CGU Insurance Ltd v Katherine Electronic Services P/L & Anor  NTCA 3
PARTIES: CGU INSURANCE LIMITED T/AS COMMERCIAL UNION INSURANCE (ACN 004 478 371)
KATHERINE ELECTRONIC SERVICES PTY LIMITED (ACN 009 642 728)
GENERAL INSURANCE BROKERS & LIFE AGENTS NONPAREIL PTY LIMITED (ACN 009 611 358)
TITLE OF COURT: COURT OF APPEAL OF THE NORTHERN TERRITORY
JURISDICTION: CIVIL APPEAL FROM THE SUPREME COURT exercising Territory jurisdiction
FILE NO: AP11 of 2003 (20015230)
DELIVERED: 5 February 2004
HEARING DATES: 10 December 2003
JUDGMENT OF: MILDREN, THOMAS & BAILEY JJ
Appellant: S Ower
1st Respondent: P O'Dwyer SC with M Cvjeticanin
2nd Respondent: J Kelly
Appellant: Hunt & Hunt
1st Respondent: Ward Keller
2nd Respondent: Cridlands
Judgment category classification: C
Judgment ID Number: tho200335
Number of pages: 31
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
CGU Insurance Ltd v Katherine Electronic Services P/L & Anor  NTCA
No. AP11/03 (20015230)
CGU INSURANCE LIMITED T/AS COMMERCIAL UNION INSURANCE (ACN 004 478 371)
KATHERINE ELECTRONIC SERVICES PTY LIMITED (ACN 009 642 728)
GENERAL INSURANCE BROKERS & LIFE AGENTS NONPAREIL PTY LIMITED (ACN
009 611 358)
CORAM: MILDREN, THOMAS & BAILEY JJ
REASONS FOR JUDGMENT
(Delivered 5 February 2004)
 Katherine Electronics Services Pty Limited was the occupier of premises known as Shop 2/31 Katherine Terrace, Katherine from where it conducted its business as an electrical goods retailer. In January 1998 the stock and the plant of the business were damaged by flood waters from the Katherine River overflowing directly into the premises. At the time the first respondent had a business insurance policy with the appellant obtained through the second respondent pursuant to which damage due to flood was excluded, but damage by storm, tempest or rain water was included.
 An issue between the appellant and the first respondent which also affected the liability of the second respondent was whether certain stock and plant of the first respondent's business was damaged initially by inundation of waters due to storm, tempest or rain water. The appellant submitted that the first respondent's entire loss was due to the flood and therefore not covered by the policy. The first respondent submitted that there was an initial inundation before the flooding of the Katherine River and that some although not all of the damage was covered by the policy of insurance insofar as the damage was attributable to storm, tempest or rain water and unrelated to flood.
 The first respondent's claim against the second respondent was on the basis that the second respondent, a firm of brokers, had failed to exercise reasonable care in failing to arrange flood cover for the first respondent.
 The learned trial Judge found that the first respondent had made out its case against both the appellant and the second respondent and made awards in favour of the first respondent in accordance with agreements reached between the parties as to the quantum of damages in each case.
 The appellant has appealed against the judgment of the learned trial Judge on a number of grounds, but before turning to those grounds it is necessary to recite some of the findings of fact made by the learned trial Judge.
 Those findings are very succinctly encapsulated by his Honour in two paragraphs as follows:
"It was common ground that the Katherine River broke its banks and flooded the town in the vicinity of the plaintiff's premises at some time between 2 am and 3 am on 27 January 1998. It is the plaintiff's case against the first defendant that at some time around 8 pm on 26 January 1998 the subject premises were inundated with storm water. There was no witness who saw water first enter the plaintiff's premises. The plaintiff called an hydrologist, Dr Weeks, who expressed the opinion that if as witnesses said, and I find, water was pooling in the rear yard of the plaintiff's premises adjacent to the rear building alignment at 7.30 pm, given the heavy rain fall both before and after 8 pm it was very likely that storm water entered the plaintiff's premises from the rear at some time about or after 7.30 pm. This opinion was expressed having regard to the floor levels of the plaintiff's building and the ground levels to the rear of the building and is consistent with eye witness accounts, which I accept, that at about 7 pm water had entered inside the floor of the business premises of Terrace Tapes situate diagonally across Katherine Terrace from the plaintiff's premises, and that at 8 pm or shortly thereafter water some 400 mm deep was on the floor at Terrace Tapes. The floor level of the Terrace Tapes premises was 104.72 metres above sea level. With 400 mm of water therein, the level of water at Terrace Tapes would be some 105.12 metres above sea level. The floor level of the plaintiff's premises was 105.065 metres above sea level. Given that 20.5 mm of rain fell during the hour between 8 pm and 9 pm, I unhesitatingly accept the conclusion of Dr Weeks that the plaintiff's premises were inundated with storm water around 8 pm. This was some hours before the Katherine River waters reached the plaintiff's premises.
I find that storm water was the sole proximate cause of certain stock and plant damage in the plaintiff's business which the parties have agreed is in the sum of $26,122.04. The plaintiff and first defendant are further agreed that the plaintiff is entitled to interest pursuant to s 57 Insurance Contracts Act 1984 on that sum from 30 June 1998 to date of judgment at a rate of nine per cent, such interest calculated to 5 June 2003 being $11,754.92 and thereafter at a daily rate of $6.44."
