Tetra Pak Manufacturing v Challenger Life Nominees [2013] NSWSC 349 | Case summary

Third issue: when did the contamination originate? The competing contentions 50Mr Parker submitted that if Tetra Pak did bear the onus of proof on this issue, it had discharged it. He submitted that the evidence, both lay and expert, was sufficient to enable the court to find that the relevant contamination had occurred, or been caused, before the date of sale. 51Mr Simpkins submitted that the evidence did not justify the court's coming to that conclusion. 52Mr Parker and Mr Simpkins agreed that the evidence did not justify a conclusion that the contamination had been caused, or occurred, after the date of sale. The lay and documentary evidence 53Tetra Pak's manufacturing activities on the property, from about 1972 on, included the use of solvents, some of which were (or included) CHCs. Such records as there are show that from 1995 to 1999, substantial quantities of a solvent known as Klenasol 75/25 were delivered to the land. Klenasol 75/25 comprises (I do not know whether by weight or by volume) 75% PCE. 54The documentary evidence shows, further, that: (1) over much the same period, substantial quantities of recycled Klenasol 75/25 were delivered to Tetra Pak at the property; and (2) over part of that period (I think, in 1998 and 1999 only), substantial quantities of recycled Klenasol 75/25, and a lesser quantity of Klenasol 75/25, were delivered to David Graphics at the site. 55Finally, and remaining with the documents for the moment, there is evidence that another supplier, Nowra Chemicals, delivered "pure PCE" to the site. There are no records of any such deliveries, or of the quantities involved. A subpoena directed to Nowra Chemicals produced no relevant documents. 56Tetra Pak called two former employees, Mr Ken Lay and Mr Bryan Davis. 57Mr Lay had been employed at the property from 1983 until about May 2009. Mr Lay described, in broad terms, the activities that had been conducted on the property over the period of his employment. He said that in 1997, Tetra Pak became accredited under an Australian Standard dealing with "environmental management systems". For a time, he was responsible for assisting in the management of the accreditation process. He proved processes and records dealing with the use and recording of chemicals and waste products. 58The records identified by Mr Lay included environmental report questionnaires for each year from 1997 until 2006. Those questionnaires, which were distributed and completed and returned electronically, dealt among other things with the consumption and use of chemicals on "Tetra Pak's Red List". Those chemicals included PCE specifically, and what I think was a description of CHCs generically. For each year, the completed questionnaire showed that no chemical on the Red List had been used or consumed on the property. 59Mr Simpkins submitted, correctly, that the completed questionnaires did not deal with the topic of storage of PCE, or other CHCs, on the property. 60Mr Lay identified some Material Safety Data Sheets (MSDS). They showed, among other things, that PCE had been supplied by Nowra Chemicals for use in relation to a "Chambon" printing press. Mr Lay said that Tetra Pak had stopped using the Chambon press by the end of 2000. 61Mr Lay said that his duties required him to participate in bi-monthly "environmental performance meetings". He said that he attended most of those meetings between 2000 and 2006, and that he did not recall any major spill being placed on the agenda of such a meeting. Nor did he recall directly observing any chemical spills. 62Mr Davis had been employed as the building, grounds and safety supervisor for the property from February 1980 until March 2010. His duties included "a range of tasks concerning access to... environmental management, workplace safety, dangerous goods storage and waste management" (affidavit sworn 22 March 2012, para 3). 63Mr Davis, too, gave evidence of manufacturing activities carried on at the property, including by David Graphics from early 1998 until late 2002. 64In cross-examination, Mr Davis said that there was a requirement that all chemical spills be reported, but that discretion was allowed in some circumstances for "minor" spills. He quantified these as being spills of up to 10 litres of material that occurred within the production facility itself. If a spill occurred elsewhere, and in particular near drains, Mr Davis said, it was to be reported. 65Within the production facility, any spill would be contained, in the sense that the facility had a concrete floor and masonry walls. Mr Davis said that the standard procedure was for absorbent materials to be used to take up the spilled material, and for the area to be cleaned. I am satisfied, on that basis, that such spills as occurred within buildings would be most unlikely to have escaped from the confines of the building. 66There are no records of any spills outside the buildings, or near the drains. That no doubt reflects, in part, the fact that records have been destroyed since Tetra Pak closed down its operations at the property in 2006. The expert evidence 67Tetra Pak called Dr Gregory Dasey. Challenger called Dr Bernard Kueper. Each of them has impressive qualifications and experience in the field of hydrogeology. Each of them expressed opinions about the likely migration of contaminants through and off the property, based on both the investigations that had been carried out and were the subject of the reports annexed to the sale contract, and on subsequent investigations carried out by other consultants. 