Precision Flooring Pty Ltd v Armstrong - [2021] NSWSC 844

Supreme Court

New South Wales

Medium Neutral Citation: Precision Flooring Pty Ltd v Armstrong [2021] NSWSC 844
Hearing dates: 2 July 2020
Date of orders: 13 July 2021
Decision date: 13 July 2021
Jurisdiction: Common Law
Before: Walton J
Decision:
The plaintiff shall bring in short minutes of order reflecting this judgment within 7 days of the publication of this judgment. Those short minutes of order should include draft orders for the resolution of any issue as to costs, to the extent there remains dispute in that respect.

Catchwords:
ADMINISTRATIVE LAW – appeal – questions of law – whether ground properly involved no evidence point – intermediate findings – ultimate findings – whether some probative evidence – adequacy of reasons – procedure fairness – appeal upheld – judgment below set aside – remitter

Legislation Cited:
Competition and Consumer Act 2010 (Cth)
Local Court Act 2007 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Amaba Pty Ltd v Booth [2010] NSWCA 344
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33
B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187
Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Brennan v New South Wales Land and Housing Corporation (2011) 83 NSWLR 23; [2011] NSWCA 298
Bruce v Cole (1998) 45 NSWLR 163; [1998] NSWCA 45
Capital Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753
D’Amore v Independent Commission Against Corruption (2013) 303 ALR 242; [2013] NSWCA 187
Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32
Precision Flooring Pty Ltd v Armstrong (Unrep, Local Court of New South Wales, Baptie LCM, 25 October 2019)
Whitehaven Coal Mining Ltd v Pain [2018] NSWCA 229
Workers Compensation Nominal Insurer v Hill [2020] NSWCA 54

Texts Cited:
Aronson, Mark, Matthew Groves and Greg Weeks, Judicial Review of Administrative Action and Government Liability (2016, 6th ed, Thomson Reuters)

Category: Principal judgment
Parties: Precision Flooring Pty Ltd (Plaintiff)
Sandra Armstrong (Defendant)
Representation:
Counsel:
D Feller SC (Plaintiff)
E Peden SC with Mr T Bateman (Defendant)
Solicitors:
Vincent Young (Plaintiff)
McLean & Associates (Defendant)

File Number(s): 2019/365342
Decision under appeal

Court or tribunal:

Local Court of NSW

Jurisdiction:

Civil

Date of Decision:

25 October 2019

Before:

Baptie LCM

File Number(s):

2018/294081

Judgment

HIS HONOUR: By a summons filed on 20 November 2019, which was subsequently amended by leave of the Court on 2 July 2020 (“the amended summons”), Precision Flooring Pty Ltd (“the plaintiff”) appealed from, and to the extent necessary sought leave to appeal from, the judgment and orders delivered and made by Baptie LCM on 25 October 2019, by which her Honour awarded Ms Sandra Armstrong (“the defendant”) damages of $63,570: Precision Flooring Pty Ltd v Armstrong (Unrep, Local Court of New South Wales, Baptie LCM, 25 October 2019) (“Precision No 1”) .

PROCEEDINGS IN THE COURT BELOW

The proceedings in the Local Court of New South Wales were commenced by the plaintiff. By an amended statement of claim filed on 1 April 2019, the plaintiff claimed the sum of $23,202.90 for breach of an agreement between the plaintiff and the defendant whereby the plaintiff would supply and install various timber products and install timber stairs at the defendant’s property at Roseville.
The plaintiff claimed that the defendant’s conduct in failing to pay progress payments, as and when they fell due, was a repudiation of the agreement between the parties, which had resulted in loss and damage for the plaintiff.
The defendant filed an amended statement of cross-claim on 22 December 2018 in which it was pleaded, inter alia, that the plaintiff (the cross-defendant on the cross-claim) was in breach of the Competition and Consumer Act 2010 (Cth) (“the Consumer Act”) and the Australian Consumer Law (“the ACL”) as the plaintiff had failed to supply goods, under the agreement between the plaintiff and the defendant, that:

were of acceptable quality;

were reasonably fit for the disclosed purpose;

corresponded with their description; and

corresponded with their sample in quality, state or condition.

The particulars of those pleadings included:

A. the timber flooring that was supplied by the Cross Defendant pursuant to the Agreement was of an inferior type in that:
i. it was too thin:
ii. contained inconsistent edging and rough finishes: and
iii. was of a different type and size as described in the Agreements

B. the timber flooring that was supplied by the Cross Defendant pursuant to the Agreements was of an inferior type in that:
i. cracks appeared in the timber: and
ii. warps and burs appeared in the timber.

It was pleaded that the plaintiff guaranteed to the defendant that the services supplied under the agreement would, inter alia, be:

rendered with due care and skill;

reasonably fit for purpose;

of such a nature and quality, state or condition that they might be reasonably expected to achieve the result expected by the cross-claimant (the defendant) and supplied within a reasonably time.

The plaintiff also pleaded breaches of the Consumer Act and the ACL, with respect to services as follows:

19. In breach of the Consumer Act and the ACL, the Cross Defendant failed to supply services to the Cross Claimant under the Agreements that were:
a. rendered with due care and skill;
b. reasonably fit for purpose;
c. of such nature and quality, state or condition that they might be reasonably expected to achieve the result expected by the Cross Claimant;
d. supplied within a reasonable time.

Baptie LCM gave judgment for the defendant essentially upon the basis that the plaintiff had supplied and installed timber flooring and stairs in the defendant’s home which were not fit for purpose.

THE LOCAL COURT ACT

Section 39(1) of the Local Court Act2007 (NSW) provides an appeal as of right to a party who is dissatisfied with a judgment or order of the Local Court to this Court “on a question of law”.
Such an appeal must be predicated upon “an identified question of law” or “an erroneous answer in respect of a question of law”: see B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [75] (per Allsop P) and [150] (per Basten JA).
It may be observed, an appeal lies to this Court against a judgment or order of the Local Court sitting in its General Division, by leave, on a ground which involves a question of mixed law and fact (s 40(1)) or which is an interlocutory judgment or order, a consent judgment or order or an order for costs: s 40(2). That provision is in the following terms:

40 Appeals requiring leave
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:
(a) an interlocutory judgment or order,
(b) a judgment or order made with the consent of the parties,
(c) an order as to costs.

Pursuant to s 41(1) of the Local Court Act, the Supreme Court may determine an appeal made under ss 39(1) or 40:

(a) by varying the terms of the judgment or order, or
(b) by setting aside the judgment or order, or
(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or
(d) by dismissing the appeal.

THE APPEAL

Whilst the appeal was said to lie against the whole of the judgment of Baptie LCM, the grounds of the appeal were directed to particular aspects of the judgment of her Honour and confined to grounds which were said to constitute three errors of law to particular classes of error.
Notwithstanding that the plaintiff brought the appeal from the whole of the judgment below, the grounds of appeal were structured so as to first identify findings below which was challenged in the appeal and then to identify the errors of law made by each such finding. The following are grounds of appeal so stated:

1. The Local Court erred in law in finding that:
(a) both experts conceded that there was some noticeable distortion in the manufactured timber (at [47]);
(b) Mr Powell agreed that there was distortion in the flooring (at [53]);
(b1) the stained areas cannot be adequately dealt with by 'spot' fixing (at [54]):
(c) the flooring was, in general, not fit for purpose (at [53]);
(d) the only appropriate remedy is to remove and replace the entire floor area (at [54]),
because;
(e) those findings were made without evidence;
(f) those findings were made in breach of the rules of procedural fairness;
(g) those findings were not supported by adequate reasons; and
(h) the findings described in sub-paragraphs (c) and (d) above were infected by the erroneous findings described in sub-paragraphs (a), (b) and (b1).

I will hereafter refer to these grounds by the enumeration selected by the plaintiff (namely, grounds 1(a) to (h)).
Some observations may be made in that light as to the course of the appeal.
The defendant correctly contended that the amended summons brought a challenge to the whole of the judgment below but that, in substance, the appeal was brought against particular findings, namely, Precision No 1 at [47], [53] and [54], which only concerned the issues of distortions to the timber flooring laid by the plaintiff.
In written submissions, the defendant took the course of meeting the appeal by reference to the impugned findings identified in the grounds of appeal (namely, grounds 1(a) to (d)) under a series of headings corresponding to those findings rather than, by those headings engaging with the errors of law asserted in grounds 1(e) to (h).
The defendant then dealt with grounds broadly in the order dealt with in grounds 1(a) to (d), commencing with grounds 1(a) and (b) together. It was submitted, in this respect, that grounds 1(a) and (b) were findings of fact. It was submitted that the plaintiff attempted to convert them into “something more” by claiming they were made without evidence or contrary to procedural fairness or without adequate reasons. It was submitted that such suggestions would fail.
It was submitted that it was assumed that there was no claim for judicial review of the Local Court Magistrate’s decision as there has been no compliance with r 59.3(4) of the Uniform Civil Procedure Rules 2005 (NSW).
I agree with the plaintiff’s written submissions in reply that, by this process, the defendant’s written submissions tended to conflate the issues of no evidence to support a finding of fact and the adequacy of reasons. As I will discuss, contrary to the defendant’s written contentions, both of those issues concern questions of law.
Similarly, with respect to ground 1(c) (and (b1)), the defendant submitted that the plaintiff required leave to appeal with respect to the finding that the timber floor was not fit for purpose because the issue raised by the plaintiff concerned the application of legal principle to the facts of the case (a similar issue arose with respect to ground 1(b1)). It was contended that the “leave ought to not be granted because there is no doubt as to the correctness of the Local Court decision and the quantum of the judgment demonstrates the understanding of the matter being further litigated”. The defendant then turned to the correctness of the judgment below.
As to ground 1(d), the defendant submitted this was a mixed question of fact and law and required leave, which should not be granted.
The approach of the defendant tended to, at least in written submissions, overlook that the gravamen of the appeal was not that the factual findings were simply erroneous but rather were made without evidence (with respect to Precision No 1 at [47] and [53]) and without adequate reasons as to all of the nominated paragraphs of the judgment in the grounds of appeal (there was a further question of procedural fairness).
Nonetheless, the plaintiff’s written reply submissions tended to engage, in terms, with the defendant’s submissions including the structure of the defendant’s submissions whilst drawing attention back to the grounds of substantive grounds of appeal. Somewhat unusually, the defendant filed a reply to that reply.

ISSUES ON THE APPEAL

By the written submission of the parties, the issues on the appeal were essentially distilled to three issues corresponding to grounds 1(e)-(h) on the appeal. These were represented by the following questions (addressed in the order of the submissions of the parties):

were certain findings of the Local Court Magistrate made without evidence (grounds 1(e));

were findings of the Local Court Magistrate made without adequate reasons (ground 1(g)); and

was there a breach of procedural fairness (ground 1(f)).

Ground 1(h) was to the affect that the errors in law in the findings in grounds 1(a), (b) and (b1) had infected the findings in Precision No 1 at [53] and [54]. As such, it will be considered under the first issue.
Those three issues shall hereinafter be referred to as, collectively, “the grounds of appeal”.
The discussion of the submissions of the parties as to those grounds is derived from the oral submission of the parties and distilled from the written submission of that were referable to grounds 1(e) to (h).

