(Re Stutley) A W Baulderstone Holdings Pty Limited v Bradford Insulation (SA) Pty Ltd & Ors [2006] NSWDDT 17

Dust Diseases Tribunal of New South Wales

CITATION : (Re Stutley) A W Baulderstone Holdings Pty Limited v Bradford Insulation (SA) Pty Ltd & Ors [2006] NSWDDT 17

A W Baulderstone Holdings Pty Limited PARTIES : Bradford Insulation (SA) Pty Ltd BI (Contracting) Pty Limited CSR Ltd

MATTER NUMBER(S) : 420 of 2002/1

JUDGMENT OF: Curtis J at 1

CATCHWORDS: :- Cross Claims

LEGISLATION CITED: Wrongs Act 1936 (SA), s25 Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s5(1)(c)

Jones v Dunkel (1959) 101 CLR 298; CSR Ltd v Wren (1997) 44 NSWLR 463; CASES CITED: BI (Contracting) Pty Ltd v The Public Trustee of South Australia [2005] NSWCA 306; Williams v BI Contracting Pty Ltd &Anor DDT 262 of 2002; Richardson v Clifton Financial Services Pty Ltd & Anor DDT 400 of 2002; Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1954-1955) 92 CLR 200.

DATES OF HEARING: 29 & 30/08/2005, 06/09/2005, 28/03/2006 & 26/05/2006

DATE OF JUDGMENT: 06/02/2006

FOR CROSS-CLAIMANT: Mr M J Neil QC with Mr J Sheller instructed by Thompson Cooper Lawyers LEGAL REPRESENTATIVES: FOR CROSS-DEFENDANT: Mr J J Fernon SC instructed by Makinson and d'Apice.

JUDGMENT:

