Advanced Concrete Sealing (NSW) Pty Ltd v Ennis Traffic Safety Solutions Pty Ltd

Supreme Court of NSW|2016-10-05

Judgment

HER HONOUR: These proceedings involve an appeal from a Local Court Magistrate involving a cross claim concerning alleged defective white paint used to paint lines in a car park.
By amended summons filed 5 October 2016, the plaintiff seeks firstly an order that leave to the extent necessary to appeal from the whole of the Local Court decision be granted; secondly, the appeal be allowed; thirdly, that the whole of the judgment of the Court below be set aside; fourthly, that the matter be remitted for retrial before a Magistrate other than Magistrate Wilson; fifthly, in the alternative, verdict for the plaintiff in the Court below on its statement of claim for $24,058 only; sixthly, verdict for the cross claimant in the Court below on its further amended first cross claim, statement of cross claim; seventhly, the verdicts be set off against each other pursuant to s 21 of the Civil Procedure Act 2005 (NSW); and finally, interest pursuant to s 100 of the Civil Procedure Act from 1 December 2014.
The plaintiff in this Court is Advanced Concrete Sealing (NSW) Pty Ltd ("Advanced Concrete") who was the defendant in the Local Court proceedings. The defendant in this Court is Ennis Traffic Safety Solutions Pty Ltd ("Ennis") who was the plaintiff in the Local Court proceedings. For convenience, I shall refer to the parties by name. Both parties relied on the documents contained in Appeal Books Volumes 1 and 2.
The Magistrate found in favour of Ennis and dismissed Advanced Concrete's cross claim. His Honour entered judgment that Advance Concrete pay Ennis the sum of $36,362.73

The appeal

Section 39(1) of the Local Court Act 2007 (NSW) provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
Section 40(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
Section 41 of the Local Court Act provides that this Court may determine an appeal made under ss 39(1) or 40(1) either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.
In Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517 Gleeson CJ at [2] reiterated that in the common law system of civil justice, the trial process determines the issues between the parties. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal.

Grounds of appeal

Advanced Concrete appeals from the whole of the decision of his Honour Magistrate Wilson dated 18 December 2015. At the hearing of the appeal, three grounds were pressed. Firstly, that the Magistrate erred in excluding the expert report of Mr Sean Brodie from evidence; secondly, that the Magistrate erred in making a general credit finding against all of Advanced Concrete's lay witnesses for having some similar passages in their evidence in chief; and finally, that the Magistrate erred in completely discounting the expert evidence of Greg Beard because he was not a chemist and erred in overlooking his earlier findings (LC T59-60 16/11/2015) when the Magistrate admitted Mr Beard's expert report into evidence. His Honour stated that Mr Beard was an experienced and accredited paint and coating consultant and was "more than qualified". ( LC T60.6 16/11/2015)

The Local Court pleadings

In the proceedings, Ennis, a supplier of road marking products, sued to recover a debt owed by Advanced Concrete in the sum of $36,362.73. Advanced Concrete ultimately accepted that goods to the value alleged had been supplied by Ennis, but filed a cross claim alleging that the white waterborne paint (the paint) supplied by Ennis was defective, not of merchantable quality and not fit for purpose. The value of the paint was $12,304.73 and therefore, Advanced Concrete conceded that it owed Ennis $24,058.00 (being the total debt less the value of the paint).
The cross claim was dismissed. Initially, the Magistrate ordered Advanced Concrete to pay Ennis the sum of $24,058. (LC T4.8-9 18/12/2015). As Ennis was successful in its claim and in defending the cross claim, Ennis was entitled to the full amount claimed, being $36,362.73. On 24 February 2016, under the slip rule, the Magistrate amended the judgment and ordered Advanced Concrete to pay Ennis the sum of $36,362.73. Nothing turns on this.

Whether leave to appeal should be granted

The first issue to be determined is whether leave to appeal should be granted. Advanced Concrete seeks leave to appeal on a question of mixed fact and law pursuant to s 40(1) of the Local Court Act, if necessary. Ennis opposes such leave being granted.
In Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164, the Court of Appeal set out the principles to be considered in deciding whether leave to appeal should be granted. At [32], [33] and [35] Basten JA stated: "[32] The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]: 'It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute.' [33] In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised 'that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable': at [46]. … [35] In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure 'recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention': at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction."
Advanced Concrete made no written submissions in relation to leave being granted but in oral submissions senior counsel submitted that its appeal only raised questions of law so leave is not necessary. Ennis submitted that Advanced Concrete's appeal raises mixed questions of law and fact so requires leave of the Court. Ennis also submitted that none of Advanced Concrete's grounds of appeal raise issues of principle, nor are they questions of general public importance and no injustice has been caused to Advanced Concrete. Appeal grounds 4 and 5 were not pressed.
It is my view that appeal ground 1, denial of procedural fairness, is a question of law. Appeal grounds 2 and 3 are less clear. So far as grounds 2 and 3 are concerned, it is difficult to discern whether they involve questions of mixed fact and law or solely questions of law. For those reasons, in the exercise of my discretion, I grant leave to appeal.

The Local Court proceedings

By statement of claim filed 18 March 2015, Ennis sued Advanced Concrete claiming $40,593.85 for money due and owing for goods supplied pursuant to a written agreement for the period June 2014 to November 2014. Advanced Concrete in its amended defence filed 25 June 2015 agreed that it entered the agreement and that the goods were supplied and had not been paid for but says it had no obligation to pay for them as a condition of the contract was breached. Advanced Concrete claimed a set off and damages as pleaded in its amended cross claim. At the hearing in the Local Court, it was the cross claim that was in dispute.

