FRANKS v BEREM CONSTRUCTIONS PTY LTD

Court of Appeal (NSW)|1998-11-12|Before: Priestley JA, Hodgson CJ

PRIESTLEY JA, FITZGERALD AJA and HODGSON CJ in Eq 12 November 1998, 2 December 1998

Practice - Reference by Court to Referee - Factual Findings of Referee - When Reconsideration of Evidence Appropriate

Trial judge considering adoption of referee's report says "It is not the function of this court in considering whether to adopt the report to look at the transcript and the intricacy of the evidence".

referee, for example when it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal could have reached, or that there was very significant evidence against the referee's decision that the referee has failed to deal with at all in his reasons.

(2) (Fitzgerald AJA dissenting) However, the trial judge's statement in its context did not amount to an appealable error.

(3) (Obiter) Even if an appealable error is found in such a case, the appeal court might not automatically allow the appeal, but rather would generally need to be satisfied that the error was material, in that it would or could reasonably have made a difference to the result.

Super v SJP Formwork (Aust) (1992) 29 NSWLR 549, Nine Network v Kennedy Miller Television, CA40641/93, 8/6/94, Flender (Australia) v Warman International, CA40342/95, 18/6/98, considered.

Priestley JA I have had the advantage of reading in draft the reasons of Hodgson CJ in Eq for proposing the appeal in this case should be dismissed and of Fitzgerald AJA for proposing that it be allowed. Fizgerald AJA agrees with Hodgson CJ in Eq's view of the relevant law, but reaches a different conclusion because of a somewhat different interpretation of the reasons of the trial judge.

Talso agree with the legal position as stated by Hodgson CJ in Eq. On the other matter, I think there is almost equal force in the reasons given by my two colleagues for their differing understanding of the trial judge's explanation of her opinion. The balance however, in my respectful opinion, favours the conclusion reached by Hodgson CJ in Eq.

Accordingly, for the reasons given by Hodgson CJ in Eq, I agree with him that the appeal should be dismissed with costs.

Fitzgerald AJA The circumstances giving rise to this appeal are set out in the judgment of Hodgson CJ in Eq. His Honour's careful treatment of the issues allows me to be brief Although I have come to a different conclusion from his Honour, the ambit of disagreement is very limited.

I agree with Hodgson CJ in Eq that, for the reasons which he gives, grounds 5 and 6 of the notice of appeal were not made out.

I also agree with his Honour's observations concerning the approach of this Court when it is demonstrated that the trial court which reviewed a referee's report made an appealable error, and generally with his Honour's observations

concerning the correct approach by a trial court with respect to the evidence before a referee. There are at least two circumstances in which it might be necessary or appropriate for a trial court to consider such evidence. One is when the issue is whether findings by a referee are unreasonable in the sense that that description is used in such a context. Another is when a referee's reasons are inadequate but the trial court is in a position to determine the relevant issue or issues without sending the matter back to the referee, or needs to consider the evidence to decide which course to follow.

Hodgson CJ in Eq, has set out the material portion of the referee's reasons in connection with his discussion of grounds 7 to 10 of the appellant's notice of appeal. His Honour has also set out the material portions of the reasons for judgment of the District Court judge from whom this appeal is brought. Her Honour correctly recognised that she needed to be satisfied that the factual issues had been properly explored and considered, and that she needed to be able to discern the reasoning processes which led the referee to his conclusion. However, she later said:

"Tt is not the proper function of this Court in considering whether to adopt the report to look at the transcript and intricacy of the evidence.... If I am satisfied that there was sufficient evidence before the referee to allow him to consider the issue, which I am, it is not for me to then look at the evidence to see whether the referee has demonstrated error in his conclusions.

It was further submitted by [the appellant's] that it is insufficient for the referee to state in his report that he prefers the evidence of one expert over the other in regard to a particular defect without disclosing the evidence to which he had regard to come to that conclusion.

.. the referee in his preamble sets out the reasons why he was in the main inclined to accept the evidence of one over the other. Having done that it was sufficient to refer briefly to the matters in dispute in each of the particular defects and make a decision.

... In all of the circumstances, I am not satisfied that it is demonstrably flawed to the extent that I cannot adopt it."

In my opinion, that passage must be considered as a whole in the context of not only her Honour's earlier correct statement of the applicable legal principles in the passage quoted by Hodgson CJ in Eq but also the extremely brief reasons given by the referee.

