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Supreme Court of Victoria Decisions |
Last Updated: 28 February 2006
AT MELBOURNE
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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Contract – implied term re electricity supply – Trade Practices Act – damage to property by fire – causation – assessment of damages.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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McCabe Terrill Lawyers
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For the Defendant
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Hunt & Hunt
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The Proceeding1 The plaintiff, Riverside Food Products Pty Ltd, has at all relevant times been carrying on business as a fruit and vegetable processor from premises at 905 Woods Point Road, East Warburton. It has been the owner and occupier of those premises and the owner of the equipment used in the business. The defendant TXU Electricity Limited is a licensed supplier of electricity. It was at all relevant times the owner of metering and associated equipment installed at the premises.
2 In about July 1998 the plaintiff and defendant entered into an agreement for the distribution and supply of electricity to the premises by the defendant.
3 On the night of 28 April 2001, the processing factory and much of the associated equipment was damaged by fire. The plaintiff alleges that it suffered substantial loss and damages. It has brought this proceeding against the defendant to recover compensation for that loss and damage. The defendant concedes that the fire occurred on about 28 April 2001 but it denies the other allegations put.
4 The plaintiff has pleaded its claim on a number of bases. The first alleges breach of the agreement. Reliance is placed on a number of terms including terms implied by the Trade Practices Act 1974. I note also that a case is pleaded relying on the existence of a duty of care in the supply of the service and the provision of the meter.
5 After the plaintiff’s opening, I invited counsel for the defendant to identify what was in issue. In responding, counsel for the defendant stated that if the fire commenced in the meter box as a result of the failure of its equipment, the defendant had no excuse under s 71 of the Trade Practices Act. Counsel submitted that if the plaintiff makes out its case on the facts regarding causation of the fire he expected the defendant to be held liable under the Trade Practices Act.
6 In the course of final submissions, counsel for the defendant noted that the reference in the Statement of Claim to terms implied by s.74 of the Trade Practices Act should have been a reference to s. 71.[1] Counsel for the defendant, however, took no issue with this. He conceded that that was the basis on which he had proceeded. He again conceded that the plaintiff only had to establish that the fire began in the TXU section of the meter box as a result of equipment failing there and that would bring s.71 into play and his client could not bring itself within any of the statutory exceptions.
7 The defendant did not pursue the defence of contributory negligence which it had pleaded.
Central issues
8 It was common ground throughout the proceeding that the two critical issues in the case were:
(a) the site of the origin of the fire and
(b) the assessment of damages.
Attached is a plan relied upon by the parties giving the layout of the premises and showing, in particular, two areas - the processing area to the north and the drying room to the south and the location in the latter of a drying oven (item 12).
9 As to the origins of the fire, the position of the plaintiff is that the fire commenced in the TXU section of the meter box situated on the northern wall of the premises and spread south until it self extinguished in the area described as the drying room. The position of the defendant is that it cannot be proved that the fire commenced in the meter box. It argues that the fire probably commenced in the drying room. The defendant also raises the issue of whether the fire in the meter box resulted from a cause other than some failure of the defendant’s equipment. The alternative explanations requires a fire in the building and material such as soot getting into the TXU part of the meter box. Absent such a cause, one is left with TXU equipment failure as the probable cause, albeit that the precise failure cannot be identified. The evidence as to the source of the fire is discussed below.
10 As to the damages claimed for damage to equipment, the issues to be resolved are which items of equipment were damaged by the fire and what is fair and reasonable compensation for that damage. As to the damages claimed for damage to the building structure, there is a major issue as to whether and to what extent the plaintiff can be compensated for the cost of rebuilding the factory premises, the defendant arguing that the plaintiff has in fact improved those premises.
Location of the source of the fire – common ground
11 There was some common ground between the parties.
• The meter box was attached to the outside of the northern wall of the building. It was in two sections. The upper section was separated from the lower section by a horizontal metal bulk head. The lower section contained the meter and time clock and other equipment belonging to the defendant, TXU. The meter and time clock were mounted on a piece of chipboard which divided the lower section vertically into two parts. The power cables entered the bottom of the meter box and were taken up between the chipboard and the rear of the meter box, passing through the chipboard into the meter and time clock. Cables then passed up and through a hole in the right hand side of the metal bulk head into the plaintiff’s switchboard and from there through an opening in the back of the meter box into two small holes in the outer wall of the building and into the wall cavity.• There was a fire within the meter box of some five seconds duration associated with arcing at many sites in the cables in the lower section of the meter box causing melted holes in its metal sides. There was widespread destruction of insulation on the cabling in the meter box caused by fire. The fire involved extremely high temperatures.[2]
• Where live cable is burnt and the insulation is charred, the insulation becomes a semi-conductor leading to leakage currents and arcing.
• The fire within the building structure was a slow burning fire. In the northern, or processing section, it burnt most of the structural timbers. They were enclosed between the outer walls and the inner cement sheeting and the roof and ceiling. In the southern or drying oven section, it destroyed the beams, rafters and battens in the immediate vicinity of the flue of the drying oven and between it and the processing section and charred to lesser degrees roof timbers to the south, east and west of the flue.
Location of source of the fire – plaintiff’s submissions12 In support of the plaintiff’s position, counsel submitted that the northern end theory is supported by the graduation of destruction. Counsel argued that the most affected area were the meter box itself on the north wall and the process room, both of which were wholly destroyed, and the least damaged area was the southern area. It was put that this was "entirely consistent" with the point of origin being at the north end.
13 The plaintiff also relied upon the fact that:
• there were multiple sites of arcing in the cables in the lower, TXU section of the meter box and none in the upper, customer’s, section.
• there was also an absence of any arcing in the wiring in the building itself, insulation of which was also burnt off in the fire.
Counsel submitted that the arcing in the wires in the TXU section of the meter box pointed to the cables carrying electricity at the time they were exposed to and charred by the fire. The absence of arcing in the wiring in the customer’s section of the meter box and in the building pointed to the conclusion that those wires were not carrying an electric current when the fire was burning them. The explanation for that was that the electricity had been cut off to the other areas as a result of what occurred in the TXU section of the meter box before the fire reached the other wires. Counsel drew particular attention to the fact that the cable passing from the TXU section to the switchboard section of the meter box had melted the metal at the side of the hole through which it passed pointing to an arcing event having occurred there also. But there was no arcing in the cables in the customer’s switchboard section even though they were obviously burnt in the fire and even though they were like a nest of cables which would easily have arced if they had been carrying a current when burnt.
14 Counsel argued that the plaintiff did not have to establish the precise point of origin. He submitted, however, that the theory of its expert Mr Collins should be accepted. He inspected the premises twice not long after the fire. His opinion is that the likely point of origin of the fire was the time clock. The theory involved
• the passage of electricity through an 80 amp fuse, significantly oversized for the current that passed into the time clock.• something occurring on the circuit board causing a fire and causing the chipboard itself to catch on fire and the fuse, because it was oversized, permitting electricity to pour into the damaged time clock "creating the fire".
Counsel submitted that whatever might be thought of the theory, the reality was that there was a weakness in the design of the construction of the circuit in that an 80 amp fuse was used rather than something appropriate for a 1.5 millimetre square wire and time clock current - such as a 10 amp fuse. I note that there was no dispute between the parties that the 80 amp fuse was over size. Counsel submitted that Mr Collins’ theory was entirely plausible and was supported by the physical manifestation of what occurred.Location of source of fire – the defendant’s submissions
15 Counsel for the defendant submitted first that to the extent that Mr Collins relied upon a comparison of destruction of the building’s north section and south section, the nature of the timber and its enclosed state meant that it was more likely that the fire there would be more intense in the northern part than that in the south. In the south, there were large members in the form of lintels and rafters but they were not enclosed, merely covered by a roof that sat above them and the area was open to the east and to the west. Counsel submitted that in those circumstances it was not surprising that the degree of overall damage sustained in the drying area was less than the overall damage sustained in the processing room. Counsel also submitted that it was incorrect to argue that the greatest destruction occurred in the meter box. It is true that the chipboard panel was consumed and the switchboard was no longer visible or identifiable but there was a considerable amount of unburnt soot within the meter box so that there had been partial combustion of the contents of the meter box.