Dust Diseases Tribunal of New South Wales Number DDT 420 of 2002/1 (Re Stutley) A W Baulderstone Holdings Pty Limited (Cross Claimant) v Bradford Insulation (SA) Pty Ltd (First Cross Defendant) and BI (Contracting) Pty Limited (Second Cross Defendant) and CSR Ltd (Third Cross Defendant) 2 June 2006 JUDGMENT CURTIS J 1. A plaintiff, Mr Neil Stutley, in 2002 contracted the disease of mesothelioma in consequence of his exposure to asbestos spray while employed by A W Baulderstone Holdings Pty Ltd (Baulderstone) to work upon the construction of a new Kitchen and Administration block for Royal Adelaide Hospital between 1964 and 1965. He sued Baulderstone in negligence and this claim was settled on 6 December 2002 by the entry of judgment against Baulderstone in the sum of $500,000 inclusive of costs. 2. Baulderstone, asserting that the asbestos was sprayed by its subcontractor BI (Contracting) Pty Ltd (BIC), claims from BIC an indemnity against its liability to Mr Stutley pursuant to the terms of the contract between Baulderstone and BIC or, in the alternative, contribution pursuant to s25 of the Wrongs Act 1936 (SA) (an equivalent provision to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). 3. Baulderstone also claims contribution pursuant to the Wrongs Act against Bradford Insulation (SA) Pty Ltd (in liquidation), (BISA), an associated company actively involved in the business of BIC, and against CSR Limited (CSR), the supplier of the asbestos material sprayed by BIC. Claims pursuant to s25 of the Wrongs Act 1936 (SA) 4. Section 25 of the Wrongs Act 1936 (SA) provides as follows: (1) Where damage is suffered by any person as a result of a tort (whether a crime or not)- (a) … (b) … (c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would at any time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought. S26 In any proceedings for contribution under the last preceding section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable, having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity. The Liability of BIC to Mr Stutley 5. BIC asserts that, if sued, it would not have been found liable to Mr Stutley because the evidence fails to establish that it was BIC which sprayed the asbestos to which he was exposed; no suggestion is made that if BIC did spray the asbestos it was not in breach of a duty to Mr Stutley. 6. Mr Murray Baulderstone was the project manager for Baulderstone on the Royal Adelaide Hospital site. He knew Mr Stutley well and knew him to be present when asbestos was sprayed. Mr Baulderstone recalls that the spraying was done by employees of a "Bradford Insulation" company who wore khaki overalls with a Bradford Insulation logo on the pocket which logo contained the word "contracting". He also recalls seeing this logo emblazoned upon the vehicles which delivered materials for the spraying operations to the site. 7. Mr Trevor Homfray worked with Mr Stutley on the site. He recalls that "Bradford Insulation" were the people who sprayed the asbestos and that their overalls and their vehicles bore logos with the abbreviation "BI". 8. BIC contracted with Baulderstone to apply asbestos insulation spray to many other areas of the Royal Adelaide Hospital site. These contracts are recorded in a list of works performed by BIC between 1960 and 1965. This list was apparently compiled from other documents some time in 1975. Significantly, 13 job numbers are missing from the sequential list. 9. Consistently with this evidence, BIC in answers to interrogatories admits that it sprayed asbestos insulation in certain areas of the Royal Adelaide Hospital site during the period 1964 to 1965, although it asserts that it has no knowledge, information or belief as to whether or not it sprayed asbestos in the Kitchen and Administration Building. 10. It is apparent from the evidence that within the Bradford group of companies it was only BIC that contracted to perform spraying works in 1964 and 1965. In the course of the execution of the contract for asbestos spraying at the Kitchen and Administration Block, Mr Baulderstone had interaction with a Mr Jim Stott, who Mr Baulderstone said was "part of the management of Bradfords". A statement by Mr Stott exists. It was the subject of a subpoena directed to the legal officer of CSR (who is also the company secretary for BIC) who, upon producing it to the court, claimed privilege in respect of its contents. BIC does not call or tender evidence relevant to the identity of that Bradford corporate entity which performed asbestos spraying works in 1964 and 1965 and in particular does not call Mr Stott nor explain his absence. 11. In Jones v Dunkel (1959) CLR 298 at 312, Taylor J said: (ii) evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence; (iii) where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference. 12. I am conscious of the detailed criticisms made by Mr Fernon SC of the evidence of Mr Baulderstone and Mr Homfray but regard the inconsistencies to which he drew my attention as irrelevant to the general thrust of their evidence, which I accept. 