Amar Produce Pty Ltd v Fairbank's Selected Seed Co Pty Ltd
[2016] VCC 1908
•14 December 2016
assoc
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-12-06315
| AMAR PRODUCE PTY LTD (ACN 131 830 932) | Plaintiff |
| v | |
| FAIRBANK’S SELECTED SEED CO PTY LTD (ACN 007 138 276) | First Defendant |
| and | |
| BAROOGA NURSERIES PTY LTD (ACN 003 979 137) | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | ||
WHERE HELD: | Melbourne | ||
DATE OF HEARING: | 26, 27, 28 and 29 September and 3, 4, 5, 6, 7,10,13, and 14 October 2016 | ||
DATE OF JUDGMENT: | 14 December 2016 | ||
CASE MAY BE CITED AS: | Amar Produce Pty Ltd v Fairbank’s Selected Seed Co Pty Ltd & Anor | ||
MEDIUM NEUTRAL CITATION: | [2016] VCC 1908 | ||
REASONS FOR JUDGMENT
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Subject:TRADE PRACTICES
Catchwords: Misleading and deceptive conduct – whether representations concerning suitability of a particular variety of broccoli seeds for transplanting at a particular time of year in a particular region were misleading and deceptive – whether there was a breach of warranty of fitness – whether there was a breach of agreement – apportionable claim – reasons for the failure of the plaintiff’s broccoli crop – calculation of the plaintiff’s loss and damage arising from misleading and deceptive conduct – whether the plaintiff failed to mitigate its loss – whether the plaintiff was guilty of contributory negligence – whether the defendant could rely upon alleged terms and conditions of agreement limiting its liability for loss and damage.
Legislation Cited: Trade Practices Act 1974, s51A, s52, s53, s68, s71, s82 and s87CD; Goods Act 1958, s19(a), s19(b); Wrongs Act 1958, s24A, s24E
Cases Cited:Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546; Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367; Milforn Astor Pty Ltd v Machinery Developments Ltd [2003] NSWSC 301; Yorke v Ross Lucas Pty Ltd (1985) 158 CLR 661
Judgment: Judgment for the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J D Catlin | Sofra Solicitors Pty Ltd |
| For the First Defendant | Mr M Seelig | Norris Coates Lawyers |
| For the Second Defendant | Proceedings against the Second Defendant resolved and, by consent, were dismissed prior to trial. |
HIS HONOUR:
1 In the latter part of 2009, the plaintiff company, Amar Produce Pty Ltd (“Amar”), planted a broccoli crop near Mooroopna in the Goulburn Valley in North Eastern Victoria. By late December 2009 or early January 2010, it became evident that the crop had failed. In this proceeding, Amar seeks damages in respect of loss allegedly suffered by it with regard to the failed crop.
2 Amar brought the proceeding against:
(a) The second defendant, Barooga Nurseries Pty Ltd (“Barooga”), a company operating a plant nursery which purchased the broccoli seeds from the seed supplier, propagated the broccoli seedlings, and sold and supplied the seedlings to Amar; and
(b) The first defendant, Fairbank’s Selected Seed Co Pty Ltd (“Fairbanks”), a company operating a business of supplying agricultural seeds and which supplied the broccoli seeds in question to Barooga. I accept that Fairbanks sold such seeds to nurseries and members of the public and held itself out as having expertise concerning agricultural seeds generally.
3 The proceeding was initially commenced in 2012 against Fairbanks alone. In November 2014, Amar joined Barooga as a second defendant. Shortly before the commencement of the trial, Amar resolved its claim against Barooga. By consent, the claim against Barooga was dismissed. The trial proceeded against Fairbanks alone.
4 Counsel for Fairbanks submitted, and I accepted, that the pleadings by Amar against Barooga and evidence concerning the role of Barooga in the sale and supply of the broccoli seedlings may still have relevance in the event that Amar succeeded in its claim against Fairbanks. Pursuant to s24AI of the Wrongs Act 1958, Fairbanks submits that any damages awarded against it in favour of Amar should be reduced to an amount reflecting the proportion of the loss and damage suffered by Amar that the Court considers just, having regard to the extent of Fairbanks’ responsibility for the loss and damage. This was likely to involve consideration as to the extent (if any) of Barooga’s responsibility for such losses.
5 In short, Amar alleges that it planted a crop of a variety of broccoli known as Ironman on the advice of Fairbanks when Ironman was unsuitable for planting in North Eastern Victoria at the relevant time; that the crop failed; and that it suffered losses as a consequence. It alleges that the advice provided by Fairbanks as to the type of broccoli suitable to be planted as a summer crop in the Goulburn Valley at that time was false, misleading and deceptive and in contravention of s52 and s53 of the Trade Practices Act 1974 (“the Act”). It claims damages pursuant to s82 of the Act in respect of that loss.
Background
6 In 2008 (and at all relevant times thereafter), Alexandra Milosevic (“Milosevic”) was the sole director and shareholder of Amar. Her partner was Anthony Rullo (“Rullo”) who at all material times acted on behalf of Amar in relation to its horticultural activities.
7 In 2008 and for some years after, Danny Demetrijevic (“Danny”) owned a block of land situated about 15 minutes north-west of Shepparton (“the Block”).
8 In late 2008, Rullo, on behalf of Amar, entered into an arrangement with Danny whereby broccoli would be planted on the Block. Fairbanks submits that the terms of that arrangement and, in particular, what monies were to be paid to Danny in return for the use of the Block have relevance to the quantification of Amar’s loss. I shall return to that issue later in these reasons.
9 The Block consisted of approximately 77 hectares (about 190 acres).
10 Amar had not engaged in the growing of broccoli or any other crop before 2009. However, Rullo and others associated or employed by the company had been involved in the growing of vegetable crops on a relatively small scale for a considerable time prior to that year.
11 In 2009, Amar planted two broccoli crops on the Block.
The first crop
12 Amar planted a broccoli crop over a period commencing in February 2009. There were then and now different varieties of broccoli seeds available in the market. Amar planted a variety known as Atomic. Rullo’s evidence was that he knew of no other varieties of broccoli at that time.
13 Barooga conducted a plant nursery business in the Goulburn Valley. Its owner and manager was Michael Florence (“Florence”).
14 In the latter part of 2008, Rullo had approached Florence to obtain broccoli seedlings for the first crop.
15 The usual manner in which a grower obtained broccoli seedlings was to request a nursery such as Barooga to obtain seeds from a seed supplier. On delivery to the nursery of the requested seeds, the nursery would propagate the seedlings over a period of six to eight weeks, the time depending on seasonal temperatures.
16 Once the seedlings had reached a stage of maturity when they could be transplanted, the nursery sold and delivered the seedlings to the grower.
17 This was the manner in which Amar obtained and transplanted the seedlings that constituted the first crop. I accept Rullo’s evidence that:
(a) He ordered 160,000 Atomic seeds/seedlings from Barooga;
(b) Barooga, in turn, ordered that number of seeds from Fairbanks;
(c) Fairbanks supplied the Atomic seeds to Barooga;
(d) Barooga propagated those seeds;
(e) When the seeds had matured, they were sold and supplied by Barooga to Amar as seedlings;
(f) Rullo and others (either employees or contractors of Amar) under his direction, had prepared the area where the seedlings were to be transplanted by rotary hoeing it and installing a drip tape irrigation system. An irrigation plan for the area had been prepared at Amar’s request by Water Dynamics, a firm which specialised in such work. The drippers were spaced 30 centimetres apart and one dripper was capable of delivering 1.2 litres of water per hour;
(g) The seedlings were then transplanted by use of a hand planter towed by a tractor. It took about a day or a little more to transplant 25,000 seedlings. Transplanting commenced in February 2009;
(h) During their growing period, Rullo attended to the first crop. This involved watering, application of fertiliser and nutrients, and application of insecticides and other chemicals. His evidence was that the seedlings would be ready for harvest within six to twelve weeks of transplanting depending upon the weather. If the weather was cooler, the growing time to harvest would likely be longer. In due course, the seedlings matured into broccoli plants and were harvested by Rullo or by others at his direction. The last plantings were harvested by the first week in June 2009;
(i) Following harvesting, the broccoli plants were boxed up in cartons and sent off to markets in Melbourne, Sydney, Newcastle and Brisbane for sale;
(j) Rullo stated that the first crop had yielded 20 tonnes of broccoli heads per hectare. He said he had planted the crop on 3 to 4 hectares which he said was “in acres terms, 15 acres”.[1] I am aware that 1 hectare is 2.47 acres. Four hectares is the equivalent of just under 10 acres, considerably less than 15 acres. Later in his evidence, he also referred to using only 4 hectares for the first crop.[2] I shall return to this issue later in these reasons.
(k) Not all the seeds were propagated or transplanted at once. The system was that seeds would be propagated over a period of time. Batches of seedlings would be delivered to Amar periodically – usually fortnightly. They were transplanted by Amar soon after each batch was supplied to it. They were, in turn, harvested as each planting matured. The harvested plants were then sold sequentially to markets.
[1]Transcript (“T”) 29A, Line (“L”) 18
[2]T209, L6
18 Rullo’s evidence was that the first crop had been successful and profitable for Amar. The extent of that profit was contested by Fairbanks and I shall return to that issue later. Both parties submit that the profit made by Amar from the first crop is relevant to the calculation of damages claimed by Amar in this proceeding.
The second crop
19 Following what they considered the success of the first crop, Rullo and Milosevic determined that Amar should plant a second crop later in 2009, this time on a larger scale. Because of the earlier success of the first crop, Rullo’s initial plan was to plant another crop of Atomic broccoli – the same variety.
20 Rullo planned to transplant the crop in sequential plantings from early October 2009. He had previously observed that there was generally a shortage of broccoli in the market over the summer months and that, as a consequence, broccoli prices were higher over that period. He saw this as an opportunity to make additional profits from a broccoli crop.
21 I accept Rullo’s evidence that:
(a) In mid-2009, he approached Florence to discuss an order for Atomic seeds for transplanting from October 2009. He discussed with him issues of supply, timing of harvest and suitable varieties of broccoli. He told Florence he wanted to harvest over the summer period when prices were good for broccoli;
(b) Florence told him that a seed supplier, South Pacific Seeds, had previously advised him that the Atomic variety was not suitable for that period but there were other seed suppliers and that he would make enquiries and get back to him;
(c) Sometime later, Florence called him by telephone and told him that Fairbanks had Ironman broccoli seeds which it recommended for that period. Florence told him that Fairbanks had advised him that for planting from October to December, Atomic was unsuitable but that the Ironman variety was suitable;
(d) In mid to late June, he had another discussion with Florence in person at his office. Florence again told him that Ironman was the only variety to be planted at the relevant time. He went home and discussed the recommendation with Milosevic and her mother. He later spoke to Florence by phone and confirmed the order. Rullo said he told Florence they wished to go ahead. Florence told him he would have to pay for the seeds in advance;
(e) Later, he attended at Barooga where he gave Florence $12,000 cash. $10,000 was for the broccoli seeds and $2,000 was for some pumpkin seeds he bought. Just prior to handing over the cash, Rullo said he was still worried about the project. Florence said he would ring the seed company there and then. Florence went into his office. He returned and said Bruno Tigani of Fairbanks had said it was the only variety suitable;[3]
[3]T64A, L3
(f) On that basis, Rullo instructed Florence to obtain Ironman seeds from Fairbanks and to propagate those seeds. Rullo agreed to pay 1 cent for each seed and 6 cents for each propagated seedling supplied (which was the same price for seeds and seedlings that he had paid for the first crop);
(g) Florence ordered the seeds from Fairbanks and it supplied them to Barooga; those seeds were propagated by Barooga over sequential periods and, in due course, they were delivered to Amar;
(h) The deliveries of Ironman seedlings by Barooga to Amar were as follows:
· 8 October 60,000
· 16 October 50,000
· 3 November 40,000
· 15 November 50,000
· 7 December 50,000
· 20 December 8,000
_______
258,000 seedlings.
