Supreme Court New South Wales Medium Neutral Citation: Metals Trading Pty Ltd v Doctor Scrap Pty Ltd [2012] NSWSC 366 Hearing dates: 13 - 17 February 2012 Decision date: 05 April 2012 Jurisdiction: Equity Division Before: Rein J Decision: 1. Judgment for the plaintiff for costs of works and hire and repair of hired equipment. 2. Judgment for the cross claimant for the costs of remediation of soil in the area underneath scrap piles maintained by the cross defendant. Catchwords: LANDLORD AND TENANT - tenant's liability to remediate land contaminated by asbestos EVIDENCE - burden of proof, presumptions, and weight and sufficiency of evidence - proof that prior activities might lead to contamination with asbestos insufficient to undo linkage between scrap piles maintained by cross defendant and discovery of asbestos at those locations Legislation Cited: Conveyancing Act 1919 Cases Cited: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Category: Principal judgment Parties: Metals Trading Pty Ltd (Plaintiff) Doctor Scrap Pty Ltd (Defendant) Representation: Counsel: P Greenwood SC; J Hynes (Plaintiff) S D Robb QC; J Baxter (Defendant) Solicitors: Minter Ellison (Plaintiff) Anderson Lawyers (Defendant) File Number(s): SC 2010/106818 Judgment 1These proceedings, commenced by Metals Trading Pty Ltd ("Metals"), concern the lease by Metals of a property at Hereford Street, Wagga Wagga ("the Site") from the defendant, Doctor Scrap Pty Ltd ("Doctor Scrap"), and equipment hired by Doctors Scrap for Metals. Mr Greenwood SC appears with Mr Hynes for Metals and Mr Robb QC with Ms Baxter appears for Doctor Scrap. 2The two elements of Metals' claim were: (1) the cost of works on the Site to a value of $216,169.70 for which Metals paid and which Doctor Scrap promised to reimburse it, plus interest; (2) an amount for hire and repair of an item of equipment hired by Metals to Doctor Scrap, with the amount claimed being $116,507.94 plus interest. There is now no dispute by Doctor Scrap that it is liable to Metals for these two heads of claim to a total amount of $332,677.64 (plus interest), subject to its cross claim. 3In view of the concessions made, the background to the lease becomes of less importance, namely that Metals bought the scrap metal business that Doctor Scrap conducted at several sites. Doctor Scrap, shortly before the sale, was contemplating purchasing the Site and as part of the sale agreement it was agreed that it would purchase the Site and lease it to Metals for initially a two-year period. It was agreed that Doctor Scrap would arrange for the completion of works required to make the Site functional as a yard suitable for Metals' business (principally by installing a shed, a road and a weighbridge) and later that Metals instead would arrange those works and be reimbursed for an amount of up to $350,000 (including the $216,169.70 referred to above). Doctor Scrap purchased the Site for $1.1 million in May 2007. 4In late 2009, Doctor Scrap sought to have Metals enter into a further lease, this time for five years (with a five year option). Metals did not agree to this and Doctor Scrap gave notice to Metals to vacate the premises by way of a notice to quit on 16 December 2009, which Metals did on 29 January 2010. Metals initially considered challenging the notice to quit but then decided to vacate the Site. 5Doctor Scrap, by its cross claim, claims that: (a) by virtue of its scrap operations on the Site, Metals brought asbestos onto the Site; and (b) by virtue of various clauses of the lease, or alternatively, by virtue of s 84(b) of the Conveyancing Act 1919, by which a term requiring the premises to be yielded up by the tenant in good and tenantable repair, having regard to the conditions of the premises at the commencement of the lease, is implied, Metals is required to remediate the Site. 6Metals did not accept that there was a binding lease imposing an obligation to remediate the property but it did not dispute that an implied term to the same effect arose by operation of s 84(b) of the Conveyancing Act, which would require it to remediate the Site in respect of any asbestos for which it was responsible, and accordingly it is not necessary to determine whether the term arose by reason of an effective lease. 7Doctor Scrap's claim is for an amount of approximately $3.8 million, being the cost of removing all of the topsoil and shipping it to an authorised asbestos site. 8The Site as it is now configured has been treated as having four portions. Portion 1 is the north-western quadrant (approximately) of the Site. Portion 2 is the north-eastern quadrant (it has within it the shed and weighbridge constructed in 2007). Below those two portions is the southern portion which has a "Y" driveway and the last portion is a small fenced off area in which a hayshed was constructed many years ago. After Metals left the Site, Doctor Scrap cordoned off what it calls "Portion 1" of the Site pursuant to a direction of the WorkCover Authority and, by reason of the confirmed presence of asbestos, Portion 1 has not been used since March 2010. Portion 2 of the Site and the southern part of the Site has been leased by Doctor Scrap to Riverina Scrap, another scrap dealer, since sometime in 2010. 