13. I find that the asbestos which caused Mr Stutley's mesothelioma was supplied and sprayed by BIC, and that BIC, if sued by him, would have been held liable for the same damage as that for which Baulderstone is liable. The liability of BISA to Mr Stutley 14. BISA wholly owned BIC. Its manager reported directly to the managing director of BISA. BISA took responsibility at board level for recovery of BIC debts. BISA regulated the salaries of senior BIC employees and organised payment of the wages of the workers from a central bureau. BISA advertised, in its own name, a process for the fireproofing of steel beams by sprayed asbestos, this activity being in practice conducted by its subsidiary BIC. Mr Jim Stott, to whom Mr Baulderstone had referred as being a "Bradford" employee, was identified by Mr Snelling, contracts manager of BIC in 1962, as the sales manager of BISA at that time. Board Minutes of BISA on 23 June 1965 record that a Mr J W Stott was to be paid a bonus in the sum of £250. They also record that a Mr J G Kernot, probably that Mr Kernot identified in the evidence of Mr Snelling as the manager of BIC in 1962, was to be paid a bonus of £250. 15. In answers to interrogatories BISA admits that it knew prior to 1965 that during the process of spraying asbestos, particles could be released and inhaled by workers in the vicinity who may in consequence contract mesothelioma. 16. In the circumstances I find that BISA owed to Mr Stutley that duty of care recognised in CSR Ltd v Wren (1997) 44 NSWLR 463. This duty could and should have been discharged by BISA warning Baulderstone of the dangers associated with the spraying of asbestos. Such warnings could easily have been included in advertisements published by BISA in trade magazines, which claimed that "Architects and builders will…welcome the news that Bradford Insulation have evolved an asbestos spraying technique which is both highly effective and…economical". BISA, if sued by Mr Stutley, would have been held liable to him for the same damage as that for which Baulderstone is liable. The liability of CSR to Mr Stutley 17. I do not understand CSR to dispute the correctness of the conclusions as to duty reached by the Court of Appeal in CSR Ltd v Wren (1997) 44 NSWLR 463 and BI (Contracting)Pty Ltd v The Public Trustee of South Australia [2005] NSWCA 306 (Richardson). Rather, CSR argues that (a) the evidence does not establish that any product of Australian Blue Asbestos was sprayed in the Kitchen and Administration Block of Royal Adelaide Hospital; and (b) if it were, there was no reasonably practicable method by which CSR could have averted the risk to Mr Stutley. 18. Mr Snelling gave evidence before me. His evidence in the matter of Williams v BI Contracting Pty Ltd and CSR Ltd, DDT 262 of 2002, was also tendered; that same evidence was tendered before Duck J in Richardson v Clifton Financial Services Pty Ltd and BI Contracting Pty Ltd and CSR Ltd DDT 400 of 2002 (Richardson). The substance of his account is that the asbestos used by the Bradford spraying companies was, in the period 1959 to 1962, supplied by Ingham Plaster Company Ltd and Fred Ingham and Co Ltd, two companies operating from premises in Pym Street Croydon Park. 19. Mr Snelling said that at some time between 1959 and 1962 a decision was made by Mr John Kernot, the manager of BIC, that the composition of asbestos in the spraying mix prepared by Ingham's should change from 75 per cent blue asbestos and 25 per cent white Canadian asbestos, to 100 per cent blue asbestos. 20. A collection of invoices relating to deliveries of asbestos to Ingham Plaster Company Ltd at Pym Street, Dudley Park covering the period 23 April 1963 to 11 August 1964 are in evidence. These documents record that the material delivered was Australian raw blue asbestos grade 3, that the supplier was Australian Blue Asbestos Pty Ltd, and that the consignee was Ingham Plaster Company Ltd. The invoices bear a logo or marking of "CSR Asbestos". 21. CSR was in 1964 the managing agent of Australian Blue Asbestos Ltd and the sole distributor of blue asbestos mined at Wittenoom. The Ingham Companies were wholly owned subsidiaries of CSR. On appeal from the decision of Duck J in Richardson, CSR did not dispute the finding, made on substantially the same evidence as is led before me, that "it was so involved in the distribution and marketing of the blue asbestos in the business conducted by the Ingham companies as to place it in the position of a manufacturer and supplier of the product sprayed". Nor did it dispute "that its duty to warn of known dangers could extend in a proper case to the employees of likely recipients of its product " (supra par 26). I incorporate by reference in these reasons the substance of the reasoning of the Court of Appeal in CSR Ltd v Wren and in Richardson. 22. The asbestos spray to which Mr Richardson was exposed was applied in 1964. That to which Mr Stutley was exposed was applied in 1964 and 1965. I find that the blue asbestos supplied in 1964 by CSR to the Ingham companies, and thence to BIC, was sprayed in the Kitchen and Administration Block of Royal Adelaide Hospital and was a material cause of Mr Stutley's mesothelioma. Drawing a presumption of continuance in the absence of evidence from CSR to the contrary, I find that the asbestos sprayed on that site in 1965 was supplied by CSR, and was also a material cause of his mesothelioma. 23. Mr Fernon for CSR submits that "there is no evidence as to how any warnings by CSR would have been communicated in such a way as to make a difference to Mr Stutley" because the product was placed in a hopper and the bags in which it was packaged, which may have carried warnings, were discarded prior to spraying. A similar submission, that there was no effective way whereby CSR could have warned tradesmen of the hazards created by spraying was advanced in Richardson and rejected by the trial judge and the Court of Appeal. 