New South Wales Supreme Court CITATION : Philpott v Kettley & Anor [1999] NSWSC 271 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 12213/98 HEARING DATE(S) : 17 March 1999 JUDGMENT DATE : 1 April 1999 Albert Andrew Philpott (Appellant) PARTIES : Gregory Ronald Stephen Kettley (First Respondent) Jacqueline Veronice Kattley (Second Respondent) JUDGMENT OF : Master Harrison LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 591/94 LOWER COURT JUDICIAL OFFICER : Magistrate J A Huber Mr W S Veitch (Appellant) COUNSEL : Mr T Stuart (Respondents) SOLICITORS : CATCHWORDS : Stated case Apps & Anor v Pilet (1987) 11 NSWLR 350 Mifsud v Campbell (1991) NSWLR 725 Allen v Kerr & Anor (1995) Aust Tort Reports 81-354 The Australian Gas Light Company v The Valuer-General (1940) 40 SR (NSW) 126 CASES CITED : Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Press v Mathers (1927) VLR 326 Soulemezi v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 Mahoney v Industrial Registrar of New South Wales (1986) 8 NSWLR 1 State Rail Authority of New South Wales v Earthline Constructions Pty Limited (In Liq) (1999) 73 ALJ 306 Rogers v Whitaker (1992) 175 CLR 479 DECISION : See para 20 10 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON THURSDAY, 1 APRIL 1999 12212/98 - ALBERT ANDREW PHILPOTT v GREGORY RONALD STEPHEN KETTLEY & ANOR JUDGMENT (Stated case) 1 MASTER On 9 October, 1996 J A Huber LCM delivered a judgment on a civil claim brought by Gregory Ronald Stephen Kettley and Jacqueline Veronice Kettley (the plaintiffs/respondents) against Albert Andrew Philpott (the defendant/appellant). The plaintiff claimed that the defendant, a building consultant was professionally negligent when he carried out a pre-purchase building inspection. 2 The learned Magistrate found in favour of the plaintiffs and ordered that the defendant pay to the plaintiff $12,000.00 plus interest and costs. These proceedings were commenced by summons filed 11 September, 1998. The appellant seeks to disturb the decision reached by the learned Magistrate. 3 At the outset, it may be helpful to make some brief comment concerning the remedy pursued by the appellant. The authorities make it clear that the remedy of stated case provides a limited avenue of appeal. The court has jurisdiction to determine only questions of law and only such questions of law as are submitted to it (Allen v Kerr & Anor (1995) Aust Tort Reports 81-354 and The Australian Gas Light Company v The Valuer-General (1940) 40 SR (NSW) 126). The matter of what is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156. The facts stated are to be taken as the ultimate facts for whatever purpose the case is stated (Press v Mathers (1927) VLR 326 at p 330). The onus lies on the appellant to demonstrate that there has been an error of law. 4 According to s 106(1) of the Justices Act 1902, this court shall hear and determine the questions of law arising on a stated case and shall either reverse, affirm, or amend the determination in respect of which the case was stated; remit the matter to the Justice of Justices with the opinion of the court; or make such other order in relation to the matter as seems fit. 5 The appellant submitted that the learned Magistrate gave inadequate reasons and the decision was erroneous in law. He has identified three areas where inadequate reasons were given. The absence of proper reasons does constitute an error of law. 6 On the issue of the adequacy of reasons, the appellant referred to two authorities Apps & Anor v Pilet (1987) 11 NSWLR 350 and Mifsud v Campbell (1991) NSWLR 725. The earlier authority referred to reasons for decision in relation to interlocutory practice matters and was not directly on point. However both cases referred to above cited Soulemezi v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247. What are adequate reasons ? 7 If a judge indicates even in brief terms, his or her processes of reasoning to a conclusion on disputed facts, this court may not interfere. But where he or she does not do so, or where the inferences from his or her given reasons establish or suggest a misapprehension of the law, the court may intervene for then an error of law is shown - see Kirby P in Soulemezis at p 249, Azzopardi and Hope JA in Mahoney v Industrial Registrar of New South Wales (1986) 8 NSWLR 1. Reasons need not be elaborate. Reasons need to be given only so far as is necessary to indicate to the parties why the decision was made and to allow them such rights as may be available to them. 8 In relation to evaluating the evidence of witnesses Mahoney JA in Soulemezis stated: "The weight which a judge will give to the evidence of a witness will often be not capable of rationalisation beyond the statement: having heard him, I am not satisfied that I should accept what he says. The weight which a judge gives to a particular fact may be affected by, as it has frequently been put, his experience and, in particular, his experience of the significance of that fact in the order of things. It was this to which reference was made in Morgan v Babcock and Wilcox Ltd (1929) 43 CLR 163 at 173 and Martin v Osborne (1936) 55 CLR 367 at 375, in referring to "general human experience" and the like. In explaining the weight which he has given to a fact in a particular decision of fact, the judge is not, I think, required to detail why he sees, for example, the significance of a CAT scan, as being greater than, for example, the opinion of a particular treating doctor. His reasons, in the particular case, may partake as much of intuition based on experience as on formal and deductive reasoning. 