Tawson Pty Ltd v Hillston Vineyard Pty Ltd

[2022] NSWSC 801

Supreme Court

New South Wales

Medium Neutral Citation:

Tawson Pty Ltd v Hillston Vineyard Pty Ltd [2022] NSWSC 801

Hearing dates:

29 March 2022

Date of orders:

17 June 2022

Decision date:

17 June 2022

Jurisdiction:

Common Law

Before:

Hamill J

Decision:

(1) Quash the orders of Magistrate Love dated 14 October 2021 entering judgment in favour of the respondent, Hillston Vineyard Pty Ltd.

(2) Remit the proceedings to the Local Court to be dealt with according to the terms of this judgment.

(3) The appellant’s (Tawson Pty Ltd) costs of, and incidental to, this appeal are to be paid by the respondent.

(4) The costs of the hearing in the Local Court are to be the costs in the cause.

Catchwords:

EVIDENCE – appeal from magistrate – damages for breach of contract to construct bore – where fine sand egression prevented installation of pump – admissibility of evidence contained in a report – opinion rule – whether opinion was a lay opinion – whether evidence was an expert opinion – where author of report not called to give evidence – where appellant conceded report was a business record – other exclusionary rules still applied – diagram and structure of Evidence Act not applied – denial of opportunity to cross-examine – fundamental precept of adversarial system of justice

Legislation Cited:

Evidence Act 1995 (NSW), ss 63, 69, 76, 78, 79, 135, Ch 3

Local Court Act 2007 (NSW), ss 39, 40, 41

Cases Cited:

Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 408; [2002] HCA 22

Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36

Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48

R v Powch (1988) 14 NSWLR 136

Category:

Principal judgment

Parties:

Tawson Pty Ltd (Appellant)
Hillston Vineyard Pty Ltd (Respondent)

Representation:

Counsel:
J Shaw (Appellant)
M Gunning (Respondent)

Solicitors:
Cosgriff Lawyers (Appellant)
Rural Law with Peter Long (Respondent)

File Number(s):

2021/00320367

 Decision under appeal 

Court or tribunal:

Local Court

Jurisdiction:

Civil

Date of Decision:

14 October 2021

Before:

Love LCM

File Number(s):

2020/47691

Judgment

1. By Summons filed 12 November 2021, Tawson Pty Ltd (“Tawson”) brings an appeal under ss 39-40 of the Local Court Act 2007 (NSW) against a decision of Magistrate Love by which he entered judgment for Hillston Vineyard Pty Ltd (“Hillston”) in the sum of $83,922.30. For the sake of clarity, I will adopt the approach of the parties and only refer to Hillston and Tawson, and not to the other corporate entities and parties that played a part in the dispute.

2. Hillston, the plaintiff in the Local Court and the respondent in this Court, brought proceedings by Statement of Claim against Tawson on 13 February 2020 for damages for breach of contract. The dispute arose out of an agreement by which Tawson agreed to construct a bore on Hillston’s land. Hillston alleged that Tawson breached the contract in various ways particularised in the Statement of Claim. The Magistrate accepted that Tawson breached the contract and, in particular, found that the bore was not fit for the purpose for which it was constructed, was not developed to the point where a “very expensive pump” could be installed, and that Tawson, by its principals Rex and David Watson, failed to “stick with its client” and address concerns raised by Hillston and others as to the state of the bore. ^[1]

   1. Tcpt, 14 October 2021, pp 10(21)-11(15).

3. One of several controversies ventilated at the hearing was the admissibility of a report authored by Luke Woods and commissioned by Hillston. The Magistrate admitted the report over Tawson’s objection. ^[2] The parties agreed, both in the Local Court and on the appeal, that this report was a “business record” for the purpose of s 69 of the Evidence Act 1995 (NSW). However, Tawson submitted that the evidence was inadmissible under the opinion rule in s 76 and that the only basis upon which could have been admitted was as an exception pursuant to s 79, that is that it was an opinion based on specialised knowledge. Tawson submitted, if the evidence was so admissible, Hillston was required to make Mr Woods available for cross-examination, which it declined to do. The Magistrate admitted the evidence as a “lay opinion” under s 78. This decision was at the heart of the first two grounds of appeal raised in the summons:

“1. The learned Magistrate erred in admitting into evidence the report of Luke Woods dated 28 March 2019 when Mr Woods was not called as a witness.