(i) In addition, I find that 42,000 Atomic broccoli seedlings were sold and delivered to Amar by Barooga on 20 December 2009. Those seeds had also been obtained by Barooga from Fairbanks and the seedlings propagated by Barooga;
(j) Each of the delivery batches were transplanted by Amar about a week after delivery to it by Barooga;
(k) Each batch of Ironman seedlings was treated by Rullo with fertilizer before transplanting;
(l) Once planted, the seedlings were watered and treated with nutrients and insecticides whilst maturing.
22 The time over which a broccoli plant matures and becomes ready for harvesting depends on various factors, a principal one being climate. In warmer conditions, the plant will mature more quickly; in cooler conditions, more slowly. In general, it would be expected that broccoli would be ready for harvest about two months after transplanting.
23 Once deliveries commenced, I accept Rullo’s evidence that, virtually from the start, he observed that the seedlings had a different appearance to those delivered for the first crop earlier in the year. They had a different leaf appearance and colour. He contacted Florence, who told him not to be concerned because the plants were of a different variety, thus explaining their differences in appearance.
24 By late December, I accept that it was evident that the earlier transplantings of the second crop (the first, second and third transplantings of it) were not satisfactory. I accept Rullo’s evidence was that they had developed unevenly, the heads were small and about 5 out of every 200 seedlings had already gone to flower. In some cases the heads were virtually non-existent. He sent some of the earlier harvested plants to the marketplace but they had been rejected and he could not sell any of them.
25 Rullo contacted Florence on Boxing Day 2009 and advised him that the crop appeared to be a disaster. Florence arranged for representatives of Fairbanks and Monsanto (the company which supplied all Ironman seeds to Fairbanks) to attend a meeting at the Block with himself and Rullo.
26 I accept that the meeting occurred at the Block on or about 6 January 2010. Present were Rullo, Florence, James Muir of Fairbanks (“Muir”), and Conrad Leeks of Monsanto (“Leeks”). Each of the attendees inspected a large percentage of the broccoli crop. Some plants were pulled from the ground for closer inspection. Muir took photographs of a number of the plants and took a number of samples away with him for testing.
27 At that time, none of the attendees provided Rullo with any diagnosis of the problem or with any advice as to how the crop could be saved. Each of Florence, Leeks, Muir, and Rullo gave evidence at the trial that they considered the crop was unsaleable because of its condition. I accept that this was so. I accept that at the meeting, no-one said anything to suggest that the failure of the second crop could be attributed to any acts or omissions of Rullo or Amar. I accept that no such suggestion was made until after the commencement of this proceeding.
28 The drip irrigation at the Block was in place and evident. No-one at the meeting asked Rullo anything about it or commented about it.
29 There was no evidence relating to the condition of the Atomic plants (as opposed to the Ironman plants) at the time of the meeting. Those plants would have been in their infancy having only been delivered by Barooga to Amar on 20 December.
30 I accept Rullo’s evidence that the representative from Fairbanks (whose name he could not recall but who must have been Muir) told him it was pointless and a waste of money to continue incurring further expenses associated with watering and fertilizing, and advised him at the meeting not to continue incurring such expenses until it could be determined what the problem was with the plants. Accordingly, Rullo ceased incurring such expenses.
31 I accept that as at the date of that meeting, the entire crop had effectively already failed.
32 At some later date, Rullo attended at Florence’s office where Florence told him Sap tests of the plants were fine. He said that Florence had shown him a document entitled “Brassica Guide for Northern Victoria”.[4] The Guide sets out recommended periods for sowing, transplanting and harvesting different varieties of broccoli, including Ironman. It recommended:
[4]Exhibit C, Joint Court Book (“JCB”) 812
(a) transplanting of Ironman from March to late April, and from mid-June to late July; and
(b) harvesting of Ironman from mid-May to early July and from early September to early October.
33 It can readily be seen that the Guide does not suggest transplanting Ironman broccoli in the months of October through to December nor the harvesting of it over the summer months.
34 Rullo’s evidence was that Florence told him that it was obviously the wrong variety for that time of the year and that he would support them. Florence organised a further meeting – this time at a café in Shepparton. Rullo was uncertain as to the date but said that those present were Leeks, Florence, Bruno Tigani of Fairbanks (“Tigani”), Danny and himself. Rullo thought the purpose of the meeting was to discuss compensation for Amar’s losses.
35 Rullo gave evidence that, at the meeting:
(a) Tigani said that there was no problem with the Ironman broccoli at this time of the year at Werribee and that he had conducted trials of Ironman.
(b) He (Rullo) had said to Tigani that he thought he had been used as a guinea pig and that many growers had been hurt;
(c) Tigani said to him that maybe Fairbanks could offer some seeds but that he (Rullo) was not interested in more seeds from Fairbanks and said he would get legal advice;
(d) Tigani said to him that “if you think you’re going to win against us, a big firm, you’re dreaming … I will lie and tell lies to make you look stupid”;[5]
[5]T47B, L11
(e) Tigani said the plants had a condition known as club root;
(f) Tigani said that if Rullo continued with the legal side of things he would get no seeds again from Fairbanks.[6]
[6]T48B, L9
Did Fairbanks give the alleged advice?
36 Amar does not allege that it was given advice concerning the suitability of the Ironman variety directly by Fairbanks. Rather, its case is that Florence sought and was provided with the advice by Fairbanks which he passed on to Amar.
37 Florence was called as a witness by Amar at the trial. Early in his evidence, I formed the impression that he was not making a genuine attempt to give evidence. I formed this impression partly on the basis of his demeanour in the witness box and partly because of the nature of some answers given by him. I concluded that he did not want to be in court and was not interested in giving evidence which assisted Amar’s case. For example he was shown a document that was plainly one produced by Barooga – his own company – and asked to identify it. His reply was that he could not recall it. It was a document that was central to Barooga’s involvement in the supply of the Ironman seedlings to Amar. Barooga had been a second defendant to the proceeding until shortly before the trial. I considered that it was incomprehensible that he was unfamiliar with the document and concluded that he was not making a genuine attempt to give evidence concerning it. Accordingly, pursuant to s38 of the Evidence Act 2008, I gave leave to Counsel for Amar to question him as though he was cross-examining him.
38 Florence’s evidence was that he was the owner and manager of Barooga, a commercial plant nursery, and that he had been involved in the business for some thirty-three years – 100 per cent of his customers being in the Goulburn Valley and Southern Riverina regions. He had not had dealings with Rullo or Amar before 2009.
39 He had been dealing with Fairbanks for twenty to twenty-five years.
40 I accept Florence’s evidence that, after the first crop, Rullo had told him he wanted to grow a million broccoli plants. Initially, Florence’s evidence was that Rullo wanted to plant these in around May-June and through the Spring.[7] If he planted in May, he would be harvesting in June-July, depending on the weather. It would be described as a “winter crop”.
[7]T622, L14
41 He said that if a million seedlings were planted from October, the planting period would extend well beyond December.
42 Florence was taken to the Defence filed by Barooga in January 2016 (at a time when Barooga was the second defendant in this proceeding). He agreed that the allegations made in it were correct. In particular, he was taken to paragraphs 5.1, 6.1 and 7A. He agreed that:
(a) In about June 2009, Rullo informed him that he wished to purchase broccoli seedlings for transplanting for the period October 2009 to approximately December 2009 and for a Summer harvest up to and including January 2010;
(b) Rullo asked him what would be the appropriate broccoli seed type to be transplanted and harvested in that period;
(c) He told Rullo that he did not know and would need to ask Fairbanks what broccoli seed type would be best suited to transplant and harvest during that period;
(d) Rullo instructed him to obtain that advice from Fairbanks and to purchase the seeds recommended by Fairbanks on behalf of Amar;
(e) In about June-July 2009, he sought advice from Fairbanks as to what type of broccoli seed was suitable for transplanting in the period October to approximately December 2009 and for a Summer harvest;
(f) Fairbanks (Florence could not recall if it was Bruno Tigani or someone else at Fairbanks) advised Florence that Ironman broccoli seeds were suitable for transplanting and harvesting during that period and that Atomic seeds were not;
(g) After receiving that advice from Fairbanks in June-July 2009, he passed that advice on to Rullo;
(h) In due course, on instructions from Rullo, he purchased Ironman broccoli seeds from Fairbanks on behalf of Amar;
(i) He said he could not recall how many Ironman seeds he purchased. He denied ever ordering or purchasing one million Ironman seeds from Fairbanks;
(j) On or about 22 July 2009, Fairbanks issued a tax invoice to Barooga for 200,000 Ironman seeds that Florence said were intended for Amar;
(k) On or about 21 October 2009, Fairbanks issued a tax invoice to Barooga for 100,000 Ironman seeds and 100,000 Atomic seeds, part of which was intended for Amar.
43 Barooga’s delivery records showed that, relevant to the second crop, it delivered to Amar a total of 258,000 Ironman seeds and 42,000 Atomic seeds. These deliveries appear to be supported by six tax invoices sent by Barooga to Amar between June and December 2009.[8] These were the six deliveries to which I have previously referred in paragraph 21(h) above.
[8]Exhibit 3, JCB 797 to 802.
44 Exhibit R was Barooga’s handwritten document relating to orders by Amar.[9] It refers to the ordering of 258,000 Ironman seeds, 42,000 Atomic seeds, and some pumpkin seeds. Florence was asked about a handwritten note on it – “450,000 ordered – sold elsewhere”.[10] Counsel for Amar suggested to Florence that this was a reference to a further order for 450,000 Ironman seeds over and above the 258,000 seeds that had been delivered. Amar submitted that this confirmed that Rullo had always intended to plant more than 258,000 Ironman plants.
[9]Exhibit R, invoices at JCB 1131 to 1132
[10]T639, L27
45 On reflection, I cannot be satisfied about this. The evidence was that over about ten weeks from mid-October to late December, Amar had transplanted 258,000 Ironman seedlings – an average of about 25,000 seedlings per week. At that rate, if Rullo intended to plant a further 742,000 seedlings (making a total of one million) it would take at least another six months of transplanting. This would involve other planting and harvesting seasons. I do not consider that the evidence supports such intention. I accept that, at an earlier stage, Rullo may have talked of planting one million broccoli seedlings and may have paid the sum of $10,000 for seeds based on a price of 1 cent per seed. However, I am not satisfied that the orders placed by Barooga for seeds from Fairbanks are consistent with an intention by it to purchase a substantial further quantity of Ironman seeds for Amar, to propagate them and to continue to supply Ironman seedlings to Amar through January and well into the new year.
