US MANUFACTURING CO PTY LIMITED v ABB SERVICE PTY LIMITED

The second delivery 10 The plaintiff also contended in the primary proceedings that it made a second delivery in response to a verbal order placed around mid-January 2003 by the defendant's maintenance foreman, Mr Danny Lynch. On 17 January 2003, the plaintiff claimed it delivered to the defendant at Winmalee six new gearboxes and two reconditioned gearboxes (these two reconditioned gearboxes being intended as gifts or a "sweetener" to encourage further orders). When the defendant failed to place any further orders and disputed the claim for payment with respect to the second delivery, the plaintiff claimed monies for all eight gearboxes (six new and two reconditioned gearboxes).

The matters that were common ground between the parties 11 It was common ground that the plaintiff had made two deliveries of gearboxes to the defendant, that the defendant had placed an original order for eight gearboxes in late 2002 and that the defendant had in fact paid for eight gearboxes in late December 2002. The defendant's case, however, differed in respect to the quantities of gearboxes delivered on each of the two occasions and the existence of the alleged second order in January 2003. 12 The defendant maintained that the plaintiff delivered only four of the eight new gearboxes it had ordered on 3 December 2002. By reason of the shortfall, it contended the plaintiff made a second delivery on 17 January 2003, delivering the balance of the original order, namely a further four new gearboxes, along with the two re-conditioned gearboxes. The defendant understood the two reconditioned gearboxes to be free of charge. Accordingly, on its case, the plaintiff had delivered a total of eight new gearboxes (and two reconditioned gearboxes) by way of the two deliveries.

The Local Court proceedings 13 The proceedings were heard in the Local Court on 22 April, 30 June, 1 July, 7 September and 17 October 2005. 14 The plaintiff called evidence from Mr Dogramaci, who the Magistrate referred to as the "principal witness for the plaintiff". In addition, it called evidence from Mr Thomas Dippel, Sydney Water, Plant Co-ordinator. Mr Dippel gave evidence as to the system in place for ordering supplies. The plaintiff also called Mr Kenneth Fitzpatrick who was Production Officer with Sydney Water. Mr Fitzpatrick gave evidence that no other purchase dockets were issued after the 3 December 2002 delivery for any further gearboxes. He also gave evidence as to the plant control and stocktaking system operative at Winmalee. 15 The defendant relied upon the affidavit and oral evidence of Mr Robert Mayrhofer, Sydney Water, Production Officer, Mr Danny Lynch, the defendant's foreman on site and Mr Brett Hayden, fitter employed by the defendant.

The Magistrate's decision 16 On 17 October 2005, the Magistrate delivered his decision. At p.12 of the decision, he stated:- "34. The plaintiff bears the onus of proving that the delivery in January 2003 was a second lot of 8 gearboxes and not 4 units outstanding from the first order. The plaintiff has failed to satisfy me that it is more probable than not. There will be a verdict for the defendant." 17 An examination of the decision indicates that the Magistrate considered the question as to whether the plaintiff had discharged its onus of proof by an analysis of the following matters:-

(1) The system in place for ordering, invoicing and taking delivery of equipment and the lack of a "document trail" in respect of the plaintiff's contention of having delivered six new gearboxes in January 2003.

(2) An examination of the conflicting accounts principally between Mr Dogramaci and the evidence given by Mr Lynch and Mr Hayden.

(3) A consideration and assessment of objective factors such as the complete absence of any requirement for six additional new gearboxes in January 2003 in addition to the eight new gearboxes the plaintiff claimed were delivered on 3 December 2002.

(4) The absence of any confirmatory documentary evidence from the manufacturer identifying an additional six new gearboxes which the plaintiff claims were obtained from the manufacturer and supplied to the defendant in January 2003. 18 In relation to the issue of the "paper trail", the evidence established that the following documentation was raised in respect of the delivery made on 3 December 2003:-

(2) A purchase order from the defendant to the plaintiff.

(4) The delivery docket signed by Mr Hayden upon delivery of the units on 3 December 2002. 19 There is no other evidence that confirmed that the eight gearboxes had been installed by 3 January 2003 and, indeed, the evidence of Mr Hayden and Mr Lynch was to the contrary. 20 In respect of the plaintiff's claim of having delivered six new gearboxes on 17 January 2003, the Magistrate noted and placed some reliance upon the absence of any documents such as those referred to in (1), (2) and (3) in paragraph [18] to support the claim. 21 In respect of the conflicting evidence given by Mr Dogramaci and that of Mr Lynch and Mr Hayden, the evidence for the defendant was as follows:-

(1) The evidence of Mr Lynch 22 Mr Lynch, in his statement dated 15 April 2005 (Exhibit 59), identified the Purchase Order 6000723 dated 11 December 2002 which requested supply of "gearbox x 8". 23 Mr Lynch said that, in December 2002, in response to a call from Mr O'Brien of Sydney Water, he made inquiries as to why the replacement of the eight reduction gearboxes had not been completed. He spoke to Mr Hayden after Christmas 2002 and was told by him that the defendant had received only four of the eight gearboxes that had been ordered. He said he rang Mr Dogramaci and told him that the defendant required the other four gearboxes. 24 He said that, by the end of 2002, four gearboxes had been installed. He again spoke to Mr Dogramaci in mid-January 2003 requesting the other four gearboxes. He said that on 17 January 2003, he personally took delivery of six gearboxes from Mr Dogramaci. Four of the six were subsequently used within about two weeks. The other two re-conditioned gearboxes delivered on 17 January 2003 remained unused. 25 The Magistrate observed that Mr Lynch said that the six units referred to on the delivery note dated 17 January 2003 represented the balance of four from the first order plus two reconditioned gearboxes which he said Mr Dogramaci was giving to the company for free. Mr Dogramaci's account, on the other hand, was that he had written "6 units" on the delivery note of 17 January 2003 to denote that six new gearboxes had been delivered and he did not make reference to the two re-conditioned gearboxes.