2. The learned Magistrate erred in finding that the opinions contained in the report of Luke Woods dated 28 March 2019 regarding the construction and development of the bore were admissible under the lay opinions exception to the opinion rule in s 78 of the Evidence Act 1995.”

2. Ibid, pp 7(50)-8(1).

4. Those grounds must be upheld for the following reasons.

Jurisdiction and leave to appeal

5. In its written submissions, Hillston submitted that the ruling allowing the Woods report into evidence was “arguably an interlocutory judgment or order” so that leave would be required under s 40(2)(a) of the Local Court Act. That suggestion, which is contrary to a long line of authorities,^[3] was not pressed at the hearing.

   3. See, for example, R v Powch (1988) 14 NSWLR 136; Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 408; [2002] HCA 22, Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48.

6. The ruling admitting the evidence, and the grounds of appeal concerning that ruling, raise a question of law. Tawson has an appeal as of right under s 39(1) of the Local Court Act.

7. If, contrary to that conclusion, the issue is one involving a question of “mixed law and fact”, it would be appropriate to grant leave to appeal under s 40(1) of the Local Court Act because of the prominence of Mr Woods’ report in the context of the proceedings and its significances in the Magistrate’s reasons.

The background to the Woods report, the objection to its admissibility and the ruling allowing its admission

8. There was no dispute that Tawson had entered a contract to dig and construct a bore for Hillston and that it had undertaken a good deal of work towards that end. Similarly, there was no dispute that Hillston had paid the full contract price and that there was a problem relating to the ingress of sand into the bore creating difficulties in progressing the bore construction. The dispute centred around (but was not limited to) whether the sand ingression resulted from faults with Tawson’s work or the geographical conditions prevailing at the site, whether there was any variation to the agreement arising from issues that arose in the course of drilling the bore, and whether Tawson had fulfilled its obligations under the contract albeit that the bore was not operational when the parties fell into dispute. While the foregoing is an oversimplification of the factual and technical issues arising from the pleadings, and from the evidence and submissions given at the hearing, it is sufficient to place the admissibility issue into its context.

9. The Statement of Claim asserted in paragraph 11 that in around mid-July 2018, Hillston engaged a company called ACSEquip to assess the bore and provide a written report of its findings. This was not in dispute. ACSEquip provided an initial Bore Assessment on 26 October 2018 and a further Bore Assessment on 28 March 2019. Luke Woods was the author of each of those assessments. The report of 28 March 2019 was essentially the same as the 26 October 2018 report and I refer to the report as “the report” or “Mr Woods’ report”, as if there were only one. The fact that there were two reports, and any differences between them, is of no significance in the context of the present dispute.

10. Colin MacFarlane was a manager of Hillston and his affidavit set out in some detail the dealings he had with ACSEquip and Mr Woods. The report and invoices were annexed to his affidavit sworn 26 May 2020. When Mr MacFarlane was called to give evidence, his affidavit was tendered as Exhibit 1. However, objection was taken to certain parts of the affidavit in which he related representations made by Mr Woods. Tawson’s submission was that those statements constituted inadmissible hearsay. As the argument developed the objection encompassed the entirety of Mr Woods’ report.

11. The objection arose on the first day of the hearing, 30 November 2020. Counsel raised the fact that Hillston did not propose to call Mr Woods and the Magistrate confirmed this with Hillston’s lawyer. ^[4] A short time later the Magistrate asked why he wasn’t giving evidence and Hillston’s lawyer replied:

“Because it was an assumption that he had business records and he’s from a very long way away, and –” ^[5]

4. Tcpt, 30 November 2020, p 12(40-42).

5. Ibid, p 13(49-50).

12. It was never suggested that Mr Woods was unavailable to give evidence, as that expression is defined in the Dictionary to the Evidence Act, or for the purpose of the exception to the hearsay rule in s 63, or otherwise.

13. Counsel for Tawson continued to articulate the objection but the argument was truncated so that Mr MacFarlane could commence his oral evidence. Shortly thereafter, counsel for Tawson raised the objection again and the Magistrate decided, with the consent of the parties, that written submissions would be provided as to the admissibility of the report. ^[6] The matter was adjourned until the following day (1 December 2020).

