Goodrich Aerospace Pty Limited v Arsic

CATCHWORDS: COURTS AND JUDICIAL SYSTEM - appeals against findings of fact - role of demeanour findings - witnesses from different cultural and ethnic backgrounds - role of probabilities and consistency with other evidence - failure to examine all material facts relevant to an issue - adequacy of reasons - explaining demeanour findings. D

LEGISLATION CITED: Civil Liability Act 2002 (NSW), s 15A(1) Workers Compensation Act 1987 (NSW), s 151Z(2)

Abalos v Australian Postal Commission (1990) 171 CLR 167 CSR Limited v Della Maddalena (2006) 80 ALJR 458 Devries v Australian National Railways Commission (1993) 177 CLR 472 Fox v Percy (2003) 214 CLR 118 Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 CASES CITED: Societe d'Advances Commerciales (Societe Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") (1924) 20 LI L Rep 140 SRA (NSW) v Earthline Constructions Pty Limited (In Liq) (1999) 73 ALJR 306 SS Hontestroom v SS Sagaporack (1927) AC 37 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 Walden v Black [2006] NSWCA 170 Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816

PARTIES: Goodrich Aerospace Pty Limited (Appellant) Dusan Arsic (Respondent)

COUNSEL: J E Maconachie QC/D P Kelly (Appellant) B M J Toomey QC/D J Hooke (Respondent)

SOLICITORS: Cutler Hughes & Harris (Appellant) Beilby Poulden Costello (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40821/05 DC 1445/04

MASON P IPP JA TOBIAS JA

Tuesday 18 July 2006 GOODRICH AEROSPACE PTY LIMITED v DUSAN ARSIC

The respondent, Mr Dusan Arsic, was born in Slovenia and came to Australia in 1995. In late 2002 a labour hire company, Workforce International, employed him as a storeman. At the end of October 2002, Mr Arsic was sent by Workforce International to work for Goodrich Aerospace Pty Limited ("Goodrich"), the appellant.

Mr Arsic claimed that in late January 2003 he was asked to sort aircraft wheel rims in the "reject cage" (an area used to store damaged wheel rims until a customer authorised their disposal). Mr Arsic claimed that Mr Mirsad Maslic, an engineer employed by Goodrich, instructed him to match corresponding wheel rims in the reject cage. According to Mr Arsic, the job was made difficult by the untidy state of the reject cage, the confined area in which he had to work and the weight of some of the wheel rims.

Mr Maslic denied having given Mr Arsic any such instructions. In support of his denial, he said that there were no matching wheel rims stored in the reject cage.

Mr Arsic claimed that, on 31 January 2003, he injured his back while lifting a heavy wheel rim in the reject cage. Mr Arsic did not make an immediate report of this injury at work or to a doctor. Over the next few months, Mr Arsic visited a number of doctors whose reports Mr Arsic tendered at trial. These reports revealed inconsistent information regarding the circumstances in which Mr Arsic sustained his back injury.

Mr Arsic and Mr Maslic provided two diametrically opposed accounts of the usage and state of the reject cage and the events leading up to the injury. Both Mr Arsic and Mr Maslic (who came to Australia from Bosnia in 1995) had difficulty in expressing themselves when giving oral evidence. No other witnesses were called to support either account. At trial, the issue of liability turned on which of the two men the judge believed.

Ainslie-Wallace DCJ, after analysing some of the evidence and taking into account Mr Arsic's demeanour as a witness, accepted Mr Arsic's account. Based on this finding, her Honour held that Goodrich had been negligent.

Goodrich's principal argument on appeal was directed at the trial judge's acceptance of Mr Arsic's evidence. Goodrich submitted that her Honour failed to have regard to all of the evidence, failed to have due regard to inconsistencies in the evidence adduced by Mr Arsic, did not pay sufficient regard to the probabilities and misunderstood Mr Maslic's evidence.

i. Great care must be exercised in making demeanour findings, particularly where a witness is from a different cultural or ethnic background to that with which the trial judge is familiar.

ii. When making demeanour findings, trial judges are expected to weigh their impressions as to demeanour carefully against the probabilities and to examine whether the disputed evidence is consistent with the incontrovertible facts, facts that are not in dispute and other relevant evidence in the case. iii. Demeanour may trump the probabilities, but it should be apparent from the judge's reasons that the probabilities and consistency with other relevant evidence have properly been taken into account.

iv. Often important issued of credibility involve sub-issues. Objective facts, or facts that are probable, may have significant bearing on these sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted them in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent.

v. A failure by a judge when making a demeanour finding to deal with an improbability constituting a "governing fact" may constitute an error in the process of fact-finding.

SS Hontestroom v SS Sagaporack (1927) AC 37, Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816

vi. Mr Maslic's unchallenged testimony as to the function of the reject cage, the impossibility of matching rims in the reject cage and the lack of any apparent purpose in matching, stacking and removing pairs of rims from the reject cage, was capable of establishing "governing facts". The trial judge's failure to examine and deal with this evidence constituted an error in the process of fact-finding, namely, a failure to examine all of the material relevant to the particular issue.

SS Hontestroom v SS Sagaporack (1927) AC 37, Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 vii. In view of her Honour's errors in regards to the testimony of Mr Maslic concerning the function of the reject cage and the characteristics of the rims in the reject cage, her positive credibility findings in regards to Mr Arsic are tainted.

viii. Much of the trial judge's criticisms of Mr Maslic's evidence are capable of being answered by reference to his different cultural background. Her Honour was not wrong in her criticism of Mr Maslic, but these criticisms do not lead inevitably to an adverse credibility finding. It is possible that some other judge would have come to a different view of Mr Maslic's credibility.

ix. Goodrich was entitled to take the view that it was not necessary to call any evidence to support Mr Maslic's case. According to the ordinary conventions of the adversarial system, when a party does not cross-examine on evidence relating to a significant issue in a case, that party is taken to concede the point.

x. The errors by the trial judge would not entitle the Court of Appeal to make any factual findings of its own. These errors require this court to order a retrial on the issue of liability of Goodrich.

xi. There was no error on the part of the trial judge in deciding that no allowance should be made for negligence on the part of Workforce International.

Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 ORDERS

(1) The orders made by Ainslie-Wallace DCJ are set aside. (2) The issue of liability is to be remitted to the District Court for retrial. (3) The damages assessed by Ainslie-Wallace DCJ are reduced by $1,755.00 to $201,522.96. (4) The costs of the trial are costs in the cause. (5) Mr Arsic is to pay Goodrich the costs of the appeal. (6) Mr Arsic is granted a certificate under the Suitors' Fund Act 1951 (NSW) if otherwise qualified.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40821/05 DC 1445/04

MASON P IPP JA TOBIAS JA

Tuesday 18 July 2006 GOODRICH AEROSPACE PTY LIMITED v DUSAN ARSIC

Judgment 1 MASON P: I agree with Ipp JA. 2 IPP JA:

The issues on appeal 3 By this appeal the appellant, Goodrich Aerospace Pty Limited ("Goodrich"), challenges demeanour-based factual findings made by the trial judge Ainslie-Wallace DCJ, in upholding the claim of the respondent, Mr Dusan Arsic, for damages caused by Goodrich's negligence. 4 Mr Arsic was employed as a storeman by a labour hire company, Workforce International. At the end of October 2002, Workforce sent Mr Arsic to work for Goodrich. Mr Arsic claimed that on 31 January 2003 he was injured when lifting a heavy aircraft wheel rim. He said this took place in an area on Goodrich's factory floor known as the "reject cage". He said that Mr Mirsad (Mick) Maslic, an engineer in the employ of Goodrich, had instructed him to match corresponding aircraft wheel rims in the reject cage. In doing this work, he lifted the rim and this caused his injury. 5 Mr Maslic denied having given Mr Arsic any such instructions. In support of this denial, he said that there were no matching pairs in the reject cage. 6 The factual dispute between Mr Arsic and Mr Maslic was the kernel of the case. Her Honour observed that counsel for Goodrich "had little to say on the question of whether [Goodrich] acted negligently if [Mr Arsic's] account was accepted". The issue of liability turned on which of the two men the judge believed. 7 Ainslie-Wallace DCJ found for Mr Arsic. After referring to and commenting upon some of the evidence, the judge said: "There are matters which cannot be reconciled with the plaintiff's account, the absence of a note of back pain in the records of the doctors to whom he went about his elbow and the apparently conflicting histories. However, looking at the evidence as a whole and taking into account the plaintiff's demeanour as a witness, I do not accept that he is lying about what he was doing at the defendant's factory when he hurt his back nor do I accept either that he injured it before or after that time." 8 Having accepted Mr Arsic's account, her Honour found that Goodrich had been negligent. There is no challenge to this finding. 9 Goodrich's principal argument on appeal was directed to the judge's acceptance of Mr Arsic's evidence. Goodrich contended that, in accepting Mr Arsic's version and rejecting that of Mr Maslic, her Honour erred. Goodrich submitted that the judge failed to have regard to all of the evidence, failed to have due regard to inconsistencies in the evidence adduced by Mr Arsic, did not pay sufficient regard to the probabilities and misunderstood Mr Maslic's evidence. 10 Goodrich raised two other issues. It contended that the damages awarded to Mr Arsic should have been adjusted in terms of s 151Z(2) of the Workers Compensation Act 1987 (NSW) to take account of the contribution that Mr Arsic would have been able to recover from Workforce had he sued it. Secondly, it contended that the judge made an error in calculating past economic loss and failed to apply s 15A(1) of the Civil Liability Act 2002 (NSW) in calculating the loss of superannuation benefits. These issues played a minor part in the appeal and were hardly touched on in oral argument.

The power of an appellate court to overturn findings of fact 11 Stern sentinels have long barred the gateway to appellate success against findings of fact substantially dependent on demeanour and credibility. These formidable guardians are the line of cases epitomised by Devries v Australian National Railways Commission (1993) 177 CLR 472 and Abalos v Australian Postal Commission (1990) 171 CLR 167. The opening of the portals is dependent on passwords that, in practice, are rarely invoked successfully. These are: "the trial judge's failure to use or palpable misuse of his or her advantage," or the judge making findings "inconsistent with incontrovertible facts," or acting on "glaringly improbable evidence," or making findings "contrary to compelling inferences". There are signs, however, that entry to the citadel can now more easily be achieved. 12 In Fox v Percy (2003) 214 CLR 118 Gleeson CJ, Gummow and Kirby JJ said at 128 -129, [30] - [31]: "It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses [eg Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 348, per Samuels JA.] Thus, in 1924 Atkin LJ observed in Société d'Advances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") [(1924) 20 Ll L Rep 140 at 152]. '… I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.' Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell the truth from falsehood accurately on the basis of such appearances [See material cited by Samuels JA in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 348 and noted in SRA (1999) 73 ALJR 306 at 329 [88]; 160 ALR 588 at 617-618]. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical." 13 In the same case McHugh J said at 146-147, [90]: "It is a serious mistake to think that anything said in Abalos or Devries necessarily prevents an appellate court from reversing a trial judge's finding when it is based, expressly or inferentially, on demeanour. Those cases recognise - in accordance with a long line of authority - that it may be done. But there must be something that points decisively and not merely persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses." 14 In CSR Limited v Della Maddalena (2006) 80 ALJR 458 Kirby J, with the concurrence of Gleeson CJ, said at 465, [19] that Fox v Percy had brought about "an important change in the statement by this Court of the jurisdiction and powers of intermediate appellate courts". His Honour said that the change "involved a shift to some degree from the more extreme judicial statements commanding deference to the findings of primary judges said to be based on credibility assessments". He went on to say at 466, [23]: "It would be a misfortune for legal doctrine if, so soon after Fox v Percy corrected the non-statutory excesses of earlier appellate deference to erroneous fact-finding by primary judges, the old approach was restored, as, for example, by reversion to the previous formulae about the 'subtle influence of demeanour' that could have affected the primary judge's conclusion … ."

See further the discussion by Tobias JA in Walden v Black [2006] NSWCA 170 at [75] - [85]. 15 The degree to which the shift in emphasis has occurred is not yet clear and regard must be had to the fact that in Della Maddalena Callinan and Heydon JJ did rely on the trial judge's impression of the respondent in that case. Nevertheless, as Tobias JA points out in Walden v Black at [83], their Honours' judgment indicates that "reliance upon the 'subtle influence of demeanour' requires careful consideration in each case before it is permitted to trump appellate intervention".

The need for care in making demeanour findings 16 Individuals who have been parties in trials in superior courts usually remember the event for the rest of their lives. The demeanour findings made in those trials will usually affect the parties far more than any legislative Act or decision by the executive government. Indeed, the difference between success in life and ruin may turn on a single demeanour finding. 17 Kirby J in CSR Limited v Della Maddalena at 470, [46] repeated the reference made in Fox v Percy at 129, [31] to scientific research bearing on the ability of judges (or anyone else) to tell truth from falsehood. His Honour had earlier, in SRA (NSW) v Earthline Constructions Pty Limited (In Liq) (1999) 73 ALJR 306 at 329 (footnote 109), referred to scientific studies of this kind. 18 Mason P, in his article "Unconscious Judicial Prejudice" (2001) 75 ALJ 676, discussed cognitive illusions revealed by psychological studies. His Honour pointed out that these illusions can lead to systematic error or bias when making factual findings (at 684 - 685). Amongst these illusions are overestimating the value and accuracy of one's own judgment, and viewing one's own behaviour and responses as typical and appropriate while different behaviour is regarded as odd and inappropriate. Cognitive illusions are capable of erroneously, and profoundly, influencing a judge's opinion as to the veracity of evidence. The renowned American judge, Jerome Frank (in a statement referred to in "Cognitive Heuristics and the Law", Leeanne Sharp, (1995) Vol 20 Bulletin of the Australian Society of Legal Philosophy 71) aptly remarked: "There can be no greater hindrance to the growth of rationality than the illusion that one is rational when one is the dupe of illusions." 19 Recent psychological research has established that memory malfunction and suggestibility can result in a person mistaking fantasy for reality (see "How the Mind Forgets and Remembers", Schacter, Souvenir Press (2003), "Remembering Trauma", McNally, Harvard University Press (2003). Professor Schacter, the chair of Harvard University's Department of Psychology, has written (at 111) that, when misattribution combines with suggestibility, "people can develop detailed and strongly held recollections of complex events that never occurred". Professor McNally (also of the Department of Psychology at Harvard University) has written (at 77) that: "A significant minority of people can unwittingly come to believe they experienced stressful events that never happened."