68Mr Parker accepted that the expert evidence alone would not permit the court to make a finding that the contaminants in question had been on the site at the time of sale. His submitted, however, that an inference to this effect was available from the lay evidence, and that the expert evidence was consistent, or at least not inconsistent, with that inference. 69Dr Dasey made two reports. As I understand his evidence, he regards the second report as setting out his current opinion on the process and timing of migration of contaminants. That is because it uses a different form of analysis (T71.17-.18). 70The migration path of contaminants through (in this case) soil is often called a "plume". There were two plumes on the land: the northern plume and the southern plume. Dr Dasey's analysis related only to the latter. 71In substance, Dr Dasey took data from other consultants' reports relating to the possible movement of a contaminant (PCE) from a measurement point inside the property known as MW 8, through second measurement point outside the property known as OMW 5, to a third measurement point, also outside the property, known as OMW 6. Dr Dasey used a computer program to estimate the "plume velocity" between those locations. He calculated that, based on an assumption that PCE had migrated (I return to this at [80] to [84] below) and on the distance between the locations, the length of time that would have been required for the hypothetical migration from MW 8 to OMW 6 was consistent with the process having started before the date of sale. 72Dr Kueper pointed out that the calculations were based on a range of assumptions. He said that, in his opinion, some of the assumptions - including, critically, as to porosity and groundwater velocity - were unreliable. He said that the use of factors that he considered to be more reliable or realistic assumptions would have the effect of shortening dramatically the time of migration. 73Dr Dasey assumed a porosity factor of 0.2. That was based on measurements and calculations of other consultants. Dr Kueper said that the value was an estimate only, and in his opinion was not likely to be accurate. He pointed out that, because the relationship between porosity and plume velocity is inverse, a change in the porosity factor from 0.2 to 0.1 would have the effect of increasing the plume velocity by a factor of 10. 74As to groundwater velocity, Dr Dasey used a value of 2.533 metres per year, which he said was established by other consultants for the particular area. Dr Kueper criticised this, noting that the range of values established by the other consultants (once corrected for an arithmetical error) was from a minimum of 3.2 metres per year up to 164 metres per year, with a geometric mean (or geomean) velocity of 22.1 metres per year. On the basis of the geomean, Dr Kueper said (and I think it was common ground), the minimum plume age would be 3.1 years. Thus, if the geomean velocity had been fed into the calculation, the result could not have been consistent with the presence of PCE at MW 8 before the date of sale. 75The validity of this last criticism is open to question, because Dr Dasey's calculation was concerned not with the overall spread of the plume but, rather, with the particular migration path from MW 8 to OMW 6. 76There were other matters raised in the debate between the experts. I do not think that it is necessary to go to them in any detail. 77I note at this point that, as Mr Simpkins submitted, whatever Dr Dasey's evidence might show as to the rate of migration of the southern plume, it showed nothing as to the rate of migration of the northern plume; and that there was no scientific evidence dealing with that. Decision 78Tetra Pak is required to prove, on the balance of probabilities, that the contamination existed on, in, under or above the property at the date of settlement of the contract for sale. The discharge of that onus requires more than "a mere mechanical comparison of probabilities independently of any belief in" the reality of the fact to be proved: Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 - 362. As his Honour said, what is required is a sense of actual persuasion of occurrence or existence of the fact. That requirement is not limited to cases (such as Briginshaw) where the fact in issue involves some serious reflection on the character of a person; it is a general incident of the fact-finding process in civil litigation: see Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [44] to, in particular, [55]. 79I start with the expert evidence. To my mind, Dr Dasey's evidence does not really assist Tetra Pak. I hasten to say that I reach this conclusion not because of any doubt as to Dr Dasey's qualifications and experience, or indeed as to his objectivity. On the contrary, I regard both Dr Dasey and Dr Kueper as eminently well qualified to consider the matters that they did and express the opinions they did; and I thought that each of them understood, and sought to perform, his duty to the court. 