Seven Sydney v Fuji Xerox

Seven Sydney Pty Limited v Fuji Xerox Australia Pty Ltd 50127/01

The issues before the referee 2 The adoption proceedings 4 Issues on the adoption hearing 9 Adoption: the principles 11 Factual background 16 The proceedings before the referee 34 The approach taken by the referee in his report 38 Seven Sydney's submissions 52 FXA's submissions 69 Analysis 75 General observations 75 The documents marked for identification 78 First category: the referee "ignored" evidence 86 The submissions generally 86 Section 3.1.13 94 Second category: failure to resolve conflicts; ignoring submissions as to credibility 101 Third category: findings not supported by the evidence and related submissions 104 3.1.14 Comparisons between DC70 and Xeikon DCP32/D 105 3.1.21 6 January 1998 meeting 112 3.1.31 Introduction of Mr Plant 114 3.4.3 Hardware Failures 117 3.4.4 Downtime 123 3.7.1 Pre-flighting 131 3.7.3 Cutter delay setting 135 3.7.4 Variable data jobs 138 3.7.5 Operator maintenance of the presses 140 3.8.3 Testing at Trendsetting in Canberra 142 Fourth category: Seven Sydney's submissions "ignored" 147 Fifth category: no cross-examination 148 The referee's treatment of the expert evidence 151 Alleged failure to deal with the misrepresentation by silence case 153 Alleged failure to consider Seven Sydney's case of negligence 156 Alleged failure to consider the s 51A case 158 Other considerations 160 Conclusion and order 168

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50127/01 SEVEN SYDNEY PTY LIMITED v FUJI XEROX AUSTRALIA PTY LIMITED JUDGMENT 1 HIS HONOUR: These proceedings concern two digital colour printing presses supplied by the defendant ("FXA") to the plaintiff ("Seven Sydney"). The presses were known as the DocuColor ("DC") 70 and DC100. Seven Sydney made complaints of breach of warranty and misrepresentation in relation to the capacities and performance of, and technical and other support, for the presses. By order made under SCR Pt 72 r 2, all questions in issue save for questions relating to quantum were referred to Mr B A Tozer ("the referee") for enquiry and report. After a hearing that lasted some 74 days (including conclaves of experts but excluding the time taken to test the presses and for views), over the period from November 2001 until December 2003, the referee reported that, in substance, Seven Sydney's case failed. The question for the Court is whether his report should be adopted (as FXA submits) or rejected (as Seven Sydney submits). The issues before the referee 2 At the commencement of the reference, Seven Sydney stated the issues as follows:

1. Did Seven Sydney advise FXA of the purpose for which the DC70 was purchased?

Did Seven Sydney advise FXA that the purpose for which the DC70 was purchased was to conduct a short run and variable print business?

Was FXA aware that Seven Sydney required the DC70 to conduct a short run and variable print business?

Was the DC70 fit for the purpose of conducting a short run and variable print business?

Did FXA represent to Seven Sydney that: (a) the DC70 was capable of operating speedily, efficiently, reliably and to the standard and quality required by customers of the commercial on-demand printing market; (b) the DC70 had been used successfully in commercial operations overseas; (c) the DC70 had any of the specific features, performance characteristics and capabilities identified in paragraph 6(i)(C) of the Amended Summons; (d) the DC70 would allow text, graphics and images to be swapped in and out of documents without limitation during the course of a print run at full engine speed; (e) the DC70 was capable of efficiently producing 24,000 A4 duplex printing sheets per month; (f) the DC70 would produce 70 printed sheets per minute under ordinary operating conditions; (g) the abovementioned features, performance characteristics and capabilities of the DC70 could operate reliably in the intended commercial printing context.

Did FXA make any or all of the following financial representations about the DC70 to Seven Sydney? (a) the DC70 would return Seven Sydney a typical monthly profit of $41,676;

(b) the DC70 had a break-even point of 18,500 sheets; (c) FXA had included reasonable allowances for wastage and other items in the financial projections provided to the plaintiff in respect of the DC70; (d) the DC70 would be competitive with lithographic printing for short runs of up to 2,900 sheets.

Did FXA make any or all of the following representations to Seven Sydney as to its service and support capabilities? (a) FXA was capable of providing Seven Sydney prompt service and support;

(b) FXA was capable of providing Seven Sydney with suitably skilled service and support;

(c) the service and support available from FXA would enable the DC70 to operate in accordance with the represented features, performance characteristics and capabilities;

Did any of the representations identified in paragraphs 6, 7 and 8 have the character of promissory statements?

Did any of the representations that had the character of promissory statements amount to a contractual warranty in those terms?

Having regard to the description applied to the DC70, its price and all the other relevant circumstances, was the DC70 fit for the purpose or purposes for which goods of that kind are commonly bought?

At the time that it was making the representations in respect of the DC70, did FXA know or ought have it known that: (a) Seven Sydney was relying upon FXA to exercise all due care, skill and diligence in the making of the representations;

(b) Seven Sydney was likely to act upon the representations;

(c) if Seven Sydney acted upon the representations and they proved to be untrue, Seven Sydney may suffer loss and damage.

Did Seven Sydney rely upon the advice and professional expertise of FXA when determining whether to purchase the DC70?

To the extent that it is found that FXA made any of the representations in respect of the DC70 identified above, were any of the representations: (a) inaccurate or untrue;

(c) if made in respect of a future matter, a representation made on reasonable grounds?

Did Seven Sydney advise FXA of the purpose for which the DC100 was purchased?

Did Seven Sydney advise that the purpose for which the DC100 was purchased was to conduct a short run and variable print business?

Was FXA aware that Seven Sydney required the DC100 to conduct a short run and variable print business?

Was the DC100 fit for the purpose of conducting a short run and variable print business?

Did FXA represent to Seven Sydney that: (a) the DC100 was capable of operating speedily, efficiently, reliably and to the standard and quality required by customers of the commercial on-demand printing market;

(b) the DC100 had been used successfully in commercial operations overseas;

(c) the DC100 had any of the specific features, performance characteristics and capabilities identified in paragraph 6(i)(C) of the Amended Summons;

(d) the DC100 was superior to and provided improved performance in comparison to the DC70;

(e) relative to the DC70, the DC100 had the attributes identified in paragraph 6(a)(i)(B) of the Amended Summons;

(f) the DC100 would allow text, graphics and images to be swapped in and out of documents without limitation during the course of a print run at full engine speed;

(g) the DC100 was capable of efficiently producing 42,000 A4 duplex printing sheets per month;

(h) the DC100 would produce 100 printed sheets per minute under ordinary operating conditions;

(i) the abovementioned features, performance characteristics and capabilities of the DC100 could operate reliably in the intended commercial printing context.

Did FXA make any or all of the following financial representations about the DC100 to Seven Sydney? (a) the DC100 would return Seven Sydney a typical monthly profit of $55,238;

(b) the DC100 had a break-even point of 21,000 sheets;

(c) FXA had included reasonable allowances for wastage and other items in the financial projections provided to Seven Sydney in respect of the DC100;

(d) the DC100 would be competitive with lithographic printing for short runs of up to 2,900 sheets.

Did FXA make any or all of the following representations to Seven Sydney as to its service and support capabilities? (a) FXA was capable of providing Seven Sydney with prompt service and support; (b) FXA was capable of providing Seven Sydney with suitably skilled service and support; (c) the service and support available from FXA would enable the DC100 to operate in accordance with the represented features, performance characteristics and capabilities; 23. Did any of the representations identified in paragraphs 20, 21 and 22 have the character of promissory statements?

Did any of the representations that had the character of promissory statements amount to a contractual warranty in those terms?

Having regard to the description applied to the DC100, its price and all other relevant circumstances, was the DC100 fit for the purpose or purposes for which goods of that kind are commonly bought?

At the time it was making the representations in respect of the DC100, did FXA know or ought to have known:

(a) Seven Sydney was relying upon FXA to exercise all due care, skill and diligence in the making of the representations;

(b) Seven Sydney was likely to act upon the representations;

(c) if Seven Sydney acted upon the representations and they proved to be untrue, Seven Sydney may suffer loss and damage.

Did Seven Sydney rely upon the advice and professional expertise of FXA when determining whether to purchase the DC100?

To the extent that it is found that FXA made any of the representations in respect of the DC100 identified above, were any of the representations:

(b) misleading or deceptive; (c) if made in respect of a future matter, a representation made on reasonable grounds?