16 Counsel for the defendant relied upon the evidence of Mr Nealon who also inspected the premises shortly after the fire. His evidence was that the timbers in the immediate vicinity of the flue had been totally consumed with no by-products and that as one moves away from the flue in the drying section there is ash and char and sound timber but no debris. He compared this with the situation in the processing room where there was some remains of roof timbers which had fallen down. Counsel submitted that what Mr Nealon was saying was that the most severe localised high level damage occurred in the immediate vicinity of the flue.
17 In addressing the theory advanced for the plaintiff through the evidence of Mr Collins, counsel for the defendant challenged the credibility of Mr Collins.
● Counsel drew attention to different conclusions advanced at different times by Mr Collins. In particular, he referred to Mr Collins’ acknowledged error in examining fuses with a multimeter. Counsel also referred to Mr Collins’ first report where he argued that there was discoloration on the fuse bases which was consistent with poor connections to the fuse bases and overheating as a result. Counsel submitted that after Professor Stokes considered that issue and rejected it, Mr Collins changed his view and agreed that the discoloration was equally consistent with the fact that they had been in a fire. Counsel submitted that up to that point the one real piece of evidence on which he was relying was challenged and he abandoned it.● Counsel noted that in his second report, Mr Collins advanced the time clock theory for the first time. Counsel commented, however, that it was not until his re-examination that he offered any detailed explanation as to how the time clock might have been the immediate cause of the fire in the meter box. Counsel referred to his evidence that looking at the remains of the printed circuit board of the time clock, it appeared to have burnt from the inside out suggesting that a fire had begun on the circuit board. He also referred to his evidence that the cable into the time clock would have glowed red hot resulting in ignition. Counsel then referred to Professor Stokes’ evidence challenging his theory, much of which Mr Collins accepted. Counsel submitted that at the end of the day Mr Collins was driven back to the position of merely putting forward a flaw in the time clock as causing the fire as a possibility. It should be noted, however, that Professor Stokes accepted it as a possibility.
18 As to the significance of the arcing in the TXU section and the absence of any evidence of any kind of arcing in the customer section of the meter box or the rest of the building, counsel for the defendant sought to rely upon evidence of Professor Stokes. Counsel submitted that Professor Stokes knows more about arcing than anybody in the world and it was an extremely difficult area. Counsel submitted that it was possible to have no arcing but that it was, on the evidence, more normal to find an arcing melt and failures of the kind observed in live cable. Counsel submitted that Professor Stokes’ evidence was to the effect that the absence of arcing did not preclude the possibility that the fire started in the customer’s side of the premises and meter box. It was put that Professor Stokes said that you can have situations where the cable may part and the bead of molten metal which indicates the arcing path may be lost. I note, however, that Professor Stokes conceded, that it was clear that in the meter box, arcing had occurred even though the beads of molten metal were not present.19 In my view Professor Stokes’ evidence did not go as far as counsel sought to take it; for it was plain from Professor Stokes’ evidence about arcing that it is a process that occurs because of the presence in a cable of live current. It is also clear from Mr Collins’ evidence that he found no evidence of any kind of arcing (with or without beading) anywhere in the building or the customer’s section of the meter box. Counsel for the defendant submitted that his observations should not be relied upon, referring to his errors of observation. In this instance, however, I note that his observations were supported by Mr Nealon.
20 As to the cause of the fire, counsel for the defendant submitted that plainly there was a very spectacular short lived arcing or series of arcing events in the meter box but the question was how they were caused – in particular whether it was as a result of the condition of the equipment or the result of a fire which commenced elsewhere in the building. He referred to Mr Cousins’ explanation of radiant heat from the fire in the building degrading the plastic insulation of the conductors and enabling release of carbon from the PVC which enabled arcing to occur. He referred in particular to Professor Stokes’ explanation of a possible origin of the fire in the meter box being gases containing particles of carbon in the form of soot or ionised gases coming from outside into the meter box and leading to the spectacular arcing activity that occurred in TXU’s compartment. I turn to the parties’ submissions relating to that explanation.
Origin of fire – Professor Stokes’ explanation; submissions of counsel
21 Counsel for the plaintiff criticised Professor Stokes’ theory. He submitted that it involved gases containing soot or ionised gas, in succession,
• passing from the burning factory out of the wall cavity into the open air,
• passing horizontally and not upwards, in defiance of the ordinary passage of hot air rising, across a one inch gap that separated the wall and the meter box,
• passing through a hole densely filled with cables into the switchboard section which contained a bird’s nest of wires,
• not causing any arcing in or burning of those wires,
• turning left and descending into the lower portion of the meter box, again in contravention of ordinary experience, and
• causing ignition in the lower portion only.
Counsel submitted that this theory was of the utmost improbability. It contemplated the hot air or gas bypassing completely an array of flammable material and bare conductors, not causing arcing or ignition and instead doing so only to those in selective lower portion of the meter panel itself. Counsel submitted that it should be rejected totally.22 In response, counsel for the defendant submitted that to talk about hot air rising was over simplistic. He relied upon Professor Stokes evidence that air within the rear section of the meter box could circulate. As to the missed opportunities and the alleged downward tortuous path, counsel submitted that, as Professor Stokes had said, these things are possible and that the arcs struck where they struck and that the scenario described by Professor Stokes could explain that occurring. Counsel had to concede and properly so, however, that none of the defendant’s experts stated that the fire could not have started in the meter box and caused the building to burn. Counsel also conceded that on Professor Stokes’ evidence there was a conflagration in the meter box lasting about 5 seconds with very high temperatures.
Origins of fire issues – analysis; inferences from the damage done
23 As noted above, both parties sought to draw inferences as to the origin of the fire from the evidence of the damage done by the fire and its intensity. One of the defendant’s experts in particular sought to rely upon such reasoning. I refer to Mr Nealon’s reports. In his original report he asserted that -
"The most severe localised high level damage has been sustained near to the flue assembly of the electric/steam cooker, which was readily evident given the near total consumption of the timber roof supports directly above this area ... . This damage would therefore appear consistent with the area of origin to fire (sic), along with the ever decreasing level of fire damage leading away from this section of the building particularly in relation to the adjacent front northern side of the main processing area ... ."
In a later report, in response to Mr Collins’ first report, he offered the further comment -
"Contrary to the visual conclusion of Mr Collins, the near total consumption of the timber supports has actually occurred above the central area of the process room and the southern partition wall (being the area of origin promoted by the author) – the main structural integrity is still in existence regards (sic) the area of the northern wall and the most internal damage to appliances and fittings has also occurred at the southern side of the process room, tending to contradict the origin proposed by Mr Collins and his own argument ... ."
In the quoted passages, Mr Nealon referred to various photographs. Perusing all photographs taken by him and Mr Collins and the videotapes, it is true that there appears to be some internal cement sheeting to the walls of the processing section other than the southern wall intact even if detached. I am satisfied, however, that Mr Collins’ evidence should be accepted that the destruction of the timber frame was general in the processing room and that no significance should be attached to the various components. I note that in cross-examination Mr Nealon ultimately accepted that the wooden componentary in the processing room was "essentially" consumed by the fire and that was not the case in the southern section of the building. It may be that Mr Nealon was influenced too much by the dramatic contrast in the southern section between the timbers that had disappeared and the timbers remaining and the way the damage surrounded the flue. This gave the illusion of fire having occurred around the flue. But the damage and its location could have occurred simply because the fire came from the northern section into the southern section along the beam (which was consumed) that ran close to the flue, and, spread south, east and west until it subsided.24 At the same time, I do not accept Mr Collins’ attempt to rely upon the greater destruction of internal timbers in the northern section compared to the limited destruction in the southern section. The two areas were very different. Accepting, as the experts did, that the fire was a slow burning fire, the destruction of the timber framing by fire was enhanced by the fact that the timber was enclosed by the internal sheeting and external walls and roof areas in the northern section so that a chimney effect operated and they were protected from the cool night air. In the southern section, however, any burning that took place did so effectively in open air on a night of 6 degrees Celsius. It was common ground that the fire self extinguished in that area.