9In November 2010, Mr Peter Jamieson, the principal of Doctor Scrap, made an assertion to Metals that he had seen asbestos on the Site (see pars 466 - 469 of Mr Jamieson's affidavit of 21 October 2011 at p160 of Exhibit A1). It is not established that what he thought was asbestos-containing material ("ACM") was in fact ACM since, although he said he was having the samples tested, he did not in fact do so (see T63.30 - 34) and there was the evidence that the product "super-six sheet" containing asbestos and which he thought he saw was replaced by the manufacturer with a very similar product which did not contain asbestos. Metals staff decided, however, that in the light of Mr Jamieson's allegations they should ensure that Environmental Resources Management Australia Pty Ltd ("ERM"), a firm of soil engineers, conduct a test for the presence of asbestos on the Site before Metals departed the Site. ERM had, in August 2008, conducted a "Baseline" study of the Site as part of a planned "Exit Report". That study, provided to Metals in the form of a report dated 27 February 2009 ("Baseline Report"), had been carried out as part of a policy of Metals in respect of all sites occupied by it to assess leased property at the commencement of occupation. The Baseline Report had not, however, been directed to making an assessment for the presence of asbestos and hence the absence of any mention of asbestos in the report does not as at August 2008 establish that there was no asbestos on the Site as at the time of the ERM 2008 investigation. ERM, at the time of commissioning of the Baseline Report, had been informed by Metals that the Site had only been used for farming. Incidentally, although Metals took occupation of the Site in May 2007, on completion of Doctor Scrap's purchase of the business it did not commence operations on the Site until April 2008. 10In January 2010, at the time that Metals was in the process of cleaning up the Site, ERM undertook, on behalf of Metals, investigations for the Exit Report dated 10 February 2010, which involved it: (a) endeavouring to mimic the investigations undertaken for the Baseline Report so that a close comparison could be made between the Exit Report and Baseline Report findings; (b) undertaking an assessment of whether asbestos was present on the Site. 11So far as (b) is concerned, ERM took "grab samples" (a scooping of 10cm of topsoil: see T303.21 - 303.24) from ten defined locations (see p664 of Exhibit A2) to test them for the presence of asbestos. Seven of the ten grab samples were found to contain asbestos fibres. 12The grab samples were all taken from positions on which Metals had stockpiled scrap, and which Metals staff identified for ERM personnel: see T303.17 - 19. Mr Troy Blackman, who was the occupational health and safety officer of Metals, was the person who organised the ERM Exit Report and, at the time of engaging ERM to carry out the investigations for the Exit Report, he was confident that there had been no asbestos contamination: see T99.1 - 39 and T102.47 - T103.12. 13Subsequently Doctor Scrap engaged its own expert to investigate the Site. Dr Takashi Itakura, who at the time worked for SLR Consulting Australia Pty Ltd ("SLR") and later for Peter J Ramsay and Associates, organised an investigation and produced reports which have been relied on by Doctor Scrap in these proceedings. 14Dr Itakura's technique was to dig 25 test pits across Portion 1 at more or less equal intervals in a grid pattern. The grid pattern is marked on p1204 of Exhibit A4. The result of what was discovered as to the soil is summarised at p1206. 15Dr Itakura's test results established that asbestos was present in 7 of the 25 test pits. 16Tests were also conducted on three very small clumps found on the Site by another person retained by Doctor Scrap, a Mr Stephen Wilkinson of the firm Carey Murphy & Associates Pty Ltd: see p1157-1 of Exhibit A4. Those tests established that two of the three clumps contained asbestos. They were taken from "near the metre box" (see par 604 of Mr Jamieson's affidavit at p176 of Exhibit A1 and T71.15 - T71.25) which may have been at the northern end of the Site (see T71.29 but see also T138.40 - T139.10), but only after Metals had already left the Site. 17In Exhibit A3 on p802 is a diagram of the Site in which are represented all of the test pits (by SLR) and grab samples (by ERM) in which asbestos was detected. The green dots show the ERM-detected asbestos and the red dots show SLR-detected asbestos, except that AB12 located on Portion 2 is wrongly coloured orange and should, it was agreed, have been coloured green. Notwithstanding that AB12 is an asbestos location, the area has not been cordoned off. 18The laboratory testing results of the grab samples which tested positive for asbestos (see p564 of Exhibit B2) were AB02 (Chrysotile), AB04 (Chrysotile), AB06 (Chrysotile and Amosite), AB07 (Chrysotile), AB09 (Chrysotile and Amosite), AB10 (Chrysotile, Amosite and Crocidolite) and AB12 (Chrysotile). The soil samples in which they were found are at p648 of Exhibit B2. Items thought to contain asbestos from AB02, AB06 and AB08 (in addition to the grab samples) were tested but found not to contain asbestos: see p564 of Exhibit B2. 