Was the plaintiff entitled to terminate the agreement made on 11 October 1999 on 6 April 2001? 3 Neither party furnished the referee with the statement of findings of fact and law for which it contended as required by Pt 72 r 8(5). The parties did, however, provide the referee with copious written submissions. Seven Sydney's submissions in chief occupy two lever arch folders and number, I was told, 509 pages. FXA's submissions also occupy two lever arch folders and number, by my count, 480 pages. In addition, FXA provided the referee with brief submissions replying to those of Seven Sydney (28 pages, and included in the two lever arch folders to which I have referred). Seven Sydney gave the referee a further folder, comprising by my count 139 pages, of submissions in reply. The adoption proceedings 4 Seven Sydney provided a lever arch folder of submissions attacking the report. I have not attempted to count the number of pages. It is fair to observe that many of the pages comprised tables cross-referencing various items of the evidence. 5 FXA likewise provided a lever arch folder of submissions. The bulk of this comprised its submissions (including on technical issues) to the referee, "modified" for the purposes of the adoption hearing. 6 Seven Sydney tendered four lever arch folders, containing those snippets of the evidence before the referee that were referred to in its submissions. That is to be compared with the total bulk of the evidence before the referee which, as reproduced for the purposes of the adoption hearing, occupied 66 lever arch folders. (I was told that, notwithstanding this alarming bulk, not all of the evidence before the referee had been reproduced.) 7 The snippets included in the four lever arch folders that Seven Sydney tendered included material that had been rejected by the referee. It included parts of some affidavits, isolated pages of transcript (from a total of more than 6,600 pages) and, in some cases, multiple copies of documents. Mr F G Lever SC, who appeared with Mr J Miller of Counsel for FXA, objected to the tender of this material. I reserved my decision on the tender and marked the folders for identification. For reasons that I give later, I have come to the view that the tender, with the exception of two documents, should be rejected. 8 Mr J B Simpkins SC, who appeared with Ms Elizabeth Frizell of Counsel for Seven Sydney, tendered his client's submissions to the referee; and Mr Lever did likewise. I admitted those submissions into evidence, for the purpose of showing (in the absence of statements under Pt 72 r 8) what issues were raised by the parties for the referee's decision. For similar reasons, I admitted into evidence the transcript of the parties' final addresses to the referee. Issues on the adoption hearing 9 Simply put, the issue was whether or not the report should be adopted. Seven Sydney's approach was to argue almost wholesale for the rejection of the findings made by the referee. In substance, the approach taken by Seven Sydney sought a rehearing of almost all of the issues put to and decided by the referee. Seven Sydney submitted that this approach was justified. It submitted that the referee had overlooked or ignored evidence (including what it characterised as uncontroverted or unchallenged evidence); that he had not dealt with the issues submitted to him in an analytical and rational fashion; that he had not exposed his process of reasoning (including, where it was relevant, his basis for preferring the evidence of some witnesses to that of others and his basis for preferring the approach of some experts to that of others). These deficiencies, Seven Sydney submitted, could be demonstrated by reference to the four volumes of material that it tendered in support of its submissions. 10 FXA submitted that, consistent with the authorities, I would be satisfied that the referee had approached his task in a thorough, analytical and scientific way; that there was no basis shown for me to interfere with his findings of fact; that his report displayed no error of principle; and that a consideration of his reasons, read in their entirety, would satisfy me that he had applied appropriate logic and consideration to the questions before him and that his report was the result of an appropriate exercise of intellectual analysis. Adoption: the principles 11 The principles to be applied, in exercising the discretion conferred upon the Court by Pt 72 r 13 to adopt, vary or reject in whole or in part a report of a referee, are well established. There are a number of cases to which, customarily, reference is made. They include Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; the unreported proceedings in that case before Giles J (19 May 1992: the relevant considerations referred to by his Honour are sufficiently extracted in the decision of the Court of Appeal); Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60; White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193; and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1995) 38 NSWLR 615. As to the nature and content of the referee's obligation to give reasons, the relevant authorities include Xuereb v Viola (1988) 18 NSWLR 453 and Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885). 12 The relevant principles, distilled from those decisions, can be stated as follows:

(1) An application under Pt 72 r 13 is not an appeal either by way of hearing de novo or by way of rehearing.

(2) The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.

(3) The purpose of Pt 72 is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation; that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.

(4) In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

(5) Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.

(6) If the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than "unsafe and unsatisfactory".

(7) Generally, the referee's findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

(8) The purpose of Pt 72 would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.

(9) The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

(10) Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by Pt 72 r 13 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.

(11) Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise. 13 I have stated the principles without attribution and without citation. However, having regard to the way in which Seven Sydney put its case before me, it is important to bear in mind the aphorism of Mahoney JA in Super at 567 that the right to be heard does not involve the right to be heard twice. 14 Seven Sydney referred in particular to the decision of the Court of Appeal in Franks & Anor v Berem Constructions Pty Ltd (unreported: NSWCA 2/12/98; BC 9806367). Although (if I may say so with respect) I do not regard that case as stating any principle, relevant to the exercise of the discretion under Pt 72 r 13, that has not been dealt with by the authorities to which I have already referred, and which I have attempted to summarise above, I refer to it separately in deference to the submissions based upon it. 15 Hodgson CJ in Eq (with whom Priestley JA agreed, and with whom, as to the questions of principle but not as to their application, Fitzgerald AJA also agreed) said that there were three circumstances in which a court considering whether to adopt a referee's report should or could go to the evidence before the referee. They are:

(1) If there were a real question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come. This was not required "by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it". The application was far more limited: "to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence."

(2) Where, although the referee's reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee's findings with which the referee did not at all deal. In these circumstances, examination of the evidence would show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

(3) Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) was justified. Factual background 16 Seven Sydney was formerly known as Colour Imaging Company Pty Limited. I mention this because, at times in the report (when referring to evidence) and elsewhere, it is referred to as "CIC". At the relevant time, it specialised in graphic reproduction, digital proofing, and colour scanning and design to produce material capable of being printed by commercial printers. It became interested in the production of digital graphics to be printed on digital colour printing equipment. From early 1997, it carried out investigations and research into the varieties of printing equipment that were available. It became aware that Xerox Corporation (the parent of FXA) had a press called the DC70. That press used a print engine known as the Xeikon, which Seven Sydney had observed being used in other digital printing presses. 17 There were a number of meetings between representatives of Seven Sydney and representatives of FXA in the period October 1997 to May 1998, relating to the DC70. In those meetings, Seven Sydney advised FXA of Seven Sydney's desire to move into digital printing, with particular emphasis on short run printing and variable data applications. Seven Sydney was particularly interested in a wide-bodied digital printing press. FXA did not have such a press available. It did have the DC70, and was intending to introduce the DC100. (The numbers refer to the width, in centimetres, of the web: ie, to the width of the paper that the press could process.) 18 Eventually, Seven Sydney decided to acquire the DC70 press, with the intention of upgrading it or replacing it with the DC100 when that press became available. FXA, for its part, was looking to launch its digital printing presses into the Australian market and was keen to "partner" with a recognised and reputable operator such as Seven Sydney. 19 Seven Sydney wanted a press that had variable data capability. This refers to the ability of the press to produce printed material in which one variable, or a number of variables, are altered from sheet to sheet. A simple example is of the numbered "bibs" worn by competitors in "fun runs" and the like, where the details of the event remain constant but the number changes from entrant to entrant. 20 It is clear, and the referee found, that Seven Sydney discussed with FXA its desire to use a digital printing press for short run business and using variable data capability. It is equally clear, and the referee found, that FXA, whilst it represented that its DC70 press (and its DC100 press) would have variable data capability, cautioned Seven Sydney that it was essential to test the press on the kinds of variable data application that Seven Sydney wanted to ensure that it would be satisfactory for Seven Sydney's purposes. 21 Understandably, it was very important to Seven Sydney that FXA had, and would make available, technical support for its presses. That included the installation and commissioning of the presses; the training of Seven Sydney's staff; and the provision of appropriate technical service and support, capable of dealing promptly and efficiently with hardware or software malfunctions. 22 The referee found in para 70 of his report that Seven Sydney decided to enter into a formal agreement with FXA in about mid November 1997. Although Seven Sydney challenged that conclusion, it provided no acceptable reasons in support of the challenge. There is no basis upon which I could reject that finding by the referee. However, it is to be understood that Seven Sydney was not then bound to proceed in its dealings with FXA. Indeed, as the referee recounted, there were a number of subsequent meetings in which Seven Sydney's requirements, and the capacities of FXA and its presses, were discussed. There were also a number of highly important letters from FXA to Seven Sydney, to which the referee referred. These were detailed negotiations of the terms of the bargain. Accepting as I do the referee's finding in para 70 of his report, it does not follow (and the referee did not on a fair reading of the report say) that representations made by FXA after mid November 1997 could be ignored; or that the correspondence and other material after that date was irrelevant. 23 A substantial amount of material was provided by FXA to Seven Sydney. That included analyses of profitability, which involved assumptions as to paper usage (including both wastage and spoilage) and other matters. 24 After Seven Sydney decided in principle to proceed with FXA and to acquire the DC 70, it negotiated to obtain commercial terms that were satisfactory to it. Those terms were documented in letters of 12 and 19 December 1997 and 7 January 1998 from FXA to Seven Sydney. The offer comprised in those letters was verbally accepted on 21 January 1998. The terms included that FXA would supply on lease, install and commission a DC70; provide appropriate training and technical assistance to Seven Sydney and its staff in the operation and maintenance of that equipment; and provide appropriate technical and service support. The offer also included a term whereby, when the DC100 was released, Seven Sydney could upgrade, effectively by trading in the DC70 at an agreed value. 25 The DC70 was delivered to Seven Sydney's premises in mid February 1998. Installation and commissioning took approximately six weeks: until the end of March 1998. In that time, some operator training was provided. 26 When the DC70 was commissioned, it did not have the software necessary for variable data capability. That was not provided until August 1998. Between March and August 1998, Seven Sydney used other available software to perform variable data work. 27 On 14 May 1998, FXA and Seven Sydney entered into a "Preferred Customer Rental and Support Services Agreement" for the supply and support of the DC70. 28 When the variable data software was supplied, it was limited in its capabilities. However, it was used to produce variable data output. 29 In late 1998, Seven Sydney became aware that the DC100 was almost ready for release. Thereafter, whilst continuing to discuss with FXA the variable data capability of the DC70, it negotiated for the replacement of the DC70 by a DC100. That was confirmed by letter dated 31 August 1999. The agreement for the lease and support of the DC100 was made on 11 October 1999. 30 The DC100 was delivered to Seven Sydney's premises in late December 1999 and installed and commissioned thereafter. Commissioning was completed by March 2000; it included the provision of training to Seven Sydney's employees. 31 The DC70 was not decommissioned until September 2000; until then, apparently, both it and the DC100 were used. Seven Sydney had a number of difficulties with the operation of the DC100 (as it had had with the DC70). It said that it ceased to use the DC100 for commercial printing at the end of March 2001, and the machine was decommissioned in late May 2001. (Somewhat mysteriously, almost 40,000 impressions were made after March 2001 and before the machine was decommissioned in mid May; and even more mysteriously, another 500 impressions were made after the machine was decommissioned.) 32 Seven Sydney and FXA were unable to resolve their differences. On 30 August 2001, Seven Sydney gave notice to FXA purporting to terminate the agreement relating to the DC100. 33 Seven Sydney claims damages for breach of warranty, misrepresentation and misleading and deceptive conduct. FXA has cross-claimed for damages for what it says was repudiation of the agreement. The proceedings before the referee 34 I have already referred briefly to the duration of the hearing, and the extent of the evidence and submissions, before the referee. I referred in para [1] above to testing that had been undertaken. That testing was undertaken in the course of the reference. It involved the recommissioning of the DC100 at Seven Sydney's premises, and the operation of the press to undertake certain printing work. The recommissioning (which involved substantial repair, and in particular the replacement of what is known as an "expand board") was required to return the DC100 to operating condition. 35 Once that work had been carried out, the DC100 was transported to the premises of a printing firm in the Australian Capital Territory known as Trendsetting. The machine was recommissioned there and an operator was trained. The machine was then used, for a substantial period in May 2003, in the ordinary business of Trendsetting. That testing was supervised and observed by (among others) an expert witness, Mr Davey, retained by FXA. For reasons that have not been explained to me, the relevant experts retained by Seven Sydney, Messrs Lawrence and Muratore, were not present. 36 The referee made observations of both the testing of the DC100 at Seven Sydney and its operation at Trendsetting. 37 The evidence before the referee included:

(1) From representatives of Seven Sydney and representatives of FXA, evidence of the negotiations in which, Seven Sydney said, the representations and warranties on which it relied were made.

(2) Evidence from Seven Sydney's operators of the problems that they claimed to have experienced with the operation of the DC70 and the DC100.

(3) Evidence from FXA's service engineers and technicians of the training and support that they provided, the service and maintenance that they undertook, and the observations that they made of the way in which the machines had been operated and maintained.

(4) Evidence from experts retained by both sides as to the operation of, and alleged defects in, both machines; and as to the operation of what were said to be equivalent or comparable machines (including both machines supplied by FXA and machines, incorporating the Xeikon print engine, supplied by other manufacturers).

(5) Evidence of the recommissioning and testing of the DC100 at Seven Sydney's premises and of its recommissioning and operation at Trendsetting's premises. The approach taken by the referee in his report 38 It is clear, both from the report itself and, in particular, from the parties' submissions to the referee, that there were very serious credit issues. Each side made sustained attacks upon the credibility of the witnesses of fact (and, I think, to some extent the experts) called by the other. The referee referred from time to time to matters which, clearly, he found troubling. By way of example only: he referred on more than one occasion to the circumstance that a particular allegation had not been raised by a witness in his first affidavit, but only at some later stage. The referee referred also to circumstances where, on the facts as recounted by him, Seven Sydney's witnesses had given evidence that they later retracted or changed. By way of example only: one of Seven Sydney's operators denied tampering with certain settings on the DC100; but there was evidence that showed clearly that he had, and he subsequently so admitted. 39 The referee did not make explicit findings on credibility. Nonetheless, it is clear that he was influenced, in his recital of the facts, by views that he formed of the credibility of the various witnesses. It is unfortunate that the referee did not make explicit findings as to credibility. Nonetheless, I do not think that this is a fatal flaw in his report. The parties provided him with copious submissions dealing with the credibility of the relevant witnesses. The referee from time to time referred to some of the matters raised by the parties in those sections of their submissions. It is clear overall, when one reads his report, that he weighed the parties' submissions as to credibility and his own assessment of the witnesses in setting out the findings of fact that he did. It is equally clear - in many cases explicitly - that the referee weighed the competing accounts of relevant events against what he viewed as the objective probabilities. 40 The structure of the report followed, in substance, the structure of Seven Sydney's submissions. The referee referred to each topic addressed by Seven Sydney in its submissions. He considered what he thought to be the evidence relevant to that topic and made findings. That having been done, the referee turned to the issues that had been framed by Seven Sydney at the beginning of the proceedings before him and dealt with them in the manner that, to his mind, his analysis of the evidence and the submissions required. The report, excluding annexures, comprises 149 pages. 41 The referee set out what he considered to be the facts relevant to the issues that he was required to decide. He did not expressly say that they were findings of fact. However, when one reads the report as a whole, it is clear that this is what they were. Equally, where there were conflicts in the evidence, it is clear that the referee had appropriate regard to those conflicts and dealt with them in the manner that I have just indicated. 42 The recital of relevant facts is commendably brief. However, each relevant finding (as I conclude it is) is supported by footnoted references to the primary evidence. I do not think that the referee is to be criticised for the way in which he reduced the vast mass of material before him to 149 pages, including both factual findings and analysis. On the contrary, I think that he is to be commended. 43 It would have been impossibly burdensome to require the referee to refer to every single matter of fact that bore on every one of the numerous issues that he was required to consider. As the majority of the High Court of Australia remarked in Fox v Percy (2003) 214 CLR 118, 132 [41], "[n]o judicial reasons can ever state all of the pertinent factors … ; nor can they express every feature of the evidence that causes a decision-maker to prefer one factual conclusion over another." No higher or more oppressive standard should be fastened upon a referee. 44 To anticipate one of the criticisms made by Seven Sydney: the referee, as I have said, followed the structure of Seven Sydney's submissions. It is not to be assumed, because he did not refer to it, that the referee overlooked, or paid no attention to, any piece of the evidence referred to by Seven Sydney in its submissions. From the structure of the report, I draw the contrary conclusion: namely, that the referee considered carefully all the matters to which he was referred. Having done that, I infer, he set out the conclusions of fact that he reached, to the extent that he thought that they were necessary for his purposes. I do not see in either this method or its application any error of principle. 45 Having considered the issues of fact raised by Seven Sydney in its submissions, the referee turned to the various aspects of the expert evidence that were raised. He dealt with them in the same way. It is clear that, in general, he preferred the evidence of Mr Davey (called by FXA) to that of Messrs Lawrence and Muratore (called by Seven Sydney). It is equally clear that he preferred the evidence of another expert called by FXA, on the issue of the damaged expand board (Mr Chakovan) to that of the expert called by Seven Sydney (Dr Corderoy). It is clear that, in his assessment of the former conflict, the referee was influenced both by the evidence of contemporaneous records (including service and maintenance records and the like) and by the evidence of Ms Robyne Hingeley. Ms Hingeley was an operator employed by Trendsetting, who gave evidence that was a hybrid of factual and expert evidence. In both capacities, her evidence as recounted by the referee generally supported that of Mr Davey. Again, it is clear that the referee was influenced, in his preference for the evidence of Mr Davey over that of Messrs Lawrence and Muratore, by the evidence of FXA's service engineers and technicians. 46 Again to anticipate a criticism made by Seven Sydney: I do not think that the report, read as a whole, fails to demonstrate the basis on which, in general, the referee preferred the evidence of FXA's experts to that of Seven Sydney's experts. Nor do I think that it demonstrates that the referee's preference for the evidence of Seven Sydney's experts was unfounded or illogical. On the contrary, I think, a reading of the report in its entirely shows that his approach to the analysis of the expert evidence was rationally planned and rationally executed. 47 I have dealt with these matters in advance because, I have concluded, they show up a basic flaw in the attack that Seven Sydney launched on the report. As can be seen from its written submissions, the attack took virtually every section of the report and subjected it to criticism. The nature of the criticism requires further consideration; but for present purposes, the important point is that the attack failed to consider the report in its entirety. The logical sequence of the report is less than perfect. This follows, not from any lack of logic on the part of the referee, but from his adoption of the structure of Seven Sydney's submissions in chief to him. A necessary consequence of the fragmented approach taken by Seven Sydney in its submissions is that matters that are dealt with in one section of the report require reconsideration in later sections of the report. To attack the individual sections, in the manner that Seven Sydney did, is to ignore both the overall unity of the report and the interrelationship between its various sections. 48 Having considered the factual and expert evidence, the referee turned to the key issues. He considered, in the body of the report, the representations made by FXA (as he found them), and whether they had been made good. In brief, to the extent that he found that representations had been made, he found that FXA lived up to them. To the extent that he found that warranties were given (either expressly or by implication - merchantability and fitness for purpose), he found that they had not been breached. Although in some cases his reasons for those conclusions are relatively brief, they require (as I have just indicated) to be considered in conjunction with those sections of his reasons where the referee dealt with the underlying issues of fact. 49 With all that done, the referee then turned to the specific issues to which he had been directed by Seven Sydney. He set out his answer to each of the questions, by which the issue was posed, at the conclusion of his report. He concluded that:

(1) Seven Sydney advised FXA of the purpose for which the DC70 was required, namely to use in a digital printing division to provide short run digital colour print and variable data printing for its clients.