    6. Ibid, p 19.

14. On 1 December 2020, counsel for Tawson conceded the report may constitute a business record for the purpose of s 69 of the Evidence Act but maintained the objection on two bases: that the evidence contained opinions that were not admissible, and that Tawson was entitled to cross-examine the witness. The issue was argued at some length with counsel emphasising the difference between a lay opinion and an expert opinion. ^[7] The issue was not resolved and the Magistrate made further orders for written submissions. The matter was adjourned until 14 May 2021, ^[8] however it returned to the Local Court on 29 March 2021 and the argument regarding admissibility continued. ^[9]

    7. Tcpt, 1 December 2020, pp 1-18.

    8. Ibid, pp 21-23.

    9. Tcpt 29 March 2021, pp 1-17.

15. The Magistrate retired and delivered his ruling on the evidence which is recorded in the transcript. ^[10] His Honour’s reasons were as follows:

    10. Ibid, pp 17(47)-19(46).

“HIS HONOUR: The plaintiff in this matter seeks to tender [two reports] by Mr Luke Woods of ACS Equip, which are annexed to the affidavit of Mr Colin McFarlane. The two reports are dated 26 October 2018 and 28 March 2019 but have been consolidated into the report of 28 March 2019.

The reports relate to an assessment made by Mr Woods of the bore in question in these proceedings, and include facts and opinions based on the examination, as well as photos from the CCTV camera showing the screen apertures and water within the bore.

It is agreed by the parties that the reports constitute business records and are admissible as an exception to the hearsay rule under s 69 of the Evidence Act.

The defendant argues that the opinions expressed in the report, and identified by yellow highlighting in the copy provided to the court, do not constitute lay opinions and are more likely expert opinions.

The defendant argues that as expert opinions they are inadmissible as they do not farm part of an expert report filed and served in accordance with the rules.

The plaintiff argues that the opinions do fall into the category of lay opinions and are therefore admissible pursuant to s 78 of the Evidence Act, which says:

‘The opinion rule does not apply to evidence of an opinion expressed by a person if the opinion is based on what the person saw, heard or otherwise perceived about a matter or event and evidence of the opinion is necessary to obtain an adequate account or understanding of the person’s perception of the matter or event.’

The plaintiff also argues that the opinions to some extent confirm what is said in the pleadings filed by the defence, particularly at para 8(d)(4) where it is said there was a significant amount of fine sand in the bore, further bore development work was required.

Included in the opinions expressed by Mr Woods are -

‘Indicating poor bore development at time of construction due to the driller’s mud and debris present in the bottom of the bore as evident on the CCTV inspection, however, a greater loss is likely due to mud present in the gravels that may not be visible, indicating 1.10 metre of debris on bottom, and poor bore development was noted. This would suggest that the bore construction has been completed with incorrectly sized screen apertures, the bore design and limited water column available would be unfavourable for pumping with a correctly positioned pump above the screen section, placement of the pump in the screened area would increase the sand ingression into the bore and in both scenarios the sands will have a detrimental effect on the pumping equipment. Bore design requires pump placement in the screen section (no sump) inadequate water column available to allow pump placement above the screen section which has prevented a comprehensive assessment of this section. This would indicate a high volume of suspended particles in the water column.’

For the record I have read out the yellow highlights in their report that has been provided to the court. I have not used any punctuation and they are just continuous, but in the report are separate comments.

These opinions are based on the facts included in the report which are admissible.

Having considered these statements I am of the view that they are opinions of common sense, a lay person with no training or expertise would have little difficulty understanding the opinions as expressed, or drawing the same conclusions as Mr Woods based on the admissible facts and evidence.

In addition the opinions appear to confirm the statement made in the defence pleadings. I consider the case of Lithgow City Council v Jackson which does not affect my conclusion that the opinions are admissible pursuant to s 78 of the Evidence Act and that it will be a matter of weight to be given to the opinions which will be determined during the proceedings.