 At trial the first respondent's case rested upon the observations of a number of eye witnesses together with the evidence of the expert hydrologist, Dr William Weeks. The evidence of the appellant was that of an expert hydrologist Mr Gregory Roads. His Honour does not mention Mr Roads at all in his reasons for judgment, although he does refer to the evidence of the eye witnesses and that of Dr Weeks whose evidence he plainly accepted. The first three grounds of appeal complain about that matter, the gravamen of the complaint being that the learned Judge's reasons were inadequate in that he failed to say why he preferred the evidence of Dr Weeks over the evidence of Mr Roads.
 The remaining grounds of appeal invite this Court to find that the learned trial Judge erred in fact in his findings in relation to the conclusion that the first respondent's premises was inundated with storm water which was the sole proximate cause of any losses of stock and plant damage that occurred at the first respondent's premises prior to the inundation of water from the Katherine River. The appellant therefore seeks a new trial. No argument was presented to us concerning whether or not the trial Judge's conclusion that the inundation was the sole cause of the loss was correct.
 The first respondent has sought leave to file a cross appeal out of time against the second respondent. The first respondent says that if the appellant is successful and judgment is entered for the appellant then the amount of its loss which was formally awarded against the appellant should now be awarded against the second respondent. However, as the appellant's application is to seek a new trial, the first respondent has applied to have its application for leave to cross appeal adjourned to a date to be fixed. That course was not opposed by counsel for the second respondent and accordingly the application for leave to cross appeal should be adjourned sine die.
 The appellant submits that the right to appellate review requires the trial Judge to state his findings and the reasons for his decision adequately. This requirement does not arise in relation to every issue, but only those that are critical to an aspect of the case. It was submitted that an appellate court must be able to discern how any conflict in the evidence relating to such an issue has been resolved, and why the evidence of a particular witness whose evidence was relevant to the resolution of that conflict has been rejected. It was submitted that there were no reasons or findings in relation to the evidence of Mr Roads that enable a proper understanding of the basis upon which the verdict had been reached, and that this failure was an error of law entitling the appellant to a new trial.
 The principles are not in doubt and have been referred to in many Australian authorities. The leading authority in this jurisdiction is the decision of this Court in Mobasa Pty Ltd v Nikic (1987) 47 NTR 48 where this Court held that it is essential that a trial Judge should give reasons for his decision sufficient for the parties to understand the basis of the verdict and that the failure to give appropriate reasons is an error of law. This Court adopted what fell from Asprey JA in Pettitt v Dunkley  1 NSWLR 376 at 382 where his Honour expressed the view that in the absence of some strong compelling reason it is a duty of the Judge as the trier of fact to provide reasons which are essential for the purpose of enabling a proper understanding of the basis upon which the verdict entered has been reached and that the Judge has a duty as part of this exercise to state the findings and the reasons for his decision adequately for that purpose. Failure to comply with that requirement is an error of law.
 However as that authority and others have pointed out, the trial Judge does not necessarily have to deal with every peripheral issue raised by the parties. It is sufficient if there are findings on the critical or real issues. See for example Todorovic v Moussa  NSWCA 419 at  to ; TCN Channel 9 Pty Ltd v Anning  54 NSWLR 333 at 150; Jones v Hyde (1989) 63 ALJR 349 at 351.
 Counsel for the appellant submitted, I think correctly, that ultimately the question is whether despite his Honour not referring to the evidence of Mr Roads, there are sufficient findings made by the trial Judge to explain why Mr Roads' evidence was rejected. I accept also the submission of counsel for the appellant, that if there was a conflict in the evidence between the experts which remain unresolved, the failure of the trial Judge to deal with that conflict would amount to an error of law if the conflict was a significant one: cf Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 443 per Meagher AJ.
 It was submitted by counsel for the appellant that there was such a conflict; however it was submitted on the contrary by counsel for the respondents that in the end there was no such conflict because the differing views of the experts depended upon whether or not one took into account the observations of the lay witnesses. In short in was put by the respondents that Mr Roads' opinion was not based upon the observations of the lay witnesses and that he agreed that if he were to accept those observations his opinion would be different. It is plain that the learned trial Judge accepted the observations of the lay witnesses and the opinion of Dr Weeks based upon them and arrived at his conclusion accordingly. The question then is whether in fact Mr Roads' evidence was as stated by counsel for the respondents.
 Having examined the evidence of the lay witnesses and of Mr Roads as well as the evidence of Dr Weeks, I do not think I can confidently say that there was no issue left between Dr Weeks and Mr Roads. Although Mr Roads made a number of concessions in cross examination based upon the observations of the eye witnesses, at the end of the day he nevertheless maintained his opinion based upon the information in Dr Weeks' report that there was no inundation of the first respondent's premises. That being so, I think the appellant has established that the learned trial Judge did need to deal with Mr Roads' evidence and to explain why his evidence was rejected.
 Nevertheless it does not automatically follow that because the reasons of the learned trial Judge were inadequate and appellable error has occurred that a new trial is required. If the only conclusion open on the evidence available at trial was the conclusion reached by the trial Judge, then notwithstanding an inadequate statement of reasons the matter need not go to a new trial and the appeal court may itself decide the matter. In a case such as the present it is only if choosing between the evidence of Dr Weeks and Mr Roads is based solely or mainly on matters of credit which would prevent this Court from examining the evidence to see if the conclusion reached by the trial Judge was indisputably correct: see Beale v Government Insurance Office of New South Wales supra at 444; Mobasa v Nikic supra at 53.
