DEAN SELAK CARRYING COMPANY LIMITED v LONERGAN [2015] NZHC 2540

DEAN SELAK CARRYING COMPANY LIMITED v LONERGAN [2015] NZHC 2540 [15 October 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-404-000515[2015] NZHC 2540BETWEEN DEAN SELAK CARRYING COMPANYLIMITEDAppellantAND GRAHAM REG KEREHAMALONERGANRespondentHearing: 8 October 2015Appearances: I Hutcheson for AppellantC Orton for RespondentJudgment: 15 October 2015JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Thursday, 15 October 2015 at 2:30 p.m.pursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors: The Small Law Firm Ltd, AucklandCorban Revell, AucklandIntroduction[1] On 16 February 2015, Judge GM Harrison gave judgment in favour of a mechanic, Graham Lonergan, for the sum of $10,659.57 against Dean Selak Carrying Company Limited (Dean Selak) for repair and servicing work undertakenon the company's vehicles.1 Dean Selak now appeals, but not against the order for payment of that sum, which it recognises is due and payable. It appeals insteadagainst the Judge's dismissal of its counterclaim against Mr Lonergan for $31,108.33for damage to one of the company's vehicles. It says that the damage was caused byMr Lonergan's negligence in leaving part of a rubber glove in the engine of thevehicle while changing an oil filter.Factual background[2] Mr Lonergan has undertaken the servicing of Dean Selak's vehicles forapproximately five years. On 9 October 2011, he undertook a service on a Nissan CW 450 truck registration number ECM763. At the time the vehicle had travelled 423,525 kilometres.[3] Just over three months later, on 26 January 2012, the vehicle engine was making an unusual noise while being driven south from Auckland over the Bombay Hills. The driver reported the problem and after an assessment by mechanics from UD Truck Distributors, the vehicle was towed to its workshop where it was established that the number five cylinder was exhibiting low compression. Further inspection identified the cause as a blocked piston cooling jet to that cylinder, which resulted in its failure. At the time of the engine failure the vehicle had travelled 440,751 kilometres, indicating that the vehicle had travelled some 17,226 kilometres between the time it was serviced and when the engine failed.[4] As part of the assessment process, Mr Lonergan was called in and it was decided to seek the advice of Flinders Cook (Technical Services) Limited to analyse the problem. It had been established that the cooling jet was blocked with a foreign substance consisting of a number of small irregular pieces of material. In a report1 Lonergan v Dean Selak Carrying Company Ltd DC Waitakere CIV-2012-090-1422, 16 February 2015.dated 3 February 2012, Flinders Cook advised that the foreign substance, or debris, was analysed by them with the results indicating that the material was a nitril rubber of the order of 0.1 mm thick. The report went on to note that nitril rubbers are widely used in products in contact with hydrocarbon liquids, oils and greases, and as components of hoses, gaskets, oil seals and tank linings. The report also noted that the substance was also used for nitril rubber gloves, which can be worn when handling engine parts. The report concluded by noting that the debris did not seem as flexible as might be expected from a nitril rubber glove, but its exposure to oil might have deplasticised it and lessened its flexibility.[5] Having received a copy of that report, Mr Lonergan completed a general liability claim form, which was submitted to Lumley General, his insurer. In the part of the form requiring detailing who was responsible for the accident, Mr Lonergan wrote:Disposable gloves tear sometimes when changing oil and filters and suspect a piece has fallen into the oil when fitting new.[6] Lumley General retained Mr Franklin Cossey, as an assessor, who engaged Dr Jonathon Smith of Optimech International Limited, an expert metallurgist with a PhD from Southampton University and 25 years experience as a consulting metallurgist. Mr Cossey obtained fragments of the debris which had been retrieved from the failed engine, which he took to Dr Smith. At the same time, he obtained three samples of nitril rubber gloves, one each from Repco and New Zealand Safety and one from the workshop of UD Truck Distributors, who repaired the engine.[7] Dr Smith undertook three tests on the debris fragments. First, he tested the thickness of the nitril rubber gloves and the debris fragments and subjected them to thermogravimetric analysis (TGA) and differential scanning calorimeter (DCS) testing. The visual examination of the debris disclosed that it consisted of thin material of up to six millimetres length, which had a smooth shiny surface with the reverse side having a rough and matte finish. The thickness of the debris was measured, producing a mean value of 99.3 microns. The three sample gloves produced respectively mean value thickness readings of 39.59 microns,33.60 microns and 52.73 microns. The sample gloves therefore were somewhat thinner than the debris. Furthermore, the sample gloves were shiny on both sides.[8] The TGA tests and DCS tests both showed that the debris was of a different blend of nitril rubber compared to the sample gloves.