My mind has fluctuated, but I have ultimately concluded that her Honour incorrectly confused the question whether she should "look at the evidence to see whether the referee has demonstrated error in his conclusion" with the question whether the referee had given adequate reasons which "properly explored and considered" that evidence and explained "the reasoning processes which led... to his conclusions".

More particularly, I am not persuaded that the referee "properly explored and considered" the material factual issues with respect to building defects involving "waterproofing of windows, sliding door units and timber clad walls", or adequately explained the reasoning process which led to his conclusions on that subject. Even when combined with a general preference for the evidence of a particular witness, I do not regard reasons which do no more than assert generalised conclusions as satisfactory when issues are potentially complex and involve a substantial sum of money.

It follows that, in my opinion, the District Court judge made an appealable error.

URJ FRANKS v BEREM CONSTRUCTIONS PTY LTD (Hodgson Cu in Eq) 3

I agree with Hodgson CJ in Eq that it does not automatically follow that the appeal to this Court must be allowed. However, the appellants' grounds of appeal 7 to 10 and their argument in this Court have convinced me that they appropriately challenged the material portion of the referee's report in the District Court, and requested her Honour to consider the evidence. In my opinion, they remain entitled to have that course followed by the District Court, at least unless it remits the material section of the parties' dispute for redetermination on the basis that the referee's present reasons are inadequate.

I would allow the appeal with costs and set aside the orders made in the District Court that the appellants' motion be dismissed and the referee's report be adopted insofar as the parties' dispute concerns the building defects relating to waterproofing of windows, sliding door units and timber clad walls. The amounts ordered to be paid by the appellants to the respondent should be varied accordingly, and the orders that the appellants pay the respondent's costs of the District Court proceedings and the balance of the referee's fees and expenses and indemnify the respondent in respect of those fees and expenses should be set aside.

The parties' motions should be remitted to the District Court for further consideration and decision of the dispute with respect to the building defects relating to the waterproofing of windows, sliding door units and timber clad walls and for appropriate consequential orders, including orders with respect to costs of all District Court proceedings and the referee's fees and expenses.

Hodgson CJ in Eq The appellants appeal from a decision of Acting District Court Judge Ainslie-Wallace made on 25th July 1997, by which her Honour determined that certain referee's reports ought to be adopted, and dismissed a Notice of Motion brought by the appellants which challenged these reports in various respects. Orders were made on Ist August 1997 pursuant to that decision, including judgments in favour of the respondent for about $130,000.00 plus interest (a little over $175,000.00 in all) and costs; and it is apparent that these orders are also challenged by the appeal.

The matter arises out of a building contract under which the respondent agreed to erect two residences on land owned by the appellants. The respondent sued for the balance claimed to be due in respect of the building work by Statement of Liquidated Claim dated Sth January 1996, and the appellants put on a cross-claim dated 26th March 1996 claiming damages for alleged defects in the building work. Pursuant to Pt28B r2(1) of the District Court Rules, the matter was referred to a referee B J O'Mara.

There was an eight-day hearing before the referee between 25th November 1996 and 12th December 1996, with written submissions being subsequently provided. The referee produced a report dated 7th February 1997, in which he found a sum of around $130,000.00 plus interest to be due to the respondent. Notices of Motion were then filed, by the respondent for orders adopting the report, and by the appellants for orders that the report be rejected or varied. On 27th February 1997, an order was made for a further report on a particular matter, and a supplementary report dated 7th March 1997 was produced by the referee, which did not alter the ultimate result. Then there was a further Notice of Motion filed by the respondent that this supplementary report be adopted.

The three Notices of Motion were heard by Acting District Court Judge Ainslie-Wallace on 27th June 1997, and her Honour delivered a reserved judgment on 25th July 1997.

The material before the trial judge included the District Court pleadings, the referee's reports, an amended Scott Schedule, two affidavits by the respondent's solicitor Mr Popper, and the transcript before the referee, all of which are included in the appeal papers. There was also before the trial judge certain material which is not in the appeal papers, namely the exhibits before the referee, including the expert's reports, and the written submissions to the referee. Apparently, these items were not marked as exhibits: it would have been preferable if they had been either marked as exhibits or else explicitly rejected, so as to make it entirely clear what material was accepted as evidence.