19Asbestos is a mineral which was mined for many years in Australia and other countries. There are three main types: Chrysotile (white in colour), Amosite (brown in colour) and Crocidolite (blue in colour). Asbestos was commonly combined with cement and used as a building product but it has been used in many products, particularly as an insulation against heat - over doors, fire doors, brake and clutch linings. In more recent times, asbestos fibres have become identified as a cause of significant and potentially fatal lung disease and its presence is regarded as a potential health hazard, so much so that when its presence is identified in a building in NSW, licensed contractors are required to be engaged to deal with the problem, and there are a restricted number of tips or dump sites permitted to hold ACMs. 20When Mr William Ellis, engineer and partner at ERM, first identified the presence of asbestos fibres in the topsoil at the locations which I have identified, he recommended a remediation process that involved removal of the topsoil within a radius of the ascertained locations and transportation to a depot authorised to receive ACMs. Mr Ellis did not at that stage know how much soil would need to be removed but he gave two indicative prices based on alternative quantities, the higher quantity being 1500m3 and the lower being 600m3. That report was provided well before Dr Itakura carried out his investigations. Later when Mr Ellis was appraised of the SLR results, he recommended a process known as "capping" whereby the affected area is capped in concrete: see p931 of Exhibit A3. Mr Ellis annexed a diagram to his report of 18 November 2011, and provided a cost estimate of $995,000 (see p933 of Exhibit A3) and said: "The cost estimates are based on a potential remediation strategy for the Site comprising containing and capping asbestos-impacted soil beneath a layer of geotextile, and natural clay. Figure 1 presented in Annex A shows the current Site layout and proposed area to be capped. It is noted that the existing shed and weighbridge would not need to be capped as they are hardstand areas, however the concrete entrance driveway will be included in the cap for ease of future use of this area. Following completion of works a site management plan would need to be recorded on the land title to ensure that future owners were aware of impacts on the site and any requirements contained within the management plan." 21Metals does not dispute that there have been found asbestos fibres and ACMs on the Site but disputes that it is responsible for the asbestos and ACMs. At one point Mr Greenwood asserted that all of the asbestos found had been removed and this seemed to amount to a contention that nothing more need be done. That contention does not accord with even Metals' own expert evidence and the document containing points of agreement between the experts: see Exhibit 2, which contained the following (see Exhibit 2): "Points of agreement - The soil type of much of the fill material is similar to that of the underlying soils, indicating that it was likely to have been sourced from the [S]ite (re-worked) or near to the [S]ite. - The location of the track [a reference to a motor cross track to which I make reference below] is visible on the 1995 aerial photograph. - Some fill material was potentially imported onto the [S]ite during the period 1990 - 1995 to construct a motor cycle track. It is not possible to determine where the fill material originated from. Given that asbestos has been encountered in fill materials in a number of locations across the [S]ite, the entire volume of fill material should be considered to potentially contain asbestos." 22There being no dispute that asbestos was found on the Site in January 2010, the central question in the case is: is its presence a result of the operations of Metals on the Site, or more accurately has Doctor Scrap established on the balance of probabilities that the asbestos found in the soil by ERM and SLR was placed there during the operations of Metals between May 2007 and January 2010? There are a number of points at which the issue of onus of proof and evidentiary burden come into play in this case, including an assertion by Metals that Doctor Scrap must prove that the soil contained no asbestos when it was handed over to Metals. Much of the case has been fought on incomplete information, such as old aerial photographs, other photographs, old council records and the absence of any evidence from any employee of Metals or ERM actually involved in the Site clean up or the Exit Report testing. 23In submissions, Mr Greenwood relied on two passages from Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. The first passage is from the judgment of Dixon CJ at 304 - 305: "But in any case we are not concerned with a choice among rival conjectures. In an action of negligence for death or personal injuries the plaintiff must fail unless he offers evidence supporting some positive inference implying negligence and it must be an inference which arises as an affirmative conclusion from the circumstances proved in evidence and one which they establish to the reasonable satisfaction of a judicial mind. It is true that "you need only circumstances raising a more probable inference in favour of what is alleged". But "they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is mere matter of conjecture". These phrases are taken from an unreported judgment of this Court in Bradshaw v McEwans Pty Ltd (Unreported, delivered 27 April 1951) which is referred to in Holloway v McFeeters (1956) 94 CLR 470, by Williams, Webb and Taylor JJ. The passage