The further amended cross claim

By further amended statement of cross claim (FAXC) dated 16 December 2015, Advanced Concrete claimed that Ennis (as cross defendant) is in the business of selling specialised paint for marking. It pleads as follows.
In about March 2006, Advanced Concrete contacted Ennis stating that they were in the business of treating, sealing and painting concrete, particularly the line marking of roads and car parks. Advanced Concrete was a new entrant in its business and required advice from a specialised supplier of paint suitable for application in the course of its business and for the supply of such paint. Advanced Concrete made it known to Ennis that it had: (a) purchased and used Atomex brand line marking machine for the marking of roads and car parks; (b) required paint suitable for that use in its Atomex machine; (c) required that the paint was water based; and (d) required the supply of paint suitable for application in line marking road and car parks. ((a) to (d) is referred to as the requirement).
In response to the requirement, Ennis represented to Advanced Concrete that it regularly supplied goods meeting the requirement to other participants in the industry; that it was a market leader in this respect; that it was willing and able to supply advice and goods meeting the requirement to Advanced Concrete. In March 2006, the parties entered into a contract for the sale of goods. ("the contract").
From March 2006 to about November 2014, Advanced Concrete regularly ordered paint from Ennis in accordance with the requirement. In response to each such order Advanced Concrete was supplied by Ennis with paint that it represented matched the requirement: that it was fit for the purpose of the requirement and was of merchantable quality ("the representation"). Advanced Concrete accepted the paint supplied by Ennis based on the representation.
In about early June 2014, Advanced Concrete contracted with Ennis for a fixed price ("the job") to paint and line mark the roads and car parks at the Castle Towers Shopping Centre at Castle Hill, New South Wales ("the centre"). Orders were placed by Advanced Concrete with Ennis for the supply of paint suitable for the job. Ennis responded to the orders by supplying paint to Advanced Concrete, making the representation for the job to Advanced Concrete about that paint and invoicing Advanced Concrete as if the paint supplied met the requirement and was in accordance with the representation.
The paint supplied was not in accordance with the requirement, was unfit for the purpose of the requirement in regard to the job, was not of merchantable quality and was defective.
At the time of the supply of the paint by Ennis, it was unaware and unable to detect that the paint was defective. Advanced Concrete attempted to and did partially use the paint supplied and encountered problems with its use of the paint on the job.
Advanced Concrete reported the problems to Ennis. Ennis provided further paint to Advanced Concrete to replace the paint already supplied for the job. Advanced Concrete applied the further supplied paint to the job and encountered similar problems.
As a result Advanced Concrete was caused loss and damage in having to repair damage to its equipment caused by Ennis's paint, and by having to grind out the paint it applied that was supplied by Ennis as well as re-line and mark the car park and roads at the centre, such loss and damage totaling $43,589.15. (FAXC [3] to [20]).
The FAXC pleaded that the representation, when made in regard to the order to supply paint by Ennis for the job was conduct made in trade and commerce; misleading or deceptive, or likely to mislead or deceive; made in contravention of s 18 of the Australian Consumer Law (as set out in Sch 2 of the Competition and Consumer Act 2010 (Cth)). Also, by reason of the facts and matters pleaded Advanced Concrete plead Ennis breached a condition or conditions of the contract in supplying the paint for the job. (FAXC [21], [22] and [24]).
Ennis in its defence to the FAXC, essentially pleaded that the "problems" alleged were not caused by the paint supplied by it.

Directions made in the Local Court

On 7 July 2015, Magistrate Grogin made the following orders: a) Ennis to file and serve any lay and/or expert evidence in support of its statement of claim by 6 August 2015; b) Advance Concrete is to file and serve any lay and/or expert evidence in support of its amended defendant to the statement o claim and its amended statement of cross claim by 3 September 2015; c) Ennis is to file and serve any lay and/or expert evidence in support of its defence to the amended statement of cross claim by 1 October 2015; d) The matter is listed for pre-trial review on 6 October 2015; e) The matter is listed for hearing commencing on 16 November 2016.
Advanced Concrete had not served its expert evidence in accordance with the order of the Court nor had it served its expert evidence by the time the matter was before the court for pre trial review on 6 October 2015.
On 6 October 2015, Magistrate Grogin extended the orders for service. Advanced Concrete was to file and serve any lay and expert evidence in response to the statement of claim and in support of the cross claim was extended to 29 October 2015. Magistrate Grogin extended Ennis's time to reply to 5 November 2015. The hearing date was confirmed
On 22 October 2015, the matter was listed for hearing of a notice of motion before Magistrate Atkinson. Her Honour ordered that Advanced Concrete was to file and serve the report of any paint expert by 4.00 pm on 26 October 2015 and the experts for both parties were to prepare, file and serve a joint report identifying the differences in their opinion by 6 November 2015. On 26 October 2015, Advanced Concrete served the report of Mr Beard. On 4 November 2015, Ennis served a report of Mr Crutchfield.
On 13 November 2015, the solicitors for Advanced Concrete served on the solicitors for Ennis the report of a proposed new expert Mr Brodie ("the Brodie report") who addressed the suitability of the paint marking machine to paint the lines in the car park.

The hearing in the Local Court

On 16 and 17 November 2017, the matter was heard by his Honour Magistrate Wilson at the Local Court, Downing Centre, Sydney. Mr Raftery appeared for Ennis. Mr Marshall SC appeared for Advanced Concrete.
So far as the FAXC is concerned, Advanced Concrete adduced evidence from Mr Robert Hunt, Mr Murray Avis, Mr Jeffrey Gault, Ms Amanda Gault and Mr Greg Beard a remedial building engineer. Ennis adduced evidence from Mr Lyall Elliott, Mr Terry Sylva an expert chemist and an employee of Ennis and Mr Dean Crutchfield an expert line marker. Advanced Concrete sought leave to rely upon an expert report of Mr Sean Brodie. Leave was opposed by Ennis. After submissions were made by both parties, the Magistrate did not grant leave for Advanced Concrete to rely on the Brodie report.