[9] Dean Selak retained Mr John Routen as an expert. He is a self-employed independent advanced automotive engineer and assessor, who has analysed failed engine components professionally, self-employed and full-time since 1998. He has two tertiary qualifications, and also has significant other practical experience. He holds himself out as an expert on the failure modes of automotive components, specialising in engine parts and metal fatigue failures. He gave evidence that he had no doubt that the debris was a foreign substance (that is, not from within the engine), which had been introduced into the oil filtration system. He was also of the view that a blockage or partial blockage of the piston cooling jet could easily have been in situ for a considerable time – and easily 17,000 kilometres or more – before the circumstances of a complete blockage combined with exceptional operating demand conspired to cause overheating and failure of the piston.District Court judgment[10] After reviewing the facts, Judge Harrison reviewed the burden of proof. He stated:[15] Mr Hutcheson acknowledged that Dean Selak had the burden of proving negligence or breach of contract by Mr Lonergan on the balance of probabilities. That is, of course, the standard of proof in civil cases. Dean Selak must prove that it is more likely than not that Mr Lonergan introduced part of a nitrile rubber glove into the truck engine while undertaking its servicing.[16] No-one else was present when Mr Lonergan undertook the service. In evidence he said that he was wearing gloves when he carried it out. He acknowledged that he used a lot of gloves because they snagged and tore easily in the course of his work on engines. On the particular occasion, however, he had no recollection of a glove tearing or of any other way he could have introduced nitril rubber into the engine.[17] Dean Selak therefore had to rely on the evidence establishing the inference that there was no other way in which the debris blocked the squirter, that is the cooling valve, than by part of the glove being worn by Mr Lonergan finding its way into the engine.[18] To do this, various factual matters had to be established.[11] It is, with respect, my view that Judge Harrison appears to have set the bar too high for Dean Selak. In [17], Judge Harrison seems to suggest that Dean Selakhas to eliminate every other possibility ("there was no other way"), other than part ofthe glove being worn by Mr Lonergan, finding its way into the engine. It would be more correct to say that Dean Selak therefore had to rely on the evidence establishing the inference, on the balance of probabilities, that the debris which blocked the squirter (that is, the cooling valve) was from part of the glove being worn by Mr Lonergan which found its way into the engine.[12] This approach is carried through by Judge Harrison into [27], where he states:[27] My conclusion on this is that Dean Selak has not established that the debris could not have been introduced into the oil lubrication system except from a glove worn by Mr Lonergan.Again, Judge Harrison seems to suggest that Dean Selak had to eliminate every other possibility. This is not the correct approach.[13] There are other difficulties with Judge Harrison's judgment. For example, in [21], he states:[21] I am therefore not persuaded that there was any proof that Mr Lonergan was wearing gloves from [Brakes and Transmission] when heconducted the service on the truck [14] In evidence in chief, Mr Lonergan was questioned about the source of the gloves he used:Q. Where did you get your gloves from?A. From a few different suppliers, I was actually trialling a few different types of gloves at that stage where I think these ones were probably bought from a supplier called Brake and Transmission, but I also purchased filer, gloves from Repco as well.[15] In cross-examination, Mr Lonergan confirmed that evidence.Q. and you thought the most likely source was from Brake andTransmission?A. Yes[16] There was only one witness able to give evidence about the gloves he wore when undertaking the service of the vehicle and that was Mr Lonergan himself. Judge Harrison must have rejected his evidence when he said he was not persuaded that there was any proof that Mr Lonergan was wearing gloves from Brake and Transmission. Mr Lonergan appears to have been an honest and reliable witness and there was, in my view, no reason to reject his evidence.Discussion[17] Appeals from the District Court are by way of rehearing.2 Following the principles set down in Austin Nichols & Co Ltd v Stichting Lodestar, the Court has the discretion to review the evidence and reach its own conclusion. Elias CJ stated:3Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If theappellate court's opinion is different from the conclusion of the tribunalappealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lowerCourt's assessment of the acceptability and weight to be accorded to theevidence, rather than forming its own opinion.[18] Although an appellate Court must be cautious, in that it has not had thebenefit of seeing the witnesses and assessing their credibility, no "deference" is required beyond the "customary caution".4 I am therefore able, on appeal, to review the evidence and reach my own conclusion as to whether Dean Selak is able to prove negligence on the part of Mr Lonergan on the balance of probabilities.[19] Having carefully reviewed the evidence, I have reached the view that the appeal should be allowed as the counter-claim has been proven to the requisite standard. I have taken the following factors into account:2 District Courts Act 1947, s 75.3 Austin Nichols & Co v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 (SC) at [16].4 Austin Nichols & Co v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 (SC) at [13].(a) The evidence of Mr Lonergan[20] As noted above, Mr Lonergan appears to be an honest and reliable witness. He accepted, first of all, that it was possible that a piece of the glove he was wearing when he changed the oil filter on the vehicle could have been torn off. His gloves used to rip quite frequently as there were lots of sharp edges. It was probable he was wearing gloves from Brake and Transmission, which were not measured for thickness by Dr Smith or analysed to ascertain the blend of nitril rubber used in them.