 It is therefore necessary to deal with the evidence in some detail. The evidence of the eye witnesses was uncontradicted and unchallenged. According to the evidence of Mr Simon Smith, at a little after 2 pm he attended the Katherine Electronics store in order to lift some of the stock and record books to higher shelves. He then went back to the home of his mother-in-law and assisted in evacuating their home until around 4 pm when he returned to the store with his brother-in-law. In order to return to the store he had to travel via a laneway between a butcher shop and an adult video shop as there was a pond of water at the rear of the Katherine Electronics store which was large and deep.
 The evidence was that the premises of the Katherine Electronics store was located at Lot 2/31, Katherine Terrace, directly opposite the Victoria Highway. There was a lot at the rear, namely Lot 35/32. The Katherine Electronic Services shop was one of three shops on Lot 2/31. Facing the subject premises from the street and looking at Lot 2/31 there was firstly from the left the Katherine Electronics store, then an adult video shop and then a covered driveway and finally a butcher shop. Lot 35/32 at the back was a vacant lot which backed onto First Street. According to the evidence of Mr Smith, he entered the premises via the laneway, parking his vehicle close to the rear entrance of the shop. There was a pond of water within two metres of the back door and no water in the shop at this stage. He and his brother-in-law, Mr Berry, did what they could to raise stock to higher levels and then left the premises. According to Mr Smith the pond of water stretched some 25 metres back towards First Street. It was about an hour before he left the premises on this occasion and by that time the water was ponding to within half a metre to a metre of the back of the shop. There was also water which covered the covered laneway running reasonably fast through the lot and onto Katherine Terrace. It was raining consistently and heavily whilst he was there.
 The next witness was a Mr Roberto Buzzo, a director of a company called Elilade Proprietary Limited which owned the business Terrace Tapes located at Lot 1871/62 Katherine Terrace. This was diagonally opposite Katherine Electronics and about four lots down from the intersection between Katherine Terrace and the Victoria Highway. Mr Buzzo's evidence was that at about 7 pm on 26 January 1998 he attended at the shop and found that there was water already in his shop between knee and waist deep from the street level. His evidence was that the steps to the shop were approximately 200 millimetres above street level, and taking into account the height of the steps, the height of the water in the shop was about 400 millimetres above street level. He said that he saw water running towards Katherine Terrace in the covered laneway that separates the Katherine Electronics store from the butcher shop. Mr Buzzo said that he was at his shop between 7 and 8pm. He noticed water "flowing down the laneway" between Katherine Electronics and the butcher shop, but he could not estimate how deep that water was. Mr Buzzo's evidence was confirmed by the evidence of Mr Yates who lived in the flat on top of Terrace Tapes whose evidence was that between 9 and 9.15 pm just before he went to bed he looked down the stairwell leading to Katherine Terrace and saw that the water was eight to ten inches deep in the stairwell. He said he could not see the footpath as it was under water.
 Finally there was the evidence of a Mr Peter Farnden who drove up First Street towards the back of the Katherine Electronics store at about 7.30 pm. He was intending to cut across the back of the Katherine Electronics store and into Katherine Terrace through the covered laneway. He was unable to proceed through the vacant block as there was a large sheet of water about 30 metres across the block which deterred him from going any further. At that stage he became bogged. There was no water ponding where his car was at the time. He left for help and returned in about half an hour with a friend. By this time there was about two to three inches of water in the footwells of the car. During this time it had been raining consistently but not heavily. At the time when he first saw the water it was up to the back of the Katherine Electronics store building but he was unable to say whether or not the water had entered inside the building.
 Evidence was uncontradicted that the height of the floor level of the premises at Terrace Tapes above sea level is 104.72 metres and the height of the floor of the Katherine Electronics premises is 105.065 metres, a difference of 345 millimetres. The uncontested evidence was that between 7 and 8 pm that evening 12 millimetres of rain fell and a further 20.5 millimetres of rain fell between 8 and 9 pm. It was the evidence of Dr Weeks that based on those observations it was very likely that water would have entered the premises of Katherine Electronics in all those circumstances. Obviously if Mr Buzzo's evidence is correct as to the height of the water inside of the premises at Terrace Tapes, taking into account the difference in heights between the two premises, water must have been above the floor level of Katherine Electronics.
 As against that there is the evidence of Mr Roads. According to his evidence the water did not reach the 105 metre level that evening. This evidence is based upon a number of statements which he says were taken from people around Katherine to say that it did not pond at that level. That evidence was objected to and it was conceded to be hearsay. Mr Roads had previously referred to the fact that the water drains away from the river towards two drains, Drain A and Drain B, located on the south and south western sides of Katherine (the river being on the northern side). There are recorded water level stations located at Drain A and Drain B which recorded water levels every 15 or 20 minutes. When he was asked to eliminate from his opinion the evidence from eye witnesses whose evidence was not in evidence in the trial, he said that he knew that the recorded water level at Drain A was nowhere near 105 and that if it had ponded at 105 at any earlier time than when the river started to come down, the whole town would have been under water at that time. According to Mr Roads no one he had spoken to said that the whole town was under water.
 At this point it is necessary to return to the report of Dr Weeks to understand some of the background. At pp4-4 to 4-5 of his report Dr Weeks said:
"Water flowing from the rear of the property must flow into Katherine Terrace and then into the storm water drainage system and then to the river.