(2) The DC70 was fit for that purpose (and - para 174 - fit for the purpose for which it was manufactured).

(3) Seven Sydney advised FXA of the purpose for which the DC100 was required, namely to perform the same duties as the DC70, but with greater variable data capability and for printing products that required a wider web.

(5) To the extent that the representations or warranties alleged by Seven Sydney to have been made concerning the DC70 were made (I interpose that the referee considered individually whether each of the representations was made out, and considered whether any of them had the character of warranties or promissory statements), they were not inaccurate or untrue or misleading or deceptive.

(6) FXA knew that Seven Sydney would rely on FXA to exercise care and skill in making the representations; that Seven Sydney was likely to act on them; and that if Seven Sydney acted on them and they proved to be untrue, Seven Sydney might suffer loss.

(7) FXA advised Seven Sydney that it should test its applications before committing to the purchase of the DC70; and that Seven Sydney should not proceed with the purchase if it did not have a committed volume of the requisite kind of printing business.

(8) FXA "made no recommendation to [Seven Sydney] that the press was suitable for the business direction that [Seven Sydney] wished to pursue with the DC70".

(9) Seven Sydney relied on some (but not all) of the representations made by FXA in respect of the DC70.

(10) None of the alleged representations (as to performance or as to financial characteristics) alleged in respect of the DC100 was made. It was therefore unnecessary for the referee to consider reliance, accuracy and reasonable grounds.