At the hearing of the appeal, challenge was made only to the trial judge's decision concerning the referee's determination of the appellant's cross-claim based on alleged building defects.

In that regard, the only material before us indicating the issues debated before the learned trial judge is the following. First, the appellant's Notice of Motion which, among other things, sought orders that the referee's report be rejected or varied in respect of certain matters, including "(d) Building Defects (p10-p13)". Second, there is a letter dated 26th February 1997 from the appellant's solicitors, annexed to Mr Popper's affidavit of 20th March 1997, in which, in response to the respondent's request for particulars of the grounds on which such an order was sought, it was stated:

Our client will not be seeking to rely on any affidavit material in support of it's (sic) Motion. Our client will ask for the relevant orders to be made upon the basis of an analysis of the transcript of evidence given before the referee. Having already considered our submissions to the referee, the reasons for which our client asked for the report to be rejected on the particular raised in the Motion will no doubt be apparent to you.

Third, there is a document dated 23rd May 1997, signed by the solicitor for the appellants, and entitled Notice of Grounds of Opposition to Adoption of Referee's Report, para4 of which is in the following terms:

(i) unconditionally accepting the expert evidence of Mr Eccles (which was discredited);

(ii) finding that he should refuse to accept the evidence of Mr Hall at all but then accepting his evidence when it produced a more favourable outcome for the plaintiff;

(iii) finding that he was constrained by anything that counsel said from imposing his own view when he believed the expert evidence from both parties to be wrong; and

(iv) not affording the expert witnesses the opportunity of hearing his views regarding the accuracy of the expert evidence which they were giving before finding that he did not agree with their evidence.

All of the above matter lead to the conclusion that the Referee has misconducted himself in relation to the manner in which evidence was given and received in respect of the whole of the cross-claim.

Fourth and finally, there are certain parts of the judgment of the trial judge as set out below. These two portions are in fact the whole of the material in that judgment which is relevant to this appeal.

URJ FRANKS v BEREM CONSTRUCTIONS PTY LTD (Hodgson Cu in Eq) 5

It is accepted that the law concerning the consideration of a referees report by the court is as set out in the decision of the Court of Appeal in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549.

That case makes it clear that the (sic) it is not for this court to reconsider the matters as they were before the referee nor for it to embark on an appellate process in relation to the report.

In that case the court considered with approval the decision of SJP Formwork (Aust) Pty Ltd v Leda Construction Pty Ltd (19 May 1992 Giles J, unreported).

In Leda Construction Giles J dealt with the criticisms of the report in a number of ways. Where the criticism involved a question of law, such as whether there was sufficient evidence to support a finding, it was dealt with on its merits. However, where the criticisms went to aspects of the report relating to disputes between witnesses the court declined to reconsider them.

Where it seems to the court that there is sufficient factual material on which the referee could have come to the findings that he did then the court having carefully considered the report "has a comfortable feeling of satisfaction that the factual issues have been properly explored and considered" then the court should adopt the report. (at 553G).

If the report reveals that some error of principle, want of jurisdiction, a patent misapprehension of the evidence or manifest unreasonableness in fact finding, the court could reject the report.

The referee is bound to give reasons and the court should be able to discern the reasoning processes which lead the referee to his conclusion. If this is not able to be done, then the court cannot adopt the report as it has no way of knowing how the referee came to his findings.

It was common ground that there were a number of defects discovered in the constructed building which were considered by the referee.

Each of the parties qualified an expert to give an estimate of the cost of rectification.

At the outset of the report in this section, the referee sets out the reasons why he preferred the evidence of one expert over the other. He then sets out the various matters and the evidence of each expert in the particular regard.

It is to be noted that the Defendant does not take issue with each of the findings of the referee in relation to the defects but only in respect of some of them. In respect of this aspect, the Defendant submits that in making findings on some of the defects the referee failed to consider the proper matters and I was invited to have regard to the transcript of the hearing before the referee. It is not the proper function of this court in considering whether to adopt the report to look at the transcript and the intricacy of the evidence. That is a matter for an appellate court. If I am satisfied that there was sufficient evidence before the referee to allow him to consider the issue, which I am, it is not for me to then look at the evidence to see whether the referee has demonstrated error in his conclusions.

It was further submitted by the Defendant that it is insufficient for the referee to state in his report that he prefers the evidence of one expert over the other in regard to a particular defect without disclosing the evidence to which he had regard to come to that conclusion.

