MGIL Pty Limited v Maria Di Giannantonio as Executrix of the deceased estate of Michele Di Giannantonio

Italiano Olivieri 11Italiano Olivieri ("Olivieri"), a director of the plaintiff, swore an affidavit of 5 April 2012 in which he detailed his dealings with the deceased. At paragraphs (6) and following of that affidavit, he deposed to the fact that he met the deceased in about 2002 and discussed with him the possibility of the deceased purchasing quantities of raw granite. According to Olivieri, he arranged for the delivery of two blocks of blue crystal granite from his quarry in Cowra to a quarry in Gosford in order that they could be cut into slabs and delivered to the deceased. 12Olivieri said he saw the deceased in September 2002 at which time the deceased informed him that he was unable to pay for the granite. According to Olivieri, the deceased explained at that time that he remained "eager" to purchase granite from the plaintiff, but could not comply with the terms of the arrangement which had previously been made. 13In paragraphs (13) and following of his affidavit Olivieri stated that in about November 2002 he had a conversation with the deceased in relation to the granite, at which time he rejected an offer from the deceased to take the granite to his (the deceased's) yard in Leichhardt. According to Olivieri the deceased then said: "What if you give them to me on consignment? I can't pay for them now but I might be able to sell them and then pay you from the proceeds?" 14Olivieri said he agreed to this proposal because (inter alia) he thought that there was a chance that the deceased could sell the granite from his yard. He explained that he took some of the slabs for his own use and that the deceased retained the remaining 22. He then said that in about March 2003 the deceased informed him that he would be able to sell slabs of a different type of granite which Oliveri had produced, known as "Capricorn red" and "Silver black". Olivieri said he also agreed to provide a quantity of that granite to the deceased. 15Various consignment notes were raised by Oliveri in respect of the granite consigned to the deceased, all of which were headed "Consignment to Fine West Holdings Pty Limited". 16Olivieri asserted (in paragraphs (17) and following of his affidavit) that he visited the deceased's yard in August 2005 for the purpose of inspecting the granite which he had supplied. He said that on enquiring as to its whereabouts, the deceased told him that he had "on-consigned" the granite to an acquaintance. Olivieri told the deceased that there was no agreement permitting him to take that course and that he held the deceased "personally responsible" for payment. 17On 19 August 2005, following his visit to the deceased's yard, Olivieri wrote to the deceased stating (inter alia) as follows: "I was most disappointed when I visited the premises at the above address to do a stock-take of the consignment, only to find that all of the stock that was there had been re-allocated to somewhere else without my knowledge and approval. Therefore, I hold you personally responsible for the payment of all stock held on consignment and I will raise a tax invoice for all the slabs held by you and the above companies." 18Annexed to that letter was a document headed "Tax invoice A1035" in a sum of $43,746.12. 19Olivieri stated that he handed the tax invoice personally to the deceased on that occasion, at which time the deceased said: "I will personally guarantee the payment of this tax invoice A1035 for $43,746.12 plus interest (incl. GST) but you have to give me more time. I am a millionaire, I have six apartments in Rome, I own a house in Haberfield worth about $3 million, I own this factory where we are working. I also have two shops in Annandale and six apartments in Annandale above the shops so you can see I can pay you this money, just give me time." 20According to Olivieri, he was in regular contact with the deceased between 2005 and 2009 seeking payment. In particular, he said that he spoke with the deceased on 22 July 2009 at which time the deceased said to him: "Yes Ollie, I do owe you for those invoices. I will sort it out. Just give me a couple of month (sic); on my honour I will pay you every cent." 21Olivieri responded (inter alia): "I'll extend the credit for a further 60 days because of our friendship, but if I do not get paid within that time I have no other alternative then (sic) to seek legal action for the loss I have incurred..." 22The deceased died on 7 September 2009. 23On 25 February 2010 Olivieri posted a demand for payment to the defendant which was in the following terms: "We hereby give notice to the above executor / executrix of the deceased's estate of the late Michel Di Giannantonio for the outstanding amount of $43,746.12 plus interest on invoice number A1035 dated 19 August 2005. A new agreement to pay the existing debt has been raised - copy hand delivered to the deceased on the 22nd July 2009. According to our last discussion between the deceased and I was, that this amount would be paid in full with interest within two (2) months." 24On about 24 March 2010 Olivieri attended the deceased's yard at Leichhardt with a friend, Amabile Pignataro ("Pignataro"). Olivieri asserted that he had a conversation with the defendant, in the presence of the deceased's son, in the course of which he explained that he was owed money in respect of the supply of the granite. He said that the deceased's son responded: "Yes Ollie, Mum and we (sic) know and will honour all the debts of my father and the company but we don't know where the files and records that my father kept in relation to his quarry dealings are. I have no record at present - can you bring me the invoices and other documents so that I can see what we owe you?" 25Olivieri said that the defendant was present on that occasion and that she said: "Don't worry, we will pay you the money owed to you". 26According to Oliveri, an arrangement was made to meet during the following week. 27Olivieri and Pignataro again attended the deceased's Leichhardt premises on the morning of 7 April 2010. He said that on that occasion the deceased's son said that he and the defendant could "make a small initial payment". According to Olivieri, the deceased's son told him that he should go to a Restaurant called Il Cugino at 12 noon that day, at which time he would be given a cheque for $2,500.00. 28Olivieri and Amabile went to the restaurant at the appointed time. A woman whom Olivieri recognised to by the partner of the deceased's son arrived. She told him that she needed to call the deceased's son and "double check" with him. Having done so, she said to Olivieri: "Sorry, Mick said it should be $2000.00. I have to write a new one for $2000.00 because there isn't enough money in the account." 29Oliveri said that a cheque for $2,000.00 was then given to him. 30Olivieri said that he continued to be in contact with the deceased's son over the ensuing weeks and that on 24 April, he was told by the deceased's son he could come and collect a cheque for "$8,000.00 or $9,000.00". Olivieri stated that because he was not well at the time he would ask Amabile to collect it. According to Oliveri, Amabile attended as arranged but was ordered away from the property. 31Olivieri was cross-examined before the Magistrate (commencing at T5). In relation the conversation in which Olivieri said the deceased had guaranteed payment, he gave the following evidence (commencing at T7 L9): Q: You made that statement, that's okay. At the foot of page 5 of your affidavit, you say that he said I will personally guarantee payment of this tax invoice number A1035 for $43,746.12 plus interest, including GST but you have to give me more time? A: Correct Q: Are they the words that he said?A: Yes Q: I put it to you that it's unlikely that in a conversation he would've used those words? HIS HONOUR: What words, all of those words? MCDONNEL Q: All of those words? A: They were used. Q: Did you say anymore to him that you can recall? A: I said if the bill not paid I give an extra two months at that time. Q: No but I just ask you a question, did you say more? I'm not asking you what you said, did you say more to him? A: No, I said I want the money." 32In relation to his visits to the Leichhardt premises it was put to Olivieri that the defendant was not present on any occasion (commencing at T10 L38). He maintained that she was present on two of the three occasions on which he attended there. 33In relation to the meeting of 7 April 2010 it was put to Olivieri (commencing at T13 L 9) that the partner of the deceased's son in fact arrived with a cheque for $2,000.00, and that she had telephoned the deceased's son because Olivieri had informed her that he was expecting a cheque for $2,500.00. Oliveri denied both propositions.

