantities of relevant flammable liquids as set out above, he estimated in his reports the total amount of flammable liquids as between 480 and 520 litres, within the mixing shed or room and between the mixing room and the spray booth. He asserted that Mr Alexander was wrong to classify all the substances in the paint mixing room as "Class 3" "Dangerous Goods - Flammable Liquids, as was the assertion that they belonged to PG I or II. After referring to the limits of "minor storage" provided for in AS1940 he asserted that in the area in question the total of 2750 litres of "Dangerous Goods" could be stored in the premises, that is the spray painting area, so long as no more than the limits earlier referred to for Class 3 flammable liquids were observed as well as the limits for combustible liquids which are less volatile. He pointed to the difference in requirements between major and minor storage, particularly that the various more stringent demands in construction and fire safety devices for major storage identified by Mr Alexander that are not required for minor storage. Dr Green and Mr Alexander both pointed to mandatory precautions for even minor storage, the most relevant in this case being storage away from potential ignition sources, decanting and mixing processes to be away from ignition sources, portable extinguishers and warning signs. Dr Green agreed, as I understand his report, with the assessment of the interior of the paint mixing room as Zone 1 and the area from the entrance for 5 metres at a particular height as Zone 2, pursuant to AS2430.

35 His assessment of the various photographic evidence concerning the relevant flammable liquids was that the majority of the automotive paints depicted in the photographs appeared to be Class 3 Flammable Liquids, with fewer Class 3 PG II "Flammable Liquids", or combustible liquids. Therefore he stated that it was reasonable to expect that "Minor Storage" in this case would allow a maximum of 750 litres of flammable liquid in the area of the "paint spray booth" (sic) as long as no more than 250 litres was Class 3 PG II or PG I. In relation to the likely ignition source he asserted that if the computer system was an "integrated commercially available system" then it is "highly likely that it would have electrical protection from flammable vapours to comply with AS2430". The physical evidence suggests that this did not occur as I earlier found. He was of the opinion that on the "limited evidence", which involved the absence of matters that ordinarily ought be in place, such as "warning signage", then the "spray paint booth" (sic) area probably did comply with minor storage standards under AS1940. This view seems to beg the major questions. Several times he referred to the "spray paint booth", which I took to include a reference to the mixing room.

36 After the initial reports of the two experts were served on each other, they both prepared reports in reply to one another. Reading this material the reports involve an almost never ending spiral of contention and dispute and criticism of one another. Dr Green identified the main points of contention as: "i. the volume of flammable materials held on the premises and their distribution; ii. the nature of the flammable materials and other chemicals; iii. the standards that should be applied to the storage and handling having regard to AS1940, particularly S.2 and its reference to minor storage; and iv. the Standard that actually applied to the area in question".

37 If this be a correct analysis in the end of the matters upon which the two gentlemen disagree then, ignoring Mr Alexander's visits to other panel beating and spray painting shops, as evidence of what was actually in the defendant's work shop on 30 December 2000, but noting his knowledge of industry practice, I accept on the basis of his assertion unshaken that he had from the photographs painstakingly counted containers shown in the photographs, his estimate as to the capacity and type of flammable liquids in the mixing room. I would allow some margin of error. In the absence of any direct evidence from Mr Normoyle or anybody else from the workshop at the relevant time, it is impossible to conclude with any certainty the actual volume given issues such as, the extent to which the containers were full of relevant material and the extent to which cans shown in the photographs, particularly those to be seen outside the shed, were simply empty cans awaiting disposal. The evidence of Mr Normoyle as far as it goes leads to the conclusion that the cans inside the shed were "active" not empty cans of automotive paint products.

38 In assessing Dr Green's opinions I note, what I regard on the facts available to me, his unacceptable analysis of the physical evidence of the fire and his assertion, that "the fire destroyed too much of the evidence to establish unequivocally an electrical source of ignition". This was not only not the view of the initial fire investigators, but the distribution of damage and the intensity at the area of the computer, rather than "destroying the evidence" underlines the primary conclusion I reach on the balance of probabilities that the fire started in that area. This is an example of his approach which I took as an attempt to distract attention form the critical issues of the appropriateness of electrical equipment in such a confined area containing flammable liquids and related issues. In this regard Dr Green further makes a number of assumptions or conclusions which are not open, save for uninformed speculation, particularly as to the issue of the reasonableness of placing this particular computer within the paint mixing shed and the worthiness of the mixing shed for its obvious purpose. taking into account all relevant considerations to that issue, including the likelihood that the equipment was designed to minimise its risk as a point of ignition. It is correct, as Dr Green points out, that "further forensic examination" of the equipment may have been undertaken to put the matter beyond doubt. However proof of the matter beyond doubt is not the standard required to be applied. Dr Green's attempts to suggest some alternative cause bear no reasonable relationship to the physical evidence made available to the Court, notwithstanding the possibilities acknowledged by Mr Alexander in his evidence. Further, Dr Green's assessment of the absence of evidence of relevant "zoning" of hazardous material but suggesting the possibility that such "zoning" existed, itself remains as a "possibility" but not a reasonable one. The photographs taken, it would appear immediately after or very shortly after the fire, provide absolutely no evidence of relevant zoning or warning signage and lead to the conclusion that no such zoning existed. Dr Green's calculations of permissible volumes of storage introduced, on the facts of this case, a furphy in so far as reference was made to combustible liquids which are less dangerous and permit higher volumes for minor storage under AS1940.

39 The paint mixing room was in reality a haphazard structure, which might have suited the immediate purposes of the business, Mr Normoyle and the other employees, but which had a number of self evident dangers and shortcomings emphasised by the matters identified particularly in Mr Alexander's report as falling short of requirements or guidelines in Australian Standards, particularly AS1940 and AS2430. The Standards have no separate evidential purpose but in the context of ADGC, show in a technical sense the justification of opinions assuming relevant factual assumptions are relevantly established.

