Williams v Sutera

Procedural history 6These proceedings have an unfortunate history of vacated hearing dates. 7The claim and cross-claim were first listed for hearing on 28 November 2011 in the Wollongong District Court running list. The proceedings were stood over for hearing in that list on Friday 2 December 2011. The matter was not ready to proceed by reason of non-compliance by the plaintiff with previous orders for service of reports. In addition, both parties needed to serve updating affidavits in relation to the claim and cross-claim. Orders were made to this effect by the List Judge, including an order that the plaintiff should provide particulars of the nature of the Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) which was alleged to apply to claims for outgoings in the cross-claim. 8When the matter was listed for hearing in the 12 March 2012 sittings, in which I was the List Judge, both parties asked for the hearing to be adjourned and to be specially fixed to commence on Monday 28 May 2012 due to outstanding issues in relation to subpoenae and discovery. Both sides considered the matter was not ready for hearing. On this occasion, as in November 2011, neither side sought a costs order by reason of the unreadiness of the other party. 9The matter was specially fixed for hearing for Monday 28 May 2012 as a three-day fixture. On 23 May 2012 Letherbarrow SC DCJ, noting that the parties were not ready to proceed until the week following, the date for this special fixture, in circumstances where the sittings had been reduced to exclude this week, directed the matter be listed as number one in the hearing list of the following sittings in September 2012. This adjournment was occasioned by no fault of the parties. At the time, no costs order in relation to the vacation of this hearing date was sought or made. 10Letherbarrow SC DCJ noted that the plaintiff did not wish to proceed with his claim under the Fair Trading Act, and directed an amended statement of claim be filed and served within 7 days deleting that part of the action, with any amended defence to be filed and served 21 days thereafter. His Honour also noted that the plaintiff intended to bring an application to set aside default judgment on the cross-claim. 11When the matter came before me for hearing on Monday 17 September 2012, the plaintiff had not filed an amended statement of claim, nor had any application been brought to set aside the default judgment. However, both parties were keen to proceed with the hearing after so many adjournments. The plaintiff once again formally abandoned both the Fair Trading Act claim and the entitlement to bring an application to set aside default judgment on the cross-claim, and the hearing proceeded on the pleadings as they were, although the plaintiff agreed he was no longer entitled to press the Fair Trading Act claim. 12I shall first deal with the plaintiff's claim for damages for deceit.

The plaintiff's claim 13The plaintiff did not give any evidence in his claim for damages, and relied solely upon affidavits of his partner, Ms Maryanne Lorae Bleakley (Ms Bleakley) and Mr Davis, the former lessee. Both these witnesses were cross-examined on their affidavits.

The evidence of Mr Davis and Ms Bleakley 14Mr Davis started his evidence by saying that "it was a long time ago" and that he had "no reason to think that it would end up in a situation like this" (T 3). 15Mr Davis' evidence about the representations was as follows (at T 3-4): "MARSHALL Q. All right. Now, sir, you, I think you've told us, are a local in the Jamberoo area, and have been all your life? A. Correct. Q. And you were familiar, before you ran this business, with the petrol station site? A. Correct. Q. And you knew, for example, that no new tanks had been put in for many, many years? A. Correct. Q. And so, if anybody said to you, in your presence, that the fuel tanks at the service station were only about five years old, you would think, that's just not true, correct? A. Could you repeat that, please? Q. All right. If somebody said, in your presence, so while you're there, "The fuel tanks at this service station are only about five years old," you, number one, would remember that, and number two, you'd think, "That's not true", correct? A. There was talk of one tank being replaced. Q. All right. At no time did Salvatore Sutera say, in your presence, that the tanks are only five years old, did he? He didn't say that? A. Not to me, no. Q. And not to anyone within your hearing? A. There were conversations between Mr Williams and Mr Sutera that I wasn't present in." 16Mr Davis then contradicted this evidence (at T 4): "Q. So you had some discussions with Paul Williams before he purchased your business; that's correct, isn't it? Just, you spoke to him about the sale of your business and-- A. Correct. Q. I think we call that negotiation; would you agree that's what you did? A. Correct. Q. And at no time during those negotiations did anybody say, within your hearing, to Paul Williams, that, "The tanks are five years old and in good condition; you should be able to do quite well there"? A. To the best of my recollection, there were words along those lines. Q. But they were not said by Salvatore Sutera, were they? A. Yes." 17Mr Davis' affidavit (Exhibit A, paragraphs 23-25) makes no reference at all to these representations: "23. Shortly after (I cannot recall the date) I met Paul ad Marianne his partner at the Service Station Premises and then we went to the private premises of the Defendants who were the landlords. I introduced Paul and Marianne to Salvatore and Dora Sutera (the Defendants) at their Jamberoo residence. We spoke about details such as the lease being transferred to Paul and other things such as the amount rent [sic], the term, Paul being transferred the first option to purchase the Defendants [sic] business similar to the option I had been given to me by the defendants' [sic], and how rent to [sic] be paid. We had the following conversation: I said to Salvatore "I have first option to purchase under the lease, will that transfer to Paul?" Mr Sutera said "Yes" I said "will the purchase price will [sic] be roughly $320,000" Mr Sutera said "Yes, roughly" Paul said "Yes I would like to purchase it I have just obtained finance for other matters and I want around 12 months to settle down and make my mind up" Mr Sutera said to Paul "If you want, I can look at helping with the finance for the purchase." Paul said "Not at this point, I would like to establish the business first and after 12 months I will get back to you." On the day in question all parties got along and there was no tension or arguments. At this meeting it was agreed by all threes [sic] parties that the lease would be transferred to Paul with the option to purchase and I would sell the business to Paul. 24. At the time I was being represented by Carter Fergerson [sic] Solicitors, Mr Tim Carter was my solicitor and I instructed him to issue contracts to Paul Williams who had agreed to purchase my business and transfer of lease [sic] to him. Everything proceeded without issue and the sale and transfer occurred. 25. After the point of the initial conversations with the defendants, Mr Paul Williams dealt with the defendants by himself." 18Mr Davis agreed, looking at paragraph 23 of his affidavit, that he had not stated anything to this effect in his affidavit (at T 5): "Q. Sir, in your affidavit, you've got some conversations you record in your affidavit. For example, paragraph 23. Just have a look at paragraph 23, and read it to yourself, and then I'll ask you a question. So, paragraph 23 is recording a conversation that you had and witnessed with Mr Sutera at his home, correct? A. Correct. Q. And this is the conversation that occurred at the home, and you've put nothing in there about tanks only being five years old, have you? A. No. Q. Well, the reason you didn't put it in this paragraph is because just wasn't said, isn't that right? A. No. Q. But you would have remembered something like that being said, if it had been said, and included it in your affidavit? A. With all due respect, sir, I am not a legal person." 19Mr Davis gave another version in which Mr Sutera stated that one tank, not all of them, had been replaced (at T 7-8): "Q. Well, back in 2004, you knew that the tanks were not five years old, they were older than that; true? A. Some of them were, yes. Q. Some of them were a lot older than five years? A. Some of them, yes. Q. And so, if Mr Sutera had said, in your presence, "The tanks are only five years old," you'd know that that just wasn't true. A. It would not be fully true, no. Q. And you'd want to correct that, wouldn't you? You'd want to say, "That's not true", wouldn't you? A. From my resurrection (as said), I thought he was talking about the one that was replaced. Q. You knew that there was more than one tank under the ground at the service station, didn't you? A. Yes. Q. And when, according to you, it's said that the tanks are only five years old, you'd know that's not true. A. I beg your pardon, sir; I have said in this Court a number of times, there was one that was supposed to be renewed. That is not all of them. Q. Renewed? A. Or replaced, whatever you want to call it. Q. So you knew back in 2004 there was one tank that had to be renewed, is that what you're saying? A. That it had been renewed. ... Q. Are you saying that what Mr Sutera said was in fact accurate? A. Yes and no, because there was a diesel tank, an unleaded tank, a premium tank - these are fuels - and there was also a spare tank that wasn't used, that hadn't been used for a long period of time. Q. And how old were these tanks? A. Some of them would have been probably original, but there was one that was supposed to be replaced. Q. Which one? A. From what I recall, I believe it was the unleaded one, but I can stand corrected on that. Q. Yes, but when Mr Sutera said this, were you - was what he said to Mr Williams accurate? A. To a degree. Q. To what degree? A. That one of them would have been replaced in a few years beforehand, and I can't say how many years that was. I'm under oath and I'm telling the truth. It mightn't be - I mightn't be answering them the way you want, but I'm telling the truth. Q. Look, I'm very happy with your answers, because what you're saying is what you recall. What you're saying is that nothing that Mr Sutera said was untruthful or misleading, is that right? He didn't say anything that made you say, "Hang on, that's not right"? Is that your evidence? A. I believe Mr Sutera was talking about the one tank, not all the tanks." 20Ms Bleakley's cross-examination, in its entirety, was as follows (at T 12): "Q. Madam, in paragraph 7, can you just read paragraph 7 again to yourself and let me know when you've finished? A. Yes, I've finished. Q. Now, the conversation, where was that conversation? Where did it take place? A. That conversation was at the Suteras' [sic] home in Jamberoo. Q. And you've referred there to something being five years old. And you've got a reference there to petrol tanks, you see that? A. Yeah, about the petrol tanks, yes. Q. Was it a petrol tank or petrol tanks, or are you not sure? A. I really wasn't sure. I think it was--"