Report of Mr Sean Brodie - Appeal Ground 1

On appeal, senior counsel for Advanced Concrete submitted that the late service of the report of Mr Brodie was a result of a major misunderstanding between the parties and the Court over when and what was to be served. Advanced Concrete submitted that in these circumstances it was denied the reasonable or sufficient opportunity to lead evidence and present its case and therefore had been denied procedural fairness. Advanced Concrete further submitted that the Brodie report was in answer to the report of Mr Dean Crutchfield, ("the Crutchfield report") Ennis' expert line marker who had opined that the problem was not the paint supplied but that the wrong machine had been used. The Crutchfield report was served in accordance with the court directions.
Advanced Concrete submitted that there were two inconsistent timetables for the service of expert evidence. Senior counsel says that Advanced Concrete and presumably the Magistrate making the second (parallel) timetable (Magistrate Atkinson) assumed that the second timetable superseded the first timetable. Under the former timetable Ennis was scheduled to serve expert evidence in reply by 5 November 2015, which was only six working days before trial. Under the latter timetable the last expert evidence to be served was by Advanced Concrete by 26 October 2015. In my view, it does not matter which timetable is applicable because the Brodie report was served outside the time provided in either timetable. Moreover, the timetable was a consent order between the parties.
Before the making of the second timetable by Magistrate Atkinson, Ennis had served the expert evidence of its paint chemist, Terry Sylva. According to Advanced Concrete, Ennis sought no orders before Magistrate Atkinson for the service of any more expert evidence.
Advanced Concrete served the report of Mr Beard, its paint expert on time on 26 October 2015 and claims that it did the best it could but that the Brodie report was not ready to be served until the working day before the trial. Advanced Concrete submitted that if the Brodie report had been admitted it would have been a complete answer to any allegation that machine failure/maintenance caused Advanced Concrete's paint blockages. Advanced Concrete submitted that the Magistrate erred in not properly considering the extra ordinary circumstances in which the Brodie report came about and the prejudice caused to Advanced Concrete by its rejection.
Ennis submitted that Advanced Concrete was aware at the time of the directions on 6 October 2015 that it intended to reply upon an opinion from a line marker. Contrary to Advanced Concrete's submissions, there was no confusion at the time of agreeing to the orders that Ennis would be serving its evidence after Advanced Concrete completed service of its evidence. Senior counsel for Ennis submitted that when the report was excluded, Advanced Concrete did not apply for an adjournment on the grounds of prejudice and made a forensic decision to continue with the hearing and that the Magistrate's decision to exclude the report should not be disturbed.
At the outset of the hearing in the Local Court, Ennis objected to Advanced Concrete being permitted to rely upon the report of Mr Brodie. The experts were ordered to have prepared a joint report in accordance with the court directions. This could not take place because on the Friday prior to the hearing, the solicitor for Advanced Concrete notified Ennis' solicitor that the meeting of experts could not occur due to it seeking to rely upon the Ennis report.
Counsel for Ennis referred the Magistrate to Aon Risk Services Australia v Australian National University (2009) 239 CLR 175; [2009] HCA 27 and Golden v V'Landys [2015] NSWSC 1589.
In V'Landys, Button J at [21] and [24] stated: "21 Turning to my determination, it is well known that the decision of the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 17[5] has led to something of a "sea change" in the approach of courts hearing civil matters to such applications. In particular, timetables that are created with an eye to ensuring the orderly preparation of matters for trial, and the maintenance of trial dates, are now to be given greater weight than they were in the past. Furthermore, costs orders in favour of one's opponent are no longer to be seen as a universal panacea for interlocutory failings. … 24 In short, I accept the submission of the defendants that as a matter of legal principle, efficient administration of justice, and common sense, it is incumbent upon a party making an application such as this one to proffer some reasonably persuasive explanation as to why timetables are to be overridden; very late evidence (including expert evidence) is to be received; the preparation of the defendants is to be disrupted, and a trial date (which is some 2 years and 6 months after the first statement of claim was filed) is to be possibly endangered. In the absence of such an explanation, I do not propose to make the orders sought by the plaintiff."
Ennis submitted that firstly, although the Brodie report was in response to a report of Mr Crutchfield, the expertise of Advanced Concrete's new expert was really in respect to the suitability of the machine used rather than line marking and the Brodie report or the orders were due to a failure by Advanced Concrete to serve evidence in the first place. Secondly, the Court was advised on 6 October 2015 that Ennis intended on serving a line marking expert. Thirdly, Ennis would have to serve further evidence to meet it and would be prejudiced if it did not have the opportunity to respond to the Brodie report (LC T5.40-47 16/11/2015). Fourthly, the experts were available that afternoon to make a joint report and Ennis' view was that thought it would be beneficial for the Court if the experts were able to get together and prepare a joint report and then they could probably be cross examined the next day. (LC T15.1-11 16/11/2015). For these reasons, Ennis submitted that the Magistrate should make a preliminary decision that the Brodie report ought to be rejected.
The Magistrate observed at (LC T10.18-19 16/11/2015): "We've got $24,000 in dispute on the one hand and we've got a cross-claim that's generated this enormous legal fees …"
The Magistrate pointed out that it was the parties fault for agreeing to a timetable (by way of consent orders) that was not able to be complied with. When counsel for Advanced Concrete in the Local Court realised that the application to rely on the Brodie report was not going well, he made an alternate submission that the Magistrate should defer his decision. That approach was not met with favour by either Ennis or the Magistrate.
With regard to the Brodie report the Magistrate stated: "Yes, that's convenient for your Mr Marshall, but I agree with Mr Raferty the decision has to be made to move the matter forward, and I do note, and I have regard to both the decision of Aon, which I am very well familiar with, and also this further matter of Golden v V'Landys that has been handed up, and taking all the matters into account, and also taking into account the expertise of Mr Crutchfield, which he may well not have the expertise to make the comments that he has in regards to machinery, it would be a matter for cross-examination, I am therefore minded not to allow the additional report of Mr Brody to be tendered in evidence in these proceedings." (T15.47-50; T16.1-6, 16/11/2015).
It is my view that the Magistrate was cognisant of submissions made by both parties as to whether Advanced Concrete should be permitted to rely on the Brodie report. His Honour also properly considered the principles set out in Aon and V'Landys. The Brodie report was served late and the explanation for the delay was not satisfactory. On 6 October 2015, it had been foreshadowed by Ennis that it would serve a report of a paint expert. Both parties had agreed to a timetable and Advanced Concrete did not comply with it. What transpired was hardly exceptional circumstances. If counsel for Advanced Concrete was of the view his client were prejudiced by the Magistrate's refusal to allow it to rely on the Brodie report, instructions could have been sought and an application for an adjournment made. Furthermore, Advanced Concrete could have applied prior to the hearing to amend the timetable to allow the Brodie report to be served and seek to vacate the hearing date. Neither of these options were pursued. In these circumstances the Magistrate was entitled to come to the decision that he did. In my view, in these circumstances Advanced Concrete was not denied procedural fairness. This ground of appeal fails.