(11) Seven Sydney was not entitled to terminate the DC100 agreement for the reasons given, namely that the machine was unreliable and not fit for its purpose. 50 One of the issues posed in respect of each of the presses was whether any representations that were made, if made in respect of a future matter, were made on reasonable grounds (see issue 14(c) in respect of the DC70 and issue 28(c) in respect of the DC100). The referee did not give explicit consideration to this in the case of the DC70. He did not need to consider it in the case of the DC100, since he found that none of the representations had been made. 51 However, to anticipate another of Seven Sydney's criticisms: I think it is clear, both from the finding made by the referee in respect of issue 14 and from the report as a whole, that the representations that he found were made were, to the extent that they were made in respect of future matters, made on reasonable grounds. It would have been desirable for the referee to have addressed this topic explicitly. Nonetheless, for reasons that I give in para [146] below, I do not think that his failure to do so is of itself a ground for rejection of the report. Seven Sydney's submissions 52 Seven Sydney's submissions on adoptions fall into a number of categories. Most of its submissions complain that the referee "ignored" evidence of Seven Sydney's witnesses. In some cases, that evidence is characterised as "uncontradicted". In other cases, it is not so described. In a variant of this submission, Seven Sydney from time to time submitted that the referee made findings that conflicted with the unchallenged evidence of its witnesses, and submitted that in the absence of challenge by cross-examination, it was not open (or reasonably open) to the referee to reach a conclusion contrary to that evidence. 53 In a second category, Seven Sydney complains that the referee failed to resolve conflicts between the evidence called for Seven Sydney and that called for FXA. In related submissions, Seven Sydney complains that the referee "ignored" Seven Sydney's submissions about the credibility of various witnesses. 54 In a third category, Seven Sydney complains that the referee made findings that were not supported by the evidence. (In some cases, this complaint is amplified by the complaint, described in para [56] below as the fifth category, that the referee's findings were not put to the relevant witnesses called by Seven Sydney.) A variant submission, convenient to be considered in this category, is that evidence relied upon by the referee was not reasonably capable of supporting a specified finding. 55 In a fourth category, Seven Sydney complains that the referee "ignored" Seven Sydney's submissions. 56 In a fifth category, Seven Sydney complains that the referee reached conclusions that were not put to its relevant witnesses in cross-examination. Where it occurs, this complaint is allied with other complaints - usually, dealing with the referee's alleged error in "ignoring" submissions put by Seven Sydney. 57 Further, as I have noted, Seven Sydney criticises the referee's analysis of and conclusions on the expert evidence. 58 In many cases, the attack on a particular aspect of the report involved more than one category of complaint. 59 As I have already indicated, each of these criticisms was made by reference to individual subsections of the report. Each and every subsection of the referee's findings in section 3.1 (dealing with the DC70 representations) from 3.1.1 to 3.1.35 (pp 15-47 of the report) was criticised. 60 Seven Sydney then turned its attention to section 3.2 of the report (DC100 representations). Again, each and every one of the subsections, from 3.2.1 to 3.2.5 (pp 48-53 of the report), was criticised individually. 61 Thereafter, Seven Sydney's criticisms became for a time, in comparison to what had preceded them, selective. The criticisms of section 3.3 (dealing with termination of the DC100 leasing agreement) dealt only with section 3.3.5: the decision to shut down the DC100. It is a little strange that Seven Sydney criticised the referee's findings in this subsection, without criticising his findings in the preceding subsections of section 3.3. It is equally strange that Seven Sydney criticised the referee's findings in section 3.3.5, but directed no criticism to his findings in sections 3.3.6, 3.3.7 and 3.3.8 (which dealt with matters that, individually and cumulatively, struck at the credit of a vital Seven Sydney witness, and at the credibility of its case as to why it decided to terminate the DC100 leasing agreement). 62 In dealing with section 3.4 of the report (Performance of the DC70), Seven Sydney criticised each of the first eight subsections, 3.4.1 to 3.4.8 (pp 64-82 of the report) individually. It did not direct individual criticisms to sections 3.4.9 to 3.4.12. Again, I find that strange, given that those sections were vital to the commercial case put by Seven Sydney and to the referee's conclusion, in section 3.4.13, that the DC70 was fit for its intended purpose. 63 Only one subsection of section 3.5 (dealing with performance of the DC100) was criticised. That was 3.5.9, in which the referee concluded (among other things) that Seven Sydney had greatly exaggerated its allegations of lack of reliability. (It should be noted that the parties are agreed that in para 105, where this conclusion is expressed and justified, the word "unreliability" in the second line should read "reliability".) It is, once more, a little strange that Seven Sydney should criticise section 3.5.9, which contains the relevant conclusions, without criticising any of the factual findings and analysis in sections 3.5.1 to 3.5.8 on which those findings are based. 64 Seven Sydney directed no criticism to the referee's findings in section 3.6 (which dealt with service and support). However, it returned to form in its analysis of section 3.7 (dealing with operation of the presses). Each of sections 3.7.1 to 3.7.5 (pp 119-125 of the report) was criticised individually. 65 Section 3.8 of the report dealt with testing of the DC100. Seven Sydney criticised the referee's findings at sections 3.8.1 and 3.8.2 (dealing with recommissioning and testing at Seven Sydney's premises). Further, it seems, the criticisms were intended to extend to some of the referee's findings in section 3.8.3 (dealing with testing at Trendsetting's premises). 66 Seven Sydney's written and oral submissions were supplemented by two further sets of written submissions, one entitled "Summary of deficiencies apparent from the referee's report itself" and the other entitled "Summary of deficiencies apparent from evidence not referred to in the referee's report". The material contained in those further submissions does not require any change to the preceding summary of the structure and content of Seven Sydney's submissions. It does, however, support the view expressed in para [9] above of the nature of Seven Sydney's case on adoption. 67 Further, Seven Sydney complained that the referee had failed to deal with its claims of representation by silence, negligence, and reversal of onus under s 51A of the Trade Practices Act. It submitted that it had pleaded, never abandoned and referred in its final submissions to each of these cases, and that the referee had failed to deal with any of them. 68 Thus, Seven Sydney submitted, the flaws in the referee's report were so extensive that it should be rejected. Alternatively, it submitted, the findings that he had made justified the conclusion that neither the DC70 nor the DC100 was fit for its purpose or of merchantable quality. FXA's submissions 69 FXA submitted that, in substance, the case sought to be made before me by Seven Sydney was that the referee did not take sufficient account of Seven Sydney's submissions to him. This, I think, relates to the first, second and fourth categories that I have identified in paras [52], [53] and [55] above. FXA referred to the length of the hearing, the extent of the evidence and, in particular, to the testing process. As to this last matter, FXA pointed out that Seven Sydney's experts had not observed the operation of the DC100 at Trendsetting's premises, and that (no doubt as a result) FXA's experts were scarcely cross-examined on their evidence relating to that matter. It referred to Hull v Thompson [2001] NSWCA 359 where the Court, speaking through Rolfe AJA, said at [21] that prima facie, if there were no cross-examination of an expert witness (or indeed, most witnesses) there is no basis for the unchallenged evidence not to be accepted. (It may be noted that this proposition may yield to the facts of a particular case: see HSH Hotels v Multiplex [2004] NSWCA 302 at [82] and following.) 70 FXA submitted that each of the critical findings of the referee was amply justified on the evidence, and that it was a matter for him to decide, on each matter, the evidence that he accepted and the conclusion that he formed based upon it. It pointed out, in particular, the very significant issues as to credit, and as to the credibility of Seven Sydney's entire case, that were raised before the referee. 71 FXA submitted that it would have been almost impossible for the referee to deal in detail with all the material, in the way for which Seven Sydney contends. It submitted that it was not open to Seven Sydney "to re-canvass virtually every issue in the case", nor to attack the credit of FXA's witnesses (written submissions on adoption of the referee's report dated August 2004, para 17). 72 Turning to the individual criticisms made by Seven Sydney of subsections of the report, FXA submitted that it was inappropriate to take each finding in isolation (as, it submitted, the approach of Seven Sydney did). It submitted that, since the referee had drafted his report by reference to each and every one of the topic headings contained in Seven Sydney's submissions in chief, it could not be said that he had "ignored" any matter referred to in those submissions. 73 FXA submitted, in relation to many of the pieces of evidence that the referee was said by Seven Sydney to have "ignored", that there was other evidence inconsistent with it; and that, in any event, acceptance of that which was said to have been "ignored" in many cases would have required the referee to come to a different view than that which, by implication, he did as to the credibility of the relevant Seven Sydney witnesses. In other cases, Seven Sydney submitted that the evidence that the referee did accept (inconsistent with the evidence that he is said to have "ignored") was supported by contemporaneous documents and corroborated by other evidence. 74 In answer to Seven Sydney's submissions that, in certain subsections of the report, the referee had made findings that were not supported by any evidence, FXA referred to the evidence that, it submitted, supported the relevant findings. It referred also to its submissions to the referee in which it had referred him to that evidence. Analysis General observations 75 Both on reading the report prior to the commencement of the adoption hearing, and upon rereading it thereafter with the benefit of counsel's submissions, I formed the view that it showed a thorough, analytical and scientific approach to the assessment of the issues that were referred to the referee for enquiry and report. The structure of the report makes it, in some ways, a little difficult to follow; particularly because one is required in effect to cross-reference the various sections to obtain a fuller understanding of the referee's reasoning process. However, that is no criticism of the referee. The structure of the report follows, as I have noted, the structure of Seven Sydney's submissions in chief to him. In a lengthy and complex case, involving a very substantial body of evidence, I think that it was appropriate for the referee to consider the issues by reference to the topics proposed by Seven Sydney, and to decide it by reference to the issues that it had posed. 76 A reading of the report against the submissions put by the parties to the referee satisfies me that he turned his mind to, and decided in a rational way, the matters that they had put to him for his consideration. 77 Accordingly, I start with a disposition towards acceptance of the report. The documents marked for identification 78 As I noted in para [6] above, Seven Sydney tendered four lever arch folders of extracts from the evidence. By bulk, and allowing for duplication and the fact that some of the material tendered had been rejected by the referee, what was tendered would appear to comprise about 5% of the totality of the evidence before the referee. 79 In Foxman at 620, Cole J said that the principles enunciated in Super did not require a court considering adoption of a report to revisit all of the evidence before the referee, nor did they contemplate the court having regard "to some selected portions [of the evidence] favourable to the party opposing or supporting adoption": particularly where findings of fact were, in part, based on considerations of credit. I respectfully agree. 80 The tender of the material to which I have referred might have made good the proposition that the referee "ignored" evidence: in that it may have indicated that there was evidence before the referee that he had not referred to in his report. This, of itself, could hardly advance Seven Sydney's case. It is obvious that the referee did not expressly refer to a huge amount of the evidence that was before him. It would have been impossibly burdensome for him to have done this; and the utility of the exercise would have been inversely proportionate to the burden. There is no principle requiring him (or any other referee) to do so. 81 Nor could the tender show that the evidence in question was "uncontradicted". By definition, that proposition could only be made good either by concession (absent in the present case) or by an examination of the entirety of the evidence. 