The level controlling the outflow from Katherine Terrace is sufficiently high that water would reach the floor of the shop if the water could not flow away. This would be caused by the high intensity rainfall, restriction of the storm water pipes, high water levels restricting the discharge to the river or a combination of all three.
The water level in the river was high during the afternoon and evening before the river overtopped the bank. During the day of 26 January, the water level in the river continued to rise, reaching 18.70m Gauge Height, equivalent to 105.06m AHD (the floor level of the shop) by 10pm. The water level in the river was therefore above the level of the floor of the shop by 10pm, though the high bank of the river prevented this water from flowing towards the shop. The floodgate on the outlet of the pipe should also have prevented flow up the pipe from the river, assuming it was operating as planned. The river had still not overflowed the banks in the region of Katherine Terrace by this time and rain continued to fall during this time. The high water level in the river would mean that the runoff from the street would not be able to flow away to the river.
Subsequently water levels continued to rise in the Katherine River with continuing runoff from the catchment. This water broke out of the river in the upstream reaches of the town area and flowed along the overflow section of the flood plain between Katherine and Katherine East. Water was reported to have begun to flow over the bank of the river at about 6pm. As the river level increased further, water began to flow over the full length of the riverbank throughout town and along Katherine Terrace. The maximum water level in the shop occurred with this event when the water reached a maximum level of about 1.5metres over the floor level.
Therefore during the period from 10pm until the overflow of the riverbanks, it would have been impossible for the local stormwater to discharge to the river because of the high river level. Rainfall was recorded during this period and this river would have flowed towards the low point of Katherine Terrace and therefore would have affected the low floor level of the Katherine Electronics Services shop."
 Much of this save for the last sentence was not in dispute.
 According to Mr Roads' calculations, a matter he confirmed in cross-examination, the premises at Terrace Tapes were not inundated with water, contrary to the uncontested evidence of Mr Buzzo and Mr Yates.
 Mr Roads in cross-examination conceded that his opinion was affected by what others had told him who had not been called to give evidence. In cross-examination the following exchanged occurred:
Mr O'Dwyer: So what you're saying to His Honour is this, 'Look, you're in the best position to tell because you've spoken to many more people --- ? --- True.
--- than Doctor Weeks'? --- True.
Is that correct? --- That's correct.
But the issue of what witnesses say or don't say really is not a matter for you in this case is it, it's a matter for His Honour? --- Well, in forming my opinion I guess that I've got to tell him on how I formed my opinion.
Yes. So essentially, what you're telling this court is that you've formed your opinion on the basis of the material that is not before this court? --- True."
 Now it is also true that Mr Roads qualified that subsequently by reference to recorded information provided in Dr Weeks' report, but it is quite unclear what information in Dr Weeks' report he is referring to. One can only assume he is referring to the various rainfall charts and the survey of the block carried out by GHD Services Pty Ltd attached to his report, but it is not clear how any of this material, in the light of the eye witness accounts which the trial Judge was bound to accept, somehow undermined Dr Weeks' opinion or strengthened that of Mr Roads'. In the end, Mr Roads' opinion amounted to little more than an assertion unsupported by any evidence. Clearly from 10 pm onwards water in Katherine Terrace was unable to discharge into the river and the evidence is that between 8 and 9 pm some 20.5 millimetres of rain fell. That, together with the evidence concerning the amount of water in the back of the premises which was only able to flow through the covered carport area, strongly suggests that there was a build up of water at the back of the Katherine Electronics premises.
 In those circumstances I think that on the evidence there was only one conclusion open, notwithstanding the evidence of Mr Roads, if the evidence of the eye witnesses was accepted as indeed they had to be, and that the learned Judge reached the correct conclusion. I would therefore dismiss the appeal.
 This is an appeal from a discrete portion of the judgment of his Honour the trial judge. The part of the judgment which is the subject of appeal is the order made by the learned trial judge that the first defendant (the appellant in these proceedings) be awarded judgment against them in favour of the plaintiff (the first respondent in these proceedings) for damages, as a consequence of the inundation of storm water, prior to the inundation of flood water from the Katherine River. The relevant extract from his Honour's reasons for judgment is para  and para  which state as follows:
" I find that storm water was the sole proximate cause of certain stock and plant damage in the plaintiff's business which the parties have agreed is in the sum of $26,122.04. The plaintiff and first defendant are further agreed that the plaintiff is entitled to interest pursuant to s 57 Insurance Contracts Act 1984 on that sum from 30 June 1998 to date of judgment at a rate of nine per cent, such interest calculated to 5 June 2003 being $11,754.92 and thereafter at a daily rate of $6.44.
 There will be judgment for the plaintiff against the first defendant accordingly."
 His Honour also made orders in favour of the first respondent against the second defendant (the second respondent in these proceedings) for damages. These orders are not the subject of any appeal.
 As between the appellant and the first respondent it was conceded by Mr Ower, counsel for the appellant, that the insurance policy covered inundation by storm water.
 Although there were a number of lay witnesses called at the trial, there were no eyewitnesses to water entering the subject premises prior to the flood. Accordingly, there was no direct evidence of storm water entering the first respondent's premises.
 The subject premises were the premises of the first respondent at Lot 31 Katherine Terrace, Katherine. The address is Shop 2, 31 Katherine Terrace, Katherine. The issue at trial was whether on 26 - 27 January 1998 there was an inundation of storm water prior to the inundation of flood water from the Katherine River.
