Sunlight Nominees Pty Ltd v Zotti and Zotti - [2019] SASCFC 11

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
SUNLIGHT NOMINEES PTY LTD v ZOTTI & ZOTTI
[2019] SASCFC 11
Judgment of The Full Court
(The Honourable Justice Vanstone, The Honourable Justice Blue and The Honourable Justice Parker)
8 February 2019
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - ADMISSION OF FRESH EVIDENCE
The appellant, "Sunlight", is a concreting company which concreted a driveway for the respondents. When they refused to pay, Sunlight commenced proceedings in the Magistrates Court for the quoted price. The respondents argued that the work was defective and counterclaimed for damages for the cost of the rectification. The Magistrate held that Sunlight should recover the contract price but awarded the respondents damages on the counterclaim.
On appeal to a single Judge Sunlight sought to introduce fresh evidence on two topics. The single Judge declined to receive the fresh evidence. Sunlight's appeal was dismissed. However the Judge increased the award on the counterclaim.
On appeal to this Court, Sunlight argues that the Judge erred in refusing to admit the fresh evidence and tenders further fresh evidence. Additionally, it argues that the Judge erred in increasing the award on the counterclaim.
Held, per Vanstone J (Parker J concurring, Blue J agreeing in separate reasons): The decision not to receive the fresh evidence was correct. The appeal is allowed only for the purpose of restoring the Magistrate's award on the counterclaim.

SUNLIGHT NOMINEES PTY LTD v ZOTTI & ZOTTI
[2019] SASCFC 11
Full Court: Vanstone, Blue and Parker JJ

VANSTONE J: Sunlight Nominees Pty Ltd (“Sunlight”) is a concreting company. It is the plaintiff and appellant in the action. The defendants and respondents, Mr and Mrs Zotti, engaged Sunlight to undertake concreting works on their residential property, for which they were to pay a total of $57,933. The works were completed. When the defendants failed to pay, Sunlight sued in the Magistrates Court for the quoted price. The defendants answered that the works were defective and not in accordance with the contract specifications and they counterclaimed for damages for the cost of the rectification work.
The Magistrate found that Sunlight was entitled to recover the agreed price, but upheld the defendants’ main claim of fundamental breach of contract and awarded $56,600 in damages on the counterclaim. This left a net award to Sunlight of $1,333.
On appeal to a single Judge of this Court, Sunlight sought to introduce fresh evidence on two separate topics. The Judge declined to receive that evidence. The Judge increased the award on the counterclaim to equate to the amount required for the rectification work as given in expert evidence; as opposed to the amount set out in the counterclaim. The Judge subsequently granted permission to appeal in relation to the refusal to admit the fresh evidence and the level of damages on the counterclaim.
On the appeal to this Court, Sunlight claims that the Judge erred in declining to receive both bodies of fresh evidence and tenders additional fresh evidence. Sunlight also asserts that the Judge erred in uplifting the damages on the counterclaim. For their part the defendants tender fresh evidence in answer to the new affidavits filed by Sunlight.
Background
Sunlight, through its sole director, Mr Antonio Russo, has conducted a concreting business for some years. In early 2008 Sunlight provided a quote to the defendants for a concrete driveway to service their house and a large, adjacent, shed. The quotation included reference to the thickness of the concrete (100 millimetres) although not its strength. It was to be reinforced. Subsequently it was agreed that the area to be constructed would be increased to about 490 square metres, charged at the same rate. There were nine pours of concrete in all, the last taking place on 13 May 2008.
Following completion the parties fell into dispute. The defendants claimed that the works were defective for several reasons, most importantly because the concrete did not comply with what they claimed was the agreed strength of 25 megapascals (MPa). They sought damages measured by reference to the cost of replacing the entire driveway with the extra strength concrete. As mentioned, the agreement was partly in writing – the written quotation – and partly oral. However no writing bore on the defendants’ claim that the concrete was to be provided at the strength of 25MPa. (The usual strength for a domestic driveway is 20MPa.) Before the single Judge the Magistrate’s credibility findings in relation to this issue were attacked. However the single Judge found that the findings were open to the Magistrate.
The tender of fresh evidence
Before the single Judge, Sunlight tendered an affidavit purporting to be that of a truck driver who had delivered some of the concrete to the defendants’ home. The affidavit was in the briefest terms. It was the affidavit of one Nino Calabria. He deposed that he was a truck driver with Hanson Construction and Building Materials and that on about 3 May 2017 (sic) he attended the third pour of concrete at the relevant address. He observed Mr Russo speaking with Mr Zotti. He heard Mr Zotti ask to see the cart note whereupon he went to his truck and retrieved it. He handed it to Mr Russo who handed it to Mr Zotti. Mr Calabria said he then overheard an exchange between the two men in the following terms:
Zotti:Are all driveways done in 20MPa?
Russo:Yes.
Russo:Your house foundation is 20MPa. If you want it stronger then you will have to pay for extra labour and materials.
Mr Calabria said he then finished pouring the concrete and left the property.
Mr Russo also provided an affidavit relevant to this issue. He said, in effect, that before the trial in the Magistrates Court he had approached Hanson Construction to ascertain the name of the driver who had overheard the conversation. However, Hanson Construction refused to provide the name to him. He said that after the trial, by chance, he ran into the truck driver, whom he knew as “Nino”. Mr Calabria told Mr Russo that he remembered the conversation. This was plainly Mr Russo’s explanation for not having called Mr Calabria at the trial.