80Dr Dasey's opinion (in his second report) is based on an apparent increase in the level of concentration of PCE in the destination point chosen by him: OMW 6. It is that change in concentration, over a period of time, that Dr Dasey has assumed to be the result of migration. He explained the nature of that assumption in his second report at paras 78, 79. 81In the former paragraph, Dr Dasey noted that the change had occurred at a relatively low concentration. Thus, he said, "whether this change is significant is currently uncertain". He said (and Dr Kueper agreed) that "there is potential that the change is a function of factors (such as variability introduced during sampling, sample handling, laboratory analysis) not related to plume migration". 82Thus, Dr Dasey said: (1) "the following analysis assumes that the change is representative of plume migration (and not variability related to other factors)" (para 78); and (2) "adoption of this assumption should not be interpreted as my acceptance that concentrations at OMW06 are increasing as a result of plume migration" (para 79). 83Dr Dasey said, in the course of his oral evidence, that he did not regard the data "at the moment" as demonstrating migration (T75.24-.44): HIS HONOUR: You say specifically that you rely on the assumption set out at the end of paragraph 78, but that your statement of that assumption should not be taken as an acceptance of the proposition that the concentrations in OMW06 are increasing at a rate of plume migration? WITNESS DASEY: Yes. HIS HONOUR: Forgive me if I'm wrong, I read that as saying you don't regard the data as showing that? WITNESS DASEY: At the moment, no. HIS HONOUR: Of course at the moment. WITNESS DASEY: Yes. 84Given Dr Dasey's inability to exclude other factors as responsible for the relatively low change in concentration at OMW 6, and given his express disavowal that his calculations showed the change was a result of plume migration, I conclude that his evidence shows no more than that the data (whether demonstrated or assumed) are not inconsistent with relatively rapid migration, and thus with relatively recent occurrence of the source contamination. 85To put it another way: if the lay (or any other) evidence provided a basis for finding, on the balance of probabilities, that the contamination had occurred after the date of sale, Dr Dasey's evidence would not be inconsistent with that conclusion. 86I return to the lay evidence. Taken at face value, that evidence suggests that the last deliveries to the property of solvents containing PCE were in about 1999, and that the use of PCE in the manufacturing process had stopped by the end of 2002. Thus, if the evidence allowed an affirmative finding to be made that all products being or containing PCE were removed from the site once they were no longer needed in the manufacturing process (and before the date of sale), there would be a basis for inferring that any contamination must have occurred before the date of sale. 87Mr Simpkins criticised Tetra Pak's selection of the lay witnesses. He submitted that neither Mr Lay nor Mr Davis had ever had any role in relation to ordering, storing on site, using or disposing of PCE or products containing it. Neither of them could say that PCE or products containing it were not present on the site after 15 May 2002. Neither of them purported to do so. 88That submission is factually correct. 89Mr Simpkins relied on the well known observation of Lord Mansfield CJ in Blatch v Archer (1774) 98 ER 969 at 970 that: It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. 90Mr Parker sought to deflect this criticism by suggesting that it should not be seen to be within Tetra Pak's power to produce more detailed proof. He relied on the proposition that manufacturing operations had stopped in 2006, and that many of the employees involved had been "retrenched". 91I do not accept that submission. It was Tetra Pak that carried on operations at the site, and employed the relevant personnel (I leave aside, for the moment, the position of its contractor David Graphics). Tetra Pak knew who the relevant people were. There is no reason to think that Challenger did. It may be the case that the relevant personnel might not be keen to give evidence, having regard to the circumstances in which manufacturing operations were stopped and they lost their jobs. But the evidence falls a long way short of showing that. 92Again, the relevant records were records of Tetra Pak. If Tetra Pak chose to destroy them because the operations had closed down, but knowing that there remained residual questions as to contamination and responsibility for it, that can hardly be something that would assist it in discharging its burden of proof. Certainly, the absence of such records should not be held against Challenger. (I am not to be taken as suggesting that, to the extent that records were destroyed, there was anything improper or underhand in this. It is the fact of destruction, to the extent that occurred, and not the motive that is important.) 