As I have indicated earlier, the referee in his preamble set out the reasons why he was in the main inclined to accept the evidence of one over the other. Having done that it was sufficient to refer briefly to the matters in dispute in each of the particular defects and make a decision.

It is a somewhat difficult argument for the Defendant to make that the reasoning process of the referee was so flawed in regard to this aspect of the report that I should exercise my discretion and reject it while at the same time taking no issue with other particular findings on defects. Either the referee's reasoning process was flawed or it was not. In all of the circumstances I am not satisfied that it is demonstrable flawed to the extent that I cannot adopt it.

In all of the circumstances and taking into account all of the matters referred to by counsel in their arguments, I remain comfortable (sic) satisfied that the report ought to be adopted.

The relevant grounds of appeal which have been pursued are those numbered 5 to 10 in the Notice of Appeal, which are as follows:

Her Honour erred in holding that the appellants did not take issue with all of the referee's findings on the appellant's cross-claim for building defects.

Her Honour should have held that the appellants did take issue with all of the referee's findings on the appellant's cross-claim for building defects.

Her Honour erred in holding that those aspects of the referee's report dated 7 February 1997 in which he dealt with the appellant's cross-claim for building defects displayed an adequate process of intellectual reasoning such as to make it appropriate to adopt those aspects of the report.

Her Honour should have held that those aspects of the referee's report dated 7 February 1997 in which he dealt with the appellant's cross-claim for building defects did not sufficiently disclose a reasoning process which could satisfy the Court below that the findings were ones based upon an intellectual exercise.

(a) that it was not the proper function of the Court below in considering whether to adopt the report to look at the transcript and the intricacy of the evidence; and

(b) that that function was the function of an appellate Court.

Her Honour should have held that it was the proper function of the Court below, when asked to do so by a party, to examine the transcript of the proceedings before the referee in order to satisfy itself whether it was appropriate to adopt, vary or reject the referee's report.

Mr Biscoe QC for the appellants referred to grounds 9 and 10, and submitted that, in the three sentences in the second extract set out above from the trial judge's decision commencing "It is not the proper function of this Court...", the trial judge manifested a misunderstanding of the appropriate legal principle to be applied. Those sentences indicate that it is not appropriate in any case for a court, other than an appellate court, to go to the evidence before a referee; whereas plainly the Court is obliged to go to the evidence before a referee if the Court is not comfortably satisfied that the reasons given by the referee are sufficient: see Skinner & Edwards (Builders) v Australian Telecommunications Corporation (1992) 27 NSWLR 567 at 576. Since her Honour misdirected herself as to the applicable legal principles, an appealable error had been shown.

URJ FRANKS v BEREM CONSTRUCTIONS PTY LTD (Hodgson Cu in Eq) 7

Mr Biscoe accepted that the applicable principles were correctly stated in the earlier of the two passages quoted, but submitted that, by the time the learned trial judge came to consider the question of defects, she had misapprehended the true position, thereby vitiating her consideration of that aspect of the case. Having regard to the very narrow basis on which a court can review a referee's decision, it was extremely important that the Court correctly state and apply the principles defining that narrow basis.

Mr Biscoe then went to grounds 5 and 6, and referred to the statement in the second of the extracts to the effect that the appellants did not take issue with each of the findings in relation to the defects but only in respect of some of them; and submitted that it was plain from the Notice of Motion that issue was in fact taken in respect of all the findings. The trial judge had not identified which issues she considered and which issues she did not consider; and this indicated that she had refused or failed to consider certain issues or arguments advanced by the appellants. To that extent, there had been a denial of natural justice, and the appeal should be allowed: see Flender (Australia) v Warman International, CA40342/95, 18th June 1998, unreported.

In relation to grounds 7 and 8, it was submitted that the learned trial judge could not have been comfortably satisfied that the reasons given by the referee when dealing with the cross-claim for building defects were sufficient, at least in relation to the alleged defects in walls and waterproofing. Particularly in relation to waterproofing, there was a finding in favour of the appellants for only about $6,000.00, as opposed to the $48,000.00 supported by the appellant's expert, and no adequate reasons had been given by the referee for accepting the respondent's evidence in preference to the appellant's evidence.