Appeal Ground 2 - whether the Magistrate erred in making credit findings

Before I set out this appeal point in detail, it is important to appreciate that the critical issue to be determined by the Magistrate was whether the paint supplied by Ennis was unfit for the purpose and/or was defective.
Appeal ground 2 is whether the Magistrate erred in making a general credit finding against all of Advanced Concrete's lay witnesses, namely Robert Hunt, Murray Avis, Jeffrey Gault and Amanda Gault. Firstly, for having some similar passages in their evidence in chief when the witnesses were not cross examined on the similarities; secondly, the similar passages in Murray Avis's affidavit were not in evidence nor put to him; and finally, the witnesses were not given an opportunity to explain any similarities in their respective accounts.
On this topic, the Magistrate stated: "… ACS relied on evidence from Robert Hunt, the site foreman; Murray Avis, the project administrator; Jeffrey Gault, a director of the cross-claimant; and Amanda Gault, who is also a director of the cross-claimant. It was apparent that many paragraphs contained in the affidavit evidence of Hunt and Avis were either identical or substantially the same. Likewise, in the affidavit evidence of Jeffrey and Amanda Gault there were numerous identical or substantially similar paragraphs. In relation to the above evidence of ACS, Ennis relies on the decision of Colorado Products Pty Limited (in provisional liquidation) [2014] NSWSC 789, a decision of Black J, which makes comment on the weight that should be given to same or similar evidence and the probative value attached to such evidence. I therefore agree with the submission that the evidence of ACS' witnesses should be given little weight although not entirely rejected." (LC T1.47; T2.1-10, 18/12/15).
In Colorado Products, Black J analysed witnesses' evidence and set out the relevant evidentiary principles. By way of example, his Honour summarised the affidavit evidence of Ms Lao Ning Huang (Helen) who was involved in the first plaintiff HY International with the evidence of Mr Kenneth Tan (Kenneth) who was involved with the second plaintiff, Phoenix. The point about their evidence is that part of their affidavits had been copied generally word for word and the passages copied included the critical evidence of disputed conversations in the defendant's camp.
In Colorado Products at 5 [17] and [18] his Honour stated: "17 In Seamez v McLaughlin [1999] NSWSC 9, Sperling J concluded from the high degree of similarity in content, detail, terminology and sequence between the affidavits of three witnesses that they could not have come into existence without direct or indirect collaboration and observed at [40]) that: "[a]cceptance of one of the three accounts of the events ... means not only that the other two are not genuinely recollected, independent accounts. It also means that the authors of those other accounts have misstated the way in which their respective accounts came into existence, and seriously so. The credit of the others would then be worthless.' The difficulty which arises from these matters is not merely the possibility of collusion between witnesses that prejudices the value of their evidence but also, as Palmer J noted in Macquarie Developments above, the possibility (and in this case the virtual certainty) that the affidavits did not use the actual words of the respective deponents. His Honour there observed (at [90]) that: "Save in the case of proving formal or non-contentious matters, affidavit evidence of a witness which is in the same words as affidavit evidence of another witness is highly suggestive either of collusion between the witnesses or that the person drafting the affidavit has not used the actual words of one or both the deponents. Both possibilities seriously prejudice the value of the evidence and Counsel usually attacks the credit of such witnesses, with good reason." Obviously enough, as Ward J (as her Honour then was) noted in Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40, it is unlikely that two deponents would have a precisely identical recollection, uninfluenced by the recollections of others, of shared experiences. Her Honour also noted, and I agree, that (at [186]): "even if there has not been collusion as such between the witnesses, in the sense of changing their evidence to make it fit with that of another, the fact that the affidavits may not contain the actual words of one or other of the deponents devalues their evidence." 18 I accept that, in some cases, the courts have taken the view that difficulties of this kind do not render the credit of a witness worthless, although they require care before accepting the evidence of one or other of the witnesses: Macquarie Developments above at [89]-[91]; Rosebanner Pty Ltd v Energy Australia [2009] NSWSC 43; (2009) 223 FLR 460 at [324], [326] per Ward J; Celermajer Holdings above at [183]-[189]. In this case, where the difficulties relate to the most important disputed conversations and where the manner in which they arose remains unexplained by the Plaintiffs, I consider that they substantially devalue the weight to be given to the affidavit evidence of each of Helen and Kenneth as to those matters, to the point that neither's affidavit evidence can be treated as reflecting a genuine individual recollection of events as distinct from a collective reconstruction of them."