 Both the first respondent and the appellant called expert hydrology evidence. The first respondent called Dr William Weeks. The appellant called Mr Gregory Roads.
 In the submission of Mr Ower, on behalf of the appellant, the evidence of Dr Weeks and Mr Roads was in conflict and contradictory opinions were expressed by the two experts. In his written submissions counsel for the appellant summarised the opinions of the two men as follows:
" Dr Weeks' opinion was that the First Respondent's premises were inundated with storm water at around 8 pm on 26 January 1998. Mr Road's opinion directly contradicted that of Dr Weeks. Mr Roads considered that it was not possible for storm water to be entering the premises at 8 pm, given the respective levels in Katherine Terrace and the fact that the street sloped down away from the Katherine River."
 The aspect of his Honour the trial judge's reasons that are pertinent to this issue are set out in paragraph  of his reasons for judgment as follows (AB 598 - 599):
"It was common ground that the Katherine River broke its banks and flooded the town in the vicinity of the plaintiff's premises at some time between 2 am and 3 am on 27 January 1998. It is the plaintiff's case against the first defendant that at some time around 8 pm on 26 January 1998 the subject premises were inundated with storm water. There was no witness who saw water first enter the plaintiff's premises. The plaintiff called an hydrologist, Dr Weeks, who expressed the opinion that if as witnesses said, and I find, water was pooling in the rear yard of the plaintiff's premises adjacent to the rear building alignment at 7.30 pm, given the heavy rain fall both before and after 8 pm it was very likely that storm water entered the plaintiff's premises from the rear at some time about or after 7.30 pm. This opinion was expressed having regard to the floor levels of the plaintiff's building and the ground levels to the rear of the building and is consistent with eye witness accounts, which I accept, that at about 7 pm water had entered inside the floor of the business premises of Terrace Tapes situate diagonally across Katherine Terrace from the plaintiff's premises, and that at 8 pm or shortly thereafter water some 400 mm deep was on the floor at Terrace Tapes. The floor level of the Terrace Tapes premises was 104.72 metres above sea level. With 400 mm of water therein, the level of water at Terrace Tapes would be some 105.12 metres above sea level. The floor level of the plaintiff's premises was 105.065 metres above sea level. Given that 20.5 mm of rain fell during the hour between 8 pm and 9 pm, I unhesitatingly accept the conclusion of Dr Weeks that the plaintiff's premises were inundated with storm water around 8 pm. This was some hours before the Katherine River waters reached the plaintiff's premises."
 The essence of the appellant's appeal is that there is no reference to Mr Roads or his evidence. Counsel for the appellant submits that on these reasons for judgment the appellant does not know why the evidence of Dr Weeks was accepted over the evidence of Mr Roads. It was submitted the learned trial judge has a duty to make finding of facts concerning the conflict in the evidence of the two expert witnesses. On the case argued for the appellant, this failure by the learned trial judge amounts to an error of law as he has a duty to give reasons and the appellant has a right to know why it has failed in its case before his Honour the trial judge.
 The grounds of appeal are set out in the Amended Notice of Appeal (AB 609). At the hearing of the appeal, Grounds (4) and (5) were abandoned and the appeal proceeded on the first three grounds:
"1. The learned trial judge erred in law by failing to make any findings in relation to the evidence of Mr Greg Roads.
2. The learned trial judge erred in law by failing to give sufficient, or any, consideration to the evidence of Mr Greg Roads.
3. The learned trial judge erred in law by failing to give adequate reasons for preferring the evidence of Dr William Weeks over the evidence of Mr Greg Roads."
 Counsel for the appellant advised that the appellant was not asking this Court to intervene and make findings of its own because the trial judge's reasons are so lacking that it is not possible for this Court to undertake that exercise. It is for this reason counsel for the appellant submits the appellant seeks a new trial.
 This Court was taken to a number of diagrams that were tendered at the hearing. The following information from these diagrams is relevant to the expert evidence.
 Map at AB 438 shows Katherine Terrace runs south east away from the bridge over the Katherine River.
 The street plan at AB 439 shows Lot 31 Katherine Terrace is located on the northern side of Katherine Terrace. The evidence is the block behind Lot 31 was vacant land.
 Map at AB 548 shows a gradual slope down Katherine Terrace and First Street from the Katherine River to Drain A. The map shows the contours of the road to be uneven. Diagram being Figure 4.1 (AB 520) shows various heights above sea level relevant to the subject premises. His Honour was advised (AB 115) that there was no contest between the parties as to the accuracy of these figures which are hydrology figures indicating height above sea level. These figures show the rear of the subject premises to be higher than the front of the subject premises on Katherine Terrace. His Honour was also informed (AB 116) that it was agreed the height of the floor level of Terrace Tapes was 104.72 metres above sea level. This point is approximately 150 metres to the south east of Katherine Electronic Services along Katherine Terrace.