The evidence of Mrs Sutera 21Mrs Sutera, the second defendant, said that she and her husband had purchased the petrol station in 1976 and ran it themselves until 1999, when a Mr Pickham was put in as the lessee. He left the premises in a state of disorder and rectification work was necessary before Mr Davis, the next lessee, took over running the petrol station. 22Mrs Sutera was adamant that no statement had been made to the plaintiff that any of the tanks were five years old: "Q. And the fact was that there were no tanks that were five years old, is that right? A. We never say the tank was five year [sic] old. Q. Well, you heard Mr Davis and you heard Mrs Bleakley say that there was a conversation in your home, that your husband, Mr Sutera, had said the tanks are no more than five years old. Whether he was referring to one tank, or more tanks-- A. Absolutely not." (T 24-25) 23She went on to explain (at T 26): "Q. Because the only tank that was replaced, was replaced in 1983, is that correct? A. It was not replaced. There was we get one extra one. Q. All right, there was an extra one. So there were no tanks less than five years old at the service station when Mr Williams is moving in? A. There was no tank under five year old [sic]." 24Mr Sutera was not called. The statement of claim refers in various places to negotiations between "the defendant" (paragraph 5), "the defendants" (paragraph 10-13) and "the first defendant" (paragraph 12(c)(i)). The statement of claim paints a confusing picture of "the defendants" having made representations (paragraph 12), either by themselves "or by their servant or agent" (a person whose identity is unknown) or by "the first defendant" (paragraph 12(c)(i)). Breach of duty is pleaded in relation to the first defendant in paragraph 16. 25Although an attempt was made to put to Mrs Sutera that she was not present during part of the negotiations, I am satisfied from her description of events that she was present throughout. I also note that the written outline for the plaintiff (paragraphs 2.1(j)- (m)) refers to these representations made by the defendants "or by their servant or agent" (paragraph 2.1(j)). The "servant or agent" is unnamed. It was never put to Mr Davis that he made any such representation; there is nothing in his affidavit to this effect. 26There is clearly ill-will of long standing between the parties. Mr Sutera was in court and, at the request of the solicitor for the plaintiff/cross-defendant, was asked to leave after complaints about his behaviour. In her evidence and cross-examination, Mrs Sutera was at times upset and angry. However, I am satisfied that she nevertheless gave truthful evidence. The real problem seems to be, to borrow the description used by White J in ET Petroleum Holdings Pty Ltd v Clarenden Pty Ltd [2005] NSWSC 435 at [132], that there has been "unreasonable and provocative conduct" on both sides for some years. An angry witness is not necessarily an untruthful witness. I am satisfied by Mrs Sutera's description of events that the representations alleged by the plaintiff were never made. 27This constitutes the totality of the evidence about this representation, as the plaintiff has not provided an affidavit or given evidence. I note references to "five years old" throughout the cross-examination differ from the alleged representation in the pleadings, which were that the tanks were six years old. Nor were there representations of the kind referred to in paragraph 2(c).

The nature of the plaintiff's claim for deceit 28Counsel for the defendant submitted that the plaintiff needed to establish the following issues: (a)The representations were made; (b)The representations were misleading in the sense of being untrue, or alternatively reckless (Wood v Balfour [2011] NSWCA 382); and, (c)There was reliance upon the representations. 29It should first be noted that the plaintiff puts his case on the basis that there were misleading statements made, and not upon omissions: Wood v Balfour [2011] NSWCA 382. 30The principles derived from Derry v Peek, supra, have been approved in a number of decisions over the past century, commencing with Civil Service Co-Operative Society of Vic Ltd v Blyth (1914) 17 CLR 601 at 609 and most recently by the Court of Appeal in Wood v Balfour, supra. Actionable statements may include those where a representor lacked belief in the truth of the representation, or made it recklessly, without caring whether it was true or false. Halsbury's Laws of Australia at [110-5140] states that: "Although actual dishonesty and recklessness may merge into lack of belief in the truth of a statement, so that nowadays the test may be stated as a unitary one, namely whether the maker honestly believed that the representation was true, moral culpability is to this extent vital in fraud, and mere carelessness is not enough. At best, lack of reasonable grounds for a belief is merely an aid in determining whether the belief is genuinely held." 31The defence consists essentially of a denial of the warranty or representation as pleaded and of the loss and damage claimed. I should, however, note that a defence of s 14(1)(b) Limitation Act 1969 (NSW) has been pleaded. In the course of oral submissions, counsel for the defendant/cross-claimant conceded that s 14 would operate from the date on which the cause of action first accrues to the plaintiff and did not press this argument.

What was said? 32In Watson v Foxman (1995) 49 NSWLR 315 at 318-319, McLelland CJ in Eq stated: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration." 33In Ingot Capital Investments & Ors v Macquarie Equity Capital Markets (No 6) [2007] NSWSC 124, McDougall J (under the heading "Attention to detail is required") set out McLelland CJ in Eq's statement of what must be proved where representations had been made orally, noting that it is necessary to prove "with some precision" (at [353]) the words used. 34Mrs Sutera said that the purpose of the meeting she and her husband had with the plaintiff was to obtain "just tenant information" (T 3). She explained: "HER HONOUR Q. Sorry, just tenant information? A. Just, you know, because we did a transfer of the lease, we just want to meet him, you know, and know what type of person, introduction, or whatever you call it. Q. Just want to meet him? A. Just want to meet him, yes." (T 3) 35Mr Davis and the plaintiff had already concluded their negotiations, which appear to have taken place at the petrol station, or at least in circumstances where the plaintiff was able to see the facilities. He made no such representation, and I am satisfied the defendants did not do so either. The plaintiff has elected not to give evidence, and I draw a Jones v Dunkel inference (Jones v Dunkel (1959) 101 CLR 298).

Conclusion - No representation was made 36I am satisfied, from the extremely limited evidence set out above, that no representation was made that any tank was five (or six) years old or otherwise as to their quality. The "new" tank referred to by Mr Davis and Mrs Sutera turned out to be an additional tank installed on the property in 1983. Any reference to this tank being new would need to be interpreted contextually, not in isolation, in circumstances where the plaintiff had the opportunity to inspect the premises and discuss these matters with Mr Davis (Mercland Investment Group Pty Ltd v Duncalm Pty Ltd [2012] FCA 183 ("Mercland")).