40 The inadequacies and dangers of the paint mixing set-up system included: i. a wholly unsatisfactory structure for housing any flammable liquids and isolating the vapours from those flammable liquids from possible ignition sources; ii. the absence of any form of ventilation or exhaust mechanism to remove dormant or present vapours; iii. the unsatisfactory method of storage of flammable liquids in such a confined space; iv. the dangerous concentration of flammable liquids without protective measures to isolate potential fires or suppress them when arose; v. the absence of any warning signage; vi. the presence in a confined area where flammable vapours most likely were present of a potential ignition source which, having regard to the circumstances of the fire was not flame proof. vii. no system for ensuring electrical equipment was not left on when unsupervised;

41 The presence of at least one flameproof switch inside the shed does not establish that the critical piece of equipment most likely the point of ignition was itself flame proofed and neither does the other evidence. I agree with the conclusion of Mr Alexander that the construction of the paint mixing room "as shown clearly in the photographs" does not indicate any attention to a Zone 1 electrical installation or vapour containment. Further, I agree with Mr Alexander's conclusion that there are "key factors" that have not been properly considered by Dr Green, such as the construction of the paint mixing room, vapour control, the floor area for the consideration of limitations under minor storage amongst other matters.

42 As to the issue of the limits of "minor storage" and their relevance here, my understanding of the Schedule setting out those limits, suggests that the limits for work shops and factories, which are relevant in this matter are limits to be assessed "pro rata" by reference to the relevant floor space. The relevant floor space here was between 280m² and 300m² (not just the 20m² - 30m² where the flammable liquids were concentrated). Thus, within this work shop, the panel beating section being a separate section and irrelevant to consideration of the floor space issue, as the experts agreed, for Class 3 PGI or II flammable liquids, the limit for an area 300m² would be 150 litres, for PGIII liquids 300 litres. The evidence available establishes, as to capacity for storage, breaches of both limits for minor storage. The breach of the limit for PGI or II was not a minor breach. On Mr Alexander's evidence the capacity was two to three times the limit, perhaps more. It was at least twice the limit even taking Dr Green's estimate as to the presence of PGI and PGII flammable liquids. The breach of AS1940 minor storage limits for PGIII flammable liquids was less significant but not marginal or minor. Thus there was in my view a need to implement at least some S3 and S4 measures as outlined by Mr Alexander such as ventilation, removal of ignition sources and construction improvements. The bare minimum measure of removing any potential source of ignition to a safe distance away was required whether major storage or within minor storage limits. This is acknowledged in Dr Green's original report. He also claimed that the storage would have complied with minor storage requirements under AS1940 when clearly, on his own analysis this was not so when one considers the presence of the computer.

43 The defendant submitted that the starting point of an examination of the issues arising in the appeal was the relationship between the plaintiff and the defendant. Having regard to the fact that there was no formal lease, that the property was owned by a family company controlled by the plaintiff, the occupation of the property by the defendant was a loose family arrangement, where the defendant was a licensee, the true bailee was the owner of the property, Tansis Pty Limited, owned by the plaintiff who was also the owner of the motor vehicles. The plaintiff was merely parking his car on his own property it was submitted. It was in reality not a bailment, as the occupation of the premises by the plaintiff's vehicles was solely for the personal convenience of the plaintiff, given the fact that he conducted his own business from time to time at the premises occupied by the defendant.

44 It was submitted by the defendant that if it was in fact a bailment, it was a gratuitous bailment and thus the issue to be resolved was whether there was an onus upon the defendant to show that he had taken reasonable care of the goods. The defendant's counsel referred to a number of authorities and the 1991 edition of "Palmer on Bailment" to justify the essential submission that where there was a gratuitous bailment the onus to take reasonable care does not rest upon the bailee. In that situation the onus is on the bailor, the plaintiff. He knew what had done or how to prevent damage. If the onus was on the plaintiff, the test was "gross negligence". If the onus was on the defendant, the test in bailment it was submitted was a requirement to establish that the defendant acted reasonably and took reasonable care as would a person would take in respect of his or her own goods. Here that onus had been discharged by the defendant if required of it. It took care of its own goods in the same way as the plaintiff's goods. The question is, has the defendant acted reasonably having regard to all the circumstances, including the plaintiff's role as manager for the defendant?

45 Here it was submitted that the defendant had acted reasonably, the motor vehicles had been treated exactly the same way as the defendant had treated its own vehicles as the photographic evidence revealed. The defendant submitted that a distinction ought not be drawn between the two vehicles in determining whether a bailment. It was conceded that if an employee casually parked his car on the premises as a matter of convenience for the employee, there would be a bailment, but this plaintiff could be distinguished from a "genuine employee".

46 As to the issue of negligence it was pointed out that the defendant was never advised of the risk that arose from the presence of the computer in the paint room and that the breach of Australian Standards was not itself prima facie evidence of a relevant breach of a duty of care due by the defendant to the plaintiff. What was reasonable required consideration of what the plaintiff, as the manager of the defendant, knew. As to the evidence, it was not clear that the storage of flammable or combustible liquids was in breach of Australian Standards and if there was such a breach it was such a minor breach which did not lead to reasonable foreseeability of damage.

47 It was submitted that fire in the area where it occurred was not inevitable and Mr Alexander's opinion should not be accepted on this point. The system had been in place for a number of years without such an occurrence and that any suggestion of inevitability had the "wisdom of hindsight". It was essentially submitted that the fire in the circumstances in which it occurred as can be ascertained from the objective evidence came "out of the blue" so to speak and did not occur in circumstances constituting a relevant negligent act on the part of the defendant.