 A very helpful summary of eyewitness evidence has been prepared by Ms Kelly, counsel for the second respondent. This summary is set out as follows:
"SUMMARY OF EYEWITNESS EVIDENCE
UNCONTRADICTED EVIDENCE OF SIMON SMITH:
1. He went to the store at 4.00 pm. [Statement para 4 AB 447; p 73- 74]
2. He drove along Katherine Terrace and down the covered laneway. 
3. A small amount of water was flowing down the laneway. 
4. There was a large sheet of water out the back - about 25 metres from edge to edge - which reached to within 3 to 4 metres of the back door of the shop.  [Statement para 5 says 2 metres - p 447]
5. He parked the car on dry land quite close to the shop. 
6. He was in there about an hour. 
7. When he left at about 5.00 pm he had to walk through water to get to his car. 
8. The water was within ½ metre to a metre of the back door of the shop. 
9. There was more water in the covered laneway. It covered more of the laneway and was running reasonably fast. 
10. It was raining quite heavily and consistently while he was in the shop. [Statement para 4 p 447] 
UNCONTRADICTED EVIDENCE OF ROBERTO BUZZO:
1. He got to his shop at about 1.00 pm. [Statement para 6 p 455]
2. At about 3.00 pm the soldiers came and started sandbagging - starting at the MP's office. [p 82]
3. At that time water was just starting to come onto the footpath. [p 82]
4. He came back at 7.00 pm and parked at the Shell servo and walked up the road. [Statement para 14 p 456] [p 82]
5. When they got to their shop at about 7.00 pm water was just starting to enter the premises. There was water inside. [p 83]
6. They were there for about an hour or more. They left just after 8.00 o'clock. At that time there was about 400 mm of water in their shop. 
7. As he left at about 8.00 o'clock he looked at Katherine Electronic Services and saw water in the laneway. The reflection of the light was showing water in the passageway. 
8. P10 was taken outside his shop at about 2.00 pm. [p 82; p 459]
9. P12 was taken before 7.00 pm. The water was deeper than that at 7.00 pm. [p 84; p 463]
UNCONTRADICTED EVIDENCE OF PETER FARNDEN:
1. He drove up First Street towards the back of KES at about 7.30 pm - on dusk. [Statement para 1 p 463; p 88]
2. He cut across the vacant block at the back of Tandy (KES) but came to a stop because there was a big sheet of water for about 30 metres across the block which deterred him from going any further. (He had been intending to drive through the covered driveway between KES and the butchers.) [p 89]
3. There was water through the driveway. [p 90]
4. He became bogged. There was no water ponding where his car was at that time. [p 90]
5. He left for help and came back about an half hour later with a friend in a 4WD. By the time he came back there was about 2 to 3 inches of water in the foot wells of the car. (The bottom of the car was resting on the ground.) [p 91]
6. During the time he was stuck it was raining consistently - but not heavily. [p 91]
7. When he first saw the water it was up to the back of the building but he doesn't know if it was inside. [p 92]
UNCONTRADICTED EVIDENCE OF JOHN YATES
1. He had a flat on top of Terrace Tapes. 
2. At about 4.00 pm the water was up over the footpath and approaching the shops. [p 97]
3. At about 4-4.30 pm he looked out over Katherine Terrace and the water stretched outwards to the centre island of Katherine Terrace therefore covering the whole width of the road. 
4. At 9.00 to 9.15 pm - just before he went to bed, he looked down the stairwell leading to Katherine Terrace and saw that the water was 8 to 10 inches deep in the stairwell. He couldn't see the footpath. It was under water. [p 95; p 96; p 97]
OTHER RELEVANT EVIDENCE
1. The height of the floor of Terrace Tapes is 104.72. 
2. The height of the floor of the subject premises is 105.065  [ie a difference of 345 mm]
3. Rainfall data:
* 7.00 to 8.00 pm 12 mm
* 8.00 to 9.00 pm 20.5 mm 
4. The general slope of the block is from a high point at the back down through a slight depression towards the front (the driveway side being lower than the other side of the yard). 
5. The roller door at the back had a gap of about 10 mm under it and the other door had a gap of about 50 mm under it. [Supplementary statement of Mike Smith para 4 p 357]"
 Mr O'Dwyer, counsel for the first respondent, submits that the learned trial judge clearly rejected Mr Roads' evidence by implication in that he accepted the evidence of Dr Weeks supported by the witnesses.
 It was further submitted on behalf of the first respondent that the evidence of Mr Roads was plainly defective in that:
(a) he ignored the evidence of witnesses at the trial and based his opinion on hearsay that was no part of the evidence at trial.
(b) insofar as it was based on theoretical calculation, it was plainly contradicted by witnesses whose evidence was uncontested and indeed accepted by counsel for the appellant in his submission (AB 256).
 By contrast, counsel for the first respondent submits that the evidence of Dr Weeks:
(a) was based on the observation of witnesses whose evidence the trial judge accepted.
(b) was consistent with the height of the premises above sea level.
(c) was consistent with the flow of water in Katherine Terrace.
 The contention by counsel for the first respondent is that a finding contrary to the evidence of a witness ought not be reversed because the learned trial judge has not made a reference to that evidence - see Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178. See also Jones v Hyde (1989) 63 ALJR 349.
 Ms Kelly, counsel for the second respondent, submits that for reasons put forward by her, the evidence of Mr Roads was not inconsistent with the evidence of Mr Weeks and the eyewitnesses on which his Honour based his decision.
 Counsel for the appellant agreed that the report prepared by Mr Roads (AB 544 - 548) was based on an eyewitness account given by Mr Andrew Day who was not called upon to give evidence at the trial. The appellant does not seek to rely on this report.
 Ms Kelly, on behalf of the second respondent, submits the following:
"1.1 Mr Roads conceded that his opinion that there was no initial inundation of the subject property was based on evidence which was not before the court. [Appeal Book pp 137 - 138; p 144; p 149; p 150].