THE DECISION IN THE COURT BELOW: PRECISION NO 1

Whilst attention was directed in the appeal to those particular findings by the Local Court Magistrate, a somewhat wider review of the judgment below is appropriate.
The preliminary aspects of the judgment in Precision No 1 consisted of the following:

That the proceedings were commenced by a company, that supplied and installed various timber flooring products and timber stairs, in the Small Claims Division of the Local Court. The defendant initiated the cross-claim in the General Division; essentially, for a failure to perform work as agreed or because of a claim for set off for defective work which was greater than the invoices claimed by the plaintiff.

There was a reference to the history of dealings between the parties, including that on 8 February 2018 the defendant claimed that she had contacted the plaintiff after the delivery of timber flooring products in boxes which were said to be damaged, as was the timber contained therein. The Local Court Magistrate also recorded that on 8 February 2018 the defendant noticed scratches and white marks on the timber and suggested they had resulted from the application of methylated spirits to remove glue from the flooring.

The defendant had part paid the invoices rendered and disputed that it had repudiated the contracts between the parties because the plaintiff was unable to satisfy the works contemplated in the contracts.

Whilst the plaintiff ultimately accepted that the stairs would need to be rectified after their expert stated that the stairs did not comply with Australian Standards, the plaintiff denied there was any evidence to support the defendant’s allegation that the entire flooring required removal and replacement. Mr Tony Powell was the expert called for the plaintiff. He produced a report of 27 May 2019 (“the Powell Report”). Mr Howard Ryan, was an expert called by the defendant, who produced two reports dated 30 April and 21 July 2019, respectively (hereinafter, the “First” and “Second Ryan Report”). There was a joint conclave, a joint report and concurrent evidence given by the experts.

Her Honour then turned to the expert evidence, first noting that both experts had accepted that the stairs were not compliant with Australian Standards and would need to be removed or replaced. As to the flooring, it was indicated that the experts were unable to agree in two respects:

whether there was moisture damage evidence in the timber flooring; and

as to the process of rectification of the areas of flooring, which had been damaged by the methylated spirits and inconsistent staining.

The defendant referred to Precision No 1 at [21], which was in the following terms:

[21] The plaintiff ultimately accepted that the stairs would need to be rectified after their expert, Mr Powell, stated that the stairs did not comply with Australian [S]tandards.

Her Honour then reviewed the evidence of the experts, particularly as to the moisture levels of timber flooring and the use of moisture metres. She referred to the issues in the expert evidence as follows (Precision No 1 at [29]):

[29] In relation to the flooring, the experts were not able to agree as to whether there was moisture damage evident. They were also unable to agree on the process of rectification of the areas of the flooring which had been damaged by the methylated spirits and inconsistent staining. They were also unable to agree on builder's margins and contingencies.

The defendant made reference to the expert evidence bearing upon those issues commencing at [30]. That discussion proceeded, in a manner which did not attract controversy as such on this appeal, through to [39]. I extract [30]-[39] of Precision No 1:

[30] Mr Powell described the appearance of the engineered timber flooring as "This board is what I would term block construction. There's two ways to make engineered boards: one is a ply core and the other is a block core. So the way this board is made is it's got a piece of timber on the bottom that supports the block system. If you look at the edge of the actual floorboard itself, you can see the individual pieces there, little blocks. What the blocks are are just pieces of timber that get laid perpendicular to the base of the board, they're glued together and then the lamella, which is the top part that we can see, the part that's sanded, stained and coated, is then glued onto the block section. So this is a three layer construction, I suppose, would be a way to describe it." (12/9/19 p 89.31) He also stated that "It's a solid piece of timber but it's not monolithic."
[31] Mr Powell stated that "there is no Australian Standard that covers engineered flooring but there is one that covers solid timber ... " (12/9/19 p 100.38).
[32] Mr Ryan attended the Defendant's premises on 11 April 2019. Mr Ryan stated in his first report that the "flooring contains between 18% to 21 % moisture and the essential "Requirements are to be 9% with a +/- tolerance of 2%." Mr Ryan produced 6 photographs of the Tramex moisture meter and the areas where he took those readings within the premises. They appear on page 16 of his first report.
[33] Mr Ryan again attended the Defendant's premises on 17 July 2019. He stated in his second report that the "supplementary moisture readings taken on 17 July 2019 are higher than the initial site inspection being between 18% and 22% in areas as to what was found on 11 April 2019."
[34] Mr Powell attended at the Defendant's premises on 6 May 2019. He stated that "Moisture meter readings of the flooring were taken using a Wagner MMC220 capacitance moisture meter. It should be noted that capacitance meters are often used as they enable many readings to be taken across a floor in quick succession, without damaging the flooring being tested. This enables easy comparison of one board or area of the floor to another. The readings are themselves not necessarily an indication of actual moisture content. If the actual moisture content of flooring needs to be determined an oven dry moisture content test would need to be undertaken; This test requires the removal of sections of the flooring and is a destructive test, but was no considered necessary at this time."
[35] He stated that "Capacitance moisture meter testing was undertaken in a number of locations throughout the areas, with the readings averaged over 10 boards at each location and with all readings falling between 10% - 12%, with these results being within expectations for the area and time of the year."

[36] Mr Powell then considered the findings of Mr Ryan's assessment of the moisture content of the flooring being 18 - 21 % and the 'Essential Requirements ' are to be 9% with a +/- tolerance of 2%. He stated that "this reference relates to the moisture content of the flooring at the time of manufacture and has no specific relationship to the in-service moisture content of the flooring, but with it generally accepted that the moisture content of all engineered floors would increase after installation, particularly when installed in a location such as Sydney and noting that an increase in board moisture content, post installation, is a cornerstone principle in the production and performance of such products ..... The photos are considered to show meter readings of (approximately) 18 - 21% with this confirmed in the report, Capacitance moisture meters work on specific gravity, with the density of the timber being assessed having a huge bearing on the accuracy of the results. It is considered that no correction figures have been applied to the readings recorded with the manufacturer stating that the meter is set at a specific gravity of 0.5 and correction must be made to meter readings when the specific gravity of the product being tested varies above or below this figure. It is considered that no such corrections were made, and as such the reported moisture content in the Ryan report is considered incorrect. .... The manufacturer of the meter provides tables to enable corrections to be applied based on the specific gravity of the timber being tested. Oak is generally regarded as having a specific gravity of 0. 7 and when the appropriate correction figures are applied, a meter reading of 20 % corrects to 14% but with it also important to understand that these figures are estimates of moisture content and not a measurement of the actual moisture content of the floor. ..... at the time of this inspection the floor had a flat appearance with this indicating it is most unlikely that there are any underlying issues associated with a high board moisture content."
[37] Both experts were questioned in relation to the manufacture and installation specification of 9% plus or minus 2%. Mr Ryan agreed that that specification applied when the installer opened up the box and obtained the timber. He agreed that the moisture content of the wood would depend on the environment and the humidity where the wood was laid. He agreed that he did not expect that the wood would be held to those levels after they were laid.
[38] Mr Ryan stated that "they can't control the moisture content when the timber is delivered in boxes. The idea is to open up the box and acclimatise the timber and determine the moisture content before it's laid." (10/9/19 p64.32). He continued to state that "the flooring contractor would then check the moisture content upon opening the box and then make a decision whether they lay the wet floor or they don't lay the wet floor." (10/9/19 p 64.45).
[39] Mr Powell stated that "the way engineered flooring is made and packaged, it's produced and shrink wrapped, so there's cardboard boxes, but it's common to all manufacturers of engineered flooring that they're wrapped in plastic. The idea is that is to maintain the moisture content from production to the time of installation, so the expectation is that, when the flooring shows up on site -some manufacturers talk about the need to acclimatise engineered flooring, but it has a completely different meaning to the acclimatisation of solid timber. So where a solid timber - acclimatisation means to stack the flooring in the area it's going to be installed and you're looking for a change in moisture content. When the manufacturer speaks about acclimatising, whether it be engineered laminate or bamboo, the commonality between the three products is · we're looking at a change in the temperature of the product. "(10/9/19 p66.25). He explained that if the engineered wood is placed in a warehouse at sub zero temperatures and then placed in a house where it is to be laid at 22 degrees, "the flooring can suffer what's called thermal shock. So acclimatisation is not the principle of opening the box up and leaving the timber around. That has an adverse effect.".

Particular attention was drawn by the defendant to the finding in Precision No 1 at [40], which was in the following terms:

[40] Mr Powell indicted that he was not aware that at the time that some of the flooring was delivered it was not shrink wrapped and was damaged upon arrival. He stated that "depending upon the environment delivered into and how it had been stored, it could affect moisture on the boards." (10/9/19 p 79 .50) He further indicated that he had not been informed that no moisture reading had been taken at the time that the timber product was delivered to the home, or prior to installation.

Her Honour then considered evidence as to the method of testing before returning to Mr Powell’s evidence at [43]. That paragraph concerned evidence given by Mr Powell upon being shown a board from the defendant’s garage. As mentioned, it was a passage of particular significance and is extracted below:

[43] Mr Powell was shown a board that had been in the garage at the Defendant's premises and agreed that the piece of timber was not flat. Mr Ryan stated that the piece of timber was crowned. Mr Powell stated that "An increase in moisture content - timber doesn't change in length, it only changes in width. So the top lamella would actually get wider and the block system is ther[e] to stabilise the board, so the block system won't change across the board width. So what happens is, as the lamella - increase in moisture content. It gets wider - it crowns. So if you had the opposite happen and there was a significant drop in moisture content, then you would expect the moisture content level to reduce and the moisture - the width of the lamella would reduce in a reduction moisture content - and then you're likely to see cupping. So generally speaking, with a floor that's in the environment that's only affected and driven by air relative humidity, an increase in moisture content will not cause cupping in an engineered board. You can't get cupping in a board like that. You can get cupping because of moisture ingress - so inundation, for instance, will do it but an increase in moisture content, in a board in service - or an engineered board, this board here, will cause crowning, not cupping." (12/9/19 p 92.03).

After further discussing some aspects of the disputes in the expert evidence, her Honour stated at [46]:

[46] Mr Powell indicated that he had offered to perform further testing during the conclave and that Mr Ryan had stated that that wasn't necessary. Both Mr Ryan and Mr Armstrong stated that they had not heard Mr Powell suggest further testing, in relation to moisture or cupping. Mr Armstrong also stated that Mr Powell's meter testing during his first visit was not as extensive as Mr Powell had described in his evidence.

Her Honour then made a finding which was specifically the subject of the appeal in the amended summons as to the no evidence contention (and concerned the distortion of the timber flooring). At [47], the Local Court Magistrate found:

[47] The Court is of the view that the evidence given by Mr Powell, as it relates to the issue of using a moisture meter, and those results, is to be preferred to that of Mr Ryan. The Court is, however, concerned with the issue of the cupping/crowning evidence, given by both experts. It would appear that both concede that there is, at the very least, some noticeable distortion in the manufactured timber.
[Emphasis given in plaintiff’s written submissions.]