Amabile Pignataro 34Pignataro swore an affidavit of 4 April 2012. In general terms, he corroborated Olivieri's evidence as to the circumstances of the meeting which took place on 24 March 2010, as well as to the circumstances of the meeting at Il Cugino restaurant on 7 April 2010. 35In relation to the attendance at Leichhardt on 24 March, it was similarly put to Pignataro (commencing at T17 L46) that the defendant was not present. He maintained that she was there on that occasion(at T 23 L25) but said that this was the only occasion on which he had attended the Leichhardt premises when the defendant was present. It must be said that due to a language difficulty, it is difficult to comprehend aspects of the evidence of Pignataro from a reading of the transcript. THE DEFENDANT'S EVIDENCE BEFORE THE MAGISTRATE

Michael Di Giannantonio 36The only witness who gave oral evidence in the defendant's case was Michael Di Giannantonio ("Di Giannantonio") the son of the deceased who had sworn an affidavit of 10 April 2012. In that affidavit, he deposed to matters concerning the acquisition of the granite by the deceased, the fact that the granite was of poor quality, and the fact that it was not selling well as a result. According to paragraph (21) of his affidavit, he had conveyed these matters to Olivieri in a conversation in 2006 in the following terms: "We can't clear this granite of yours. People come into the yard and look but they are not interested. We have spoken to Quality Marble and Granite Pty Limited at Revesby, they may have a better chance of selling it. They are also wholesalers and might have better contacts." 37According to Di Giannantonio: "Mr Olivieri agreed. I cannot recall his words". 38It is apparent that the first sentence of the quote in [37] above was admitted into evidence without objection, notwithstanding the terms in which it was expressed. 39It was evident from Olivieri's affidavit (at paragraph (17)) that he asserted that he did not agree to the granite being sent to Quality Marble and Granite ("QMG"). The proposition that he did agree was not put to him in cross-examination. Moreover, the fact that Di Giannantonio asserted that Olivieri agreed in 2006 to send the granite to QMG is not completely consistent with the evidence of Olivieri (at paragraph (17) of his affidavit) that he discovered the fact that the granite was not at the deceased's premises when he went there in 2005. 40Di Giannantonio said (commencing at paragraph (22) of his affidavit) that the remaining granite was sent to QMG. He said that QMG was similarly unable to sell the granite and demanded that he accept the return of it. 41According to Di Giannantonio, he contacted Olivieri and an arrangement was made to meet at QMG on 24 May 2010, but Olivieri did not keep that appointment. On the same date, QMG wrote to Di Giannantonio stating (inter alia): "Silvio, Pablo and I were ready to load Olivieri's slabs this morning. Oliveri did not show to count ...." 42In paragraph (40) of his affidavit, Di Giannantonio deposed to the attendance of Oliveri and Pignataro at the deceased's premises at Leichhardt in April 2010. He said that he believed that either Fine West or MTP owed money to Oliveri but he was not aware of the amount. He said (at paragraph (41)) of his affidavit: . [41] I drew a cheque for $2000.00 on the MTP account under protest. Two months later it went into liquidation." 43The solicitor appearing for the defendant in the hearing before the Magistrate was granted leave to elicit further evidence in chief from Di Giannantonio. He said (commencing at T25 L49) said that he could recall Olivieri and Pignataro visiting him after the deceased's death. He said that they had visited on two occasions and that his mother was not present on either occasion. 44Di Giannantonio also gave evidence (commencing at T26 L22) that the defendant had not, at any time, played any part in the day to day operation of the deceased's business and (commencing at T27 L16) that the defendant had never been a signatory to any bank account of any company operated by the deceased. 45In cross-examination, his attention was drawn to a letter from DibbsBarker, Lawyers of 28 June 2010, addressed to the defendant which sought payment of a sum of $43,746.12, and which foreshadowed the commencement of legal proceedings if the money was not paid. 46It was put to Giannantonio that he had received this letter in June 2010, a proposition which he denied (at T30 L7). He denied (commencing at T30 L9) ever having seen the letter and said that he was unaware of the claim made by DibbsBarker on behalf of the plaintiff until that day when he was giving evidence. Those denials did not sit well with the contents of Exhibit 4 which was a letter dated 30 June 2010 addressed to DibbsBarker, on the letterhead of MTP and under the hand of Di Giannantonio. When this letter was put to him, Di Giannantonio asserted that he had not written the letter, although he agreed that he had signed it and that it was in response to the earlier letter from DibbsBarker demanding payment for the Granite. 