continues: "All that is necessary is that according to the course of common experience the more probable inference from the circumstances that sufficiently appear by evidence or admission, left unexplained, should be that the injury arose from the defendant's negligence. By more probable is meant no more than that upon a balance of probabilities such an inference might reasonably be considered to have some greater degree of likelihood." (1956) 94 CLR, at pp 480, 481." The second passage in Jones v Dunkel on which Mr Greenwood relied is from the judgment of Kitto J at 305: "One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration, for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed." 24I will return to the issue of onus later but first I shall set out the broad outline of Doctor Scrap's case. Doctor Scrap's case 25Doctor Scrap's case has these elements: (1) asbestos is found in many products, including motor vehicles and industrial equipment such as boilers and fire doors; (2) Metals conducted a scrap business on the Site; (3) Metals itself recognised the asbestos risk in scrap materials (see Safety Work Sheet No. 19 ("SW19") in Exhibit B3, pp804 - 809), but introduced this to workers on the Site only in late 2009; (4) Metals utilised scrap stockpiles in specific locations within the Site; (5) Metals identified those scrap stockpiles as the locations from which ERM should take grab samples and that is where ERM took the samples; (6) the results (7/10 positive samples) is statistically significant and was recognised to be so by Mr Ellis: see T302.16 - 35 (note the reference in the question to 7/12 was incorrect) (7) the combination of propensity of a scrap operation to generate asbestos and the proof of actual contamination leads to the conclusion (on the balance of probabilities) that asbestos found on the Site was brought on by Doctor Scrap's operations; and (8) ACMs found in locations other than the Metals scrap pile is a result of the extensive exit works. 26In May 2009 Mr Blackman changed his role at Metals and became responsible for safety, human resources issues, environmental issues and quality of product issues within Metals. In that role, he gave consideration to the need for instructions to staff in regard to asbestos and determined that there was a need: T92.50 - T93.42. He ascertained that branch managers had encountered asbestos in their working with scrap metal previously and he became aware that some types of acetylene gas cylinders contained asbestos and that there were acetylene gas cylinders at some of the yards operated by Metals. 27There is much that has been said on behalf of Metals and to which I shall return but to the extent that it is argued that Doctor Scrap cannot succeed because it has not demonstrated that there was no asbestos in the soil when it handed over the Site to Metals, I do not accept that contention. The grab samples and the known risk of scrap metal items containing asbestos, in my view, provide strong evidence against Metals. Mr Ellis obviously regarded them as significant. It was suggested in argument that since he did not know about the Site's previous uses, his conclusion is not important. Mr Ellis did not, however, say that in view of what he now knows he does not regard the grab sample results as significant. Had ERM known about the Site's previous uses (or possible uses) at the time it conducted the tests, it might have taken grab samples from spots other than the stockpiles used by Metals - if those other grab samples had produced similar results, the significance of the ERM grab sample may have been much reduced or even eliminated, but no such grab samples were taken then or at any subsequent time and the only other samples were the SLR test pit samples, and the Carey Murphy & Associates tests. 28There is another theme in Metal's case concerning the grab samples which is relevant also to the SLR test samples and which is connected with Metals' exit from the Site. 29In January 2010, as part of its clean up process, Metals carried out works on the Site which included the use of excavators, bulldozers and a device called a flip screen. There are photographs taken of some of the equipment, see for example Exhibit C2, pp1403, 1407, 1409, 1410, 1431, 1459 and 1461. A flip screen is pictured in the photograph at pp1490 and 1488 of Exhibit C2. The purpose of the flip screen is to sift metallic objects which can then be removed by a backhoe or equivalent. It seems that the process is to create mounds of earth which the flip screen then "processes" by a rolling action, dropping the soil and small non-metallic objects and hence separating out metallic objects. A heavy magnet was attached to heavy equipment also used to pick up metal on the Site. There are photographs taken in January 2010 which depict mounds of earth on the Site which mounds were later levelled: see Exhibit C2, pp1447, 1456, 1463-1469, 1471, 1475 - 1480. There are also photographs depicting scrap piles at Exhibit C2, pp1385, 1386, 1393, 1398, 1411, 1415, 1420, 1423, 1432, 1433. 30Not all of the mounds of earth depicted in the photographs are necessarily mounds brought about by work in January 2010 as there is evidence that by 2008 there were mounds created and likely to be a result of excavation of the soil beneath the large industrial shed: see p591 of Exhibit A. 31Mr Blackman, following his consideration of the issue of the potential introduction of asbestos by scrap metal operations on sites operated by Metals, prepared what became the safety work instruction sheet SW19 in late 2009 and went to visit the Site to talk to employees about SW19 around Christmas 2009. 