Perhaps generously, the single Judge accepted that there was a reasonable explanation for Sunlight’s failure to call Mr Calabria at the trial. He also accepted that the evidence was relevant and would have been capable of influencing the Magistrate’s consideration of whether or not the agreement was for a concrete strength of 25MPa. However, his Honour went on:
[85]However, I cannot be satisfied without more that the evidence would, or even would likely, have had an important influence on the case. First, while the evidence, if accepted, would tend to support the plaintiff’s case, it does not in fact square with the evidence of either Mr Zotti or Mr Russo. Secondly, and more significantly, the evidence from Mr Calabria relates to a short conversation that he overhead almost 10 years ago. It cannot be said that the evidence is inherently likely to be reliable and of significant weight. In any event, its reliability and weight could only be assessed after hearing cross-examination of Mr Calabria, and perhaps also additional evidence from Mr Zotti and Mr Russo. This would likely require that the matter be remitted to the Magistrates Court for rehearing given its interrelationship with the issues of credit that arose in the case. Further, in the circumstances of a civil or commercial dispute of the nature and limited dollar significance of the present case, and which relates to events that occurred almost 10 years ago, the public interest in the finality of litigation looms large.
The Judge declined to receive Mr Calabria’s affidavit.
The second issue in relation to which Sunlight tendered fresh evidence before the Judge went to the state of development approval in relation to the defendants’ premises. Sunlight tendered an affidavit from one of its solicitors, Ms Irving, attaching the local council’s September 2002 approval for the development of the Zottis’ house and shed and an extract from the council’s September 2016 development plan. The development approval included a condition that the “shed and carport must only be used for domestic storage… and must not be used as a habitable living area nor for industrial or commercial purposes”. The development plan included reference to principles of development control that confined the permitted developments to various domestic and farming uses and stated that the storage, parking and keeping of vehicles should only occur where the use of such vehicles was ancillary to the existing lawful use of the site.
Before the single Judge (and before this Court) Sunlight asserted that, although the defendants’ defence and counterclaim included a pleading that the contract stipulated concrete of a strength of 25MPa, it did not outline why the extra strength was required and did not detail the contemplated use of the driveway to access the shed. Sunlight asserted it was taken by surprise at trial and therefore had not undertaken research into the permitted use of the shed and the property generally.
In relation to the claim of being taken by surprise, the Judge said that this was some explanation, but not a complete explanation, for the failure to adduce evidence at trial. He then said:
[88]More importantly, I am not persuaded that the further evidence on this topic was likely to have had an important influence on the outcome of the case. There is no concern about the reliability of the proposed evidence; the issue is its probative value. The proper interpretation of the terms of the development approval and plan, and the precise nature of Mr Zotti’s intended use of the shed, are not entirely clear. Even if they are inconsistent, Mr Zotti might have intended to, or at least had needed to, obtain some variation or amendment to the development approval that he had been given, or to have obtained some other form of permission for his proposed use of the shed. In any event, the issue in the case was not what use was permissible, but rather what use Mr Zotti intended to make of the shed. Even then, this issue was really only a matter going to the explanation for, and hence credibility of, Mr Zott’s ultimate evidence that he specified concrete with a strength of 25MPa. While cross-examination would have been permitted in relation to the development approval, evidence of its terms may not have been admissible given its merely collateral relevance.
The Judge declined to receive Ms Irving’s affidavit.
Arguments on appeal
Sunlight does not argue that the Judge misstated or misapplied the relevant considerations bearing on the admission of fresh evidence. Rather, it is suggested that his Honour erred in the exercise of his discretion in the evaluation of the evidence under consideration.
Regarding the affidavit from Mr Calabria the plaintiff argued before this Court that this would potentially have had a marked effect on the issue of the disputed term of the contract, because, this material would have counter-balanced some post-contract correspondence tendered by Mr Zotti to support his version of the agreement. It would have shored up Mr Russo’s contention that the terms of the oral contract did not extend to concrete having a strength of 25MPa. Therefore, it was said, the Judge was wrong not to find that this evidence would have had an important impact on the Magistrate’s evaluation of the terms of the contract. Moreover, referring to [85] of the Judge’s reasons earlier set out, it was said that the Judge overstated the differences between Mr Russo’s and Mr Calabria’s evidence about the critical conversation. It was put that, in saying that the evidence of Mr Calabria did not “square with” the evidence of Mr Russo, the Judge was relying only on the variance between them as to the timing of the conversation: whether it occurred on the first concrete pour or the third. This detail was not such as to undermine the evidence of either man. It was argued that this evidence would also have had a significant impact on the issue of damages; although, in my mind, it is not easy to see how that could be so. If the disputed term issue were resolved against Mr Zotti then it would seem that very few or no damages would have been awarded on the counterclaim.
Relevant to this ground of appeal the defendants’ solicitors filed an affidavit of Mr Zotti (FDN 24) containing statements about a conversation with Mr Calabria said to have taken place in about September 2018, that is, subsequent to the appeal before the single Judge. Whatever the outcome of this appeal I would have rejected this affidavit on the ground that it contains purely hearsay.