(2) Mr Hayden's evidence 26 Mr Hayden, in his statement dated 15 April 2005 (Exhibit 53), stated that on 3 December 2002, Mr Dogramaci attended at Winmalee and delivered only four of the eight gearboxes that had been ordered. He said that, other than the eight gearboxes in operation, there were only two other gearboxes on site in the maintenance shed. These were "critical spares" which were kept in case of break down or failure of the gearboxes in use. He said that there were already two spares on site before Mr Dogramaci delivered the four gearboxes in December 2002. He personally assisted in the installation of the four gearboxes delivered in December 2003. 27 Mr Dogramaci gave evidence for the plaintiff. The evidence for the plaintiff was as follows:-

(3) The evidence of Mr Dogramaci 28 Mr Dogramaci swore an affidavit in the Local Court proceedings on 14 April 2005. He gave an account of having received a telephone order from Mr Hayden. Annexure A to his affidavit is a copy of order 50439 indicating the number of units as eight. 29 Mr Dogramaci said that he delivered eight units in December 2002 and that he wrote on the delivery note "8 units" before handing it to Mr Hayden. This notation was the subject of cross-examination in which Mr Dogramaci changed his evidence, a matter noted by the Magistrate in the course of his decision, observing:- "… he contradicted this in his evidence when he said he wrote those words onto the document at a later time. He conceded that he contradicted himself. Mr Hayden, on the other hand, denied that the words '8 units' were on the delivery note that he signed. A carbon copy of that same delivery note has been tendered and the words '8 units' are not shown. It is clear that the words have been written onto the original delivery note and not carboned through to the copy. Mr Dogramaci has no feasible explanation for this. The defendant contends that he altered the document after delivery to improve his case." 30 The Magistrate in his decision (paragraph 32) observed:- "As to Mr Dogramaci's evidence, it is not without problems. He conceded that he had contradicted himself in some respects. His evidence in relation to the supply of the two re-conditioned gearboxes is one such example. In the statement of claim, the plaintiff claims that two gearboxes were to be provided free conditional upon the defendant giving an order number for the purchase of other equipment within one day. In neither Mr Dogramaci's affidavit nor his oral evidence was such a claim made. The statement of claim was prepared presumably on his instructions. Indeed, it is difficult to see on what basis the plaintiff claims in respect of the two re-conditioned gearboxes. The plaintiff concedes that they were unconditional gifts, presumably as a 'sweetener' as to further possible purchases by the defendant. If they were unconditional gifts, what is the legal basis on which the plaintiff says that the defendant is liable to pay for them? I don't see any. In my view, Mr Dogramaci's credibility is affected by some of these matters." 31 The learned Magistrate then went on to observe:- "As to the delivery docket. It is more probable that the words '8 units' were written on the document after it had been signed by Mr Hayden on behalf of the defendant. The evidence of the defendant was to neutralise any inference that the defendant had signed for the delivery of 8 units, contrary to its evidence that only 4 were so delivered at that time. The defendant says this was done by the plaintiff to wrongly bolster its case. There is merit in this claim." 32 The Magistrate observed that the defendant's requirement for gearboxes at the site was limited to eight with two "critical spares" at any one time. This was supported by the evidence given by Mr Lynch. The Magistrate observed that there was no evident reason or explanation as to why, in January 2003, the defendant would require, in addition to the eight gearboxes which Mr Dogramaci contended he had delivered on 3 December 2002, an additional six new gearboxes in circumstances in which there was only ever a requirement for eight working gearboxes with two critical spares. 33 The Magistrate also examined the question of whether the absence of a surplus of gearboxes at the site could not have been explained by a lack of proper management of equipment and the possibility of theft. He referred to the evidence and each of the relevant witnesses as to these possibilities and concluded (at paragraph 33(b)):- "… there is no evidence that any gearboxes were, in fact, stolen or missing from the Winmalee site. There were regular stock-takes done and nothing in the documents from the defendant or Sydney Water indicate any such equipment missing. The evidence is that such equipment can only be used at the Winmalee site and not at other sites maintained by the defendant." 34 In relation to documentation that might identify the six new gearboxes which the plaintiff contended were delivered on 17 January 2003, the learned Magistrate observed:- "12. Another method of proving the sale would be to prove the original purchase by the plaintiff from the manufacturer of relevant gearboxes, together with a stock entry corresponding to this purchase, and a subsequent stock entry showing the sale. One might expect there to be records showing serial numbers which could readily be traced. No such records were produced. The plaintiff produced documents to show that he had purchased similar gearboxes prior to the relevant time, but those documents were not shown to have related to the gearboxes, the subject of this claim."