Both these authors give many examples of research that support these conclusions. 20 There are other matters that give rise to concern. Witnesses may be dishonest about only parts of their evidence. Nothing is more deceitful than half the truth. Care must be taken to differentiate between assessing whether a witness is being honest or deceitful, and whether a truthful witness is giving accurate or inaccurate testimony. Distinguishing truth from intentional deceit is a different exercise from distinguishing between true and false memory. A liar intends to be deceptive, whereas the faulty rememberer tries to be truthful (Schacter, op cit at 100). Discerning what is accurate or inaccurate in the testimony of a truthful witness may be the most difficult task of all. Particularly when cognitive illusions or memory malfunctioning and suggestibility are involved. 21 Another area where great care must be exercised in making demeanour findings is where a witness is from a different cultural and ethnic background to that with which the judge is familiar. That occurred in this case. Mr Arsic was born in Slovenia. The court was told that he came to Australia in about 1995. Mr Maslic was born in Bosnia and also came to Australia in 1995. Neither was fluent in English. Both had difficulty in expressing themselves. Mr Maslic, in particular, was said to have a strong accent. 22 Sir Thomas Bingham (as he then was) illustrated the difficulties clearly when he said (in "The Judge as Juror", (1985) Current Legal Problems 1 at 10-11): "[H]owever little insight a judge may gain from the demeanour of a witness of his own nationality when giving evidence, he must gain even less when … the witness belongs to some other nationality and is giving evidence either in English as his second or third language, or through an interpreter. Such matters as inflection become wholly irrelevant; delivery and hesitancy scarcely less so. … If a Turk shows signs of anger when accused of lying, is that to be interpreted as the bluster of a man caught out in a deceit or the reaction of an honest man to an insult? If a Greek, similarly challenged, becomes rhetorical and voluble and offers to swear to the truth of what he has said on the lives of his children, what (if any) significance should be attached to that? If a Japanese witness, accused of forging a document, becomes sullen, resentful and hostile, does this suggest that he has done so or that he has not? I can only ask these questions. I cannot answer them. And if the answer be given that it all depends on the impression made by the particular witness in the particular case that is in my view no answer. The enigma usually remains. To rely on demeanour is in most cases to attach importance to deviations from a norm when there is in truth no norm."

See also SRA (NSW) v Earthline Constructions Pty Limited per Kirby J at 329. 23 Against this background it is no wonder that judges and jurists of the highest eminence have expressed deep scepticism about the reliability of demeanour findings. 24 In "The Judge as Juror" (at 8) Sir Thomas Bingham referred to comments of this kind (with which he largely allied himself) made by "three very experienced trial judges", namely, Lord Devlin, Browne LJ and MacKenna J (whose words Lord Devlin later adopted as his own). I shall repeat the remarks of MacKenna J, which articulate the basic problems with clarity: "I doubt my own ability, and sometimes that of other judges, to discern from a witness's demeanour, or the tone of his voice, whether he is telling the truth. He speaks hesitantly. Is it the mark of a cautious man, whose statements are for that reason to be respected, or is he taking time to fabricate? Is the emphatic witness putting on an act to deceive me, or is he speaking from the fullness of his heart, knowing that he is right? Is he likely to be more truthful if he looks me straight in the face than if he casts his eyes on the ground, perhaps from shyness or a natural timidity? For my part I rely on these considerations as little as I can help." 25 Sir Richard Eggleston QC wrote in Evidence, Proof in Probability, Weidenfeld and Nicolson (1983), at 199: "Many judges think that they can tell from the demeanour of a witness when he is lying, but in the course of my practice at the Bar there were several occasions on which witnesses, whom I firmly believed to be honest and to be telling the truth, displayed evident signs of embarrassment and discomfort in the witness box, sufficient to make them appear to be lying. I am therefore very sceptical of such claims." 26 Mr A M Gleeson QC, as he then was, wrote in "Judging the Judges" (1979) 53 ALJ 338 at 344: "Reasons for judgment which are replete with pointed references to the great advantage which the trial judge has had in making the personal acquaintance of the witnesses seem nowadays to be treated by appellate courts with a healthy measure of scepticism. What might be called the Pinocchio theory, according to which dishonesty on the part of a witness manifests itself in a fashion that does not appear on the record but is readily discernible by anyone physically present, seems to be losing popularity." 27 These problems and doubts about demeanour findings explain why trial judges are expected to weigh their impressions as to demeanour carefully against the probabilities and to examine whether the disputed evidence is consistent with the incontrovertible facts, facts that are not in dispute and other relevant evidence in the case. Of course, demeanour may trump the probabilities, but it should be apparent from the judge's reasons that the probabilities and consistency with other relevant evidence have properly been taken into account.

Giving adequate reasons for demeanour findings 28 It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: "I believe Mr X but not Mr Y and judgment follows accordingly". That is not the way in which our legal system operates. I hasten to add that this is not what the trial judge did in this case. Her Honour gave detailed reasons as to why she preferred Mr Arsic's testimony. 29 Often important issues of credibility involve sub-issues. Often, objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted them in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent. 30 In the influential case of SS Hontestroom v SS Sagaporack (1927) AC 37 Lord Sumner said (at 50) that one of the material questions in determining whether the credibility finding in that case was erroneous was: "Is there any glaring improbability about the story accepted, sufficient in itself to constitute 'a governing fact, which in relation to others has created a wrong impression,' or any specific misunderstanding or disregard of a material fact … that has had the same effect?" It is in this context that the following remarks of Hayne J in Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 at 1835, [130] are particularly relevant: "Rather, because the primary judge was bound to state the reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Understanding the reasons given at first instance in that way, and the error identified in this case is revealed as an error in the process of fact-finding. In particular, it is revealed as a failure to examine all of the material relevant to the particular issue." 31 A failure by a judge, when making a demeanour finding, to deal with an improbability constituting a "governing fact" in the SS Hontestroom sense may constitute "an error in the process of fact-finding" as explained by Hayne J.