In the Local Court, the first witness called by Advanced Concrete was Robert Hunt. He was employed by Advanced Concrete as an on-site supervisor at the Castle Towers job throughout its year long duration. On being called to give evidence, Ennis unsuccessfully objected to Mr Hunt's first affidavit on the basis it contained paragraphs that were the same as paragraphs contained in Murray Avis' affidavit. The Magistrate said: "That could be sorted out in cross-examination can't it?" (LC T25.21 16/11/2015)
Advanced Concrete submitted that notwithstanding that suggestion Ennis did not cross examine Mr Hunt as to his common paragraphs with those appearing in Mr Avis' affidavit. Ennis was not obliged to do so.
Mr Hunt gave evidence that from late May 2014 that he had started to personally observe the difficulties when Advanced Concrete received a new delivery of paint from Ennis. Mr Hunt accepted that he did not have any technical understanding regarding paint, had never received any training relating to paint and had no specific qualification regarding paint.
Mr Avis who was also employed by Advanced Concrete as a project administrator gave evidence after Mr Hunt. Advanced Concrete elected not to read or tender some paragraphs of his affidavit. As a result of Advanced Concrete's election, Advanced Concrete says that there were no paragraphs in evidence that were the same in Mr Hunt's first affidavit and Mr Avis's affidavit.
Mr Avis was not cross examined on the paragraphs deleted from his affidavit nor on the similarity of any part of his affidavit to any part of Mr Hunt's first affidavit. However, the following exchange occurred between counsel for Ennis and Mr Avis. (LC T 36.14-23 17/11/2015): "Q. Have you had the opportunity since drafting the affidavit to read the other ACS affidavits? A. Yeah. I've read them sometimes, yeah. Q. So you've had the opportunity to read Mr Hunt's affidavit? A. I didn't read much of Mr Hunt's, no, because he hadn't been with us for some time. I read more of Jeff's. Q. But at least you had them available for you to read if you wanted? A. Yeah."
Mr Avis gave evidence on the following topics, firstly about his complaints to Mr Sylva about Ennis's paint and swapping paint stock with Ennis several times to unsuccessfully try to overcome the blockage issues; secondly, about the advice Mr Sylva gave him on how to overcome the blockages; thirdly, the excuses he says that Mr Sylva gave such as "I still don't know what's wrong with the paint" (Aff [17]); and finally when Advanced Concrete changed to Dulux paint in November 2014 that there was no more trouble. (Aff [25] [26]).
Mr Avis deposed to a conversation he had with Murray Lyall of Ennis on 4 November 2014 as follows: "Lyall: G'day Murray. So, where are we at with the paint, what are the issues now? Mr Avis: Lyall, they're exactly the same issues that Rob told you about when you came to the site on the first of August, Since then, we've tried adding the defoamer, as Terry suggested. The difference it makes is only marginal, at best, and it takes us half an hour to add to each drum of paint before we use it, so we're even worse off in terms of wasted labour and time. We've tried leaving it in the sun or in the shade, but it makes no difference. We've tried using bigger filter and filters with bigger hole, we've had the machines checked and rechecked, served and repaired, but nothing works. AA Spray is convinced it's the paint, and absolutely nothing else has changed regarding our machines, processes or the job we're on. Lyall: Ok, I get you. Leave it with me and I'll come back to you."
Similar to Mr Hunt, Mr Avis accepted that he did not have any technical understanding regarding paint, had never had any training relating to paint and had no specific qualifications regarding paint.
According to Advanced Concrete, the problem was compounded when the proposition that one witness copied his evidence from the other was not put to either Mr Hunt or Mr Avis in cross-examination, contrary to the rule in Browne v Dunn (1894) 6 R 67. This was raised by the Magistrate when Ennis unsuccessfully tried to tender the paragraphs 9, 10, 11 and 16 deleted from Mr Avis's affidavit after Mr Avis had been excused from the witness box. (LC T59.15-40 17/11/2015). Counsel for Advanced Concrete objected on two bases, firstly, that if it went to credit he could not get them in; and secondly, it was unfair. His Honour stated (LC T59.32.35 17/11/2015): "I don't know how it can go to credit when nothing was put to him in cross examination with regard to his credit or otherwise, it wasn't in issue from my recollection. Having regard to that fact I won't allow you to tender those paragraphs and rely on that evidence."
So far as Mr Hunt and Mr Avis's evidence is concerned, Advanced Concrete submitted that the Magistrate's finding was therefore not based on any evidence but it carried through to the credit finding made by the Magistrate.