The grounds of appeal 35 The plaintiff set out five grounds of appeal in the summons. At the hearing, Mr Hanrahan said that Ground 4 was not pressed. The grounds were in the following terms:- "1. That the Magistrate incorrectly applied the principle in Jones v Dunkel by placing an incorrect burden upon the Plaintiff to produce order forms or documents from a manufacturer as to the original purchase by the Plaintiff from the manufacturer of the goods supplied by the Defendant. 2. The Magistrate failed to give proper weight to the Plaintiff's own evidence of the delivery of 8 units and 6 units respectively in the light of the evidence from the Defendant's witnesses that at the commencement of the contract 2 units were in situ at the Defendant's premises and at the completion of the contract 2 units continued to be in situ at the Defendant's premises, those units not being reconditioned units. 3. The Magistrate failed to give proper reasons for the rejection of the Plaintiff's evidence in relation to the matters raised in ground 2 above. 4. The Magistrate misdirected himself in assuming a set of facts that 8 units were missing when there was no evidence for him to have made an assumption as he did. 5. The Magistrate erred in finding that the Plaintiff failed to establish that it was 'more probable than not' that the Plaintiff had supplied the goods and misdirected himself as to the onus of proof upon the Plaintiff." 36 As to the point raised in Ground 1, I do not accept that the Magistrate approached his fact-finding task by placing a burden upon the plaintiff to produce order forms or other documents from the manufacturer of the gearboxes concerning the original purchase by the plaintiff from it of the goods that were said to have been supplied to the defendant. 37 In the Magistrate stating as he did in paragraph [12] of the decision that one might expect there to have been records confirming the original purchase by the plaintiff from the manufacturer as well as documentation that would record serial numbers in order for the gearboxes to be able to be traced, the Magistrate, in my opinion, was doing no more than pointing to a manner or method by which the plaintiff might have sought to discharge its onus of proof. His observation, in my opinion, amounted to no more than recording that this manner or method had not been employed by the plaintiff, but in doing so, he did not state or suggest that the plaintiff had the onus of producing records of that nature. In particular, there is no statement by the Magistrate that he did not draw any adverse inference from the failure to produce such records. He was merely emphasising, in effect, the obvious fact that, absent documentary evidence, the plaintiff's case, in large measure, essentially turned upon Mr Dogramaci's credibility and the credibility of the defendant's witnesses. 38 The matters raised in the oral submissions for the plaintiff tended to focus on Grounds 3 and 5. In Mr Hanrahan's written outline of submissions dated 30 June 2008, he contended that the Magistrate had overlooked or failed to understand documents introduced into evidence by the defendant and, thereby, fell into error. He further contended:- "21. In short, the Appellant complains that the Magistrate failed to properly examine the objective evidence at hand and resorted rashly to an imprecise evaluation of the demeanour of witnesses in order to decide questions of fact. 22. USM contends that if the Magistrate had properly analysed the objective material as he ought, then it would have been unnecessary to rely so decisively on the negative impressions he gained form the demeanour of the Plaintiff by comparison with the 'plausibility' of 2 witnesses Heydon [sic] & Lynch for the Defendant. 23. USM alleges that the Local Court did not properly or fairly weigh up the evidence in the light of the admission made by the Defendant concerning the amount of the payment made before the second delivery and the other documentary evidence of 'changeout activities' at Winmalee which were tendered to the court. 24. The Magistrate did not make proper findings concerning primary facts nor draw inferences logically from documents and uncontrovertible business records, rather he failed to properly exercise his jurisdiction by declining to draw necessary inferences from those facts and relied instead only on the impression he gained from the demeanour of certain witnesses concerning the credibility of their testimony." 39 At the hearing, Mr Hanrahan stated that the principal point in the appeal was the plaintiff's complaint that the decision of the Magistrate was unsatisfactory, in that the plaintiff was unable to discern a reasoned explanation as to the basis and the reasoning that led him to the ultimate conclusion expressed in the decision. 40 Mr Hanrahan was asked, during the course of the hearing, to formulate in precise terms the errors of law in respect of Ground 3 in the summons. In that respect, he identified two matters:-

(1) The failure by the Magistrate to explain why the defendant's witnesses were preferred over the plaintiff's witnesses.

(2) The failure by the Magistrate to take account of Mr Mayrhofer's evidence (he being a defendant's witness) in resolving the conflict between witnesses for the plaintiff and for the defendant. In this respect, Mr Hanrahan relied, in particular, upon Exhibits 29 and 56. He said there was a failure by the Magistrate to express any reasons for not adjudicating on that matter. Had he done so, it was contended he would have been bound to have found that the plaintiff had discharged the onus of proof. 41 I do not accept, as was submitted, that these or other documents establish incontrovertible facts which carry the consequence that the Magistrate was in error in concluding that the plaintiff had failed to discharge the onus of proof on the question as to the number of new gearboxes that had been delivered by the plaintiff. 42 It is clear from the analysis undertaken by the Magistrate, as summarised above, that he not only relied upon the absence of a "documentary trail", but upon evidence that established there had not been, as the plaintiff had contended, a delivery of eight gearboxes in December and a further six new gearboxes on 17 January 2003. In evidence, Mr Fitzpatrick of Sydney Water confirmed that there was no further purchase orders raised for six new gearboxes after December 2002. 43 Mr Hayden's evidence, to which I have referred, established that there were only four gearboxes delivered on 3 December 2002. Mr Hayden was not shown to be an unreliable witness and it was open to the Magistrate to make an assessment of his evidence and to accept it, which he did. He was, in particular, entitled to accept Mr Hayden's evidence that he had spoken to Mr Dogramaci in January chasing up the four outstanding gearboxes due under the purchase order of 20 November 2002. 44 In circumstances in which Mr Lynch similarly was not discredited as a witness, it was open to the Magistrate to accept his evidence. That evidence, as earlier indicated, was to the effect that he attended on Mr Dogramaci on 17 January 2003 and took delivery of four new gearboxes from him as well as two re-conditioned gearboxes and, that he subsequently, used the four new gearboxes within the next two weeks. It was, in my opinion, open to the Magistrate to treat the evidence of Mr Lynch and Mr Hayden as affirmative evidence that supported the defendant's position.