Were the representations misrepresentations? 37In the event that I have erred in finding the representations were not made, I now consider whether, if made, they were misrepresentations. 38In Mercland, Edmonds J listed at [108] relevant circumstances comprising the context for the objective determination as to whether a non-disclosure was misleading or deceptive. Although that was an exercise carried out for the purpose of determining a claim under the Trade Practices Act and Fair Trading Act, and related to a non-disclosure that was admitted, the same procedure is of assistance here, particularly in view of the similarity of the asserted representation. 39Factors taken into account by Edmonds J included the fact that the state of the faulty bitumen was "manifest and obvious on careful inspection" (at [117]). In the present case, not only did the plaintiff have the opportunity to inspect the premises for himself, but to discuss the day-to-day workings with Mr Davis, with whom negotiations had been carried out. The plaintiff met the defendants in circumstances where, at least according to Mr Davis, the decision to lease the property had already been made. Any implied meaning arising out of the reference to a tank being "five years old" would, if it had been said, be a descriptive statement of age, rather than a warranty of quality. Anything that is five years old can be defective, just as an item which is second hand or has been in operation for many years can be in perfect working order. 40Mr Davis' evidence was that there were problem with water in the tank while he was the lessee. These claims were, however, very generally put and, like the rest of Mr Davis' evidence, suffer from being recalled so long after the events that the precise date when he noticed water in the tank is uncertain. This evidence is of little or no value, and does not excuse the plaintiff from making his own inquiries. 41The plaintiff's solicitor sent a letter dated 7 March 2006 (Exhibit L) referring to problems of water in the tank commencing in 2005. The plaintiff instructed "Tanknology" to prepare a report and that although a report was prepared on 13 September 2006, it was not until January or February 2007, when the offending tank or tanks were removed from the ground, that it could be determined that the tank or tanks were not of the age which had been represented by the plaintiff (written submissions, paragraph 3.9). 42In written submissions, the plaintiff claims he was not on notice until January or February 2007 as to the cause of the problem, and this was the first time he became aware of "the potential connection" (written submissions, paragraph 3.12) between the representation when in fact the tanks were older than had been described. 43I am satisfied that if such representations had been made, there was no reliance upon them. The plaintiff had already decided to lease the premises, based on his own inspection and information from Mr Davis. 44This brings me to the question of whether there was in fact any loss.

Was there any loss? 45Although I have found that the representations were not made, were not misrepresentations or fraudulent, and were not relied upon by the plaintiff, I also set out my findings as to whether the plaintiff can establish loss flowing from the representations. 46The plaintiff's written submissions provide me with only one sentence in this regard, namely a statement that I should make orders as to damages "set out in the affidavit of Mr Brett Goodyer" (page 12 of the plaintiff's written submissions). Mr Autore did not elaborate on these submissions in the course of his address to me. Counsel for the plaintiff submitted that Mr Goodyer's report did not refer to or contain any of the plaintiff's financial records, and was based on untendered material, anecdotal information and speculation. 47The first problem is that Mr Goodyer's report does not include information about some of the damages claimed, such as an assessment of potential economic loss suffered by the business as a result of damage to customer vehicles that the business had either repaired or paid to have repaired. The report does, however, assert that the business suffered the following potential economic loss: POTENTIAL DAMAGES From To Premium Unleaded $49,836.29 $62,295.36 Diesel (No Diesel) $20,694.84 $31,042.26 Diesel (Reduced Sales) $5,237.12 $7,855.68 Total $75,768.25 $101,193.30 Other Losses Loss of Goodwill $20,000.00 $20,000.00 Residual Fuel as at 8 September 2011 $8,351.10 $8,351.10 Total Other Losses $28,351.10 $28,351.10 Total Losses $104,119.35 $129,544.40

48Interest would be claimable as follows: Interest on Potential Economic Losses per Table 3.1 Interest From To Premium Unleaded $9,791.98 $12,239.98 Diesel (No Diesel) $11,185.46 $16,778.20 Diesel (Reduced Sales) $1,601.78 $2,402.68 Total $22,579.23 $31,420.85 Daily accrual of interest from 15 October 2011 Premium Unleaded $12.57 $15.71 Diesel (No Diesel) $5.76 $8.64 Diesel (Reduced Sales) $1.32 $1,97 Total $19.64 $26.32

49These documents were prepared on the basis of third party records of Kel Campbell Pty Ltd and Caltex Australia Limited, provided by the plaintiff for the purpose of this report. Mr Goodyer notes other losses, including the complete loss of the business after the plaintiff walked out of the business on or about 8 September 2011, although this appears to have been regarded by him as a loss of goodwill (for which he accepted the plaintiff's estimate of $20,000). 50Mr Goodyer states that an interview with the accountant for the business, Ms Leanne Mitchell, as well as a review of the financial statements of the business, indicated that "the financial statements of the business of the business were not sufficient to determine the potential economic loss suffered by the business in relation to the reduction in fuel sales, mechanical sales or the business goodwill" (paragraph 6.1 of Mr Goodyer's report). 51Mr Goodyer went on to note that there were no financial records of "sufficient quality" (paragraph 6.1) to enable him to perform quantification of economic loss in relation to the mechanical services portion of the business. Essentially, all he had to go on were the third party records of fuel sales and purchases during the period of review. 52This means that the calculation of economic loss was carried out without any regard to the tax returns, profit and loss accounts or other financial records of the plaintiff. Similarly, the estimate of "goodwill" for the business of $20,000 (paragraph 6.23) was based upon the plaintiff's statement to this effect. The third party records of Kel Campbell Pty Ltd are not before the court. 53Mr Goodyer's report suffers from the following defects: (a)He has accepted, without question, information he calls "anecdotal evidence", which he says proves substantial loss resulted from a reduced mechanical services revenue, in circumstances where I have no information as to what that loss was, or why it resulted from problems with the tanks, let alone problems with the tanks being more than five or six years old. Anecdotal evidence is no substitute for business records: Re Samir Baini and Commissioner of Taxation [2012] AATA 440 at [161]; (b)It is reliant upon documentation which has not been tendered or made available to the court (Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 ("Makita") at [85]); (c)Essential financial records such as the plaintiff's tax returns and profit and loss accounts have not been made available; (d)As Mr Goodyer acknowledges, what financial records of the business exist are not sufficient to determine the potential economic loss suffered by the business in relation to the reduction of fuel sales, mechanical sales or the business' goodwill (at paragraph 6.1); (e)Most of the information provided to Mr Goodyer was provided informally by the plaintiff. The plaintiff has elected not to give evidence in this case and this information cannot be tested (Makita at [85]). This is just as much a problem in relation to quantum as it is in relation to liability; and, (f)Mr Goodyer fails to expose his reasoning process in order to justify opinions expressed on many issues, such as the value of the goodwill (Australian Securities and Investments Commission (ASIC) v Rich (2005) 218 ALR 764 at [135]-[136]). 54The manner in which damages for deceit should be assessed has been helpfully summarised by the New South Wales Court of Appeal in Auyeung v Chan [1999] NSWCA 417 ("Auyeung"). There should be evidence in relation to causation (Auyeung at [32]-[33]) as well as a careful analysis of financial records demonstrating the loss, unless there are compelling reasons for the unavailability of those documents. I am satisfied that no such evidence has been led here. The evidence of damage to the petrol tanks has no relevance to the age of those tanks. 55In Auyeung, the plaintiff had difficulty establishing precise costs of establishment expenses following the loss of records in a fire and her exclusion from the premises. No such explanation is volunteered here. The defendants' counsel drew my attention to the plaintiff's failure to provide documents on subpoena, which included financial records. 56I have set out in more detail, in relation to the cross-claim, the difficulties a trial judge faces where parties simply tender documents and leave it to the court to analyse them (Chouman v Margules (1993) 17 MVR 144). The onus lies on the plaintiff to establish both causation and the quantum of any loss claimed. The failure of the plaintiff to give evidence and be cross-examined, or to produce adequate financial records in order to establish his loss, or to make good his claim, for example that he was unable to sell diesel fuel for a lengthy period solely as a result of the tanks, means that I must find that the plaintiff has not established any loss arising as a result of the conduct of the defendants. 57The plaintiff accordingly fails in relation to all aspects of his claim for deceit. This brings me to a consideration of the cross-claim, which proceeds by way of assessment only, by reason of judgment having been entered in favour of the cross-claimants/defendants.