25 In my view, the highest either side can put any inference from the evidence of damage is that it was not inconsistent with the views advanced. It should also be noted that Mr Nealon, in the end, was not prepared to nominate a place of origin to the exclusion of any other and neither was Professor Stokes.
Origins of fire issues – analysis; the defendant’s possible causes
26 Several possibilities were advanced by the defendant’s experts to explain how a fire may have been caused in the southern section of the building. As counsel conceded, the defence experts took the position that the meter box could not be identified as a cause but they could not positively identify another cause. They identified only possible causes and theories.
(a) pyrophoric action
Mr Nealon advanced the theory that intermittent or constant application of heat to timber can result in pyrophoric action. This is a chemical change in the timber resulting in a charcoal like appearance known as pyrophoric carbon. He stated that this action will cause the timber to dehydrate over a period of time and release quantities of carbon dioxide from within dead cells. He said that additional heat application can cause carbonisation and that this is the beginning of the process that turns wood into charcoal. He stated that the auto ignition temperature of commonly occurring structural timber is of the order of 250 degrees Celsius but that pyrophoric action often causes a reduction in the ignition temperature down to the order of 90 to 120 degrees Celsius. He said the time for the process to occur depends on the type of timber involved, the frequency of the application of heat, the proximity of the heat source to the wood and the average temperature of the heat source. In extreme conditions the period involved might be of the order of a few months. He said generally it is in excess of 5 years and often more than 10. He said that darkened areas to the wood in the form of a "flaked" or "powdered" charcoal with a change of colour were usually evident as the pyrophoric action progressed with time. He stated that concern over this process had resulted in building regulation and appliance standards requiring that appliances not be capable of raising the temperature of any adjacent combustible material above a temperature of 70 to 90 degrees Celsius.Having rejected an electrical cause of ignition and having come to the conclusion that the origin of fire appeared to be closer to the flue assembly, Mr Nealon concluded that the only remaining reasonable accidental source of ignition would appear to be the generation of pyrophoric carbon over time. He noted that Mr Urbanek said that the cooker and flue had been in position for at least 12 years "with the energy emitted from this assembly over this timeframe well within the accepted limits for the production of pyrophoric carbon". Asked if the temperature would be high enough for this process if a person could touch the flue, he said he would like to see the temperatures more elevated. He said that if one is able to physically touch and hold the heat source then the temperature would be fairly low. He said the process will generally start at temperatures above 100 degrees centigrade. He also said steam pipes at 60 to 70 degrees can generate pyrophoric carbon over 6 to 8 years. Nonetheless, he was not prepared in his report to promote that scenario to the exclusion of all other possible causes because of the extent of the overall damage. His conclusion was "cause not determined".
Mr Cousins also took up this issue as a possible source of the fire. Mr Cousins suffers some disadvantages as an expert witness.
● He does not appear to have any theoretical training of any significance in the sciences or engineering but appears to have acquired some experience in the assessment and analysis of fires.● His business relies very heavily on investigations of fires on behalf of TXU in recent times – according to his CV, currently 35 to 52 investigations per month.
● A further problem with the quality of Mr Cousins’ assessment was that one of the reasons he advanced in his report for rejecting the proposition that there was any significance in a lack of arcing in the wiring in the building was that,
"if an earth leakage detector protected the electrical installation, as required by AS/NZS 3,000:2,000, then it is highly likely that a 30mA RCD’s would have operated quickly and early when currents leaked to earth through degraded insulation.......We would, therefore, NOT EXPECT to see any arcing on any of the conductors within the building."[3]
As he conceded, however, he had no evidence that there were any RCD’s in the installation and there is in fact no evidence of the presence of such. This is hardly surprising bearing in mind that the standard is a standard that was finalised in the year 2000 and the installation was in place many years before that. I note that Professor Stokes signed the report, it being a joint report, and the argument was advanced as a joint argument.● Mr Cousins also took the view, on the basis of the materials supplied by Mr Collins and Mr Nealon including the photographic evidence, that the (greater damage) was "apparent to the south of the process room and closer to the oven". This, in my view, cannot be demonstrated. He accepted in his report that the internal wooden frames and battens in the processing room were consumed.[4]
● He also attempted to conduct some experiments to test the capacity of fire to progress along the cables through the chipboard and on and through the main wall of the building. The experiments failed to replicate what occurred and can provide no satisfactory basis for assessing the origin and cause of the fire.
It may be argued that Professor Stokes joined with Mr Cousins in advancing the pyrophoric carbon theory in their joint report. But at no time did he refer to it in his evidence nor was he asked questions by defence counsel about it - even though present in the "hot tub" when defence counsel questioned Mr Collins about the theory.In my view, the evidence renders the pyrophoric carbon theory highly improbable. I am satisfied that I should accept Mr Urbanek’s evidence that the drying oven operated at a constant temperature of 60 degrees Celsius. This evidence was not seriously challenged. Accepting that evidence, the temperature of the flue would not have reached the required temperature. On the view, Mr Urbanek climbed the ladder to demonstrate that with the oven operating at 60 degrees Celsius he could place his bare arm and his face on the flue and suffer no discomfort. There was no objection to this being received as evidence. It was not suggested that there was any reason why such a situation should not have obtained at the time of the fire. It also stands to reason in any event because the flue was exposed to the open air and was likely to be cooler than the oven, at worst, as it approached the roof and the roof timbers. In addition the nearest timber was about 200 millimetres from the flue (as shown by photo 32 of Exhibit D2). I note that the plaintiff also relied on the evidence of Mr Urbanek and his partner Ms McDonnell that they had not observed any visible change in the appearance of the timber including colour change. I do not attach any weight to that evidence, however, because it was not something to which they had given specific attention.
I accept the submission of counsel for the plaintiff, that the pyrophoric carbon theory was put forward as a possibility and when properly examined should be rejected even as a possibility. I am satisfied that the temperature of the flue did not get hot enough to result in pyrophoric change. In addition, the evidence does not support the conclusion that, assuming pyrophoric change, the temperature in the vicinity of that change would have been high enough to start a fire. I note that counsel for the defendant did not argue for this theory in final addresses.
(b) Oils
Mr Cousins advanced, as a possibility, the condensation of oils released in the drying of fruits, seeds and nuts on the rafters above the oven. There was no evidence, however, that that could or did occur and accordingly this suggestion is mere speculation.
(c) Soot passing from the building into the meter box
I have referred above to the parties’ submissions on this explanation about how fire could have occurred in the meter box from a fire in the building. Professor Stokes gave evidence that severe electrical arcing could develop where a carbonised filled air stream deposited soot on bare conductors. Once some arcing process has developed there would be an ionised gas circulating within that meter box space and provoking connections between points, more or less at random. Any fluctuation of air current or plasma movement may bring a flame between two conductors that are active and neutral and cause an arc. He said that that process persisted, from the amount of damage, for a time much longer than the normal time of an electric arc which is self interrupting. He, therefore, felt something external had been causing the arcing activity and he suggested that that was an external fire which provoked continual arcing for 4 to 5 seconds.Later he said that one would have had vagaries in the air currents and soot laden currents within the meter box and that they do not necessarily point themselves at the first available target. He said that if the fire was coming from outside, the soot laden air may not attack the first point but continue on to the next one. He said he could not be more specific than that. Later he said that you only need a small amount in a small area to begin the process. Later Professor Stokes said that he accepted that there were bare contact points in the upper section as well as the lower section of the meter box. He went on to talk about the buoyancy effects of fire stating that if the fire came from outside the meter box it was creating a kind of micro climate with swirls of air, possibly even creating low pressure regions haphazardly. He was not suggesting necessarily that the fire itself was heating up the box and its contents. If the box was warming up, he said that the air inside it would be circulating, going up and down at the sides where it was hottest. Invited to give more detail he said he did not want to speculate too much.