Appeal as of right - judgment or order - "erroneous in point of law": s.73(1), Local Court Act 45 The plaintiff does not have a general right of appeal. The provisions of the Local Courts Act limited appeal proceedings in accordance with s.73(1) and s.74(1). 46 In Kalokerinos v HIA Insurance Services Pty Limited [2004] NSWCA 312, Bryson JA at [39] observed that limited rights of appeal are sometimes conferred in legislation in terms of "a point of law" or "a question of law". The expression "question" or "point" of law is wider than "error of law": Attorney-General for the State of New South Wales v X (2000) 49 NSWLR 653, [2000] NSWCA 199 per Spigelman CJ at [124] (Priestley JA agreeing). 47 The right of appeal under s.73 arises only in the event that the plaintiff establishes that the learned Magistrate's decision was "erroneous in point of law". 48 I will firstly refer to the principles concerning "an error of law" and then to the particular provisions of s.73(1). In RL & D Investments Pty Limited v Bisby (2002) 37 MVR 479, [2002] NSWSC 1082 at [12] to [14], Kirby J considered the relevant authorities on the question of "error of law". His Honour referred to dicta of Jordan CJ in Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 in which the Chief Justice stated a number of propositions at p.138:- "(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences or, (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or (c) if it has misdirected itself in law." 49 Kirby J referred to a number of authorities that established, his Honour stated, the following propositions:- "• First, there is no error of law in simply making a wrong finding of fact ( Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason CJ at 341), unless there is no evidence to support that finding.

• Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence. (Glass JA in Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155).

• Thirdly, it is not an error of law, even if the reasoning process by which the Court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in Regina v District Court: ex parte White (1966) 116 CLR 644 at 654. • Fourthly, there is a limited exception (which has no application in this case) in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment ( Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1 per Hope JA at 1 at Samuels JA at 5)." 50 Kirby J went on to state that there would, however, be an error of law in the circumstances described by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355 as follows:- "The question whether there is any evidence of a particular fact is a question of law. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions. So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law." 51 In Hanlon v McKay Investments Pty Limited [2001] Tas SC 37, the Court (Evans J) stated:- "6. The many authorities dealing with terms such as 'in point of law' and 'a question of law' are a testament to the difficulty of discerning the border between issues of fact and issues of law in some circumstances. No distinction is drawn in the authorities between a 'question of law' and a 'point of law', Barry v Shoobridge [1971] Tas SR 265, Burbury CJ at 269. 7. The term 'point of law' has been interpreted widely in England. In Edwards (Inspector of Taxes) v Bairstow [1956] AC 14, Lord Radcliffe, at 36, said:- 'When the case comes before the Court it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the Court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test.'" 52 In Hanlon (supra), reference was also made to the observations of Lord Denning MR in Instrumatic Ltd v Supabrase Ltd [1969] 1 WLR 519 wherein, at 521, it was observed:- "There are many tribunals from which an appeal lies only on a 'point of law': and we always interpret the provision widely and liberally. In most of the cases, the tribunal finds the primary facts (which cannot be challenged on appeal): and the question at issue is what is the proper inference from those facts. In such cases, if a tribunal draws an inference which cannot reasonably be drawn, it errs in point of law, and its decision can be reviewed by the Courts. That was settled, once and for all, in Edwards (Inspector of Taxes) v Bairstow … In other cases, the question is whether, given the primary facts, the tribunal rightly exercised its discretion. In such cases, if the tribunal exercises its discretion in a way which is plainly wrong, it errs in point of law, and its decision can be reviewed by the Courts." 53 Accordingly, for the purposes of the present proceedings, it is important to be clear as to the true nature and scope of the available appeal to this Court and the authorities to which I have referred assist in this respect. 54 It is clear that an error in point of law may include:-

(1) A finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn.

(2) A finding that no person acting judicially and properly instructed as to the relevant law could have made.

(3) Where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General (supra). 55 In Porican v Australian Consolidated Industries Ltd (1979) 2 NSWLR 419, the Court of Appeal, considering a provision that stated an appeal was available only as to a question of law stated:- "There was evidence both ways and his Honour was not persuaded that a causal relationship had been established. It was argued that he was guilty of an error of law, because the reasons he gave for findings against the applicant involved a misconception of the evidence. Where, however, the party bearing the onus fails to persuade the tribunal of fact, an alleged error in the evaluation of the evidence, even if it extends to the point of perversity, is no more than an error of fact." (per Hope and Glass JJA at 422).

The issue of "objective" documentary evidence: Exhibits 29 and 56 56 There were two specific points to which Mr Hanrahan directed submissions. First, he contended the Magistrate, accepted the evidence of Mr Lynch and Mr Hayden without having examined and made findings in relation to three matters:-

(1) The significance of the document, Exhibit 29, which it was contended was evidence of eight, not four, gearboxes having been delivered on 3 December 2002.

(2) Entries in documents in Annexure D to Exhibit 56 and to entries in SBR Gearbox Changeout documents initialled by Mr Mayrhofer and forming part of Exhibit 56 and evidence given by Mr Mayrhofer upon those entries.

(3) Inconsistencies in the evidence of Mr Hayden and Mr Lynch. 57 Second, the claimed deficiency in the Magistrate's reasons for his decision (Ground 3: appeal grounds).