The cross-claim 58During the hearing, a schedule of damages served by the cross-claimants was tendered and marked Exhibit 1. There were calculation errors in this document. A revised schedule of damages was marked as MFI 3, with handwritten amendments. 59Although the contents of the Exhibit 1 and MFI 3 were not challenged by the cross-defendant at the time, it was plain from the face of the document that it contained addition and other errors as follows: (a)Wrong calculations such as the total figure for item 2 (reduced from $4,865.30 to $4080.26), item 3 (reduced from $21,538 to $15,026.60), repairs (increased from $702.08 to $709.53) and Bunnings costs (reduced from $635.79 to $516.35). (b)Inclusion of figures which should not have been there, such as the sum of $4,135 added to both the environmental report and soil removal sections. (c)An additional $3,034.35 for matters recently identified. This was added in a handwritten note and was not part of the Scott Schedule when the cross defendant's expert examined the issues raised in the Scott Schedule. 60The hearing progressed on the basis of MFI 3 as amended during the hearing. Mrs Sutera was cross-examined about many of these claims. 61However, after the evidence and submissions were concluded, a document described as "version 2" of the schedule of damages was provided, without leave, as an annexure to further written submissions. This document contained: (a)A statement that legal costs totalling $10,796 were no longer included in the schedule; (b)An addition to the amount claimed in item 2 resulting in a new total of $4,865.30 in lieu of $4,080.26; and (c)A significant increase in the sum sought in item 3, namely $20,346.80 in lieu of $9,846.80. 62I have set out below the three different versions of the cross-claimant's schedule of damages.

Exhibit 1 - Schedule of damages on the cross-claim No Description of item claimed and particulars of accounts paid or calculations Amount claimed for total item 1 Mesne Profits claim for the period 15/4/11 to 6/9/11 during which the cross defendant remained in occupation after the termination of the lease. The monthly rental as at the end of the lease was $2,551.16 per month. Rounded up, the claim is for $2,550 per month or $83.83 per day. The calculation is as follows: $11,876.60 15/4/11 - 16/8/11 4 months @ $2,550 per month: $10,200 16/8/11 - 5/9/11 20 days @ $83.83 per day: $1,676.60 Total: $11,876.60 2 Claim for unpaid outgoings Clause 11 of the Lease and item 6 in the Reference Schedule (100%) provided that the cross defendant was to pay the outgoings of the property. $4,865.30 The individual amounts claimed were as follows: Sydney Water - Dec 2010 to Mar 2011: $245.05 Sydney Water - June to September 2011: $459.85 This is for the period after termination and to qualify as mesne profits. Land tax - 1/1/11 - 15/10/11: Note: $1,360.73 is for the period after termination and to qualify as mesne profits. Council rates for 2007: $350.00 Council rates for 2010/11: $697.00 Council rates - first instalment for year commencing 1/7/11 (qualifies as mesne profit): $727.63 City Coast plumbing regarding sceptic tank: $240.00 Total of unpaid outgoings:$4,865.30 3 Cost of repairs undertaken by cross claimants (as lessor). $48,558.20 The parties fell into dispute over the repairs that had to be carried out by the cross claimants. This necessitated engagement of lawyers by the cross claimants to attempt to enforce the cross claimants' rights under the lease. The relevant legal costs billed to the cross claimants are claimed as a consequential loss. Replace suction line - 4/4/2006. Supplier: Executive Electrical & Petroleum Services P/L: $1,665.00 Council application fee for replacing diesel tank - 11/1/2007: $668.00 Replacement of diesel tank. Contractor: T.V. Rossi & Sons P/L in the period Nov 2006 to Feb 2007 comprising: $9,846.80 up to 4/2/07; and $2,846.80 on 5/2/2007. The total amount claimed as outstanding is $21,538.00 Environmental report. $4,135.00 Supplier: Ecowise Environmental April 2008: $110.00 Waste/Soil stockpile Report Supplier: Heggies 27 May 2008: $1,000.00 Soil Removal Contractor: Jeffrey & Co. Excavations P/L 24/8/2009: $4,145.35 Tip fees and Huntly Heritage P/L (Jeffrey): $1,120.00 Tip fees (Huntley): $3,025.35 Replacement of steel workshop roll-a-door Supplier: Steel-Line Garage Doors 13/9/11: $4,716.00 Leaking shower repair Supplier: Geaffney's Leaking Shower & Waterproofing Services P/L 21/10/11: $1,500.00 Replacement of shower screen Supplier: Clymax Glass & Showers P/L 14/11/11: $770.00 Plumbing to replace toilet Supplier: McFadden $198.00 Repairs carried out to property. Cost of materials from Tradelink Oct/Nov 2011 25/10/11: $22.45 25/10/11: $51.90 29/11/11: $162.20 7/10/11: $180.40 23/9/11: $210.55 22/9/11: $82.03 [SUBTOTAL:] $702.08 Repairs to property - cost of materials from Bunnings: 13/10/11: $29.92 4/10/11: $24.00 8/10/11: $16.20 20/9/11: $21.80 12/9/11: $72.05 26/9/11: $15.00 28/9/11: $34.10 1/10/11: $133.14 16/9/11: $2.80 28/9/11: $34.10 1/10/11: $133.14 [SUBTOTAL:] $635.79 Steam cleaning of carpets Supplier: Toms Property Maintenance 13/11/11: $280.00 Timber use and repairs Supplier: Sawmill Trading Co. 14/10/11: $114.65 4 Legal costs in enforcing lessor's rights $10,796.00 Lockage [sic] Lawyers 8/8/06 - 19/1/07: $6,427.00 Verikas [sic] Lawyers 12/6/08: $3,577.00 Verikas [sic] Lawyers 31/5/07: $792.00 5 Cleaning up waste left to accumulate on property $220.00 The cross claimants carried this work out themselves and the only claim is in regards to tip fees and waste removal. Shellharbour City Council: $50.00 Chris the contractor, paid by cheque: $170.00 6 Clothes line, pest control, RPZ valve canvas awning $3,034.35 ALL ITEMS TOTAL $79,350.45