Turning to the development approval material, counsel for the plaintiff argued that its “real relevance” was as to the question of the reasonableness of the damages awarded on the counterclaim. While on the question of liability it might have undermined Mr Zotti’s claim that he had a specific purpose for needing the extra strength concrete, counsel argued that its principal work was in relation to the assessment of damages. Such an assessment would probably take into account that Mr Zotti’s claimed purpose was unlawful, that he appeared to have been using the driveway for 10 years without replacing it with concrete of his desired strength, and that it had apparently withstood whatever loads he had required it to bear. Counsel argued that to surmise that Mr Zotti might, in the future, apply to have the development approval expanded was to speculate and this was not a sound basis on which to award damages, or, more correctly, to uphold an award of damages.
In this Court there was something of a dispute about whether the development approval material was presented to the single Judge as going only to the question of liability, or also to the assessment of damages. Sunlight’s counsel asserted that, were the material to be received, it would have a substantial impact on the measure of damages, because the uses foreshadowed by the defendants at trial would not have been lawful. In those circumstances the Court would hardly compensate the defendants in order to give them an extra strong driveway for which they had no lawful use.
This matter was further complicated by Mr Zotti filing an affidavit (FDN 25) prior to the appeal, making various assertions about other properties in the area used for commercial purposes and annexing “an information sheet” provided by the local council detailing acceptable standards for a home-based business. Mr Zotti deposed that his intended uses did not contravene the permitted uses set out generically in that document. Rather than objecting to that affidavit, Sunlight’s counsel embraced it, arguing that, if this were so, Mr Zotti was demonstrably not in need of the extra strength concrete.
Counsel for Sunlight also tendered upon the appeal a further affidavit of Ms Irving (FDN 28) which purported to report on enquiries made with an officer of the relevant local council in relation to the state of development approval. Ms Irving deposed to being told by that officer that he attended the premises and established that the shed was, contrary to planning permission, being used as accommodation and not for any industrial purpose. This investigation was apparently conducted in November 2016. Plainly, evidence of this nature could not be received unless this Court determined that the whole issue should be reopened. In its present form it is simply inadmissible in any event.
Counsel argued that in this case removal and replacement of the entire driveway was not an appropriate remedy, first because the installed product was capable of withstanding the stresses said to be intended for it and which Mr Zotti’s most recent affidavit established continued to be its intended use, and second that, in any event, the intended use foreshadowed at trial was not permitted as a matter of law. It was put that the defendants have had the use of the driveway for some 10 years without paying for it and, as a result of the orders made by the Magistrate, were to retain that benefit.
Consideration
I deal first with the issue of the fresh evidence emanating from Mr Calabria. The Judge gave two reasons why he was not satisfied that the evidence would have had an important influence on the case. Although he did not elaborate, I consider that there was more to his Honour’s observation that Mr Calabria’s statement did not sit well with Mr Russo’s evidence than merely whether the conversation occurred on the occasion of the first or third pour. When he described the relevant conversation at trial, Mr Russo gave the following evidence:
Q …at any time did you receive a complaint from Mr or Mrs Zotti… About the strength of the steel that you were using.
ANo, on the first day he asked to see the docket, the part note docket from the concrete which I handed him and he had a look at it, he did query the – he said, ‘I thought you quoted for 25MPa’ I said ‘No, I didn’t, it’s 20MPa which is the standard driveway’.
…
QDid they ever say to you at any time that they wanted 25MPa.
ANo, when he had all of that cart note he said ‘I thought you were using 25MPa’. I said ‘No, it’s all 20MPa, that’s what I quoted for. But if you wanted to go 25 you’ve got to pay the difference in the concrete’ and he left it at that. I never heard from him, you know, he was coming out every day, we were greeting each other, you know, for we did eight or nine calls there, you know, and it never come up again.
QSo you had a discussion about a cart note.
AYeah.
QWhen did that discussion take place.
AOn the first pour.
At no time during his evidence did Mr Russo assert that a truck driver or anyone else was present during this conversation. That is curious since Mr Russo’s affidavit of 24 August 2017 deposes to his having made efforts, before the trial, to obtain the name of the truck driver who handed the docket to the defendant and who overheard the conversation. In his affidavit Mr Russo deposed to having telephoned Hanson Construction, Mr Calabria’s employer, for the purpose of obtaining the driver’s name and having been told that the information would not be provided because of privacy laws. He then deposed that it was only after the trial and because of a chance meeting with the driver that he was able to raise the issue with him. If it were in Mr Russo’s mind that a third person was present at the time of his conversation with Mr Zotti and indeed that the third person had handed over the cart note at his request, then one would have expected him to say so in his evidence before the Magistrate.
The affidavit of Mr Calabria is in the briefest terms. Moreover, Mr Calabria does not say why he was able to retain in his memory a conversation which, it might be assumed, was of little importance to him, over a period of some nine or so years.
For these reasons I agree with the Judge that Mr Calabria’s evidence did not sit well with that of Mr Russo. I also agree that having regard to the brevity of the conversation and its lack of significance to a person in Mr Calabria’s position, it could not be said to be inherently reliable. Moreover, there is no apparent reason why, by further efforts, the evidence could not have been obtained before the trial. The Judge further observed that to admit the fresh evidence would be to depreciate the public interest in the finality of litigation. In my opinion for all these reasons the Judge was correct not to receive the affidavit of Mr Calabria, or that of Mr Russo.