Her Honour then turned to the staining and disfigurement of the flooring as follows (at [48]):

[48] There is the aligned, yet separate issue of the staining and disfigurement to the flooring. The Court in this regard, prefers the evidence of Mr Ryan as to the damage and inadequacy of the means to rectify that damage. This would appear to be corroborated by the plaintiff's employees. It would appear from the available evidence that a number of attempts were made by the plaintiff to rectify the white marks with sanding and further staining, which appeared to exacerbate the marks. It should be noted that Mr Powell commented in his report that the dark marks appeared to be more pronounced than was apparent in the photographs annexed to his report.

As to the removal and replacement of sections of the flooring, her Honour made the following finding (at [49]):

[49] The Court accepts the evidence of Mr Ryan over that of Mr Powell in relation to the difficulty in removing sections of the tongue and groove, and the unlikelihood of a uniform finish if the areas are simply patched.

At the conclusion of Precision No 1 at [50], her Honour commenced discussion as to a variety of considerations ranging from the stipulation by the defendant as to the work to be carried out and the nature of the implied consumer guarantees given by the plaintiff to overall conclusions as to the stairs, distortion to the flooring and staining of the flooring.
Paragraphs [50]-[52] of Precision No 1 were uncontroversial. They are extracted below:

[50] The Court is of the view, based on the evidence that the Defendant made it quite clear to the Plaintiff that she wanted a 'bespoke' floor with a uniform appearance. She stated that she wanted a "beautiful floor and stairs." It is accepted on the evidence that the Plaintiff was aware of the purpose for which the flooring was to be installed. The Defendant was relying on the Plaintiff' expertise and the Defendant accepted the Plaintiff's recommendations. As such, the Court is of the view that the facts engage the operation of the ACL.
[51] The Defendant contends that the "ACL imports implied consumer guarantees into consumer contracts, which the relevant agreements are." Those implied consumer guarantees are as follows:
(a) Acceptable quality
(b) Fit for purpose
(c) Comply with sample
[52] It is clear on the Plaintiff's own case that the stairs are both defective and incomplete. The claim by the plaintiff in those circumstances, must be rejected.

Paragraphs [53] and [54] concerned the overall conclusions reached by Baptie LCM in Precision No 1 and were in the following terms:

[53] In relation to the rest of the flooring, Mr Powell agrees that there is some distortion in the flooring, but denies that the product is exhibiting cupping, consistent with excessive moisture. It would appear that there is no other explanation for the inconsistencies in the flooring, except that the flooring is not fit for purpose.
[54] In addition, is the issue of the rectification of the staining, caused by the Plaintiff's contractors. The floors in this regard are clearly "unfinished" and the Court rejects the Plaintiff's claim that the invoices remain unpaid as the work has been completed. The Court is of the view that the stained areas cannot be adequately dealt with by 'spot' fixing. The two issues have caused the Court to conclude that the only appropriate remedy is to remove and replace the entire affected floor area. The Court is not of the view that the kitchen should be removed for this purpose.
[Emphasis given in plaintiff’s written submissions.]

THE FIRST GROUND: NO EVIDENCE

The Plaintiff’s Submissions

The plaintiff’s challenge to the judgment below, in this respect, was fixed upon those parts of Precision No 1 at [47] and [53] as earlier emphasised in this judgment by the italicisation relied upon by the plaintiff (see above at [39] and [44], respectively). The plaintiff contended that those passages of the judgment below represented a determination by the Local Court Magistrate that Mr Powell had conceded there was distortion in the flooring and, in the result, it was a common position between the experts on that issue.
The plaintiff contended there was no evidence that supported that element of the reasoning of the Court below and, further, that this was an important factor in her Honour concluding that there was a distortion in the floor boards such that all floorboards should be removed in rectification.
The plaintiff made the following additional submissions as follows as to distortion in the floor (this issue also has a relationship to the issue of rectification):

There were two core areas of disagreement between the experts. The first was whether there was moisture damage evident in the floor and the second, which was related to the first, was whether there was any “cupping” in the floor. Another question was whether the appropriate method of rectification of any area of the floor which showed imperfection, in the form of spotting and staining, should be rectified by re-staining or alternatively by replacing sections of the floor which were not capable of being repaired by spot fixing (to which I shall refer to below).

Again, at [43] of Precision No 1, her Honour referred to Mr Powell being shown a board in the course of cross-examination that had been kept in the garage at the defendant’s premises. Whilst it was accepted that this Court may not infer from the judgment below that the board was kept in the garage because it was defective as having been culled, it was submitted that “the Magistrate seems to have inferred something from that which is not in evidence”.

Again at [43], her Honour refers to Mr Powell’s evidence where he stated, as to the board in question, “This board here, will cause crowning not cupping”. Senior counsel for the plaintiff, Mr D Feller, submitted that Mr Powell’s evidence did not involve a concession that the piece of timber shown to him represented the floor as laid. There are two further important aspects of the evidence referred to by the Local Court Magistrate. First, the claim brought by the defendant was that the floor as laid exhibited cupping not crowning. Secondly, Mr Powell’s evidence was that the piece of timber in question, insofar as it was not flat, was exhibiting signs of crowning as opposed to cupping.

In the light of this submission, it was contended:

Now, by referring to the concession in terms of the manufactured timber, the magistrate in my respectful submission was blurring the distinction in Mr Powell’s evidence between the unlaid piece from the garage and the timber which had been laid about which Mr Powell had made no such concession. So there seems to be this transition in the logic from a particular specimen to the generality of the floor, which then subsequently appears to infect the logic and the conclusions that are later made. But we say that the finding that Mr Powell conceded, that there was some noticeable distortion in the manufactured timber, is not one that is supported by Mr Powell’s evidence.

The finding in Precision No 1 at [53] was also not supported by the evidence. There is no evidence that Mr Powell agreed that there was some distortion in the flooring. What is being considered in this passage by Local Court Magistrate is not the sample of timber but the whole of the flooring as laid. That is because the paragraph commences: “In relation to the rest of the flooring”. There is no evidence that Mr Powell agreed there was some distortion in the rest of the flooring. He denied the product was exhibiting cupping consistent with excessive moisture and the Local Court Magistrate seems to be dealing with the question of cupping at [53]; such that the inconsistencies in the flooring that her Honour appears to be dealing with concern the question of cupping.

From that submission, the following proposition was advanced by the plaintiff:

So having found that there was cupping, partly because Mr Powell agreed there was, or there was distortion I should say, she says, “There’s no other...fit for purpose.” Now, the fact that the flooring is not fit for purpose cannot be an explanation for the inconsistencies. The fact that the flooring is not fit for purpose is a conclusion that must follow a premise. So the fact that the floor is not fit for purpose is a conclusion that follows the premise that the floor has inconsistencies. It’s not the other way around, except it’s expressed the other way around, so it’s just meaningless.

It was then submitted that [53] of the judgment displays a clear error of law, in that it is not supported by the evidence and the conclusion drawn is not supported by the evidence. The last sentence of [53] is a non sequitur.

Further, in support of those contentions, the plaintiff relied upon other aspects of the evidence bearing upon Mr Powell’s opinions; namely, the Powell Report, the joint conclave Scott Schedule (“the Scott Schedule”), evidence given by Mr Powell before the Local Court, together with evidence given by Mr Ryan and Mr Phillip Armstrong (the husband of the defendant).
Reference was made to the Powell Report at 16, which is extracted below:

In overall terms the engineered floor is considered to conform the industry standard and meets industry expectations with the caulking of the doorways and the installation of trim of the stairwell. servicing the lower ground floor. considered unfinished, rather than defect work.
It is considered that the installation of the flooring has been undertaken to a commercially acceptable standard and as such no remedial work is necessary regarding this aspect of the installation. If, however remediation is considered necessary to address the "staining'' (both the lighter and darker marks) it would be expected that this could be achieved without the removal of any flooring, but with the touching up of individual boards or sections of board.
The moisture content of the flooring was assessed at 10%-12% with this considered to be within expectations for the area and time of the year. The Ryan report stated that a moisture content of 18.0% - 21% was recorded but with this estimation considered erroneous for the reason outline[d] in the report. Additionally, the flat appearance of the floor supports the assessed moisture content recorded at the time of this inspection.
[Emphasis added.]

It was contended that the Powell Report, therefore, made it clear that the flooring installed was of a commercially acceptable standard. Further, it was contended that the reference to the flat appearance of the floor was a negation of the proposition that “cupping” was present. In support of this latter contention, reference was made to the evidence of Mr Powell in cross-examination, as follows:

PEDEN: It's the case that you did not take any photos of the floor or do any measurements on the floor to establish that it was flat, as opposed to cupping?
WITNESS POWELL: I didn't take any photos of it but I had a look at that. I assessed the dimension of the boards and the flatness of individual boards when I was there the first time - there at the time of the first report, of preparing the first report.
…
WITNESS POWELL: We spoke about a few things while we were sitting at the table and Mr Ryan and I got up and we walked around and we were looking back towards the front door, the front of the house, and I walked down the hall 45 a distance, towards the stairs, and that's - at that point we had a difference of opinion about whether the floor was flat or not. I explained what we were looking at and the - so the flatness of the floor is affected by--

As to the Scott Schedule, reliance was placed upon the following statements from Mr Powell:

Furthermore, I did not observe any cupping in the flooring at the timer [sic] of my original site inspection or at the conclave. as identified by Mr Ryan in his report. In circumstances where there are abnormally high moisture levels in the flooring, one could expect to see cupping, crowing (the opposite of cupping), buckling, squeaks in the floorboards and/or some vertical movement. I did not observe any of these manifestations at either of my on-site inspections. There were no apparent signs of any reduction in installation integrity.

At the conclave, in response to my suggestion to carry out further assessment of the alleged cupping Mr Ryan conceded that further testing was not required and that there was no cupping present. This further indicates that it is unlikely that the floor has an unacceptably high moisture content.
[Emphasis relied upon by the plaintiff.]

The plaintiff also relied upon Mr Powell’s evidence given at the hearing below, in which he stated:

Mr Ryan was of the opinion that cupping was present and I was of the opinion it wasn't. We spoke about a lot of other issues, as well. I stood up and I asked Mr Ryan, who stood up with me, to show me which boards were cupped. He indicated a couple - it's not really a hallway but it's a walkway from the dining room, at the back of the house, to the front door. And I've walked down there, probably got to about the stairs, in that area, Mr Ryan has said, "That board down there", so I've down to look at it. The board in question - and there were a couple in the floor. Because the product is a wire brush finish, the significance - or the embossing from the wire brush varies across the board, so in some spots it's deeper than other spots, so when you look at a board that's got - and this is the way they're made, they're made - it's not a fault or anything but when you look across the board. the surface doesn't necessarily appear to be flat because of the way light refracts off the textured surface, as opposed to a section of the board that's not so textured. So Mr Ryan - I pointed to the board and he said, "That's the one", we had a look at it - or I had a look at it and in my opinion. it wasn't cupped and I offered to go out and get my toolkit and bring it in, a steel rule, my moisture meters, feeler gauges, put a rule over it and then assess the flatness of that board, and Mr Ryan said that wasn't necessary.
[Emphasis relied upon by the plaintiff.]