Mr Biscoe submitted that, since an appealable error had been shown, the appeal should be allowed and the matter remitted to the District Court to be considered according to law. It was not appropriate for the Court of Appeal to enter into the merits of the matter, and itself to consider whether the referee's report ought to be adopted: see Super v SJP Formwork (Aust) (1992) 29 NSWLR 549, at 555-6; Nine Network v Kennedy Miller Television, CA40641/93, 8th June 1994, at p10-p12 in the judgment of Gleeson CJ; and Flender.

In any event, in this case the appealable error was plainly material: in the light of the issues raised and the contents of the report, it was necessary for a court considering whether or not to adopt the referee's reports to go to the evidence before the referee, and the Court of Appeal was not in a position to do this.

Mr Callaghan SC for the respondent provided written submissions, which will be left with the papers, and which it is not necessary for me to repeat.

He also submitted that the relevant part of the referee's reasons, on the matters the subject of the appellant's submissions, were such as to give comfortable satisfaction that the factual issues had been properly explored and considered; and a fair reading of the trial judge's reasons indicated that her Honour did indeed have that comfortable satisfaction.

Mr Callaghan further submitted that there would in this case be no occasion for a court considering the adoption of the referee's report to go to the evidence before the referee, this not being a case where it was suggested that there was no material upon which the referee could have made the findings of fact which he made, nor one of those exceptional cases where it could be demonstrated that no reasonable tribunal of fact could have reached the decision achieved: see Foxman Holdings v NMBE (1994) 38 NSWLR 615 at 620; Collings Construction Co v ACCC (1998) 152 ALR 510 at 535-7.

In reply, Mr Biscoe submitted that the case of Foxman indicated too narrow a view of the circumstances in which it could be appropriate for the court considering the adoption of a referee's report to look at the evidence before the referee: he referred to Super at 559 and 564, where Gleeson CJ adopted the views of Jacobs J in Buckley v Bennell Design & Constructions (1978) 140 CLR 1 at 36, to the effect that a referee's report may be set aside or remitted if the referee acts perversely or unreasonably, "as he would do if he decided against the evidence and weight of evidence". If it is alleged that a referee has acted unreasonably in that respect, as in this case, it was necessary for the court to look at the evidence before the referee.

Dealing first with grounds 9 and 10, it is my opinion that if one reads the three challenged sentences in the light of the earlier passage quoted and the judgment as a whole, it is plain that her Honour was not there saying anything different from what she had said in the earlier passage, which was accepted by the appellants as correctly stating the law.

In my opinion, where her Honour refers to "sufficient evidence before the referee to allow him to consider the issue'', this means sufficient evidence for the referee to decide the issue one way or another, including the way in which he did decide it. Mr Biscoe submitted that what her Honour meant was sufficient evidence to consider the issue but not to decide it; but in my view this is wholly implausible as an interpretation of what her Honour said, particularly in the light of the earlier statement of principle in her Honour's judgment.

On that interpretation of what her Honour said, and given that there was sufficient evidence before the referee to decide the issue one way or another, including in the way in which he did decide it, it was appropriate for her Honour not to go to the detail of the evidence but rather to consider whether the referee's reasons were flawed, or rather were such that her Honour could have comfortable satisfaction that the issues had been properly explored and considered. This is in substance what her Honour said she was doing, and in substance what she did.

T accept Mr Biscoe's submission that it would not be correct to say in absolute terms that a court considering whether to adopt a referee's report should never "look at the transcript and the intricacy of the evidence". The following are circumstances in which I believe the Court should or at least could do so.

If there were a real question as to whether there was evidence on which the referee could, without manifest unreasonableness, have come to the decision to which he came, it may indeed be necessary to refer to the evidence; but plainly this is not required by a mere suggestion of a factual error such that, if it were made by a trial judge, an appeal court would correct it. The reference by Jacobs J in Buckley to a decision "against the evidence and weight of evidence" must be read in its context, that is, as being an example of a referee acting perversely or unreasonably. Accordingly, it should be limited to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence.

A second circumstance in which it could be necessary or appropriate for a court considering the adoption of a referee's report to go the evidence is where the referee's reasons on the face of them appear adequate, but the party challenging the report contends that the reasons are not adequate because there

URJ FRANKS v BEREM CONSTRUCTIONS PTY LTD (Hodgson Cu in Eq) 9

was very significant evidence against the referee's finding which the referee did not deal with at all. Such a contention may concede that the referee's conclusion was one which a reasonable referee could have reached on the whole of the evidence, and also that the referee's reasons on the face of them appear sufficient; and yet claim that examination of evidence would show that the reasons were in fact quite inadequate because some very significant evidence was not referred to at all.