47Di Giannantonio (at T32 L34-36) agreed that the deceased had used company bank accounts "as if they were his own personally". However he was at pains to point out (commencing at T32 L1) that the deceased was astute in business and would have been very careful as to whether he was contracting with the plaintiff through Fine West or MTP. That evidence was somewhat at odds with paragraph (35) of his affidavit which was in the following terms: "When my father ran the business of the companies he did not always make a distinction between whether arrangements were made on behalf of Fine West or MTP." 48The cross-examination then turned to the meeting at the Il Cugino restaurant where the cheque of $2,000.00 was handed to Olivieri. Di Giannantonio (commencing at T36 L39) told the court that on his instructions, his girlfriend Melanie Hunter handed over a cheque to Olivieri on that occasion. His attention was then directed to paragraph 41 of his affidavit (commencing at T37 L27): "Q: You then go on at paragraph 41 to say: "I drew a cheque for $2000.00 on the MTP account under protest"? A: Yes. Q: That seems to give the impression that they were getting heavy with you at the premises and under protest you drew a cheque for $2000.00 and handed it over? A: Yes. Q: Do you agree it gives that impression? A: Yes Q: But the truth of the situation is that it was Melanie Hunter who delivered the cheque at Il Cugino, would you agree with that? A: I can't remember exactly. Q: But you certainly remember that you didn't hand over the $2000.00 at the premises? A: I can't remember exactly, no. Q: Well you'd certainly remember if someone was getting heavy with you at the premises? A: I remember that yes. Q: But was money handed over because he was getting heavy with you at the premises? A: I don't remember if I gave him the money then or Melanie and I dropped it off. Q: But it makes a big difference if you were able to cool off and think about it or if someone is demanding money at your office, I'm not leaving until you pay me. Can't you recall which is which? A: There was a bit of a - a disagreement at the time because my cousin was there, my nephew was there, there was a bit of words thrown back and forth and there was a bit of an argument at the time. Q: You agreed that you owed money, either your companies or your father, whatever the situation was, you agreed the plaintiff was owed money. Would you agree with that? A: Yes. Q: You also agree, do you not, that you owed more than $2000.00, would you agree with that? A: That's correct yes. Q: The $2000.00 taken in any sense was only a part payment, would you agree with that? A: Yes. Q: It was on the basis that $2000.00 would be paid at this point and the balance could be paid later, would you agree with that? A: Yes." 49Di Giannantonio explained that he did not seek the defendant's consent or approval to make the payment of $2,000.00. However, he also agreed (at T39 L4) that anything relating to the business of the deceased was, following his death, left to him to deal with. 50The defendant was ill on the day of the hearing and was not present. She had sworn an affidavit on 10 April 2012, paragraphs (1) to (16) of which were admitted without objection.

THE MAGISTRATE'S REASONS 51The Magistrate reserved his decision and delivered judgment on 19 June 2012 in which he entered a verdict for the defendant. 52I have set out the relevant passages of the Magistrate's reasons when considering the various grounds of appeal.

THE GROUNDS OF APPEAL 53The plaintiff pleaded 14 grounds of appeal. I have dealt with those grounds in accordance with the manner in which the submissions of the parties were structured.

GROUNDS 1, 3, 11 AND 12 54Grounds 1, 3, 11 and 12 are in the following terms: (1) The Magistrate erred in law by failing to give adequate reasons in respect of the finding that the late Michele Di Giannantonio ("the deceased") did not make an agreement with the plaintiff to personally guarantee payment for the granite slabs which had been consigned by MGIL Pty Limited to Fine West ("the granite slabs"). (3) The Magistrate erred in law by failing to give adequate reasons for not accepting the uncontested testimony of the plaintiff in respect of the personal guarantee agreement. (11) The Magistrate erred in law by failing to give adequate reasons for the findings that the assertion by the plaintiff that the deceased made a personal guarantee: a. does not accord with the evidence of Michael Di Gianni; b. does not accord with the documentary evidence annexed to the affidavit of Michael Di Gianni; and c. does not accord with annexures "C" to "J" relating to the consignment of the slabs. (12) The Magistrate erred in law by failing to give adequate reasons for finding that the assertion by the plaintiff that the deceased made a personal guarantee did not conform to the letters bearing the heading "M.G.I.L." and dated 19 August 2005 and 22 July 2009.