1.2 That opinion was based on two assumptions arrived at on the basis of logic:
a. that there could not be any ponding of water at the rear of the subject premises because it would drain down Warburton Street towards Drain A or through the covered driveway and down Katherine Terrace to Drain A (yet at AB 151 (tp 136) he agreed that water probably ponded to within 3-4 metres of the back door) [AB p 137; 138; 139]; and
b. that the ponded water in the low point in Katherine Terrace would overflow before it reached a sufficiently high level to flood either Terrace Tapes or the subject premises. [AB p 137; p 145 - 146]."
 Ms Kelly further submitted that there was uncontradicted eyewitness evidence before the court:
"a. that there was an extensive sheet of water ponding at the back of the premises which reached to the back of the building at a time when there was continuing rainfall and the water level was observed to be rising; [Evidence of Simon Smith AB pp 74 - 75; See also Statement AB pp 446 - 449] [Evidence of Peter Farnden AB 88 - 92; See also statement AB pp 463 - 466]; and
b. that the ponded water in the low point in Katherine Terrace reached a higher level than that calculated by Mr Roads - a sufficiently high level that there was 400 mm of water in Terrace Tapes (ie approximately 100 mm above the floor level of the subject property) at a time when there was continuing rainfall and the water level was observed to be rising. [Evidence of Roberto Buzzo AB pp 81 - 85; See also statement AB pp 454 - 458]. [See also evidence of John Yates AB pp 95 - 98; See also statement AB pp 467 - 476]."
 Ms Kelly referred to the evidence of Mr Roads in cross examination (AB 148):
"Mr O'Dwyer: Mr Roads, I take it that you would, if presented with a witness statement that contradicted your hierology calculations, you would go back and have another look at the calculations - - -?---Absolutely, yes.
- - - is that correct?---Correct.
Because it would mean that there may be some other factor influencing - - -?---Correct.
- - - the calculations, and also there may be factors which haven't been observed or which might influence the flow or ponding of water, for example, that you haven't considered because you weren't aware of it?---Correct, absolutely.
And indeed, I think, as you said in your - in cross examination before, you really - your eyewitnesses are your starting point?---Yes.
And if you'd had evidence that there was ponding behind 31 Katherine Terrace that would lead you to go and have another look at it, is that correct?---Yes.
And indeed, if there was evidence that as early as 5 pm there was water which was observed to be rising between 4 and 5, and very close to the back door of shop 2/31 that again would give you cause to carefully review your hydrology calculations?---That's correct.
Yes. And in those circumstances, it would be fair to say, would it not, that there's one or two alternatives in those circumstances, the witness is wrong, or your calculations are wrong?---Yes.
Yes. And again, if the water is observed to a greater height on Katherine Terrace, that is, something in the vicinity of 105.12 then that again would involve you in revisiting your calculations?---Yes."
 Ms Kelly further submitted that if the facts were as she has stated and set out at par  of these reasons for judgment under the heading "Summary of Eyewitness Evidence", then:
"a. water could have entered the premises by the rear; [AB p 151 - 153];
b. water must have been coming into the ponded area at the rear of the premises faster than it could escape [AB p 154];
c. the ponding of water in Katherine Terrace downstream of the premises would have affected the rate at which water was able to escape from the rear of the property down Katherine Terrace [AB p 154 - 155]; and
d. there must have been an obstruction to the flow path such that the ponded water was unable to overflow from the depression in Katherine Terrace [AB pp 157 - 158]."
 It is the ultimate submission by Ms Kelly, on behalf of the second respondent, that Mr Roads conceded if the eyewitnesses were correct then storm water entered the subject building.
 On the argument for the second respondent, there was no material difference between the evidence of Mr Weeks and Mr Roads and no conflict for the learned trial judge to resolve. The second respondent submits the decision of the learned trial judge was based on a common sense inference to be drawn from the undisputed facts.
 Mr O'Dwyer for the first respondent, argues that it is a matter of common sense if water is not flowing down hill then something is stopping it. Mr O'Dwyer states the first respondent only had to prove the level of the water, not what may have been stopping it flow away. In the submission of Mr O'Dwyer it is clear from his Honour's judgment that he has accepted the evidence of the eyewitnesses. It follows from an acceptance of the evidence of these witnesses that Mr Roads cannot be right. On the submission for the first respondent a retrial is not necessary and the appeal should be dismissed.
 Mr Ower for the appellant, points to the fact that whatever concessions Mr Roads may have made, he has not resiled from his opinion that storm water did not enter the premises. In Mr Ower's submission, this opinion is in clear conflict with the opinion expressed by Dr Weeks. The case was fought on the conflict between the expert witnesses. In the argument for the appellant there is nothing in the learned trial judge's reasons for judgment which explains why Dr Weeks' evidence was accepted in preference to Mr Roads. This means the appellant does not know why it lost the case. Mr Ower states justice should appear to be done. The appellant asserts it was entitled to reasons which have not been given and a new trial should be ordered.