9 In a recent High Court decision, State Rail Authority of New South Wales v Earthline Constructions Pty Limited (in Liq) (1999) 73 ALJ 306 the court discussed the history and principles governing appellate review of questions of fact (see Kirby J at pp 322-327). It must be remembered that when a trial judge resolves the evidence between witnesses the subtle influences of demeanour on his or her determination cannot be overlooked. This court does not have the advantage which the learned Magistrate enjoyed in seeing and hearing. 10 The agreed facts contained in the stated case were that the defendant/appellant was a licensed builder and building consultant retained for a fee by the plaintiffs/respondents to carry out a pre-purchase building inspection of a property known as 10 Glenbawn Place Leumeah (the property) and that as a consequence of Mr Stevenson's inspection he prepared a report dated 15 February 1991. It is agreed the plaintiffs/respondents subsequently purchased the subject property on 22 February 1991 for the sum of $120,000 and later sold the subject property on 6 July 1994 for the sum of $92,000. It was agreed that the value of the subject property if it was unaffected by efflorescence and fretting brickwork would have been $104,000. 11 The stated case referred to three issues and I have reproduced them together with the corresponding grounds of determination. The first issue that was determined by the learned Magistrate was, what was the state of brick and mortar decay which exhibited itself at 10 Glenbawn Place Leumeah on or about 15 February 1991? The learned Magistrate found that: (1) Mr Kettley noticed that the bricks to the house were darker below the damp course than those above it and there were one or two white coloured bricks on most sides of the house. (2) Mr Kettley in the course of leading antenna wires to various rooms found the ground under the house was dry and he later dusted the dirt off his clothes. (3) Mrs Kettley gave similar evidence to that of her husband about the brickwork. (4) The report of Mr Stevenson makes no mention of the bricks below the damp course being darker than those above it nor is there any mention of white on any bricks nor is there any mention of the condition of the external wall except referring to the same as "feature brickwork". However Mr Stevenson noticed some discolouration to a couple of bricks in the external brickwork, near the manhole entrance. He could not remember whether there was any "whiteness" and he did not notice any bricks displaying signs of efflorescence. 12 The Magistrate accepted the evidence of Mr and Mrs Kettley as to the state of the brickwork in February 1991. 13 The defendant/appellant submitted that the Magistrate erred in law as she failed to give sufficient reasons to, firstly, support her finding that Mrs Kettley gave similar evidence to that of her husband about the brickwork; secondly, by preferring the respondents'/plaintiffs' expert evidence over that of the appellant/defendant and failing to give reasons for such preference; thirdly, by failing to take account of the evidence of Linzy James Osmond in relation to the state of the brickwork at the subject property on or about 15 February 1991 and fourthly by failing to make any finding about the evidence of Linzy James Osmond. 14 The Magistrate in her judgment commenced her judgment by dividing the evidence into two categories the first being visual/factual and the second being that of expert opinion. In relation to the visual/factual issue she said at para 5 of her judgment: "Both the Plaintiff and the Defendant called eminently qualified experts, Mr Muldovan and Mr Grainger, who not surprisingly gave completely different opinions as to what would have been visible in 1991. I do not intend to go into any detail as to the different methods used or which method the Court prefers. When faced with differing expert opinions when there is evidence from "eye witnesses" it is quite proper for the Court to accept the evidence of those who were present at the time. I accept the evidence of Mr and Mrs Kettley as to the state of the brickwork in February 1991." 15 Mr and Mrs Kettley, Mr Stevenson and Mr Osmond gave evidence and were cross examined. Mr Osmond was the vendor who sold the property to the plaintiffs. Mr Stevenson was employed by the defendant to carry out the physical inspection of this property and write the pre-purchase report. While the learned Magistrate did not specifically refer to the evidence of Mr Stevenson and Mr Osmond she stated that she preferred the evidence of Mr and Mrs Kettley. I infer from that that she took into account the evidence of Mr Stevenson and Mr Osmond because if she did not she would have no reason to say she preferred the evidence of Mr and Mrs Kettley. The learned Magistrate stated that Mr and Mrs Kettley gave similar evidence about the brickwork. Mr Kettley noticed that there were bricks in the house which were darker below the damp course than those above it and he noticed one or two white coloured bricks on most sides of the house. Mrs Kettley stated the lower section under the silver part was dark and the higher section was all a very light brown colour. There was conflicting evidence. Mr Stevenson's evidence differed from Mr Osmond's. The Magistrate was entitled to conclude that Mr and Mrs Kettley gave similar evidence. Mr Osmond gave evidence that he did not observe any damage or fretting to the brickwork of the house while he was living there (t 83). Mr Stevenson gave evidence that he noticed a bit of discolouration in the external brickwork but thought it was caused by water which had flowed beneath the house