As Professor Stokes himself might have said, one cannot exclude the possibility of a small quantity of soot landing on a bare conductor in the lower part of the meter box but it would be extremely improbable for such to have occurred. The soot had to be airborne. It had to be carried out of the building through one or other or both of two small holes in the wall containing wires (or from the burning wires) and to travel horizontally and enter the opening into the meter box. For one of the holes in the wall there was a gap of approximately one inch between the wall and the opening in the box. The other opening was closer. The soot would then immediately have found itself in the company of a nest of wires and bare conductors. Assuming soot had entered that space one might have expected some of it to settle in that area. It was a still night and the temperature was cold and there does not appear to have been any particular reason why some soot carried into that area would do anything other than simply settle. To pass into the lower section, it had, however, to pass a considerable distance to its left, not settle on any bare conductors, pass through the hole into the lower section and be carried down into that section. It then had to land on a bare conductor to start the sort of effect referred to. Such a scenario is possible in the sense that anything is possible but appears to me to be one which should be described as highly unlikely.
Origins of the fire – analysis; the explanations of Mr Collins27 As already mentioned, Mr Collins made some basic errors and his evidence requires careful scrutiny. But he acknowledged his errors frankly and other errors were not demonstrated. Generally, he appeared to approach his evidence with care and the issues with an open mind. Unlike Mr Cousins, he was amply qualified.
28 As noted above Mr Collins advanced different explanations. In the course of the debate that ensued in the case, and in particular the discussion in the "hot tub" his preferred theory as to equipment failure, the time clock, was reduced to a possibility. Nonetheless, he did identify a fundamental weakness in the design and structure of the lower section of the meter box which Professor Stokes had to accept; namely, the use of a 80 amp fuse, a capacity which was significantly in excess of the capacity required for the wires in question.
29 Mr Collins, however, kept returning to the proposition that what was critical in determining the location of the source of the fire was that the presence of arcing in burnt out cable indicated that the cable was live at the time it was attacked by fire and its absence in other burnt out cable indicated that that cable was not live. He argued that it was significant that the only arcing observed by himself or Mr Nealon was in the TXU portion of the meter box. He argued, from that, that it must follow that fire occurred first in that part of the meter box at the time of that arcing while there was current flowing in that part of the meter box but thereafter when the remaining cables in the upper section and in the building were burnt there was no current flowing. It followed, he said, that the current had been cut off before the fire in the meter box passed into the upper section of the meter box and before any fire took place inside the building.
30 When Mr Collins confirmed to Professor Stokes that there was no evidence of arcing anywhere in the building, Professor Stokes stated:
"If you review the texts on this matter you would find that isn’t necessarily uncommon, the latest fire – the latest fire ignition handbook of which we have a copy – we did have a copy here regards the finding of arc beads, as they are called, a matter of speculation, that it’s not necessarily the case that you are going to find it, that it is possible for them to be disturbed immediately after being created and as we can see over here on the main switchboard, there are obvious signs of arcing damage at the end of conductors but there are no arcing beads there. So the fact they are not found is not necessarily evidence that there was no arcing taking place. "
31 The Professor’s comment does not provide an answer. It acknowledges that arcing damage can be seen at the end of conductors even though arcing beads are not present. But the evidence was that no arcing damage of any sort was seen in the wiring in the building. It seemed to me that at that point, if not at other points, Professor Stokes was attempting to defend the defendant’s position but did so unsuccessfully. In the end, it was common ground that for arcing to occur the cables must be live. Further, Professor Stokes expressed the opinion that
"It’s hard to see how a fire could be caused other than something reaching a temperature capable of ignition unless there is an arc involved."
32 The question is - why extensive arcing in the TXU section and nowhere else? It is difficult to avoid the conclusion that the probabilities are that the fire began in the section of the meter box containing the TXU equipment and, as a result, the current was cut off before the fire progressed any further. That is not to say that the plaintiff’s case does not have its difficulties. It requires that the fire proceed along the cable and manage to ignite the timber inside the building. That issue requires further examination.Origins of fire - the flammability of the cables
33 Defence Counsel submitted that, if the plaintiff’s theory of the origin of the fire was correct, it required that the fire pass along the cabling into the building.[5] He submitted that it was in fact critical to the plaintiff’s theory that the fire passed along the cable by means of combustion of the PVC insulation which had fire inhibiters in it. Counsel submitted that on the evidence of the experiments of Mr Cousins it was unlikely that the fire could have passed along the cables into the building.
34 The defendant’s experts, notably Mr Cousins and Professor Stokes, sought to make much of the fact that the PVC material insulating the cables was made in such a way as to be resistant to fire. Professor Stokes commented that the PVC was manufactured with chlorine and stated that more than half of it was chlorine. He said chlorine is a very effective fire retardant so by its very nature PVC will not propagate a fire. Mr Collins commented in his evidence that in fire terms the PVC insulation is considered to be "doped" meaning that it is designed to have a retarding effect. His evidence was that it will burn only with the provision of an external heat source and that if you remove the heat source it will self-extinguish. It will burn, however, while there is an external heat source. Mr Collins also commented that with the duration of time and exposure to temperature the fire resistant properties reduce. As time goes by there will be some lessening of their retarding nature. Professor Stokes disagreed saying that it was still 50 or maybe 60 per cent chlorine. He agreed, however, it was capable of being consumed by fire when exposed to a sustained external heat source. He said it could not provide that external heat source itself to support the burning in other things. It only supported a flame when subjected to an external heat source. Mr Collins said he agreed with the latter comments.
35 Mr Collins identified the piece of chipboard as a constant and sustained heat source. The Professor was asked to comment on that and he said the chipboard was certainly in close proximity. He said it was a fuel source but not an easy one. He said if you could picture holding a cigarette lighter to a piece of chipboard you would need to hold it there for quite a long time and that the flame itself could be 2000 degrees from a cigarette lighter.
36 Asked to explain why the PVC on the cabling in the meter box had disappeared Professor Stokes commented
"If you were to subject it to the amount of arcing which obviously has taken place, this is not a point of disagreement, the PVC will certainly disappear".
37 He said initially that it needed a temperature of 200 to 250 degrees to cause charring and disappearance of the PVC. He then raised that to 200 to 300 degrees and then attempted to raise it a little further by stating that with a slightly higher temperature it will begin to char and disappear. Mr Collins gave evidence that the chipboard, if burning would produce a flame of 700 to 900 degrees which was more than adequate to sustain the burning of a cable. Professor Stokes did not dispute that proposition. Mr Collins said that arcing may have been involved in the very early stages of the fire but generally the major holes shown in the meter box walls were the result of the material in the meter box being on fire. Professor Stokes did not express disagreement with that. As to the temperature at the arcing site, Professor Stokes said that it could be 10,000 degrees. He said that he was more or less in agreement and would say that the holes punctured in the meter box walls were direct arcing sites - they are arcing holes.38 Mr Cousins did some experiments using cabling passing through chipboard in a mock-up meter box and a video was produced of the experiments showing the difficulty in setting alight cable insulation. In my view, this took the matter no further than the oral evidence of Professor Stokes and Mr Collins. A viewing of the photographs taken and the video tape reveal that the circumstances of the experiment were so different from the reality of the incident that no useful comparison can be made.
39 Bearing in mind
● the difficulty of burning PVC and the high temperatures required to do so,
● the fact that the insulation was burnt,
● the frequency and amount of arcing activity that occurred in the lower part of the meter box, and● Professor Stokes’ evidence that the meter box would have been consumed within five seconds,
it is reasonable to conclude that there was a fire of extremely high temperature which took place in the meter box and of such intensity that it would have been capable of causing the chipboard and all the cabling in the meter box and from the meter box to the wall to burn and burn very quickly. Accepting that proposition, it is understandable that the fire could have continued into the building despite the fire resistant qualities of the insulation around the cables. It should be borne in mind that the opening at the top and rear of the meter box was large enough to allow flames and heat from the burning meter box to escape and fuel the burning of the cabling as it passed into the wall of the processing room.40 There does not appear to be any other satisfactory explanation and the logic of the plaintiff’s explanation is compelling.