32SW19 warns staff of products that commonly contain asbestos (see pp805 - 806) and included in that are automotive body underseals, brake and clutch linings, exhaust pipe insulation, door seals, pipes, pipe insulation, welding rods, cooling towers. SW19 also warns at p806 under the title "Detection": "It is important that any items containing asbestos, or thought to contain asbestos, are detected early - preferably before scrap is purchased or tipped out. If ACM enters our yards we could jeopardise employee health and safety, face environmental issues e.g. soil contamination, and incur significant asbestos removal costs. All employees need to be aware that any supplier of scrap, and in particular those that supply steel scrap, could supply ACMs e.g. demolition contractors, cooling and heating installation and removal contractors, automotive repair businesses." 33The submissions made on behalf of Metals seek to suggest that the grab sampling undertaken by ERM cannot be reliable since so much of the earth had been moved around. Doctor Scrap submits that such a contention is not open given the absence of any evidence from Mr Ellis, other ERM staff or Metals employees establishing that the process was compromised and particularly given the evidence from Mr Ellis that he was satisfied that the process was properly undertaken by ERM field staff: see T263 - T265.6, T269 - T270 and T302. 34I accept Doctor Scrap's submissions. Metals called no evidence to undermine the evidence of its own expert (and that of the Metals employee who organised the report - Mr Blackman) that the ERM grab samples were required to be and were taken from the location of Metal's scrap piles. 35The excavation and levelling work has another important dimension - it could provide an explanation for why asbestos or ACM was found in locations beyond the stockpiles. This is because once metal had been extracted from the piles of earth and the stockpiles of the soil was then bulldozed to create a level site (or level within the existing topology) the asbestos or ACM could well have been moved beyond their original locations (i.e. inferentially under the scrap piles). Whether that is the conclusion which ought be drawn is left for consideration after I have dealt with the Metals case for alternate sources of contamination. Metals' case 36Metals, having obtained details of the history of the site, identified a number of potential sources of asbestos contamination. It was accepted that the asbestos found was not naturally occurring in the soil. 37Metals put forward an extensive list of alternative sources of asbestos and they were (see par 77 of Metals' closing submissions dated 17 February 2012): "(a) the filling of the tributary; (b) Mr Moore's establishment and use of an industrial or agricultural development; (c) Mr Moore's used tractor parts business; (d) Mr Moore's wrecking yard factory; (e) Mr Moore's four year operation of Bomen Four Wheel Drive which operated as an auto dismantler and was described as having "acres of spares"; (f) the old truck chassis' stored overtime at the site; (g) Mr Hartley's operation of the dismantler's business; (h) debris left after the removal of the demountable sheds and other structures; (i) the importation of fill material to establish the motor cross track; (j) the use of the site by Ms Blacker as an auto dismantler, which involved storage of rubbish and car wrecks throughout the site; (k) the use of the site by any number of tenants of Mr Hartley; (l) the use of the site by Mr Cooper, the motor auctioneer; (m) the dumping of waste on the site by Mr Hartley, as notified to him by council; (n) the 20 truckloads of dirt identified on the site by Mr Allen; (o) the scrap metal left at the site on behalf of Mr Jamieson prior to the plaintiff's occupation of the site; (p) the truck bodies observed on the site by both Mr [Mark] Frecheville and Mr Jamieson prior to the plaintiff's occupation of the site; and/or (q) the use of the site by the plaintiff." 38I shall deal with first the issue of the tributary. Tributary 39An aerial photo taken in 1973 in Exhibit B3 p798 (and enlargement at p799) depicts, it is agreed, a tributary of nearby river which I assume to be the Murrumbidgee River flowing west to east in the region of the Site. An aerial photo taken in 1980 in Exhibit B3 p796 (and an enlargement at p797) does not depict a tributary in the region of the Site and hence, it was agreed, it can be concluded that it was filled in. 40Metals' case is that since the tributary was filled in and there being no evidence of from where the fill was obtained or what was contained within it, there is a potential source of asbestos that has not been excluded. 