Reliance was also placed on the following evidence from the same day of the hearing:

I did ask, or clarified, was it not necessary because he just simply didn't want me to do it or was it not necessary because he was conceded that, after I explained to him why that board had that particular appearance that he understood that it's not cupped, it's simply the way the light's refracting off the board, and he conceded the board wasn't cupped.

Reliance was placed upon Mr Ryan’s evidence, which was to the effect that Mr Ryan concurred that Mr Powell did not agree with his statement that there was cupping near the kitchen area. Similarly, reliance was placed upon evidence given by Mr Armstrong in cross-examination, as to an exchange between Mr Ryan and Mr Powell. Mr Armstrong’s evidence was that Mr Powell did not agree there was cupping in the timber pointed to by Mr Ryan.

The Defendant’s Submissions

The defendant contended that Baptie LCM provided adequate reasons by making the findings of fact necessary to determine issues of want of fitness for purpose and the appropriate remedy if the timber floor was not fit for purpose. One issue in dispute was the levels of moisture and whether the flooring was negatively impacted by the existence of moisture. It was contended that both Mr Powell and Mr Ryan had taken moisture readings at the home. Mr Ryan's expert opinion was that the flooring was negatively impacted by moisture because of the moisture readings he took and the visual appearance of cupping.
Mr Powell's evidence concerning the use of a moisture meter and his results were preferred to those of Mr Ryan. However, that was the not the whole of the evidence of the experts concerning the impact of moisture on the flooring. There was no “oven dry test” carried out, which would have been conclusive of the existence of moisture in the flooring. Mr Powell considered such a test unnecessary.
Mr Ryan gave evidence that he had seen “cupping” in the timber and provided a photo of the timber to demonstrate that issue. Mr Powell took no photos of the same area, but denied there was cupping. Baptie LCM gave the parties the opportunity of further inspecting the site and carrying out further tests, and the plaintiff did not take that opportunity.
The defendant was correct to submit that in Precision No 1 at [47] Baptie LCM drew a distinction between the expert evidence concerning the use of a moisture meter and the results deriving therefrom (where the Local Court Magistrate had exhibited a preference for Mr Powell’s evidence) and other concessions as to the destruction of the timber floor, namely, the issue of cupping and crowning.
As to the latter consideration, the defendant submitted that “both experts considered there was distortion in the timber at the defendant’s home”.
Adjusting for an amendment made to the written submissions of the defendant in support of that proposition, during the course of oral submissions, the defendant placed reliance upon the following unchallenged findings by Baptie LCM concerning Mr Powell’s evidence:

He expected that the flooring would be delivered wrapped in plastic with "the idea… to maintain the moisture content from production to the time of installation".

A number of the boxes of flooring were damaged and the timber also appeared to be damaged.

He had not been told when preparing his report that the timber was not tested for moisture when it was delivered or when it was delivered to the home, nor laid.

Mr Powell considered that the type of flooring would "crown" if affected by moisture.

He agreed that a piece of timber shown to him in cross-examination (which had come from the defendant's garage) evidenced some distortion in the form of "crowning".

As to the last consideration, the defendant pointed to the evidence of Mr Powell where he, it was contended, conceded there was crowning the floorboard from the defendant’s home that he was shown to the effect that the floorboard was effected by moisture.
It was further submitted in reply that:

[38] The Primary Judge concluded that it was not possible to rectify the discolouration damage without replacement of the flooring because of the following compelling reasons recorded at J[48]-[49]; CB51:
a. She preferred Mr Ryan's evidence about removal being the appropriate solution, because of the difficulty in removing sections of tongue and groove and unlikelihood of a uniform finish if only patching is done;
b. The Plaintiff had made a number of attempts to rectify the white marks;
c. Mr Powell agreed that the dark marks were more pronounced than was apparent in his report: T121:38-32;CB175.

That submission sprung from answers given by Mr Powell in questioning by the defendant of the piece of timber. Mr Powell’s evidence, in that respect, (with emphasis upon the component relied upon by the defendant) appears below (it is a slightly longer extract of the evidence than taken in by Baptie LCM in Precision No 1 at [47]):

WITNESS POWELL: Yes. Sorry, so I'm just explaining in a general sort of - I suppose, the process. So if you took this board and if we - let's say we say it was made at a moisture content at the top end of the scale, 11 %. 11 % moisture content is ideally suited to an environment where relative humidity is 60% and that being case, as long as relative humidity doesn't go above or below that, the board won't change shape; it simply sits there and doesn't change. If relative humidity drops below that or rises above it, what happens is the board will actually either lose or take on moisture and in doing so you will see a slight change in the board. So with an engineered board with this particular board, with an increase in moisture content that you would expect in service in the eastern seaboard of Australia, in most applications, you would find that, with an increase in moisture content, the lamella on top is the first thing that reacts. An increase in moisture content - timber doesn't change in length, it only changes in width. So the top lamella would actually get wider and the block system is there to stabilise the board, so the block system won't change across the board width. So what happens is, as the lamella - increase in moisture content, it gets wider - it crowns. So if you had the opposite happen and there was a significant drop in moisture content, then you would expect the moisture content level to reduce and the moisture - the width of the lamella would reduce in a reduction moisture content - and then you're likely to see cupping.
So generally speaking, with a floor that's in the environment that's only affected and driven by air relative humidity, an increase in moisture content will not cause cupping in an engineered board. You can't get cupping in a board like that. You can get cupping because of moisture ingress - so inundation, for instance, will do it but an increase in moisture content, in a board in service - or an engineered board, this board here, will cause crowning, not cupping.
[Emphasis by the defendant.]

Senior counsel for the defendant, Ms E Peden, who appeared with Mr T Bateman of counsel, made the following oral submissions as to [47] of the judgment below:

It was contended that:

There was a wealth of evidence given by the experts about moisture and cupping and crowning. I submit, what her Honour is saying is it is possible that they are both right and it was not necessary for her to conclude that one was right and one was wrong. I will make that good. Her Honour does conclude, “It would appear that both concede...at least some noticeable distortion in the manufactured timber.” What she is concluding in paragraph 47 is all of the matters, which have been identified previously in the judgment concerning the risk of damage to the timbers that were present in the home and were laid. This is, in a sense, picking up on all of those previous paragraphs.
It is not suggested by the defendant that Mr Powell maintained his position that there was no cupping, that is not put by us. Instead we say it was entirely open to the primary judge to conclude that Mr Powell had noticed distortion in the piece of timber he had been shown, as had been recorded in paragraph 43, which only came four paragraphs earlier. That makes sense. Mr Ryan's evidence was that there was cupping on the flooring and that's not in dispute either as we have already been over.

By reference to [47] and [53] of Precision No 1, it was submitted:

Then what occurs in relation to the distortion issue is at paragraph 53 of the judgment her Honour records, "Mr Powell agrees there is some distorting in the flooring" that is just merely a repetition of paragraph 47. It is recorded, "He denies the product exhibited cupping". So, there is no question her Honour didn't understand or didn't record the evidence. She knew Mr Powell said, no cupping; but he did agree that a piece of timber was crowning…. It is correct that Mr Powell agreed that there was some distortion, as I have been over.

Reference was then made to [47] of Precision No 1 and whether, it was submitted, Baptie LCM intended that the view of cupping or crowning on a floor was subjective and that even with some distortion of that view, the product would be commercially acceptable. The defendant stated, however, that question is whether it was “aesthetically acceptable to a customer”

Turning specifically to [53] of Precision No 1, it was contended:

I submit, what her Honour was doing in paragraph 53 by indicating that there is no other explanation for the inconsistencies in the flooring was referring to the experts subjective understanding of "cupping" or "crowning". She did not reject Mr Ryan's evidence that he could see cupping, even though Mr Powell said he could not. The inconsistencies in the flooring were explained by the fact it was not fit for purpose, which was also consistent and logical with the previous findings about the state of the timber when delivered and the possibility of there being an impact on what was delivered. Therefore, it was not fit for purpose.

As to staining, it was submitted that the question of “staining” was “clearly separate” to the issue of floor moisture. By reference to [48] of the judgment, it was submitted that staining was sufficient to sustain the remedy of replacement. As to staining, her Honour at [48] stated she preferred the evidence of Mr Ryan. She does not elaborate on that preference but it is submitted the conclusion is supported by the plaintiff had attempted to rectify the floor with sanding and further staining.

In the event the Court found there was no evidence to sustain that conclusion that Mr Powell had made the concession in question, the appeal would not succeed because that finding was not essential to the ultimate finding by the Court.

Those submissions corresponded to parts of the defendant’s submissions in reply as follows:

19. The lay evidence also supports the Primary Judge's conclusion that the floor boards were imperfect and stained, which, as McHugh J indicated, is a permissible approach to determining a factual issue, such as fitness for purpose. The lay evidence included:
a. The unchallenged evidence of Mrs Armstrong that:
i. "there are a number of boxes that have damage to them, some of which looks like it has also damaged the timber itself': CB283;
ii. she had "serious concerns regarding the finish, stains and marks on the timber flooring and the Plaintiff's attempt to cover up the issues": CB284;

b. the extensive email chains between the Plaintiff and the Defendant in relation to the rectification of the staining caused by the Plaintiff's workers: CB334-358;
c. The evidence of Mr Armstrong that:
i. He "observed the Plaintiff's employees and contractors preparing the timber flooring products inside the Premises, causing damage to the timber flooring products... ": CB:389;
ii. He considered it unacceptable that the "floors [had] marks and stains all over them from methylated spirits that have been applied to the, which has ruined the finish... " CB:391.

In the final disposition of this question, I have had regard to the defendant’s submissions as to the adequacy of reasons, which were summarised under the corresponding heading below.

The Plaintiff’s Reply Submissions

It is convenient to set out the response of the plaintiff to those propositions at this juncture. The plaintiff submitted that the various findings concerning Mr Powell’s evidence did not rationally support the conclusion that “Mr Powell agreed that there was some distortion in the flooring” and, further, supported the contention that “there was no evidence on which the Magistrate could reasonably have based her finding that Mr Powell had conceded that there was some noticeable distortion in the floor”.
Those propositions were supported by the following analysis corresponding to the five propositions advanced by the defendant (as set out at [60] of this judgment) as follows:

Whilst Mr Powell expected that engineered flooring would be shrink wrapped, as noted at [39] of the judgment below, he did not concede that the failure to do so would invariably affected the moisture of the boards, and stated, as noted at [40] of the judgment below, that this depended on the environment it was delivered into and how it had been stored. The Local Court Magistrate did not make any finding based on this evidence.

The difficulty with reliance upon this factor is that the Local Court Magistrate rejected Mr Ryan’s readings about the excessive moisture content. In any event, Her Honour made no findings at all about excessive moisture content. Nor does the Local Court Magistrate make any finding about cupping in the existing floor but merely finds there are inconsistencies without explaining what those inconsistencies were in a case that essentially concerned cupping. Thus, the issue of whether the product was shrink wrapped is irrelevant to the questions raised on the appeal because the moisture level does not seem to have featured in the Local Court Magistrate’s decision. There was simply no engagement in the issue of cupping or crowning, avoiding the issue by means of stating that there is a concession which results in an agreement that there is some noticeable distortion without even stating what the distortion was in the particular case.