41 I turn next to a particular issue relied upon by the defendant to contradict the plaintiff’s case that the fire commenced in the meter box. It arises from alleged damage to a water pump.
Origin of fire - the pump issue
42 An issue raised for the defendant was what became known as the pump issue. In giving evidence about damaged equipment, Mr Urbanek gave evidence that the electric pump from the water tanks which gave pressure to the water systems in the building had burnt out as a result of the fire. He said that the pipes from the tanks had been damaged and, as a result, the pump had run empty – it had kept pumping but without water passing through it. He said that the pump had been working properly up until the fire.43 Counsel for the defendant submitted that, if this evidence was accepted, Mr Collins’ theory about there being no electricity going out from the customer’s side of the board by the time the fire entered the building could not be accepted. He pointed out that Mr Collins had accepted that, if this had occurred, his theory about there being no electricity going out to the customer’s side of the meter box by the time the fire entered the building could not be accepted. Counsel also referred to the evidence of Professor Stokes that the maximum time for major arcing events in the meter box would have been 10 seconds and that a pump would take minutes to destroy itself by running dry. Counsel, therefore, submitted that, if Mr Urbanek’s evidence was accepted, the fire could not have started in the meter box. Whatever difficulties there might be about determining where the fire started, this evidence, if accepted, was totally inconsistent with the meter box being the source of the fire.
44 Counsel for the plaintiff submitted that Mr Urbanek was obviously wrong in saying that the pump was running. Counsel also submitted that there was some debate as to what he had in fact said.
45 Plainly if his evidence was as described and correct, it contradicted the plaintiff’s case that there was an approximately five second fire with extensive arcing that occurred in the lower portion of the meter box resulting in the electricity being cut off to the building and its facilities before the fire entered the building. I accept that electricity would have had to run for a longer period for the pump to be able to burn itself out in the manner described. I have come to the conclusion, however, that Mr Urbanek’s evidence should be rejected.
46 The explanation for his erroneous evidence is that he attempted to claim compensation for an item that was not damaged in the fire. As will be seen below he has done that in respect of a large number of items of damages claimed. He demonstrated a total lack of credit as a witness in this area and as the person responsible for the plaintiff’s details of claim. I also refer to the following evidentiary issues.
• In his original witness statement he did not refer to the pump as having burnt out. Rather he stated that there was no power so that the water pumps would not run.[6]• In his evidence in cross-examination he stated that the taps were working but they did not have pressure. If that was so, the pumps would not have run dry.
• It was unclear how and why the flow of water to the pump could have ceased when it appears he was able to obtain water from the tanks immediately after the fire.
• There was no evidence as to how the section of pipe carrying water to the pump was damaged, the pump being outside and to the east of the drying area of the building.
In my view, Mr Urbanek’s evidence about the pump being damaged in the fire was false.
Other evidence relevant to causation theories
47 There were two other items of evidence to which reference should be made. In the end, they provide little assistance.48 I refer to the evidence of Mr Urbanek and his partner Ms McDonnell that Mr Urbanek attempted to throw water on the remaining smouldering timbers which were at the base of the wall dividing the southern section from the northern processing section. The timber was separated from the southern drying section by a metal dividing wall. Counsel for the defendant relied upon the evidence of Mr Reidy of a conversation with Mr Urbanek which according to Mr Reidy was to the effect that he had poured water on the fire through the window. Counsel submitted that the only windows were at the northern end of the processing section and therefore there must still have been fire burning at the northern end. This was relied upon to suggest that the fire had moved from south to north Bearing in mind that the fire was a slow burning fire, it was possible that different parts of the structure would still be smouldering or burning at the time Mr Urbanek arrived. Thus, the evidence, if accepted, is inconclusive.
49 In cross-examination, Mr Urbanek denied throwing water through the window. As I understood his evidence he said that the damage was such that he couldn’t have done that. Photographic evidence suggests that the damage may well have made it impossible or pointless. He said that he tried to throw water on the eastern wall of the processing section in the south corner. To get to that he went through the roller door location in the south west corner of the dividing wall. He said that the timber at the bottom of the wall was just simmering. He said that the roof of the drying section was not burning at the time. Ms McDonnell gave evidence that she followed Mr Urbanek up to the factory some time after he had left the house. She said she saw him putting water on the building. He entered the building where the roller door was and tried to get in over the rubble so she was worried about things falling on to him at the time. She carried water to him in a bucket.
50 Mr Reidy was not called to give evidence. His witness statement was received after editing in respect to his evidence about the above. It is possible that he misunderstood Mr Urbanek. That would be very easy because Mr Urbanek’s English is very difficult to understand. Because there was some support in the evidence by Ms. McDonald, the evidence of Mr Urbanek should be preferred. Alternatively, the evidence should be treated as inconclusive.
51 The other evidence was the damage done to a large set of scales. They were situated beside the oven and the back of the scales was a short distance from the dividing wall between the north processing section and the south drying section. It was common ground that the damage to the rear of the scales was damage caused by fire attacking the metal backing. The front of the scales revealed damage only to the plastic covering of the scales which had melted. It was common ground that this was consistent with exposure to heat but not fire. But cross-examination of Mr Collins about the scales rendered the evidence inconclusive. It was clear that somewhat similar temperatures were required on both sides to achieve the damage done.
Causation and liability - conclusion
52 To the extent that the resolution of the question of the source of the fire turns on a choice between the evidence of Professor Stokes and Mr Collins, I prefer the evidence of Mr Collins.
53 Professor Stokes, in resisting Mr Collins’ explanation as to the source of the fire, relied upon the existence of other possibilities. I am satisfied that he was requiring the exclusion of all other possibilities before he would be prepared to accept Mr Collin’s explanation. He was, in my view, lacking the advantage that Mr Collins had of visiting the scene after the fire and shortly after it happened. He had also formed his opinions without the benefit of an inspection of the meter box together with all its contents. It is also a matter of concern that he was prepared to join Mr Cousins in what purported to be a report of experts, and was prepared to accept his experiments and rely on a standard that was not applicable. If he did have concerns about those matters, it may explain what appeared to me to be a degree of apparent discomfort and irritation displayed throughout his evidence.
54 The standard of proof that I am called upon to apply is the balance of probabilities. I refer to my analysis of the evidence and arguments. I am satisfied on the balance of probabilities that a fire commenced in the TXU section of the meter box while the cables in it were live resulting in the current ceasing before the fire passed into the rest of the meter box and into the building. The alternative source of the fire in the meter box, a fire in the building itself, is for reasons already advanced highly improbable and contradicted by the absence of any evidence of arcing in the building. I am also satisfied, on the balance of probabilities, that the fire was a result of a failure of one or more unidentified pieces of equipment provided by TXU and contained in its section of the meter box.
55 It is unnecessary to explore the precise bases of legal liability. The above findings having been made, counsel for the defendant properly conceded for the defendant that liability for compensation was established. I turn therefore to the question of compensation.
Damages
56 The plaintiff claims the following damages:
Owner (building costs)
The plaintiff originally claimed $56,762.45. The claim was the subject of evidence from an accounting expert Mr Fettes, as were all the claims. After his review of the claim it was reduced to $47,237.69. The defendant has challenged a number of the items making up the total and argued for a total deduction from the amount of the claim of $3,999.10 and would allow $42,250.79. I turn to the challenged claims.
(i) Adams – electric freezer
This claim related to an invoice dated 20 July 2001 for work done by an electrical contractor named Adams. The total amount of the invoice was $6,870.45. The amount challenged by the defendant relates to work described in the invoice as "rewire total freezer". The defendant argues for a deduction of $1,495.35 – on the basis that the rewiring of the freezer had nothing to do with the fire.Mr Urbanek was challenged in his evidence about this item. He agreed that the work referred to concerned getting the new freezer going. He also agreed that the freezer was not damaged in the fire. He nonetheless maintained that the work referred to was to repair fire damage. He stated:
"Yes, because we lost the wire to the freezer so he had to replace it; we lost it in the fire."
I regard this evidence as unsatisfactory and the amounts should not be allowed.