The judge's reasons 32 Ainslie-Wallace DCJ described the evidence of Mr Arsic as to the instruction received from Mr Maslic as follows: "The plaintiff said that when wheels were not being delivered to the factory he was given other jobs to do. In late January 2003 he said he was asked to sort out the rims in the reject cage. He said that although rims were put onto pallets in the cage they had been put in there rather haphazardly, some of the pallets were broken and the cage was untidy and disorganised. The plaintiff said that Mick Maslic, an engineer employed by the defendant, had asked him to do this work. Each half of a rim is numbered to ensure that the pairs are properly matched and he said that he was told to sort the rims and match the pairs ." [My emphasis] 33 Her Honour observed: "The plaintiff said that the job was difficult because the cage was so untidy and it was hard to find the matching halves of the rim and then to find a clear spot to put the matched rims down … Once the plaintiff had cleared a space in the centre of the cage he began stacking the matched rims onto a pallet he put down in that space. The plaintiff demonstrated the way in which he was required to work and said that on many occasions he was lifting from awkward positions when he could not get both of his feet flat on the floor because of the jumble of rims in the space." 34 The Judge recorded Mr Maslic's evidence as to the purpose of the reject cage and the parts stored in there as follows: "He agreed that there is a specific area for reject parts in the factory known as the reject cage. Rims were placed in there while waiting for the client's approval of the decision that the rim is not serviceable."

And: "Mr Maslic absolutely denied telling the plaintiff to clean the cage. He said that there would be no pairs of rims in there because the serviceable half of the rim would not be included in the reject cage. He did not give his key to the plaintiff because he said he kept that key on a ring with other factory keys. He never saw the plaintiff in the scrap cage and said that there was no reason for him to be there." 35 The judge made no other reference to Mr Maslic's evidence that the serviceable half of the rim was not in the reject cage. Mr Maslic was not cross-examined about this evidence and the judge did not refer to this omission. 36 Her Honour noted that Mr Maslic said that the reject cage was always clean and tidy although, in re-examination he said he could not remember whether it was untidy during the period that Mr Arsic was employed there. Her Honour observed that, at one point in his cross-examination, Mr Maslic had said that he was not sure whether he asked Mr Arsic to tidy the cage. 37 Her Honour criticised Mr Maslic's evidence as follows: "There was a dogmatic quality to Mr Maslic's evidence in chief, however, when he was pressed in cross-examination, his evidence became contradictory and confusing. In relation to the issue of housekeeping he sounded as if he was protecting the defendant from criticism. His insistence that the cage was always clean and tidy could not be reconciled with his evidence that, at least in January 2003, he was away from the factory much of the time. When he was pressed on the changes to the reject cage made since January 2003 (and there was no challenge to the plaintiff's evidence that since his accident a system of trolleys and lifts for moving rims had been instituted in the cage) he would not concede any changes and when pressed insisted that the questions should be asked of someone else."

And: "Mr Maslic's evidence did not offer the defendant as much comfort as the defendant's submissions would have it. He was not an impressive witness because his account varied during the course of his evidence and he seemed to be uncomfortable giving any evidence which might reflect badly on the defendant. He was at pains to tell the court that the defendant had always paid great attention to keeping the factory clean and tidy. This is not apparent from the Dohrman report. Counsel for the plaintiff submitted that his evidence was flawed because it was a reconstruction rather than being given from actual memory. That argument is well founded in my view. More particularly, his evidence was not, when considered as a whole, starkly at variance with that of the plaintiff. Much of Mr Maslic's evidence was supportive of the plaintiff's account of the reject cage and how it was maintained and used. His evidence of what he would want done if the cage became full of rims or untidy was consistent with the plaintiff's evidence." 38 In dealing with Mr Arsic's evidence the judge said: "Generally in his evidence the plaintiff was an impressive witness, he was careful and considered the questions, he did not seen [sic] to overstate his injuries or the effect of his life, in fact, it could be fairly said, given the radiological and medical evidence, that he rather downplayed his injuries." 39 In regard to Mr Arsic's description of the work he had done in the cage, the judge said: "During the course of his evidence about working in the reject cage, the plaintiff painted a vivid picture of what he was required to do. When asked to demonstrate how he managed to lift wheel rims and place them on the pallets, his demonstration was clear and unambiguous. His evidence in this respect was rich in detail and he appeared to be giving truthful evidence." 40 Her Honour recorded various submissions made on behalf of Goodrich concerning statements made by Mr Arsic to a number of medical practitioners. She said: "The defendant argued that the plaintiff's account of the injury to various doctors supported the submission that he was not injured at work. There was no dispute that the plaintiff did not make an immediate report of the injury at work or to a doctor." 41 Mr Arsic relied Goodrich's failure to call Mr Deshpande, a supervisor, and a Mr Rowe, who was his direct supervisor in the receiving area. The judge dealt with this argument as follows: "First, it is to be kept firmly in mind that it is for the plaintiff to prove that he was injured while working in the reject cage and there is no onus on the defendant to bring evidence to boost the plaintiff's case. However, that there were witnesses available to the defendant to whom the plaintiff was directly responsible and who were in a position to say whether the plaintiff had access to the cage key and whether he was working in the reject cage, who were still working for the defendant at the time of the hearing is a matter I am able to take into account in evaluating whether the plaintiff has discharged the onus of proof. Given that this evidence was not called, I am more comfortable in accepting the plaintiff's account that he asked to work in the cage and that he injured his back in the way he described." 42 Her Honour expressed her conclusion in a passage that I have previously quoted but will repeat for the sake of convenience: "There are matters which cannot be reconciled with the plaintiff's account, the absence of a note of back pain in the records of the doctors to whom he went about his elbow and the apparently conflicting histories. However, looking at the evidence as a whole and taking into account the plaintiff's demeanour as a witness, I do not accept that he is lying about what he was doing at the defendant's factory when he hurt his back nor do I accept either that he injured it before or after that time."

Goodrich's arguments 43 It is apparent from the extracts from her Honour's reasons that I have quoted that she attempted to give full reasons for her preference for Mr Arsic's testimony. There can be no argument based on the brevity of her reasoning. 44 Goodrich's arguments, rather, were directed to the following areas:

(a) The judge's failure to deal with the reliability and implications of Mr Maslic's evidence that there were no matching rims in the reject cage and the omission on the part of counsel for Mr Arsic to cross-examine Mr Maslic on this aspect.

(b) The judge's understanding of Mr Maslic's evidence as to the system that was adopted on the factory floor.

(c) The judge's failure to take into account Mr Maslic's cultural and ethnic background.

(d) The judge's approach to the inconsistent statements Mr Arsic made to the expert witnesses.

(e) The reasons given by her Honour for not accepting Mr Maslic's evidence.

(f) The influence of delay in giving judgment on the demeanour findings made (evidence was completed on 9 June 2005, addresses were delivered on 12 July 2005, and judgment was delivered on 7 September 2005).