but did not feel that it was significant (t 89). There is no basis for concluding that in so far as the Magistrate preferred the evidence of Mr and Mrs Kettley she failed to use or palpably misused the advantage which she had of seeing and hearing the witnesses. She preferred the eye witnesses evidence over that of the experts who saw the brickwork years later and then conjectured as to what they thought would have been visible in 1991. She makes this clear. The Magistrate was entitled to prefer the evidence of two eye witnesses whose evidence was similar. I am not satisfied that the Magistrate has erred in law. 16 The second issue determined was would such decay as was ascertainable on a visual inspection have been sufficient to cause a reasonably prudent builder providing a pre-purchase inspection report to advise the intending purchaser that there was a problem with the property in the nature of that pleaded by the plaintiff? The learned Magistrate found that: on one hand Mr Grainger, the expert qualified for the defendant, was of the opinion that specific comment was not demanded of the Builder/Inspector in 1991 concerning the then presenting aspects of the brickwork, and on the other hand, Mr Muldovan, the expert qualified for the plaintiff, was of the opinion that such specific comment was demanded. The Magistrate held that a prudent builder would have alerted the purchaser/s to the discoloured bricks and advised them as to the possible causes(s) and what further steps could be taken to reach a diagnosis of the problem. The appellant submitted that the Magistrate erred by failing to give any reasons, or adequate reasons, for her finding that a prudent builder would have alerted the intending purchaser(s) (plaintiffs) to the discoloured bricks and advised them as to possible cause or causes. 17 Although this does not appear in the agreed issues, it appears that it was accepted by the parties that the defendant owed the plaintiff a duty of care. In relation to expert opinion, the Magistrate stated that the court needed to look at the evidence of Mr Stevenson and the opinions of two experts in relation to the building industry's knowledge of efflorescence in 1991 and at all times keep in mind the purpose and reasoning behind the obtaining of a builders' pre-purchase inspection report. She summarised the evidence of these experts and concluded that she did not find Mr Muldovan's report useful. The learned Magistrate came to the view that the expectation of the community, both at large and the building consulting community, is that they would report on significant items and the skill to be exercised by the building consultant is identifying and separating which item is significant and which is not. It was common ground that the expert did not mention the discoloured bricks below the damp course or the possibility of efflorescence. There was a conflict between the experts. It is accepted that the standard of care to be observed by a person with special skill or competence is that of the ordinary skilled person exercising and professing to have such skill. But the standard is not determined solely or even primarily by the reference to the practice followed or supported by a responsible body of opinion in the relevant possession or trade. These expert opinions have an influential, often decisive role to play in determining the appropriate standard of care - see Rogers v Whitaker (1992) 175 CLR 479 at 487. It was open to the Magistrate to prefer one view over the other, or indeed come to her own view as to the appropriate standard of care. The Magistrate accepted the view of Mr Muldovan which she was entitled to do. I am not persuaded that the Magistrate has erred in law. 18 The third issue determined was, did the defendant exercise all due professional skill, care and diligence in inspecting and reporting on the property? The Magistrate made a finding that the defendant did not exercise all due professional skill, care and diligence in inspecting and reporting on the property. 19 The appellant submitted that the Magistrate erred by failing to give any reasons, or adequate reasons, for her finding that the defendant did not exercise all due professional skill, care and diligence in inspecting and reporting on the property. It was common ground that Mr Stevenson in his report made no reference to the discoloured bricks nor what further steps could be taken to reach a diagnosis of the problem. The Magistrate decided that such a specific comment was demanded. It follows that the opinion provided in the defendant's report fell below that standard of care and breached the duty of care he owed the plaintiffs. The damage was agreed. The defendant was found to be negligent. The Magistrate was entitled to make the finding that the defendant did not exercise all professional skill care and diligence in inspecting and reporting on the property. I am not persuaded that the Magistrate has erred in law. The appellant/defendant has not discharged his onus and satisfied me that the Magistrate has given inadequate reasons. The Magistrate had indicated her processes of reasoning to a conclusion on disputed facts and there is no reason for this court to interfere with her decision. I affirm the determination in respect of which the case was stated. I dismiss the summons. The appellant is to pay the respondents' costs. 20 The orders I make are: (1) I affirm the Magistrate's determination in respect of which the case was stated. (2) The summons is dismissed. (3) The appellant is to pay the respondents' costs. ********** Last Modified: DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.