The Magistrate's reasons 55Having shortly summarised the nature of the case, the Magistrate (in the heading to paragraph [2] of his reasons) identified the first issue he was required to determine as being "Is the cause of action maintainable?" He proceeded to set out the provisions of ss 14 and 54 of the Limitation Act before making the following observation (at the conclusion of paragraph [3]): "The date will only run from the date of payment if the person making the payment is the trustee of the deceased estate of Michele Di Giannantonio (Limitation Act 1969 s. 54(6)(c)). The plaintiff asserts that Maria Di Giannantonio authorised her son to make the payment through MTP Marble and Granite Pty Limited. In paragraph 16 of her affidavit Maria Di Giannantonio states: 'Anything of a commercial or business nature received by me was passed on to my son following my husbands death and he dealt with it' The statement is evidence that Maria Di Giannantonio gave express authority for her son to act as her agent." 56Having defined the first issue in the terms that he did, and having made the observations in paragraph [3] of his reasons, the Magistrate proceeded to identify (commencing at paragraph [4]) a second issue. He did so without expressing any conclusion as to the first. 57The second issue identified by the Magistrate (in the heading to paragraph [4] of his reasons) was expressed as "Did the deceased guarantee payment?" The Magistrate summarised aspects of the evidence before stating (at [8]): "It is clear from the documentary evidence that the deceased and Mr Olivieri did not enter into an agreement for Mr Olivieri to supply certain slabs to Fine West for consideration. The documentary evidence shows that the agreement was one of consignment. A letter dated 19/08/2005, from M.G.I.L to Fine West claims that the consignment is to be finalised. The letter appears to have been used again with a date of 22/07/2009." 58 The Magistrate then said (at paragraph [10]): "Michael Di Giannantonio made a payment to Mr Olivieri, but I am satisfied on the balance of probabilities that he did so under protest due to Mr Olivieri and Mr Pignataro demanding money when they visited". 59The Magistrate proceeded to find (at [11]) that the documentary evidence established that the plaintiff consigned the slabs to Fine West and that there was no evidence that the terms of the consignment prevented Fine West from consigning the slabs to QMG. He then concluded (at [12]) that the arrangement between MGIL and Fine West constituted a bailment, with a sub-bailment existing between Fine West and QMG. 60Finally, (commencing at [14]) the Magistrate said: "The assertion made by Mr Olivieri that the deceased made a personal guarantee is not corroborated. There is no document to support his contention that the deceased made an agreement of guarantee. The assertion does not accord with the evidence of Michael Di Gianni, or the documentary evidence annexed to the affidavit of Michael Di Gianni, annexure "C" to "J" relating to the consignment of the slabs, nor does it conform to the letters bearing the heading of "M.G.I.L dated 19/08/2005 and 22/07/2009. [15] I find that the deceased did not make an agreement with Mr Olivieri to guarantee personal payment for the slabs consigned by M.G.I.L. Pty Limited to Fine West." 61The Magistrate then entered a verdict for the defendant.

The submissions of the parties 62Counsel for the plaintiff submitted that the Magistrate's reasons were fundamentally inadequate and that such inadequacy constituted an error of law. 63Counsel firstly submitted that although it was apparent that the Magistrate rejected the evidence of Olivieri about his conversation with the deceased, the plaintiff was left wondering as to the basis on which such a conclusion had been reached. By way of illustration, counsel submitted that it was not clear whether the Magistrate had concluded that Olivieri had been deliberately untruthful on the one hand, or just mistaken on the other. 64Counsel argued that it was not sufficient for the Magistrate to broadly assert that other evidence which was before him was not consistent with that of Olivieri. He submitted that the Magistrate's duty to provide reasons extended beyond merely citing the evidence and making the observation that it was not consistent with what Olivieri had said, and that it extended to a requirement to explain, by reference to the evidence, why this was so. 65Counsel further submitted that the Magistrate's apparent rejection of Olivieri's evidence must necessarily have involved an assessment of Olivieri's credit. This, he argued, emphasised the necessity for the Magistrate to give proper reasons explaining why the evidence had been rejected. 66Counsel for the plaintiff also submitted that there had been a related failure on the part of the Magistrate to determine what he himself had identified as the first issue in the case, namely the application or otherwise of certain provisions of the Limitation Act. Counsel submitted that whilst it might be inferred that the Magistrate had found against the defendant in that respect, the Magistrate was under an obligation to reach an affirmative determination of that issue. 67Counsel for the defendant firstly submitted that none of the matters raised by the plaintiff in these grounds involved any question of law. In these circumstances he submitted that having regard to the provisions of s. 39(1) of the Local Court Act 2007 ("LCA") the plaintiff did not have an appeal as of right. He submitted that at their highest, the issues raised in these grounds involved questions of mixed law and fact and that accordingly, the plaintiff required the leave of the court, pursuant to s. 40 of the LCA, to appeal. By reference to various authorities, counsel submitted that such leave ought not be granted. 68In the event that I came to the conclusion that these grounds did involve a question of law such that the plaintiff had an appeal as of right, or alternatively if I came to the conclusion that they involved a question of mixed law and fact and further concluded that leave ought be granted, counsel for the defendant submitted that the Magistrate's reasons disclosed no error. 69The principal submission of counsel for the defendant was that when properly analysed, this was a matter in which the Magistrate had considered all of the evidence, and had properly concluded that there had been a fundamental failure on the part of the plaintiff to prove its case based on the evidence it had adduced. 70Counsel submitted that in these circumstances, questions of whether the deceased had guaranteed the relevant payment, or whether the provisions of the Limitation Act applied, were not issues that the Magistrate was required to determine. 71Counsel further submitted that the Magistrate's reasons, when viewed as a whole, were adequate in any event. Specifically, in terms of the issue concerning the application of the Limitation Act, counsel submitted, in effect, that it should be reasonably inferred that such issue had been determined adversely to the defendant.