Mr Arsic's work prior to working in the reject cage 45 The business of Goodrich was evaluating and repairing aeroplane wheels (made up of wheel hubs and tyres - being the entire wheel assembly). The wheels would be sent to Goodrich by various airlines for evaluation and repair. When the work had been done, Goodrich would return the wheels to the airlines. 46 Wheel hubs are made up of an inboard rim and an outboard rim (referred to in the evidence as "halves" of a wheel). One rim (or half) is smaller than the corresponding rim (or half). Each rim has the same serial number recorded on it. Without the tyres, the two halves when affixed together look like a large cotton reel. Mr Arsic explained that the data on the wheels is computerised and unless the data matches, "the plane can't fly". 47 When Mr Arsic first worked at Goodrich he was involved in their shipping section. This section arranged for the return of wheels and tyres that Goodrich had worked on to the airlines who owned them. In the shipping section Mr Arsic had to remove the plastic covers in which each wheel was placed and had to examine the rims and tyres to see whether they were damaged in any way. He was required to record the serial numbers on the rims and the tyres. 48 At about Christmas 2002, Mr Arsic was transferred to the receiving section. This section received the wheel hubs and tyres for evaluation that were sent to Goodrich by various airlines. The wheels and tyres arrived as a complete unit comprising the wheel hubs and the fitted tyres. At the receiving section, the wheels would be rolled off a delivery truck, put in lines and sorted by different types of aircraft. Mr Arsic said that he did not then have to lift the wheels and described the job as "not too heavy". 49 Typically, having wheeled a wheel off a truck into the Goodrich storeroom, Mr Arsic would sit down and record the relevant data, including the serial numbers of the rims and tyres, on a form. He would also have to check the rims to see if any parts were missing. He would inspect the outboard rim and the inboard rim for damage and would clean them with soap and water.

Mr Arsic's version of the job in the reject cage 50 In late January 2003 Mr Arsic was given a different job to do. This was in the "reject cage", a caged-off area on the factory floor. Mr Arsic said that there were about 20 to 25 pallets and about 150 wheel rims in the reject cage. The pallets were approximately one metre by one metre in size. He said that some of the pallets in the cage were broken and the rims and the pallets were not stacked evenly or in any order; they were stacked at uneven heights. He said that the smallest wheel rim in the cage was about 30 centimetres in diameter and the largest about half a metre in diameter. He said that the large wheel rims were heavy and there were many of them. He said that most of the rims inside the cage were painted red; the inference being that some were not. 51 He said that the only clear floor space in the cage was at the entrance and was the size of two pallets. He said that the cage was in a mess. 52 In examination in chief, Mr Arsic first said he was asked to "sort the rims". After explaining the state of the cage, he was asked: "What was the job you were given?" He replied: "I should match the inboards and outboards, that's smaller and bigger parts of the rims in a certain order which I got a book which I need to follow."

He said he was given a manual to match the inboard and outboard rims. This was the "manual for the aircraft". 53 He underlined the fact that he was asked to match the rims by saying: "Nothing was in order, everything was uneven and it was hard to find anything what was matching inboards and outboards."

He said that he set about doing the job he had been instructed to do by putting a rim on the pallet and finding "the match in all that mess". 54 Having selected an inboard or outboard rim and placed it on the pallet at the entrance to the cage, he set about searching for the match. This meant that he had to move rims to the side to try and find the rim with the serial numbers that matched the rim he had selected. He said this was not an easy task because of the confined space, the awkward shapes of the rims, the broken pallets, the way in which the rims rubbed each other in an uneven way, and the difficulties in lifting the different rims. He described in great detail how this occurred and the awkwardness involved. 55 Once he had found the matching rim, he stacked it next to the rim he had already selected and placed on the pallet. He then recorded on a card the serial numbers of the rims he had placed on the pallet. He would put four pairs of matched rims on each pallet. All this occurred inside the cage. 56 Mr Arsic said that Mr Maslic would inspect the rims to check that they in fact matched. After this had occurred, Mr Arsic would remove the pallet, with the rims, from the cage. After a while, Mr Arsic did this without checking with Mr Maslic. Once Mr Arsic had removed the pallet and rims from the cage, he would stack them in a front of a shelf at the back of the factory. This was an ongoing process. 57 From time to time, as Mr Arsic was working in the cage, wheels would come in to the factory and would have to be received. He would then return to the receiving section and work on that task. Thereafter, he would return to the reject cage.

Mr Maslic's evidence as to the function of the reject cage 58 Mr Arsic's evidence has to be contrasted with that of Mr Maslic. Mr Maslic had a Master's degree in mechanical engineering that he had received in Bosnia and which was recognised in Australia. He commenced working at Goodrich in 1998. He was the controller of non-destructive testing. He was involved in making decisions about the serviceability of wheels and wheel halves. 59 Mr Maslic said that once a rim was found to have a defect it would be painted red and placed into the reject cage. He said (in contrast to Mr Arsic's 100 to 150) that there were only about 10 to 15 rims in the reject cage at a given time. 60 After a defect had been identified Mr Maslic would make what he called a "hidden damage report" which described the damage to the rim and recorded his reason for recommending its rejection and scrapping. The rim would then be put in the reject cage and stacked awaiting the customer's final decision as to whether it should be scrapped. All the wheel halves in the reject cage were awaiting the customer's final decision in this regard. Mr Maslic said that no customer had ever failed to approve his recommendation to destroy a rim. 61 The reject cage was kept locked as the parts in it were unserviceable and Goodrich wished to avoid any possibility that unserviceable parts could be brought back "on-line". Thus, no unauthorised person was allowed to go into the cage. 62 Once a customer approved the scrapping of a rim, it would be removed from the reject cage and cut through its vertical axis, through its bearings. Thereby the rim was rendered unrepairable. 63 It was put to Mr Maslic that he had instructed Mr Arsic to match inboard and outboard rims in the reject cage and had given him a manual to assist him in doing that, Mr Maslic replied: "Absolutely misunderstanding. No matching wheel halves in the scrap cage. You've only got half a wheel, other half is in quarantine cage waiting for new halves to be matched, nothing to do with scrap cage. Scrap cage is scrap cage, unserviceable halves."

He denied that he gave Mr Arsic a manual. 64 When it was put to him that Mr Arsic had testified that there were inboard and outboard pairs in the reject cage and one had to be matched precisely with the other, Mr Maslic replied: "Absolutely misunderstanding. In scrap cage you've only got exclusively only halves, scrapped halves, no any serial number, no any that could be matched in scrap cage … ." 65 He repeated that the other half of the rim in the reject cage was kept in the quarantine cage, in another part of the shop. He said that the rims in the quarantine cage were waiting for new halves "to be matched". 66 Mr Maslic emphasised that "wheels" were not in the reject cage, only "wheel halves". 67 Mr Maslic denied that there were rims on the scrap cage floor. He said that they were placed on pallets. He said that there were shelves in the scrap cage for small wheels. 68 Mr Maslic denied that rims were taken from the cage under his supervision. He said that the supervisor and team leader were responsible for authorising their removal. 69 In summary, Mr Maslic's evidence, on the issues I have mentioned, was to the following effect:

(a) The reject cage contained only single rims; there were no pairs of rims in the reject cage with the same serial numbers.