48 As to the issue of damages, if relevant breach of duty was found, essentially the defendant submitted that its retained expert, Mr Heydon, ought be preferred to Mr Green, who had given evidence on behalf of the plaintiff. This was because amongst other things Mr Green had conceded that the "Red Book" was the better guide and that the "Glass's Guide" was inflated, yet he relied on Glass's Guide.

49 The plaintiff's submissions started with the observation that the pleadings reveal that the defendant had conceded that it had care and control of the property of the plaintiff and the defendant and that relevantly a bailment existed casting upon the defendant the onus of establishing that it had taken relevant reasonable care of the property. The goods were delivered to the possession of the defendant. It was not conceded that it was a "gratuitous bailment", as there were benefits for the defendant arising from the presence of the vehicles on its premises including a benefit for an employee in relation to the second vehicle and the benefit of promotion of the business by the presence of the motor vehicles from time to time. It was submitted that the existence of a gratuitous bailment did not disturb the traditional onus placed upon the bailee. This was so because of the "assumption of responsibility" for the goods by the defendant.

50 As to the plaintiff's position as an employee of the defendant, and owner of the premises, it was submitted that this should have been met by the defendant either by cross claim or by a pleading of contributory negligence on the part of the plaintiff, in the defendant's pleadings.

51 As to the issue of "breach of duty" the plaintiff submitted in essence that the defendant had "not landed a glove" on the essential conclusions of its retained expert, the defendant had on the facts breached its duty of care towards the plaintiff either by the storage of flammable and combustible liquids as revealed in the evidence and / or by the construction of the paint shed and the presence of the computer within that structure. There were two bases of breach of duty, (1) the character of the construction of the mixing room and (2) the excessive storage of flammable liquids given the circumstance of that storage. There was no evidence of any approval being sought or obtained in relation to the construction of the shed. If the shed had been properly constructed then the fire would not have happened. Further, as the computer was the cause of the fire, in the context of there being an excessive quantity of flammable or combustible liquids stored, the defendant was clearly in breach of its duty.

52 As to damages Mr Green was to be preferred to Mr Heydon, who had no practical experience of assessing Walkinshaw vehicles and had not inspected the vehicles before and after the fire like Mr Green.

53 As a preliminary matter it was effectively conceded by the defendant, that although the plaintiff was a manager of the defendant's business, he and the defendant are quite separate legal entities and, on the facts of this case, the plaintiff was not legally responsible for the conduct of the defendant. His role however was important in assessing whether any breach occurred. In this regard the matters relied upon by the defendant from the particulars supplied by the plaintiff do not in my view advance the defendant's position, as the plaintiff was not purporting to answer for or on behalf of the defendant and did not claim exclusive knowledge of matters within the thrall of the defendant and all of its employees.

54 In Nicol v Allyacht Spas Pty Limited (1988) 165 CLR 306, the High Court held that the respondent, of which the appellant was both a director and an employee, had a duty of care to the appellant, notwithstanding the fact that he was a director who had a part to play in the setting up of the unsafe system the subject of a claim for damages for personal injury. Dawson J, whilst he disagreed with the majority on the issue of apportionment of responsibility observed: "It was said that it was a decision of the company (which contributed to the appellant's injuries) but one for which the company was not liable because it was made by the plaintiff as a director or employee, and the fault, if any, was the fault of the plaintiff himself. In this way it was said that the plaintiff was the cause of his own injuries and if so could not recover against the company. One answer to that argument is that the decision to use inadequate equipment and a faulty system of work was, as the majority demonstrated in their reasons, a decision which the plaintiff played only a minor part. But major or minor, it was a part played, either as a director or an employee, in the control of the activities of the company and the acts and omissions which result from the implementation of the decision taken were the acts or omissions of the company. The failure to take reasonable steps to provide adequate equipment and a safe system of work was the failure of the company and it matters not that the plaintiff was instrumental in the making of the decisions which lead to that failure…. any duty owed by the directors or employees of the company to see that the company went about its affairs in accordance with its legal obligations was not a duty owed to themselves or other employees of the company but a duty owed to the company itself. It was the duty of a managerial kind which arose out of their position or employment and was different from the duty owed by the company to its employees……".

55 In Ander Transport Pty Limited v Brambles Limited (2004) HCA 28 the Court when discussing "corporate structure", in the context of the appellant having been found liable to indemnify the respondent for injuries suffered by one of its employees, who was also a director and shareholder of the company, cited with approval the judgment of Mason JA in Shedlezki v Bronte Bakery Pty Limited (1970) 72 NSW 378 at 386, where Mason JA said of a plaintiff, in a personal injuries case claiming breach of statutory duty by the defendant who was the managing director of the defendant and jointly owned the shareholding of the company with his wife; "it matters not that the plaintiff had control or the capacity to control the defendant's activities for the principle that a corporation is a legal entity distinct from the corporators (sic) applies with equal force to a company which is a "one man" company" (at [49]-[50]).

56 The majority in Ander held, in light of decisions of the High Court such as March v Stramare (EMH) Pty Limited [1991] 171 CLE 506, and others on causation, that, to the extent that reasoning of the English Court of Appeal in Ginty v Belmont Building Supplies Limited [1959] 1 All ER 414 (that "one had to enquire whether a fault of the employer under the statutory regulation consists of and is coextensive with the wrongful act of the employee" and the employer is liable only if "some fault on the part of the employer…. goes beyond or is independent of the wrongful act of the employee"), was adopted by the Court in Nicol v Allyacht Spas Pty Limited, it should not be accepted and the reasoning of Dawson J in Nicol should be preferred. The Court observed with approval that in Nicol, Dawson J said: "It does not seem to me that the duty of an employer and an employee in such regard can be coextensive or coterminous. The duty is that of the employer and even if the employee is entrusted with its performance it remains an independent obligation of the employer of a more comprehensive kind to ensure that reasonable care is taken" (at [44]).