Consideration and conclusion 72It is firstly necessary to resolve the preliminary question of whether or not the plaintiff has an appeal as of right, or whether the issues raised by these grounds involve questions of mixed law and fact requiring the leave of the court. 73Sections 39 and 40 of the LCA are in the following terms: 39 Appeals as of right (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. (2) A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness. 40 Appeals requiring leave (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. (2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs. 74The fundamental complaint of the plaintiff in respect of these grounds is that there was a failure on the part of the Magistrate to provide adequate reasons for his decision. In Stoker v Adecco Gemvale Constructions Pty Limited [2004] NSWCA 449 Santow JA (Mason P and Sheller JA agreeing) said (at [41]): "It is clear that the duty to give reasons is a necessary incident of the judicial process. Without adequate reasons, justice has not been seen to be done, so that failure to give adequate reasons may be an error of law: Pettit v Dunkley [1971] 1 NSWLR 376, Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 278-9 per McHugh JA, Mifsud v Campbell (1991) 21 NSWLR 725, Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430." 75In Beale, which was one of the authorities to which Santow JA referred, Meagher JA (at (444)), although not deciding the question of whether the failure to provide reasons, or the provision of inadequate reasons, was an error of fact or law, observed that "most cases assume that the error is one of law". 76Having regard to these authorities, I am satisfied that the failure to provide adequate reasons is an error of law. The matters raised by the plaintiff in these grounds therefore involve a question of law. In these circumstances, and in view of the provisions of s. 39 of the LCA, the plaintiff does not require leave and has an appeal to this court as of right in respect of these grounds. 77In Stoker (supra) Santow JA pointed out that the duty to give reasons is a necessary incident of the judicial process. However, his Honour also said (at [41]): "It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings." 78In Beale (supra) Meagher JA said (at 442): "A failure to provide sufficient reasons can, and often does, lead to a real sense of grievance that a party does not know or understand why the decision was made: Re Poyser and Mills' Arbitration [1964] 2 QB 467 at 478. This court has previously accepted the proposition that a judge is bound to expose his reasoning in sufficient detail to enable a losing party to understand why it lost." 79His Honour went on to observe (at 442 - 443) that whilst a statement of reasons need not necessarily be lengthy or elaborate, an adequate statement of reasons will: (i)refer to all relevant evidence; (ii)set out any material findings of fact and any conclusions or ultimate findings of fact reached; and (iii)provide reasons for making the relevant findings of fact (and conclusions), and reasons in applying the law to the facts found. 80Similar observations were made in Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 (at [56] and following). 81In my view, the Magistrate's reasons in the present case were inadequate for several reasons. 82Firstly, the Magistrate's reasons were structured in such a way that he identified two principal issues that he considered he had to determine. The second of those issues was whether or not the deceased had guaranteed payment of the debt. There was cross-examination of Olivieri in relation to the conversation in which the deceased was said to have provided that guarantee, in response to which Olivieri steadfastly maintained that the words he attributed to the deceased were said. Obviously, the cross-examiner was unable to put directly to the plaintiff that the conversation did not take place. However in my view, that simply highlighted the necessity for the Magistrate, in determining the issue he had identified, to make it clear why he concluded that Olivieri's evidence should be rejected. 83The Magistrate found that Olivieri's evidence (inter alia) "did not accord" with other evidence, including documentary material. He did not explain why it was that he so concluded. If documentary evidence is to be used as a basis for rejecting oral testimony of a witness it must be dealt with in a satisfactory manner (see State Rail Authority (NSW) v Earthline Constructions Pty Limited (in liq) (1999) 73 ALJR 306 at [94] per Kirby J). Merely citing the evidence and making a bald conclusionary statement is not sufficient (see Pollard (supra) at [64] per Ipp JA, citing Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; (2006) 66 NSWLR186 at [28]). 84In my view, it was incumbent upon the Magistrate to explain why it was that he concluded that there was other evidence which was not consistent with that of Olivieri, and why it was that a consideration of that evidence caused him to reject Olivieri's account of his conversation with the deceased. I accept counsel's submission that Olivieri is, as a result of the Magistrate's failure to do so, is left in a position where he simply does not know why it is that his evidence was rejected. It follows that the Magistrate's reasons were inadequate in this regard. 85Further, and as I have previously noted, the first issue identified by the Magistrate was whether the provisions of the Limitation Act applied. That issue was the subject of lengthy and repeated references by the representatives of both parties in the course of final submissions. Having identified that issue, and having set out the relevant statutory provisions, the Magistrate's reasons contain no determination of it. That, in my view, further demonstrates that his reasons are inadequate. 86In this particular respect it is no answer to submit, as counsel for the defendant sought to do, that the Magistrate's determination of this issue is, in effect, capable of being inferred from other passages in his reasons. Taking that approach simply highlights the inadequacy of which the plaintiff complains. It has been observed that it is unsatisfactory for a superior court exercising an appellate function to be left to undertake an analysis of exchanges between the bench and counsel in order to ascertain the reasons for making a particular determination (see Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited (2006) 67 NSWLR 402 at [19] per Johnson J citing R v Pham [2005] NSWCCA 94; R v Thompson (2005) 156 A Crim R 467). It has also been observed that a superior court should not, in such circumstances, be left to speculate, from collateral observations, as to the basis of a particular finding (see Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 at 280; Wright v Australian Broadcasting Commission (1977) 1 NSWLR 697 at 701; 713). The position is no more satisfactory, and is arguably less so, when a superior court is asked to speculate as to whether a finding in respect of an identified issue has been made at all. 87I am also unable, in the circumstances, to accept the submission of counsel for the defendant that the Magistrate simply concluded that the plaintiff had not made out its case, such that the question of whether the deceased had guaranteed payment was not an issue that he was required to determine. Quite apart from anything else, such a submission is at odds with the manner in which the hearing proceeded before the Magistrate. In particular, the issue of the guarantee was the subject of reference in the opening address of counsel for the plaintiff. The relevant conversation was the subject of cross examination and the issue was the subject of references, by the representatives of both parties, in their respective submissions at the conclusion of the evidence. Consistent with all of this was the fact that the Magistrate identified it as the second of two issues that he was required to determine. 88If the Magistrate was wrong in so identifying it as an issue, that would support the conclusion that he had misdirected himself, in the sense that he had defined, otherwise than in accordance with the law, a question of fact which he was required to answer. That, in itself, would reveal an error of law (see Azzopardi v Tasman UEB Industries Pty Limited (1985) 4 NSWLR 139 at 156). 89For these reasons, I am satisfied that these grounds are made out.