(b) Thus, no matching of pairs could have occurred in the reject cage.

(c) All rims recommended for destruction were painted red and only rims recommended for destruction were placed in the reject cage.

(d) Rims matching those in the reject cage were in the quarantine cage. Rims remained in the quarantine cage until the customer supplied a replacement for the destroyed rim.

(e) He was not involved in the removal of rims from the reject cage. 70 This evidence was unchallenged but diametrically opposed to that given by Mr Arsic. Mr Arsic testified that the work he had done in the reject cage was to match pairs. He said that only "most" of the rims in the reject cage were painted red. He made no reference to the quarantine cage. He did not explain what purpose there was in matching pairs in the reject cage. He did not explain what purpose there was in stacking four pairs of rims on a pallet, moving the pallet with four matched pairs out of the reject cage, and then continuing, in an ongoing process, to stack four pairs on a pallet and move them out of the reject cage. He did not explain what was to happen to those pairs once they had been moved out of the reject cage (and, in particular, whether any person had authorised their destruction). 71 Nevertheless, Mr Maslic was not cross-examined about any of his evidence relating to:

(b) The existence and function of the quarantine cage.

(c) The purpose for which rims were removed from the reject cage.

(d) The fact that the reject cage only contained single halves (or rims) and no matching halves (or rims).

(e) The fact that all the rims in the reject cage were painted red, and were recommended for destruction.

(f) The fact that all matching halves were in the quarantine cage waiting for new halves to be matched when the customer agreed to the scrapping of a rim in the reject cage and provided a new, replacement, rim. 72 Towards the end of Mr Maslic's cross-examination the following exchange occurred: "Q. That you instructed him that the tidying up was to be done without moving the items out of the cage? A. I told you already I didn't instruct him at anything about scrap cage. No, nor any work for anybody in scrap cage. He has not clean up. HER HONOUR: Given the answer I don't believe you have to put anything more. HOOKE: Well if your Honour's content with that approach. HER HONOUR: And you would be too. I know it's a habit that has developed down here and no doubt encouraged by some of my colleagues but I would have thought if someone denies a fact then the detail of the fact -- HOOKE: Well the subsequent facts don't really matter do they."

The cross-examination terminated almost immediately afterwards. 73 This exchange may explain the omission on the part of counsel for Mr Arsic to cross-examine Mr Maslic in the respects I have mentioned. If counsel understood her Honour to mean that it was unnecessary to cross-examine on these matters, and if this is what the judge really intended (as was submitted in argument on appeal), they both seem to have misunderstood the way in which this evidence was capable of affecting Mr Arsic's case. Even if the judge did not fully appreciate, at that stage, the implications of Mr Maslic's evidence in question, it was open to counsel to seek leave to cross-examine further.

The importance of the function of the reject cage and the nature of the rims in it 74 Counsel appearing for Goodrich at the trial described Mr Maslic's unchallenged evidence as to the function of the reject cage, and the fact that it contained only single rims without any matching rims, as "the most significant aspect of the conflict". He put the following submission to the judge: "This suggestion about having given the plaintiff specific instructions to match defective rims, your Honour, is entirely illogical, and with respect, that of itself indicates the plausibility of Mr Maslic's evidence, and the implausibility of the plaintiff's on that issue." 75 Nevertheless, the trial judge made no mention of this argument in her reasons. 76 Mr Arsic made it clear that his main task in the reject cage was the matching of rims. As the judge said, his description of how he did this work was "rich in detail". There can be no misunderstanding about this part of his evidence. While Mr Arsic said that part of his work in the cage was tidying up, there can be no doubt that his main task was matching the rims. This is what he described with such particularity and it was plain that any tidying up was to facilitate the task of matching corresponding outboard and inboard rims. If Mr Maslic's testimony that there were no corresponding or matching pairs is correct, Mr Arsic's evidence as to why he was working in the reject cage could not be true. All his detailed evidence as to how he set about matching pairs would have to be false. Or, the work he described could not have been performed in the reject cage (but he testified that that is where he worked and that is where Mr Maslic instructed him to work). 77 Mr Maslic gave a description of the function and location of the quarantine section. Mr Arsic gave no evidence about a quarantine section and Mr Maslic's evidence in this respect was not challenged. Once there was a quarantine section, there could be no point in storing serviceable rims in the reject section. There is a certain sense of probability about the existence of a quarantine section. It is not likely something that was invented. If it be correct that the matching rims were in the quarantine section, there would be no point in looking for matching rims in the reject section. 78 If it be correct that the only rims earmarked for destruction (painted red for identification purposes) were stored in the reject cage, how is Mr Arsic's evidence that only "most" of the rims in the reject cage were painted red to be explained? What were rims that were not painted red doing in the reject cage? The evidence does not supply answers to these questions. 79 It is conceivable that Mr Maslic was wrong and there were some pairs of rims in the reject cage, and he asked Mr Arsic to find the pairs and stack them together so that they would be easy to find when needed for destruction. But there was no evidence to this effect and this proposition was not put to Mr Maslic. 80 Further, Mr Arsic's evidence as to the continuing removal from the reject cage of pairs of rims, chosen at random, is difficult to reconcile with the notion that rims would be kept in the reject cage until a customer authorised a specific rim for destruction. What would be the point of removing rims, at random, from the reject cage without authority from a customer to destroy a specific rim? 81 It is also to be noted that if there were only about 15 rims in the cage at a given time (as Mr Maslic testified), and not 100 to 150, Mr Arsic's task may not have been nearly as difficult as he suggested. 82 To put the point briefly, were Mr Maslic's evidence in these respects to be correct, Mr Arsic's testimony could not be believed. Mr Maslic had difficulty in elucidating what he was getting at in regard to the work Mr Arsic allegedly carried out in the reject cage. It appears from the transcript that he was impatient, dismissive and frustrated with the proposition that he had instructed Mr Arsic to match pairs of rims in the reject cage. He said twice that the questions, in which this proposition was put to him, were based on a "misunderstanding". I think what he meant was that the questions showed a profound misunderstanding of the system and function of the reject cage. His intensity about this issue may have to be understood against his cultural background. 83 In my opinion, these matters go to the heart of the case. The judge needed to focus on and give full consideration to the evidence that related to them. Her Honour, however, did not do so. 84 I accept that the probabilities are against Mr Arsic inventing the "rich detail" of how he set about matching pairs in the reject cage. On the other hand, the probabilities are against Mr Maslic inventing the functions of the reject cage, the quarantine cage, and painting the rims red. Other significant evidence given by him (that I have identified) was not challenged. In this situation, all the misgivings that have been expressed about demeanour findings, particularly in regard to persons of a different culture, come into play. 85 Mr Maslic's unchallenged testimony as to the function of the reject and quarantine cages, the impossibility of matching rims in the reject cage and the lack of any apparent purpose in matching, stacking and removing pairs of rims from the reject cage, is capable of establishing "governing facts" - in the sense of the term used by Lord Sumner in SS Hontestroom v SS Sagaporack at 50. 86 The judge's failure to comment upon these matters suggests that her Honour did not appreciate the significance of this evidence. This impression is strengthened by her Honour's comment: "Much of Mr Maslic's evidence was supportive of the plaintiff's account of the reject cage and how it was … used". In fact, on this fundamentally important question, Mr Maslic's evidence was directly antithetical to that of Mr Arsic. 87 In my view, the omission to examine and deal with this evidence constitutes an error in the process of fact-finding, namely, a failure to examine all of the material relevant to the particular issue in the sense explained by Hayne J in Waterways Authority v Fitzgibbon at 1835, [130].