Mr and Mrs Gault

Mr Jeffrey Gault is a director of Advanced Concrete and gave evidence of the representations made to him by Ennis in March 2006. Mr Gault was on the Castle Towers site approximately once per month. He deposed to a conversation he had with Terry Sylva of Ennis on 18 September 2014 as follows: "Mr Gault: Look, the boys have just told me you still haven't sorted this paint situation out yet. What the hell's going on over there? You've obviously changed the product since the company takeover. Terry: Oh, well, I don't know anything about that Jeff. I don't think so. Mr Gault: Well, either that or something's seriously wrong with the paint or your production line. I'm hearing it all over town. Terry: Oh, well, I don't know anything about that either. I haven't heard about any complaints. Mr Gault: Well, listen, our paint's not right. You need to fix it now because we're getting killed with the Castle Towers job. Terry: Alright make, look, I'll throw in some of the defoamer for free, just add double the usual." (Aff, [31]).
Mr Gault then explained that he had to put on more staff and have the staff do overtime to complete the work by the scheduled dates.
At [35] Mr Gault deposed: "Approximately 80% of the Castle Towers job required the use of the white paint of the Plaintiff/Cross-Claimant. When we were experiencing the problems, on average, our staff would paint about four decent lines, before the fifth oversprayed and produced an inconsistent, patchy line. On that fifth average line, our staff would have to stop work, clean the machines and parts and/or replace parts such as filter and hoses, then respray that fifth line. More often, they would also have to grind the overspray out of the carpark manually."
Ms Amanda Gault was also a director of Advanced Concrete. Ms Gault only attended the Castle Towers site to drop items off and then she would leave. The bulk of her evidence concerns accounting records and the ordering of paint both white and other colours from Ennis. Relevantly, Ms Gault deposes as to two conservations, one with Lyall Elliott of Ennis on 4 November 2014 concerning accounts and the other with Ciaran O'Flanagan of Ennis on 28 November 2014.
On 28 November 2014, Ms Gault said to Mr O'Flanagan: "But Ciaran, we shouldn't be paying for any of that. It's faulty paint and it's caused us heaps of damage. I've had so many phone calls and emails with you guys trying to sort this out. Terry and Lyall have been to our job site to inspect it and spoken with out staff. Terry has even accepted returned paint and admitted it's faulty. I've go emails from your staff admitting it's faulty. This is ridiculous and I'm actually offended after almost ten years of doing business with you that we're being treated this way." (Aff, A Gault [32]).
It is common ground that Mr Sylva became aware of Advanced Concrete's complaints about the white paint and that he went on site on 8 August 2014 to inspect the problem with the paint. At that inspection Mr Sylva formed the view that Advanced Concrete were running the machine at a very high rate which put a lot of pressure on the machine and that there was no problem with the white paint. It was Mr Sylva's view that it was more likely that Advanced Concrete's machine motor was failing, or the tip size they were using, or the filters of the machine were the problem. Mr Sylva suggested that the filter be removed and then Advanced Concrete test whether there was an issue with the paint getting through the filter and that more defoamer be added to the paint mix. (Aff 2/10/15 [32]). Advanced Concrete's witnesses were of the view that the problem lay with the white paint.
There were three possible causes of the problems with the white paint. Firstly, the wrong machine had been used; secondly, the way in which the paint was applied was incorrect; and finally, the paint itself was deficient. Ennis would only be liable if the last alternative was found to be the cause. The critical evidence was given by the experts, although oddly Mr Sylva gave both lay and expert evidence. The Magistrate did not completely discount Advanced Concrete's lay evidence but made a finding it should be given little weight "although not entirely rejected." In my view the Magistrate's decision as to the weight that should be afforded to witnesses' evidence is not a question of law. Even if I am wrong, the Magistrate did not entirely reject their evidence but determined the critical issue on the basis of expert evidence. There is no error of law. This ground of appeal fails.

Appeal Ground 3 - evidence of Greg Beard

Appeal ground 3 is whether the Magistrate erred in completely discounting the expert evidence of Greg Beard because he was not a chemist and erred by stating that overlooking his earlier findings on admitting Mr Beard's expert report that Mr Beard was an experienced and accredited paint and coating consultant and was "more than qualified" these Advanced Concrete submitted were errors of law.
Section 79(1) of the Evidence Act 1995 (NSW) provides that an expert's opinion may be based on the person's training, study or experience.
Advanced Concrete submitted that the issues as to a witnesses' eligibility to give expert opinion evidence are questions of the admissibility of that evidence: see Makita (Australia) Pty Limited v Sprowles [2001] 52 NSWLR 705. According to Advanced Concrete a witness is either qualified or not; if he or she is or his or her evidence should be rejected at the outset.
Ennis objected to the tender of Mr Beard's report on the basis that he did not have expertise in road marking paint. Mr Beard's expert report was tendered and admitted following objection. (LC T60.13 16/11/2015). However, before admitting Mr Beard's report, the Magistrate commented that Mr Beard was "just giving an opinion on what those solids indicated that the paint was defective and had started to coagulate. He can give that evidence surely." Mr Beard was giving three likely scenarios as to how this could happen. The Magistrate questioned how counsel for Ennis could cross examine Mr Beard as to his specific expertise. The Magistrate then stated that he would allow it but noted that from Mr Beard's CV it appeared that he was more than qualified to make comment. (LC T60.1-7 16/11/2015).
Advanced Concrete says that Mr Beard was accepted as an expert paint consultant and it was not for the Magistrate to later decide that the expert is not qualified. According to Advanced Concrete, a court could prefer one expert's opinion over another for any number of reasons but those reasons cannot include finding an admitted expert not be qualified to comment.
Ennis submitted that because Mr Beard did not have the required qualifications and expertise, his Honour was right to disregard or give little weight to his opinion. Ennis also submitted that the Magistrate's decision not to accept Mr Beard's opinion about the paint, preferring the evidence of Mr Sylva, is not a matter in respect of which an appeal lies: see Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139.