46 Tigani gave evidence and was cross-examined.
47 In an email sent by Tigani in January 2013, he said:
“… at that time, if a grower wanted to grow Broccoli for spring and early summer harvest, Ironman would likely have been the suggestion. The grower’s decision to grow broccoli in the most difficult harvest window, was his choice.”[11]
[11]Exhibit V, JCB 1096
48 In a statement signed by Tigani in June 2013, he said:
“The statement by Barooga Nursery in relation to the enquiry to Fairbanks about the seed or seed varieties I cannot recall if it was myself or James Muir. But if I did, given what I knew at the time of varieties and the broccoli market, if I was asked in July 2009 which variety should I sow now, it’s very likely that Ironman would have been my answer …
… Barooga would ring the office quite regularly to ask for variety advice and that call may have happened but I cannot specifically recall it and I did not record it …
I do not believe the area subject to the claim by Amar Pty Limited is a suitable area for growing Broccoli.”[12] (My emphasis).
[12]Exhibit U, JCB 1088 to 1091
49 Tigani said he did not recall the conversation with Florence but did not deny that it occurred. Nevertheless, he said that, if he had been asked in July 2009 “which variety should I sow now, it’s very likely that Ironman would have been my answer”.[13] (My emphasis)
[13]Exhibit U, JCB 1088
50 These statements are somewhat at odds with the Brassica Guide produced by Fairbanks in February 2010, which recommends harvesting of Ironman up to late July but not over the summer period.[14] This guide had been prepared by Tigani in 2010 after the failure of Amar’s crop. In his evidence, Tigani said the Guide was “very conservative”. Notwithstanding his comments as to what he would say if asked what variety should be planted “now” (that is, in about July), the guide states that no variety should be planted then. I consider it likely that Tigani prepared the recommendations contained in the Brassica Guide so as to distance himself from the advice he had provided to Florence.
[14]Exhibit C, JCB 812
51 I accept that Rullo did not have expert knowledge of the various varieties of broccoli to determine what he should plant for a summer harvest. It is quite understandable he would approach Florence for advice. Rullo states that he did seek such advice and Florence agreed that he did. I find that he did.
52 Prior to 2009, Florence had little or no knowledge of Ironman seeds and whether they would be suited for a summer crop in the Goulburn Valley. It is again understandable that he would seek advice from his major seed supplier, Fairbanks. I find that he did do so. Fairbanks did not have a large staff. I consider it likely that Florence sought the advice from Tigani notwithstanding that Tigani states that he cannot now recall it.
53 On the balance of probabilities, I am satisfied that Fairbanks (probably through Tigani but possibly through Muir) represented to Florence that the Ironman variety of broccoli was suitable for planting in North Eastern Victoria over the period between October to December and for harvesting over the summer months.
54 I am not satisfied that Tigani effectively told Rullo that he would lie in evidence if Rullo persisted with a legal claim. I think it is unlikely that he would have said such a thing especially in the presence of witnesses, Leeks and Florence. In evidence, neither of them could recall such a statement being made. Nevertheless I do not consider that Rullo was being dishonest in giving that evidence. I consider it to be more likely that he misinterpreted something said by Tigani concerning the proposed involvement of lawyers in the dispute.
55 However, I do accept that Tigani told Rullo that he might be able to give him some seeds by way of compensation and further, that Rullo would get no seeds from Fairbanks if he persisted with a legal claim.
What was the cause of the crop failure?
56 The cause of the failure of the crop was largely the subject of expert evidence. It should be noted that no attempt was made to qualify Tigani or Muir as an expert to enable them to give expert opinion evidence on that subject.
57 David Bell is a horticultural and agricultural consultant with the qualifications set out in his curriculum vitae.[15] He was called to give evidence by Amar. His reports dated 1 September and 31 October 2015 were tendered.[16]
[15]Exhibit AA, JCB 98
[16]Exhibits Y and Z respectively
58 In his report of 31 October 2015,[17] he said:
“As broccoli cannot be planted over the period October to mid-January alternative vegetable crops…could have been planted by Amar Produce Pty Ltd.”
[17]Exhibit Z, JCB 131
59 He gave evidence and was not challenged over that statement. The bulk of his evidence concerned quantification of losses suffered by Amar.
60 Ken Bullen, agricultural scientist, was called by Fairbanks. His two reports dated 25 March 2014 and 26 August 2016 were tendered.[18] In addition, he gave evidence and was cross-examined. In summary, his opinions were:
[18]Exhibit 19, JCB 167 and 365
(a) The Shepparton area could be best described as a district of more extreme weather conditions, given particularly low temperatures in winter and particularly high temperatures in summer, compared to the southern coastal regions where temperatures are more moderate season-round;
(b) Significant supplementary irrigation would have been required to produce a broccoli crop at Amar’s property in the planting period 8 October to 20 December 2009;
(c) In general, broccoli is not produced in the spring/summer period in northern Victoria due to climatic conditions. Significant fluctuations in temperature is deleterious to broccoli;
(d) Whilst broccoli production does occur in the spring/summer periods in Victoria, it is predominantly located in the southern coastal regions, in more mild climate conditions;
(e) He quoted (with approval) a researcher and author, Michael Titley, as stating:
“Production of broccoli must be finished harvest by the first week of November each year in northern Victoria. Broccoli is a temperate crop and production at Shepparton in the October to December period is totally unachievable.”[19] (My emphasis)
[19]Exhibit 19, JCB 177
(f) Production of horticultural crops is specialised and, as such, high level expertise is required for this activity;
(g) The Block’s soil type was suitable for broccoli production;
(h) The period of 8 October to 20 December was totally unsatisfactory for broccoli production;
(i) Fundamentally, the change in maximum and minimum temperature ranges from the end of October onwards had resulted in deleterious effects for the broccoli crop;
(j) Irrespective of the broccoli variety, any broccoli crop in that region over that period would have failed to produce a viable and saleable product;
(j) Due to the high maximum and minimum temperatures, “bracting” of the crop occurred – resulting in the crop prematurely flowering and seeding;
(k) He would have assumed that the crop would have had some bug problems and required treatment, especially in summer. However, the bug problems were not the cause of the crop failure;
(l) Potential issues such as the time taken between delivery of seedlings and the planting of them, and the location in the trays of seedlings during that period might have affected the yield of the crop but were not a cause of the failure of it.
61 Don McDougall is a director of an agricultural risk consulting company. His qualifications are set out in an appendix to his report.[20] Mr McDougall was not available to attend to give evidence. His report dated 6 August 2015 was tendered by Fairbanks with the consent of Amar. The report had been read by another expert witness, Tony Hartley, who stated that he agreed with the opinions expressed by Mr McDougall and adopted them.
[20]Exhibit 16, JCB 633-639
62 Mr McDougall opined in his report[21] that:
[21]Exhibit 16, JCB 611
(a) The broccoli crops that are grown in the Goulburn Valley are planted over the cooler months as the hotter conditions during summer have traditionally been found not to be suitable for broccoli production;
(b) In hotter conditions, the broccoli run to head and do not produce a marketable product;
(c) A report by AgVita on the nutrition of Amar’s crop did not indicate that crop nutrition is the cause of the crop failure;
(d) The failure of the crop was highly unlikely to be a soil pathogen;
(e) The symptoms described and the photographs seen are consistent with what he would expect of a crop that had run to head due to unsuitable environmental conditions, for example high temperatures, typically found in the Goulburn Valley over summer;
(f) Although Atomic is better suited to higher temperatures, he did not consider that Atomic could have been successfully grown over summer in the Goulburn Valley.
63 Tony Hartley was called by Fairbanks. His reports dated 30 August, 4 October and 5 October 2016 were tendered.[22] He is an agronomist and has a Bachelor of Applied Science (Agriculture) and a Diploma in Applied Science (Agricultural Protection). In addition to adopting the report of Mr McDougall, he gave evidence and was cross-examined. In summary, he reported that:
[22]Exhibits 17 and 18
(a) He had spoken with Joe Serra, a small crop farmer in the Goulburn Valley, who, in 2009, had trialled the growing of spring-planted brassica crops, including 2,000 Ironman broccoli plants, and had concluded that the growing of spring-planted broccoli was not commercially viable because the quality of the broccoli produced was poor;
(b) He agreed with conclusions of Mr Bullen about the suitability of the Block to produce broccoli at certain times of the year, but not during the period in question;
(c) If there was a delay in the planting of the seedlings after delivery, that might have contributed to problems with the crop and affected the yield. He thought a four to seven-day delay in planting was unusual;
(d) He was shown photographs of some of the plants taken by Rullo[23] and could not explain the appearance of the roots depicted;
[23]Exhibit G
(e) It was possible that there were other causes of the failure of the crop such as lack of irrigation, the retention of the seedlings in the trays for too long and the conditions in which they were stored before planting;
(f) He considered that bug attacks could reduce yield but did not suggest that that would be a cause of the crop failure.
64 Conrad Leeks was also called by Fairbanks. His report dated 30 August 2016 was tendered.[24] From 2009 to 2015, Mr Leeks was Regional Business Manager for Victoria and Tasmania of Monsanto Ltd, the sole supplier of Ironman broccoli seeds in Australia. He has a qualification of Masters in Agricultural Science (Seed Technology).
[24]Exhibit 21
65 Monsanto had supplied the Ironman seeds the subject of this proceeding to Fairbanks.
66 Leeks had attended the meeting at the Block on 6 January 2010 at the request of Fairbanks.
67 A copy of two pages from his diary containing notes made during his attendance or soon after was tendered.[25]
[25]Exhibit 20
68 Mr Leeks opined that:
(a) The use of a T-Tape Irrigation system was unusual, as the majority of growers in Victoria use overhead irrigation which gives good moisture spreadage and sub-soil penetration;
(b) Using T-Tape limits the spread of even irrigation creating a stress factor for the plant. This in turn will limit the plant’s root system coverage which will limit moisture and nutrient uptake. These limitations result in smaller plants, root systems, stems and heads (if any are formed) and, in extreme cases, bolting where the plant produces flowers as a stress response;
(c) Poor irrigation management was the major factor in the majority of Amar’s plants bolting;
(d) Excessive chemical spray could stress the plant, especially under high temperatures such as those experienced through the relevant period. Rullo had said at the meeting that he was spraying every second day for grub, that grub was in the soil and that he was applying high levels of a nemacide to the plants;
(e) The plants observed by him at the meeting exhibited twisted leaves, poor and under-developed root systems, and the root systems were compact and twisted. Such poor plant development is a symptom of stress caused by poor growing practice;
(f) The broccoli variety recommended for sowing between June and August would be Ironman. Globally, Ironman is used in this timeslot;
(g) Ironman was likely to be the most successful crop of harvesting in December up until mid-January. Ironman performs well in this timeslot domestically and globally;
(h) The earliest he would consider Atomic for harvest would be February because it is susceptible to bolting under diurnal temperature variation;
(i) The most likely causes of Amar’s crop failure were poor irrigation, and excessive chemical application;
(j) He disagreed with the suggested planting and harvesting times set out in the Brassica Guide prepared by Tigani.[26]
[26]Exhibit C
69 In oral evidence, Mr Leeks clarified that the use of T-Tape irrigation was unusual for Werribee South growers. He said 80 to 85 per cent of them used an overhead system. I note that Werribee South is a Port Phillip Bay coastal area.