MFI 3 - Amended Schedule of damages on the cross-claim No Description of item claimed and particulars of accounts paid or calculations Amount claimed for total item 1 Mesne Profits claim for the period 15/4/11 to 6/9/11 during which the cross defendant remained in occupation after the termination of the lease. The monthly rental as at the end of the lease was $2,551.16 per month. Rounded up, the claim is for $2,550 per month or $83.83 per day. The calculation is as follows: $11,876.60 15/4/11 - 16/8/11 4 months @ $2,550 per month: $10,200 16/8/11 - 5/9/11 20 days @ $83.83 per day: $1,676.60 Total: $11,876.60 2 Claim for unpaid outgoings Clause 11 of the Lease and item 6 in the Reference Schedule (100%) provided that the cross defendant was to pay the outgoings of the property. $4,080.26 The individual amounts claimed were as follows: Sydney Water - Dec 2010 to Mar 2011: $245.05 Sydney Water - June to September 2011: $459.85 This is for the period after termination and to qualify as mesne profits. Land tax - 1/1/11 - 15/10/11: Note: $1,360.73 is for the period after termination and to qualify as mesne profits. Council rates for 2007: $350.00 Council rates for 2010/11: $697.00 Council rates - first instalment for year commencing 1/7/11 (qualifies as mesne profit): $727.63 City Coast plumbing regarding sceptic tank: $240.00 Total of unpaid outgoings:$4,080.26 3 Cost of repairs undertaken by cross claimants (as lessor). $29,086.35 The parties fell into dispute over the repairs that had to be carried out by the cross claimants. This necessitated engagement of lawyers by the cross claimants to attempt to enforce the cross claimants' rights under the lease. The relevant legal costs billed to the cross claimants are claimed as a consequential loss. [I note this figure should have been either: Replace suction line - 4/4/2006. Supplier: Executive Electrical & Petroleum Services P/L: $1,665.00 (1) $28,971.73 (if "Timber use and repairs, Supplier: Sawmill Trading Co., 14/10/11: $114.65" is not claimed); or Council application fee for replacing diesel tank - 11/1/2007: $668.00 (2) $29,086.38 (if the claim for "Timber use and repairs, Supplier: Sawmill Trading Co., 14/10/11: $114.65" is claimed).] Replacement of diesel tank. Contractor: T.V. Rossi & Sons P/L in the period Nov 2006 to Feb 2007 comprising: $9,846.80 up to 4/2/07; and $2,846.80 on 5/2/2007. The total amount claimed as outstanding is $15,026.60 Environmental report. [SUBTOTAL:] $1,110 Supplier: Ecowise Environmental April 2008: $110.00 Waste/Soil stockpile Report Supplier: Heggies 27 May 2008: $1,000.00 Soil Removal Contractor: Jeffrey & Co. Excavations P/L 24/8/2009: [SUBTOTAL:] $4,145.35 Tip fees and Huntly Heritage P/L (Jeffrey): $1,120.00 Tip fees (Huntley): $3,025.35 Replacement of steel workshop roll-a-door Supplier: Steel-Line Garage Doors 13/9/11: $4,716.00 Leaking shower repair Supplier: Geaffney's Leaking Shower & Waterproofing Services P/L 21/10/11: $1,500.00 Replacement of shower screen Supplier: Clymax Glass & Showers P/L 14/11/11: $770.00 Plumbing to replace toilet Supplier: McFadden $198.00 Repairs carried out to property. Cost of materials from Tradelink Oct/Nov 2011 25/10/11: $22.45 25/10/11: $51.90 29/11/11: $162.20 7/10/11: $180.40 23/9/11: $210.55 22/9/11: $82.03 SUBTOTAL: $709.53 Repairs to property - cost of materials from Bunnings: 13/10/11: $29.92 4/10/11: $24.00 8/10/11: $16.20 20/9/11: $21.80 12/9/11: $72.05 26/9/11: $15.00 28/9/11: $34.10 1/10/11: $133.14 16/9/11: $2.80 28/9/11: $34.10 1/10/11: $133.14 SUBTOTAL: $516.25 Steam cleaning of carpets Supplier: Toms Property Maintenance 13/11/11: $280.00 4 Legal costs in enforcing lessor's rights $10,796.00 Lockage [sic] Lawyers [Not included] 8/8/06 - 19/1/07: $6,427.00 Verikas [sic] Lawyers 12/6/08: $3,577.00 Verikas [sic] Lawyers 31/5/07: $792.00 5 Cleaning up waste left to accumulate on property $220.00 The cross claimants carried this work out themselves and the only claim is in regards to tip fees and waste removal. Shellharbour City Council: $50.00 Chris the contractor, paid by cheque: $170.00 ALL ITEMS TOTAL $56,059.21 (including item 4 - legal costs) or $45,263.21 (excluding item 4 - legal costs) 6 Clotheslines, pest control, RPZ valve canvas awning $3,034.35 ALL ITEMS TOTAL $59,093.56 (including item 4 - legal costs) or $48,297.56 (excluding item 4 - legal costs)

63I note that in MFI 3, the claim for "Timber use and repairs, Supplier: Sawmill Trading Co., 14/10/11: $114.65" appears to be missing. This must be an oversight as Mrs Sutera was cross-examined about this.

Schedule of damages on the cross-claim (Cross claimants' version #2 as at 19.9.12) No Description of item claimed and particulars of accounts paid or calculations Amount claimed for total item 1 Mesne Profits claim for the period 15/4/11 to 6/9/11 during which the cross defendant remained in occupation after the termination of the lease. The monthly rental as at the end of the lease was $2,551.16 per month. Rounded up, the claim is for $2,550 per month or $83.83 per day. The calculation is as follows: [amount agreed] $11,876.60 15/4/11 - 16/8/11 4 months @ $2,550 per month: $10,200 16/8/11 - 5/9/11 20 days @ $83.83 per day: $1,676.60 Item sub-total: $11,876.60 2 Claim for unpaid outgoings $4,865.30 Clause 11 of the Lease and item 6 in the Reference Schedule (100%) provided that the cross defendant was to pay the outgoings of the property. The individual amounts claimed were as follows: Sydney Water - Dec 2010 to Mar 2011: $245.05 Sydney Water - June to September 2011: $459.85 * Land tax - 1/1/11 to 15/4/11: $785.04 Land tax - 15/4/11 - 15/10/11: $1,360.73 * * qualifies and is claimed as additional mesne profits. Council rates for 2007: $350.00 Council rates for 2010/11: $697.00 Council rates - first instalment for year commencing 1/7/11: $727.63 * City Coast plumbing regarding sceptic tank: $240.00 Total of unpaid outgoings:$4,865.30 3 Cost of repairs undertaken by cross claimants (as lessor). $59,933.18 The parties fell into dispute over the repairs that had to be carried out by the cross claimants. This necessitated engagement of lawyers by the cross claimants to attempt to enforce the cross claimants' rights under the lease. The relevant legal costs billed to the cross claimants are claimed as a consequential loss. [However (a) to (ff) add up to Diesel Tank $39,586.38] (a) Replace suction line - 4/4/2006. Supplier: Executive Electrical & Petroleum Services P/L: $1,665.00 (b) Council application fee for replacing diesel tank - 11/1/2007: $668.00 Replacement of diesel tank. Contractor: T.V. Rossi & Sons P/L in the period Nov 2006 to Feb 2007 comprising: (c) up to 4/2/07: $20,346.80 [Note: This was previously $9,846.80 in Exhibit 1 and MFI 3]; and (d) on 5/2/2007: $2,846.80. Environmental report (e) Supplier: Ecowise Environmental April 2008: $110.00 (f) Waste/Soil stockpile Report Supplier: Heggies 27 May 2008: $1,000.00 Soil Removal (g) Contractor: Jeffrey & Co. Excavations P/L 24/8/2009: $1,120.00 (h) Tip fees (Huntly Heritage P/L): $3,025.35 Replacement of steel workshop roll-a-door (i) Supplier: Steel-Line Garage Doors 13/9/11: $4,716.00 Leaking shower repair (j) Supplier: Geaffney's Leaking Shower & Waterproofing Services P/L 21/10/11: $1,500.00 Replacement of shower screen (k) Supplier: Clymax Glass & Showers P/L 14/11/11: $770.00 Plumbing to replace toilet (l) Supplier: McFadden $198.00 Repairs carried out to property. Cost of materials from Tradelink Oct/Nov 2011 (m) 25/10/11: $22.45 (n) 25/10/11: $51.90 (o) 29/11/11: $162.20 (p) 7/10/11: $180.40 (q) 23/9/11: $210.55 (r) 22/9/11: $82.03 Sub-total: $709.53 Repairs to property - cost of materials from Bunnings: (s) 13/10/11: $29.95 [Note: This was previously $29.92 in Exhibit 1 and MFI 3] (t) 4/10/11: $24.00 (u) 8/10/11: $16.20 (v) 20/9/11: $21.80 [Note: there is no (w) in this list.] (x) 12/9/11: $72.05 (y) 26/9/11: $15.00 (z) 28/9/11: $34.10 (aa) 1/10/11: $133.14 (bb) 16/9/11: $2.80 (cc) 28/9/11: $34.10 (dd) 1/10/11: $133.14 Sub-total: $516.25 Steam cleaning of carpets (ee) Supplier: Toms Property Maintenance 13/11/11: $280.00 Timber use and repairs (ff) Supplier: Sawmill Trading Co. 14/10/11: $114.65 4 Legal costs in enforcing lessors' rights (now claimed as party/party where relevant) NIL 5 Cleaning up waste left to accumulated on property $220.00 The cross claimants carried this work out themselves and the only claim is in regards to tip fees and waste removal. Shellharbour City Council: $50.00 Chris the contractor, paid by cheque: $170.00 6 Other Repair and Replacement Costs Clothes line (Bunnings): $89.00 Pest control (Oak Flats Pest Control); $176.00 RPZ Valve (Dapto Plumbing): $504.55 Canvas Awning (Apollo Blinds): $2,265.00 Total of Item 6: $3,034.35 TOTAL $79,929.43

64As a result of inclusions and omissions, the sums claimed have varied from $48,297.56 to $79,929.43, the sum claimed in version 2 (provided after the hearing). 65The solicitor for the plaintiff/cross-defendant has not played an active role in endeavoring to ascertain what the correct sum for the quantum is. Although I imposed a timetable for further written submissions in relation to the proposed amendments, the plaintiff did not provide submissions on quantum (except legal costs), and it was necessary to relist the matter for directions on 26 September 2012. 66The parties' submissions on legal costs were in error. When preparing my judgment, it became apparent that the parties had overlooked clause 18(5)(d) concerning legal costs. In addition, the cross claimants had not answered the cross defendant's argument concerning liability to replace the tank (arguably an underground fixture), where the expert evidence was that the tank had failed due to reaching the end of its life rather than because of lack of care or misuse by the cross defendant (clause 18(4)(e)).