The evidence as to how and when Mr Arsic was injured 88 Ainslie-Wallace DCJ found that Mr Arsic injured his back at the time and in the way he alleged. The evidence, however, adduced by him in this regard was not always consistent. It was open to the judge to regard these inconsistencies as immaterial, as she did. But, her Honour does not appear to have paid due regard to the way in which these inconsistencies are capable of supporting Goodrich's attack on Mr Arsic's description of the work he was doing when he was injured. 89 Mr Arsic, in his evidence in chief, testified that he first recalled feeling pain in his back on 31 January 2003. He remembered that that was a Friday and he had to spend the weekend in pain. By then he had been working in the reject cage for at least a week. 90 Mr Arsic said that a particular event brought about the pain in his back. He said that this was the lifting of a particular rim in the reject cage. He described in detail how he had stood to lift the rim, where his feet were, and how he twisted his body. 91 After Mr Arsic first felt pain he went outside and sat on a bench. He said his pain was so great that he could not sit properly. Having rested for five minutes, he returned to the receiving section where he continued to receive wheels rolling off the truck. 92 He said that he did not first report the injury to anyone because he believed that if he did so he could lose his job. For the same reason he did not at that stage see a doctor about his back. 93 He spent all weekend in bed. He slept on the floor and took Panadol but the pain remained the same. He returned to work but felt great pain, particularly when sitting down. The pain radiated down the left leg to the heel. 94 On 17 February 2003 Mr Arsic "smacked" his left elbow against a steel cage. His elbow became swollen. On the same day he went to see Dr Lau who certified that, by reason of his left elbow, he was not able to do work that involved the use of the left hand. Dr Lau suspected that Mr Arsic had been bitten by a spider but did not find any bite marks. On 19 February 2003, another doctor, Dr Kafaris, certified that, by reason of the injury to the elbow, Mr Arsic could only do light pushing or pulling. Dr Kafaris gave a similar certificate on 14 March 2003, again on 28 March 2003, on 3 April 2003 and on 11 April 2003. 95 Between seeing Dr Kafaris on 19 Februry 2003 and 14 March 2003, Mr Arsic saw his general practitioner Dr Stojanovic on 26 February 2003. Dr Stojanovic's notes record that Mr Arsic consulted him about the injury to his left elbow. An x-ray was taken of the elbow. The x-ray was normal. Dr Stojanovic recommended that Mr Arsic stay off work on 26 and 27 February. 96 None of these doctors' notes, made up to this stage, record that Mr Arsic made any mention of an injury to his back. 97 Mr Arsic consulted Dr Stojanovic, again on 14 April 2003. Mr Arsic then complained of "low back pain over the last few months". Dr Stojanovic recorded in a note that Mr Arsic had had three sessions with a chiropractor without improvement. 98 Dr Stojanovic's notes also record a consultation on 17 April 2003 when he reviewed Mr Arsic's back pain. According to the notes Mr Arsic recalled "an event at work around Christmas time when worked for 12 hours and developed acute back pain". In fact, neither at that stage nor on 31 January 2003 did Mr Arsic work 12 hours a day. 99 According to Dr Stojanovic's notes, on 22 May 2003 Mr Arsic "clarified injury date to 31 January 2003". 100 When cross-examined, Mr Arsic appeared to have forgotten that he had seen Dr Stojanovic on 26 February 2003. Mr Arsic agreed that when he "first" saw Dr Stojanovic he told the doctor about his back injury, the pain in his leg and that it happened at work. It was then put to him that he had seen Dr Stojanovic on 26 February 2003. Mr Arsic said that he could not recall having told Dr Stojanovic on 26 February 2003 about any injury to his back. 101 It was put to Mr Arsic that, prior to 14 April 2003, although he had so much pain in his back and his leg that sometimes he could hardly move, he did not, in this period, bother to see Dr Stojanovic or consult any doctor about his back. He asserted, however, that he had mentioned his back pain to the doctors but they had failed to make a note of his complaint. 102 The judge observed that Mr Arsic had complained about his back to Drs Lau, Kafiris and Stojanovic before 14 April 2003 "and there is no note of that complaint". The judge commented: "Perhaps this was an oversight by the doctors, one cannot tell. There are inconsistencies in the evidence of history given by the plaintiff of the onset of his problem to which the defendant went in great and painstaking detail in order to make good his attack on the plaintiff's credit." 103 According to a report by Dr Stojanovic dated 24 December 2003, Mr Arsic told him that the pain in his back occurred "while he was moving airplane tyres at work on 31 January 2003". According to a report by Dr Dixon, an orthopaedic surgeon, dated 23 June 2003, Mr Arsic injured his back "when moving aircraft tyres on 31 January 2003". 104 According to a report by Dr George M Weisz, an orthopaedic surgeon, dated 28 December 2003, on 31 January 2003 Mr Arsic, "for the first time ever" experienced sharp low back pain. According to Dr Weisz's report Mr Arsic stated this occurred whilst he was "wheeling large aircraft tyres". According to Dr Weisz, Mr Arsic stated "this work was performed 50 times a day, lifting 15 to 30 kilograms each time". It was on one of these occasions that the pain was first experienced. 105 In a report dated 18 June 2003, Dr Ian Barrett, an orthopaedic surgeon said: "It was difficult to obtain an exact history from Mr Arsic. Although he listed a date of injury as at 31/01/03, he said that there was no one incident on that day."

This report records the injury as having occurred when Mr Arsic was moved to an area where he was "required … to sort, lift and stack aeroplane tyre rims". 106 According to a report by Dr James G Bodel, an orthopaedic surgeon, Mr Arsic told him that on 31 January 2003 he suffered an injury when he was "sorting out reject tyres by numbers" and he was working in a very confined space. 107 A report by Mr Max Hely, a safety management consultant retained by Mr Arsic, records: "Mr Arsic could not recall the precise timing of events on the 31st January 2003, approximately one week after commencing the work in the 'wheel reject cage'. However, he did recall that, after working for some time in the cage, he was instructed to proceed to the 'receiving' area to undertake another task which involved him sitting on a low (approximately 30 cm high) stool in order to record identification details of recently delivered tyres, a task he had been required to undertake about once a day since commencement of his work in the cage. On this occasion, as he sat down, he felt a sudden, severe pain in his lower back." 108 It is difficult to accept that Mr Arsic would not know the difference between rims and tyres as he worked constantly with these objects and had to record data about them. It was submitted on his behalf that the doctors might have erroneously recorded what he said. 109 The matters recorded in the experts' reports that are presently pertinent are:

(a) The early uncertainty evinced on the part of Mr Arsic as to when his injury occurred.