70 At the meeting at the Block, Mr Leeks had taken photographs which were placed in the Monsanto Complaint System and a form was filled out by him relating to the crop. Neither the photographs nor the form were produced in evidence. I note that Mr Leeks ceased employment with Monsanto in June 2015. He said that prior to leaving Monsanto, the company’s solicitor in Singapore had contacted him and asked him for his notes of the meeting. He had told the solicitor of the photographs. He said the solicitor had told him he would get someone to dig them up. Mr Leeks said he had been approached to give evidence at the trial as long ago as late 2015.
71 I consider that Mr Leeks was in attendance at the meeting at the Block because he was considered by Fairbanks to have some expertise in the area and had been specifically invited to attend by Fairbanks which had a strong relationship with his employer, Monsanto.
72 He said he was aware of another complaint by Ms Singh concerning her Ironman crop. He had not seen her crop. He said that he was told by Fairbanks that he was not needed regarding her crop.
73 He said he understood that Rullo’s claim was one concerning advice given to him, and not one about seed variety or performance. He said that it had become clear to him it was an irrigation issue.
74 I note that on the first page of his report, Mr Leeks stated that he had made all enquiries that he considered were desirable and appropriate. However, despite his report containing a damning assessment of Rullo’s farming and irrigation practices, he made no enquiries of Rullo at all. In particular, he made no enquires concerning Rullo’s irrigation system or the amount of water that had been put onto the crop on an hourly or daily basis.
75 His diary notes contained no mention of any irrigation issue. He asked no questions concerning the identity or quantity of chemicals being applied to the crop by Rullo.
76 If Mr Leeks considered there were other deficient “farming practices” of Rullo, he did not refer to them in his notes, his report or in his evidence.
77 Mr Leeks made no enquiries concerning the Singh complaint despite being aware that it involved a failed Ironman crop in the same region and at a similar time of year. I consider that, before reaching any view of the reason for the failure of Amar’s crop, he would have wanted information concerning the reason for the failure of the Singh crop, whether or not Fairbanks had said that they needed him to do so.
78 Mr Leeks’ mention of a report being prepared soon after his visit to inspect the crop is puzzling. It is difficult to accept that such a report with the photographs taken by him would not have been provided to Fairbanks given the circumstances. No such report was discovered or referred to by Fairbanks. It would seem that despite the presence at the meeting of a representative of Fairbanks, no mention was made to Fairbanks of any perceived irrigation deficiency or poor farming practices. None of Tigani, Muir or Lauren O’Connor (all then with Fairbanks) gave evidence of any knowledge of such a claim.
79 It is hard to avoid the conclusion that Mr Leeks was far from an arm’s length, independent, expert witness. The initial declaration in his report that this was an “invalid claim” is indicative, in my view, that he was not independent.
80 Where the opinions of Mr Leeks were contrary to those of Mr Bullen, Mr McDougall, Mr Hartley or Mr Bell concerning the likely cause of the failure of the crop, I prefer and accept their views which were generally consistent.
81 In addition, Fairbanks called as a witness Russell Lamattina, who had conducted a vegetable growing business known as Lamattina & Sons for some sixty years. He grew broccoli, as well as other vegetables up until 2012.
82 Mr Lamattina said that he grew vegetables from properties at Boneo (on the Mornington Peninsula) and also near Robinvale, in northern Victoria.
83 He had written a letter dated 24 June 2013 “to whom it may concern” wherein he stated:
“We at A & G Lamattina & Sons Pty Ltd, situated at Browns Road in Boneo, Victoria, grew large commercial volumes of Ironman broccoli from 2008 until we ceased growing broccoli altogether in 2009. During the transplanting period of October through to December throughout those years, we planted some 200,000 seedling plants weekly.
During this planting period, the Ironman broccoli harvested was of high yield and quality and our customers in the retail sector, were pleased with the quality of the Ironman broccoli we produced.
Even now in 2013, if we were still growing broccoli commercially we would transplant Ironman broccoli on our Boneo property in Victoria during the window of October through to December as it proved to be the best variety in that timeslot.”[27] (My emphasis).
[27]Part of exhibit 19, JCB 267
84 In oral evidence, Mr Lamattina said that he had probably first come across the Ironman variety of broccoli in 2008. He said that he had grown it at Boneo over the period October through to December. When asked how many plants he grew in that period, he replied “200,000”[28]. This is to be contrasted with 200,000 seedling plants “weekly” as stated in the letter.
[28]T597, L28
85 He stated that he had ceased growing broccoli altogether in about 2012 (as opposed to 2009 referred to in his letter). He said that broccoli had been profitable for his company group and that the crops of Ironman that he grew were profitable.
86 It was not until cross-examination that Mr Lamattina mentioned that between 2008 and 2012, he had also grown Ironman broccoli at Robinvale. He said that before he started growing there, he had done Ironman trials at Robinvale. He did them with a seed company but was unable to say which one. He said that his company still had the Robinvale property until 2015 but he had chosen not to grow any broccoli at either property after 2012 because it did not suit him to do so.
87 The letter written by Mr Lamattina, previously referred to, makes no mention of the Robinvale property or of any variety of broccoli being grown there. The letter only refers to the company being situated in Boneo and of broccoli being grown at Boneo. Tellingly, in my opinion, in the final paragraph of the letter, he states that if he was still growing broccoli commercially, he would be transplanting Ironman broccoli “on our Boneo property”.
88 I considered Mr Lamattina was an unimpressive witness. His tone was one of general irritability bordering on aggression. If he had grown Ironman broccoli, or for that matter any broccoli, in the Robinvale area by transplanting in the October to December period, it is difficult to see why this was not referred to in his letter. In fact, his planting of Ironman broccoli for a summer harvest in Boneo is consistent with the evidence of experts who opined that the variety was suitable for the milder coastal regions. Nowhere in his evidence-in-chief did he mention growing Ironman broccoli as a summer crop at Robinvale.
89 Mr Lamattina stated that he would not grow a strain of broccoli unless that strain had been trialled in the area in which it was to be grown. He said that he had trialled Ironman broccoli at Robinvale before growing it there. This also was a matter not referred to in his evidence-in-chief. He said that trials would have been conducted in conjunction with one or other seed company. The only seed company that had access to Ironman seeds was Monsanto (which the parties agreed could be treated, in this proceeding, as one and the same as Semenis). If such trials had been conducted with Mr Lamattina in the Robinvale area, it is, in my view, extraordinary that evidence of those trials was not led from Mr Leeks or other employees of Monsanto.
90 I do not accept that Mr Lamattina grew Ironman broccoli in that region as a summer crop or conducted relevant trials of Ironman there.
91 I am comfortably satisfied that the cause of the failure of the crop was that, over the relevant timeslot, the Ironman broccoli variety was unsuitable for the Goulburn Valley region and was virtually bound to fail no matter how it was transplanted, grown and harvested. I conclude, on the basis of the evidence before me that it is likely that there was no variety of broccoli that was suitable for growing in that timeslot and region.
92 I am fortified in that conclusion by the evidence of Ms Singh, Mr Fotia and, to a lesser extent, Mr Serra.
93 Ms Singh had grown fruit and vegetables in the Goulburn Valley successfully since the mid-1990s. She had grown broccoli there each year since 2003 as a winter crop. In 2009, she considered planting broccoli as a summer crop but was not sure if it could be done. She consulted Mr Florence as to whether it could be planted successfully and, if so, what was the most suitable variety. Her evidence was that he had advised the Ironman variety and, as a consequence, she had purchased that variety from Barooga, Barooga had propagated 250,000 seeds for her and that she had transplanted them. I accept that her crop also failed and she suffered bad losses. She attempted to sell nine pallets but these were rejected. She was unable to sell any of her crop. She had called Mr Florence about the crop and had also called Fairbanks and had been told that Ironman was the right seed for that weather. She had not paid Barooga for any of the Ironman seedlings.
94 Dominic Fotia gave evidence that he had grown broccoli in the Goulburn Valley since the late 1990s as a winter crop. In 2009, he had also considered growing it as a summer crop and sought advice from Florence. Florence told him he had been in contact with his seed supplier, Fairbanks, and that the only variety to grow as a summer harvest crop was Ironman. His evidence was that his Ironman broccoli crop did not look like broccoli. They had uneven beads, some flowering. He said he had called Florence, who had suggested that Fotia did not know how to grow broccoli. Fotia had not been able to sell the vast portion of his crop.
95 Giuseppe Serra had also planted about 6,000 Ironman broccoli seedlings as a summer crop in 2009 as a trial. The plants were of a different shape. Although he said made a small profit, he stated that he would not plant Ironman again.
Was the representation misleading or deceptive?
96 The representation that I have found to have been given by Fairbanks was that Ironman broccoli is a suitable variety of broccoli to be transplanted in North East Victoria in the period October to approximately December and for a summer harvest up to and including January.
97 There was no dispute that the representation, if made by Fairbanks to Florence, was made in trade or commerce.
98 Likewise, I am satisfied that Fairbanks was aware that advice given by it to a plant nursery such as Barooga concerning what seeds were appropriate for transplanting in a particular region over a particular time of year would be passed on to one or more of Barooga’s customers.
99 Further, I find that Fairbanks was aware, at the time that it made the representation, that a summer crop was one which would be transplanted over the October to December period and harvested around eight weeks after each transplanting – perhaps a little longer or shorter depending on the weather.
100 I am satisfied that the representation was one with respect to a future matter. Fairbanks would have been aware that farmers do not plant seedlings for the sake of it. They plant with the expectation that the seedlings will, in the future, grow into a healthy plant of sufficient size and quality so that it can be harvested and sold to the public for consumption. Whether a seedling will display such attributes will, to a large extent, depend on whether it is inherently suited to the climate of the particular location – in this case North Eastern Victoria. I am satisfied that there are varieties of broccoli which are unsuitable for some regions and climates, depending upon the temperatures or the variation of temperatures experienced. I consider that the representation was one to the effect that planting Ironman broccoli in the relevant timeslot would be suitable because it would be likely to produce a successful crop in the future.
101 Based upon the expert evidence before me, I am satisfied that Ironman broccoli was not suited to be planted in North Eastern Victoria in the October to December timeslot. Such a crop, planted over that timeslot, was highly unlikely to succeed. It was highly likely to fail.
102 I consider that, in these circumstances, s51A of the Trade Practices Act 1974 has application. Where a representation is made with respect to a future matter, where the representor does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
103 The onus of demonstrating that it had reasonable grounds for making such a representation rests upon the representor. On the evidence before me, I consider that Fairbanks had no reasonable grounds for representing that Ironman was a variety of broccoli suitable for planting as a summer harvest crop.
104 A number of witnesses gave evidence that a new variety of any vegetable including broccoli would need to be trialled in a region before it should be recommended for commercial planting there. By 2009, Ironman had been marketed in Australia for some years. I accept that it may not have been considered to be a new variety in all areas. I accept that it appears to have been a successful variety in coastal areas. It appears that it can be successfully grown as a summer crop in areas such as the Mornington Peninsula and other coastal areas where the climate is relatively moderate and variations in temperature relatively limited.
105 The evidence disclosed that Ironman had been trialled in coastal areas. On the evidence before me, I do not accept that it had been previously trialled anywhere in or near North Eastern Victoria, nor in similar conditions. I reject the evidence of Mr Lamattina that he had trialled Ironman near Robinvale. He may well have trialled it at or near Boneo.