The defendant also argues that the evidence should be excluded pursuant to s 135 of the Evidence Act which says:

‘The Court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:

(a) be unfairly prejudicial to a party; or

(b) be misleading or confusing; or

(c) cause a result in undue waste of time.’

The defence rely on s [135(a)].

The reports of Mr Woods and the opinions therein are of considerable probative value. He provides evidence of his observations of the bore which is highly relevant to the issue of fit for purpose.

The report was served on the defence as part of the plaintiff’s case and in accordance with the directions of the court. There was no impediment to the defence obtaining their own report in response to the Wood[s] report and the defence witnesses are in a position to comment on or give evidence to counter the facts or opinions expressed in the report.

While there is some prejudice to the defence in not having the opportunity to cross-examine Mr Woods, in my view this does not outweigh the high probative value of the evidence and i intend to admit the report in its entirety.”

The evidence was wrongly admitted as a lay opinion

16. At the hearing of the appeal, counsel for Hillston made various arguments attempting to justify the admission of the evidence and the refusal to expose Mr Woods to cross-examination.

17. Hillston contended that it “was not obliged to call Mr Woods as a witness as a precondition to the admissibility” of his report. ^[11] This was predicated on the assumption, accepted by Tawson, that his report was a business record. It was put that the report “contained representations based upon what [he] saw and perceived when he inspected the bore and carried out bore development and bailing operations.”^[12] While some of the material in the report fits that description, there were many opinions expressed. I will return to that issue presently.

    11. Respondent’s Written Submissions (“RWS”), 22 March 2022 at [11].

    12. Ibid at [13].

18. The fact – assuming it to be, and based on Tawson’s concession – that the evidence was a business record for the purpose of s 69 of the Evidence Act, and that it thereby fell within an exception to the hearsay rule, is not determinative of its admissibility pursuant to other exclusionary rules within the Act. To find otherwise would, as counsel for Tawson submitted, represent a fundamental shift in the way cases such as the present are conducted. It would not be uncommon for one party to have obtained a report in the course of a dispute (to mitigate their alleged loss, to obtain a second opinion, or otherwise), and it is not correct that such a report will automatically be admissible under s 69 without exposing the author of the report to cross-examination.

19. Such a construction is contrary to the scheme of the Evidence Act, a matter that is obvious from the diagram at the commencement of Chapter 3 (with my emphasis):

20. Hillston submitted that the evidence contained no more than what Mr Woods saw and perceived himself, and pointed to some aspects of the report which accorded with Tawson’s own case. Examples were that there was a significant amount of fine sand in the bore and that there was driller’s mud over the screened apertures.

21. While so much may be accepted, these observations were only part of the report. Mr Woods went on to provide opinions as to the cause of the ingression of the sand and what it portended in terms of the quality of the drilling and construction. For example, he said “poor bore development was noted”, that “the bore has continued to allow large amounts of fine sand ingression through the screened apertures” and that the “construction has been completed with incorrectly sized screen apertures”. He said the “bore design and limited water column available would be unfavourable for pumping with a correctly positioned pump above the screened section”. ^[13]

    13. Affidavit, Colin MacFarlane, 26 May 2020 at Tab 23, p 9.

22. These were statements of opinion. Pursuant to the Evidence Act, they were not admissible (s 76) unless they fell within an exception under s 78 (lay opinion) or s 79 (opinions based on specialised knowledge). Hillston did not attempt to qualify Mr Woods as an expert although, from what I know of the case, it could probably have done so. Rather, it relied on the lay opinion exception in s 78:

“The opinion rule does not apply to evidence of an opinion expressed by a person if--

(a) the opinion is based on what the person saw, heard or otherwise perceived about a matter or event, and

(b) evidence of the opinion is necessary to obtain an adequate account or understanding of the person's perception of the matter or event.”

23. I do not accept, as the Magistrate did, that the kinds of opinions recounted above at [21] were lay opinions in the sense (as it was put by his Honour) that they were “opinions of common sense”, or that “a lay person with no training or expertise would have little difficulty understanding the opinions as expressed, or drawing the same conclusions as Mr Woods based on the admissible facts and evidence.” ^[14]

    14. Tcpt, 29 March 2021, p 19(7-10).

24. The first part of that proposition – that a lay person could understand the opinion as expressed – is not relevant. It is a doubtful proposition in any event.

