| Date | 19 March 2003 |
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| Judgment | BHP Billiton Petroleum Ltd v Dalmine SPA CA 19 February 2003 |
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| The Issue | Determining the burden of proof in legal proceedings. |
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| Implication |
The burden of proof generally lies on the party that affirms a particular matter such as causation of loss. Where a defendant seeks to challenge the claimed causation by asserting an alternative cause, it will bear the burden of proving that alternative cause on the balance of probabilities. |
printThe recent case of BHP Billiton Petroleum v Dalmine examined the interesting question of the burden of proof in claim proceedings. BHP was a joint venture company engaged in the exploitation of oil and gas in the Liverpool Bay area of the Irish Sea. As part of the venture, a submarine gas re-injection pipeline was laid between two of the platforms in the field some 37 km apart. Dalmine manufactured the steel pipes incorporated into that pipeline. Gas production began in January 1996, but by June 1996 it was evident that gas was escaping from the pipeline when gas bubbles were noticed on the surface of the sea. Inspection of the entire pipeline revealed leaks at six sites. The reasons for the failure of the pipeline were investigated. It was established that cracks had developed in the roots of welds which joined the pipes together. These cracks had propagated from the weld roots into the parent metal of the adjacent pipe and had developed into cracks which penetrated through the wall of pipe. The cracks had initiated because of a combination of the excessive hardness of the weld root metal and because the pipeline was subject to harsh conditions on the seabed, creating an effect known as 'sulphide stress corrosion cracking'. The resistance of pipe metal to this form of cracking depended upon the 'carbon equivalent value' (CEV) of the steel used for the pipeline and for that reason the specification under which the steel had been manufactured stipulated a maximum CEV of 0.4 percent. When the CEV of the pipes adjacent to the leak sites was investigated it emerged that in the case of each of the sites where the cracks had occurred, at least one of the pipes on either side of the weld had a CEV greater than the specified limit. This discovery was despite the fact that inspection reports and certificates of compliance for the pipes had been issued by Dalmine. However it emerged on discovery that a senior member of Dalmine's quality control department had deliberately changed results and produced false inspection reports and a false certificate of compliance. Dalmine subsequently admitted that it had fraudulently misrepresented the quality of the steel from which the pipes had been manufactured by misrepresenting its carbon equivalent value. Nevertheless there remained an issue or issues of causation between the parties. BHP argued that the incorporation of non-compliant pipe caused the pipeline to fail. Dalmine however argued that the failure would have occurred in any event. It was their case that cracks had initiated both in welds which joined pipes which complied with the CEV specification, and also in welds which joined pipes which did not comply. At the trial there was therefore an issue as to the burden of proof. BHP accepted that it bore the burden of proving that the incorporation of non-compliant pipes caused the pipeline to fail, but submitted that Dalmine bore the burden of proving that the pipeline would have failed in any event even if it had been made solely of compliant pipe. In the end the judge did not have to determine this question for he found that BHP had succeeded on both parts of the causation issue. "For all the reasons set out above I find that on the balance of probabilities the incorporation of non-compliant pipe caused the pipeline to fail. For the reasons set out above I find on the balance of probabilities that the pipeline would not have failed anyway." The matter then proceeded to the Court of Appeal where both parties made fresh submissions concerning the burden of proof. Dalmine initially asserted that it could, if necessary, show that even a pipeline made up solely of compliant pipe would have failed. During the course of the hearing however, Dalmine accepted that it could no longer meet that burden. Nevertheless the Court of Appeal proceeded to give its guidance on the question of the burden of proof. Lord Justice Rix stated that the plain facts were that the pipeline had not failed at any point other than where the pipe adjacent to the weld had been non-compliant. Sulphide stress corrosion cracking, possibly in combination with the welding procedure, may have caused some cracks to initiate but it had nowhere caused such cracks to propagate sufficiently to cause compliant pipe to fail. In such circumstances if Dalmine wished to show that a hypothetical pipeline made up only of compliant pipe would have failed in any event, then it bore the burden of proving that on the balance of probabilities. Dalmine had accepted in any event that it could not meet that burden.The judge accepted that if the pipeline had failed at some welded joint adjacent to a pair of compliant pipes, then BHP may well have borne the burden of showing that the cause of the failure was the non-compliant pipe rather than the welding procedures or any other cause. This however was not the issue in the present case. It followed that the appeal must be dismissed.
CJ-0310
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