106 I accept that broccoli is generally a winter crop and that to grow any variety of it as a summer crop in North Eastern Victoria would have been experimental, at best. I accept that Ironman was a variety which was virtually unknown in North Eastern Victoria.
107 Amar is not required to establish any intention on the part of Fairbanks to mislead.
108 I am not satisfied that Fairbanks has discharged the onus of proving that it had reasonable grounds for making the representation. Accordingly, I find the representation is taken to be misleading and in breach of s52 of the Act.
109 Even if it were considered that the representations that I have found to have been made by Fairbanks were not representations as to a future matter, I am satisfied that they were nevertheless misleading and deceptive within the meaning of s52 of the Act.
110 I am conscious that a statement of opinion will not breach s52 merely because it proves to be inaccurate.
111 Whilst the representation here was not one of hard, physical fact, it was a statement of opinion of an expert in the field. Recipients of it were entitled to assume that Fairbanks had rational grounds for making the representation. [29] For the reasons previously given, I do not consider that Fairbanks had such grounds. I consider that the representation that I have found was made by Fairbanks was of an opinion which could not reasonably have been held in view of information known to it. In particular, I consider that:
[29]See generally The Law of Misleading or Deceptive Conduct (3rd ed), Lockart at 4.37 to 4.45 and the authorities referred to
· Fairbanks knew that Ironman broccoli had not been trialled in North Eastern Victoria or in any similar climate as a summer crop.
· Fairbanks knew of no broccoli grown as a summer crop other than in coastal areas such as Werribee and the Mornington Peninsula.
The “further advice”
112 Amar also alleged that “the further advice” was misleading and deceptive. This allegation related to advice given to Rullo at the meeting on 6 January 2010 at the Block. This allegation is, in my view, misconceived.
113 I accept that Muir advised Rullo not to incur and possibly waste further expenses associated with the crop (including water and nutrients) until the cause of the failure of the crop was established. On the whole of the evidence, I consider it was probably sound advice not to incur further expenses in all of the circumstances until further investigations were made.
114 The “further advice” does have relevance to issues of contributory negligence and failure to mitigate loss which I address later in these reasons.
Section 53 of the Act
115 Amar also alleges that the representation made by Fairbanks constituted a breach of s53 of the Act. I consider, for the reasons previously stated, that it did constitute a false and misleading representation concerning the performance characteristics of Ironman seeds in breach of s53(c) of the Act.
Did Amar rely on the representation?
116 Prior to 2009, Rullo had planted crops of broccoli on a half-acre Block in the Goulburn Valley. None were summer crops. His interest in planting a summer crop had arisen because of his awareness that summer prices for broccoli were higher than at other times of the year. I assume that this was because traditionally there was less broccoli grown for summer harvesting – principles of supply and demand would be likely to have influenced the market.
117 Rullo had harvested a successful Atomic broccoli crop on the Block earlier in 2009 and his initial intention was to plant the same variety later that year. His enquiries of Florence had led to discussions as to whether Atomic was a suitable variety for a summer crop in the Goulburn Valley. I accept that these discussions led to Florence making the enquiries of Fairbanks discussed earlier in these Reasons. I accept that Florence passed onto Rullo the advice he had received from Fairbanks – that is, that Ironman was a suitable variety to be planted as a summer crop in North Eastern Victoria and that Atomic was not.
118 I accept that Rullo relied upon that advice in determining to plant an Ironman crop in the relevant timeslot.
119 Fairbanks submitted that, in considering the reliance issue, much turned on the particular date that the representation was made.
120 In its Statement of Claim, Amar pleaded that Fairbanks had advised in about June 2009 that, for transplanting in the October to December timeslot, Atomic should be avoided and that Ironman was preferable. In Further and Better Particulars dated 18 April 2013, Amar stated that Florence had conveyed the advice of Fairbanks to Rullo by telephone in June 2009 and at a meeting at Barooga in late June 2009.
121 In evidence, Rullo said that his first discussions with Florence about varieties of broccoli and timing of planting in relation to the second crop occurred at the Block and later by telephone. He said that Florence had told him that one seed supplier, Pacific Seeds, did not recommend Atomic seeds for a summer harvest but there were other seed suppliers and he would get back to him. He later passed on the advice he had received from Fairbanks that I have referred to above. I accept Rullo’s evidence that he wanted to discuss the advice with Milosevic and her mother and told Florence that he would get back to him. At this point, Rullo said there was no firm arrangement. Having discussed the matter with Alex and her mother, Rullo spoke with Florence by telephone and told him they had decided to go ahead. On a later date of which he was unsure, Danny had driven him to Barooga (Rullo had lost his driver’s licence at the time[30]) and he paid $12,000 cash to Florence. He said that, before handing over the cash, he was still worried about the Ironman venture and that Florence had said to him that he would ring Fairbanks then and there. He said that Florence went into the office and returned saying he had spoken to Tigani who had said that Ironman was the only variety suited for that time. Upon being told that, Rullo confirmed he was going ahead and handed over the cash.
[30]T276, L7
122 Rullo was unable to say exactly when this conversation had occurred. Fairbanks pointed to exhibit 4 which was an adjustment note issued by Barooga to Amar dated 12 August 2009, relating to what was described as an outstanding credit in the sum of $12,000. The document does not describe the transaction to which it relates. Fairbanks submitted that this was likely to be a part payment or deposit for the seeds the subject of this proceeding. It submitted that this was evidence that Rullo had not acted on the advice provided to Barooga by Fairbanks in June or July but on a later representation. It submitted that in Further and Better Particulars dated April 2013, the only representations relied upon were made “during June 2009” and then in “late June 2009”. In its original Statement of Claim dated December 2012 and the Further Amended Statement of Claim of December 2015, Amar had alleged that the relevant representation was made by Fairbanks in “about July 2009”.
123 I do not consider that the variation of dates referred to is of any great significance. At trial, Rullo and Florence were recalling conversations that had occurred more than seven years before and it is unsurprising that their memories as to dates were somewhat vague. Likewise, it seems relatively unimportant that the pleadings referred to the representation having been made in “about July” as opposed “late August”. In any event, as stated previously, I am satisfied on the balance of probabilities that the representation was made by Fairbanks to Florence – whether it was made in about July or June or in August is not, in my view, an important distinction.
124 I am satisfied that Florence conveyed the advice to Rullo and that Rullo relied upon it in determining to transplant the 258,000 Ironman seedlings on the Block between October and December 2009.
125 I am not satisfied that Rullo ever made a firm order for or committed to an order for one million Ironman seeds. I accept that he probably mentioned such a figure to Florence but I am not satisfied that he ever went ahead with such an order.
126 Amar had transplanted 258,000 Ironman seedlings between October and mid December 2009. On my calculations, this is an average transplanting of about 103,200 per month. To transplant an additional 742,000 seedlings at the same rate would take a further seven months or more. I am not satisfied that the evidence discloses that this was ever his firm intention.
127 Exhibit 13 was a table prepared by Counsel for Fairbanks which set out Barooga’s stocks of Ironman and Atomic seeds held by it up to mid-December 2009, and showed that Fairbanks only held 72,000 Ironman and 52,000 Atomic seeds at that time. None were being propagated for Amar.
Contributory negligence
128 In its Defence, Fairbanks pleaded that, if Amar’s loss and damage occurred as alleged, and if Fairbanks’ breach of s52 of the Act was a cause of it, then Amar was, nevertheless, guilty of contributory negligence. The Particulars pleaded by Fairbanks are as follows:
“PARTICULARS
An inexperienced broccoli grower should not have planted any broccoli in the Goulbourn Valley between October 2009 and January 2010 because of the extent of expected temperature fluctuations and expected high temperatures. The Plaintiff and its officers were an orchardist who planted broccoli in the Goulbourn Valley during that period despite large temperature fluctuations and high temperatures.
As an inexperienced grower of non-orchard plants, not engaging an agronomist to advise it when, what and how to grow produce at the Plaintiff’s Land.
In May 2009, as an experienced grower of non-orchard plants, not engaging an agronomist (or similar advisor) to advise it how to grow the 1 million broccoli seedlings it says it decided to grow.
The Plaintiff’s failure to plant seedlings before they became root bound as a consequence of staying in their trays too long.
Insufficient watering of the broccoli crops.
The Plaintiff’s failure to source seed from an alternative supplier had Fairbanks refused to supply anymore (sic) seed purportedly in breach of the alleged Supply Agreement (which is denied) as pleaded in paragraph 24.
If Fairbanks did give the Further Advice as defined in paragraph 15 (which is denied), to in effect not do anything further on the Plaintiff’s Land until ‘thorough tests had been conducted on the seedlings already planted and results obtained …’ the Plaintiff’s failure to have those tests conducted itself and or chase up the said test results from Fairbanks and or from Barooga in any timely manner and or at all. It was unreasonable in the circumstances for the Plaintiff to rely upon the alleged ‘Further Advice’.”[31]
[31]JCB 24-25
129 Given my findings as to the representation that was made by Fairbanks and relied on by Amar, the allegation of contributory negligence set out in the first paragraph of those Particulars amounts to an allegation that Amar was negligent in following the advice given to it by Fairbanks. I consider that there was no evidence to support the proposition that a reasonable and prudent grower in the place of Amar should have concluded that the advice given by Fairbanks was in any way unreliable or that some second opinion ought to have been sought in respect of it.
130 The second and third paragraphs of those Particulars refer to the alleged failure of Amar to engage an agronomist to advise it how to grow the broccoli seedlings. In relation to an allegation of contributory negligence, it is the defendant who carries the onus of proving, on the balance of probabilities, the contributory negligence it alleges and that such contributory negligence was a cause of Amar’s loss. On the totality of the evidence, I consider that the defendant has failed to discharge the onus upon it of establishing that a reasonably prudent grower would have sought advice from an agronomist prior to planting, having effectively received advice from the supplier of the seeds concerning their suitability.
131 The fourth paragraph of those Particulars relates to an alleged delay in planting the seedlings after their delivery by Barooga to Amar. The evidence of Rullo was that all seedlings were planted within a week of their delivery. Whilst there was some evidence that such a delay was unusual, I do not consider that the evidence leads to a conclusion that such a delay had led to the failure of the crop.
132 The fifth paragraph of those Particulars concerned an allegation that Amar had not watered the broccoli crops sufficiently. There was no evidence supporting this allegation. At best, there was evidence that Mr Leeks considered that a fixed-spray watering system was more effective than a trickle-tape system and that fixed-spray systems were commonly used by broccoli growers in coastal regions of Victoria. None of the attendees at the meeting held on or about 6 January 2010 at the Block commented, or expressed the view, that the crop appeared to have been watered insufficiently or that the irrigation system was in any way inadequate. Mr Leeks took a number of notes concerning, what he said, were his observations from that meeting. No shortcomings of the irrigation system were noted. Rullo gave evidence of the output of water that his irrigation system was capable of producing. It was not suggested to him in cross-examination that his watering system was in any way deficient. On the evidence before me, I am not satisfied that Fairbanks has established, on the balance of probabilities, that the watering system was in any way inadequate or that lack of water was a cause of the failure of the crop.
