A & R Khoury & Co v Ryburn Industries [2003] NSWSC 685 | Case summary

JUDGMENT 1 MASTER: The defendant brought proceedings in the Local Court to recover moneys payable pursuant to a contract to design, manufacture and install a garbage disposal unit at a property now known as the Alrose Apartments (the property). The plaintiff responded with a Cross-Claim. 2 The proceedings were heard by Madgwick LCM. The hearing occupied a number of days. Judgment was delivered on 12 February 2003. 3 The defendant was successful in its action. The plaintiff was successful in part on the Cross-Claim. 4 The plaintiff has brought proceedings in this Court by way of challenge to what was done by the learned Magistrate in respect of the Cross-Claim. It is common ground that relief is only available where there is error of law. The onus rests with the plaintiff. 5 It seems to be common ground that a sprinkler system needed to be installed in the building and that sprinkler heads needed to be installed in the chutes of the garbage disposal unit. 6 In this case, the garbage disposal unit had been bricked up before that was done. 7 There were two aspects to the Cross-Claim. One aspect related to the costs of rectification and additional costs (including the making of openings in brick walls to enable the sprinkler system to be installed). The claim for these costs was founded both on implied term and breach of duty. The other aspect related to what has been described as a theft and damage claim. 8 The plaintiff was successful on the theft and damage claim. It recovered a sum of $2,591.25 plus interest. There was error in the calculation of the sum allowed. It is common ground that a further sum of $905 should have been allowed to the plaintiff. This error was corrected by consent during the hearing of the appeal. 9 The plaintiff failed on the counts framed in contract and tort to recover the said costs (the sum claimed was $10,802). The present appeal concerns those matters. I shall now deal with the grounds of appeal that were argued in relation to them. 10 A number of witnesses gave evidence during the hearing before the Local Court (including Mr Khoury who gave evidence on behalf of the plaintiff and Mr. Zahra who gave evidence on behalf of the defendant). 11 Mr Khoury is a licensed builder and was one of the defendants in the Local Court. The plaintiff is a company owned by his father and mother. It owns the property. 12 Mr Zahra was employed as a supervisor by Fire Control Pty Ltd. It was the company engaged by the plaintiff to install the sprinkler systems. He attended the property and was involved in the work. 13 A question of fact emerged during the hearing. It concerned when the plaintiff first became aware that there was a need to install the sprinkler system and of the need for there to be sprinkler heads in the chutes of the garbage disposal unit. It was the plaintiff's case that this did not happen until after the garbage disposal unit had been bricked up. The defendant came to argue that the plaintiff had prior knowledge. 14 Mr Zahra was the last witness called. He gave evidence inter alia to the effect that he had advised the plaintiff (by telling inter alia Mr Khoury) that there was a need to do so prior to the bricking up. 15 The plaintiff objected to the admissibility of his evidence. The ground of objection was expressed as "prejudice until I've heard his evidence". It appears that there had been directions as to witness statements and no witness statement had been provided for him. Notice of intention to call him was given at a late stage. Until that time, it appears that there may have been difficulty in locating him and a belief that he may have been earlier called to give evidence. It was said that prior to the giving of his evidence, there had been no suggestion that the plaintiff had been informed that there was a need to have the holes in the chute prior to the bricking up. 16 The learned Magistrate decided to see how it unfolded and she allowed his evidence to be taken. His evidence fell within a short compass. No subsequent application was made by the plaintiff in relation to it. It is unclear whether the defendant had intended to lead the evidence which gives rise to the plaintiff's complaint. In any event, there was no application to have it struck out. 17 Mr Khoury had earlier given evidence to the effect that he did not become aware of the need to leave holes or apertures for the installation of the sprinkler system until after the bricking up had been done. It was not put to him in cross-examination that he had prior knowledge of the problem. Why this was so, was also left unclear. It may be that the cross-examiner was not aware of what Mr Zahra would subsequently say. 18 The plaintiff alleges that the learned Magistrate was in error in allowing the admission of the evidence given by Mr Zahra. The learned Magistrate had a discretion to exercise. In my view, no injustice flowed from that decision. I do not consider that there was any error justifying the disturbing of the decision of the learned Magistrate. 19 Mr Zahra was in a position to give evidence that was material to the dispute between the parties. His evidence could be taken without causing prejudice to the plaintiff. Indeed, there seemed to be no difficulty had by the plaintiff in dealing with it. It saw the court having before it competing evidence on a question. There was then a clear issue for determination by the Local Court. If it had been thought that there was a need to do so, Mr Khoury could have been recalled and the competing evidence from Mr Zahra could have been specifically put to him. It was conceded that this was not sought to be done. The rule in Browne v Dunn is one of procedural fairness and gives rise to discretionary considerations. In my view, in the circumstances of this case, no unfairness resulted from the course that was taken. 20 It is said that there was further error on the part of the learned Magistrate in failing to deal with the causes of action founded on contract and tort. In my view, this is not the case. 21 It may be that the learned Magistrate could have been more expansive in the disclosure of her reasoning process. However, she clearly determined both causes of action adversely to the plaintiff. 22 The learned Magistrate accepted the evidence given by Mr Zahra. It was the accepting of this evidence, that brought about the failure of the plaintiff's causes of action. It was implicit in the findings made by the learned Magistrate that both causes of action failed on a question of causation (the damages claimed by the plaintiff was not a consequence of any alleged breach). It was found that despite having knowledge that the holes or apertures were required, the plaintiff proceeded to brick up the garbage disposal unit. 23 It is also said by the plaintiff that the learned Magistrate erred in failing to give reasons for preferring the evidence of Mr Zahra to that given by Mr Khoury. It is not in dispute that failure to give sufficient reasons may be an error of law. In the present case, it is true that there is a lack of express disclosure of the reasoning process. 24 The authorities make it clear that what may sufficiently disclose the reasoning process will vary from case to case. It may sufficiently emerge by way of implication from what has been done by the decision maker (see Madden v NSW Insurance Ministerial Corporation [1999] NSWSC 196). 25 Mr Zahra was an employee of one of the plaintiff's contractors. In a sense, he could also be regarded as being independent of the parties in the dispute. In my view, it is reasonable to proceed on the basis that inter alia his evidence was accepted as it was seen as either coming from someone in the plaintiff's camp or an independent witness. There were also other matters that the learned Magistrate could have taken into account (including consistency with other proven facts and Mr Khoury's participation in the dishonouring of a cheque). 26 The preferring of his evidence by the learned Magistrate was reasonably open on the evidence. I am not satisfied that there was error justifying the disturbing of the decision made by the learned Magistrate. 27 I have now dealt with the grounds of appeal that were argued on behalf of the plaintiff. In my view, the plaintiff has failed to satisfy the court that the decision in the Local Court should be disturbed. Accordingly, the appeal fails. 28 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. The exhibits may be returned.

A & R Khoury & Co v Ryburn Industries

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