57 Of course, noting what the majority in Ander said about the distinction to be drawn between the duty of the corporation and the duty of employees and directors (at para. 43-49) it is to be remembered that in this matter the plaintiff whilst a manager of the defendant's affairs was not either a shareholder or a director.

58 Turning to the issue of bailment the relevant duties of the defendant and the role of the plaintiff in the above context, the defendant was the occupant of the premises at which the fire occurred and conducted its business in those premises. Although there was no formal lease in place, it conducted its business on the premises to the exclusion of all others. Even allowing for the plaintiff's managerial position in conducting the defendant's business, and his significant role as such with creating and maintaining relevant systems, the plaintiff had left the vehicles that he owned at the business premises for safekeeping and in all the circumstances I am satisfied that the defendant voluntarily assumed possession of the goods and at the relevant time had the care of and control of the goods, as admitted by the defendant and was to return the vehicles in the condition in which they were left. The plaintiff did not have exclusive control over or access to the premises. In Walton Stores Limited v Sydney City Council [1968] 2 NSWR 111, the Court of Appeal had to consider whether on the facts of the case the parties were "bailor and bailee" of the subject motor vehicle left at a parking station or whether the relationship was one of "licensor and licensee". The Court distinguished the English decision of Ashby v Tolhurst [1937] 2 All ER 837, a case concerning the issue of whether a "car park ticket" allowing a vehicle to be stored in a building, from the subject matter as there was "delivery of possession" of the vehicle .

59 Asprey J A for the Court observed inter alia: "If, as Professor Winfield has said, the salient feature of bailment is the element of possession… in the present case the defendant did have possession of the subject vehicle. I think that Ashby v Tolhurst [supra] is clearly distinguishable and the relationship of the plaintiff and defendant was that of bailor and bailee".

60 His Honour also referred to Canadian authority, Appleton v Ritchie Taxi [1942] 3 D.L.R. 546 which likewise distinguished between the situation in Ashby v Tolhurst where possession had not been "turned over" and where there was "mere permission to leave the car on the defendant's property". In Appleton "possession of the car was delivered to and accepted by the defendants for safe custody". Such was the position here. Likewise, WD & HO Wills (Australia) Limited v SRA (and Ors) (1998) 43 NSWLR 338, is authority for the proposition that bailment turns upon the taking of possession of the goods and required consent or knowledge of possession by the bailee. Clearly through its employees the defendant had knowledge of its possession of the vehicles.

61 Although there existed a bailment, there was an absence of remuneration or other benefit, either direct or indirect, accruing to the defendant in return for the care and control of the vehicles. This is clear in relation to the first vehicle and on balance was so in respect of ABM, notwithstanding occasional use of the vehicle by another employee or other employees. Thus, in the circumstances, I am satisfied that the bailment was gratuitous. Although it was submitted that there was direct or indirect benefit to the defendant by the prestige or publicity that arose from the presence of the vehicles on the premises and / or for a particular employee that might from time to time drive the second vehicle, I am not satisfied on the facts of this matter that it could be reasonably held that there was such a direct or indirect benefit to the defendant as to create a bailment for reward.

62 Although the law in this State as to whether an onus is placed upon the bailee in such a situation to take care of the goods is not clear, I have concluded that, in accordance with the view expressed in Palmer on Bailment (2nd edition - 1991) the "non existence of reward is immaterial to the traditional justification of making the bailee negative fault which is that he, the person in possession, is most likely to know what has gone wrong" (at 564). This conclusion by the learned author is arrived at notwithstanding his consideration of the most compelling Australian decision favouring an onus on the bailor in "modern times" the decision of Justice Zelling in W G H Nominees Pty Limited v Tomblin (1985) 39 S.A.S.R. 117.

63 In reaching his decision on the onus Zelling J felt bound by the decision of the South Australian Full Court in O'Day v O'Hara and Anor (Register Newspaper, 17 May 1895). In that decision Way CJ had held:

64 "The innkeeper was merely a gratuitous bailee. He might have become responsible if, with his connivance or gross negligence, injury had been done, but no evidence of that had been brought forward…..there was no evidence of breach of bailment on the part of the appellant….the defendant was not liable and the question….. must be answered in the defendant's favour".

65 Zelling J. cited an observation of Justice Windeyer in Thomas National Transport (Melbourne) Pty Limited v May and Baker (Australia) Pty Limited (1966) 115 CLR 353 (at 386) where his Honour doubted that the onus lay with the bailee who gratuitously assumed responsibility for the goods. He also noted the decision of his Honour Judge Goran QC in E A Lee and Sons Pty Limited v Abood (1968) 89 WN (NSW) (Pt1) 430 (at 433) as supporting that conclusion. However the majority in TNT (Melbourne) Pty Limited, did not question that the onus, in this situation, lay with the bailee. That was how the case had been conducted at trial. Goran DCJ was in fact not so certain that the onus lay on the bailor in a gratuitous bailment situation. After referring to TNT (Melbourne) Pty Limited he said: "(After reviewing) all the judgments it appears to me that the Court (the High Court) may have had some doubt as to whether any onus falls on the bailee in a gratuitous bailment . Wherever the onus of proof falls (in such cases) I am unable to find "gross negligence…." (at 433). (emphasis added)

66 Zelling J also noted the dictum of the Privy Council in Port Swetenham Authority v T W Woo and Co [1979] AC 580 at 589-590 where the Board expressed the view that "the onus is always on the bailee, whether he be a bailee for reward or gratuitous bailee, to prove that the loss of any goods bailed to him was not caused by any fault of his or any of his agents to whom he entrusted the goods for safekeeping" (at 590). Noting the conflict in the authorities he concluded on the facts that even if the defendant (the bailee) bore an onus, the onus had relevantly been discharged. He observed however that while the "final onus" was on the bailor, there may be evidential onus upon the defendant bailee "to point to circumstances negativing negligence on its part". In its terms W G H Nominees Pty Ltd, and its basis for determining the issue of which party bears the onus, was less than persuasive.