(ii) Electrical Needs Pty Ltd
The claim made in respect of an invoice dated 10 May 2001 is for $485. The invoice describes the work done as
"Variations: 1. Supply for pole safety switch.
2. Repair faults in office shop to bring up to standard.
Price:$485 plus GST."
In cross-examination, Mr Urbanek conceded that that there was no fire in the office shop but he said they needed power supply in the packing shed where the office is situated. Again the evidence is unsatisfactory and while the claim in respect of the office shop is still pursued it is not in my view made out. In relation to the item "Supply for pole safety switch" the evidence did not satisfactorily explain that item. Accordingly an amount of $485 should be disallowed.
(iii) A & M Garages
This invoice dated 1 May 2001 concerned aspects of the construction of the new factory premises built to replace the totally destroyed factory. The issue that emerged in cross-examination of Mr Urbanek was that there had been a roofing section provided which was not in the original factory which connected the roof of the factory to the first refrigerated container used by the plaintiff for storing the produce it processed. Mr Urbanek accepted that the reconstruction involved extending the roof but gave evidence that they used a wall panel for the roof. The latter comment does not appear to have been challenged and I accept that it was an assertion that loss had been mitigated by using a wall panel as part of the roof. At the same time, the claim involves labour and probably some additional materials for new work. Absent any attempt by the plaintiff to justify a more accurate amount, the amount claimed should be reduced by the amount suggested by the defendant of $800.
(iv) S & J Green
This invoice dated 28 June 2001 was for $9,750.00 plus GST. It related to the installation of cool room panels for a room 10 x 6 x 2.5 metres high. Mr Urbanek agreed that this quotation related to what were described as sandwich panels. He said the supplier was a refrigeration person. He agreed that the sandwich panels were a substantial improvement over the prior building but said that it had to be done because of health regulations and building regulations. He said that he was advised by the Health Department that he had to make such an improvement. He applied for a permit approximately 2 to 3 weeks after the fire and said that that was his first contact with the Council. The Council sent out the necessary paperwork and this apparently involved Health Department issues. He agreed that bearing in mind the date of the quotation he had made up his mind to improve the building before he went to the Council.Accepting that the plaintiff had decided to improve the building after the fire, nonetheless he maintains that what was done was necessary to comply with the regulations applying at the time. The plaintiff’s position was easily challengeable if wrong. The defendant has had the opportunity to investigate the issue, put a contrary position to Mr Urbanek in cross-examination and call contrary evidence if there is any. It has not challenged his position. In those circumstances, I think it appropriate to accept Mr Urbanek’s evidence on this point notwithstanding the reservations I have about his credibility on these issues. Accordingly, no deductions should be made for that item.
(v) D R P
The DRP invoice dated 23 April 2001 for $913.55 pre dated the fire and this was acknowledged by Mr Urbanek. Put to Mr Urbanek that it was, therefore, not proper to include it in the cost of repairing the fire damage he replied "Because I haven’t paid him a penny, I sacked him." He apparently regarded the charges as unfair. He said that after the fire the contractors had come out to the premises and removed his equipment and wires and that was why Adams had to do the new wiring to the freezer. Cross-examined about the detail of the invoice which referred to "performing repairs on the heating oven" and "re-electrical work, second hand cool room and repairs to heating oven, etc", Mr Urbanek replied that he was working on the oven because he was running a wire from the oven to the freezer. He said that the contractor put a switch on the heating oven. Challenged that it only spoke of repairs he said "what you call repairs or put something on it I don’t know." Asked if he did or did not perform repairs to the heating oven in the week prior to the fire Mr Urbanek replied "not repair, he just hooked up the wire continuously to the freezer."It is understandable that the plaintiff is not pressing this claim.
(vi) Y V Machinery
The Yarra Valley Machinery invoice dated 24 May 2001 for $74.25 relates to work performed on a Mitsubishi L200 motor vehicle. Mr Urbanek accepted that this should not be part of the claim.
Thus the amount claimed of $47,237.69 should be reduced by the following amount: $1,495.00, $485.00, $800.00, $913.55 and $74.25 – a total of $3,767.80. The amount allowed by way of compensation is $43,469.89.Plant and equipment purchased or repaired
57 The plaintiff originally claimed $22,939.50 in respect of plant and equipment purchased or repaired. There are some 12 items which the plaintiff concedes should not be included which total $10,234.18. They comprise the following items of expenditure incurred more than a year after the fire which either did not relate to the fire or relate to items damaged in the fire. They are the following: Royal Wolf (shipping container) $2,400.00, Hoogies (water tank) $1,119.55; John Beal (bearing/seals refrigeration unit) $204.00; A 1 machinery (meat mixer) $800.00; PPN (bottle labeller) $5,500.00; Impresstik (bottle labeller) $4,322.00; Impresstik (bottle labeller) $400.00; Matthews Australasia (bottle labeller) $545.45; Matthews Australasia (bottle labeller) $727.27; Australian Instruments Service (digital thermometer) $125.00; Riversdale Mowers (Davey pump) $490.91; Fog 9 (piston filler) $6,400.00.
58 There are five items that remain in dispute
(i) Adams, invoice 18 February 2003.
The amount in issue is $422.09. It appeared in the list of Mr Fettes, as an item of electrical repairs to a compressor. The invoice did not identify the equipment. Mr Fettes said he would have asked Mr Urbanek what it was about. When cross-examined about it Mr Urbanek said that it concerned damage done to an upright filler. When it was pointed out that the upright filler did not have any electrical fittings he then corrected himself to say that it concerned part of the dryer which had to be repaired and replaced. The defendant’s criticism is that the evidence does not prove what was alleged – namely, that it concerned repairs to a compressor. The item should be disallowed.
(ii) Y R Sandblasting invoice 10 June 2003
The amount in issue is $130.00. The invoice itself refers to the work done as "sandblast food processing equipment". Cross-examined about the matter there was some confusion about the invoice but it would appear that looking at this particular invoice, Mr Urbanek said that some of the damaged engines or machinery were out in the rain and he tried to clean them up but they needed sandblasting. This applied to the upright filler.On this evidence there is a connection and an upright filler was in the burnt out processing section. That claim should be allowed.
(iii) Bill Jones, invoice 24 June 2003
This invoice for $115.00 related to an AEG Motor and fan and involved the removal of the fan and the dismantling and replacing of the bearings assembly. The defendant argues that this item of work was not fire related. Under cross-examination Mr Urbanek said that it related to repair to the motor for the oven. He agreed that he had been using the oven after it was repaired in 2001 by Mr Jones. He agreed it had only one motor. Put that, therefore it could not relate to fire damage if it was done in 2003. He said it was still the same repairs to the same electric motor but he said that the bearings had to be replaced because in the first place they had not been touched or had not been repaired.I find this unconvincing. More evidence is required to link the replacement of bearings with the event when two years have elapsed since the event occurred. Evidence would be needed from the repairer at the very least. This claim should be disallowed.
(iv) Butchers Service Engineering Co Pty Ltd invoice 10 July 2003
The invoice for $97.50 was for the repair of a sausage filler piston and for fitting new rubber.In cross-examination Mr Urbanek agreed this invoice related to the upright filler. In re-examination he repeated that this concerned the repairing of the installation on the piston part of the filler. It was done because it was damaged in the fire.
Again this is left in an unsatisfactory state. Was the filler used after the fire? If so why is this not general wear and tear? Again the plaintiff would have been assisted by evidence from the repairer even though the size of the amount hardly warranted the cost or time. The item should be disallowed.
(v) Stokes Australasia invoice 3 October 2003
This invoice for $271.81 related to the purchase of thermostats for the dryer. Under cross-examination Mr Urbanek confirmed that in October 2003 thermostats had been purchased for the thermal control of the dryer. Put that this did not relate to the repair of fire damage. He said that it did. He maintained this position in re-examination.Again the evidence is unsatisfactory. The dryer had been used when the factory had been re-commissioned in late 2001. Evidence is needed to explain how the fire damage could be responsible for the need to replace the thermostats approximately two years later after the dryer had been in use over that period. The claim should be disallowed.