41There are a number of difficulties with this argument. The first problem is that although Mr Ellis, by the use of blow-ups of photographs, sought to place the tributary (prior to its filling in) in the middle of the Site (see Exhibit 2, p3 where Mr Ellis has marked with two dotted red lines his estimation of the course of the tributary), the process by which he had gone about that was shown to be inaccurate, and Dr Itakura provided a far more detailed explanation for his hypothesis that the tributary did not run through any portion of the Site in which asbestos was found (see affidavit of Dr Itakura of 17 February 2012 and see Mr Ellis' evidence). There is also no corroborative evidence that soil was added to the Site over an alluvial course and at least one point of the testing at which, if Mr Ellis' estimate was correct, fill would be expected, it was not found in five of the six bore holes: see T262. I accept Dr Itakura's estimation as more reliable. I am satisfied on the balance of probabilities that the tributary did not go through the Site at any point at which test pits were dug. I therefore do not accept that soil was brought to the Site to fill in the tributary on any relevant portion of the Site. The Further History of the Site 42A Mr Gordon Moore owned the Site from 1984 to 1988. He also owned a site known as 2 Lewington Street, adjacent to the Site. In 1988 he sold both the Site and Lot 2 Lewington Street to Mr Raymond James Hartley and his wife. The Hartleys sold the Site to Doctor Scrap in 2007. 43There is no dispute that prior to 1984 the Site was agricultural land. There is no dispute that Mr Moore constructed the "Y" shape driveway at the Hereford Street entrance to the Site and that there were five to six concrete pads 20 feet in diameter in that southern portion of the Site to the right of the driveway: see T235.40 - 46. He used the pads as part of an agricultural equipment exhibition. There is a dispute as to the further use made by Mr Moore. There is no dispute that Mr Moore operated a motor vehicle dismantling business on 2 Lewington Street but there is a dispute about the use he made of the Site for the purposes of that business. It is not disputed that he did store some old trucks on the property although it seems that it was the southern portion of the Site that was used for that storage. 44There is no dispute that Mr Hartley constructed a motor cross track in the entire northern portion of the Site in 1993. He denied in his affidavit sworn 18 October 2011 (Tab 8, Exhibit A1) that he had operated a commercial business but I think it is clear that he did: see T242 - 3 and Exhibit B3. It is Metals' contention that Mr Hartley brought in fill to make the track, and that that is a potential source of asbestos contamination. Mr Hartley explained that he did not need to bring in fill - to create the heights he used soil from the area of the Site dug out to create the hollows, and when use of the track ceased in 1991, he filled it in again. He also said the soil was "very clean": T232.38 - 47. His oral evidence was not challenged and acceptance of it leads inevitably to the rejection of the creation of the motor cross track as a possible source of contamination, it not having been argued that use of the motorcycle track could have created asbestos dust from the motorbikes' brakes. 45In 1996, Mr Hartley leased the Site to Ms Wendy Blacker. In his affidavit, Mr Hartley stated that he only rented the front part of the Site "along Hereford Road, in line with the internal fence stretching along to the boundary with [No. 2 Lewington Street]": see par 35. He says that she and her husband said they wanted to use the Site for an auto-dismantling business and that they applied to Wagga Wagga Council in November 1996 (see p743 of Exhibit B3). He says that they did not in fact "do any works or truck dismantling on the property" and that they did not pay rent and vacated the property (see par 37 of Mr Hartley's affidavit). 46In cross examination, Mr Hartley, when shown aerial photographs of the Site, agreed that they showed that Ms Blacker had used more of the Site than he had intended her to use. 47The cross examination at T249.4 - 27 was as follows: "Q. And you can see that where the motocross circuit used to be, there is piles of rubbish there? A. That's right. Q. When one looks at the enlargement one can see the different types of rubbish in different parts of the site? A. That's correct. Q. You were responsible for putting the rubbish there? A. No, that was Blackers. In the first place I told Wendy Blacker she could use if you look at the diagram I told her she could use the area where her mobile unit was located, from there across to the fence on the right hand side and forward. Like the area on the right hand side of the concrete. Q. Right? A. I said look you can use that small area there for what you want to do and she got a bit carried away and put material there further and when she didn't pay eventually I kicked them out. And then I had to clean it up anyway. Q. What was the piles of rubbish you saw there? A. Mainly cars. Q. And other things? A. No, just mainly cars. Their idea was to wreck cars and also resell cars." 48So far as the use of the Site by Doctor Scrap is concerned, there was evidence from Mr Wayne Allen that he was employed by Doctor Scrap until he was employed by Metals as yard manager and that during the time he acted as yard managed paid by Doctor Scrap some loads of scrap were placed on the Site. The position of those loads was not identified. 