In the trial before the Magistrate Mr Zotti’s reference to his planned use of the driveway was put forward as a reason for justifying why he needed a driveway of the strength of 25MPa. The use of this evidence was confined to the issue of liability, that is, the likelihood of the defendants stipulating 25MPa. Before the single Judge, the plaintiff sought to justify the tender of the material emanating from the council as being relevant to that issue of credibility and to liability. That the basis for the pressed admission was so limited is borne out, not only by the grounds of appeal before the Judge, but also the outline of argument filed on behalf of Sunlight.
By the time the permission appeal hearing took place, before the same Judge, Sunlight had different counsel. In supporting the proposed grounds to the Full Court, counsel sought to widen the asserted relevance of the development approval material to also inform the measure of damages. The transcript of the permission to appeal hearing demonstrates that after the Judge ruled, Mr Adams, by now appearing for Sunlight, argued that the development approval material had a twin relevance. Permission was then expanded to include that head of relevance. The Judge said:
I will hear from Mr Riggall in a moment, but I think you having now articulated that, as long as it is clear that you are not challenging my decision in relation to Bellgrove v Eldridge on facts as found and that all you are now foreshadowing is a submission to the effect that the fresh evidence was relevant not only potentially to the contractual terms but also to the Bellgrove v Eldridge issue, and for that reason the evidence ought to be adduced. I think it is then a matter for the Full Court what they do with that, whether they could be persuaded to change the outcome or whether they accept that the matter needs to be simply remitted to me, or more likely the magistrate, or indeed perhaps hear the evidence themselves.
It can readily be seen that what I have called the development approval material could have had relevance to the measure of damages. However, that was a matter argued neither before the Magistrate nor on appeal before the Judge. In these circumstances it would be controversial, to say the least, to now allow Sunlight to expand the arguments in favour of admitting the fresh evidence.
As seen, there is an antecedent issue. It is true that the defendants’ counterclaim, although claiming that there was a “fundamental breach” of the contract by reason of the use of 20MPa concrete, did not assert why concrete of the greater strength was necessary. Nothing was said about the proposed use for the driveway. Accordingly, Sunlight was not on notice about this issue in advance of the trial. That is unfortunate, as in my view the pleading should have extended to outline why only complete replacement of the driveway would suffice in terms of damages. However, there were a number of remedies available to Sunlight’s counsel when the defendant’s plans arose in the Magistrates Court. First, counsel could have cross-examined on the issue of whether or not the intended use was a permitted one. Next, counsel could have called for production of any documents which would have substantiated Mr Zotti’s claims. Alternatively, counsel could have sought an adjournment of the trial to have the matter researched. In the further alternative, counsel could have sought a ruling from the Magistrate that, this matter not having been pleaded, evidence in support of it should be struck out. All these avenues were open. It appears that counsel did not choose to pursue any of them. While it can well be understood that this was then merely one issue among many live issues, this was the choice counsel made. As the single Judge observed, it is often the case that, with the benefit of hindsight, additional evidence might have been presented. But even assuming that the intended use was not a permitted use at that time, it is conceivable that Mr Zotti might have secured some sort of change of the planning permission, or at least have intended to do so.
I can find no error in the Judge’s approach to admission of the fresh evidence on this topic. Again, as the Judge observed, the public interest in the finality of litigation was a material matter in circumstances where the events under consideration dated back almost 10 years. I consider the Judge was correct to reject the fresh evidence going to this topic.
Furthermore, to entertain the new submission that this evidence had a twin impact on the trial, at this stage of the proceedings, would be to entirely undermine the lengthy and expensive litigation that has preceded this appeal. In my opinion this Court should not now allow Sunlight to argue the expanded basis for the admission of this evidence.
The ground of appeal referring to damages concerns only the single Judge’s decision to increase the amount of damages ordered on the counterclaim. Sunlight asserts that the increased amount was not pleaded by the defendant and was not supported by the evidence. Sunlight complains that in uplifting the level of damages in this way the Judge made no or inadequate allowance for the fact that a significant proportion of the driveway would not be employed in accessing or otherwise using the shed. While it can be accepted that trucks might need an expanded area in which to perform three-point turns, or to stand at rest, it seems that not all the driveway would need to be of extra strength to accommodate those purposes.
In my view there is some force in Sunlight’s argument on this ground. The Magistrate was in the best position to assess damages and to take into account that the trial proceeded on the basis of amounts given in the pleadings. Without descending into the level of detail presented before the Magistrate, I am persuaded that it would be appropriate to restore her Honour’s award on the counterclaim.
Conclusion
I would allow the appeal only for the limited purpose of setting aside the Judge’s award of damages on the counterclaim and restoring the award made by the Magistrate.
In relation to the affidavits filed I would make the following orders:
1.FDN 24 is not received;
2.FDN 25 is not received;
3.FDN 28 is not received;
In relation to the appeal itself I would order:
4.The appeal is allowed to the extent of setting aside the Judge’s award of damages on the counterclaim and restoring the Magistrate’s order, namely an amount of $56,600.
BLUE J:
The background, issues and contentions are summarised in the reasons for judgment of Vanstone J. I agree with the disposition of the appeal proposed by Vanstone J but for somewhat different reasons.