Grounds 2, 4, 9, 10, 13 and 14 90These grounds are in the following terms: (2) The Magistrate erred in law by finding that the deceased did not make an agreement with the plaintiff to personally guarantee payment for the granite slabs ("the personal guarantee agreement"). (4) The Magistrate erred in law by failing to accept the uncontested testimony of the plaintiff in respect of the personal guarantee agreement. (9) The Magistrate erred in law by finding that the assertion of the plaintiff that the deceased made a personal guarantee is not corroborated, there being no evidence to support such finding. (10) The Magistrate erred in law by finding that there is no document to support the plaintiff's contention that the deceased made an agreement of guarantee with the plaintiff, there being no evidence to support such a finding. (13) The Magistrate erred in law by failing to find that the deceased agreed with the plaintiff to personally guarantee payment for the granite slabs. (14) The Magistrate erred in law by failing to consider all of the evidence in the case.

The Magistrate's reasons 91The submissions of counsel for the plaintiff in support of these grounds attacked a number of the Magistrate's findings arising out of paragraph [14] of his reasons (set out at [60] above). The submissions of the parties 92Counsel for the plaintiff made a number of specific submissions which had the effect of refining the errors which were said to have arisen. 93Firstly, counsel for the plaintiff submitted that the plaintiff's evidence in respect of the guarantee was "unchallenged in cross-examination" as a consequence of which "the rule in Browne v Dunn accordingly applied to that evidence". Even accepting these matters to be correct, it was not completely clear what was said to flow from a breach of the rule, other than the fact that counsel submitted that the asserted failure to cross-examine was a "weighty matter which ought to have been taken into account". 94Secondly, counsel for the plaintiff submitted that the Magistrate had misdirected himself, and thus erred in law, in two particular respects. Firstly, he argued that the Magistrate had erred in concluding that the plaintiff's evidence in relation to the issue of the guarantee issue was uncorroborated, in circumstances where there is no requirement in law for corroboration. Secondly, and adopting a similar approach, he argued that the Magistrate had erred in concluding that there was an absence of documentary evidence to support the plaintiff's contention that the deceased had given a guarantee because there was no requirement in law for such evidence. As I understood it, these submissions amounted to the proposition that the Magistrate had erroneously concluded that as a matter of law, evidence was required to be corroborated in some way before it could be accepted. 95Finally, counsel submitted that in the absence of any adverse finding regarding the credit of the plaintiff as a witness, the Magistrate's failure to accept his evidence constituted an error of law. Despite counsel disavowing it, this submission appeared to amount to the proposition that the Magistrate was somehow bound to accept the evidence of Olivieri because it had not been challenged. 96Counsel for the defendant submitted that none of these grounds involved any question of law, or any question of mixed law and fact, and that accordingly the plaintiff had no avenue of appeal in relation to any of them. 97In addressing the grounds themselves, counsel made reference to the fact that defendant's ability to challenge Olivieri's evidence of his conversation with the deceased was obviously limited. However, he submitted that it was not correct to say that the evidence was unchallenged in cross-examination. In this regard, he cited the passage of cross-examination set out at [31] above (commencing at T7 L9) and submitted that in these circumstances the rule in Browne v Dunn (1893) 6 R 67 had not been breached. 98Further, counsel submitted that the Magistrate had correctly concluded that there was no corroboration of the plaintiff's assertions.