82 In my judgment, the approach taken by Cole J to the tender of selected portions of the evidence is applicable in this case. If it is appropriate to revisit factual findings made by a referee then the exercise should be undertaken with the entirety of the evidence bearing on the factual findings that are to be revisited. In the present case, given the submissions for Seven Sydney, that would require the Court to consider the entirety of the evidence put before the referee. Neither party tendered the 66 lever arch folders that were said to comprise the substantial part of that evidence. I do not think that the exercise is one properly to be undertaken by considering a small percentage of the whole. It might be otherwise if FXA conceded that the four lever arch folders contained the entirety of the material relevant to the challenges raised by Seven Sydney. But it did not. Indeed, in most but not all cases, it submitted that there was other evidence upon which the referee was entitled to (and, it said, did) rely in reaching the impugned findings. 83 As I have sought to make plain, each party launched significant attacks on the credit of the other's witnesses, and on the credibility of the other's case. It is apparent that the referee considered those attacks. It is in my judgment inescapable that his findings of fact were, to a very substantial extent, influenced by his views on credit. In those circumstances, the tender of a small portion of the entirety of the material before the referee could scarcely assist, since it would not give any indication of the credit issues. (The problem is, no doubt, exacerbated because it is unlikely that Seven Sydney would have chosen to tender the material reflecting adversely on the credit of its witnesses; but even if it did, the general point that I have made is not affected.) 84 For those reasons, I have concluded - as I indicated in para [7] above - that, with two exceptions, the tender of the four lever arch folders of extracts from the evidence before the referee should be rejected. The exceptions relate to two hard copy versions of a PowerPoint presentation relating to the DC70. 85 I now turn to the various categories of the criticisms made by Seven Sydney in its submissions. First category: the referee "ignored" evidence The submissions generally 86 I do not think that this challenge - which, as I have said, is the largest single category - is made out. Leaving aside, for a moment, the question of whether or not the evidence said to have been ignored was, in a particular case, "uncontradicted", an assessment of the challenge requires two matters to be considered. I have already referred to them, but it is desirable at this point to restate them. 87 The first is that it is neither possible nor necessary for a decision-maker such as the referee to state every detail of the reasoning that leads to a particular conclusion, or every detail of the evidence relied upon. To do so would be, as well, burdensome and unhelpful. 88 The second is that the referee followed, topic by topic, the structure of Seven Sydney's submissions to him. FXA's written submissions in reply to those of Seven Sydney followed the order of Seven Sydney's written submissions in chief. Thus, from Seven Sydney's submissions in chief and FXA's submissions in reply, the referee had a topic by topic statement of what Seven Sydney said was the relevant evidence, and (where FXA desired to make a particular point) a corresponding reply. In addition, of course, he had FXA's written submissions in chief; and he had the not insubstantial oral submissions for each party. 89 The referee's failure (if such it be) to mention a particular matter raised in submissions does not, of itself, vitiate his conclusion upon a topic to which that matter is said to be relevant. It therefore seems to me in principle that this first category of Seven Sydney's submissions is less than persuasive. But when one considers the second matter to which I have referred - the structure of the report mirroring the structure of Seven Sydney's submissions in chief - the attack becomes unsustainable. It is difficult, to the point of impossibility, to accept that the referee on the one hand read and followed Seven Sydney's submissions in chief but, on the other, ignored evidence referred to in them. The irresistible inference (arising from this and from what he wrote) is that he considered not just the topic headings but the detail that followed them. 90 The reality, as a detailed reading of the report shows, is that the referee made findings on each of the topics referred to by Seven Sydney but that he set out, in his findings, only what he thought was relevant to an overall conclusion on the issues submitted for his decision. In doing so, he referred (in some cases, by direct quotation, in others by paraphrase, and in most cases by footnotes) to the evidence that he considered to be material. 91 Careful attention to Seven Sydney's written and oral submissions leads to the conclusion that Seven Sydney is seeking to reargue - in effect, to conduct an appeal by way of rehearing from - the great bulk of the referee's report. The submissions (in this category and others) do not limit themselves to the well recognised grounds upon which adoption of a referee's report may be opposed. They seek the opportunity to be heard twice, on matters where Seven Sydney had every opportunity to be heard before the referee; and, in so doing, they effectively treat the proceedings before the referee as a warm up for the real contest in this Court. 92 I do not accept Seven Sydney's submission that numerous subsections of the report are vitiated by the alleged failure of the referee to consider evidence. On the contrary, I think, the report shows a proper and analytical approach to the subject matter of those subsections. 93 What I have said so far deals with the submissions generally. I now turn to the specific submission in relation to the PowerPoint presentation and section 3.1.13 of the report. Section 3.1.13 94 In this section of the report, the referee dealt with a PowerPoint presentation said to have been given by FXA to Seven Sydney. I say "said to have been given" because, as the referee found, the document that was first put in evidence (and that Seven Sydney initially relied upon in its submissions on adoption) was not a copy of the presentation actually made, but one created (apparently, by Seven Sydney) from another PowerPoint presentation made by Seven Sydney and FXA jointly. Seven Sydney subsequently located, and put into evidence, a copy of the earlier PowerPoint presentation. Those documents were identified as POH 1 (the reconstructed presentation) and POH 2 (the original presentation). They are found behind tab 3.1.13 in volume 1 of the documents tendered by Seven Sydney. They will be admitted as exhibits in the adoption hearing. 95 The document (in both forms) included a graph that purported to compare the unit cost of digital printing with the cost of offset printing. That graph apparently showed that the cost per unit of digital printing was lower than that of offset printing for lower print runs but that, after a run of about 2,900 impressions, the cost per unit of offset printing was lower than that of digital printing. (I say "apparently" because the graph as reproduced in POH 1 and POH 2 is not crystal clear; but this explanation was given from the Bar table without demur.) 96 The referee referred to 2,900 copies as a "break even point". Seven Sydney criticised this finding. In my view, if the referee were intending to say that a print run of 2,900 was the point at which digital printing "broke even" when compared to offset printing, then he was wrong. Of course, if he were intending to say that it was the point at which offset printing broke even with digital printing, then he did not err; but the relevance of that finding is less than clear. I think the better view is that the referee did err. But this is of little significance. Firstly, there was no suggestion in Seven Sydney's submissions on adoption that FXA represented the graph to Seven Sydney as showing a "break even" point of 2,900 copies. Secondly, there was no suggestion in Seven Sydney's submissions on adoption that Seven Sydney so understood it. Thirdly - and particularly because the version of the PowerPoint presentation originally tendered was one created jointly by Seven Sydney and FXA - it is likely in fact that Seven Sydney had derived its own, correct, understanding of the graph without relying on anything said by FXA to induce that understanding. 97 The referee said further, of the graph in question, that he read it "as general information on the relative capabilities of digital presses compared with offset presses". Seven Sydney criticised that, saying that the graph was "as much a representation about the DC70 press as about digital presses generally since the presentation was made in the context of the prospective sale of that press". It is quite clear, when one looks at the PowerPoint presentation (in either version) as a whole, that the graph was a representation about digital printing generally. That is apparent from the graph itself, which gives as the source of data not anything that could be taken to relate to the DC70, but a publication dated in July 1996 which was "based on research at R.I.P.". Again, when one reads the document as a whole, other statements in it - in contrast to the graph - are directly referable to the DC70 in particular rather than to digital printing generally. 98 There is other material contained in the PowerPoint presentation that is ignored by Seven Sydney. It includes the assertion (in the reconstructed version, prepared by Seven Sydney and FXA jointly) that: "Variable information printing [is] arriving soon." 99 That is entirely consistent with FXA's case that it had told Seven Sydney on a number of occasions, and Seven Sydney clearly understood, that variable data printing was not yet available on the DC70 but would "soon" become available. 100 Seven Sydney submitted that other pages of the reconstructed document "illustrated a high degree of variable data" and that the referee "wrongly ignored" those references. In the context of the warning to which I have referred, that could only have been a reference that variable data capability of the represented level would be available "soon". It cannot amount - as Seven Sydney appears to submit - to a representation that such a level (or any level) of variable data capability was available at the time either of the PowerPoint presentations was given. Second category: failure to resolve conflicts; ignoring submissions as to credibility 101 It will be apparent from what I have said already that, in substance, I think that the referee did resolve conflicts in the evidence. No doubt, he could have expressed his reasons in much fuller terms, referring, in detail, to the evidence that was in conflict and, in equal detail, to the reasons why he accepted one aspect of it in preference to the other. It might have been desirable for the referee to have been slightly more discursive in expressing his reasons for making the findings that he did where there were conflicts. Nonetheless, I do not think that it can be said that he failed to resolve the conflicts. It is clear, on reading the report, that he did: at least, where he regarded them as being significant. 102 Equally, it is clear that the referee was influenced by questions of credit and credibility. (I use the word "credit" to refer to the credit of particular witnesses, and the word "credibility" to refer to the credibility, or "believability", of the cases for which each party contended.) He referred on a number of occasions to aspects of the evidence of Seven Sydney's witnesses that could be regarded as unsatisfactory. He referred also to aspects of Seven Sydney's case (including, by way of example only, its failure to complain at any material time of the matters alleged in its summons) that might be thought to reflect on the credibility to be accorded to the case that it sought to make out. 103 The parties' written submissions show that questions of credit and credibility were central. FXA's written submissions to the referee contained trenchant criticisms both of Seven Sydney's principal witnesses and of its case as a whole; and Seven Sydney dealt with FXA's witnesses and case in like manner. It is impossible to accept that the referee took no account of those submissions. It follows, not only that he resolved conflicts in the evidence but that, where appropriate, he did so by reference to questions of credit and credibility. It also follows, I think, that in doing so he took account of the submissions made to him by each of the parties on those topics. No doubt, he was also assisted by his observations of the witnesses whose credit was in issue. Third category: findings not supported by the evidence and related submissions 104 It is, I think, clear that if a referee makes a finding that is not supported by any evidence then there is an error of law that is capable of enlivening the discretion to reject the report. It is therefore necessary to consider the submissions individually. 3.1.14 Comparisons between DC70 and Xeikon DCP32/D 105 Seven Sydney submits that the referee concluded, in paras 58 and 61 of this section of his report, that two representatives of Seven Sydney based their conclusions on the capabilities of the DC70 on their observations of other presses at other premises. Seven Sydney submits that those findings are not supported by evidence and were never put to the witnesses in their cross-examination. 106 The paragraphs of the report in question read as follows: "58. I have formed the opinion that the impressions gained by O'Hanlon[] of the capabilities of the DC70 were obtained from his prior observation of the performance of the Zeikon DCP/32D press with a Barco collator at Print Central [] and a similar Zeikon press demonstrated to Seven Sydney representatives by Edward Keller. Those observations appear to have been of a significantly different press configuration from the DC70 specification in the documents annexed to his affidavit. None of the Seven Sydney executives saw a DC70 demonstrated by Fuji Xerox or in operation anywhere before they made the commitment to purchase the press. … 61. Markland [] expressed a similar understanding of the capabilities of the DC70 based on materials other than representations made by Fuji Xerox. He made reference [] to the demonstration of variable data printing on the DCP/32D at the premises of Edward Keller. He explained [*] that it was his understanding that the DC70 had capabilities that were at least equal to the variable data capabilities of this Xeikon press that he had seen in operation."