49It was argued by the plaintiff that Mr Hartley's saying that when Ms Blacker left he had to clean up the Site (at T249.21) was consistent with his having buried piles of rubbish on the Site. I do not accept that his answer that he cleaned up the rubbish can be turned into evidence that he buried the rubbish on the Site. If Metals wished to contend that is what he did, it should have been put to him. That he cleaned the Site, however, is not inconsistent with some contamination from the piles of rubbish remaining on the Site or the auto-dismantling work more generally, but I shall return to this topic. 50The history I have recounted is coupled with the evidence of applications to the Council which referred to the Site having been used as an auto-wrecking yard, together with Mr Allen's unchallenged evidence that he drove by the Site previously and observed it being used as a truck dismantling yard (see p50 of Exhibit A2). Mr Allen also observed large stockpiles of soil near the western boundary of the Site: see p514 of Exhibit A2. 51There is no doubt that there were stockpiles of material of some description on the Site in the period 1996 - 2006. What that material was is unclear. There are aerial photographs which show the presence of material and structures although it is not possible to say what these structures were other than they did include a pantechnicon truck and a demountable shed. 52The evidence, referred to in [43], [50] and [51], coupled with the documents in Exhibit B3, leads me to conclude that, on the balance of probabilities, the Site was used for auto-dismantling work before Doctor Scrap purchased the business in 2007. There is also no dispute that in 2006, a friend of Mr Hartley's dumped "a few tonne" of rubble and dirt on the Site to the northern end of the property: see T249.50. Mr Hartley said he required his friend to remove it following an order he, Mr Hartley, received from the Council. Conclusions 53Metals has established on the balance of probabilities that there was carried out on the Site for some period activities that might by their nature lead to contamination of the Site with asbestos. 54However, even assuming in favour of Metals that uses were in fact made of the Site by which asbestos could have been brought on, there is no evidence that asbestos was in fact brought on as a result of these uses. If a scrap pile used by Metals was shown to have been one used by Ms Blacker for example that would mean that it could not be concluded that Metals had brought the asbestos on to the Site. No evidence was given by Metals as to where and how its scrap piles were established. I accept that it is distinctly possible that one or more of the piles were placed in the same location as some previous pile but there is no evidence that establishes that any of the scrap pile locations used by Metals were the same locations as used by anyone else either as a general pile or for trucks. 55The fact that Mr Ellis took grab samples from ten locations at which Metals had stockpiled scrap and that seven of those samples were contaminated, coupled with his evidence of the widespread use of asbestos, without more, makes it more probable than not that Metals' stockpiling of material at those locations was the cause of contamination at those locations at which contamination was found. If there were evidence that previous occupants of the Site used the same areas as those used by Metals, the position would have been different. Similarly, if grab samples had been taken by ERM at areas at which Metals had not stockpiled Scrap, and those samples had been shown to have asbestos, then subject to one important matter to which I shall refer in a moment, different conclusions would be supported. 56Mr Greenwood submitted that Metals was a company with a demonstrated professionalism in relation to its business, with Mr Blackman giving serious and appropriate consideration to asbestos, and that the evidence concerning earlier tenants of the Site suggests that those occupants are unlikely to have exercised any of the steps that Metals took, particularly given the increasing awareness of asbestos issues over time. Even accepting that submission, I do not think it undoes the linkage between the scrap piles maintained by Metals and the discovery of asbestos at those locations. 57I am not satisfied on the evidence presented that the asbestos found in piles operated by Metals came from any source other than Metals and the absence of such evidence leaves the inference upon which Doctor Scrap relies intact. 58This leaves the question of asbestos found in areas away from the Metals scrap piles and at depths far deeper than the first 10cm of soil. TP11, with asbestos found at 30 - 40cm, is reasonably close to AB06 but the other test pits are not close. TP09 and TP14 are not far removed from where the shed was constructed. TP18 and TP24 are not close. 59Doctor Scrap's case for establishing that asbestos in the Site away from the Metals scrap piles appears to be based on the proposition that soil from contaminated positions has been pushed to the positions at which test pits were dug and the contention that no contaminated material has come from any other source. As I understand it, some questions of Mr Ellis at T277 - T279 were directed to establishing that the test pits of Dr Itakura, in comparison to the bore holes of ERM and comparison between the ERM's Baseline Report and ERM's Exit Report bore holes, demonstrate that more "fill" is found in the later tests than the earlier tests. As Mr Ellis pointed out, the differences between small bore holes and much larger test pits can be significant and small distances between test spots can produce significant differences. I think this fill difference is relevant but of limited weight. 