133 The sixth paragraph of those Particulars contains an allegation that Amar had failed to source seed from an alternative seed supplier in the event that Fairbanks had refused to supply more seed. This is, in reality, an allegation going to the failure to mitigate damages rather than contributory negligence. The allegation presupposes that Amar was in a position, financially, to purchase further seeds or seedlings from another supplier. In my view, it overlooks that, by January 2010, Amar had not been able to sell any part of its crop and was not in receipt of any proceeds of sale of it because the crop had failed. In order to succeed in this allegation, Fairbanks would need to establish, on the balance of probabilities, that Amar could have sourced seed from an alternative supplier and that it was financially able, at that time, to make such purchases on whatever terms such alternative supplier was requiring. I consider that none of these matters have been established.
134 The seventh paragraph of those Particulars relates to the Further Advice, as defined in Paragraph 15 of the Statement of Claim. The alleged Further Advice was not to feed or water the Atomic seedlings planted by it and not to plant further seedlings until thorough tests had been conducted on the seedlings already planted and results obtained as to the reason for flaws, unsuitability, or substandard nature of the Ironman seedlings. Fairbanks denied giving that Further Advice, and alleges that the plaintiff ought reasonably to have had those tests conducted itself, or should have chased up the test results from Fairbanks and/or from Barooga in a timely manner. While I consider it to be somewhat strange that Rullo did not pursue Fairbanks, Barooga or Leeks regarding the results of tests that he understood were being, or had been, conducted, I am not satisfied that Fairbanks has established, on the balance of probabilities, that had Amar conducted its own tests or chased up Fairbanks or Barooga for the results of their tests, that such tests or enquiries would have made any difference to the end result. To suggest otherwise is, in my opinion, mere speculation.
135 Accordingly, for the reasons set out above, I am not satisfied that Fairbanks has discharged the onus upon it in order to establish any contributory negligence on the part of Amar. Likewise, and in relation to the provisions of s82(1B) of the Trade Practices Act 1974, I am not satisfied that any loss suffered by Amar was partly a result of its failure to take reasonable care or that it is just and equitable for damages recoverable by Amar pursuant to s82 of that Act to be reduced.
Apportionment of liability
136 Fairbanks further pleaded that, if it is liable to Amar, the amount of any damages which Amar may recover is limited pursuant to Part IVAA of the Wrongs Act 1958 to an amount reflecting the proportion of the loss or damage claimed by Amar that the Court considers is just, having regard to the extent of Fairbanks’ responsibility for that loss and damage.
137 For the purposes of s24AI(3) of the Wrongs Act 1958, the parties were in agreement that I should treat Barooga as still being a party to the proceeding notwithstanding that Amar was no longer pursuing the claim against it.
138 Fairbanks has not pleaded in its Defence any specific allegations against or in respect of Barooga and, in particular, any alleged responsibility of Barooga for Amar’s loss and damage.
139 Nevertheless, in written submissions at the close of the trial, Fairbanks submits that its responsibility for any loss suffered by Amar should be reduced by reason of the responsibility of Florence and/or Barooga for that loss. In that regard, it submits:
(a)Despite Florence having general knowledge, derived of many decades of servicing the needs of growers in the Goulbourn Valley that “its common knowledge that you don’t grow broccoli in the Spring and Summer in Northern Victoria”,[32] he never once advised Amar of that knowledge;
(b)Florence did not advise Fairbanks of his knowledge that nobody had ever grown broccoli in the Goulbourn Valley in that time and never queried whether Ironman was suitable;
(c)Amar had made significant allegations against Barooga (Florence) in its Statement of Claim, including misleading and deceptive conduct on its part. Fairbanks submits that the Court should not disregard these allegations merely because Amar settled its action against Barooga;
(d)If the Court found against it, damages awarded against Fairbanks should be reduced by 75 per cent on the basis that Fairbanks’ responsibility for Amar’s loss would be about one third of the responsibility of Barooga. In essence, the allegation made by Fairbanks is that Florence should not have blandly accepted the advice given by Fairbanks and should have queried it by pointing out to Fairbanks or Amar that no broccoli was commonly grown in the relevant timeslot in the Goulbourn Valley.
[32]T651, L24
140 The evidence was that Florence made many and regular calls to Fairbanks seeking advice about suitability of seeds of a number of different vegetables. Mr Tigani made it clear that such calls were common.
141 Further, Fairbanks had its own representatives who serviced different regions including the Goulbourn Valley. It would have known that broccoli was virtually never grown in the relevant timeslot in that region.
142 Further, I take into account that Florence never purported to be giving his own advice to Amar as to the suitability of Ironman, or any other type of broccoli, for sowing in the relevant timeslot. Rather, the evidence was that he told Rullo that he did not know the answer to Rullo’s query, but that he would contact the seed supplier for advice. The evidence was that, at all times, Florence had made it clear to Amar that he was merely passing on information and advice that he had been given by Fairbanks.[33]
[33]See also Yorke v Ross Lucas Pty Ltd (1985) 158 CLR 661 at 666
143 In all the circumstances, I am unable to be satisfied, on the balance of probabilities that Barooga was in breach of s52 of the Act or was in any way responsible for Amar’s losses.
144 Fairbanks bears the onus of establishing that its liability should be reduced as it alleges. I am not satisfied that Fairbanks has established that its responsibility should be reduced.
145 I accept that Amar made allegations against Barooga in its Statement of Claim. Those allegations allow for the possibility that the Court may have found that the representations concerning the suitability of the Ironman variety of broccoli in the relevant timeslot were not made by Fairbanks, but were made to Amar by Barooga alone. Such a scenario is not what I have found. I have found that in providing the information concerning the suitability of Ironman to Amar, Barooga (through Florence) was merely passing on what Florence had been told by Fairbanks. In that context, I consider that the allegations contained in the Statement of Claim against Barooga were not supported by the evidence accepted by me.
Failure to mitigate loss
146 Fairbanks pleads that Amar did not act reasonably and failed to mitigate its loss and damage.
147 Fairbanks carries the onus of proving such an allegation.
148 Its particulars of that allegation identify the same matters upon which it particularised its allegations of contributory negligence. For the same reasons as set out above under the Contributory Negligence sub-heading, I am not satisfied that Fairbanks has established any failure on the part of Amar to mitigate its loss and damage.
The limitation clause
149 In its Statement of Claim, Amar pleaded that Barooga was its agent in dealing with Fairbanks.
150 In paragraph 6, it pleaded, inter alia, that Florence had sought seeds from Fairbanks for transplanting from October 2009 onwards “as agent for Amar”. Fairbanks denied the allegations contained in paragraph 6.
151 In paragraph 7, it pleaded, inter alia, that Fairbanks had advised Amar “via its agent Mr Florence” that the Atomic variety of broccoli should be avoided for transplanting in the months of October to December and that the Ironman variety was preferable for such transplanting. Fairbanks denied the allegations contained in paragraph 7.
152 In paragraph 9, Amar pleaded, inter alia, that it (through Barooga) purchased 1,000,000 seeds from Fairbanks (which it described in its Statement of Claim as “the Supply Agreement”). Fairbanks denied the allegations contained in paragraph 9 and alleged in its Defence that it had sold the seeds to Barooga in its capacity as a customer of Fairbanks and, expressly, not as an agent of Amar.
153 At no time did Amar withdraw its allegation that Barooga had purchased the seeds in question from Fairbanks as agent for Amar. Nor did Fairbanks withdraw its denials of those allegations.
154 The relevance of the agency issue is that Fairbanks alleges that it sold the seeds to Barooga subject to terms and conditions printed on:
· its invoices directed to Barooga relating to the sale of the seeds;
· the delivery dockets that accompanied the seeds when they were delivered to Barooga; and
· the packaging of the seeds delivered to Barooga.
155 It submits it is entitled to now rely upon those terms and conditions.
156 The terms and conditions printed on the Fairbanks’ invoices contained terms as follows:
“CONDITIONS OF SALE:
All our seeds are sold subject to the following Conditions of Sale:-
We warrant to the extend (sic) of the purchase price that the seeds sold are described on the container within the recognised tolerances. We give no other warranty expressed (sic) or implied. If these Conditions of Sale are not acceptable the purchaser should immediately return the goods unopened. Any liability incurred by the Seller to the Buyer, to the extent legally permissible is to be limited to the replacement of the goods or a refund of the price paid by the buyer.”
157 The terms and conditions of sale printed on the delivery dockets stated:
“LIMITED OF LIABILITY: We warrant to the extent of the purchase price that seeds and plants sold are as described on the container within recognised tolerances. We give no other or further warranty expressed (sic) or implied. If this Condition of Sale is not acceptable the buyer should immediately return the goods unopened. Any liability incurred by the Seller to the Buyer, to the extent legally permissible is to be limited to the replacement of the goods or a refund of the price paid by the Buyer.”
158 On the packets of seeds sold by Fairbanks, the following words were stated:
“… Do not open this container or plant this seed until you read and understand the Notice to Purchaser. This seed is intended for planting by professional growers familiar with this variety.
NOTICE TO PURCHASER
Use of this seed indicates your acceptance of the following terms. If you do not accept these terms, you may return the seed for full credit.
…
WARRANTY AND LIMITATION OF LIABILITY
Seminis makes no other warranties of any kind including but not limited to any warranties for crop performance, marketability, merchantability, fitness or freedom from disease (even if seed-borne). Your exclusive remedy for loss or damage arising out of the seed is limited to return of the purchase price of the seed and you may not recover from Seller or Seminis any other damage including incidental or consequential damages claim under any legal theory.”
159 Fairbanks pleaded that the sales of the seeds to Barooga were subject to each of the conditions printed on the invoices, the delivery dockets and the packaging of the seeds. It submits Amar’s recoverable loss is restricted to a refund of the price paid for the seeds. The price paid was one cent for each seed.
160 Fairbanks alleges that, if it sold seeds to Barooga as agent for Amar, the terms and conditions agreed to by Barooga also bind Amar.
161 On the evidence before me, I am not satisfied that, when Barooga purchased seeds from Fairbanks, it was acting as Amar’s agent.
162 Barooga purchased various quantities of Ironman seeds from Fairbanks in 2009.[34] These are summarised in exhibit 13:
[34]Exhibit 13, Defendant’s Court Book (“DCB”) 796
· 11 June 2009 200,000
· 10 July 2009 250,000
· 22 July 2009 200,000
· 21 October 2009 100,000
_______
Total 750,000 Ironman seeds.
163 These purchases by Barooga bear little resemblance to the sales and deliveries of Ironman seedlings by Barooga to Amar to which I have previously referred. These were:
· 8 October 2009 60,000
· 16 October 2009 50,000
· 3 November 2009 40,000
· 15 November 2009 50,000
· 7 December 2009 50,000
· 15 December 2009 8,000
_______
Total 258,000 Ironman seedlings.
164 Further, in the period between August and December 2009, Barooga sold and supplied a total of 420,000 Ironman seeds to four other growers – Khakh, Singh, Serra, and Fotia – in addition to those sold to Amar.
165 That history of purchases and sales by Barooga indicate, in my opinion, that it was simply acting as a middle man – buying seeds from a supplier and on-selling them to several of its customers. Those purchases and sales are not, in my opinion, consistent with Barooga purchasing any particular quantities of Ironman seeds as an agent for Amar. I accept that, out of prudence, Barooga may have delayed the purchase of seeds until it had adequate orders from clients for them.
166 For those reasons, I am not persuaded that any agency existed as between Amar and Barooga at any relevant time. It follows that Amar is not bound by terms and conditions that may have existed as between Fairbanks and Barooga, and Amar’s claim for damages is not limited as alleged.