Thirdly, if a court considering the adoption of a referee's report decided that the referee's reasons were flawed, either on the face of them or because they did not deal at all with an important matter appearing in the evidence, the court could, if it thought appropriate, rather than automatically declining to adopt the report, itself look at the detail of the evidence in order to decide whether or not the expense of further proceedings before the referee was really justified.

In the present case, as I understand the issues before the trial judge, the grounds of appeal, and submissions made to us, at no stage did the appellants undertake to demonstrate that the referee's decision was, in any respect now relevant, one to which no reasonable referee could have come, as distinct from being an erroneous decision on the evidence; or that the reasons were flawed because there was some particular very significant evidence which should have been referred to by the referee but was not dealt with at all. Accordingly, even if one were to take the trial judge's reference to not looking "at the transcript and the intricacy of the evidence" out of context, and as an unqualified statement of principle, it would not be a statement of principle causing error in this particular case.

Turning to grounds 5 and 6, in order to make out the claim of denial of natural justice, it would at least be necessary to make good the assertion that her Honour was in error in stating that the appellants did not take issue with all of the referee's findings in relation to defects, but only in respect of some of them. The only basis put forward for challenging that statement is the content of the Notice of Motion. However, when one goes to the referee's findings in relation to defects, one finds that three of them, namely those identified by the letters D, F and H, are findings more favourable to the appellants than what was supported by the appellants' own expert witness. Mr Biscoe was unable to assure the Court that in relation to those findings there had in fact been issue taken by the appellants before the trial judge; and in those circumstances, in my opinion, the essential basis for the suggestion of denial of natural justice is not made out. Furthermore, in so far as complaint is made that the trial judge did not deal individually with each of the defect items, neither the Notice of Grounds before the trial judge, nor the submissions before this Court, suggest that any more than a global consideration of the matter was necessary.

Accordingly, in my opinion these grounds are not made out.

Turning to grounds 7 and 8, these should be considered in the light of the referee's relevant reasons, which are as follows:

After considering the report of David Hall, Building Consultant - Ex 41 - together with the report of John Eccles, Building Consultant - Ex-2 - I will now deal with the heads of defects raised by those consultants. Mr Eccles indicated that he had with him the Hall report of 25 August when he conducted his inspection of the property. TP331.07. At the same time, I will note the evidence of J R Howell Constructions Pty Ltd in chief together with his statement - Ex 43.

Mr Howell's evidence was, in the main, unsubstantiated as his quotation submitted and marked "A" in Ex 43, is in the simplest form. When I compare the figures of Mr Howell as against Mr Eccles, there is a wide disparity between the two. He supplied little or no back-up or costing to support the amounts claimed. His statement at TP 477.49 that he is "obviously here for a purpose", in my mind damages his creditability.

WATERPROOFING OF WINDOWS, SLIDING DOOR UNITS AND TIMBER CLAD WALLS

Mr Hall indicates there is no sill flashing provided. Mr Howell's estimation to rectify this problem is $48,000.00 and at TP 482.39 indicates that this is for rectification and not complete replacement of the doors and windows. This I do not accept.

Mr Eccles' rectification cost to perform a minor section of the work is $168.00. This I do accept.

Mr Eccles goes on and provides costs to provide flashings below sliding doors and timber walls. These costs include the repairs to parquetry flooring and its re-finishing, repainting of affected walls and the removal and replacement of a quantity of terra cotta tiles to allow a 'Z' flashing to be installed around the perimeter of these walls.

Mr Eccles' exercise is a detailed cost analysis that, with the exception of the omission of $150.00 for item K, is acceptable. To his figure of $5,588.00, I add the figure of $150.00 bringing the cost that I accept for rectifying this item to be $5,738.00.

To this amount should be added the figure of $168.00 which indicates a total rectification cost of $5,906.00 for the repairs to this total item.