Oversights of fact in the conduct of proceedings 67The adversary system used in common law proceedings places the obligation of investigation and presentation of proceedings on the parties, in contrast to "inquisitorial" (Sharp v Rangott (2008) 246 ALR 84 at [3]) systems of enquiry by the judge used in civil code systems. If there is an error or oversight in the evidence, such as the mathematical errors in calculation of damages, the judge hearing the application is in a difficult position. 68In Chouman v Margules, supra, neither the parties nor the trial judge noticed that a police report tendered in the hearing referred to an 18 metre skid mark. This skid mark cast doubt on the defendant's claim of brake failure. The Court of Appeal held (by majority) that the oversight by counsel and the judge justified a new trial. Kirby J at 150 stated: "Having admitted the report into evidence, it was then essential that Garling ADCJ should deal with it in disposing of the case before him. Of course, his Honour would ordinarily be entitled to rely upon the parties to direct his attention to matters of relevance in the case and to present, by questions and argument, the issues which arose from it. As it happens, they did not. His Honour did not himself advert to the entry, doubtless for this reason. If the entry were of minimal importance, or equivocal or unlikely to affect the result, this court would not interfere. It would uphold the trial judge's conclusion. It would do so out of deference to the advantages which he enjoyed in conducting the trial; the principle of finality of litigation; and the further principle which binds parties to the way in which their cases are conducted by their legal representatives: cf Devries v Australian National Railways Commission (1993) 67 ALJR 528 at 531; 112 ALR 641 (HC). However, in this case I have come to the view that there is a real risk that an injustice has occurred. The appellant was entitled to have the respondent's defence of brake failure properly and thoroughly scrutinised. She, at least, was completely innocent of any fault being a passenger in her son's vehicle and being undoubtedly injured in the impact which occurred. In the circumstances of a collision from behind she had a strong prima facie entitlement to recover damages by reason of negligence on the part of the respondent. His defence of brake failure should therefore have been scrutinised against the one crucial element in the police report which seems to have been overlooked by everybody, namely the record of the 18-metre skid. As that defence was not scrutinised by reference to this evidence and as the evidence was not adverted to at all by Garling ADCJ, it is my opinion that the trial before his Honour miscarried. An error has been shown which requires correction. It is not an error that can be corrected in this court. It requires a retrial so that the appellant may test both the respondent and the police constable by reference to the entry referring to the 18-metre skid which was entirely overlooked during the first trial, including by the trial judge." [Emphasis added]. 69Similarly, in Whalan v Kogarah Municipal Council [2007] NSWCA 5 an appeal was allowed on the basis that the trial judge failed to consider relevant evidence. There was no suggestion that submissions had been made on this evidence, but ignored by the trial judge; the failure to address this evidence was a failure by counsel to do so, but the trial judge was criticised for not raising the issues of fact with counsel, or in his judgment, that the Court considered should have been raised. 70The problem of what a judge should do when relevant evidence has not been referred to in the is not one capable of easy resolution. Appellate courts have noted that the focus of common law courts in ascertaining the truth is increasing (Jones v National Coal Board [1957] QB 55 at 63; Sharp v Rangott at [3]; Bassett v Host [1982] 1 NSWLR 206 at 243). However, in Sharp the Full Court stated at [47] that "a strictly adjudicative role, and absence of inquisitorial power, distinguishes the common law judge from his or her civil counterparts" in relation to the calling of witnesses and the presentation of evidence. This applies to criminal proceedings as well: R v Apostilides (1984) 154 CLR 563 at 576, although oversight in criminal proceedings may, unlike civil proceedings, constitute grounds for a new trial: Teoh v Hunters Hill Council (No 4) [2011] NSWCA 324 at [23] (but cf LVMH Watch & Jewellery Australia Pty Ltd v Lassanah (New South Wales Court of appeal, Tobias and Young JJA, 4 March 2011, unreported)). 71As these decisions do not set out what a judge should do when parties, for tactical reasons or due to oversight, make fundamental errors such as making, or not noticing, mistakes in the quantum of damages or overlooking a clause in a lease, I initially sought further written submissions. The submissions I received did not resolve the mathematical errors, or the failure to have regard to provisions in the lease. I therefore relisted the matter to invite further submissions, in the manner adopted by the first instance judge in Ford v Nagle [2004] NSWCA 33. There are still some minor mathematical discrepancies (see comments in version 2 of the cross-claimants' schedule of damages above), but I propose to disregard these. 72On 27 September I received further submissions from the cross claimant's solicitor, which can be summarised as follows:

• The correct total of 3(a) - (ff) is $39,586.38 and not $59,933.18; it is agreed the sum earlier given is incorrect.
• Items 3(c) and (d) are agreed to be inconsistent with the affidavit of Mrs Sutera and should have been $21,538.
• Reconciliation of the payments for Rossi & Sons show that the sum in (d) is correct but the sum in (c) should be amended to $17,000.80 (being $19,846.80 less item (d) ($2,846).
• This means that the total claimed for (a) - (ff) is $36,240.38 (being $39,386.38 less $3,346).
• Consequently, the "All items total" in the document described as version 2 of the Schedule is also amended to $56,236.83. 73Having noted the history of the changes to the sums claimed, I shall deal with each item in turn.

Item 1 - Mesne profits $11,876.60 74This claim is admitted.

Item 2 - Claim for unpaid outgoings 75These water rates, council rates and land tax payments relate (other than for an amount of $350 for 2007 rates) to outgoings payable under clause 11 of the Lease and item 6 in the reference schedule. 76The cross defendant claimed he was not obliged to pay any of these sums on principles derived from Anshun, supra. This claim is misconceived. First of all, the estoppel claimed arises out of a settlement between the parties of a claim by the cross claimants against the cross defendant. This is not Anshun estoppel, but accord and satisfaction: see the discussion of the relevant principles in National Australia Bank v Pollak [2001] FCA 1408. More importantly, the settlement related to land tax payments only, and for periods prior to the land tax and other outgoings sought by the cross claimants in this action. As the cross defendant conceded, in the course of the hearing, there was no overlap of any kind. 77The cross defendant did not challenge the quantum of these items, and he is liable to pay all these amounts.