167 If I am wrong in my conclusions concerning agency, I consider that in the circumstances of this case, Fairbanks is not able to rely upon those terms and conditions in defence of Amar’s claim against it.
168 I have found that the circumstances here are that:
(a) Fairbanks was guilty of misleading and deceptive conduct in representing that Ironman broccoli was suitable for planting as a summer crop;
(b) In reliance upon that representation, Amar purchased seeds and seedlings, transplanted them and attempted to grow an Ironman broccoli crop. It alleges that it has suffered loss and damage as a consequence of doing so.
169 If, contrary to my finding, Barooga purchased the seeds as Amar’s agent, it would follow that, in reliance upon Fairbanks’ misleading and deceptive representation, Amar entered into a contract to purchase the seeds. But for the representation, I consider that Amar would not have entered into such contract. I do not consider, in such circumstances, that Fairbanks can rely on a term of such contract to limit the damages that can be recovered from it.
170 I consider that it is not open to Fairbanks to rely on a liability limitation clause contained in a contract between it and Amar in circumstances where Amar entered into that contract as a consequence of Fairbanks’ misleading and deceptive conduct the subject of the claim and induced by it.[35]
[35]See Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 560; Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 at 371; Milforn Astor Pty Ltd v Machinery Developments Ltd [2003] NSWSC 301 at paragraph [64]
Amar’s loss and damage
171 I accept that, but for the misleading and deceptive representation by Fairbanks, Amar would have planted alternative crops of beans and chillies between October and January and broccoli seedlings from about February to April 2010.
172 Amar alleges, and I accept, that it is likely that it would have profited from such crops. What Amar lost is the opportunity to profit from such crops. Precise calculation of such forgone profits is difficult, especially when one is dealing with horticultural activities. However, the mere fact that quantum of damages is difficult to assess does not mean that a plaintiff is only entitled to a nominal sum. Even where there is a lack of precise evidence as to what a plaintiff would have earned but for the offending conduct of the defendant, the Court must do the best it can.[36]
[36]State of New South Wales v Moss (2000) 54 NSWLR 536 at paragraphs [72] and [74]
173 With regard to the quantification of its losses, Amar led evidence from David Bell and tendered his reports dated 1 September[37] and 31 October 2015.[38] Fairbanks relied on evidence of Mr Hartley and tendered his reports dated 4 and 5 October 2016.[39]
[37]Exhibit Y
[38]Exhibit Z
[39]Exhibit 18
174 I accept Mr Bell’s evidence that:
(a) Whilst broccoli could not be successfully planted between October and mid-January, a number of vegetable crops could have been, including beans and bullhorn chillies. This was not disputed;
(b) Beans could have been planted on 5 hectares by way of four sequential plantings in modules of 1.25 hectares from early to late October with harvests from mid-December through to mid-January;
(c) The area could then have been mulched and bullhorn chillies could have been planted on 6.25 hectares by way of five sequential plantings in modules of 1.25 hectares from mid-December to mid-January with harvests from early March to mid-April;
(d) A number of varieties of broccoli could then have been planted on the 17.5 hectares of the Block from mid-January 2010;
(e) The total area available for planting would have been 23.75 hectares;
(f) That sub-surface drip irrigation would be available; and
(g) The various horticultural practices set out in the assumptions at paragraph 5.11 of his report would be utilised.
175 The areas and dates of such plantings and harvests are best understood by perusal of Table 1 of Mr Bell’s final report.[40]
[40]Exhibit Z, JCB 136
Profit associated with a green beans crop
176 With regard to the proposed crop of green beans, both Mr Bell and Mr Hartley based their calculations on the understanding that there would have been four sequential plantings on modules of 1.25 hectares.
177 Mr Bell calculated a loss of net profit of $92,995 on the basis of gross income of $180,500 less expenses of $87,505. Mr Hartley calculated a loss of net profit of $25,938 based upon gross income of $72,200 less expenses of $46,262.
178 The principal difference in calculations between the two experts concerned the likely yield of the beans crop. Mr Bell assumed a yield of 1,000 cartons (or 10,000 kilograms) per hectare, whilst Mr Hartley based his figures on a yield of 400 cartons (or 4,000 kilograms) per hectare, 60 per cent less than the yield estimated by Mr Bell.
179 Mr Hartley based his calculations on the yields reported by the Queensland Department of Primary Industry (“QDPI”), MacFranklin, Ausveg Vic and Ausveg Australia being 500 cartons (5,000 kilograms) per hectare, 650 cartons (6,500 kilograms) per hectare, 400 cartons (4,000 kilograms) and 520 cartons (5,200 kilograms) per hectare, respectively. He could see no justification for Mr Bell’s use of a much higher yield figure. For the reasons set out by him at paragraph 6.18 of his report, Mr Hartley considered that an allowance of 400 cartons (or 4,000 kilograms) per hectare was fair.
180 In oral evidence, I consider that Mr Bell justified his yield estimate on the basis of research trials conducted by him in the Goulburn Valley region which he said had consistently resulted in yields of 1,000 cartons of beans per hectare.
181 I find it puzzling that the estimates are so far apart. Nevertheless, I note that Mr Bell’s estimate is based upon his own research trials in the Goulburn Valley whereas Mr Hartley appears to base his estimate on statistics published by others and which, in the main, are based on average figures for Australia, Queensland and Victoria.
182 The fact the Mr Bell’s trials were conducted in the very area in which the Block is located persuades me to accept the yield estimate provided by him.
183 With regard to expenses, I consider that many of them depend upon the yield achieved and I consider it appropriate to adopt Mr Bell’s figure – his estimate of likely expenses is higher than that of Mr Hartley largely because the crop is estimated to be larger.
184 It follows that I prefer Mr Bell’s calculation of a lost net profit with regard to green beans of $92,995.
Profit associated with bullhorn chillies crop
185 Mr Bell calculated a loss of net profit of $118,768 based upon gross income of $323,500 less expenses of $204,732. He based this on there being five sequential plantings in modules of 1.25 hectares.
186 Mr Hartley made his calculations on the basis of only one planting on 1.25 hectares. For that reason his calculated loss is far less than that calculated by Mr Bell. In his written submission, Counsel for Fairbanks pointed to Mr Hartley’s evidence that he had only allowed for one planting because that was what he was asked to allow for by the solicitors who engaged him.[41] He seems to have assumed that planting of chillies must have stopped when the last planting of the 258,000 broccoli plants (that figure must relate to the Ironman crop planted by Amar) would have occurred. I consider that this is misconceived. The calculations relevant to the lost opportunity to profit from alternative crops such as beans and chillies is, I consider, to be based on the assumption that no Ironman broccoli was planted at all in the relevant timeslot.
[41]T958, L25
187 I accept that it is reasonable to calculate the loss of profit on the basis of five sequential plantings as adopted by Mr Bell.
188 Mr Bell and Mr Hartley agreed that the likely yield for bullhorn chillies was 4,000 cartons per hectare.
189 In his report of 30 August 2016, Mr Hartley stated that the estimated yield would be 6 kilograms per carton, a total of 24,000 kilograms per hectare.[42] He states that Mr Bell has wrongly assumed a weight of 10 kilograms per carton when the correct weight is 6 kilograms per carton.[43] This is not consistent with Mr Bell’s calculations in Table 5 of his report of 31 October 2015 and not consistent with Mr Bell’s oral evidence in which he identified the 10-kilogram figure in his report as a typographical error.[44] Both experts in fact calculated a yield of 24,000 kilograms.
[42]Exhibit 17, at paragraph [6.46]
[43]Exhibit 17, at paragraph [6.47]
[44]Exhibit Z, JCB 142; T867
190 In any event, both experts calculate the gross revenue on the basis of a price per carton. Mr Bell estimates 4,000 cartons per hectare at $12.94 per carton, an amount of $51,760 per hectare. Given 6.25 hectares in total, he calculates gross revenue at $323,500. Mr Hartley’s estimate of the average sale price per carton is not significantly different to the price used by Mr Bell.
191 Mr Bell was not cross-examined concerning his calculations of lost profit set out in Table 5 of his report. I consider that his calculations of lost profit of $118,767 should be accepted.
Profit associated with further broccoli planting
192 For the reasons given previously, I am not persuaded that Amar would have planted another 700,000 broccoli seedlings in early 2010 as submitted by its Counsel. Nevertheless, I am satisfied that Amar would probably have planted a broccoli crop from about February, as it had done the previous year (the first crop). I am satisfied that it did not do so because of the financial situation in which it was in as a consequence of the failure of the second crop.
193 Mr Bell calculated the loss of net profit from such additional broccoli crop at $7,820 per hectare. This was based on a gross income of $20,417 per hectare and expenses of $12,597 per hectare. He made no allowance for lease or rental of the land.
194 Mr Hartley estimated a loss of net profit of $6,292 per hectare based on loss of gross income of $13,782 per hectare less expenses of $7,491 per hectare.[45] In reaching these figures, Mr Hartley has adopted the industry average figures set out in Mr McDougall’s report.[46] He does not appear to have brought into account pre-harvest expenses such as fertiliser, herbicide, insecticide, fungicide, irrigation and machinery costs (which expenses Mr Bell totalled at $5,568 per hectare). If those amounts were added to the expenses allowed for by Mr McDougall, he would have reached a figure for expenses of $13,059 which is very close to that calculated by Mr Bell. He also made no allowance for the cost of leasing the land.
[45]Exhibit 18, DCB 798L
[46]Exhibit 16, at paragraph [6.10]
195 Again, the principal difference in the two sets of calculations is yield. Mr Bell has assumed a total yield of 1,478 cartons per hectare. Mr Hartley has assumed a yield of 887.5 cartons per hectare.
196 Mr Bell adopts the average weight of 350 grams per broccoli head based upon weighing 20 heads of broccoli at a local supermarket on what appears to be one occasion. I accept, as Mr Hartley points out, that this figure is critical for Mr Bell’s calculation of yield.[47] The larger the average weight of the broccoli head, the greater the yield. On the other hand, Mr Hartley does not calculate yield on the basis of average weight. He states that the most reliable approach to determining possible yields is to defer to the Australian industry average figures.[48] These two approaches help to explain the difference between Mr Bell’s estimate of 1,478 cartons per hectare and Mr Hartley’s estimate of 887.5 cartons per hectare. Mr Bell, in response, opined that, with a yield of 887.5 cartons per hectare, this would reflect an average head weight of 209 grams. He estimates that growing broccoli with such an average head weight would not be commercial.[49]
[47]Exhibit 17, at paragraph [5.3]
[48]Exhibit 16, at paragraph [6.12]
[49]Exhibit Y, at paragraph [5.6]
197 I prefer the approach of Mr Bell in estimating the likely yield of the proposed broccoli crop. It appears to me that the approach of Mr McDougall and Mr Hartley would result in a profit for such broccoli crop of less than $800 per hectare which I do not consider is consistent with the profit that I have found was made by Amar from the first crop, an issue that I will now address.
198 The parties were in dispute as to the actual net profit made by Amar from the first crop. Its relevance is that it is arguable that the profit from the first crop would provide a good guide as to the likely profit that would have been earned from a further crop planted at the same time of year in 2010.