Accordingly, the amounts of $422.09, $115.00, $97.50 and $271.80 (total $906.39) should be deducted in addition to the conceded amount of $10,234.18 – totalling $11,140.57. The amount of the compensation that should be awarded for these matters is, therefore, $11,798.93.
(vi) Plant and equipment "quoted"
The amount claimed in accordance with the calculations of Mr Fettes is $152,592.00.(i) Stephens slicer, "PPN" $27,460.00
Mr Urbanek in evidence-in-chief identified in exhibit P3 a photograph of an item which he described as a Stephen’s slicer. In the photo in question there is a reasonably obvious piece of equipment that looks a little like a trestle. Mr Urbanek said that that was not the item - it was an item that looked like a large dish. This became clearer in the subsequent batch of photos supplied by the defendant and marked D1. Photograph 25 in that batch of photos showed something that looked like a very badly damaged bowl immediately behind the object that looked like a trestle. In his evidence-in-chief Mr Urbanek described it as a high speed three blade cutter. Mr Fettes relied upon instructions from Mr Urbanek and also on the above quotation which concerned a ACO cutter mixer.In this instance, the plaintiff took the precaution of calling an independent witness as to value, Mr Adrian Dommisse. He runs a company that trades in second hand machinery and plant for the food processing and packaging industries. Asked about the cost of a replacement Stephen cutter he said that depending on condition and age, if he could get a second hand one, and they are very rare, he would sell it for between $4,000 and $10,000. He said a new one would cost between $40,000 and $50,000. In saying that he was referring to a Stephen slicer of a capacity of 40 litres. In cross-examination, Mr Dommisse said that a Stephen’s cutter was a machine that had a bowl. He said they are a combination of a cutter and a mixer. Looking at photograph 25 in Exhibit D1 he said it looked like a bowl, he said that they cut and mix inside the bowl and the bowl tilts. He said that the bowl shown in the photograph looked to be in a tilting position and it could be the same machine. He said that the cutter in a Stephen cutter came up the middle of the bowl like a Kenwood food processor and it could be between one and three blades mounted on the shaft depending on the operation it was being used for and the action is exactly the same as a Kenwood.
The defendant has raised the issue as to whether the Stephen slicer was still in use at the time of the fire. There is no evidence to support the proposition that it was not and what evidence there is points to a Stephen slicer on site in the processing room and damaged in the fire. It seems to me that sufficient has been established by the plaintiff to entitle it to compensation and that compensation should be the fair and reasonable costs of the replacement of the item. Notwithstanding the difficulty in obtaining a second hand piece of equipment, fair and reasonable compensation should be confined to the cost of such an item of equipment. The amount the plaintiff has claimed is well in excess of the cost of a new piece of equipment and an amount of $10,000 should be allowed.
(ii) Cabbage slicer, ACT quotation $22,500
Mr Urbanek gave evidence that he acquired the cabbage slicer in January 2001 for $7,500. He paid for it partly in cash and partly by cheque. It was identified in the photographs in P3 as a piece of equipment sitting to the right of the drying oven. He said that if it did not appear in the accounts of the company it could be a mistake by the accountant. He agreed that he had a quotation for a cabbage slicer of $22,500 and also a quotation from Butchers Service Engineering Company for a $2,000 cabbage cutter – a quotation obtained on 15 April 2002. He agreed he had purchased neither. Put to him that the more expensive cutter had a capacity of 2 ton per hour and asked whether that was his usual production he said it was not but that the $2,000 cutter was just a very good kitchen slicer and useless for his work. He said the quotations were obtained around Christmas in 2001/2002. Put that he had been able to trade quite satisfactorily without one he said he could but actually he had to get the product because he was short in some of the product which he can’t process and produce. He agreed he produced some 197 products but said he could not produce sauerkraut, beetroot and capsicum. In further cross-examination, counsel for the defendant called for production of the invoice for the purchase of the cabbage slicer. The response was that the plaintiff no longer had it.In support of this particular claim the plaintiff also relied on evidence from Mr Dommisse who quoted on an equivalent slicer, an Emura manufactured in Japan which had been purchased second hand in Japan. He said they were selling it for $8,250. He said an equivalent new machine like that would be in the vicinity of $24,000 to $25,000. He said that second hand equipment of that kind is rarely available. The last one they sold which was somewhat similar to that piece of equipment was sold about 12 to 18 months before and they would get one every 12 to 18 months. Cross-examined about this slicer he said that the Emura slicer was different to a cabbage slicer in that that Emura slice blades were vertical with the food being fed by a conveyor whereas a cabbage slicer normally had horizontal blades and the cabbages were fed from the top and sliced in that direction. He said that it would serve the same function but it was normally used for vegetables like onions or carrots which can be fed on a conveyor. You would not need a conveyor to feed in cabbage to a cabbage slicer.
I note that the defendant submits that on the evidence it should also be found that the cabbage slicer was still in use. Counsel referred to the evidence given by Mr Urbanek in cross-examination about the cabbage slicer when asked if it was still in use. He replied "still in repairs, hasn’t used but only will be repaired." Asked if it would be repaired he replied "yes if I can get the parts." Contrary to the submission of counsel, I think it clear that he was not saying that it was in use but that, if he could repair it, it would be.
Finally, I note that counsel for the defendant referred to the relevant depreciation schedules of the company and argued that the cabbage slicer was not present. This would appear to be so. I note, however, that Mr Fettes said that he didn’t place a lot of reliance on the depreciation schedules. I consider it reasonably clear from the evidence that Mr Urbanek is careless about the company’s financial records.
It is clear there was a cabbage slicer on the premises and I proceed on the basis that it was. I also accept that it was damaged and needs to be replaced, it not having been used in the meantime. Again it is difficult to determine a reasonable amount but in light of the evidence of Mr Dommisse I suggest that a reasonable sum would be $8,250.00, that being the price of a second hand machine, not identical but capable of performing the same functions. That sum would be fair and reasonable in my view.
(iii) Ewe stainless steel centrifugal pump, PPN quote 26 April 2002, $1,500.00
Cross-examined about this item, Mr Urbanek said it was a unit with a milk thread – that is a fine thread for ease of connection to pipes from one container to another when transferring material from one container to another. Put to him that he did not have such a pump at the time of the fire he said he had a pump but it wasn’t that type of pump. He agreed that the pump was not noted in the diagram he drew showing items of equipment and locations – the attached diagram. He said that it was situated outside between the containers and the wall where there was the actual dryer. Put that it was not involved in the fire he said it was because he lost the pipes connected into the pump. He said the pump was damaged - basically the casing, the motor was very hot and the gears inside had gone. He said the stainless steel pump is an ordinary pump with a propeller which pushes the product approximately 40 to 50 litres per minute. But the cover for health regulations was a stainless steel jacket. He said because it was outside and very close to other machinery it was damaged from the heat and they completely lost the connections. He said the pump service on the front where it was connected to the pipes was destroyed and the gear system was damaged from the heat of the fire. It was approximately three metres south of the dryer. Put that he had been able to conduct his business satisfactorily without it he did not agree. He said he had conducted it but not satisfactorily. Counsel for the defendant noted again that the item was not in the depreciation schedule but again I do not attach significance to that. He has produced a quotation for a replacement item. The amount quoted is $1,500. The claim in that amount should be allowed.(v) Hunt piston filler quote from J L Leonard Pty Ltd 6 September 2001 - $19,180 claimed
Mr Urbanek gave evidence that a piston filler had been purchased four years prior to the fire for about $2,000. The bottle filler for which the quotation had been obtained had not been purchased but the plaintiff had in fact purchased a bottle filler since the fire for $7,600. That was a Fogg filler purchased on 5 September 2003 from Process Plant Network. Under cross-examination he agreed that the bottle filler had replaced the one destroyed in the fire and there was no need to spend a further $19,000 to $20,000 on a bottle filler. It would follow that this claim should be allowed but in the sum of $7,600.