The appeal grounds
The notice of appeal is unfortunately drafted in that it ostensibly sets out two different sets of appeal grounds, one comprising eight grounds and the other comprising three grounds. However, on the hearing before the single Judge of the application for permission to appeal and again before this Court, the appellant (Sunlight) said that the three grounds are the grounds of appeal and the eight “grounds” are merely particulars thereof. The appeal was conducted on this basis. Accordingly I refer in these reasons to the three grounds as the grounds of appeal. For the sake of clarity I refer to the eight “grounds” as sub-grounds. The first three sub-grounds are particulars of ground 1, the next three sub-grounds are particulars of ground 2 and the last two sub-grounds are particulars of ground 3.
Grounds 2 and 3 complain of the exercise by the single Judge of the discretion not to admit new evidence on appeal (relating to the affidavit of Mr Calabria and to evidence concerning development approval). If one or both of grounds 2 and 3 is successful and new evidence is admitted on appeal, Sunlight challenges the Magistrate’s finding concerning the 25 MPa alleged term of the contract on the basis of the new evidence. However, Sunlight does not challenge that finding on the evidence that was before the Magistrate.
Ground 1 complains of the allowance by the single Judge of the cross appeal by the Zottis which increased the quantum of the counterclaim by $8,400 from $56,600 to $65,000. However, during the hearing of the appeal, due to the unfortunate drafting of the notice of appeal, a question arose as to whether ground 1 extends beyond the allowance of the cross appeal to the quantum of the counterclaim allowed by the Magistrate.
It is convenient to address the fresh evidence grounds (2 and 3) first, followed by ground 1 insofar as it complains of the allowance of the cross appeal, followed by the question whether ground 1 extends more generally to the quantum of the counterclaim.
The admission of fresh evidence on appeal
Common law courts considering the exercise of the power to order a new trial generally required an applicant to satisfy two criteria:
1.the evidence sought to be admitted could not with reasonable diligence have been obtained for use at the trial; and
2.if the evidence had been available at the trial, it is reasonably clear that an opposite outcome would have resulted.[1]
[1] As formulated by McHugh, Gummow and Callinan JJ in CDJ v VAJ (1998) 197 CLR 172 at [89] referring to the formulation by Dixon CJ (with whom Williams, Webb, Kitto and Taylor JJ agreed) in Wollongong Corporation v Cowan (1955) 93 CLR 435 at 444.
However, these criteria were not rigid and were applied with some flexibility in reconciling the competing demands of justice and finality.[2]
[2] CDJ v VAJ (1998) 197 CLR 172 at [105] per McHugh, Gummow and Calllinan JJ citing Dixon CJ Fullagar, Kitto and Taylor JJ in McCann v Parsons (1954) 93 CLR 418 at 430-431.
In CDJ v VAJ[3] the High Court held that the common law criteria do not apply as such to the discretion to admit new evidence on a statutory appeal conferred by section 93A(2) of the Family Law Act 1975 (Cth). Nevertheless the extent to which the evidence was or could by the exercise of reasonable diligence have been available at trial and the extent to which the evidence was capable of resulting in a different result are clearly critical factors to be taken into account in the exercise of the discretion.
[3] (1998) 197 CLR 172.
In Viscariello v Livesey[4] White J held, or proceeded on the basis, that the approach articulated by the High Court in CDJ v VAJ applies to the determination of a civil Magistrates appeal (under section 40 of the Magistrates Courts Act 1991 (SA)) because the provisions of rule 286(3)(a) of the Supreme Court Civil Rules 2006 (SA) are in very similar terms to section 93A(2) of the Family Law Act 1975 (Cth). It appears that both parties on the appeal before the single Judge proceeded on this basis and I therefore assume that the reception of the new evidence on appeal to the single Judge was to be determined on this basis.
[4] [2013] SASC 99 at [132].
Ground 2: The evidence of Mr Calabria
Ground 2 is that the learned Judge erred as a matter of law and in fact and hence the exercise of the discretion in relation to the question of admission of evidence on appeal in characterising the evidence of Mr Calabria as not of significant weight.
The context in which Nino Calabria’s affidavit is to be considered is that at trial Mr Russo gave evidence that there was no discussion about concrete strength before the job started; during a concrete pour Mr Zotti asked to see the cart note for the concrete, which Mr Russo showed him; Mr Zotti said “I thought you quoted for 25 MPa”; and Mr Russo replied “No, I didn’t, it is 20 MPa which is the standard driveway” and Mr Zotti did not demur. By contrast Mr Zotti gave evidence that when Mr Russo first attended at his house he told Mr Russo that he wanted the concrete extra strength; Mr Russo asked “What strength do you want?” and he replied “32 MPa”; Mr Russo asked “32 MPa what do you need that for?” and he replied “there’s a shed down there… and I want to be able to get up and down that shed because down the track, I don’t know when, I will be operating and selling oil hopefully or other stuff”; Mr Russo said “20 should be enough” and he replied “No I want stronger”; and Mr Russo said “25 will be more than enough” at which point they settled on 25 MPa. Mr Zotti gave evidence that it was not until after the job had been completed that he saw a cart note and observed that it referred to 20 MPa.
In his affidavit Mr Calabria said that as an employee of Hanson Construction he delivered concrete to Mr Zotti’s address for the third concrete pour by Mr Russo of the driveway slab. He heard Mr Zotti ask Mr Russo to see the cart note for the delivery and as a result gave the cart note to Mr Russo, who handed it to Mr Zotti. He heard Mr Zotti ask Mr Russo “Are all driveways done in 20 MPa?” and Mr Russo replied “Yes. Your house foundation is 20 MPa. If you want it stronger then you will have to pay for extra labour and materials.”