24. In the present case the particulars of negligence pleaded against CSR include: (i) Failure to devise and implement a national scheme of warning purchasers, users and bystanders of the said products of the risk to health of inhaling asbestos including crocidolite asbestos dust and fibre, and (j) Failure to warn of the dangers of disturbing the said products. 25. In each case an appropriate warning could and should have been communicated to builders using the asbestos spray by advertisement in those same trade journals which advertised the spraying process. In addition CSR should have contractually required of Ingham's that it warn the occupiers of each site upon which Ingham's asbestos products were to be sprayed of the dangers associated with the spraying operations. I find that CSR, if sued by Mr Stutley, would have been held liable to him for the same damage as that for which Baulderstone is liable. Contribution and apportionment 26. Baulderstone settled Mr Stutley's claim in the sum of $500,000 inclusive of costs agreed at $45,000. The cross-defendants submit that Baulderstone acted unreasonably and improvidently in agreeing to pay this sum having regard to the evidence available at the time of settlement and that the Tribunal should discount the amount for which Baulderstone is liable before determining the contribution which may be required (Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport [1954-1955] 92 CLR 200). 27. Baulderstone have tendered an opinion by Mr Graeme Little SC that the value of Mr Stutley's claim at the date of settlement of the action on 6 December 2002 was $509,050. Mr Little has practised as a barrister before the Tribunal since its inception and in that time has been engaged in more than 100 cases in this jurisdiction. He has sat as an Acting Judge of the Tribunal on occasions, and delivered judgments both on liability and quantum. I accept his opinion as sound. 28. It is not to the point that Mr Fernon for the cross-defendants may quibble with any particular head of damage to which Mr Little addressed himself when he does not dispute his estimate of other heads of damage. For my own part I believe that Mr Little's allowance of $165,000 for general damages was too modest. I do not believe it necessary, on an issue where the cross-defendants bear the onus, of formulating detailed reasons as to why I consider that the amount paid by Baulderstone to Mr Stutley was reasonable. 29. Each of the cross-defendants directly traded in asbestos. Each had actual knowledge of its dangers. Baulderstone was a building company and the asbestos spraying was peripheral to the scope of its works; it is liable to Mr Stutley because it ought to have known of the dangers to which the activities of BIC exposed him. The causal contribution of Baulderstone and of the three cross-defendants is equal, because each is liable in respect of the same exposure of Mr Stutley to asbestos dust and fibre. Because I regard the conduct of the cross-defendants to be far more blameworthy, I apportion the liability of Baulderstone as to 80 per cent jointly and severally to the cross-defendants, and as to 20 per cent to Baulderstone. The claim in contract 30. Mr Murray Baulderstone was the project manager employed by Baulderstone on the Royal Adelaide Hospital site between 1964 and 1973. He gave evidence that Baulderstone used a standard form of contract for all subcontractors. Although Baulderstone cannot now locate the contract entered between it and BIC for the works to which Mr Stutley was exposed, it has located and tendered into evidence a subcontract dated 28 January 1964 between Baulderstone and Alfred Martin Industries Ltd in respect of air-conditioning works. Clause 6 of the contract is in these terms: The Subcontractor shall take out and maintain workmen's compensation insurance and public risk insurance policies in respect of the subcontract works and shall pay all premiums thereon and all fees required by any public or local government authority in respect of the subcontract works and shall indemnify the builder against all liability relating to the subcontract works. 31. BIC in answer to interrogatories has admitted that "at some time in or about 1964 it obtained a contract…at Royal Adelaide Hospital". This contract related to asbestos spraying works at the Royal Adelaide Hospital site at places other than the Kitchen and Administration Block where Mr Stutley was exposed. BIC does not tender this contract, nor call evidence that it is lost, or give secondary evidence of its terms. I infer that the contents of that contract do not advance BIC's case. 32. I am satisfied that BIC performed the works to which Mr Stutley was exposed. I am further satisfied that those works were performed pursuant to a contract which included the indemnity clause upon which Baulderstone relies. Orders 33. Judgment for A W Baulderstone Holdings Pty Ltd jointly and severally against Bradford Insulation (SA) Pty Ltd, BI (Contracting) Pty Ltd, and CSR Limited in the sum of $400,000. Judgment for A W Baulderstone Holdings Pty Ltd against BI (Contracting) Pty Ltd in the sum of $500,000. Cross-Defendants to pay the costs of the Cross-Claimant as agreed or in accordance with further order of the Tribunal.