In my opinion, this discloses a reasoning process whereby the referee discounted the weight of Mr Howell's evidence because it was in the main unsubstantiated and came with little or no back-up or costing, and because the quoted statement was taken as indicating an objective of supporting the appellants' case; whereas Mr Eccles on the other hand gave a detailed cost analysis which, with one exception, the referee found acceptable. The referee's reasons were brief in relation to a finding which in effect reduced the appellants' claim by $42,000.00; but in my opinion were sufficient to enable the trial judge to be satisfied by them, and in my opinion the brief reasons given by the trial judge adequately express her satisfaction and her reasons for it.

I note that the Notice dated 23rd May 1997 did refer to certain matters not dealt with in the referee's reasons, such as the discrediting of Mr Eccles' evidence and the accepting of Mr Hall's evidence (I believe this should be Mr Howell's evidence) when it produced a more favourable result for the respondent; but it was not suggested to us that it was put to the trial judge that the referee's reasons were deficient because they did not deal with these matters, or that the trial judge was asked to look at the evidence in order to see that there was very significant evidence, concerning these matters, that the referee should have dealt with in his reasons.

For those reasons, in my opinion, the appellants have not shown an appealable error by the trial judge, and the appeal should be dismissed.

URJ FRANKS v BEREM CONSTRUCTIONS PTY LTD (Hodgson Cu in Eq) 11

There was debate before the Court as to what this Court should do if appealable error was found. Having regard to the view which I have just expressed, this question does not arise; but I think I should take the opportunity to express a tentative view about the matter.

For my part, I would not read the cases of Super, Nine and Flender as showing that once an appealable error is shown, the Court of Appeal automatically allows the appeal and sends the matter back to the trial court. Consistently with what was said by Gleeson CJ in Nine, this is the course which will ordinarily be taken, at least where it appears that the error would have made a difference to the result, or could have made such a difference and the Court of Appeal thinks it appropriate for the trial judge to determine whether the error did make a difference. However, if the Court of Appeal is not satisfied that the appealable error is material (a word used twice by Gleeson CJ towards the end of p11 of his judgment in Nine), in that it at least could reasonably have made a difference to the result, the appeal should in my opinion be dismissed. Even where the Court of Appeal is satisfied that the appealable error could have made a difference to the result, it may be appropriate in the interests of finality and savings of costs for the Court of Appeal itself to consider whether or not it did in fact make a difference to the result. On one view, that is what was done by Beazley, JA and Sheppard AJA in Flender; and that exercise confirmed to them that the matter was appropriate for detailed consideration by the trial judge, not the Court of Appeal.

In the present case, if I had come to the view that there was appealable error, I would have gone on to consider whether or not that error would or could reasonably have made a difference to the result.

If the appealable error had been that the trial judge misdirected herself as to the principles to be applied as to whether or not she should consider the evidence before the referee, I do not believe I would have allowed the appeal on the basis that such consideration could have shown that no reasonable referee could have made the findings of fact which the referee made, unless I was satisfied that the appellants had made that submission to the trial judge, and had also made the submission that for that reason the trial judge needed to see the evidence; and unless it had squarely been put on the hearing of the appeal that was what proposed to be put to the trial judge if the matter was sent back to her. I do not in fact understand those matters to have been put to the Court. I may also have required to be satisfied that there was at least a realistic possibility that the trial judge would accede to such a submission; and certainly I am not satisfied of that.

If the appealable error had been that the trial judge should not have been satisfied by the referee's reasons because they were inadequate on their face, I believe I would have needed to be satisfied that the expense of a further hearing before the trial judge, with the possibility of a further hearing before the referee, was justified; and where the amount in issue was $42,000.00, I would have needed to be satisfied at least that the evidence was such that a different result before the referee was a reasonable possibility.

If the appealable error had been that the trial judge should not have been satisfied by the referee's reasons because she should have looked at the evidence before him and seen that the referee failed to deal with some very significant evidence, I believe I would have needed to be referred myself to that evidence, and also to be satisfied that a different result before the referee was a reasonable possibility; although if the referee had in fact failed to deal at all with very significant evidence, I would probably quite readily have been satisfied of that.

In any event, for the reasons I have given, the appeal should be dismissed. Counsel for the appellant: P Biscoe QC/A Lo Surdo

Solicitors for the appellant: David Trodden & Associates

Counsel for the respondent: P R Callaghan SC/D M Lowenstein

Solicitors for the respondent: Solomon Garland & Partners

At a glance

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Judgment (113 paragraphs)

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Cases Cited (6)

Cited By (8)