The conversation narrated by Mr Calabria is completely inconsistent with Mr Zotti’s evidence that before the job began he had agreed with Mr Russo on a strength of 25 MPa, there was no conversation about strength while the job was being done and he did not see a cart note until after the job had been completed. While there are variances between the words spoken as recalled by Mr Russo and Mr Calabria, they are typical of the variations in recall between two honest and reliable witnesses and the gist of the conversation narrated by Mr Calabria corroborates Mr Russo’s evidence.
Mr Russo swore an affidavit for the purpose of the appeal to the single Judge in which he said that before the matter went to trial he telephoned Hanson Constructions requesting details of the drivers who delivered concrete to the Zotti site and in particular the driver who handed over the cart note but Hanson declined to provide the information on privacy grounds. Mr Russo said that he recalled the first name of the driver as Nino. Mr Russo said that after the trial he met Mr Calabria by chance who said that he remembered the site because he only lived down the road and remembered Mr Zotti asking for the docket.
The Judge accepted that there was a reasonable explanation for Sunlight’s failure to adduce evidence from Mr Calabria at trial and that the evidence was relevant and capable of influencing the Magistrate’s consideration of the 25 MPa issue. The Judge gave the following reasons for declining to receive the evidence of Mr Calabria on the appeal:
… I cannot be satisfied without more that the evidence would, or even would likely, have had an important influence on the case. First, while the evidence, if accepted, would tend to support the plaintiff’s case, it does not in fact square with the evidence of either Mr Zotti or Mr Russo. Secondly, and more significantly, the evidence from Mr Calabria relates to a short conversation that he overhead almost 10 years ago. It cannot be said that the evidence is inherently likely to be reliable and of significant weight. In any event, its reliability and weight could only be assessed after hearing cross-examination of Mr Calabria, and perhaps also additional evidence from Mr Zotti and Mr Russo. This would likely require that the matter be remitted to the Magistrates Court for rehearing given its interrelationship with the issues of credit that arose in the case. Further, in the circumstances of a civil or commercial dispute of the nature and limited dollar significance of the present case, and which relates to events that occurred almost 10 years ago, the public interest in the finality of litigation looms large.
The first reason given by the Judge was that Mr Calabria’s evidence did not square with the evidence of Mr Zotti or Mr Russo. The Judge did not explain why he considered that Mr Calabria’s evidence did not square with the evidence of Mr Russo. Two potential differences were canvassed on the appeal to this Court. The first was that Mr Calabria’s evidence was that the conversation occurred during the third pour whereas Mr Russo’s evidence was that it occurred during the first pour (there having been nine pours in total). This is not a significant difference – it was the content of the conversation that was important and not whether it occurred on the first, second or third pour. Moreover neither witness was cross-examined in relation to the difference. The second potential difference was that Mr Russo did not say in his evidence at trial that the concrete delivery driver had been present on the occasion of the discussion about the cart note and about the concrete strength. It is to be noted that Mr Russo did not say that no one else was present and, assuming his affidavit is accepted at face value, it is unsurprising that he did not volunteer the presence of a third person when he had been unable to locate that person as a witness. Mr Russo was not cross-examined in relation to his evidence in this respect and before this difference could be relied upon it was essential that he be cross-examined in relation to it.
The second reason given by the Judge was that Mr Calabria’s evidence related to a conversation that he overheard 10 years ago and accordingly his evidence was not inherently likely to be reliable. Given that Mr Calabria purported to have a recollection of the conversation, any issue as to his evidence was unlikely to relate to his reliability but rather to his honesty. In the absence of cross-examination of Mr Calabria, the Judge was not in a position to make an adverse assessment of his reliability, or honesty, as a witness.
On its face, if evidence had been given by Mr Calabria at trial in terms of his affidavit, its acceptance or rejection by the Magistrate would have determined the concrete strength issue. This is because there was no unequivocal objective evidence that supported the version of either Mr Russo or Mr Zotti. There were some matters that may have been regarded as making Mr Russo’s version more intrinsically likely, such as the fact that the incremental cost of 25 MPa concrete over 20 MPa concrete was relatively insignificant; concrete for driveways with loads greater than residential traffic is normally 150 millimetres thick (as well as being 25 MPa) but the quotation by Sunlight specified a thickness of only 100 millimetres; and the fact that Mr Zotti in subsequent correspondence in 2009 articulated several complaints about the work without giving prominence to a complaint about concrete strength. On the other hand the Zottis tendered a facsimile bearing the imprinted date 16 May 2008 and a letter bearing the date 16 May 2008 complaining about concrete strength but there was no independent evidence that they were transmitted and sent in 2008.
For these reasons, the Judge’s exercise of the discretion whether to receive Mr Calabria’s evidence miscarried. It is necessary for this Court to exercise the discretion afresh. In exercising the discretion, it is necessary to consider whether evidence could have been adduced from Mr Calabria at trial by the exercise of reasonable diligence by Sunlight. Mr Russo knew that a driver employed by Hanson named Nino had been present on the occasion when, according to Mr Russo, the critical conversation with Mr Zotti about concrete strength took place. On appeal Sunlight does not identify any reason why it could not have issued a subpoena to Hanson to obtain documentation that would have disclosed details of the drivers making the concrete deliveries in question. The importance of the issue concerning concrete strength ought to have been apparent to Sunlight and in fact was apparent to Mr Russo as disclosed by his affidavit. Parties are required to use reasonable endeavours to procure and adduce all evidence at trial rather than seeking to adduce evidence on appeal. In the circumstances, I would exercise the discretion against receiving Mr Calabria’s evidence because Sunlight failed to exercise reasonable diligence in attempting to procure his evidence at trial.