The asterisk in each case represents a footnote referring to a particular part of the evidence. Messrs O'Hanlon and Markland were key witnesses for Seven Sydney. 107 The first thing to observe is that in neither paragraph does the referee say (in Seven Sydney's words) that either witness "based his conclusions" on the relevant observations. What the referee says is that each gained an impression, or an understanding, based on prior observations (in the case of Mr O'Hanlon), or on materials other than representations made by FXA (in the case of Mr Markland). 108 In other paragraphs in section 3.1.14 of the report, the referee deals with other aspects of the evidence that bear on the question of the information available to Messrs O'Hanlon and Markland to enable them to form some impression of the relative capabilities of the DC70 and other presses. It is not appropriate to consider paras 58 and 61, in the way that Seven Sydney does in its submissions, without regard to that context. 109 Equally, it is apparent from the footnotes that the referee did base his conclusion on evidence given by Messrs O'Hanlon and Markland respectively. Whether or not someone else, considering that evidence, would come to the same conclusion is immaterial: at least where there is no submission of perversity or manifest unreasonableness. 110 It is clear, from the way the referee expressed his conclusions in paras 58 and 61, that they were based on his consideration of the entirety of the relevant evidence and on his views of the credit of the two witnesses. Thus, it is significant that in the same subsection, from paras 62 on, the referee considered what was in effect an allegation of recent fabrication made by FXA against Seven Sydney. He also considered the evidence of FXA's witnesses in which they denied making representations as to comparisons between the DC70 and other presses. In para 69, he accepted that evidence, finding "that there is no reliable evidence that Fuji Xerox represented to Seven Sydney that the DC70 … had performance or capabilities equal to a DCP/32D … ". The referee's finding necessarily indicated that Messrs O'Hanlon and Markland must have got their understanding from some source other than representations made by FXA. In those circumstances, the particular opinions expressed by the referee in paras 58 and 61 can be seen as the commonsense result of his analysis. 111 The first aspect of the criticism of those paragraphs (leaving aside that the criticism itself misrepresents what the paragraphs say) is not sustainable on the face of the paragraphs. Nor is it sustainable when the paragraphs are put in context. The second takes the matter no further; indeed if (as the referee indicates) the findings are based on the evidence of Messrs O'Hanlon and Markland respectively, it is difficult to understand why it was necessary to put that material to them again in cross-examination. 3.1.21 6 January 1998 meeting 112 In para 137 of the report, the referee found, among other things, that as at 6 January 1998, "the date for delivery of the variable data software was not of immediate concern to Seven Sydney." Seven Sydney submits that that finding "is unsupported by any evidence accepted by [the referee] - whether directly or by reasonably open inference." 113 Again, the complaint under this heading does less than justice to the report. The referee considered in detail the evidence of what was said at the meeting, and made findings on it. The evidence that was available to him included (as FXA had submitted forcefully) the lack of any complaint whatsoever when the DC70 was delivered without variable data capacity. Although that relates to a point in time three months after the January meeting, it was open to the referee to infer that it cast light on Seven Sydney's position at the January meeting: particularly in view of his reasoning in paras 135 and 136. 3.1.31 Introduction of Mr Plant 114 In para 179 of the report, the referee noted that Mr Plant of FXA "confused Seven Sydney with his advice on variable data software for the DC70". Seven Sydney submits that the referee thus "inferentially found that the confusion was unintended", referring back to the referee's finding that Mr Plant was probably not aware that the DC70 was not enabled for variable data applications. This inferential finding, it says, is not supported by any evidence. 115 I do not think that the inferential finding that Seven Sydney attacks is in fact to be inferred on a fair reading of the relevant subsection of the report. For this reason alone, I do not think that the criticism goes anywhere. But there is another reason for thinking that it does: because, as Seven Sydney submitted, the inferential finding "missed the point since Seven's submissions did not turn on this". 116 It is difficult to understand why a nonexistent finding, not based on any evidence, was constructed for the sole purpose of being attacked, when the nonexistent finding was irrelevant. 3.4.3 Hardware Failures 117 Seven Sydney paraphrases the relevant finding of the referee as "that the DC70's hardware failures were no worse than those of comparable machines". It then submits that the evidence relied upon by the referee "is not reasonably capable of supporting this finding". Although this is not in strictness a "no evidence submission", it is convenient to deal with it at this point. 118 In fact, as FXA submits, Seven Sydney's paraphrase misstates, in a significant way, the relevant finding, which is set out in para 48 on page 70 of the report: "I find from this evidence that the incidence of hardware failures on the DC70 was probably no different from what could be expected from other Xeikon print engines performing similar types of printing work." 119 Firstly, the referee was talking about the incidence of hardware failures. The paraphrase would appear to refer to the actual failures (ie, their nature and characteristics) themselves. Secondly, the paraphrase omits the qualification "probably". Thirdly, it omits the qualification "performing similar types of printing work". 120 Seven Sydney asserts that the finding was based entirely on the evidence of Ms Hingeley. However, reading the relevant subsection of the report, it was clearly based on other evidence, including that of Mr Davey and documentary evidence. 121 FXA submitted that neither Ms Hingeley nor Mr Davey was cross-examined on this aspect of their evidence. Seven Sydney did not controvert this in either oral submissions or written submissions in reply. I therefore take it that I may proceed on the basis that, as FXA submitted, Ms Hingeley and Mr Davey were not cross-examined on this aspect of their evidence. That might explain why the referee appears to have found their evidence convincing. 122 Seven Sydney does not explain why it is that the evidence referred to by the referee in this subsection of his report was not reasonably capable of supporting the finding that he actually made (as opposed to the different finding that it says he made). On re-reading the subsection, it is apparent that the paragraphs preceding para 48 do lead to the conclusion expressed in para 48. On that basis, Seven Sydney's submission is not made good. 3.4.4 Downtime 123 In para 77 on page 74, the referee concluded that the availability of the DC70 was in the range of 90 to 95%: ie, that it was unable to be used, because of breakdowns or unscheduled call-outs, for between 5 and 10% of available single shift work time (see para 74). The referee concluded that this "should have been an acceptable level for viable commercial operation of the press." 124 The finding as to 90 to 95% availability is criticised, but there was evidence on which the referee could reach this finding and his analysis in the relevant subsection of the report (paras 49 to 76 at pp 70-74) considers it. The referee rejected evidence of one of Seven Sydney's witnesses, Mr Stock, that was said to have been unchallenged in cross-examination. Even if this were so (and FXA submits that Mr Stock was effectively challenged), it would not, necessarily, mean that the unchallenged evidence should be accepted: Bulstrode v Trimble [1970] VR 840, 849; HSH Hotels at [86]-[87]. 125 The submission as to commercial viability involves restating the conclusion that is actually set out in para 77 of the report into a conclusion that the DC70 was not fit for the purpose for which it was sold, which purpose required it to be available for on demand printing. It is that recast conclusion, rather than the conclusion actually expressed by the referee in the paragraph in question, that is said to be unsupported by evidence. 126 I propose to deal with the conclusion that the referee expressed, rather than with the ultimate conclusion that depends on it, and into which (in this part of Seven Sydney's submissions) it was recast. 127 The evidence recounted by the referee included, among many other things, evidence dealing with the use that Seven Sydney made of the DC70 and the extent to which its unavailability interfered with that use. Accepting (as Seven Sydney submits) that unavailability for breakdowns and unscheduled call-outs is likely to be unexpected rather than planned, it does not follow that the level of availability that the referee found the DC70 probably had was not adequate for viable commercial operation. 128 The level of availability would only be insufficient for viable commercial operation if, for the press to be commercially viable, Seven Sydney required a higher level of availability. There was no evidence that this was so; and, indeed, there was evidence that if Seven Sydney had the necessary volume of work (which it did not at any point have), then the machine could have been commercially viable at a much lower level of availability. 129 In truth, the referee's conclusion reflects not only his finding as to the level of availability of the DC70 (and his findings as to the service downtime of other machines in other businesses), but also his analysis of Seven Sydney's failure to attract the kind of business that it needed to operate the DC70 successfully and profitably. 130 Even if it is appropriate to do as Seven Sydney has done, namely translate its criticism of the actual finding in para 77 to the finding of fitness for purpose, the criticism cannot be sustained. It does not follow, from the fact that the business was an "on demand business" that 90 to 95% availability automatically rendered the DC70 unfit. Again, it would be necessary to show that on demand printing work required the machine to be available for 100% of the time. No machine would be: if only because of the need for downtime in relation to regular maintenance and planned services. For an availability of 90 to 95% to be inconsistent with the purpose of on demand printing, it would be necessary to show that unavailability of 5 to 10% would require Seven Sydney to turn away such a volume of work that the DC70 could not be operated profitably. This is not a matter that could be said to be axiomatically correct. 3.7.1 Pre-flighting 131 This topic is dealt with by the referee in paras 4 to 9 at pp 119-120 of the report. Seven Sydney complains that it was not reasonably open to the referee to conclude that a failure to pre-flight caused any of the crashes complained of by it. 132 Pre-flighting was a software module used to check that the files for a job were available and, I think, complete and correctly assembled, before processing. The evidence of Seven Sydney's witnesses, as recounted by the referee, included an acknowledgment that pre-flighting "was part of a standard work flow that was the responsibility of pre-press operators" (para 5, p 119) but that it was not always used (ibid: see also paras 6 and 7, p 119). Mr Stock, one of Seven Sydney's operators, understood that "[i]f a file was incorrectly assembled, particularly with variable data, then … this would crash the machine on start up" (para 8, p119). It is clear from the referee's findings that pre-flighting was intended to detect, among other things, whether a file was incorrectly assembled. 133 It follows that there was evidence, coming from Seven Sydney's operators, that supported the relevant conclusions of the referee. Those conclusions were set out in para 9 at p 120 as:

(1) Customer files were not always checked (ie, pre-flighted);

(3) The failure to use pre-flighting was an operator error. 134 Each of those conclusions was supported by the evidence as it was recounted by the referee. Whether or not he accepted it, and whether or not he drew from it the conclusions that he stated, were matters for him. 3.7.3 Cutter delay setting 135 This is dealt with by the referee in paras 17 to 22 (pp 120-121) of the report. Mr Stock had denied that he changed the cutter delay timing. However, there was evidence, which clearly the referee accepted, that he had done this, and that it could have caused the cutter to break in operation. 136 The evidence referred to by the referee included that of Mr Stock; that of Mr Kouvas, a technician employed by FXA, who had dealt with Mr Stock in relation to this problem; and that of Ms Hingeley. 137 It is clear that the referee concluded from the totality of Mr Stock's evidence that Mr Stock had changed the cutter delay setting on at least some occasions. It is equally clear that the referee concluded from Mr Kouvas' evidence that this could cause the cutter to break, through a failure mechanism identified by Mr Kouvas and Ms Hingeley, and described by the referee in his report. Seven Sydney's criticism, that the referee did not identify the evidence of Mr Stock on which he relied and that there was no evidence that could support the finding, distorts and misinterprets the referee's reasoning. 3.7.4 Variable Data Jobs 138 This topic is dealt with by the referee in paras 23 to 32 at pp 121-122 of the report. Seven Sydney criticises the referee's finding in para 32, which it states was "a finding that crashes were caused by file errors that would not have been detected by pre-flighting". Again, Seven Sydney's submission takes out of context, and to some extent misstates, the finding: which was expressed in terms of probability and which, in context, was limited to some rather than all crashes of the press. 139 When para 32 is read in the context of the subsection in which it appears, it is apparent that the referee was expressing a conclusion (qualified in terms of probability) on the basis of the evidence referred to in those paragraphs. In truth, although the submission is put in terms that the finding was not reasonably open, it is no more than (as elsewhere) an attempt to reargue the underlying issue. 3.7.5 Operator maintenance of the presses 140 In paras 33 to 54 (pp 122-125) the referee set out his analysis of the evidence relating to the maintenance (or lack of it) provided by Seven Sydney operators for the DC70 and the DC100. He did this because part of FXA's case was that at least some of the problems experienced by Seven Sydney in the operation of the presses were the direct result of the failures by its operators to perform required routine maintenance that was the responsibility of the operators and in which they had been trained. 141 In para 52, the referee recorded that the high level of service calls for the DC70 during 1999 (in particular, for specified problems) "provided some support for the observations by service technicians of inadequate maintenance". That conclusion is said to be "not open on the evidence". However, the referee referred to the nature of the service calls. When the paragraph is read in context, the reasoning in para 52 is, in my view, supported by the factual findings made by the referee in earlier paragraphs of this subsection of the report. 3.8.3 Testing at Trendsetting in Canberra 142 This is dealt with by the referee in paras 42 to 68 at pp 132-135 of the report. (The related topics of recommissioning - s 3.8.1 - and testing at Seven Sydney - s 3.8.2 - are dealt with in paras 1 to 41 at pp 126-132.) 143 Seven Sydney complains that it submitted to the referee that the Canberra testing lacked utility, but that "this submission was ignored by the referee who found that the DC100 performed reliably under "commercial operating conditions" (paragraph 58)". This finding, Seven Sydney says, "was not reasonable [sic] open or, if it was open, was meaningless because of the limited nature of the "commercial" work performed." 144 The strength of the complaint that the finding was not reasonably open is, I think, shown by the alternative complaint that is made. Nonetheless, I propose to deal with it. 145 It is clear that the referee regarded the recommissioning and testing (at both Seven Sydney's premises in Sydney and at Trendsetting's premises in Canberra) as being of some significance. He dealt with the evidence relating to the Canberra testing at considerable length. The evidence recounted by him was clearly capable of supporting the conclusion in para 58 "that the D100 performed reliably under commercial operating conditions whilst at Trendsetting in Canberra." It was a matter for him whether he accepted that evidence and, if he did, what conclusions he drew from it. 146 The alternative complaint, that the testing was "meaningless", is not a "no evidence" or related submission. It was a matter for the referee to assess the value of the testing. Seven Sydney's complaint on the adoption hearing sits ill with the circumstance that its experts did not see fit to attend the testing at Trendsetting and that, as a result, it scarcely cross-examined the witnesses who gave evidence in relation to that testing. I see no reason to interfere with the referee's reliance on the testing. Fourth category: Seven Sydney's submissions "ignored" 147 For reasons that I have given, including particularly relating to the structure of the referee's report, I do not think that it is possible to conclude that the referee "ignored" certain of Seven Sydney's submissions. In truth, I think, Seven Sydney's complaint is that he did not agree with the submissions. That is not a recognised basis for rejection of a report; nor should it be. Fifth category: no cross-examination 148 As I have noted, Seven Sydney submitted from time to time that the referee reached conclusions that (so it submitted) had not been put to a relevant witness in cross-examination. On other occasions, Seven Sydney submitted, the referee had reached conclusions that were inconsistent (so it said) with unchallenged evidence of its witnesses. 149 As to the former submission: it is clear that there was a conflict between Seven Sydney and FXA on almost every issue in the case. In that context, I do not think that it matters if, assuming it to be the case, a particular conclusion on a particular aspect of the case was not put to a Seven Sydney witness who had given, or could give, evidence on the subject matter with which the conclusion is concerned. This is not a case where application of the rule in Browne v Dunn (1893) 6 R 67 required such painstaking cross-examination. It would be otherwise if (for example) the referee had made serious findings against a witness personally, without the relevant material having been put to the witness for him or her to deal with in cross-examination. But no such submission is put. In a case where the parties are clearly at issue, it is not incumbent on each party to put to the other's witnesses every minute detail of the differences between the two cases. There is no suggestion that the pre-trial process (exchange of statements and the like) was insufficient to enable the relevant witnesses every opportunity of understanding the other side's case. 150 As to the latter: I refer to what I have said in para [124] above, referring to Bulstrode and HSH Hotels. The referee's treatment of the expert evidence 151 From time to time, the referee referred to the expert evidence called by the parties. When he did so, he analysed it and expressed his concurrence (in most cases) with the approach taken by FXA's experts. 152 On each occasion where this was done, the referee's reasoning was clear. I see no basis for rejecting those parts of the report. Alleged failure to deal with the misrepresentation by silence case 153 Seven Sydney dealt with this, before the referee, both in submissions dealing with legal issues and in its factual submissions. As I have noted more than once, the referee structured his report to discuss, one by one, each of the topics raised in the latter document. Given that those submissions referred, among other things, to the misrepresentation by silence case, I find it difficult to see how the referee can be said not to have dealt with it. Presumably, for the reasons given in the next paragraph, he thought that it was effectively dealt with by the findings that he made on the balance of Seven Sydney's misrepresentation case. At most, therefore, the submission must be that he failed to deal with it explicitly. 154 In any event, the affirmative findings made by the referee confirm that this aspect of Seven Sydney's case lacked substance. He found that Seven Sydney's representatives knew, well before they were committed to the purchase of the DC70, that it would be delivered without variable data capability; and that it might take some time for this capability to be supplied. He found that they made no complaint about this. He found, in substance, that it played no relevant part in their decision-making at the time (as opposed to their reconstruction of that process in their evidence which, it is apparent, the referee found less than convincing). There was evidence, which apparently the referee accepted, that Seven Sydney had no real need for variable data capability when it acquired the DC70, and that such variable data work as it did thereafter (before the further software was supplied) was able to be done. 155 Those findings mean that any case of misrepresentation by silence, in relation to the variable data capabilities of the DC70, was doomed to fail. Again, it would have been helpful had the referee said so; but I do not think that his failure to do so is a ground for rejection in circumstances where his ultimate conclusion is clearly sustainable. Alleged failure to consider Seven Sydney's case of negligence 156 As I understand it, this related to the alternative characterisation of the alleged misrepresentations as negligent representations. If this understanding is correct, then the referee's findings were completely adequate to deal with this aspect of the case. He found, in substance, that the representations that were made (and I interpose that he did not find that all the representations alleged in respect of the DC70, or any of the representations alleged in respect of the DC100, were made) were reasonably made. 157 No doubt it may have been desirable, in a perfect world, for the referee to have referred explicitly to this. His failure to do so does not, in my view, vitiate his report to the point where it should be rejected. Alleged failure to consider the s 51A case 158 It is correct to say that the referee did not in terms refer to the s 51A case. However, his findings mean that it must fail. That is, again, because he found that such of the alleged representations as were in fact made, were reasonably made. It follows necessarily from his findings on those matters that FXA had satisfied any onus cast on it by s 51A of the Trade Practices Act. 159 Again, the referee's failure to refer expressly to this aspect of Seven Sydney's case cannot vitiate his report to the point where it must be rejected. Other considerations 160 It is apparent that the parties had every opportunity to put their cases to the referee. It is not suggested that either party was deprived of any opportunity to advance, through evidence or submission, any issue that it thought might favour its case or detract from the other party's case. 161 In substance, the submissions for Seven Sydney on adoption comprised an attempt to reargue the great bulk of the conclusions reached by the referee. In many cases, the complaint, when analysed, was simply that the referee had failed to accept Seven Sydney's submissions. Such an approach to a report might conceivably be justified if the party advancing it had not had a full opportunity to put its case to the referee. It cannot be justified in a case, like this, where it has had that opportunity. This, in other words, is a case where it is particularly important to bear in mind that the right to be heard does not involve the right to be heard twice. 162 Even where the submissions in terms appeared to relate to alleged errors of principle, rather than to reargument, they did not, either individually or collectively, constitute such a challenge to the report that, if made out, I would have been tempted to reject it. That is because, by focussing on individual paragraphs in the report, those submissions took the matters complained of out of context and elevated them to a position of importance that, in context, they could not sustain. 163 The only exceptions to this are the criticisms made of the referee's findings that the presses were fit for purpose and of merchantable quality. Clearly, those criticisms go to the heart of the report. But to be valid, those criticisms require a rejection of the underlying conclusions on which the referee based them. Even if the complaints of principle (to the extent that there were any) were upheld, this would not have warranted a rejection of the referee's conclusions as to fitness for purpose and merchantability, which were based not just on the conclusions alleged to be affected by errors of principle but upon the totality of his findings. 164 It may be accepted that, in a particular case, a point will be reached where the errors that are demonstrated, although each in itself of no great significance, are together sufficient to undermine the conclusions overall. In this case, assuming against what I have said that the errors of principle were made out, they would not have this effect. 165 At this point, I should note that, although I have dealt individually with the various categories of complaint made by Seven Sydney, more often than not an attack on a particular subsection of the report involved more than one category. In a sense, therefore, the complaints may be regarded as cumulative. However, considering them in this way, I do not think that any different conclusion is required. That is because, each category being in substance baseless, a combination of them (in the case of any one subsection of the report) cannot have greater validity. 166 Seven Sydney submitted that, if I came to the conclusion that the report should be rejected, I should re-examine the factual material for myself and decide the issues between the parties. Even if I agreed with the starting point of this submission - and I do not - I cannot conceive that it would be appropriate to decide contested questions of fact where, clearly, the resolution of those questions involves considerations of credit. It is apparent from the parties' submissions to the referee, and on the question of adoption, that this is such a case. 167 I should make it clear that in some ways the brevity with which the referee expressed his conclusions makes it a little difficult to follow, without detailed study and analysis, his reasons. In particular, his failure to address directly the question of credit is unfortunate. But I do not think for this reason that the matter should be returned to him. Far less do I think that it would be appropriate to commit the parties to another hearing, either before the referee or before someone else, which would presumably occupy substantially the same time, require consideration of substantially the same documents, and cost substantially the same (no doubt immense) amount of money. There may be cases where the defects in a report are such that the interests of justice demand a hearing de novo. This is not one of them. Conclusion and order 168 In my judgment, each of the challenges to the report fails. The report should be adopted. The result is that there should be judgment for FXA on Seven Sydney's claim against it and judgment for FXA on its cross-claim against Seven Sydney. 169 I direct the parties to bring in short minutes of order to give effect to these reasons. That is to be done within 14 days, at a time to be arranged with my associate. If the parties cannot agree on costs (of the reference, of the adoption hearing, or generally), I will hear argument at that time.

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