67 In Tottenham Investments Pty Limited v Carburettor Services Pty Limited Kirby P, as he then was said in respect of an allegation of theft from a bailee that " a bailee for reward ….assumes a duty to take care of the bailed goods as is reasonable in the circumstances ….it is essential to bailment that, unless forgiven by law, the bailee should restore the property bailed to its lawful owner…. In the event of loss of goods during the bailment, the onus is upon the bailee to disprove that the loss is the result of any negligence on its part. This exceptional shifting of the onus of proof to the defendant derives from the essential obligation from the bailee to restore the property to the bailor and from the obligation imposed by the reward which the bailor pays to the bailee for the work and labour done and the safekeeping of the goods". He went on to say that the duty imposed upon the bailee is "to act reasonably" ….. "it is to take reasonable care such as a person would take in respect of the persons own goods" (at 5-6). Although his Honour pointed to the features of a bailment for reward which warranted "the exceptional shifting of the onus of proof" I find nothing in the judgment in Tottenham Investments Pty Limited, that warrants a conclusion other than that expressed in Palmer as to where the onus lies. The judgment sets out however rationales for the reversal of the onus which may have equal force whether for bailment for reward or otherwise. Further, His Honour referred to "the strong principle of the law obliging a bailee, particularly for reward, to restore the bailed goods to the bailor unless it can prove that its inability to do so derives from no fault or want of care on its part" (at 18). This dictum the plaintiff draws comfort from on the issue of onus.

68 The learned author of Palmer noted that "it is suggested that to distinguish between rewarded and unrewarded bailments….would be anomalous and confusing. It would, for instance, meant that if the bailor was suing for negligently caused damage to the chattel, he would have to advance evidence of default: whereas if he were suing in detinue for its total loss, the burden (as in all cases of detinue) would fall upon the bailee". The reality of the situation is, even here given the relationship of the plaintiff to the defendant, that the defendant "is most likely to know what has gone wrong" (Palmer, at 562-564). Further, as the Plaintiff submitted, a justification for the onus to be on the bailee was because the bailee had made an assumption of responsibility the employees having driven the vehicles into the premises for safe keeping. The plaintiff was not the sole employee with relevant responsibility for care of the motor vehicles. I note the submission of the defendant that here the "bailor knew what had gone wrong". However having regard to all the circumstances contributing to the circumstances of the fire, that proposition is something of an oversimplification and fails to recognise the distinction to be drawn between the plaintiff and the defendant, as earlier outlined and the fact, as the evidence revealed, that other employees performed tasks that contributed to the system of work, including operation of the computer in the mixing room, moving and parking vehicles and the like.

69 Another decision on is James Buchanan and Co. Limited v Hay's Transport Services Limited [1972] Lloyd's Law Reports Vol.2 535. There the English court considered the issue of the standard of the onus to prove "loss…without fault", in the instance of a "gratuitous sub bailment". In that judgment Justice Hinchcliffe observed, assuming that the sub bailee bore the relevant onus: "In these circumstances the next question the Court has to determine is whether the first defendants have discharged the burden which is on them of proving the loss was without their fault. I am quite satisfied that this sub bailment is a gratuitous one, but I take the view that the standard of care is the same. It is that which a reasonable man would take of his own goods in similar circumstances".

70 As to standard of care his Lordship cited the decision of the Court of Appeal in Morris v CW Martin and Sons [1966] 1 QB 716. He also referred to the observations of Lord Justice Diplock, as he then was, in the same judgment (at 731): "The nature of those legal duties in particular as to the degree of care which the bailee is bound to exercise in the custody of the goods, and as to his duty to redeliver them, varies according to the circumstances in which the purpose for which the goods are delivered to the bailee….".

71 Unlike Zelling J, there is no binding authority upon this Court on the issue of onus of which I am aware, merely the competing "persuasive" authorities to which I have been referred.

72 Although there is debate in the authorities on the standard, here I understood the parties to agree it as "reasonable care, as would a person take for his own goods". The learned author of Palmer on Bailment points out a number of objections to the implementation of the test of gross negligence, as opposed to the test of "reasonable care". Apart from the policy matters discussed at pages 528-529 of the text, the learned author points out "that modern English judges have now discarded the old criteria of gross negligence and have consistently preferred to found the bailees liability upon a simple failure to exercise reasonable care having regard to all the circumstances of the case" (at 529). The author points out that there is only one modern Australian authority directly in point supporting a test of "gross negligence" that is the earlier mentioned judgment of Zelling J in the context determining that the onus was on the bailor and not the bailee. Given the "exceptional" nature of the shift of onus having regard to the character of bailment, the "gross negligence test" would in my view make the situation more "exceptional" and difficult for a party that traditionally bore no onus on ultimate issues for determination. The learned author in Palmer observed: "the extent that an Australian Judge would be likely to participate in this move towards an obligation of reasonable care, any discussion of the meaning of gross negligence must of course assume a rather archaic flavour".

73 There is a detailed discussion about the difficulties of a test of "gross negligence" which need not be reiterated here, but having found against the defendant's submissions on the issue of onus, one might have thought that concluding that "gross negligence" was a matter upon which the defendant bore the burden would be a matter of rubbing the salt into the wound so to speak. Justice Zelling himself said, citing James Buchanan and Co Limited that "English courts in recent times have equated gross negligence with a lack of reasonable care".