This ground of appeal is not established.
Ground 3: The evidence relating to development approval
Ground 3 is that the learned Judge erred as a matter of law and in fact and hence the exercise of the discretion in relation to the question of admission of evidence on appeal in characterising the evidence as to development approval as lacking in probative value and not likely to have an important influence on the trial.
The evidence sought by Sunlight to be adduced on appeal comprised the development approval by the Council dated September 2002 relating to construction of the Zottis’ house and shed and an extract from the Council’s development plan. Condition 4 of the development approval was that the shed “must only be used for domestic storage, or for purposes reasonably incidental to a lawful use of the dwelling or/and the subject land and must not be used … for industrial or commercial purposes”. It may be assumed for the purpose of this appeal that Mr Zotti’s proposed use, according to his evidence, of the shed for commercial storage of oil would have contravened condition 4 of the development approval.
The Judge gave two reasons for declining to receive the new evidence. The first was that Sunlight had not demonstrated that it could not have obtained the evidence at trial by the exercise of reasonable diligence. The Judge said:
Turning to the further evidence in relation to the development approval and plan for the defendants’ shed, there was nothing to prevent this evidence being obtained prior to trial. While the factual issue to which it related was not expressly mentioned in the pleadings, there was not (and could not properly have been) any objection to Mr Zotti giving evidence about the shed by way of explanation for his evidence that he specified concrete with the strength of 25MPa. It is often the case that, with the benefit of hindsight, there is additional evidence that might have been adduced had the case been considered and prepared more thoroughly or with greater knowledge of what was to come. In summary, while there was some explanation for the evidence not being adduced at trial, it is not a complete explanation.
I agree with Vanstone J that the Zottis ought to have pleaded their intended use of the driveway in conjunction with the storage of oil in the shed as part of the plea of “Bellgrove v Eldridge damages”. Indeed, they ought to have pleaded as particulars of the oral component of the contract the conversation between Mr Russo and Mr Zotti of which Mr Zotti gave evidence as summarised at [46] above. However, I also agree with Vanstone J that when the Zottis’ case was disclosed at trial in this respect, it was or should have been apparent to Sunlight that a real question arose as to whether it was lawful for the Zottis to use the shed for the commercial storage of oil. Sunlight was faced with a choice between pressing on with the trial or seeking an adjournment to make inquiries into such matters as development approval. It chose the former course. Having made that election, it cannot now contend that reasonable diligence would not have disclosed the terms of development approval.
The second reason given by the Judge was that Sunlight failed to establish a sufficient prospect that if the evidence had been available at the trial an opposite outcome would have resulted. The Judge said:
… I am not persuaded that the further evidence on this topic was likely to have had an important influence on the outcome of the case. There is no concern about the reliability of the proposed evidence; the issue is its probative value. The proper interpretation of the terms of the development approval and plan, and the precise nature of Mr Zotti’s intended use of the shed, are not entirely clear. Even if they are inconsistent, Mr Zotti might have intended to, or at least had needed to, obtain some variation or amendment to the development approval that he had been given, or to have obtained some other form of permission for his proposed use of the shed. In any event, the issue in the case was not what use was permissible, but rather what use Mr Zotti intended to make of the shed. Even then, this issue was really only a matter going to the explanation for, and hence credibility of, Mr Zotti’s ultimate evidence that he specified concrete with a strength of 25MPa. While cross-examination would have been permitted in relation to the development approval, evidence of its terms may not have been admissible given its merely collateral relevance.
Ultimately, the most that can be said of the evidence about the development approval for the shed is that it may well have been useful. I am not satisfied that it would likely have had an important influence on the trial.
I proceed on the assumption that evidence of the development approval would have been relevant at trial to two issues: the 25 MPa issue and the “Bellgrove v Eldridge damages” issue. As to the 25 MPa issue, the mere fact that it would not have been lawful for the Zottis to use the shed for the commercial storage of oil would have been a very negligible factor in the Magistrate’s assessment of the intrinsic likelihood of Mr Zotti’s version of the conversation with Mr Russo as opposed to Mr Russo’s evidence. Mr Zotti may well have been ignorant of the existence or relevance of condition 4 to his intended use (according to his evidence) of the shed; he may have intended to build a driveway capable of facilitating such use with the intention of seeking a future variation in the condition; he may have intended to ignore the condition. As to the “Bellgrove v Eldridge damages” issue, for parallel reasons the existence of condition 4 would have been of relatively little weight in the Magistrate’s assessment of the reasonableness of the Zottis being compensated for rectification costs. Such a factor would have been dwarfed by the much greater consideration, available to and deployed by Sunlight at trial, that the Zottis had not in fact taken any steps to replace the concrete with concrete of a greater strength over the eight years which had elapsed between 2008 and the trial in 2016 and did not appear to have concrete plans to do so at the time of trial.
I agree with the result of the Judge’s exercise of the discretion not to receive evidence of the development approval and development plan.