The defendant's evidence that upon delivery "a number of those boxes were damaged and timber also appeared to be damaged" is noted at [8] of the judgment below, but is not again referred to in the judgment or in the reasoning process. The defendant's submissions do not point to any evidence specifying how the timber "appeared to be damaged" or if that damage is in any way relevant to the Baptie LCM's finding as to the existence of "inconsistencies in the flooring".

This is affected by the same considerations as (1) above.

Precision No 1 at [43] records Mr Powell's evidence, namely, that the type of flooring could either "crown" or "cup" depending on whether it is affected by a significant increase or a decrease in moisture content, respectively. However, as was also recorded in the judgment, Mr Powell stated that an engineered board in question may experience crowning but not cupping as the result of an increase in moisture content. The Local Court Magistrate did not make any use of this evidence, her Honour’s only reference being at [47] with respect to the Court's concern "with the issue of the cupping/crowning evidence, given by both experts". Further, Mr Ryan had only claimed the existence of cupping and not crowning. Baptie LCM did not make any finding resolving the issues whether: (a) cupping as opposed to crowning was possible, and (b) whether there was cupping evident in the laid floor.

At [43] of the judgment below, Baptie LCM recorded that Mr Powell was shown a board that had been in the garage at the defendant's premises and agreed that the piece of timber was not flat. Mr Powell did give that evidence and also said that it was "slightly" crowned. He then continued to explain the effect of moisture content on crowning or cupping. Mr Powell did not accept that the timber that had been laid exhibited any cupping as asserted by Mr Ryan or was otherwise anything but "flat". Moreover, there was no evidence that Mr Powell conceded that there was any noticeable distortion in the timber that had been laid and was the subject of the complaint. If the Local Court Magistrate was processing in her reasoning from Mr Powell's evidence that the piece of timber from the garage that was shown to him was not flat to her finding that he conceded that there was some "noticeable distortion" in the timber as laid, that reasoning was not readily apparent and required explanation for at least the following reasons:

Mr Powell's evidence was that the piece shown to him in evidence was slightly crowned, whereas the defendant's claim was that the timber as laid was cupped;

Mr Powell's evidence was that the timber as laid was flat and not cupped;

Baptie LCM, at [47], did not refer specifically to the floor as laid, but rather to the "manufactured timber", thus eliding the important distinction between Mr Powell's concession about the piece shown to him and his opinion about the floor as laid.

The submissions by the defendant as [60(1)]-[60(3)] above are examples of ex post facto reasoning being supplied to justify the Local Court Magistrate’s ultimate finding as to distortion. Baptie LCM did not refer to those matters.
As to the question of reasons, it was submitted that there was no evidence of the particular findings which were fundamental building blocks in the reasoning chain leading to the decision and there was an absence of reasons in relation to various findings which were critical findings (which will be returned to below).
It was contended, by the plaintiff, that the Local Court Magistrate’s finding that Mr Powell had agreed that there was some distortion in the flooring was an essential step leading to the ultimate finding in Precision No 1 at [53] (specifically, the second sentence) that there was no other explanation for the inconsistencies in the flooring except that the flooring was not fit for purpose.

Conclusion: The First Ground

Whilst the plaintiff variously referred to the illogicality or irrationality of the decision making below, the ground of judicial review relied upon, in that respect, was squarely based upon there being no evidence to support the impugned findings (see the discussion of relationship between those grounds of judicial review: D’Amore v Independent Commission Against Corruption (2013) 303 ALR 242; [2013] NSWCA 187 (“D’Amore”) at [235] (per Basten JA); see also Brennan v New South Wales Land and Housing Corporation (2011) 83 NSWLR 23; [2011] NSWCA 298 at [93] (per Basten JA), citing Amaba Pty Ltd v Booth [2010] NSWCA 344 at [23]). As earlier mentioned, in my view, the attack in that respect was not upon a finding of fact per se but the ground was formulated as a point of law based upon there being no evidence to support the finding: see Workers Compensation Nominal Insurer v Hill [2020] NSWCA 54 at [82] (per Simpson AJA). However, it is ultimately necessary to analyse the impugned finding to determine whether the ground of appeal does, in fact, invoke that principle: Capital Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753 at [52] (per McCallum J).
The absence of material capable of supporting a finding on a material issue constitutes an error of law: Kostas v HIA Insurance Services Pty Ltd t/as Home Owners Warranty (2010) 241 CLR 390; [2010] HCA 32 (“Kostas”) at [91]; D’Amore at [224]. Thus, a tribunal which decides a question of fact when there is no probative evidence to support the finding makes an error of law (not a factual error): Kostas at [91] and [92]; Bruce v Cole (1998) 45 NSWLR 163 (“Bruce”) at 188-189.
What amounts to material that “could” support a factual finding is ultimately a question for judicial decision (Kostas at [91]). Evidence in this respect means material which could rationally affect the decision-maker’s assessment of the probability of the facts in issue: D’Amore at [235].
Similarly, the drawing of an inference without evidence to support it is an error of law: Bruce at 188; Whitehaven Coal Mining Ltd v Pain [2018] NSWCA 229 (“Whitehaven”) at [29] (per White JA, with whom Emmett and Simpson AJJA agreed).
Thus, in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33 (“Bond”) at [87]-[88] (per Mason CJ, with whom Brennan J agreed) stated:

[87] The question whether there is any evidence of a particular fact is a question of law: McPhee v. S. Bennett Ltd. (1934) 52 WN (N.S.W.) 8, at p 9; The Australian Gas Light Co. v. The Valuer-General (1940) 40 SR(NSW) 126, at pp 137-138. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law: Australian Gas Light, at pp 137-138; Hope v. Bathurst City Council (1980) 144 CLR 1, at pp 8-9. This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions: Federal Commissioner of Taxation v. Broken Hill South Ltd. (1941) 65 CLR 150, at pp 155, 157, 160. 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: Sinclair v. Maryborough Mining Warden (1975) 132 CLR 473, at pp 481, 483.
[88] But it is said that "(t)here is no error of law simply in making a wrong finding of fact": Waterford v. The Commonwealth (1987) 163 CLR 54, per Brennan J. at p 77. Similarly, Menzies J. observed in Reg. v. The District Court; Ex parte White (1966) 116 CLR 644, at p 654:
"Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law."

Further, Mason CH stated in Bond (at [89]):

[89] Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.

Spigelman CJ in Bruce (at 188-189) observed that the expression reasonably open in this context went no further than requiring some probative evidence or other factual material.
As Mark Aronson, Matthew Groves and Greg Weeks observed in Judicial Review of Administrative Action and Government Liability (2016, 6^th ed, Thomson Reuters), at common law, when there is some evidence, no matter how unconvincing, and no matter how overwhelmed it might have been by evidence to the contrary, the traditional approach is to treat the complaint as being factual (although that is not to preclude the possibility of there being a jurisdictional error).
In my view, the findings of Baptie LCM which were impugned under these grounds may be properly understood as follows:

An intermediate finding that there was a common conclusion by the experts that there was “at the very least, some noticeable distortion in the manufactured timber” (Precision No 1 at [47]). Given her Honour’s expressed understanding of Mr Powell’s opinion in that paragraph of the judgment below, the plaintiff was correct to submit that a finding was made that Mr Powell had made a concession to that effect. The concession was in relation to what Mr Powell had referred to as an “engineered board” or a “manufactured board” and was distinguished (both in the evidence below and the first instance decision) from the timber flooring as laid.

The ultimate finding in Precision No 1 at [53], which, in my view, contained the following elements:

Given [53] was concerned with distortion and having regard to the preceding paragraphs, namely, [50]-[52] (by reference to the overall floor as distinguished from the stairs), the immediately preceding discussion of distortion (vis-à-vis the engineered board at [47]) and the identification of issues at [29], it is clear that the opening words “In relation to the rest of the flooring” was a reference to the timber flooring as laid and not the manufactured or engineered timber board(s) delivered to the premises or the particular piece of timber shown to Mr Powell (which had been located in the garage. So much is also clear from [54], Baptie LCM is addressing overall deficiencies (as I will discuss below) in the timber as laid. Further, in Mr Powell’s evidence as set out in [47] of the judgment below, he draws a distinction between “board in service” and “an engineered board”. He attributed the latter description to the board he was shown during the course of giving evidence.

Mr Powell had agreed there was a distortion in the timber flooring as laid; even though he disputed there was any cupping, as such.

There would appear to be “no other explanation for inconsistencies in the flooring, except that the flooring is not fit for purpose”.