Consideration and conclusion 99In my view, the issues raised by these grounds, and by the submissions made in support of them, involve one or more questions of law. However, none of the asserted errors have been made out. 100A failure to cross-examine a witness in relation to a material aspect of his or her evidence will, in the usual course, imply acceptance of that evidence (see Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at [586]). However in the present case there was no such failure. That much is clear from that passage of the transcript set out at [31] above (at T7). Accordingly, and contrary to the submission advanced by counsel for the plaintiff, there was no breach of the rule in Browne v Dunn. 101In any event, as was canvassed in submissions, the rule in Browne v Dunn is a rule of fairness, not a rule of evidence. Even if the rule had been breached, and the evidence of Olivieri in relation to the deceased's guarantee was completely uncontradicted and unchallenged, there was no rule of law which compelled the Magistrate to accept that evidence (see Re Doran Constructions Pty Limited (2002) 194 ALR 101; [2002] NSWSC 215; Elkington v Shell Australia Limited (1993) 32 NSWLR 11). 102Further, there is no substance in the submission made by counsel for the plaintiff that the Magistrate misdirected himself in terms of the need for corroboration. I accept that there is no legal requirement that there be corroboration of an assertion before that assertion is accepted. However, the Magistrate should not be taken as having concluded that there was such a requirement. His observation that the plaintiff's assertion was not corroborated should, in my view, be read as nothing more than a reference to the fact that the Magistrate apparently took into account what he regarded as an absence of corroboration in coming to the conclusion that Olivieri's evidence should be rejected. 103The submissions of counsel for the plaintiff in respect of the Magistrate's reference to the absence of documentary evidence should be similarly rejected. The Magistrate did not assert, at any stage, that there was a legal requirement for there to be documentary evidence in support of the plaintiff's assertion before he found the assertion proved. 104For these reasons, none of these grounds are made out.

Grounds 5 and 6 105These grounds are in the following terms: (5) The Magistrate erred in law in finding that Fine West Pty Limited or Quality Marble and Granite Pty Limited "endeavoured to deliver" the granite slabs to the plaintiff, there being no evidence that Fine West Pty Limited or Quality Marble and Granite Pty Limited "endeavoured to deliver" the granite slabs to the plaintiff. (6) The Magistrate erred in law in making a finding that Fine West Pty Limited or Quality Marble and Granite Pty Limited had "endeavoured to deliver" the granite slabs to the plaintiff as such issue had not been pleaded as a defence and there was no justiciable issue between the parties in respect thereof.

The Magistrate's reasons 106The Magistrate's reasons included the following (at [12] - [13]): "[12] The arrangement between MGIL and Fine West was one of bailment. The arrangement was for Fine West to sell the slabs for the benefit of Mr Olivieri. The implied term of the bailment at Common Law was that Fine West would exercise reasonable care in relation to the goods, and not convert them. The consignment to QMG amounted to a sub-bailment. The implied term applied to the sub-bailee, either to Fine West, or if the sub-bailment with the authority of the bailor, to MGIL. The actions of QMG are consistent with the sub-bailment being with the authority of the bailor, because QMG sought the attendance of Mr Olivieri to check the state of the slabs prior to loading. [13] The sub-bailment to QMG did not amount to a conversion by Fine West, and whether or not MGIL authorised the sub-bailment, it could only demand delivery of the slabs, or payment from Fine West or QMG on failure to satisfy the demand to deliver the slabs. The evidence indicates that Fine West and QMG endeavoured to deliver the slabs to MGIL on various occasions, but it ignored the requests and demands of Fine West and QMG."

The submissions of the parties 107In support of these grounds counsel for the plaintiff made two fundamental submissions. 108The first was that there was no evidentiary basis for the Magistrate's finding that FWH or QMG "endeavoured to deliver" the granite slabs to MGIL, and that such finding was an error of law. 109The second was that a defence of delivery, be it constructive or otherwise, had not been pleaded. As I understood it, counsel submitted that the finding of the Magistrate in these circumstances amounted to a denial of procedural fairness. 110Counsel for the defendant submitted that there was evidence, particularly at annexure "G" to the affidavit of Di Giannantonio, which supported the finding that FWH endeavoured to deliver the granite slabs. In these circumstances, he submitted that no error was established. 111Counsel for the defendant further submitted that matters relevant to that finding were the subject of evidence before the Magistrate and that there had, in those circumstances, been no denial of procedural fairness.

Consideration and conclusion 112The making of findings of fact, and the drawing of inferences, in the absence of evidence to support those findings and inferences, is an error of law (see Sinclair v Maryborough Mining Warden (1975) 132 CLR 473 at 481; 483 cited by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355). However, the evidence before the Magistrate of the communication from QMG of 24 May 2010 (referred to at [40] above) supported the finding that he reached. There was clearly an evidentiary basis for the Magistrate's finding and no error has been made out in this respect. 113As to the second matter, I accept that a denial of procedural fairness involves a question of law. I also accept that the defence did not plead a defence of delivery. However, that fact does not lead to the conclusion that the Magistrate's reasons reflect error and in my view, no error has been established. 114Proper pleadings are obviously fundamental to procedural fairness (see Banqe Commerciale (SA) (in liq) v Akhil Holdings Pty Limited (1990) 169 CLR 279). They serve, amongst other things, to identify the issues in dispute along with the relevance and admissibility of evidence adduced in the trial (see Dare v Pulham (1982) 148 CLR 658 at 664). That said, cases are decided on the evidence. It has been observed that modern pleadings have never imposed so rigid a framework that the case is to be decided upon a basis which does not embrace the real controversy between the parties (see Banqe Commerciale (SA) (supra) per Dawson J at 296-297; Vale v Sutherland (2009) 237 CLR 638 at [41]). 115Obviously, a person whose interests may be adversely affected by a decision must be afforded a fair opportunity, prior to such decision being made, to put his or her case, adduce evidence, and make submissions (see generally Allesch v Maunz (2000) 203 CLR 172 at [35] per Kirby J; Beveridge v Dontan Pty Limited (1991) 23 NSWLR 13). However, it would appear from a perusal of the transcript (commencing at T48 L 23) that the issue of delivery was the subject of submissions on behalf of the defendant. It also appears to have been referred to by counsel for the plaintiff in response, at least to some degree (commencing at T54 L6). Clearly, the plaintiff was given the opportunity to deal with the issue. 116To the extent that the plaintiff's submissions advanced the proposition that the Magistrate was under some obligation to provide an advance indication that he was minded to reach the particular finding that he reached, and that his failure to do so was somehow procedurally unfair, that proposition should also be rejected. Fairness is not an abstract concept, it is essentially a practical one. The concern of the law is to avoid practical injustice (see Re Minister for Immigration and Multicultural Affairs; Ex Parte Lam (2003) 214 CLR 1 at [37] per Gleeson CJ). 117In Commissioner for ACT Revenue v Alpha One Pty Limited (1994) 49 FCR 576 the full court of the Federal Court, Northrop, Miles and French JJ expressed the position in this way (at 590 and following): "It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. That would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material...The subject is entitled to respond to any adverse conclusion drawn by the decision maker on material supplied by, or known to, the subject which is not an obvious and natural evaluation of that material. The decision maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material". 118In my view, the plaintiff was given an adequate opportunity to respond to what had been put on behalf of the defendant in relation to the evidence concerning delivery. 119For these reasons, both of these grounds fail.