(1) Exhibit 29 58 Mr Hanrahan's submission was that Exhibit 29, "… ought to have carried significant weight which the Magistrate has dealt with in a most unsatisfactory fashion" (t.15). 59 Exhibit 29 was a document entitled "Winmalee STP, ABB Breakdown Response Log for Cost Period". It contained an entry dated 20 November 2002 "Order SBR gearboxes". There followed a series of columns. One column "completed by" contained the cost of $22,544 and the last column entitled "closed by" contained the date "03/01/03". 60 In relation to terminology appearing in these documents, Mr Fitzpatrick gave evidence in relation to the expression "closed by" in Exhibit 29. He confirmed that the document did not refer to the installation of the gearboxes but only referred to the purchase of them "purchase and the job completed". He added that "it refers to all the paperwork matches up, the hours, the money on the dockets and then it's closed by us" (Sydney Water) (transcript, 30 June 2005, pp.82 to 83). 61 Mr Mayrhofer also gave evidence about the matter. He said that the expression "closed by 3 January 2003" was "essentially that's an administrative thing to a sure payment to ABB as it was for the time. They would have given me the original order with all the costs labelled on that order and attached to that order". 62 The Magistrate referred to Exhibit 29 in paragraph 20 of his decision. It is clear that he was both aware of the document and that the plaintiff relied upon it. The criticism was that he did not accord it the significance which the plaintiff claims it had on the issue of the number of new gearboxes delivered in December 2002. 63 I do not consider that Exhibit 29 can be regarded as carrying the significance claimed for it. In particular, I do not consider that it warrants a finding that would outweigh or give rise to a doubt about the evidence of Mr Hayden or of Mr Lynch. On its face, It refers to an order for SBR gearboxes but does not expressly refer to eight gearboxes having been delivered. Moreover, it is a costing document for a period referred to as the "cost period" closed by 3 January 2003. 64 Mr Hanrahan relied upon Mr Mayrhofer's evidence in chief on 1 July 2005 at transcript, p.138 in relation to the documents:- "Q. Would you look at the item which is seven down dated 20 November 2002, order SBR gearboxes. Is any of the writing on that line yours? A. The two columns to the right, the final two columns, the dollar figure and my initials with the date and I closed off the work order. Q. The entry before description is order SBR gearboxes. Can you recall what you were intending to be conveyed when you said 'Closed by 3 January 2003'? A. Essentially that's an administrative thing to assure payment to ABB as it was for the time. They would have given me the original order with all the costs labelled on that order and attached to that order." 65 In cross-examination on that date at transcript it was put (pp.144 to 145):- "THOMPSON: Q. Would you have a look at exhibit 29 please? A. Yes. Q. You've given evidence that as at 3 January 2003 that action required had been satisfied? A. Yes. Q. The supplier was ready for payment? A. ABB was ready for payment. Q. ABB was ready for payment? A. Yes Q. That means does it that ABB had received the gearboxes as at that time? A. Yes, that was my understanding. Q. As at 3 January 2003? A. Yes. Q. Because Sydney Water wouldn't be paying any bills until the work had been done, would it? A. The goods had arrived, that's correct." 66 Mr Mayrhofer's evidence set out above does not, in my opinion, establish as unequivocally as Mr Hanrahan suggested that he was saying that the installation had been completed by 3 January 2003 and he did not clearly state that he knew or understood that eight, and not four, gearboxes had been delivered on 3 December 2002. 67 In re-examination at transcript p.152, Mr Mayrhofer indicated that he was not personally or directly involved in the delivery and his "understanding" was based on what he had been told. He gave evidence as follows:- "McMANUS: Q. Mr Mayerhaufer [sic] , you were asked some questions about one exhibit 29? A. Yes Q. The item you were asked about was the entry 20/11/2002 order SBR gearboxes and there's a dollar figure of 22544 and close by reference 03, sorry 3 January 2003. the question was put to you that one piece of information, the approve by day was 20 November 2002. You were asked had the gearboxes been received by that time and your answer was, 'That was my understanding'. When you say 'understanding' what do you mean by that? Did you have personal knowledge? OJBECTION. NOT APPROPRIATE FOR RE-EXAMINATION. ALLOWED. Q. Your answer was, 'That was my understanding'. Did you have personal knowledge of whether they had been received or not? A. I was assured at the time that they had. I didn't sight them myself but -- HIS HONOUR: Q. Sorry, I didn't hear that? A. I was assured at the time that they had. Q. You were sure or you were assured? A. Assured that they had and I had the documentation attached to the docket. THOMPSON: Your Honour, might I ask a question arising from that answer?

… BY LEAVE, FURTHER CROSS-EXAMINATION THOMPSON: Q. Who assured you, Mr Mayerhaufer [sic] ? A. Specifically I can't recall. More than likely Danny Lynch, Brett Hayden or Warren Norman. Q. Sorry, what was the third name? A. Warren Norman. Q. Who's he? A. He's the fitter that eventually took over from John. Q. John? A. John Ryan, our former resident fitter. Q. Warren Norman, thank you? A. Warren Norman." 68 The evidence made it clear that Mr Mayrhofer had no direct or personal knowledge of how many new gearboxes were delivered in December 2002. It was not, in my opinion, open to the plaintiff to rely upon his evidence as in some way superimposing the meaning or significance on Exhibit 29 which it claimed.