Items 3(a) - 3(h) in version 2 78The costs claimed here are the costs of Executive Electrical & Petroleum Services Pty Ltd replacing the suction line ($1,665.00), the Council application fee for replacing the diesel tank ($668.00), the replacement of the diesel tank ($23,193.60), the environmental report ($1,100), the costs of soil removal ($4,145.35). These costs are the subject of the adjustments set out in paragraph 72 above. 79Mr Connor's report (page 3 of Exhibit B) sets out the following general statements concerning the $1,665.00 claim for replacing the suction line by Executive Electrical & Petroleum Services Pty Ltd: "The diesel tank allowed the influx of water contaminated to the storage vessel. Diesel tank was identified as being defective on or before 4 April 2006 as confirmed by the Electrical & Petroleum Services Pty Ltd invoice dated 4 April 2006 (annexure "J-1") which reads at second sentence under contained Scope of Works states "Note the suction line has been previously pressure tested and found to be faculty". Subsequent pressure tests obtained by the cross-defendant from Tanknology Pty Ltd dated 12 September 2006 (annexure "J-2") reads that a pressure test carried out by Mr Steve Hamer failed as leaks detected to the vessel exceeded EPA required criteria. The author states "Tank failed due to a water ingress over the course of the test period". Subsequent excavation of the diesel tank identified at least four (4) holes to the vessel, ie. not fit for purpose (see photographs "J-3", "J-4", "J-5", "J-6", "J-7" and "J-8"). The vessel had reached the extent of its service life and had corroded to such extent that the vessel had to be replaced. Specifically, based on these established facts, no breach of Clause 18(4)(e) has been demonstrated." 80These comments would also relate to the Kiama Council application fee of $668 (item 3(b)). 81Mr Connor has the following to say about the costs of T.V. Rossi & Sons Pty Ltd (items 3(c) and 3(d)): "Documents are from the installation contractor who excavated, removed, supplied replacement vessel and installed replacement vessel. Specifically, based on these established facts, no breach of Clause 18(4)(e) has been demonstrated. In addition, the claimed quantum is not established by the documents served with the claim. Document "59" Tax invoice and receipt rendered by T.V. Rossi & Sons Pty Ltd asserts that only $19846-80 was claimed upon Mr Sam Sutera on 4 February 2007 for works associated with the replacement of the defective diesel storage tank." 82The earth removal costs are agreed to relate to the fact that the stockpile material was left on site. 83Clause 18(4)(e) of the lease provides: "LESSEE TO REPAIR LEASED PREMISES 18. (4) In addition to the lessee's obligations under paras 18(2) and 18(3) the lessee shall throughout the term of this lease and notwithstanding any other clauses in this lease (which do not apply to the matters listed in this para 18(4), carry out the following repairs and maintenance: (e) repair any damage or breakage to the property, to the lessor's fixtures and property in the property, and to services and facilities in the property, caused by lack of care or misuse by the lessee or by its employees or agents." 84The obligation of the lessee to carry out repairs to underground tanks and pipes for pumping petrol is helpfully set out in a decision of Austin J in RA & K Becker Pty Ltd v Cariste Pty Ltd (2001) 11 BPR 20,111. The facts in that case were similar to the present, namely that underground tanks and pipes installed before the plaintiff entered into possession developed a water problem after the plaintiff entered into the lease, and the question of responsibility for the maintenance of underground tanks, pipes and equipment needed to be construed in accordance with the lease. As was also the case here, there were rust holes in the pipes, water was entering into the petrol tank, and repairs needed to be carried out. The plaintiff commenced proceedings, seeking a declaration that the defendant was obliged to repair fuel tanks and pipes which supplied petrol. 85The relevant clauses of the lease in those proceedings, like the clauses in these proceedings, did not clearly and unambiguously allocate responsibility for the tanks, as both parties note in their further written submissions. 86Austin J noted (at [15]-[17]) that his task was as follows: "[15] It is obvious from reading these provisions that nothing in the lease clearly and unambiguously allocates responsibility for maintenance of the tanks and pipes to one party or the other. The plaintiff says that when it commenced occupation the tanks and pipes were in place under the shopping centre and were not a part of the demised premises. It was understood between the parties, according to the plaintiff, that the plaintiff would be able to use the tanks and pipes which were connected to the petrol bowsers. On the plaintiff's view, these arrangements implied that the defendant would be responsible for the tanks and pipes. As its solicitor pointed out in correspondence, 'it would seem absurd for an incoming lessee to be responsible for the state of underground pipes for which it cannot obtain access without removing the concrete laid on top of the said premises'. [16] On the other hand, the defendant maintains that Item 13 of the Schedule (the Equipment) was specifically stated to be 'not applicable', and the plaintiff was informed by the defendant's solicitors before the lease was entered into that no equipment would be provided. This made it clear, according to the defendant, that it was to have no responsibility for the tanks and pipes. In correspondence Mr Roach said: 'This is an independent service station and has the ability to do deals with suppliers regarding the dispensing of products, including but not limited to tanks, bowsers, pipes, pumps, waste etc, all of which can change at the whim of the operator.' In his affidavit he said: 'The tank system is removable and can be changed in service stations depending on sales volumes of fuels. For example, if demand for a particular brand of fuel increases, a larger capacity tank can be supplied and installed. The recent trend away from leaded fuels is a further example of the necessity to replace or add new tank systems.' [17] In my opinion, both the plaintiff and the defendant have made some valid commercial points, which could have been used in negotiations had the issue of responsibility for the tanks and pipes been specifically raised. But as far as the evidence goes, it appears that the issue was never raised prior to the execution of the current lease. All I can do, therefore, is to construe the words of the lease in order to decide whether they cover the issue." 87Austin J's findings were set out at [28]-[31] as follows: "[28] In my view, the key provision is cl26.15. Cl26 is headed 'Equipment'. It is literally unclear whether the heading is intended to refer to equipment generally, or to 'the Equipment'(the defined term). The heading begins with a capital 'E', suggesting the defined term, but that may be explained by the fact that every heading commences with a capital letter, and the definite article 'the' is missing from the heading. If the correct heading were 'the Equipment', it would be arguable that cl26 has nothing to say about the problem in this case, since the tanks and pipes do not fall within the definition of 'the Equipment'. But the sub-clauses of cl26 are not limited to the subject matter of 'the Equipment', as they deal with specific obligations relating to matters such as records of sales, dips of tanks, reporting the presence of water in tanks, meter readings on pumps, maintenance of stop switches and fire extinguishers and fuses, the cleaning of sumps and drains, and generally the maintenance of plant and equipment. Given the range of subject matter, it seems to me that the heading of cl26 is intended to refer to equipment generally rather than to 'the Equipment'. [29] Cl26.15 obliges the Lessee to supply, install, repair, maintain and replace all plant and equipment necessary for the conduct of the Premises as a service station. There can be no doubt that if the tanks and pipes fall within the meaning of the words 'plant and equipment', they are plant and equipment necessary for the conduct of the Premises as a service station. [30] In my opinion, the tanks and pipes are 'equipment', as that word is used in cl26. In support of that conclusion, I rely on my construction of the heading of cl26. Additionally, in a clause that deals with equipment of various kinds, provisions are found dealing with tanks and lines. Further, cl26.3 implies that the tank system can be part of the Equipment, and therefore can be characterised as equipment, and cl26.13 speaks of 'tanks and dispensing equipment', suggesting that tanks are a kind of equipment. [31] At the time of execution of the lease, the tanks and pipes had been installed and had been used by the plaintiff for some years. In those circumstances the plaintiff contended that the 'plant and equipment' to which cl26.15 refers does not include the tanks and pipes that had been installed so much earlier. In my view, however, cl26.15 applies, in its terms, to equipment already installed at the time of commencement of the lease, as well as to equipment subsequently installed. In the former case, it imposes an obligation to repair and maintain the equipment. In so doing, it literally covers the problem raised by this case." 88In the present case, the cross claimants relied, during the hearing, upon clauses 18(1) (which they argue constitutes an estoppel against any claim that the petrol tank was not in good repair at the time the lease was entered into), clause 18(2)(4) and clause 18(4)(e). Clause 18(4)(e) requires the lessee to repair "any" damage or breakage "caused by lack of care or misuse by the lessee or by its employees or agents." 89The problem is that there is no evidence of lack of care or misuse by the cross defendant. Mr Connor states that the tank had reached the end of its productive life and needed to be replaced. The reports from Tanknology are to the same effect. 90Clause 18(5)(8) obliges the cross defendant to ensure the facilities are regularly inspected, but does not require that the lessee should then pay the cost. Similarly, clause 21(2) only imposes on the lessee the obligation to pay the lessor for work carried out if the work "should have been carried out by the lessee". 91In the absence of evidence that the tank failed due to lack of care or misuse by the cross defendant, the cross claimants cannot claim reimbursement for the tank costs. The costs of removal of soil were agreed to relate to removal of the tank, and must similarly be disallowed. This means that the cross claimants are not entitled to claim the items set out in 3 (a) - (h). This also means that the problems in addition which I raised with both parties on 26 September (39,586.38 instead of $59,933.18, and the lack of explanation for the increase from $9,486.80 to $20,346.80) do not need to be resolved. 92Mr Colbron, in his further submissions, argues that the underground diesel tank forms part of the property by virtue of clause 18(1) and can also be categorised as "services and facilities". Clause 18(e) requires the cross defendant to repair any damage to services and facilities caused by lack of care (written submissions paragraphs 18 - 21). As the cross defendant accepted the premises were in good order in October 2004 when he took over the lease, he is estopped from warranting that the premises, services and facilities were in good repair and working condition in 2006, when water was found in the tank. 93Mr Autore, for the cross defendant, submits that RA & K Becker turns on its facts, and that a lessee will not always have to repair pipes or other services which are not part of the premises. 94The additional submissions of the cross claimants are essentially a restatement of their original argument. Acknowledgments by the lessee about the state of the premises at the start of the lease do not vitiate the obligations of the landlord (or, for that matter, the tenant) to comply with repair obligations under clause 18 later on during the leaseholding. Whether or not the underground tanks form part of the leased property, the fundamental failure of a tank because it has reached the end of its life is a matter for which the landlord, not the tenant, is liable. The cross claimants are not entitled to claim these amounts.