As to the last mentioned element of the finding, the plaintiff was correct to submit that there is an apparent illogicality (see (c) in the preceding list) as presumably the premise for the conclusion that the flooring was not fit for purpose was that there were inconsistencies in the flooring. However, the substance of what Baptie LCM found at [53] (and there seems to be no dispute in this respect) was that the timber floor as laid is not fit for purpose.
The foundation for that conclusion is clouded by the non sequitur to which I have referred above. However, there can be little doubt that Baptie LCM reasoned to a finding that the flooring was not fit for purpose from the existence of inconsistencies or distortions in the floor as laid. In the result, the reference to there being “no other explanation for the inconsistencies in the flooring” relates, in my view, to the first sentence of the paragraph.
As the first sentence of [53] impliedly (at least) recognises the dispute as to the existence of distortions in the timber floor boards as between the experts and Baptie LCM nowhere in her judgment explicitly resolves that dispute, it should be concluded that the basis for the reasoning in the second sentence (as to the existence of inconsistencies and the absence of fitness for purpose) was that which her Honour expressly relied upon in the first sentence, namely, the concession made by Mr Powell as found at [47]. The defendant seems to accept that process of analysis and refers to an acceptance of crowning by Mr Powell, although the defendant also contended that Baptie LCM also took into account damage in the packaging (to which I will return below).
In the light of that analysis, I may now return specifically to the no evidence ground as confined by the plaintiff to [47] and [53] of the judgment below.
As to the finding at [47], the plaintiff accepted that Mr Powell gave evidence that the engineered board was “slightly crowned” but disputed (as accepted by Baptie LCM) that it was cupped. However, it was correctly submitted by the plaintiff that Baptie LCM did not make any use of that evidence, stating only (at [47]) that the “Court is, however, concerned with the issue of the cupping/crowning evidence, given by both experts”. Mr Ryan’s opinion only extended so far as distortion in the timber boards were concerned with “cupping” and not crowning. The plaintiff was correct to submit that the Local Court Magistrate did not make any finding resolving the issues of whether cupping as opposed to crowning was possible and whether cupping was evident in the laid floor.
Nonetheless, I do not consider that the challenge on no evidence grounds may be sustained with respect to [47] of Precision No 1. As discussed, the impugned finding, in that respect, is that “there is, at very least, some noticeable distortion in the manufactured timber”. When framed in that way, the finding is, in the light of the above discussion, no more than a finding that, in the board shown to Mr Powell (reference is made to “the manufactured board”), there may be noticed, to some extent (see the words “some noticeable” and “at the very least”) distortion.
The evidence represented a concession by Mr Powell as to a distortion in the board in question (albeit that there was crowning which did not seem to be the area of dispute between the experts). That the evidence may have been slender is beside the point given the nature of the ground of appeal as I have previously explained.
However, the same conclusion does not follow with respect to [53] of Precision No 1. Here, Baptie LCM was concerned with the flooring as laid as a whole not a sample of engineered board from the defendant’s garage.
The only concession made by Mr Powell was that extracted in [43] of Precision No 1 but that concession did not extend to the floor as laid. Nor, in my view, was there any evidentiary basis, upon the extract of Mr Powell’s evidence appearing at [43] of Precision No 1 and the concession contained therein, to infer that there were distortions in the floor as laid.
It follows that there was no evidence that Mr Powell had conceded that there was a distortion in the laid floor. In fact, there was no concession by Mr Powell that the timber boards, as laid, were other than flat. There was no basis in the evidence to infer from that concession that the timber floor boards as laid were distorted or inconsistent.
Given that I have concluded that Baptie LCM’s conclusion at [53] was solely predicated upon the concession made by Mr Powell, there was no evidence to support the conclusion reached therein.
It may be, as submitted by the defendant, that the question that Baptie LCM had to resolve on the cases put was whether the floor was “aesthetically acceptable to the consumer” but, so far as distortion of the timber floor was concerned, that issue hinged upon whether the floor was “flat”, the very subject to the impugned finding in [53].
As to the existence of damaged boxes of timber or possibly damaged timber on delivery, I accept the submission for the plaintiff that, whilst Mr Powell expected the engineered flooring should be shrink wrapped, he did not concede that the failure to do so would have invariably affected the moisture content of the boards (which depended upon the environment it was delivered into or if it was stained). Further, in that respect, the Local Court Magistrate rejected Mr Ryan’s moisture readings (as to excessive moisture) and the Court below made no finding about cupping in the floor, merely finding inconsistencies upon the basis discussed above without further reasoning as to the respective opinions of the experts as to cupping (or for that matter crowning).
I accept that the question of whether the engineered boards were properly shrink wrapped is not depositive to the issue raised on the appeal. Nor, in my view, did that consideration figure in the conclusions reached at [53].
The finding in [53] was pivotal to the ultimate findings below for two reasons. First, as mentioned, I accept the submission made by the plaintiff that the finding by Baptie LCM that Mr Powell agreed that there was some distortion in the floor was an essential step leading to the ultimate finding that there was “that the flooring is not fit for purpose”.
Secondly, it is true that there is a separate issue of staining and that the Local Court Magistrate made findings at [54] as to the removal and replacement of sections of flooring to which I will return (see [48] and [49] of the findings below and findings made as to the need for rectification in that respect), but it does not follow that, for the purposes of the finding in favour of replacement, the finding is severable from the findings as to distortion in [53]. The Local Court Magistrate introduced [54] by the words “In addition” and refers to “the two issues” causing the Court to conclude replacement is the “only appropriate remedy”. When read with the balance of [54], in my view, Baptie LCM found that replacement was the only appropriate remedy due to the cumulative effects of distortion and staining.
Thus, the finding at [53], materially contributed to the determination as to the remedy in [54] vis-à-vis the replacement of the floor as well as the finding that the timber floor was not fit for purpose.
In the circumstances, the plaintiff has thereby established grounds 1(e) and (h). The error is such as to be of significance to the ultimate disposition of the matter below and should, therefore, result in orders consistent with the relief claimed by the plaintiff.

THE SECOND GROUND: ADEQUACY OF REASONS

The Plaintiff’s Submissions

The plaintiff contended that Baptie LCM had failed to give adequate reasons for the following reasons:

Baptie LCM failed to give any reasons for finding that it was the common position of the experts that there was distortion in the flooring. There was no reference to any evidence where that concession was made.

It was submitted that, whilst a judge was not obliged to spell out every detail of the process of reasoning to a finding, it was essential to expose the reasons for deciding a point critical to the contest between the parties. Thus, it was necessary for the Local Court Magistrate to enter into the issues canvassed and explain why one case is preferred over another. The finding of fact in the first sentence of [53] of the judgment below, which was unsupported by reasons, was that "Mr Powell agrees that there is some distortion in the flooring". This was an essential step leading to the ultimate finding in the second sentence that "there is no other explanation for the inconsistencies in the flooring, except that the flooring is not fit for purpose".

In the circumstances, there was no evidence on which the Local Court Magistrate could reasonably have based her finding that Mr Powell had conceded that there was some noticeable distortion in the floor. Baptie LCM has not exposed her process of reasoning leading to that finding.

The finding that there was a common position between the experts then led Baptie LCM to the ultimate finding in [53] that there was no explanation for the inconsistencies in the flooring except that the floor was not fit for purpose. The Magistrate did not explain what the inconsistencies in the floor were, particularly in the light of Mr Powell’s denial of cupping and the finding that there had been some distortion in the flooring. Further, without knowing what the inconsistencies were it is not possible to ascertain why the flooring was not fit for purpose.

It is by no means clear that Baptie LCM considered that the staining on the floor was sufficient cause for the floor being considered unfit for purpose or requiring removal and replacement, referred to as to the “two issues” as the basis for her conclusion.

Baptie LCM failed to give any reasons for her finding at [49] of the judgment below for accepting the evidence of Mr Ryan over that of Mr Powell in relation to the difficulty in removing sections of the tongue and groove, and the unlikelihood of a uniform finish if the areas are simply patched. However, the unexplained finding at [49] is the basis for the finding at [54] that the stained areas could not be adequately dealt with by “spot” fixing.

Baptie LCM concluded, at [54], that the only appropriate remedy in respect of the staining issue and the cupping issue was the removal and replacement of the entire affected floor area. That conclusion, affected by the absence of sufficient reasons, is ambiguous. There is no explanation as to whether Baptie LCM concluded that each of the two matters referred to was by itself a sufficient condition for the requirement of removal and replacement of the entire affected floor area or whether the requirement was cumulative arising from the existence of both matters.

In particular, her Honour provided no reasons for, it was contended:

her finding that the stained area could not be adequately dealt with by “spot” fixing contrary to Mr Powell's evidence; or

her acceptance of Mr Ryan's evidence over that of Mr Powell in relation to the difficulty in removing sections of the tongue and groove, and the unlikelihood of a uniform finish if the areas are simply patched.

In further oral submissions, the following submissions were made with respect to the question of staining as follows:

The passage of Precision No 1 at [48] concerns the separate issue of staining. There is a reference to a preference for the evidence of Mr Ryan but no explanation was provided the Local Court Magistrate either as to his opinion as to damage or the inadequacy of the means to rectify the damage. No explanation was given as to why Mr Powell’s evidence is not accepted.

The same difficulty arises with respect to [49], with Baptie LCM not expressing why Mr Ryan’s evidence was preferred.

As to [54], it was submitted, here the Local Court Magistrate ignored the question of replacement of sections of the floor, which was the subject of debate between the experts. The Local Court Magistrate fails to provide a reason why the stained areas cannot be adequately dealt with by spot fixing. The following submission was made:

But that in itself doesn’t deal with Mr Powell’s evidence about how spot fixing would be properly done. The fact that the plaintiff’s employees may have had a go at it at some early stage and not done a proper job in spot fixing doesn’t answer Mr Powell’s evidence about the utility of spot fixing done properly in accordance with his recommendations. But the magistrate just doesn’t engage with any of that technical evidence at all. And, again, one just doesn’t know why it is that she preferred the evidence of one over the other.
And then finally we come to the next sentence which is also one of critical importance, “The two issues...affected floor area.” Now, the two issues would be the issue of the distortion in the flooring or the cupping referred to in paragraph 53 and the staining issue referred to in paragraph 54, and the conclusion is that the two issues lead the magistrate to conclude that the only appropriate remedy is to remove and replace the entire affected floor area. But that sentence in itself is ambiguous because we are not told whether the requirement for the two issues is separate or cumulative. In other words, is the existence of each of the issues a necessary and sufficient condition for the floor to be removed, or is the existence of both issues a necessary requirement for the floor? In other words, do you need one or do you need both? We just don’t know. And if, in fact, you need both, then the logic falls over because of the problems in paragraph 53 dealing with the distortion in the flooring.

As to replacement, the Local Court Magistrate never engaged with the conflict between Mr Powell and Mr Ryan on the issue of replacement. No reasons were given in making the finding about spot fixing, namely, whether spot fixing could create a uniform stain across the whole of the floor.

The Defendant’s Submissions

The defendant advanced the following submissions:

The challenge alleges inadequate reasons were provided in reaching findings of fact, in order to seek to establish an available appeal concerning a matter of law. The factual findings challenged are:

distortion in the timber;

floor not fit for purpose; and

floor could not be fixed by “spot staining”.

Baptie LCM clearly identified the key matters relied on to reach those findings of fact as explained below.

As to distortion there was no need to refer to the precise location in the evidence by the Court below, because there was an unchallenged finding that Mr Powell had agreed that there was distortion on a piece of timber that had been in the defendant's home, which was obviously part of the "flooring" material that was used in the provision of flooring by the plaintiff. Her Honour recorded that Mr Powell did not agree he had seen "cupping consistent with excessive moisture", which clearly evidences that the Court understood the difference between those different forms of distortion.

There was a basis for the Court to conclude that both experts considered that floor timber delivered to the defendant was “distorted” – Mr Ryan by way of cupping and Mr Powell by way of crowning.

As to the question of “fit for purpose” and “inadequacy of spot fixing”, the plaintiff contended there are "no reasons" for preferring Mr Ryan's conclusion concerning difficulty of removing the tongue and groove and the resultant conclusion that the floor ought to be replaced should be regarded. However, her Honour made the following unchallenged findings:

the purpose of the floor was to be a "bespoke" and "beautiful floor";

Mr Powell accepted that a piece of timber delivered to the defendant's home was distorted;

there was "staining and disfigurement to the flooring";

the plaintiff’s employees had made a number of attempts to rectify the white marks with sanding and further staining which appeared to exacerbate the marks;

Mr Powell stated that the marks on the floor were more pronounced than in the photos in his report; and

the floor was "unfinished".

It is also important to appreciate the way the parties approached the issue of remedying the staining at the hearing in the Court below. The plaintiff caused:

light marks by applying methylated spirits to the stained floors, and

dark marks (as identified by Mr Powell in the Powell Report) by trying to “spot fix” the white marks.

The defendant's case was that because of the various stains caused by the plaintiff, the floor needed to be replaced in order to provide the defendant with the “bespoke” and “beautiful” floor she has been promised so as to be fit for her consumer purpose. Mr Powell agreed that replacement would remedy that issue. Mr Powell also agreed that, if the floor was removed and replace, it would result in an "even and consistent finish".

The defendant referred to the First Ryan Report, which recorded Mr Ryan’s reasons for requiring replacement because of the staining problems:

"The flooring materials in the kitchen/dining room are not acceptable in their appearance and finish as I can see a large stain has developed in the centre of this rear room”;

"the works are marked causing an aesthetic loss"; and

"remove and replace all the flooring… the timber flooring is defective and unacceptable in their appearance and finish".