74 In Tottenham Investments Pty Limited v Carburettor Services Pty Limited Kirby P hinted at the proposition that, in the context of considering a bailment for reward that the bailee took "such care of the bailed goods as is reasonable in the circumstances" bearing in mind it is essential to the bailment that unless forgiven by law "the bailee should restore the property bailed to its lawful owner". He expressed the test as "it is to take reasonable care such as a person would take in respect of a person's own goods", although it did not cast an obligation to "take every conceivable or possible precaution to prevent loss of the goods". There may be an evidential burden upon the bailor to establish precautions reasonably could and should have been taken by the bailee to prevent the loss of the goods. Similar standards are expressed in Pitt Son and Badgery Limited v Proulefco (1984) 153 CLR 644 ,which is a "bailment for reward" case. The appropriate test to be applied in this matter is that articulated by Kirby P. above.

75 Additionally, or alternatively, the plaintiff must establish on the balance of probabilities that the defendant had a duty of care towards the plaintiff, that the defendant breached its duty to him and the damage was caused by the breach.

76 As to what was the "measure" or "scope" or "content" of the duty of care (Morgan v Sherton Pty Limited (1999) 46 NSWLR 141 (at 145 per Sheller JA)) the "starting point" is the application of the principles set out by Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40 (at 47-48). "In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position. The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors".

77 In this matter complex questions of causation do not arise for consideration and were not addressed upon. The "casual link" between the alleged breach of duty and the damage claimed was not disputed, nor could it.

78 I propose to deal with the issue of negligence first, as in this matter it resolves all the issues given the greater burden on the plaintiff. It is clear the defendant, having care and control of the goods, had a relevant duty of care to the plaintiff. Having regard to the case pleaded by the plaintiff and the findings above I am relevantly satisfied that the defendant breached its duty of care to the plaintiff in a number of ways. He has established a failure by the defendant to take adequate precautions to ensure the safety of the plaintiff's vehicles, exposed a risk to the vehicles which could have been avoided with reasonable care, failed to install adequate fire protection and / or suppressant methods, stored flammable liquids close to electrical / computer equipment and failing to secure the fire accelerants away from electrical equipment, particularly the computer. Be it that the limits of minor storage were not breached, of which I am not satisfied, minimum safety requirements demanded the reparation of electrical equipment from proximity with flammable liquids present. By permitting an excessive concentration of flammable liquids be they Class 3 PGI II or III in a confined area, without adequate protection to limit the spread of fire, including any exhaust system to expunge dangerous vapours by reason of the construction of the paint mixing room and by the unavailability of fire reduction methods or suppressants as described by Mr Alexander, the defendant breached its duty of care to the plaintiff, creating a foreseeable risk of damage.

79 Critically in this matter the presence of the most probable ignition source, the computer, in close proximity to flammable liquids, caused the fire to start and it was propagated by the quantities of those liquids present, even on Dr Green's estimate, which caused the damage the subject of claim. There was no rational reason for the computer to be in such close proximity to the paint products. The risk was appreciated by the plaintiff, as it must have been by employees who had the responsibility of operating the computer which the plaintiff did not and perhaps could not do. No system was in place to ensure that the computer was switched off to reduce the risk of electrical fire. Such a risk was reasonably foreseeable in the circumstances because the danger from flammable liquids and their vapours ought reasonably to have been well known within the industry and particularly in this business. The ADGC classifications underline the volatile and dangerous character of these products. It was beside the point that the defendant's employees got advice from the paint manufacturer or supplier (who supplied the computer) and the builder of the booth about the system and that the plaintiff as an employee received no advice about the matter or these suppliers failed to adequately warn or advise. This aspect does not include the reasonable possibilities that advice was given to the other employees and ignored and that those employees were aware of the risk in any event and did not need advice. In any event no application or attempt has been made at any stage to join these entities although they have been identified. In any event, although I have not heard specific submissions on the issue, the defendant's duties of care were probably non delegable in respect of those independent contractors (TNT Australia Pty Limited v Christie & Ors (2003) NSW CA 47 (at [45]-[49]).

80 In simple terms it was reasonably foreseeable that the computer would be an ignition source and given the capacity of the limited area of the shed for storage of flammable liquids it was reasonably foreseeable that an electrical malfunction within the computer could and would create a fire hazard, not just within the shed but for property outside the shed, including any motor vehicles which of necessity from time to time would be parked in the immediate vicinity of the mixing shed, either for storage purposes or for work to be performed upon them. Steps to reduce the magnitude of the risk or remove it altogether, short of proper construction of the mixing room and installing fire suppressant measures, would have been as simple as moving the computer out of the mixing room, perhaps no more than 8 metres from the room and the booth and putting an exhaust system in the mixing room as it was presently constructed and appropriate warning advice.

81 Having regard to the above findings, if there was a bailment, whether the defendant has the relevant onus or not, it is clear that the defendant cannot discharge the onus upon it to establish that the damage to the plaintiff's goods was not by reason by its failure to take reasonable care of the vehicles whilst in its care and control. Common to the claim of negligence, the reasonably foreseeable risk of damage to property, given the character of the flammable liquids essential for spray painting purposes, the presence of an ignition source in close proximity to flammable liquids or their vapours from time to time, even accepting as fact the estimates of Dr Green as to the capacity for the presence of Class 3 Dangerous Goods, the defendant failed to address. As with the plaintiff's claim in negligence, that the defendant placed its own vehicle(s) in the same position as the plaintiff's is not a matter that establishes that the defendant took such reasonable care of the plaintiff's property as it would take of its own goods or that the plaintiff has not established that this was not so.