Ground 7 120Ground 7 is in the following terms: (7) The Magistrate erred in law in making a finding as to whether the sub-bailment of the granite slabs by Fine West Pty Limited to Quality Marble and Granite Pty Limited was a conversion of those goods by Fine West Pty Limited as such issue had not been pleaded as a defence and there was no justiciable issue between the parties in respect thereof;

The Magistrate's reasons 121Paragraphs [12] and [13] of the Magistrate's reasons which are relevant to this ground are set out at [106] above. The submissions of the parties 122The submissions of the parties in relation to this ground were substantially the same as those advanced in respect of grounds (5) and (6). 123In short, counsel for the plaintiff submitted that the plaintiff did not plead a cause of action against the defendant which had been founded on the tort of conversion by sub-bailment. In these circumstances, it was submitted that the Magistrate's findings in that respect amounted to an error of law. 124Counsel for the defendant submitted in essence, that having regard to the evidence, the Magistrate's conclusions were open to him.

Consideration and conclusion 125Accepting that cases are decided on the evidence, there was evidence in the present case of the circumstances in which the granite was transferred to QMG. That issue was the focus of submissions on behalf of the defendant (at T48 L14) and the plaintiff (commencing at T54 L6). The mere fact that the matter was not pleaded does not, in those circumstances, mean that the Magistrate erred as suggested. 126This ground is not made out. Ground 8 127Ground 8 is in the following terms: (8) The Magistrate erred in law in making a finding that the payment of $2000.00 by Michael Di Gianni to the plaintiff was made "under protest" as such issue had not been pleaded as a defence and there was justiciable issue between the parties in respect thereof;

The Magistrate's reasons 128The relevant passage of the Magistrate's reasons is at [10]: "[10] Michael De Gianni made a payment to Mr Olivieri, but I am satisfied on the balance of probabilities that he did so under protest due to Mr Olivieri and Mr Pignataro demanding money when they visited". The submissions of the parties 129Counsel for the plaintiff submitted that the Magistrate's finding that the payment of $2,000.00 which was made to the plaintiff was made "under protest" was an error of law. In support of this proposition counsel for the plaintiff submitted: (i)that no defence of duress was pleaded in respect of the payment; (ii)there was no evidence before the Magistrate which would support a finding that the payment was made under duress; and (iii)that the legal effect of such payment, in any event, was a confirmation of the debt for the purpose of the Limitation Act pleaded by the defendant. 130Counsel for the defendant submitted that there was no error in the Magistrate's finding. He submitted that on the evidence, the issue had squarely arisen and that the Magistrate's finding was in accordance with the evidence. Consideration and Conclusion 131As I have pointed out (at [112] above) the making of a finding of fact in the absence of any evidence to support it is an error of law. However, the plaintiff's complaints in support of this ground are not made out. 132The fundamental submission advanced by counsel for the plaintiff was that the evidence did not support a finding that the relevant payment was made under duress. The fundamental difficulty with that submission is that the Magistrate made no such finding. He found that the payment was made "under protest". It is evident from the evidence Di Giannantonio (at [48] above) that the protest arose, and the payment was made, following what he described in his affidavit as "bit of an argument", not as the result of pressure, amounting to duress, having been applied to him. 133Moreover, the assertion that the payment was made "under protest" was made, in those specific terms, by Di Giannantonio in his affidavit (at (41)). It thus formed part of the evidence before the Magistrate. In those circumstances, it could hardly have come as a surprise to the plaintiff that it was to form part of the defendant's case. 134For these reasons this ground is not made out.

CONCLUSION 135I have concluded that the Magistrate's reasons were inadequate. In these circumstances, and given one of the issues to which such inadequacy relates, it is necessary to remit the matter to the Magistrate to be further dealt with according to law. As I understood it, both parties accepted that this would be the inevitable consequence of a finding that the Magistrate had erred. ORDERS 136Accordingly, I make the following orders: (i)the appeal is allowed; (ii)the judgment and orders of the Magistrate delivered in the Local Court on 19 June 2012 are set aside; (iii)the matter is remitted to the Magistrate in the Local Court for determination according to law; (iv)the defendant is to pay the plaintiff's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 August 2013