Mr Beard's opinion and evidence

Greg Beard is a remedial building engineer. He holds a Bachelor of Engineering from University of New South Wales. His report was tendered. (Ex 6). His attached curriculum vitae records that he is a paint consultant accredited with Master Painters NSW. Since 2003 he has been a paint consultant, an expert witness in painting disputes and a coatings consultant. His area of expertise includes paint and coating testing and inspection. His cadetship was served with Paint & Technical Services, a specialist paint consulting business where he learnt paint testing.
Mr Beard was instructed in writing to answer the question, "The defendant (Advanced Concrete) experienced clogging of its spray equipment when it used white water based paint supplied by the plaintiff (Ennis). What in your opinion were the likely causes of such clogging?" (Ex 6). He was also briefed with a schedule of assumed facts and a photograph of a clogged spray gun filter taken by Mr Hunt. In his report Mr Beard set out the assumptions of fact, referred to his experience and qualifications (para 3.3), defined line marking and its reliance upon airless spray application (para 4), discussed airless sprayer application and advantages (paras 4.1.1 & 4.1.2), and discussed the advantages of water based paint. Mr Beard then discusses the facts at paragraphs 4.2.1 and 4.2.2. He relied on the photograph and the assumed facts.
Mr Beard concluded that the paint was defective and had started to coagulate, suggesting that the drying process had begun. He opined that this was likely caused by one or a combination of the following. The manufacturing defect during the production process, exceeded shelf life leading to coagulation and drying out of the paint and possible impurities in the constituent parts of the paint. He cited the unusually high number of replacement filters and spray nozzles as indicative of defective paint.
Mr Beard's evidence was that the "possible impurities" referred to fine particles of dirt getting into the paint at the time that it was batched. (LC T: 114.1-15 16/11/2015). That assertion is inconsistent with Mr Beard's evidence that the quality control process was "completely reasonable". This is in contrast to Mr Sylva's evidence that if particles of dirt fall into the paint during the manufacturing process those particles would not get through the final filter. (LC T: 114.19-23 16/11/2015). Mr Sylva's evidence on that issue was not challenged by Advanced Concrete.
Mr Beard was asked to express an opinion as to the likely causes of the clogging (one of the pleaded difficulties). He accepted that the issues Advanced Concrete was facing could have been caused by various matters, but he considered they were likely the result of (a) "defective paint" trying to pass solids larger than possible through the spraying tip; (b) the hose line and spray tip not being cleaned after the previous use, allowing paint to dry in the lines; (c) leaving paint in the line for a short period of inactivity for some solidification to occur; (d) paint left open on site being used in the line marking machine; (e) manufacturing defect during the production process; (f) exceeded shelf life leading to coagulation and drying out of the paint; (g) possible impurities in the constituent parts of the paint.
Advanced Concrete submitted that in his oral testimony Mr Beard confirmed this evidence (LC T: 70.35 16/11/2015). He dismissed application and operator error based on the available evidence. He dismissed machine unsuitability (LC T: 77.13-16 16/11/2015). According to Advanced Concrete that left only defective paint as the cause. Mr Beard concluded that causes [a] to [d] were unlikely as Advanced Concrete was a line marking professional that would understand the care required when undertaking line marking works.