(2) Exhibit 56 69 The plaintiff relied upon documents contained within Annexure D forming part of Exhibit 56 as "objective" evidence. 70 A great deal of emphasis was placed upon the fact that the documents in Annexure D were tendered through the evidence of the defendant's witness, Mr Mayrhofer, and that he had initialled the documents. However, the prospective nature of them as programming documents does not enable them to be interpreted as if they were recording past events. 71 The last two pages of Annexure D to Exhibit 56 are entitled "SBR Gearbox Changeout". They identified the gearbox replacement work as commencing on 18 October 2002 and finishing on 27 December 2002 by which time the work would be 100% complete. Page 2 indicated completion by 30 December 2002. The argument was that these documents supported the conclusion that eight new gearboxes had been delivered on 3 December 2002 and had been installed by the end of December. 72 It was submitted for the defendant that the "SBR Gearbox Changeout" documents were clearly prospective programme documents and did not reflect retrospectively the completion of the work to which it referred. This submission was supported by the footnote, "please note, due to operations & weather conditions dates are subject to change". 73 I accept that it is clear from the documents that they related to a programme based upon a prospective timeline and they did not establish the actual completion of the work. 74 The Magistrate did not, as Mr Hanrahan observed, analyse Exhibits 29 and Annexure D in Exhibit 56 in detail. However, a fundamental question, however, is whether the failure to do so is capable of establishing an error of law or raises a mixed point of law and fact. 75 Given the nature of the documents and the evidence about them to which I have earlier referred, the question in the preceding paragraph must, in my opinion, be answered in the negative. The Magistrate was not required to consider every piece of evidence unless particular evidence in a document is probative and relevant to the issues. 76 I, for reasons stated above, do not see any basis for treating what were clearly prospective programming documents as open to the construction which the plaintiff sought to place upon them. The Magistrate's fact-finding was, as earlier stated, based, not upon an unquestioning acceptance of Mr Hayden and Mr Lynch, but on a level of analysis that involved a consideration of the evidence on matters of "system" and relevant events that together led to the conclusion that the plaintiff's evidence, including, in particular that of Mr Dogramaci, lacked the probative strength that was essential before the plaintiff could discharge its onus of proof. 77 In the course of submissions, it was stated that the plaintiff's complaint was that the Magistrate had decided against him by accepting the credibility of the defendant's witnesses, Mr Lynch and Mr Hayden over the evidence given by Mr Dogramaci. Mr Hanrahan stated:- "… It is that decision, and the way that the Magistrate handled that, that is the plaintiff's primary complaint about the manner in which this matter was decided, and it is a feature of the decision which is the most unsatisfying from the plaintiff's point of view in that it does not really give him anything to hold on to or to recognise or identify as something which is a reasoned explanation for how this state of affairs came about." (t.6). 78 Reference was then made to the observations made by the Magistrate at paragraph 32(e) of the decision under appeal, which follows the sub-heading "Inherent weaknesses in the plaintiff's case". It is in the following terms:- "32(e) There is no doubt that the plaintiff was paid for 8 gearboxes on 24th December 2002. there are several possible reasons for this. Firstly it could be because in fact 8 gear boxes were delivered on 3rd December. This is the reason advanced by the plaintiff. Secondly it may have been paid after a partial delivery of 4 gearboxes because there had been a history of dealing between the parties and Mr Dogramaci had promised to deliver the balance of the order fairly soon. Thirdly it may be that the accounts department prematurely authorised payment. The defendant would urge either the second or third possible reasons on the Court. The evidence does not enable me to determine that the first possibility is more probable than the others." 79 Mr Hanrahan submitted that the payment made in December was an "admission" by the defendant. He said the second and third possibilities referred to in this paragraph amounted to a single possibility. In relation to the Magistrate's statement, "the evidence does not enable me to determine that the first possibility is more probable than the others", the submission was:- "We say what the Magistrate has done here is abandon his duty to make proper inferences and decide in relation to specific facts, to make a determination based on all the evidence which was before him." (t.7) 80 Unless the Magistrate was compelled by other evidence, including documentary material tendered in evidence, to accept the plaintiff's contention that it had delivered eight gearboxes in December and that Mr Lynch had ordered a further six new gearboxes in January 2003, it remained a matter for him to evaluate all the matters to which I have referred above in determining whether the plaintiff had satisfied the onus of proof in establishing those matters. What the Magistrate said in the last sentence in paragraph 32(e) was simply that "the evidence" (that is all the evidence) did not enable him to be satisfied to the required standard that eight gearboxes were in fact delivered by the plaintiff on 3 December 2002. That did not involve, as was submitted, the Magistrate abandoning his duty. It was, in my opinion, a conclusion that was clearly open to him as a matter of fact following an analysis of all the evidence. The payment in December 2002, accordingly, was not capable of explanation only by the actual delivery of all eight gearboxes. I am, accordingly, of the opinion that the attack on this aspect of the Magistrate's decision is without substance. 81 The Magistrate was again in this context criticised for relying on Mr Lynch and Mr Hayden's evidence in making findings that led him to conclude in the way he did. Mr Hanrahan stated that Mr Lynch and Mr Hayden were the people:- "… who had been working there for the least time and who were most exposed to any allegation of misconduct, or the items being missing - in fact they were asked about these sorts of things - and they were probably most exposed to discipline in the event that the payment for eight was indeed inappropriate and had to be explained in some way by them." (t.7) 82 There was no evidence identified during the hearing of the appeal that would support any claim or suspicion that either Mr Hayden or Mr Lynch had been guilty of any impropriety or personal mis-management. 83 In relation to the evidence of Mr Hayden and Mr Lynch, there was criticism that the Magistrate did not evaluate their evidence sufficiently in that he did not deal with inconsistencies in their evidence. Reliance, in this regard, was made to the time at which they each respectively commented on or reported the shortfall in the delivery on 3 December 2002. 84 I have earlier referred to the evidence on this point. Mr Lynch, in paragraph 25 of his statement (Exhibit 13), said he spoke to Mr Hayden "after Christmas 2002" and inquired why the replacement of the gearboxes had not been completed. He said Mr Hayden, at that time, told him that the job had not been completed because the company had only received four gearboxes from Mr Dogramaci. 85 Mr Hayden, in his statement (Exhibit 63, paragraph 7), said that he knew, on 3 December 2002, of the shortfall in the delivery and said that he spoke to Mr Dogramaci pointing out to him that only four gearboxes had been delivered. I do not consider that any such inconsistency was of such moment or significance as to have caused the Magistrate to doubt the veracity or credibility of their accounts. It was, as Mr Stevenson SC for the defendant submitted, at least consistent with a divergence on a point of timing that suggested that they had not cross-checked their statements. Mr Hanrahan did not suggest that the inconsistency went to any particular matter of a critical significance in the scheme of things other than the submission made as to the Magistrate's general acceptance of the witnesses' credibility. 86 In arriving at his conclusion, the Magistrate was also entitled on the evidence to include in his reasoning process the question as to why the defendant would, as the plaintiff contended, lodge orders for a total of 14 new gearboxes. Had the eight gearboxes been installed by 3 January 2003, there was no explanation on the evidence as to why the defendant would order another six new gearboxes on 17 January 2003. Mr Hanrahan suggested that the possibilities included that "… Danny Lynch had ordered another eight without realising that the first eight had arrived …" (t.6). Mr Lynch, of course, gave a contrary account of the December delivery. 87 Further, I do not accept the submissions, for reasons I have stated, that the Magistrate's decision was "a decision based on a demeanour finding …". The decision was founded upon factual findings following an analysis of relevant evidence on the matters I have earlier identified.