(b) Mr Arsic's statements to Dr Stojanovic, Dr Weisz, Dr Bodel and Mr Hely that he had been injured while moving tyres (not rims).

(c) Dr Weisz's statement that Mr Arsic had been injured while "wheeling" tyres (which suggests that the injury occurred in the receiving section and not in the reject cage).

(d) Mr Arsic's statement to Dr Barrett that there was "no one incident" on 31 January 2003 that caused his injury.

(e) Mr Arsic's statements to Mr Hely that he first felt pain as he sat down on the chair when recording details of recently delivered tyres.

(f) The absence of any record of back pain until 1 April 2003 when Mr Arsic saw a chiropractor.

These matters tend to cast doubt on Mr Arsic's version and to lend support to Goodrich's version. 110 Mr Arsic, himself, tendered the reports that contained this evidence. There was no cross-examination of the expert witnesses as they were not called to testify orally. Speculative reconciliations between the evidence in the reports and Mr Arsic's own testimony are thereby rendered more difficult. 111 The judge was not prepared to find that the inconsistencies and uncertainties in Mr Arsic's various accounts to the experts reflected adversely on him. Even though Mr Arsic himself adduced this material, her Honour discounted it on demeanour grounds. Had the judge not erred, as I consider she did, in regard to Mr Maslic's testimony concerning the functions of the reject and quarantine cages and the characteristics of the rims in the reject cage, I would have regarded her findings in this respect as difficult to challenge. But, in view of the fact that I consider that her Honour erred as I have found, I conclude with respect that all her credibility findings are tainted.

The other grounds on which Mr Arsic's version was preferred 112 The judge criticised Mr Maslic because of his dogmatism, his contradictory and confusing replies in cross-examination, his tendency to protect Goodrich from criticism, his insistence that the reject cage was always clean and tidy, and his denial that changes had been made to the reject cage. 113 It is indeed difficult to understand some of Mr Maslic's replies to the questions that were put to him about the state of the cage. My impression is that he distinguished between a "dirty" cage and an "untidy" cage. He was unwilling, generally, to accept that the cage was either dirty or untidy but some of his replies do seem to suggest uncertainty on his part as to these matters, particularly as to whether the cage was untidy. 114 Much of the judge's criticisms of Mr Maslic's evidence are capable of being answered by reference to his different cultural background. It is apparent from his evidence that, as a recent immigrant to Australia, he was proud of his achievements in rising to a senior managerial position in Goodrich; he was proud of his employer and the standard of work it produced. This may explain his dogmatism on these issues and his sensitivity to criticisms of Goodrich and allegations that the work floor was untidy, dirty and in a mess. His insistence that the cage was always clean and tidy could readily be reconciled with his evidence that he was away from the factory much of the time; his evidence should be understood as meaning that, to his personal knowledge, the cage was always tidy. The change in the system of trolleys and lifts for moving rims was not a relevant change to the reject cage in the context of the issues in the case. The uncertainties in his evidence related principally to peripheral issues. 115 I make these comments, not because I suggest that the judge was wrong in her criticisms of Mr Maslic, but to indicate that these matters did not lead inevitably to an adverse credibility finding. It is possible that some other judge would have come to a different view of Mr Maslic's credibility. Of course, this is not a ground for overturning her Honour's decision. She has made no error in relying on these matters. In my view, however, as I have explained, her judgment as a whole is affected by her error to address squarely Mr Maslic's testimony concerning the functions of the reject and quarantine cages and the characteristics of the rims in the reject cage. 116 The judge's belief that Mr Rowe might have assisted Goodrich's case was erroneous. Contrary to her Honour's findings there is no evidence that, when Mr Arsic was injured, Mr Rowe was Mr Arsic's supervisor and was involved in the work Mr Arsic was doing. There is also no evidence that, at the time of the trial, Mr Rowe was still employed by Goodrich. 117 In my view, Goodrich was entitled to take the view that it was not necessary to call any evidence to support Mr Maslic's case. According to the ordinary conventions of the adversarial system, when a party does not cross-examine on evidence relating to a significant issue in a case, that party is taken to concede the point. Whether, in the context of this case, that was indeed the intention of the cross-examiner, seems unlikely. Nevertheless, the failure to cross-examine in this crucial area does detract substantially from the need on the part of Goodrich to call supporting evidence.

Conclusion 118 I have explained that I consider that the there were fundamental errors in the trial judge's process of fact-finding, namely, in not examining all of the material relevant to the work undertaken by Mr Arsic in the reject cage (that is, errors in the sense explained by Hayne J in Waterways Authority v Fitzgibbon at 1835, [130]). The relevant material includes the function of the reject cage, the existence and function of the quarantine cage, whether there were any matched rims in the reject cage, whether all the rims in the reject cage were painted red, and Mr Arsic's purpose in removing, in a continuing process, four matched pairs of rims from the reject cage. In my view, her Honour erred in failing to deal with crucial testimony by Mr Maslic, in apparently not appreciating the significance of that evidence, and in not explaining the grounds on which she discounted that evidence. 119 In my opinion, those errors require this court to order a retrial on the issue of liability. Those errors would not entitle this court to make any factual findings of its own. 120 In the light of the conclusion to which I have come, it is not necessary for me to address Goodrich's arguments based on the period taken by the trial judge to deliver judgment. 121 Mr Arsic concedes that the judge erred in calculating past economic loss. The consequent reduction of Mr Arsic's damages is $1,755.00. I would order the damages assessed by the judge to be reduced by that amount. 122 In the light of the way in which the trial was conducted, I would not uphold Mr Maslic's contentions regarding loss of superannuation benefits. 123 In my view, there was no error on the part of the judge in deciding that no allowance should be made for negligence on the part of Workforce: see Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174. 124 In my view the retrial should only relate to the liability of Goodrich. The evidence as to liability is not relevant to the quantum of damages. The statements Mr Arsic made to the medical practitioners as to when and how the injury was sustained do not bear on the assessment of damages. There is no need for damages to be assessed again. 125 Hence, I propose the following orders:

(a) The orders made by Ainslie-Wallace DCJ are set aside.

(b) The issue of liability is to be remitted to the District Court for retrial.

(c) The damages assessed by Ainslie-Wallace DCJ are reduced by $1,755.00 to $201,522.96.

(e) Mr Arsic is to pay Goodrich the costs of the appeal.

(f) Mr Arsic is granted a certificate under the Suitors' Fund Act 1951 (NSW) if otherwise qualified. 126 TOBIAS JA: I agree with Ipp JA. **********

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