Concurrent evidence

At the hearing Mr Beard, Mr Sylva and Mr Crutchfield gave concurrent evidence. As previously stated, Mr Crutchfield was an expert retained by Ennis. Mr Crutchfield has extensive expertise in road marking. He is currently employed with the Roadmarking Industry Association of Australia. In preparing his report, he confirmed that it was purely based on his experience and that he had no other additional qualifications. In regard to the regular clogging, paint blockages and the choking of valves and filters of the line marking machines, Mr Crutchfield made the following observations: (a) clogging, blocking and choking were likely to be caused as a result of poor maintenance; (b) filters should be cleaned at the end of each day; (c) the photo of the filter (Aff, Hunt Ex E) showed a normal amount of paint build up. Mr Beard agreed with the above three observations.
Mr Beard accepted in cross examination that the issues experienced by Advanced Concrete were potentially the result of particles falling into the paint after the line marker had opened the paint container or the paint having particles of dried paint going through the machine. Mr Beard also accepted it could possibly be caused by the use of an unsuitable machine, the paint being left in the sun and the drying process starting, inexperienced operators or a suction problem rather than a pumping problem with the line marking machines which is the result of basic preventative maintenance or irregular cleaning of the paint pot. Mr Beard subsequently attempted to retract parts of the evidence he gave.
Mr Beard gave the following evidence (LC T: 70.32-38 16/11/2015): "But in this case, taking into consideration the amount of maintenance that was done, the number of clogged filters, the consistency of the filters actually got clogged, and the fact that this only occurred with the actual white paint, it didn't occur with the other two colours, and then when the contractor changed to a different brand of paint it also didn't occur. Those things, when taken into consideration, make me form my opinion that this is most likely a defective paint issue, as opposed to application or a user operator issue."
Ennis submitted that the opinion by Mr Beard is not based upon his training, study or experience. Rather, his opinion is based upon a combination of speculation and is the result of a factual analysis drawn from Advanced Concrete's evidence.
During cross examination Mr Beard conceded that he had no experience in the manufacturing of paint nor had he undertaken any qualifications in respect to the manufacturing of paint. (LC T: 62.30-38 16/11/2015). Further, in answer to a question regarding his opinion as to the possible manufacturing defect, Mr Beard confirmed that such an opinion was outside his area of expertise. (LC T: 88.1-9 16/11/2015).
On this topic of Mr Beard's evidence, the Magistrate in his reasons stated: "Although Mr Beard accepted the quality control process of Ennis to be satisfactory, he concluded that the paint was not fit for purpose and was defective. Mr Beard did concede that his report was based upon his experience and that he did not have any additional qualifications specifically related to paint or chemistry. Mr Beard did not inspect a wet sample of the paint and relied upon photographic evidence only. Mr Beard accepted that it was not unusual that defects did occur in commercial paints, and took into consideration a number of times problems that were allegedly experienced in the application by ACS [Advanced Concrete] at the centre, together with the number of times maintenance of the spray machines was required." (LC T: 2.29-38 18/12/2015)
Mr Sylva is a technical and compliance manager with Ennis and a qualified chemist. He has extensive knowledge in surface coating product development and quality control systems. He swore two affidavits dated 2 October 2015 and 3 November 2015. He sets out the compliance process of Ennis in relation to waterborne paint and quality control undertaken in the manufacturing process of the waterborne paint in detail. (Aff, 2 October 2015). Mr Sylva was not cross examined in relation to this evidence and Mr Beard accepted that the process of quality control measures were satisfactory.
The alleged defective paint was returned by Advanced Concrete to Ennis on or about 31 July 2014. The testing of the returned paint was undertaken by Mr Sylva. That testing revealed that the paint remained within the quality control specifications. It had not exceeded its shelf life. The paint was resold to another customer. Advanced Concrete did not challenge this evidence. Mr Sylva was the only expert who tested the alleged defective paint.
On the issue of whether the paint was defective, the Magistrate referred to the unchallenged evidence of Mr Sylva, a chemist, who actually tested the paint returned by Advanced Concrete and found it within specifications.
The Magistrate went on to summarise Mr Beard's evidence (which was not inconsistent with the admissions made by Mr Crutchfield about machine suitability) and then continued: "Mr Beard, as noted, concluded in his report that the paint was not fit for the purpose of and was defective. This opinion is set out at 4.2.2 of the report and is based on documentation provided to him regarding the quality of the paint. There was no inspection or analysis of a wet sample of paint. A photograph was provided showing large solids within the paint, which he considered led to ongoing repairs of the spray machines. Because of the large solids within the paint, he concludes the paint was defective and had started to coagulate. There is no analysis, scientific or otherwise, provided on which he has based his opinion. Mr Beard is not a chemist but a civil engineer. I am therefore of the opinion that the Court cannot be assisted in the determination of whether or not the paint was defective by either of the two experts. Further, there was uncontroverted evidence as to the quality control system as to the manufacture of this paint." (LC T: 3.22-34 18/12/2015).
Advanced Concrete submitted that this passage explains in no uncertain terms that it is Mr Beard's expertise that is denied. It was not open to the Magistrate to reason that way. Advanced Concrete further submitted that it therefore remained open to Mr Beard to opine as to a cause that was not covered in absolute terms by the chemist's evidence of the testing of a sample pulled out of the manufacturing mix. Advanced Concrete submitted that it was wrong to discount Mr Beard's logical expert explanation based on over 20 years experience just because he was not a qualified chemist who performed chemical tests in this instance.
These reasons cannot be read in isolation. This Court "should not read the reasons of the decision maker with an eye finely tuned for error": see McGinn v Ashfield Council [2012] NSWCA 238 per McColl JA at [17] (Sackville AJA and Gzell J agreeing); Walsh v Parramatta City Council [2007] NSWLEC 255; (2007) 161 LGERA 118 (at [67]) per Preston CJ citing Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 (at 291).
The Magistrate did not "completely discount" the evidence of Mr Beard. Mr Beard acknowledged, as did Mr Crutchfield, that there were a number of possible causes of the pleaded difficulties. While Mr Beard's expert report was admitted and he agreed that Ennis' chemically tested paint from the same batch and found that it was within quality control specifications. Mr Beard was not qualified to carry out this testing and could not dispute its findings. In these circumstances, the Magistrate preferred the evidence of Mr Sylva . Further admissions were made by Mr Beard during the evidence he gave that he had no experience in the manufacturing of paint nor had he undertaken any qualification in respect to the manufacturing of paint. He confirmed that any possible manufacturing defect was outside his area of expertise but conceded that quality control analysis was satisfactory. The Magistrate held that Advanced Concrete had not discharged its onus of establishing that defective paint caused the pleaded difficulties.
In my view the Magistrate was entitled to prefer the evidence of the qualified chemist who tested the actual paint alleged to have been defective and found it to be within specification. This ground of appeal fails.

Two further grounds of appeal

The amended summons added two further grounds of appeal, namely that the Magistrate erred in failing to have regard to the admissions made by the road line marking expert called by Ennis to the effect that the equipment used by Advanced Concrete at the Castle Towers job was reasonable and the white paint supplied by Ennis was the likely cause of the problems experience by Advanced Concrete at the Castle Towers job; and the Magistrate erred in finding that the problems experience by Advanced Concrete at the Castle Towers job were not caused by the white paint supplied by Ennis. Senior counsel for Advanced Concrete did not make any written or oral submissions on these two grounds of appeal. Therefore it is not necessary that I deal with them.
The result is that the appeal is dismissed. The decision of Magistrate Wilson dated 18 December 2015 is affirmed. The amended summons filed 5 October 2016 is dismissed.
Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs on an ordinary basis as agreed or assessed.

The Court orders: (1) Leave to appeal is granted. (2) The appeal is dismissed. (3) The decision of Magistrate Wilson dated 18 December 2015 is affirmed. (4) The amended summons filed 5 October 2016 is dismissed. (5) The plaintiff is to pay the defendant's costs on an ordinary basis as agreed or assessed.

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: 13 March 2017

Local Court Act 2007(NSW)ss 39, 40, 41

(2007) 161 LGERA 118

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