82 The plaintiff's schedule of damages produced at Court claims $67,779.25 as his loss, comprising a loss of $24,542.80 in respect of the vehicle UNR-00L and $43,196.45 as the claim in relation to the other vehicle ABM-21R, having regard to the claimed market value (including GST) and costs and charges recovered by the plaintiff on sale of the vehicles in a damaged condition. Garry Green, for the plaintiff, provided valuations in relation to the vehicles on behalf of the plaintiff, placing the market value of UNR-00L, including GST at $44,200 and setting out in his report the relevant assumptions for that figure. In respect of ABM-21R he assessed the market value as $49,500 (including GST) setting out his reasons for that conclusion in his report. Phillip Heydon, for the defendant, assessed the "reasonable market value of these vehicles" to be, in respect of UNR-00l, $25,000 and in respect of ABM-21R, $30,000. The difference turned primarily upon the considerably less kilometres travelled by ABM.

83 I have earlier referred to the evidence of the plaintiff as to the circumstances in which the vehicles were purchased and the condition in which they presented at the time of the fire. Mr Heydon had not inspected the motor vehicles although he saw one or other or both a few times at the smash repair business doing other work before 30 December 2000. Mr Green not only inspected (in the sense of closely examining) the vehicles in their damaged condition and also had seen and apparently inspected the vehicles prior to the fire parked at the Centenary Smash Repairs premises which he attended from time to time. Certainly on any view of the evidence he was more familiar with vehicles than Mr Heydon.

84 Mr Green's estimate of the value of UNR-00L, proceed from consideration of "Glass's (sic) Guide" for the years 1998-1999 (which apparently value the cars in average condition at $26,000) and his experience in valuing these cars put the average market value (excluding accessories) at between $33,000 to $37,500 but in this instance $34,000. The presence of accessories, which at market value were worth $6,100 (allowing for appropriate depreciation) was added. In the instance of this vehicle and the other vehicle the plaintiff gave evidence of modifications and additions to the original model however I accept the particular "accessories" identified by Mr Green as valued by him given his direct knowledge of the motor vehicles. This was not challenged. In respect of ABM-21R he considered the market value of that vehicle as $36,000 taking into account the average market value for standard vehicles of this make and the details set out in Glass's Guide. He further took into account accessories, including an enlarged motor, considering depreciation, as worth $10,200. Neither of the market values include GST. Again, because of his familiarity with the vehicles as earlier outlined I am prepared to accept his identification of accessories and their value. I understood from Mr Green's evidence that the difference between the value of ABM-21R and UNR-00L could be accounted for by the less mileage travelled by ABM-21R and the greater number of accessories in that car.

85 Having regard to the evidence of Mr Green and Mr Heydon and the contents of their reports I do not accept the assertion made by Mr Heydon in his report that in assessing the value of the cars the "accessories" that were identified by Mr Green were in fact "standard items on the vehicle". This he retracted in part during cross examination.

86 Mr Heydon's enquiries as to the value of the vehicles included consideration of "The Red Book" valuation, a well known industry guide which identifies the SS-Group A Commodore, which is the basis of the "Walkinshaw" model for the relevant year in December 2000 as between $19,250 and $22,500. Glass's Guide for the relevant period of time according to Mr Heydon's enquiries revealed that a Commodore SS Group A vehicle in above average condition would fetch approximately $26,000, whilst a vehicle in average condition would fetch approximately $22,000. These values were based upon an assumption that the vehicles had travelled approximately 205,000 kilometres and "could be increased slightly for a vehicle which has travelled less than that figure". It does not appear to include consideration of vehicles in mint condition. UNR-00L had travelled 167,510 kilometres, ABM-21R had travelled 90,000 kilometres. It is to be borne in mind too that the more powerful engine in ABM apparently had only travelled something less than 2,000 kilometres at the time of the fire.

87 Mr Heydon also took into account enquiries he made of other specialist dealers and high performance motor vehicles, one dealer put the value of UNR at the "early to $20,000's", the other vehicle had about $30,000. A dealer sold the same VL Commodore Walkinshaw Group A manufactured in 1988 for $45,000 in recent times on at least two occasions although that vehicle had only travelled 931 kilometres. That dealer whose opinion was not given first hand expressed the view that the larger engine would not add value to the vehicle, the reasons for that opinion however the plaintiff is unable to test nor am I informed. On that matter I prefer Mr Green's opinion. Another retired motor journalist who has an interest in "unique cars" including "muscle cars", amongst which these cars could be categorised, estimated UNR-00L at a value of $22,500 and the second car at $33,000. An insurance underwriter claimed, as reported by Mr Heydon, that he would not insure the vehicles for more than $30,000. Whether that reflects in his opinion "an agreed value" as opposed to what he would be prepared to underwrite the car for I do not know, however the agreed value of the motor vehicles which were insured was much greater than that underwriter's estimate.

88 Mr Heydon took the liberty of criticising Mr Green's estimates on the basis that on having viewed the burnt out vehicles they realised at auction much more than he was prepared to value them. Mr Heydon expressed the opinion that it would "indicate that his knowledge of damaged vehicles" was "questionable". I would have thought, bearing in mind Mr Green saw the vehicles, that his underestimation of their value in damaged condition, as opposed to what they actually realised at auction was a matter to his credit in so far as he was not prepared to exaggerate values of vehicles, although I suppose another view may be taken of the matter. I regarded Mr Heydon's attempt to delve into a criticism of Mr Green's credibility or qualification was unhelpful given the fact that Mr Green is undoubtedly at least as qualified as Mr Heydon to express opinions about the value of motor vehicles as their respective curriculum vitae revealed and their evidence revealed. He was not challenged as to his qualifications and was more familiar with the cars which was conceded by Mr Heydon to be an advantage. Mr Heydon also took time to criticise the absence of logbooks and other matters which in the context of the damage to the motor vehicles and the other evidence available to me I see as a matter of no moment. This would have been a difficulty for him I appreciate given his unfamiliarity with the cars.