60I accept that it is possible that asbestos and ACM found in test pits in locations away from the Metals' scrap piles came from the Metals scrap piles but I do not think that Doctor Scrap has established on the balance of probabilities that that is what occurred. There are several reasons why I say this: (1) The asbestos and ACMs were (except for TP11, close to AB06) found at locations some distance away from the Metals' scrap piles. No evidence had been led from anyone about the method of working or the actual operations on the Site for the exit works. No evidence has been led to establish where the mounds were in relation to the test pits or Metals stockpiles or what they were created from or how far they were pushed. There is no evidence of the distance between ERM sample sites and SLR test pits. (2) Some of the ACMs, vinyl tiles, sheeting and bituminous lumps, have no connection with scrap metal. That is not to say Metals may not have been dealing with other materials but ACMs with a connection with metal objects seem to be more likely if they have come from Metals. (3) The asbestos and ACMs in the SLR test pits were located at a quite deep layer. A lot of fill would have had to be moved. (4) There is evidence of mounds created from beneath the shed, in other words which did not come from scrap piles operated by Metals. (5) The only explanation which would make asbestos and ACMs a result of Metals' operations is the January exit works, and the SLR test pits in some cases appear, as best can be discerned from the documents recording the location of test pits and grab samples, well away from the ERM sample sites. (6) The prior use of the Site involved uses which at least potentially provided a source of asbestos. 61I am not persuaded on the balance of probabilities that asbestos and ACMs away from Metals' scrap piles are from Metals' scrap piles. There are too many unknowns about the Site and the exit works to be confident as to the source of contamination. 62It follows that, in my view, Metals is required to remediate the soil in the area underneath the scrap piles maintained by it and within a reasonable radius of those piles, but not otherwise. Damages 63Doctor Scrap claims entitlement to $3.8 million as the costs of remediation. This is based on Dr Itakura's estimate for remediation of Portion 1: see Exhibit A4 at p1388. Dr Itakura is using 7000m3 as the amount of cubic metres of soil that needs to be removed, with a conversion of that into tonnes by using 1.9 tonnes to the cubic metre, having regard to the clay nature of the soil to be removed. He assumes the need for transportation to Sydney. 64Mr Ellis proffered for soil removal two alternative figures of $295,000 and $575,000, the first based on 600m3 and the second based on 1500m3. Both experts have factored in fixed costs such as management, supervision, validation and Dr Itakura's figures are higher probably given the far more extensive area involved. 65Dr Itakura's assessment assumes that Metals is responsible for all asbestos on the Site and that it must pay for remediation of the whole Site. Mr Ellis' second report, based on the assumption that Metals was required to remediate most of the Site, proposed a capping of the whole of Portion 1 and 2 other than the area of the shed: see pp928 - 932 of Exhibit A3. 66Since, in my view, the remediation for which Metals is responsible is limited to areas in and adjacent to the scrap piles maintained by Metals, the only evidence of what cost is involved in that is Mr Ellis' report, and he does not explain how he has calculated the two quantities. Nothing was said about this difference in submissions, indeed little was said on the topic of quantification of damages. There was no mention of the issue of damages in Mr Greenwood's written submissions (opening or closing, and there were no written submissions from Mr Robb) and the only references to damages can be seen in T326 - 335, T 349 - 351 and T353 - 354. Mr Greenwood submitted in his oral submissions that it would be necessary to embark on further tests before anything as expansive as Dr Itakura's remediation work were attempted. That idea was not explored either in cross examination with Dr Itakura or in Mr Ellis' evidence. 67Given my conclusion that Metals is responsible for asbestos in locations at which were located its scrap piles and given that Mr Ellis is the only expert to provide evidence as to what the cost of remediation work focused on the Metals' scrap piles area would be, I think it is appropriate to use that evidence to determine the remediation costs and hence damages, and I take the midpoint between the two figures provided by Mr Ellis, that is $435,000, a cost based on removing 950m3 of soil. 68There should therefore be judgment for Doctor Scrap on its cross claim in the amount of $435,000 and judgment for Metals against Doctor Scrap on its claim for $332,677.64 plus interest of $60,754.43. With the offset of the monies owed by Doctor Scrap to Metals, the net amount payable by Metals to Doctor Scrap is $41,417.94. Costs 69I will hear the parties on the issue of costs and the form of orders to be made. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2012