Defendant's submissions on appeal 88 In the Written Outline of Respondent's Submissions on Appeal, the defendant outlined the reasoning of the Magistrate in coming to his conclusion that the plaintiff had not discharged its onus of proof (paragraphs 3 to 6). 89 Reference is there made to the fact that the Magistrate identified the reasons for the reservations that he expressed in accepting Mr Dogramaci, based on issues of credibility. In particular, the Magistrate referred to Mr Dogramaci's affidavit evidence about the words "8 units" he claimed he wrote on the delivery docket dated 3 December 2002 before handing it to be Hayden. There was no attempt by Mr Dogramaci to correct any error in this regard in his evidence in chief and it was only in cross-examination that it emerged that it was in fact after the delivery docket had been signed by Mr Hayden on behalf of the defendant that he wrote the above words. As the defendant observed:- "… his Honour considered that there was 'merit in [the] claim' that USM wrote the words onto the delivery docket later in order wrongly to bolster its case." (paragraph 5 of the Written Outline of Submissions) 90 Plainly an issue of credibility of this kind concerning the evidence of a key witness in relation to an important document was a matter that any tribunal of fact would be entitled to regard as significant in evaluating the overall credibility of such a witness. Mr Dogramaci had, in his affidavit, specifically made what was potentially a very significant statement It was not a true statement and, as I have stated, no attempt was made before cross-examination commenced to correct it. 91 In the Delivery Note concerning the gearbox delivery on 17 January 2003, the entry was "6 units" (Exhibit 14), as observed in the defendant's written submissions (paragraph 5(f)), Mr Dogramaci's evidence was that he wrote "6 units" because he was only charging for six gearboxes. However, the Magistrate considered, not unreasonably, that it was more likely that the delivery docket recorded the number of gearboxes that were actually delivered. Had Mr Dogramaci wished to record that he was delivering eight units, two of which were the re-conditioned "gifts", then it would have made more sense to write "6 gearboxes plus 2 re-conditioned gearboxes at no charge": decision, paragraph 33(d). The Magistrate's observations were well open to him and accord with a common sense interpretation of the facts. 92 These matters illustrate plainly enough that the primary issues for the Magistrate's determination were pure questions of fact and that they were questions that depended to a significant extent upon the credibility of witnesses, in particular, Mr Dogramaci's credibility. 93 I consider, as stated below, that there is substance to the submission made on behalf of the defendant that certain of the grounds of appeal (in particular, Grounds 2, 4, and 5) are concerned with matters of fact and that the grounds constitute an attempt by the plaintiff, in effect, to have this Court on appeal find that the Magistrate should have placed more weight on some aspects of the evidence and less weight on others. As the defendant submitted, an appeal which is limited to an error in point of law is not and cannot be directed to an exercise of that kind. 94 I also accept the submission made on behalf of the defendant (paragraph 10 of the written submissions), that there is no error in point of law by making a wrong finding of fact, nor by making a finding of fact contrary to the overwhelming weight of evidence, nor even if the reasoning process is unsound or illogical: R L & D Investments Pty Limited v Bisby (supra) at [12]. I have, notwithstanding, sought to examine the fact-finding process employed by the Magistrate in reaching his decision. I am of the opinion that there are no grounds that support the criticisms made of the findings and ultimate conclusion based upon them.