 The law on this issue has been stated in a number of authorities. In Pettitt v Dunkley (1971) 1 NSWLR 376, the Court of Appeal allowed an appeal and ordered a new trial in circumstances where the trial judge had not given any reasons but simply entered a verdict for the defendant. Asprey J stated at 382:
"In my respectful opinion the authorities to which I have referred and the other decision which are therein mentioned establish that where in a trial without a jury there are real and relevant issues of fact which are necessarily posed for judicial decision, or where there are substantial principles of law relevant to the determination of the case dependent for their application upon findings of fact in contention between the parties, and the mere recording of a verdict for one side or the other leaves an appellate tribunal in doubt as to how those various factual issues or principles have been resolved, then, in the absence of some strong compelling reason, the case is such that the judge's findings of fact and his reasons are essential for the purpose of enabling a proper understanding of the basis upon which the verdict entered has been reached, and the judge has a duty, as part of the exercise of his judicial office, to state the findings and the reasons for his decision adequately for that purpose. If he decides in such a case not to do so, he has made an error in that he has not properly fulfilled the function which the law calls upon him as a judicial person to exercise and such a decision on his part constitutes an error of law."
 In my opinion, the case before this Court on appeal is a long way from that situation.
 In TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 the Court of Appeal, Spigelman CJ at 360 found that the trial judge's failure to give reasons for accepting the reports of the respondent's medical experts and not referring to the evidence of the appellant's expert medical witness, indicated a failure to consider it. Spigelman CJ continued:
"One of the functions of reasons for decisions is to enable an appellate court to discern how the conflict in the evidence was resolved. Furthermore, the parties are entitled to know why the evidence in their case has been rejected. In my opinion, her Honour did fail to give adequate reasons for preferring the evidence of the respondent's experts. "
 I accept the principle that failure to give adequate reasons for judgment is an error of law. I accept that a party to a proceedings is entitled to know the judge's reasons for the decision reached.
 In discussing these principles the New South Wales Court of Appeal in Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Mason P at 431:
" Nevertheless, there is a miscarriage where what is and is not disclosed involves a breach of the principle that justice must not only be done but must be seen to be done. "
 I also refer to the statement of Meagher JA at 444:
"It does not automatically follow that because the reasons for decision are inadequate then an appealable error has occurred. Examination of nearly any statement of reasons with a fine-tooth comb would throw up some inadequacies. Indeed, an appeal court will reserve any intervention to those situations in which it is left with no choice: where no reasons have been given in circumstances where there was an obligation to provide them and in circumstances where a statement of reasons is so inadequate as to constitute a miscarriage of justice. In other words, the statement of reasons must be looked at as a whole and the material inadequacies identified and considered."
 In NRMA Insurance Ltd v Tatt & Another (1990) 92 ALR 299 the majority in the NSW Court of Appeal found that the trial judge failed to provide findings and reasons enabling a proper understanding of the basis upon which the verdict entered had been reached.
 Again I consider the context of his Honour's reasons for judgment in the matter before this Court of Appeal are very different to the context in which NRMA Insurance Ltd v Tatt & Another (supra) was decided.
 In the matter before this Court, his Honour stated he accepted the evidence of the eyewitnesses. Accepting their evidence meant that the basis of Mr Roads' opinion was eroded. Mr Roads himself, in cross examination, agreed (AB 149) that in looking at something in small scale such as Katherine Terrace, the evidence of eyewitnesses is generally the most reliable source for coming to a conclusion.
 Mr Roads made a great many concessions in cross examination, part of which I have already recounted. I refer also in particular to his evidence under cross examination from AB 151 - 156. He also agreed in cross examination (AB 157 - 158) that he had had no knowledge of any obstructions there may have been downstream of the overflow point of the depression in Katherine Terrace outside Terrace Tapes. He stated he did agree that water could rise in that area higher than the overflow point of that depression if the overflow pathway were obstructed in some way.
 It is a matter of common knowledge that water will normally flow downhill.
 In the report prepared by Dr Weeks he states in his conclusion (AB 523) that he has relied on the reports and observations of local witnesses. Dr Weeks concluded that there were two phases of inundation in the property Katherine Electronic Services shop both of which caused at least some damage. Dr Weeks states in his report (AB 523 par 3):
"The first phase was produced by local storm water that flowed from the back of the shop and also by other local storm water that ponded in Katherine Terrace and could not flow through the drainage system towards the river. The high intensity rainfall caused the water to pond in the area with outflow limited both by the capacity of the pipes, the possible effects of the flood gate and the tail water produced by the high water level in the river."
 I consider it is quite clear from the reasons for judgment of his Honour the learned trial judge, that he accepted the expert evidence of Dr Weeks which was based on the evidence of eyewitnesses and rejected the evidence of Mr Roads who formed an opinion either without regard to the evidence of eyewitnesses, taking into account evidence which was not admissible and/or based on calculations which he had to concede may be flawed.
 It is clearly implicit in the reasons of the learned trial judge that he did not accept the opinion expressed by Mr Roads. In the context of this case, I am not persuaded that a failure to refer to the evidence of Mr Roads means that it was not considered by the learned trial judge nor that it amounts to an error of law.
 If I am wrong about this, and it is an error of law to have failed to mention Mr Roads' name or his evidence, then it is not an error that has given rise to a miscarriage of justice.
 I would dismiss the appeal.
 I have had the advantage of reading in draft the judgments of Mildren and Thomas JJ. I agree with their Honours that the appeal should be dismissed. Having regard to the uncontradicted and unchallenged evidence of the eye witnesses, the learned trial judge was bound to reject the unsupported opinion of Mr Roads. If the learned trial judge was bound as a matter of law to spell this out, his Honour's failure to do so has not given rise to any miscarriage of justice.