This ground of appeal is not established.
Ground 1
Ground 1 is that the learned Judge erred as a matter of law and in fact and hence the exercise of the discretion in relation to the question of the respondents’ cross-appeal and entering judgment on the defendants’ counterclaim in an amount not pleaded by the defendants and not supported by the evidence in that the sum adopted included betterment and sums not reasonable for rectification and replacement of works.
The allowance of the cross appeal
By their amended counterclaim, the Zottis pleaded that Sunlight’s breach of contract caused them to suffer loss and damage of $56,600 and they claimed damages in the sum of $56,600.
This formulation of quantum was obviously based on a quotation obtained by the Zottis from Radako Constructions in November 2012 for $56,600 (which quotation was tendered in evidence at trial).
The Zottis subsequently obtained an expert report form a quantity surveyor, Mr Altamura, in which he assessed the cost of removing the existing driveway and replacing it with 25 MPa concrete totalling $83,827[5] (which report was also tendered in evidence at trial). However, Mr Altamura gave oral evidence at trial that the rectification cost, excluding the paths, was approximately $65,000. No application was made at any time by the Zottis to amend the amount of the counterclaim to $65,000 or any other amount other than $56,600.
[5] All figures identified by Mr Altamura referred to herein were as at 2008. Mr Altamura identified higher ‘figures as at the time of his report or as at trial.
The Magistrate noted Mr Altamura’s oral evidence estimating rectification costs at $65,000 but held that the Zottis were confined to the amount sought in their counterclaim being $56,600.
The Judge on appeal said that there was no suggestion by Sunlight, or the Magistrate, that the Zottis might be held to the quantum of their pleaded claim in the face of evidence adduced by them and reference in their addresses to higher figures. The Judge said that the Zottis contended that, if they have been put on notice, they would have applied to amend the amount of the counterclaim. The Judge concluded that the Magistrate erred in confining them to the amount claimed in their counterclaim.
Normally parties are confined to their pleadings, but this does not apply when the opposite party acquiesces in a party conducting a case outside its pleadings. In the present case there was no such acquiescence by Sunlight. Evidence was adduced by the Zottis of various estimates of rectification costs, including $56,600, $65,000 and $83,827. Their evidence as to quantum of rectification costs was neither clear nor straightforward. Sunlight was entitled to proceed on the basis that the amount actually sought remained at $56,600 in the absence of any application to amend the counterclaim. Indeed, it should be noted that in the Magistrates Court the amount of a claim is not only relevant to quantum but also relevant to costs. The Zottis obtained a potential cost advantage (depending on the ultimate outcome of their cross action) by maintaining the amount sought at $56,600 and not increasing it.
There was no basis to conclude that the Magistrate erred in confining the Zottis to the amount claimed in their counterclaim. The Judge erred in allowing the Zottis’ cross appeal.
Any residual contention under ground 1
On its face, ground 1 is confined to the Judge’s allowance of the cross appeal whereby the Judge increased the amount of the judgment on the counterclaim from $56,600 to $65,000. It does not challenge the quantum of the judgment on the counterclaim by the Magistrate in the sum of $56,600.
Sunlight submits that the Magistrate erred in allowing damages for the replacement of the entirety of the concrete driveway in circumstances in which, on the Zottis’ case, they only needed extra strength concrete for vehicles proceeding along the driveway to the point where there was a turnoff to the shed and not for the entire length of the driveway. A similar argument had been advanced before the single Judge, who rejected it essentially because this contention was not advanced at trial and Mr Zotti was not given the opportunity to explain why he may have needed greater strength concrete even beyond the turnoff point to the shed.
The Zottis contend that Sunlight’s submission is outside the scope of ground 1 and the single Judge only granted permission to appeal on grounds 1, 2 and 3 which do not extend to this submission and granted permission on the explicit basis that ground 1 was confined to the allowance by the Judge of the cross appeal.
As noted above, the first three sub-grounds are particulars of ground 1. If read in isolation, the second sub-ground might perhaps be read as a contention that the Judge erred in not reducing the amount of judgment on the counterclaim below $56,600. However, read in context, all three sub-grounds are confined to a contention that the Judge erred in increasing the amount of the judgment on the counterclaim above $56,600. Thus, each sub-ground only asserts error by the Judge and does not assert error by the Magistrate. Moreover, given that Sunlight explicitly accepts that the sub-grounds are only sub-grounds of ground 1, the stream cannot rise higher than the source.
In addition, during argument on Sunlight’s application for permission to appeal, the Judge made it clear that he proceeded on the basis that ground 1 was confined to his allowance of the cross appeal and Sunlight acquiesced therein. In his ex tempore reasons for granting permission to appeal, the Judge explicitly stated that permission was granted on ground 1 on this basis and again Sunlight acquiesced therein.
In the absence of seeking permission to amend its grounds of appeal to insert an additional ground and seeking permission to appeal on that ground, which it has not done, Sunlight is not permitted to advance a contention that the Magistrate erred in assessing the quantum of the counterclaim at $56,600 and the Judge erred in not reducing that quantum on appeal.
Conclusion
I would allow the appeal on ground 1 to the extent of setting aside the Judge’s award of damages on the counterclaim and restoring the Magistrate’s order, namely an amount of $56,600.
PARKER J: I agree that the appeal should be allowed to the extent stated by Vanstone J. I agree with the orders that her Honour proposes.