Whether there was an adequate statement of reasons 95 The plaintiff challenged the adequacy of the reasons given by the Magistrate for his findings and decision (Ground 3 of the grounds of appeal). 96 In determining this ground, it is necessary to have in mind the relevant principles by which the content of an adequate statement of reasons is to be determined. As observed by Meagher JA in Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 442, the requirement to provide reasons depends upon the particular matter. Similarly, the content of the reasons depends on the particular circumstances of the matter being considered by the Court. 97 Whilst it is a requirement for a judge to consider all relevant evidence, it has been accepted that it is plainly unnecessary for a judge to refer to all the evidence led in the proceedings or to indicate which of it is accepted or rejected: Mifsud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA. 98 Similarly, in Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 at 281, McHugh JA (as he then was) stated:- "In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If, for example, the only issue before a Court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turned simply on the plaintiff's credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding would not be enough." 99 In Beale (supra), Meagher JA at 443 stated that it followed that reasons need not necessarily be lengthy or elaborate: see also Sasterawan v Morris [2008] NSWCA 70 per Tobias JA at [33]. The content of the obligation is not, Meagher JA stated, the same for every judicial decision and no mechanical formula can be given in determining what reasons are required. His Honour further observed that there were three fundamental elements involved in a statement of reasons. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. 100 Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. 101 Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well. 102 In the present proceedings, it was made plain in the submissions for the plaintiff that Mr Dogramaci has a strong sense of dissatisfaction with the reasons given by the Magistrate. In particular, reference has been made to the alleged failure to expressly deal with particular documents (including Exhibits 29 and 56) and the failure, in light of that evidence, to evaluate the credibility of Mr Hayden and Mr Lynch. 103 There is a question as to whether or not a failure to provide reasons or the provision of inadequate reasons is capable of constituting an error of law. 104 In Sasterawan (supra) at [31], Tobias JA (Beazley JA concurring) approved the dicta of McHugh JA in Soulemezis (supra) at 281 in which his Honour stated:- "The issue, therefore, is whether the failure to explain the basis of the crucial finding of fact involves a breach of the principle that justice must not only be done but must be seen to be done. If it was, that is itself an error of law …. However in determining the issue which this appeal raises, great care must be taken that dissatisfaction with the finding of fact does not mislead the Court into holding that the learned judge has failed to give his reasons for his finding." 105 I am prepared to proceed upon the basis that more recent decisions of the Court of Appeal establish that a failure to provide adequate reasons is capable of constituting an error of law. 106 It does not automatically follow that because the reasons for a decision are inadequate, an appellable error has necessarily occurred. As Meagher JA in Beale (supra) stated, examination of nearly any statement of reasons with a fine-tooth comb would throw up some inadequacies and that, indeed, an appeal court will reserve any intervention to those situations in which it is left with no choice. His Honour stated that, in evaluating the statement of reasons, they must be looked at as a whole and the material inadequacies identified and considered. I now turn to whether or not, in the present case, the Magistrate's decision constituted an adequate or inadequate statement of reasons. 107 Whilst I accept, as Mr Hanrahan submitted, that there was no detailed analysis set out in the decision in relation to the documents, Exhibit 29, Annexure D in Exhibit 56 or to Mr Mayrhofer's evidence concerning them, an examination of the documents does not, as earlier stated, in my opinion, establish objective or incontrovertible facts favourable to the plaintiff's case. 108 The issues which the Magistrate had to decide were factual ones, namely, whether or not four or eight gearboxes were delivered on 3 December 2002 and the further issue as to whether or not there was second order made soon after (on or about 17 January 2003) for six further new gearboxes and a delivery of six new gearboxes in fulfilment of a second order. 109 I have given close consideration to the submissions that have been made both in writing and orally on behalf of the plaintiff as to the claimed inadequacies in the fact-finding by the Magistrate, the content of the reasons set out in his decision and to the decision itself. However, having done so, I do not consider that the Magistrate, in accepting the evidence of Mr Hayden and Mr Lynch and otherwise, failed in the judicial method he employed in making his findings of fact. Nor do I consider that he failed to provide an adequate statement of reasons. The decision did, in my opinion, deal with the essential factual matters that were central to the issues between the parties. I consider that the judgment is a logical and concise analysis and statement of the issues the parties presented for determination and the evidence concerning them and as to the findings made upon that evidence. I do not consider that any aspect in the statement of reasons to which I have referred above leads to the conclusion that his Honour's reasons failed to fulfil each of the elements identified by Meagher JA in Beale (supra). 110 I am accordingly of the opinion that the plaintiff has failed to establish that the decision is erroneous in point of law. 111 I have separately considered whether or not a basis has been established for leave being granted pursuant to s.74 of the Local Courts Act. 112 I have earlier noted the reference in s.74(1) of the Local Courts Act to a ground "… that involves a question of mixed law and fact …". It is conceivable that, in some circumstances, a question of mixed law and fact may exist, even though it cannot be said that an error in point of law has been established. Accordingly, I have considered whether there is any possible ground involving a question of mixed law and fact in the circumstances of the present case and, if so, whether leave ought to be granted. 113 Such a mixed question may and often will involve the application of a legal test or standard to the facts under consideration in a particular case: Kalokerinos (supra) per Bryson JA at [39]. As his Honour there observed, the facts and the law in such a case must be decided in deciding what result is produced by their interaction. I do not consider that the present case involves a point as to the interaction of a legal test or of a standard to the facts. I do not consider that there is a question of mixed law and fact on any other basis. 114 On the basis as I have earlier stated, that the issues for the Magistrate's determination were questions of fact and no point of law is involved in these issues or in the Magistrate's fact-finding, there does not arise, in my opinion in these proceedings, any ground that could be said to involve a question of mixed law and fact that would warrant consideration in terms of s.74(1). Accordingly, the application for leave to appeal should be refused. 115 In the circumstances to which I have referred, the appeal must be dismissed. 116 In that event, costs would ordinarily follow the event: Uniform Civil Procedure Rules, Rule 42.1. Unless the plaintiff wishes to make submissions to the contrary within the next 10 days, then I propose to make an order which will require the plaintiff to pay the defendant's costs of the appeal. 117 Accordingly, the orders I make are as follows:-

(2) The plaintiff may lodge submissions on costs with my associate within 10 days of the date of this judgment and serve a copy upon the defendant. If no submissions are made within that period then the plaintiff is to pay the defendant's costs. **********

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