93To submit, as Mr Parker appeared to do, that the parties were in an equal position to call the relevant evidence strikes me as verging on the unreal. Tetra Pak had records of employees. Whether or not it still has those records I do not know. But there is no reason for thinking that Challenger ever had any such records, or access to them. 94If anyone were in a position to prove what had actually happened on site after 2000 and before the date of sale, in relation to the retention, storage and disposal of PCE or products containing it, it was Tetra Pak. 95The evidence of Messrs Lay and Davis is consistent, or not inconsistent, with a conclusion that it is more likely than not that any contamination occurred before the date of sale. But the question is not whether the evidence is consistent with that conclusion, but whether it, in conjunction with the documentary evidence, justifies the court in coming to that conclusion. I do not think that it does. 96The fundamental gap in the evidence is as to the retention and storage on site of PCE or products containing it. In the absence of any evidence (let alone persuasive evidence) that all products containing PCE were consumed and returned for recycling, and that no stores were kept, I regard that gap as fatal to Tetra Pak's case. 97It might be said that Tetra Pak would not keep PCE, or products containing it, once they had ceased to be used in the manufacturing process. There is some force in that, but, on the other hand, in the absence of evidence to say that this reflected reality, I do not feel inclined to draw that inference. 98Further, there is some evidence that PCE was used for purposes other than the printing process - specifically, for cleaning electrical fittings. That appears in an MSDS prepared by Nowra Chemicals (the supplier of pure PCE). If, as that evidence suggests, PCE had other uses, it cannot be said to be unlikely or improbable that some was kept on site for use for those other purposes. Again, this is a matter that Tetra Pak could have dealt with, but did not. 99In circumstances where it has not been shown that PCE was not retained on site, and in circumstances where there is no reason to infer that it would have been returned (because there is evidence that it could have been used for purposes other than printing), I do not regard the evidence of Messrs Lay and Davis, coupled with the documents, as supporting a conclusion, on the balance of probabilities, that PCE was neither used nor stored on the site by some date prior to the date of sale. 100Mr Simpkins relied on registers kept by Tetra Pak known as the "MSDS index". Two such indices were in evidence. Each, on its face, relates to the period up to February 2004. One appears to have been prepared in about April 2004 (at least, it was transmitted within Tetra Pak under copy of an email dated 20 April 2004). The other appears to have been prepared in or after August 2004, because it contains entries of receipt of some chemicals in that month. 101Each of the indices referred to receipt of PCE supplied by Nowra Chemicals. 102Each index is in the form of an excel spreadsheet. One of the cells that is referable to the PCE listed in it contains the word "remove". Mr Simpkins submitted that this was a direction to remove the PCE from site. Mr Parker submitted that it was a direction to remove the listing from the index. 103It is likely that the author of the indices was a Mr Balaschow. He was certainly the author of the email under cover of which the earlier MSDS index was sent; and he was the person named by Mr Lay as having responsibility for the preparation of such records. 104Tetra Pak did not call Mr Balaschow. Nor did it suggest that he was unavailable to be called, or likely to be unwilling to give truthful evidence if called. In those circumstances, I do not feel inclined to draw the inference for which Mr Parker contended. It may be noted, as Mr Simpkins submitted, that if all that were required was deletion of the chemical from the record then (the record being in the form that I have indicated) this could have been achieved by a key stroke. 105Nor do I feel comfortable in drawing the inference for which Mr Simpkins contended. If it were desired to have all stocks of PCE removed from the site, this could have been communicated in a somewhat more direct fashion: for example, by sending an email to the relevant person. Burying the instruction deep in an excel spreadsheet does not seem to me likely to have been an effective form of communication of such an instruction. 106Nonetheless, putting aside each of the inferences for which counsel contended, it is possible to view each of the indices as consistent, or not inconsistent, with the proposition that there was present on the land pure PCE, supplied by Nowra Chemicals, at the date each index was prepared: that is, as late as August 2004. 107I do not regard the MSDS indices as compelling the conclusion that there was PCE on the land at that time. But in conjunction with the undoubted evidence that PCE (including pure PCE supplied by Nowra Chemicals) had been delivered to the land from time to time, and in the absence of any evidence that once manufacturing operations ceased all stocks of PCE (or chemicals containing it) were removed, I regard those records as inconsistent with Mr Parker's submission recorded at [50] above. 108I conclude that Tetra Pak has not shown, on the balance of probabilities, that PCE was not present on the site after the date of sale. 109It follows that the third issue must be answered "no".

Tetra Pak Manufacturing v Challenger Life Nominees

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