Items 3(i) - (ff) 95 Items 3(i) - (ff) can be dealt with globally, as these repairs are all the subject of photographs taken by the real estate agent, Mr Boreland of Laing + Simmons on 7 September 2011. The damaged state of the roll-a-door, shower and toilet is self-evident. What little I can see of the carpets in these photographs makes it clear that they were filthy. While Mrs Sutera could not now recall what the timber ($114.65) was used for, there was missing timber on the balcony, and I am prepared to accept her evidence in relation to this issue and the receipts from Bunnings and Tradelink. These costs are very modest because the cross claimants carried out these repairs themselves. The obligation of the lessee to redecorate within three months of the lease period "however it ends" (clause 18(3)) applies. 96According to Mrs Sutera's evidence, these items were not wear and tear; they were the result of the plaintiff/cross-defendant living on the premises, which was a breach of the terms of the lease. The cross-defendant did not deny living there. The state of the premises was poor due to the failure of the cross-defendant to honour his obligation to repair. 97These claims should be allowed in full.

Item 4 - Legal costs 98The cross defendant during the hearing abandoned the claim for the total of solicitor and client costs, but claimed the right to be able to have these bills assessed and to claim the solicitor and client proportion, on the basis that the disputes in the present proceedings have their genesis in events going back to 2006, when both sides sought legal advice in relation to disputes arising under the lease, including the replacement of the tank, the demand for outgoings which resulted in the Local Court proceedings for unpaid land tax, and the complaint by the cross defendant about failure of the landlord to effect repair. Counsel for the cross claimant relied upon general principles discussed in Re Gibson's Settlement Trusts [1981] Ch 179 at 187 and Frankenberg v Famous Lasky Film Service Ltd [1931] 1 Ch 428 at 439 - 40, arguing that the costs order in these proceedings should include these costs, which can now be the subject of a party/party costs order. It was submitted that the costs assessor, when assessing the costs of this litigation, should not be fettered by any restriction upon costs incurred prior to these proceedings being commenced or even contemplated by either party. I received submissions opposing this course from Mr Autore on 26 September 2012. 99In fact, both parties were incorrect in their assumption that the lease did not provide for legal costs. Clause 18(5)(d) specifically requires the lessee to "indemnify" the lessor against any expense incurred as a consequence of the breach, including "legal costs". This was one of the matters I raised with the parties on 26 September, when I requested further submissions on legal issues about which I required further assistance. 100Mr Colbron, in further written submissions, has set out the basis upon which legal costs are now claimed under clause 18(5). It is submitted that the legal costs were not incurred because of breaches by the lessee but relate to disputes about the matters which led to these proceedings. 101These legal costs relate to the removal of the petrol tank and contaminated soil, matters where I have made findings in favour of the cross defendant. No breakdown of the subject matter of these costs has been provided, and I am not in a position to go through them item by item. Even if some of the costs relate to issues other than the petrol tank and contaminated soil, I am not satisfied, on the balance of probabilities, that they relate to issues in this litigation, as I have no evidence to this effect and they relate to exchanges of correspondence 4 - 5 years before proceedings were commenced. Exhibit L, a bundle of legal correspondence at that time, confirms this. 102No allowance has been made for the legal costs claimed.

Item 5 - Cleaning up waste left to accumulate on the property 103The cross claimants paid $170 to a contractor named Chris to collect rubbish from the property and incurred $50 fees from Shell Harbour City Council. 104Mr Connor states (Exhibit B) that "the quantum claimed is deceptive and misleading" as Chris's name on the cheque butt is illegible and the IBAS Dilapidation Report of 6 September 2011 described the condition of the premises as "reasonable". 105The photographs taken by Mr Boreland of Laing + Simmons on 7 September include 5 photographs of debris, as well as photographs of broken shelving left in the open, the untidy state of the grounds and oil stains (pages 7 - 11) as well as further photographs of debris and damage on pages 14 - 16. 106These premises have been in a filthy state for years. The photographs attached to Mrs Sutera's affidavit, which were taken on 1 February and 7 March 2007, show premises covered with rusting cars, rubbish and other detritus. 107An expert has an overriding duty to the court to assist impartially, not to be an advocate for a party (UCPR Schedule 7(2)). Mr Connor's intemperate language, failure to expose his reasoning and inaccurate statements of fact on this issue undermine his credibility on this issue and on items 3(i)-(ff) above.

Item 6 - Other replacement costs 108The claims set out in item 6 were not the subject of report. Mrs Sutera has referred to these in her affidavit at pages 8 - 11. No objection was taken by the cross defendant to the late addition of these matters. Mrs Sutera was cross-examined at some length about the clothes line ($89) but not the other items. 109The ripped awning (the principal item claimed - $2,265) was photographed by Mr Boreland (page 23) and is clearly in tatters. 110Having regard to the years in which rubbish was stored on the premises, attendance by a pest controller was warranted. 111I allow these items in full at $3034.35.

Summary of cross claim amounts Item 1: $11,876.60 Item 2: $4,865.30 Item 3(a)-(h): NIL Item 3(i)-(ff): $8,804.43 Item 4: NIL Item 5: $220.00 Item 6: $3,034.35 TOTAL: $28,800.68

Concluding remarks 112 There will be judgment on the cross-claim in the sum of $28,800.68. The cross defendants are entitled to damages on the amount awarded and I have granted liberty to apply.

Costs 113The plaintiff has been unsuccessful in his claim and has enjoyed only limited success on the cross-claim. Costs should follow the event. I have awarded costs of the proceedings in favour of the defendants/cross-claimants, but granted liberty to apply. 114I asked the parties for submissions as to whether there should be any special order in relation to the costs of prior hearing dates. These proceedings were listed for hearing three times prior to these sittings. The unreadiness of the plaintiff was the principal cause in relation to the first hearing, and the unreadiness of both parties on the second occasion was substantially a result of the unfortunate history of the proceedings. While the hearing was unable to go ahead on the third occasion by reason of court commitments, the plaintiff's abandonment of Fair Trading Act claims and the setting aside of the default judgment on the cross-claim were matters which required attention. I see nothing in the history of these matters warranting a variation of my order that the plaintiff/cross defendant pay the costs of these proceedings.

(1)Judgment for the defendants. (2)Judgment for the cross-claimants in the sum of $28,800.68. (3)The parties to bring in Short Minutes of Order setting out the mathematically agreed total of interest on the judgment in the cross-claim. (4)Plaintiff/cross-defendant pay the defendants/cross-claimants costs of these proceedings. (5)Liberty to restore in relation to interest and costs. (6)Exhibits retained for 28 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 October 2012