Citation: Capitol Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753
Court: Supreme Court of New South Wales
Date: 14 December 2016
Judge(s): McCallum J
Background
The appellant, a carpet installation company, was engaged by the respondent hotel owner to install carpet in the common areas of multiple floors of the Mercure Hotel in Sydney. The hotel owner supplied the carpet itself; the installer supplied the underlay and other materials. Installation was carried out periodically between 2008 and 2009.
Several years after installation, the carpet began to ripple and detach from the underlay, creating a trip hazard. The hotel owner blamed the installer's workmanship. The installer maintained that the hotel owner had supplied poor-quality carpet and had allowed foot traffic and trolleys onto the carpet too soon after installation, before the adhesive had properly cured.
The hotel owner commenced proceedings in the Local Court claiming the cost of relaying the carpet, quantified at $106,000. The Local Court found both parties equally at fault and awarded $53,000. The installer appealed to the Supreme Court on questions of law.
Legal Issues
- Whether a failure to comply with a procedural direction could properly inform the court's evaluation of evidence already admitted at trial, under s 61 of the Civil Procedure Act 2005 (NSW)
- Whether the magistrate erred in accepting expert evidence about the carpet's remaining useful life where the factual assumptions underlying the opinion had not been proved
- Whether the finding that the hotel owner had used "the same carpet" in other hotels without problems was available on the evidence
- Whether the magistrate erred in concluding there was no evidence that a problem with the carpet itself contributed to the adhesion failure
- Whether the finding that the wrong trowel was used was supported by the judgment
- Whether there was a proper evidentiary basis for the finding that the carpet should have been expected to last another five to eight years, being a necessary premise for any damages award
Decision
Ground 1: Procedural non-compliance and evaluation of admitted evidence
The installer argued that the hotel owner's failure to produce carpet documentation, as ordered, should have caused the magistrate to disregard evidence on the quality of the carpet. The Supreme Court rejected this argument. Section 61(3)(e) of the Civil Procedure Act provides a power to strike out or reject evidence for non-compliance with a court direction, but the Court held that power is exercisable at the point when evidence is sought to be adduced, not after the hearing has concluded (at [61]). Even if the section could operate at that later stage, declining to exercise that discretionary power was not an error (at [62]–[63]).
Ground 2: Expert evidence on remaining carpet life
The hotel owner's expert stated that, had the adhesion not failed, the carpet could have lasted another five to eight years. The Court noted that the expert had based earlier reports on a packing list that, on its face, appeared unrelated to the carpet actually installed (at [75]–[76]). Although the Court declined to find the magistrate had erred in admitting the evidence, it found the evidence was of very little weight: there was nothing in the expert's evidence to explain how inspection alone enabled him to assess the remaining life of an otherwise unidentified carpet (at [83]–[85]).
Ground 3: Finding that same carpet was used in other hotels
Both parties accepted that the magistrate's finding that the hotel owner had used the same carpet in other hotels without problems was not supported by any evidence. The Court confirmed this ground was made out (at [68]).
Ground 4: No evidence that carpet quality was a contributing factor
The installer's experts had opined, based on an employee's unchallenged observation of the carpet's unusual stretchiness, that the carpet was of poor quality and that this was the main factor in the installation's breakdown. The magistrate found there was "no evidence" the problem lay with the carpet itself. The Supreme Court held that this was legal error: the evidence existed and appeared simply to have been overlooked in the judgment (at [87]–[88]).
Ground 5: Finding as to use of wrong trowel
This ground rested on a misreading of the judgment. The magistrate made no adverse finding about trowel use; only one particular of breach was found against the installer (failure to allow correct tack time). Ground 5 was not made out (at [90]–[91]).
Ground 6: Tack-off time finding
Although framed as a no-evidence ground, this ground in substance challenged a finding of fact, that lack of tack-off time caused the adhesion failure. There is no right of appeal on a pure question of fact, so this ground could not be maintained (at [93]–[94]).
Ground 7: No evidentiary basis for damages
The Court found that all four reasons the magistrate gave for concluding the carpet should have lasted another five to eight years were either unsupported by the evidence or of negligible weight (at [97]–[98]). The only additional basis, evidence volunteered by the hotel owner's director in cross-examination after an objection to the same evidence in his affidavit had been sustained and not pressed, could not properly be given any weight (at [98]). The Court concluded that the hotel owner had failed to prove any basis for a damages award, because there was no properly-admitted evidence as to what the carpet actually was, and there was unchallenged evidence suggesting a problem with the carpet itself that had not been addressed (at [99]).
Orders Made
- Appeal allowed
- Judgment of the Local Court set aside
Key Takeaways
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A plaintiff claiming the cost of relaying or replacing goods must prove something about the condition and remaining useful life of those goods; without that proof, there is no evidentiary basis for the damages claimed, regardless of a finding on liability (at [65], [99]).
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Where a party cannot produce particulars of its own goods, that failure does not by itself permit a court to disregard evidence already admitted. The power under s 61(3)(e) of the Civil Procedure Act 2005 (NSW) to reject evidence for non-compliance with a direction is exercisable at the time evidence is sought to be adduced, not retrospectively after a hearing has concluded (at [61]–[62]).
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Expert opinion evidence on a specific issue, here the remaining useful life of a particular carpet, carries very little weight where the expert provides no explanation of how inspection alone, without any knowledge of the carpet's provenance or specifications, enables that conclusion to be reached (at [83]–[85]).
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A finding of fact that is not supported by any evidence in the record constitutes legal error and is reviewable on appeal as of right under s 39 of the Local Court Act 2007 (NSW); the question whether there is any evidence of a particular fact is a question of law (at [67]–[68]).
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Evidence volunteered by a witness in cross-examination that repeats the substance of an objection previously sustained (and not pressed) in that witness's affidavit cannot properly be given weight, because the objection, once upheld, effectively removed that material from the evidentiary record (at [98]).
Legislation and Cases Referenced
Legislation
- Civil Procedure Act 2005 (NSW), s 61
- Local Court Act 2007 (NSW), ss 39, 40
- Local Courts Act 1982 (NSW), s 73
- Uniform Civil Procedure Rules 2005 (NSW), sch 7
Cases
- Attorney-General for the State of New South Wales v X (2000) NSWLR 653; [2000] NSWCA 199
- Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
- Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
- Hamod v Suncorp Metway Insurance Ltd [2006] NSWCA 243
- Kostas v HIA Insurance Services Pty Limited (2010) 241 CLR 390; [2010] HCA 32
- Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
- R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082
- US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705