Reference was also made to the Second Ryan Report, which recorded:

"the timber flooring is still defective, and unacceptable in their appearance and finish";

“The timber flooring has not been installed and finished as displayed";

"I recommend the floors be replaced in the kitchen/dining area, and the expansion joints be completed to the door and window sill sections";

"The flooring product has been stained by the contractor mistakenly using a chemical during its installation process in areas of the kitchen/dining rooms";

"To rectify this sort of poor-quality workmanship, works cannot be done in-situ and is not acceptable as the homeowners wanted and expected a floor laid with due care and skill, basically a good job";

"factory finished timbers have specific factory colours and finishes that cannot be applied in-situ after the fact of wrongly applying a type of chemical. Factory applied colours are as intended and to what consumers expect. A consumer does not expect an unnatural finish or a finish that does not equal that displayed in the original display shop"; and

"staining on timbers caused by chemicals having been mistakenly applied is not considered minor. This is an aesthetic loss and requires replacement".

However, rather than agreeing that replacement was an appropriate remedy (despite Mr Powell accepting that would be an effective remedy), the plaintiff’s case, in the Court below, was that all the marks on the floor could be removed by “spot staining” or “touch up” only:

Mr Hemsworth, representing the plaintiff, informed the Court "Mr Powell's position is that it [the floor] doesn't need to be replaced, so Mr Ryan's evidence would stand by itself. He's the only person who's put on evidence about replacing the entire floor".

Mr Powell's evidence was:

"[the marks] can be adjusted by adjusting the stain. So they can be remediated without the removal of the boards";

remediation "would be expected to be achieved by 'touching up' affected boards but with this based on the skill set of the contractor. It is considered unlikely that the remediation of this aspect of the work would require the removal and replacement of any flooring"; and

areas "can be re-stained to match the existing".

Mr Powell maintained that position even in the document entitled "Joint Conclave" served by the plaintiff just before the trial.
However, in that document, for the first time, Mr Powell inserted a single line raising the possibility of remedying the light staining problem (methylated spirits issue) by removing individual boards:

If the lighter areas observed in the meals are [sic] was not able to be stained this would require the removal and replacement of 4-6 individual boards.
[Emphasis added.]

However, removal of individual boards was never put forward by Mr Powell to remediate the "darker marks" he identified in his report, in relation to which he only suggested "touching up".
In light of the late provision of that version of the document entitled "Joint Conclave" to the defendant, Mr Ryan did not have an opportunity of dealing with that suggestion in a report or written response.
In any event, as the plaintiff did not bring a case that all the various stain affected floors (light and dark stains) should be remediated by only replacing the relevant boards (rather than the whole floor), it was not a matter that Baptie LCM needed to determine. Instead, the debate was whether remediation could be achieved by spot fixing (as suggested by the plaintiff) or replacement (as suggested by the defendant).
Her Honour found that “spot fixing” was not an appropriate solution, because the plaintiff’s previous attempts to do that had failed and, in fact, those attempts had "exacerbated the marks". That also clearly led to the conclusion of "unlikelihood of a uniform finish if the areas are simply patched".
Mr Ryan's comments about the problems with replacing a few tongue and groove boards merely gave further support to her Honour's finding that replacement was the only appropriate remedy where there was a breach of the ACL consumer guarantee. In fact, both experts agreed that replacement would be effective to provide the defendant with that for which she had bargained.
Baptie LCM preferred the evidence of Mr Ryan to the effect that there were difficulties with replacing some of the tongue and groove floor boards, which was open on the evidence and taking into account her Honour's advantage of seeing the witnesses give evidence. However, since the plaintiff was not proposing replacement of boards for all the staining issues it was open, at first instance, to conclude that a consistent outcome could not be achieved by the various “spot fix” proposals.
Contrary to the submissions of the plaintiff there is no ambiguity in the reasons at first instance. Her Honour makes it plain:

that the issue of "staining and disfigurement to the flooring" was an "aligned, yet separate issue" to that of the distortion; and

the "two issues have caused the Court to conclude that the only appropriate remedy is to remove and replace the entire affected floor area".

On a plain reading, Baptie LCM considered that each issue was sufficient to require replacement. However, even if the judgment is read as meaning the two issues taken together led to the conclusion that replacement was needed, that was also available and supported by evidence and reasons.
To those contentions attention may also be directed to the defendant’s written submission directed to the same paragraph of the reasons for decision as to the finding that the only appropriate remedy is to remove and replace the entire floor area. That submission was in the following terms:

36. Having found breach, cost of cure was the appropriate remedy: s 259 ACL and s 54 Sale of Goods Act; Bellgrove v Eldridge (1954) 90 CLR 613. This finding is a mixed question of fact and law and the Plaintiff requires leave, and should not be granted.
37. The Plaintiff does not challenge the findings concerning the extent and effect of the issues with the incomplete and miscoloured flooring. Therefore, the limit of the appeal ground appears to be that the Plaintiff says the Primary Judge ought not to have granted that remedy for the breach of 'fitness for purpose' because Mr Powell did not concede there was distortion in the floor from moisture.
38. The Primary Judge concluded that it was not possible to rectify the discolouration damage without replacement of the flooring because of the following compelling reasons recorded at J[48]-[49]; CB51:
a. She preferred Mr Ryan's evidence about removal being the appropriate solution, because of the difficulty in removing sections of tongue and groove and unlikelihood of a uniform finish if only patching is done;
b. The Plaintiff had made a number of attempts to rectify the white marks;
c. Mr Powell agreed that the dark marks were more pronounced than was apparent in his report: T121:38-32;CB175.

39. The Primary Judge further records that the floor could not be adequately fixed with "spot staining" - J[54], which indicates that discolouration was a concern in giving the remedy.
40. The Primary Judge was entitled to determine that the flooring needed to be replaced for that reason alone, without regard to any issue of distortion, which is the only factual finding about the floor challenged.

Conclusion: The Second Ground

In Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 (“Beale”), Meagher JA stated at 442-4:

Just as the requirement to provide reasons depends on the particular matter, so too the content of the reasons depends on the particular circumstances of the matter being considered by the court. As Samuels JA said in Mifsud v Campbell (1991) 21 NSWLR 725 at 728:
“… it is an incident of judicial duty for the judge to consider all the evidence in the case. 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. The extent of the duty to record the evidence given and the findings made depend, as the duty to give reasons does, upon the circumstances of the individual case.”

Similarly, in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281, McHugh JA, as he then was, said:
“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 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.”

It follows, that reasons need not necessarily be lengthy or elaborate: Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 5; 63 WN (NSW) 34 at 36. The scope of the reasons to be given is, as Mahoney JA said in Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386, related “… to the function to be served by the giving of reasons”. Accordingly, the content of the obligation is not the same for every judicial decision. No mechanical formula can be given in determining what reasons are required. However, there are three fundamental elements of a statement of reasons, which it is useful to consider. 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: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.
Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the trial judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear: Selvanayagam v University of the West Indies [1983] 1 WLR 585; [1983] 1 All ER 824. Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance: Rajski v Bainton (Court of Appeal, 6 September 1991, unreported).
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.

In Beale at 441, it was stated:

It is well-settled that a judge or magistrate at first instance in particular cases has an obligation to provide reasons for the judgment given: Pettitt v Dunkley [1971] 1 NSWLR 376.

Given the issues raised in this ground of the appeal, reference should also be made to Whitehaven at [32]-[38] in which White JA (with whom Emmett and Simpson AJJA agreed) observed:

[32] Even if an appeal lay on matters of both fact and law, the primary judge did not fail to provide adequate reasons. That is because there was no dispute between the doctors called both by Mr Pain and the appellant if the primary judge found, as she did, that events occurring at work after April 2015 could not be excluded as causing an exacerbation of Mr Pain’s lumbar disease.
[33] The appellant submitted that the primary judge was required to provide reasons of the kind it contended for by reference to observations of McColl JA in Hume v Walton [2005] NSWCA 148 at [69] where her Honour said:
“69 The primary judge’s duty was not only to record the evidence but also to record the findings she made based on that evidence: Mifsud v Campbell (1991) 21 NSWLR 725 at 728. While the extent of that duty may depend upon the circumstances of the individual case (ibid), where there is disputed expert evidence, the ‘parties are entitled to have the judge enter into the issues canvassed before the Court and to an explanation by the judge as to why the judge prefers one case over the other’: Archibald v Byron Shire Council [2003] NSWCA 292 ; (2003) 129 LGERA 311 at [54] per Sheller JA (with whom Beazley JA agreed); see also Bright v Joodie Holdings No 2 Pty Ltd [2005] NSWCA 134 at [33] per Santow JA (with whom Sheller JA and Campbell AJA agreed).”

[34] Here, there was no relevantly disputed expert evidence. In any event McColl JA was there speaking of the required standard of reasons where an appeal lies on questions of both fact and law. The appeal in Hume v Walton was from orders of a District Court judge where the appeal to the Court of Appeal is by way of rehearing under s 75A(5) of the Supreme Court Act 1970 (NSW).
[35] In Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 the reasons of the judge or the Compensation Court were manifestly inadequate to sustain his findings of fact. An appeal was limited to cases (relevantly) where a party was aggrieved in point of law. McHugh JA said (at 281-282):
“Accordingly, the present case is concerned with a finding of fact which involves no legal standard and is not subject to appeal. 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 because, as Asprey JA pointed out in Pettitt v Dunkley (at 382), the learned judge ‘has not properly fulfilled the function which the law calls upon a judicial person to exercise’. However, in determining the issue which this appeal raises, great care needs to 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.
Here the learned judge has obviously acted on the strength of the CAT scan report. His reasons for judgment necessarily involve the total acceptance of the opinions of the applicant’s doctors until 17 January 1984 and the total rejection of their opinions after that date. His Honour gave no reasons for doing this. Since, ex hypothesi, the opinions of the applicant’s doctors concerning her fitness after 17 January 1984 are necessarily wrong, it is difficult to see how on the facts of this case they could be right for the period immediately before that date. Alternatively, if they were right before that date, it is difficult to see how they could be wrong immediately after that date. Moreover, as counsel for the applicant pointed out, a CAT scan is simply a diagnostic aid. It would be quite erroneous to find as a fact that the applicant was fit for work from the date of the CAT scan simply because the CAT scan failed to reveal any evidence of unfitness. However, the question is not whether his Honour’s finding that the applicant was ‘fit for all work’ after 17 January 1984 was correct. It is whether his Honour gave reasons, however erroneous, for that finding. While it is true that his Honour did not expressly give any reasons for the finding, his reasons for judgment show quite clearly in my opinion that he held that the applicant was fit for work because the CAT scan did not reveal any abnormality. It is not to the point that his Honour’s finding was erroneous or, as counsel for the applicant claimed, perverse. An erroneous or perverse finding of fact raises no question of law and cannot be challenged by way of appeal. What is decisive is that his Honour’s judgment reveals the ground for, although not the detailed reasoning in support of, his finding of fact. But that is enough in a case where no appeal lies against the finding of fact. Accordingly there was no failure to give reasons sufficient to constitute an error of law.”