[21] Mr Lonergan was also the person who came up with the theory that it was a piece of his glove which caused the blockage. Although the report of Flinders Cook was then available, it did not isolate the cause as a piece of glove. It was just one possibility mentioned among a number of others. At that time, the engine had been stripped and the investigation was in its early stages. There is no evidence that Dean Selak had accused Mr Lonergan of causing the blockage and yet Mr Lonergan said he thought it was his responsibility to go ahead and ring his insurance company. When he filled out that part of the insurance claim form relating to who was responsible for the accident and why, Mr Lonergan thought that the most likely explanation was that the blockage was caused by a piece of his glove.[22] Mr Lonergan also agreed with Dean Selak's witnesses that the engine was acompletely sealed system and that it was not possible for some part of the filter or some other part of the engine to have detached and got past the filter. He also agreed that there was no rubber of 0.1 millimetre thickness between the oil filter and the piston where the blockage occurred.(b) The evidence of Dr Smith[23] Dr Smith did not analyse gloves from Brake and Transmission. Although the three gloves he analysed were not comparable to the debris found in the engine, his evidence does not say anything about gloves from Brake and Transmission. In other words, it is neutral. He said:Q. And you can't exclude the possibility of this being a different, thisdebris being a different brand of glove to that which you were tested?A. I haven't excluded the other brands, I have only tested the brands that I was asked to test.[24] Dr Smith also agreed that it was speculation that the source of debris couldhave been from an engine part. He had not even seen a list ("a manifest") of partsfrom the engine. He agreed that it was unlikely to be from a gasket. Dr Smith mentioned the possibility of the oil filter itself having been contaminated during manufacture, but that too must be speculation.[25] Although Judge Harrison was impressed by the evidence of Dr Smith, his evidence when properly analysed does not support the case for Mr Lonergan (which was, in reality, the case for his insurer given his own evidence).(c) The evidence of Mr Routen[26] Mr Routen said he was not aware of, and could not imagine, any other possible source for the existence of the debris within the oil lubrication system other than part of a glove. The oil filter cartridge did not contain any nitril rubber consistent with the dimensions of the debris. He did agree, and accepted, that nitril rubbers are used in engine components such as top hoses, washes and oil seals. However, that material was generally a thick black rubber and not a thin material with a consistent thickness of around 0.1 mm as in the case of the debris. Mr Routen was in no doubt that the debris was foreign matter (that is, not from within the engine), which had been introduced into the oil filtration system. The oil filter filters all the oil and any particles or foreign matter in the oil before it goes into the engine to the size of 30 microns so that any contaminant of greater than 30 microns in size, such as the debris would be filtered out by the main oil filter.[27] Mr Routen was of the view that there was simply no way for the contaminant (part of a glove or any other object) to be able to get to the other side of the oil filter, other than being introduced in the course of a service of the oil filter. The debris was in the nature of thin material consistent with being a thin rubber glove. Once forced into the oil squirter this would likely have been pushed and pulled under heat andpressure, which could have easily resulted in the material shredding into the dimensions subsequently described by Dr Smith.[28] Finally, Mr Routen gave evidence that it is important to understand that the oil squirter operates by squirting oil into the cylinder bore to cool (rather than lubricate) the piston – the failure of which becomes acute in exceptional operating conditions (that is, extreme power/heat/combustion). So a blockage or partial blockage of the oil squirter could easily have been in situ for a considerable time, and easily 17,000 kilometres or more, before the circumstances of a complete blockage, combined with exceptional operating demand, conspired to cause overhearing and failure of the piston.[29] I have also had reference to the other evidence in the case, including that from Mr Frank Cossey for Mr Lonergan and Mr Dean Selak, Mr Mike Searle and Mr Bryan Musgrave for Dean Selak. I am of the view that, on all the evidence, the only proper conclusion is that on the balance of probabilities the most likely explanation (accepted by Mr Lonergan in his insurance claim) is that the nitril rubber found to have blocked the oil squirter and cylinder number five came from a piece of rubber glove, inadvertently left in the engine on the inside of the oil filter by Mr Lonergan, at the time of service of the vehicle over three months earlier.Conclusion[30] The appeal is allowed. There will be judgment in favour of Dean Selak against the respondent in the sum of $26,120.10, being the total of the counter-claim minus the cost of repair and servicing work undertaken by Mr Lonergan on thecompany's vehicles.[31] Dean Selak is also entitled to costs on a 2B basis. If those costs are unable to be agreed between the parties, memoranda are to be filed within 28 days of this judgment..Woolford J