199 The evidence relating to the profit from the first crop was far from precise. However, I note the following:
· Receipts from sales of the first crop were approximately $133,000. Some of those receipts were received in the financial year ending 30 June 2009, but a good portion were received after 1 July 2009 and hence were not brought into account in Amar’s 2009 tax return.[50]
[50]See the remittance advices being part of exhibit 1
· Expenses incurred by Amar in connection with the first crop were about $83,000.[51] Most of these are likely to have been incurred in the year ending June 2009. These expenses do not include an allowance for the lease of the Block.
· It would follow, on that basis, that the net profit would be $50,000, less an allowance for leasing.
[51]Taxation Return of Amar for the year ending June 2009 – Exhibit O, JCB 1112
200 Initially, Rullo had said he thought the net profit from the first crop had been about $100,000.[52] Later in his evidence, he was unsure whether that figure was gross or net profit. On this issue, I found that he was vague and uncertain. Where possible, I prefer figures supported, at least to an extent, by documentary evidence.
[52]T55A, L5
201 I consider it reasonable to conclude that, had Amar planted broccoli in about February 2010, it would have made a comparable profit per hectare to that made by it from the first crop in the previous year.
202 If I was to accept that the area of the first crop was about 4 hectares, it would follow that a net profit of $12,500 per hectare was likely to have been made. However, two matters cause me to doubt the likelihood of that figure being accurate:
(a) Rullo initially said the area of the first crop was 3 or 4 hectares. But he described this as about 15 acres. As a matter of arithmetic, 15 acres is more than 6 hectares. If the area of the first crop was 6 hectares, the return would have amounted to $8,333 per hectare. I am not confident that his estimate of the area of that crop was reliable.
(b) The yield estimates of Mr Bell and Mr Hartley are considerably less than the estimates suggested by Rullo’s evidence even with no allowance for lease expenses. I do not consider it likely that Amar would achieve a yield any greater than that estimated by Mr Bell.
203 I have concluded that Mr Bell’s estimate per hectare is likely to be a more reliable figure to work from.
204 As set out previously, the first crop consisted of 160,000 seedlings. Amar submits that I should accept Rullo’s evidence that Amar would have planted a significantly larger crop the following year and would be likely to have made a greater profit than that achieved from the first crop.
205 There is some merit in that submission. Amar had enjoyed some success the previous year at its first attempt to plant broccoli. I consider it likely that Rullo would have had justified confidence that he could successfully cope with a larger crop the following year. However, working on the assumption that he would not have planted broccoli as a summer crop but planted beans and chillies in accordance with Mr Bell’s Table 1,[53] I am not persuaded that Amar would have planted 17.5 hectares of broccoli – much larger than the area of the first crop and more than double the area that he had actually planted with broccoli by mid-December 2009.
[53]Exhibit Z, JCB 136
206 I consider that, had Amar not relied upon the representation of Fairbanks concerning a summer crop, it would have probably planted:
§ green beans (as discussed previously)
§ bullhorn chillies (as discussed previously); and
§ a further broccoli crop, probably Atomic, from about early February 2010 consisting of approximately 10 hectares.
207 Although I accept that at an earlier stage, Rullo had mentioned transplanting one million seedlings, I do not accept that this idea ever reached a point of being a confirmed plan.
208 Accordingly, I shall assume that a further broccoli crop would have returned $7,820 per hectare. I shall allow lost profit of $78,200 on the basis that the area to be planted was 10 hectares, less an appropriate allowance for the lease of the land.
Wasted expenses associated with second crop
209 Based upon Mr Bell’s estimate of pre-harvest expenses of the second crop,[54] expenses thrown away when planting the second crop total $2,488 not including the cost of seeds. This figure consists of $354 for machinery costs, $192 for planting costs, $922 for chemical costs, and $1,020 for irrigation.
[54]Exhibit Z
210 In addition, I would allow the cost of seed paid at $10,000 in accordance with Rullo’s evidence.
211 Total pre-harvest costs of the second crop I assess at $12,488.
212 I assume also that Amar would have incurred expenses in attempting to sell a small part of the second crop including some harvest and packing expenses, cost of ice and transport costs.[55] I will allow a total sum of $13,000 for expenses wasted in relation to the second crop. It may have been more, but I would be speculating in the absence of clearer evidence.
[55]T36B, L16
Was there a share farming arrangement?
213 Fairbanks submits that the evidence points to a share farming arrangement in existence between Amar and Danny rather than a lease. If this was so, the sale proceeds of each of the proposed crops would have been shared with Danny and any loss suffered by Amar would be reduced accordingly.
214 Non-contentious evidence concerning Danny was that:
(a) He owned the Block.
(b) When the sequential harvests of the first crop were sold, some of the remittances between June and September 2009 were shared evenly between Amar and Danny. Remittance cheques relating to some but not all of those sales were split evenly. In that period, seven cheques totalling $19,734.25 were written out to Danny with the words “Danny Lease payment” on the cheque butts.[56] Other cheques not apparently related to crop remittances were paid to Danny as lease payments. The total of all cheques paid to Danny was $42,705.
[56]Part of exhibit 1, DCB 631
215 Rullo’s evidence was that these were lease payments made to Danny in relation to the Block and that they were not a sharing of receipts or referable to any share farming arrangement. He said some of the receipts had been split simply as a matter of convenience or fairness – that when a payment was received, it was convenient to pay some of the money due to him for allowing Amar to use the Block. The picture is clouded a little further because Danny was also recorded on Amar’s wage records as a contractor engaged by them for labouring work relating to the first crop and for which Rullo said he was paid. Hourly records of time worked by him were noted.[57]
[57]Exhibit 2, JCB 914-922
216 Rullo stated that the total amount paid by Amar to Danny was a lease payment relating to the two proposed crops, not just the first crop. It was conceded by Counsel for Amar that about $20,000 should be allowed as a rent/lease expense in relation to a 2010 crop.[58] The figures of Mr Bell and Mr Hartley had made no allowance for lease payments.
[58]See also the evidence of Milosevic at T534, L18
217 Although the precise division of receipts on the seven occasions might have appeared at first glance to have been consistent with an agreement to equally divide gross takings, I consider such payments are equally consistent with them being payments for lease or on account of lease payments. The evidence as a whole disclosed total payments to Danny of less than a third of the total receipts and are inconsistent with an agreement to split receipts equally.
218 I have concluded that there was no share farming agreement in place. Further, I conclude that there was no formal lease agreement between Amar and Danny – merely a relatively loose arrangement to pay him a reasonable sum of money for the use of the Block.
219 Rullo’s evidence was that the amount of approximately $40,000 paid to Danny covered the lease of the Block for two crops. Although the evidence was somewhat vague, I consider that the arrangement was to use the Block for the first crop and for a second crop – the crop that failed. I conclude that an amount of about $20,000 should be assumed to have been paid in respect of the use of the land for the first crop, and a further $20,000 for the lease of the land for the period of the second crop. I conclude that, had Amar intended to plant a further broccoli crop from about February 2010, it would have incurred a further sum of about $20,000 by way of lease payments for the period February to about August 2010.
220 Fairbanks points to the failure of Amar to call Danny and submits that I should draw an inference that his evidence, had he been called, would not have assisted Amar. I do not agree. Prior to the trial, there had been no suggestion by Fairbanks in its pleadings that it alleged a share farming agreement existed. The first suggestion of this came during the rather drawn out evidence of Rullo (a number of witnesses were interposed). It was put to him in cross-examination that such a share farm arrangement was in place. Rullo denied this. Later in his evidence, he said that he had made attempts to locate Danny but had been unsuccessful. He said that Danny, at times, lived in a caravan on the Block without power or water but that, at the time of the trial he was not there and was unable to be found. I do not consider that, in the light of the whole of the evidence, it could be concluded that Amar had made a conscious decision not to call Danny. I do not agree that any inference should be drawn.
221 Likewise, Fairbanks submitted that the same inference ought to be drawn concerning Amar’s failure to call its accountant (Mr Di Petta) who had prepared Amar’s 2009 taxation return. Again, I do not agree that any such inference should be drawn. The accountant had prepared the taxation return showing a small loss for the financial year ended 30 June 2009. That loss correctly does not take account of a good portion of the sales revenue from the first crop which was received after 30 June. For that reason, I do not consider that the loss shown on the 2009 taxation return accurately reflects the financial result of the first crop. It merely reflects Amar’s taxable income for that financial year. No additional explanation was required to clarify this.
222 I shall not speculate what either Danny or the accountant would have said in evidence but I shall not infer that their evidence would not have assisted Amar’s case.
223 It might have been argued that, by February 2010, Amar could have had the remnants of the failed broccoli crop out of the ground or mulched into it so as to be able to proceed to plant an Atomic broccoli crop. But, as previously discussed, to do so would be to ignore the practical problem facing Amar at that time. Its crop had failed. Rather than being in receipt of remittances from market buyers, it was unable to sell any of the crop. It had no available funds available for purchase of seeds or seedlings. Fairbanks had already told Rullo that Amar would get no seeds from it unless it undertook not to proceed with any legal claim against it. Amar might have been able to obtain seeds on credit from another seed supplier but I consider this to be mere speculation.
Summary of loss
224 I accept that Amar has, as a consequence of its reliance upon the representation by Fairbanks that Ironman was a suitable broccoli variety to plant as a summer crop, lost the opportunity of planting alternative vegetable crops (beans and chillies) between October 2009 and January 2010 and a further broccoli crop from February 2010. I find that potential lost profit from those activities amounts to:
· Green Beans $92,995
· Bullhorn Chillies $118,767
· Broccoli $78,200
· Wasted expenses $13,000
$302,962
Less lease payment
(February to August) $20,000
$282,962
225 Notwithstanding those calculations, I do not consider that this is a case where Amar’s plans with regard to those proposed crops were certain to be successful. The vagaries of rural climate, and the fact that some crops may not do as well as others are, I consider, notorious. That is, no crop, regardless of how well it is looked after, is guaranteed to thrive or to produce an optimal profit. There are many reasons why the yield of a crop might be reduced. What Amar lost by reason of the breaches of the Act by Fairbanks is not some fixed and mathematically calculable sum. Rather, it lost the opportunity to plant other more suitable crops at particular times. On the evidence before me, I accept that Amar would probably have planted beans and bullhorn chillies as an alternative to broccoli in the October to December period and would not have planted broccoli until February. I consider that it is appropriate to apply a discount to the profit figures that I have calculated from such crops to allow for the general vicissitudes of such horticultural activities. I am aware that Mr Bell has allowed for a 15 per cent discount for field losses in respect of the proposed broccoli crop but not for the beans and chillies.[59]
[59]Exhibit Z, at JCB 143, 145
226 Although Rullo may have been a hardworking man with some experience in growing vegetables, he had little experience growing the crops involved on the scale that I have accepted he would have done but for the misleading and deceptive conduct of the defendant. In all of the circumstances, I consider that a further discount should be allowed over and above that allowed for by Mr Bell.
227 I consider that estimated profits of the three crops referred to above (totalling $289,962) which I have found would probably have been planted by Amar but for the offending representation by Fairbanks, should be discounted by a further 15 per cent ($43,494) to reflect horticultural vicissitudes relating to the bean, chilli and broccoli crops in general.
228 A figure of $239,468 is reached by applying such discount.
Conclusion
229 For the reasons expressed above, there will be judgment for the plaintiff in the sum of $239,468.00.
230 I shall hear the parties regarding matters of interest, costs, and any other consequential Orders sought.
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