25. The second part is relevant, but the inferences and conclusions that Mr Woods sought to draw are a long way removed from the kind of evidence that is traditionally caught by the lay opinion exception to the rule against witnesses giving evidence of their opinions. Nothing in the decision in Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 – a case his Honour said did “not change his conclusion that the opinions are admissible” ^[15] – authorised such an expansive approach to what constitutes a “lay opinion” under s 78.

    15. Ibid, p 19(13-16).

23. On the contrary, the High Court explained the proper basis for which lay opinions are admitted:

24. “The function of the law in relation to that category is to permit reception of an opinion where the primary facts on which it is based are too evanescent to remember or too complicated to be separately narrated. Where the evidence is that a person appeared to be drunk or middle-aged or angry, for example, it is impossible in practice for the observer separately to identify, remember and narrate all the particular indications which led to the conclusion of drunkenness, middle age or anger. For that reason, s 78 permits the conclusion to be stated: without it the evidence does not convey an adequate account or generate an adequate understanding of the witness's perception of the sobriety, age or emotional state being observed. But in cases of the present type the primary facts are not too evanescent to remember or too complicated to be separately narrated.” ^[16]

    16. Lithgow City Council v Jackson at [48] (French CJ, Heydon and Bell JJ).

25. The same, or a very similar rationale, lay behind the common law rule:

26. “The common law permitted the reception of non-expert opinion evidence where it was very difficult for witnesses to convey what they had perceived about an event or condition without using rolled-up summaries of lay opinion – impressions or inferences – either in lieu of or in addition to whatever evidence of specific matters of primary fact they could give about that event or condition. The usual examples are age, sobriety, speed, time, distance, weather, handwriting, identity, bodily health and emotional state, but a thorough search would uncover very many more. The problems which arise in examples falling into this category would have been reduced, though not completely solved, if, at the time of the observation, the observer had foreseen that one day he or she would be questioned by a police detective or a barrister, for then the observer might have made some conscious contemporaneous attempt to sort out the primacy facts so as to facilitate their future recollection and expression. But in many cases, to endeavour to describe the primary facts underlying the inference may be ineffective or misleading without stating the inference. The reason why it is very difficult for the observer is that it is almost impossible to separate the inferences from the primary facts on which they are based, and often very difficult to identify and recollect the primary facts themselves.”^[17] (footnotes omitted)

    17. Ibid at [45].

27. Lithgow City Council v Jackson concerned representations contained in ambulance officers’ notes concerning a patient who was injured in a fall. The note said:

“Found by bystanders — parkland

? Fall from 1.5 metres onto concrete

No other [history].”

31. French CJ, Heydon and Bell JJ doubted this contained, or constituted, an opinion. ^[18] However, their Honours went on to consider the criteria in s 78 of the Evidence Act and it was in that context that their Honours explained the purpose and function of the lay opinion exception. Their Honours also said:

“At common law, expert opinion evidence can be given as to the cause of injuries by inference from their nature. There is no reason to doubt that similar evidence in suitable form, from suitably qualified experts, about the causation of injuries is admissible under s 79. Had the ambulance officers given evidence of the medical and physical details they observed, it would have been admissible. But a statement of a conclusion by them that the respondent fell from a particular place would be opinion evidence banned by s 76. It would not have passed through the s 79 gateway into admissibility because they were not experts. It would not have passed through the s 78 gateway into admissibility because it failed to satisfy s 78(b).

18. Ibid at [38].

32. For those reasons the conclusions stated in the paragraph quoted above are incorrect. Those conclusions therefore afford no valid basis for the conclusion stated in the short paragraph that the ambulance officers’ opinion is admissible even though they were not called.”^[19] (footnotes omitted)

    19. Ibid at [48]-[49].

33. As to the Magistrate’s statement that Mr Woods’ opinions were no more than an application of common sense, it is worth repeating the plurality’s dismissal of a similar submission in Lithgow City Council v Jackson:

“The respondent submitted that the impugned representation ‘was a conclusion based on the position and condition etc of the respondent, and was a commonsense conclusion, in circumstances where the respondent was found at the foot of and facing away from a concealed drop’. This is fallacious. It rests on an assertion made many times in the respondent’s submissions that the ambulance officers perceived and relied on the position of the respondent relative to his environment. For reasons given above, that assertion is inconsistent with the evidence and with the Court of Appeal’s second decision.”^[20] (footnotes omitted)

20. Ibid at [55].

34. While the circumstances of the present case are obviously different, the reliance on a suggestion that the opinion was nothing more than an application of common sense raises the question: why Hillston sought to rely on the evidence at all. If the inferences could be drawn by the tribunal of fact, what could Mr Woods’ “lay opinion” add to the evidence of his observations?