[36] Mahoney JA said (at 274):
“As I have said, it is clear why the learned judge made the order that he did. He found the worker was incapacitated up to but not beyond 17 January 1984. As I have said, the nub of the complaint made is that he did not detail the reasons why he found the incapacity to cease on that date.
He was moved to select that date because it was the date of, or of the report of, the CAT scan. It is, in my opinion, not required of a judge to detail why the CAT scan, for example, carried such weight as to change his view of her condition at that time. It is sufficient that it be clear, as I think it is, what it was that was involved in his reasoning process”.

[37] In Resource Pacific Pty Ltd v Wilkinson Basten JA (at [52]) summarised the reasons of the Compensation Court judge in Soulemezis as “brief to the point of exiguous”. Nonetheless, they did not demonstrate error of law.
[38] The appellant never satisfactorily attempted to demonstrate why the alleged inadequate reasoning errors of the primary judge meant that it was aggrieved in point of law. …

Having regard to my considerations with respect to the “no evidence” ground, there is, in my view, no basis upon which to conclude there was an absence of reasons as to the distortion issue so far as it concerns [47] of Precision No 1. The decision sufficiently exposes that the finding at [47] was a concession by Mr Powell and was predicated upon a single component of the evidence of Mr Powell set out in [43] of Precision No 1.
My conclusions as to the no evidence ground with respect to [53] of the judgment below sit ill with any conclusion that there was an absence of reasons in that respect. Upon the basis of my earlier conclusions, her Honour reasoned to a conclusion that timber floor being not fit for purpose out of a concession made by Mr Powell. That the concession offered no evidence from which it may be inferred inconsistencies or distortions in the whole of the timber flooring does not constitute a proper basis to establish this ground – namely, an absence of reasons.
If, however, a different view were taken to my understanding as to the effect of her Honour’s reasoning at [53], then plainly the adequacy of reasons ground has been established in that respect. As I have discussed the subject matter of [53] was the fitness for purpose of the timber flooring. There was a dispute as to that question essentially revolving around whether there was cupping in the floor. That was the subject of differing expert opinions. If the foundation of the conclusion at [53] was not the concession by Mr Powell as to distortions (as the defendant contended, as to crowning), then, in order to resolve the question of fitness for purpose predicated upon whether the floor was distorted, inconsistent or simply not flat it was necessary for the Court below to resolve the dispute between the experts and to offer some reasons for the opinion reached in that respect. Neither course was taken by her Honour which, on that basis, would result in the absence of reasons ground being established.
The issues concerning staining raise different considerations. This directs attention specifically to the finding at [54] below, but also has a relationship, by way of background, to [48] and [49].
Broadly speaking, I accept the submission of the plaintiff that aspects of submissions of the defendant in this respect exhibit ex post facto reasoning by placing reliance upon considerations not entertained in the judgment below.
I do not agree, however, with the submission by the plaintiff that [48] of Precision No 1 provides no explanation as to the preference in favour of Mr Ryan’s evidence as to the opinion as to damage to the timber by staining. Reference is made to the corroboration of Mr Ryan’s evidence by the plaintiff’s employees. Baptie LCM also referred to the comments by Mr Powell that the dark marks appeared to be more pronounced than were apparent in the photographs annexed to his report. Baptie LCM also referred to attempts at rectification of “white marks” which appeared to exacerbate the marks.
I agree with the plaintiff that her Honour failed to give any reasons for her finding at [49] accepting Mr Ryan’s opinion in relation to the difficulty in removing sections of the tongue and grove floor or the unlikelihood of a uniform finish in areas that were patched but [49] did not feature in the grounds of appeal. Nonetheless, the opinion in [49] did form the basis for the conclusion in [54] of Precision No 1.
As to [54], I accept the submission of the plaintiff that the judgment below does not adequately deal with the dispute between experts on the issue of replacement. No reasons were given as to the finding about spot fixing in a context where Mr Powell had opined that spot fixing, carried out properly, could rectify the staining problem. Nor is there adequately exposed in the reasoning why Mr Ryan’s evidence was preferred to Mr Powell’s in relation to the difficulty of removing stains of the tongue and grove floors.
As to the reference to the floor being “unfinished” in Precision No 1 at [54], it is unclear as to how, if at all, that finding relates to the issue of rectification.
There was a further issue raised by the plaintiff as to [54] of Precision No 1 under this ground, namely, whether the Court below found that either the distortion or staining would be sufficient to sustain the conclusion as to remedy or whether the cumulative effect of those factors was necessary to reach the conclusion in [54].
On the basis of the findings earlier made as to the effect of [54] of Precision No 1, I would not sustain this aspect of the challenge to the reasoning in that paragraph. In other words, the words “in addition” and “the two issues have caused the Court”, in that paragraph, were found to have reasonably exposed her Honour’s reasoning in that paragraph so as to indicate that her Honour considered that the combination of the factors of staining and distortion resulted in finding that the appropriate remedy was the replacement of the floor.
If that conclusion were not correct then it may well be that the reasons had not adequately exposed the basis for the conclusion reached as to replacement. There would, in that event, be no explanation as to why Baptie LCM concluded that each of the two matters was a sufficient condition for the requirement of removal and replacement of the entire affected floor area. A further question unresolved by the reasons in that event would be how the requirement of the defendant for the floor to be “bespoke” or “beautiful” should have resulted in the rectification by replacement of the timber floor as opposed to the rectification proposed by Mr Powell.
However, I do not consider that her Honour gave reasons as to the finding that spot fixing was not an adequate means of rectifying stained areas. This issue was disputed between the experts and, in particular, Mr Powell gave evidence as to the question. No foundation was provided for that aspect of conclusion in [54] – the earlier conclusion reached at [49] was also given without adequate reasons.
The plaintiff has established ground 1(g) with respect to the findings in [54] of Precision No 1 as to spot fixing (ground 1(g) read in conjunction with ground 1(b1)) and thereby established an error of law. That conclusion was important to the disposition of the amended cross-claim, as it concerned one of the two factors justifying replacement, namely, staining. I note that, if a challenge was made based upon [49] of the judgment below or if the alternative scenarios discussed above as to [53] or [54] operated, then I would have also found the ground established, in those wider respects.

THE THIRD GROUND: BREACH OF PROCEDURAL FAIRNESS

The plaintiff submitted that the Local Court Magistrate was obliged to ensure procedural fairness and failed to do so; resulting, therefore, in an error of law.
That submission was predicated upon the sole basis that the Local Court Magistrate reached the adverse conclusion that the experts had a mutual position on the issue of distortion, that was adverse to the plaintiff. It was contended that it was not obviously open on the known material, given that Mr Powell had made no such concession. Her Honour did not give the plaintiff notice that that finding might be made.
The short answer to that contention is that, as I have found, there was a concession made by Mr Powell, albeit not one that constituted basis for the finding made at [53] or [54] of Precision No 1.
There was no other procedural unfairness if the conduct of the trial is considered as recorded in the transcript. The plaintiff sought to introduce further late evidence on the issue of cupping, to which objection was taken. In the midst of considering the issue her Honour indicated she was willing to entertain the introduction of:

more recent photographs, as of, for example, today, in light of, as I anticipate, the Armstrongs' giving evidence. I do that in an attempt to be fair to both parties. Both of you might howl me down but that's the proposal, on the basis of allowing those questions.

Her Honour candidly indicated to the parties that "this is a really big issue in my mind and I suspect it's a really big issue for both parties. These things don't happen in a vacuum".
The defendant was willing to allow a further inspection and further photos, but the plaintiff's solicitor "withdrew" the issue.
The plaintiff has failed to establish this ground.

CONCLUSION

The plaintiff has established the no evidence and inadequate reasons grounds (grounds 1(e) and (g)). I also accept that, for the reasons I have given, the errors of law manifested in the acceptance of those grounds established ground 1(h), namely, the findings in [53] and [54] of Precision No 1 were infected by the erroneous findings challenged in the no evidence and inadequate reasons grounds. Leave to appeal is not required as the appeal was available as of right under s 39 of the Local Court Act, as grounds 1(e) and (g) raised questions of law and ground 1(h) concerned whether those errors of law were essential to the ultimate finding below.
The plaintiff sought the following relief in the amended summons:

Appeal allowed.

To the extent necessary, leave to appeal from the whole of the judgment below.

Set aside the following orders made below:

the order that the plaintiff pay the defendant the sum of $63,570.

the order that the plaintiff pay the defendant's costs.

Remit the matter to the Local Court for determination in accordance with law.

Costs

Upon the conclusion by this Court as to the appeal, it is appropriate that orders (1), (3) and (4) be made.
The parties sought that the question of costs be reserved. Whilst there would seem, at face value, to be proper basis to award costs to the plaintiff, I accept that other factors may be relevant to that question. I will, therefore, reserve costs.

DIRECTION

The plaintiff shall bring in short minutes of order reflecting this judgment within 7 days of the publication of this judgment. Those short minutes of order should include draft orders for the resolution of any issue as to costs, to the extent there remains dispute in that respect.

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Decision last updated: 13 July 2021

Medium Neutral Citation:	Precision Flooring Pty Ltd v Armstrong [2021] NSWSC 844
Hearing dates:	2 July 2020
Date of orders:	13 July 2021
Decision date:	13 July 2021
Jurisdiction:	Common Law
Before:	Walton J
Decision:	The plaintiff shall bring in short minutes of order reflecting this judgment within 7 days of the publication of this judgment. Those short minutes of order should include draft orders for the resolution of any issue as to costs, to the extent there remains dispute in that respect.
Catchwords:	ADMINISTRATIVE LAW – appeal – questions of law – whether ground properly involved no evidence point – intermediate findings – ultimate findings – whether some probative evidence – adequacy of reasons – procedure fairness – appeal upheld – judgment below set aside – remitter
Legislation Cited:	Competition and Consumer Act 2010 (Cth) Local Court Act 2007 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Amaba Pty Ltd v Booth [2010] NSWCA 344 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33 B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Brennan v New South Wales Land and Housing Corporation (2011) 83 NSWLR 23; [2011] NSWCA 298 Bruce v Cole (1998) 45 NSWLR 163; [1998] NSWCA 45 Capital Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753 D’Amore v Independent Commission Against Corruption (2013) 303 ALR 242; [2013] NSWCA 187 Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 Precision Flooring Pty Ltd v Armstrong (Unrep, Local Court of New South Wales, Baptie LCM, 25 October 2019) Whitehaven Coal Mining Ltd v Pain [2018] NSWCA 229 Workers Compensation Nominal Insurer v Hill [2020] NSWCA 54
Texts Cited:	Aronson, Mark, Matthew Groves and Greg Weeks, Judicial Review of Administrative Action and Government Liability (2016, 6th ed, Thomson Reuters)
Category:	Principal judgment
Parties:	Precision Flooring Pty Ltd (Plaintiff) Sandra Armstrong (Defendant)
Representation:	Counsel: D Feller SC (Plaintiff) E Peden SC with Mr T Bateman (Defendant) Solicitors: Vincent Young (Plaintiff) McLean & Associates (Defendant)
File Number(s):	2019/365342
Decision under appeal	Court or tribunal: Local Court of NSW Jurisdiction: Civil Date of Decision: 25 October 2019 Before: Baptie LCM File Number(s): 2018/294081