(v) Hand held mixer, PPN quote $12,000
Mr Urbanek gave evidence that the hand held mixer was two years old. He had bought it for cash and it did not appear in the accounts of the company. It was made for him for $1,000. He agreed that the same people could make him another one if he asked them but he had not done so. He said that the emulsifier did the task in a different more sophisticated way. If an amount was to be allowed it should not be more than $1,000.00. But there is a further issue. Mr Urbanek stated that the hand held mixer was not in fact inside the building at the time of the fire but it was outside the building. It was outside because he was changing the blades on it before the fire – the cutting blades. He said it was lying down outside on the wall. The evidence is inadequate and the claim should not be allowed.
(vi) Steam jacketed mixer – amount claimed $16,500; quote by Darren Cameron 15 April 2002 for 860 litre capacity steam jacketed mixer $15,000
Mr Urbanek gave evidence that the problem was that the gear box on top of the steam jacketed mixer was completely destroyed and he is looking for a replacement for it. He said that the original machine had cost him $5,500 before the fire in the year 2000. He purchased it from a company called A-One. He said they had been paid for it by cheque. Again it seems that this piece of equipment did not appear in the company’s accounts. He said that Mr Cameron had provided the cheapest quotation.
Counsel for the defendant put to Mr Urbanek documents relating to a steam jacketed mixing pan with a 100 litre capacity. He said that was similar in capacity to the machine that was destroyed but referring to its design, it would seem, commented that he could not fit that particular machine in to the premises. I note that he agreed that all the equipment that he had purchased was purchased second hand. In all the circumstances, it is difficult to obtain any guidance from the quote obtained in view of the size of the machine and the fact that it was new. Fair and reasonable compensation is best obtained by accepting the figure for which it was originally purchased of $5,500, a figure which the defendant is prepared to allow.
(vi) Mincer – electric, quotation Butcher Service Engineering Company Limited $5,000
In his evidence Mr Urbanek identified the mixer in the photographs. However, in cross-examination, asked if he would replace it because it was necessary to do so because the Workcare people required it, he agreed. The response in cross-examination was not further explained in re-examination or in further cross-examination. It is possible that his English let him down but it was not corrected. On its face Mr Urbanek appeared to be saying that it was replaced because the Workcover required it to be replaced not because of damage in the fire. Accordingly this item should not be allowed.
(vii) Upright filler, quote for EM 30 hydraulic sausage filler $7,200 plus GST
According to Mr Urbanek this item was in the premises that were burnt but there is no evidence that it was actually damaged in the fire. It could not be used because it was regarded as dangerous by Workcover and had to be replaced. Reference has already been made to repairs to the upright filler which would suggest that it was not damaged in the fire.
The plaintiff has not demonstrated a connection between the fire and the need to replace this item and the claim should not be allowed.
(viii) 45 plastic storage containers. Nylex quotation 24 May 2002 $960
It would appear that Mr Fettes and Mr Urbanek were at cross purposes with this item. Mr Urbanek was claiming for 20 plastic pails and one 45 litre drum. He said that was to replace plastic containers he lost in the fire. He bought replacements about 2 1/2 years ago. There was a quotation from Costpack dated May 2002 for 107 20 litre white pails and 20 litre white lids for a total cost of $582.08. There is also a quotation from Nylex for 120 45 litre drums complete with two handles and lids totalling $9,486.00. He agreed that no 45 litre drums were damaged in the fire. There was one 45 gallon drum of glucose lost in the fire. He said he had 12 to 15 white drums approximately. It appears that the claim to the extent that it relates to the purchase of 107 20 litre buckets from Costpack is not disputed, the amount involved being in $582.00. On the strength of Mr Urbanek’s evidence, however, compensation in respect of 45 litre drums should be confined to one - $79.05.
(ix) Stainless steel preparation benches, Fallsdell quote 15 April 2002, $2,000.00
This claim is allowed by the defendant at the amount claimed.
(x) Drier including delivery quotation West Martin 20 January 2005 for $29,920,00 and trays for drier $4,730.00
The plaintiff is now claiming $25,000 in respect of this item - because it seems that he now has a quotation for $20,000.00 for the drier. He also, however, had a quotation apparently for $34,650.00 including all new trays. He had had the original drier for 10 years.
There was evidence that in November 2001 a Mr Hooper did repairs upon the drier (as well as a freezer). Mr Urbanek agreed in cross-examination that the work had been done to return the drier to use. Mr Urbanek explained that the back part of the drier facing the wall had been damaged and they had started to loose insulation in it. They put in a new metal piece underneath to prevent losing the insulation completely. In re-examination he said that the efficiency of the operation of the drier was very poor. He said that the fire had caused the insulation to be damaged and it was down on the bottom part. The insulation between the walls had collapsed. He said there was no option but to replace the drier. It seems that the aim is to replicate the drier and use the trays and similar equipment.
He said that to achieve the required temperature inside the drier they now had to set it at 70 degrees to obtain 60 degrees internally. He said it takes him 48 hours for the process to be carried out as opposed to 32 hours at 60 degrees prior to the fire. In his evidence Mr Fettes confirmed that to his own observation the drier was not working efficiently in that whatever is on the trays does not dry fully so you have a tray which doesn’t dry on the edges. This involves additional costs to the manufacturing process. They have to trim up the outside of the produce. He said it was not working efficiently.
I am satisfied on the above evidence that the drier was damaged in the way described. The extent of the damage and the cause of it has not been directly challenged by the defendant by cross-examination or by the calling of other evidence. In addition, it has not sought to advance evidence supporting a lesser cost of replacement or repair. The item is one for which the plaintiff should receive reasonable compensation. It is true the equipment had been in operation for some years but the drier I am satisfied has to be replaced because of damage from the fire. Having regard to the quotations obtained by the plaintiff, the amount now claimed of $20,000 appears to be a fair and reasonable amount. It is a substantial item of equipment.
The defendant relied upon the fact that the depreciation schedule for the year ending 30 June 2000 recorded the cost of the drier as $577. This was repeated in the depreciation schedule for the year ended 30 June 2001. The acquisition date is said to be 1 January 1990. The reality is, however, that the depreciation schedule is unreliable.
I am satisfied that as a result of the fire the drier that was in use has to be replaced and compensation of $20,000 would be fair and reasonable.
Equipment and rental costs
The amount claimed on the basis of Mr Fettes evidence was $10,646.60 and that amount is accepted by the defendant.
Ingredients and packaging
The amount claimed on the analysis of Mr Fettes was $14,245.29. That amount is accepted by the defendant.
Bendigo Bank loan costs
Mr Fettes originally estimated the loan costs at $2,404.00. Under cross-examination, however, he stated that he had originally calculated the amount on limited documentation. Having obtained all the documentation required he accepted Mr Warwick’s calculation which reduced the amount claimable to $1,626.82. The defendant has indicated that it accepts $1,625.82
Conclusion as to damages59 In light of the above the following sums are recoverable in respect of the identified categories:
(a) building total $43,469.89
(b) plant and equipment
paid (purchased/repaired $11,798.93
quoted
• Stephen slicer $10,000.00• cabbage slicer $ 8,250.00
• stainless steel centrifugal pump $ 1,500.00
• Hunt piston filler $ 7,600.00
• steam jacketed mixer $ 5,500.00
• 20 litre plastic buckets $ 582.00
• one 45 litre drum $ 79.05
• stainless steel benches $ 2,000.00
• d
• rier including delivery $20,000.00
total $55,511.05(c) equipment rental $10,646.60
d) raw materials etc $14, 245.29
(e) loan costs $ 1,626.82
Total 137,298.58
I am satisfied that $137,298.58 would provide fair and reasonable compensation to the plaintiff.
[1] Section 5 defines the supply of electricity as a supply of goods.[2] Flame from the chipboard of the order of 700 to 900 degrees and at the point of arcing 10,000 degrees.
[3] The Cousins and Stokes report, 14; the emphasis of the last sentence copies that of the report.
[4] Paragraph 550.
[5] Counsel for the defendant submitted, and (counsel for the plaintiff agreed) that it would also follow that it was possible for the fire to pass along the cable into the meter box.
[6] (para 20)
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URL: http://www.austlii.edu.au/au/cases/vic/VSC/2006/37.html