35. Hillston also argued that Mr Woods’ opinions were readily understood by the Watson brothers, who were the principals of Tawson. ^[21] This submission was made to place the statements of Mr Woods in the context in which they were made. While so much may be accepted, it does not convert expert evidence into lay opinion evidence. The fact is that the Watsons were also experts, or purported to be, in the construction and drilling of bores. They had decades of experience in the industry. The fact that they could understand Mr Woods’ opinion did not make the opinion a lay opinion.

    21. Appeal tcpt, 29 March 2022, p 40(25-37).

36. The last matter I will address in this context is the Magistrate’s statement that “it will be a matter of weight to be given to the opinions which will be determined to during the proceedings.” ^[22] Such an approach – admitting evidence subject to weight – is often encountered and can be a sensible way of moving forward in civil proceedings. However, it is not an answer to a validly made objection. Further, it has little role to play where, as here, the witness providing the impugned evidence is not called to give evidence. Cross-examination may have established that the evidence was entitled to little weight. Alternatively, the evidence may have been entitled to great weight once the bases of the opinions were explained, and the extent of Mr Woods’ expertise was explored.

    22. Tcpt, 29 March 2021, p 19(15-16).

37. For those reasons, I uphold ground 2.

The failure to call Mr Woods and the denial of the right to cross-examine

38. I would also uphold ground 1 which complains of Tawson being denied the right to cross-examine Mr Woods about the contents of his report. Hillston made no attempt to justify the failure to call him, simply stating that he was a long way away and that it relied on s 69 of the Evidence Act.

39. Counsel for Tawson set out the following matters upon which Mr Woods could have been cross-examined:

• his expertise

• whether he measured the screen apertures

• his understanding of what size the screen apertures should have been

• alternative explanations for the presence of fine sands in the bore

• the cause of the iron related bacteria growth

• what effect, if any, his inability to assess the screen sections at 51.40 m and 52.70 m had on his opinion regarding the size of the screen apertures

• whether discharge of fine sands is a necessary and normal occurrence during bore development

• the evidence of Rex Watson and David Watson about the size of the screen apertures and the bore development process. ^[23]

23. Appellant’s Written Submissions (“AWS”), 15 March 2022 at [16].

40. It is apparent from a perusal of that list that cross-examination of Mr Woods had the potential to significantly impact on a proper assessment of the evidence received in the form of the report.

41. It is a fundamental aspect of procedural fairness that parties to any litigation have the opportunity to challenge the witnesses who give evidence against them.

42. The evaluative judgment, or balancing exercise, required under s 135 of the Evidence Act is a difficult one in which to engage in circumstances where the “unfair prejudice” arises from the refusal of one party to call a witness and the resulting inability of the other party to test the credibility and reliability of the evidence and the assumptions upon which it is based.

43. The Magistrate resolved Tawson’s objection under s 135 by saying the evidence had “considerable probative value” and to diminish the prejudice by finding there “was no impediment to the defence obtaining their own report in response to the Wood[s] report”. ^[24] That statement might be seen to undermine the suggestion that it was not an expert report. In any event, his Honour’s finding that there was “some prejudice”^[25] to Tawson in denying it the opportunity to cross-examine the witness seriously understated the unfairness involved. Where a fundamental precept of the adversarial process is denied to a party, it is difficult to undertake the evaluative process required by s 135.

    24. Tcpt, 29 March 2021, p 19(32-38), extracted at [15] above.

    25. Ibid, p 19(42).

44. I would also uphold ground 1.

Grounds 3 and 4

45. Ground 3 was not pressed. ^[26]

    26. AWS at [19]; Appeal tcpt, 29 March 2022, p 22(17).

46. Ground 4 is in the following terms:

“The learned Magistrate erred in finding that the contract between the parties did not consist of two separable parts, namely the construction of the bore and the development of the bore.”