89 Although in cross examination it was suggested that the valuations Mr Green had supplied were "exaggerated" it was not suggested to him that the differences between his valuation for the cars in damaged condition and what they realised at salvage represented some adverse reflection upon his credibility in the instant case or his qualification to value cars generally. Although Mr Green's report referred to reliance upon the Glass's Guide, he also said in evidence that he referred to the "Red Book" guide, and that the guides themselves were that "only a guide for a vehicle of particular make and model", he agreed however that market value was to be found "in the market place". He denied that he took into account the agreed value in assessing the valuation claiming, which I accept, that he did not know the agreed value for the vehicle. I noted the submission made about the dependence by Mr Green on Glass's Guide to which he turned himself for some guidance. He said that that Guide's prices were "actually inflated", he also said that he took into account the Red Book Guide. I have taken this evidence into account , but I have also taken into account his particular experience in relation to valuing these models of Holden, before and at about the time of the fire. The concession, given the evidence of Mr Heydon of the opinions of others, does not cause me to doubt Mr Green's credibility. Glass's Guide, in its own terms represents a significant under estimation of the value of these particular cars.

90 Mr Heydon agreed that the Red Book valuation, setting out indicative wholesale and retail prices for vehicles related to those vehicles "in average and good condition". This may result in "variants" from the prices indicated. He also conceded that "inspecting the vehicle is always the best option". He also conceded that accessories that are not standard whilst they may "detract form the vehicle" can also "add the value". He also conceded that in dealing with particular motor vehicles an enthusiast may pay more than a general member of the public, although in assessing market value I do not believe that I should contemplate what may be "extreme lengths" that a particular individual may go to. Particular types of car will sometimes only be purchased by enthusiasts and it would appear, from the evidence available to the Court, given the limited number of "Walkinshaw" Commodores that were manufactured (apparently 500 in one year) this was such a motor vehicle. Whilst I accept Mr Heydon made enquiries of others probably more experienced in dealing with this motor vehicle than himself, I cannot be satisfied that the estimates given to him reflect full knowledge on the part of those persons of all relevant matters relating to the subject vehicles. Their estimates obviously are based on second, or third or fourth hand hearsay in circumstances where Mr Heydon himself had not inspected the motor vehicle either before the fire or afterwards. Several of those estimates reveal market valuations above his final figures.

91 In assessing Mr Heydon's final conclusion as to market value for cars, given the fact that he supplied the number of kilometres travelled for each vehicle on his report at least to the motoring journalist, I note that he places a value on ABM, at $3,000 less than the journalist's valuation who assumes the vehicle was in "A1" condition and the body condition was consistent with the kilometres travelled. Clearly the uncontroverted evidence is that the vehicles were in excellent condition. Putting aside consideration of inflation, in strict dollar terms, an as new vehicle of the type the subject of this claim (that is with hardly any kilometres travelled) which obviously is not the case here, still attracted a price apparently in recent times only slightly less than the original retail price. This clearly evidences the interest of "enthusiasts" who would be prepared to pay well in excess of what the respective guides indicate. There is nothing in the detail of Mr Heydon's report that reveals that the "market value" advice that he received included any consideration of the accessories which are not standard to the Walkinshaw Commodore and of course. Mr Heydon himself accepted that whilst certain accessories in these vehicles may have been "options" when the cars where originally manufactured, those "options" were not "standard" to the vehicle and added value to the vehicle. He claimed of the various accessories identified that "the alarm cut off and deadlocking was "standard" as was the tinting of the windows and the "leather trim". All the other "accessories" identified by Mr Green in the vehicles were either "optional", to the standard make and thus added value to the vehicle, or were otherwise not standard".

92 Even in his own terms one might have thought that assuming the market value of "standard" Walkinshaw Commodore model, given the excellent conditions of the motor vehicle and the presence of accessories that would enhance the vehicle. Even though he said the "alarm" were standard for the vehicle the opinion of Mr Green was that they had in fact had been "added" to this vehicle and in the absence of any evidence from Mr Green illuminating on this point I assume that they were different to the "standard" features of the motor vehicle.

93 I appreciate in relation to motor vehicles, particularly specialised or unique models, that value, in the sense of market value, like beauty, will be in the eye of the beholder. To this extent the industry guides have their limitations as indicative of market value and importantly generally do not reflect either the value of vehicles in excellent condition or which have had added accessories or options which add to the value of the motor vehicle. I cannot accept that even allowing for depreciation they have a full add on value. On some occasions of course, as Mr Heydon said, accessories can detract from the value of the vehicle however having regard to the character of the accessories referred to in this matter and in the absence of any specific opinion to the contrary from either expert, I do not believe that is the case here, in fact to the contrary. What is common ground between those better qualified than I to provide an estimate is that the second vehicle (ABM) was for various reasons including less mileage travelled, worth more than the first vehicle. The proper distinction between the base price for the respective cars is difficult to gauge. There was a major divergence of opinion between Mr Green and Mr Heydon on this matter. Although UNR was in "mint condition" it was a vehicle that did not have a new engine (a matter reflected in the assessment of the accessories) and had travelled almost twice as many kilometres. On the other hand even having regard to Mr Heydon's own points of reference, his valuation of both motor vehicles in my view is an understatement of reasonable market value for motor vehicles that were not of identical condition, and did not adequately, in all the circumstances exposed to the court, include proper consideration of the added value to the vehicles of the accessories identified by Mr Green.

94 In respect of UNR-00L on the available evidence of market prices I would assess the base market value of the vehicle at $32,000 and add to that figure some added value for accessories which were not standard, but less than that allowed by Mr Green, in the sum of $2,000. In respect of the second vehicle I would assess a base value of $36,000 as estimated by Mr Green and again add to that value a value for relevant accessories, with the exception of tinting but again reduced from Mr Green's estimate of $3,000. Thus the damages to be awarded to the plaintiff will be, having regard to the matters set out in the Schedule calculated upon these conclusions, subject to further advice from the parties before I make final orders.

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