47. This ground was subject to an extremely brief passage in the written submissions and was not expanded upon at all during the hearing. No question of law was identified and no authority identifying any such question was mentioned.

48. This ground raises a question of fact and is not amenable to an appeal to this Court under the Local Court Act.

49. If it raises a question of mixed fact and law, I would not grant leave to appeal under s 40(1) of the Local Court Act. My reasons are four-fold. First, it was not subject to any substantial argument in this Court. Secondly, the appellant has succeeded on the first and second grounds. Thirdly, any opinion expressed on the issue has at least some potential to pre-empt an issue that may arise if the matter is remitted to the Local Court to be deal with according to law. Finally, if I decided to vary the orders made by the Local Court, determining ground 4 would be an unnecessary exercise because it is an issue that would need to be considered, on its factual merit, in determining the appeal.

Disposition

50. The powers of the Court dealing with an appeal from the Local Court are set out in s 41 of the Local Court Act, which provides as follows:

“(1) The Supreme Court may determine an appeal made under section 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.”

51. Having concluded that grounds 1 and 2 must be upheld, the question is whether I should nevertheless dismiss the appeal, vary the terms of the orders made by the Magistrate, or set aside the judgment and remit the matter to the Local Court to be dealt with according to the terms of this judgment and any other directions made under s 41(1)(c).

52. The parties addressed the various possibilities.

53. Hillston’s primary position, as submitted in writing, was that the grounds “should be dismissed”. However it was at least implicit in both its written and oral submissions that, even if grounds 1 or 2 were upheld, I should nevertheless dismiss the appeal. This seemingly unusual outcome was based on the proposition that the evidence in Mr Woods’ report played very little role in the decision of the Magistrate and that there were aspects of the appellant’s claim that were not disputed by the respondent. Accordingly, even if any of the grounds were upheld, I should confirm the orders made by the Magistrate by dismissing the appeal.

54. It is true that there was much common factual ground, including the fact that the bore drilled and constructed by Tawson was not in a condition where the pump could be installed to make the bore operational. Further, one of the central findings of the Magistrate was that the Watsons (which is to say, Tawson) “walked away from the contract” and “did not stick with its client until both parties were happy”. His Honour found there was a “complete lack of transparency” on Tawson’s part. ^[27]

    27. Tcpt, 14 October 2021, pp 10(21)-11(15).

55. Even allowing for those matters, the fact is that the Magistrate described the Woods report as of “considerable probative value” ^[28] and referred to the opinions expressed in that report on several occasions throughout his judgment, including in making assessments of the evidence given by David and Rex Watson.

    28. Tcpt, 29 March 2021, p 19(31-32).

56. Tawson took the view that if the grounds were upheld, I would enter judgment in its favour. This submission disregarded those findings to which I have just made reference, including findings which seemed to impeach the credibility of one or other or both of the Watson brothers. Confronted with those matters, counsel for Tawson took the more moderate approach that the judgment should be quashed and the matter remitted to the Local Court, perhaps with directions made as to the filing of appropriate expert reports.

57. I am satisfied that the matter should be remitted to be dealt with according to the contents of this judgment. This will enable the parties to call expert evidence, if they choose to do so, and to cross-examine any experts so called. It was suggested that I should contemplate making directions to this end, but the Local Court should be left to make such directions and to control its own processes.

58. Tawson also suggested that a different Magistrate should hear the case and given the implicit findings made as to the evidence of the Watson brothers, I accept that is the more appropriate course.

Orders

59. I make the following orders:

1. Quash the orders of Magistrate Love dated 14 October 2021 entering judgment in favour of the respondent, Hillston Vineyard Pty Ltd.

2. Remit the proceedings to the Local Court to be dealt with according to the terms of this judgment by a different Magistrate.

3. The appellant’s (Tawson Pty Ltd) costs of, and incidental to, this appeal are to be paid by the respondent.

4. The costs of the hearing in the Local Court are to be the costs in the cause.

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Endnotes

Decision last updated: 17 June 2022