Brown, A.S. & B.J. v Australian Harvestore Products Pty Ltd

Re: ALLAN SEAFORD BROWN and BEVERLEY JOY BROWN
And: AUSTRALIAN HARVESTORE PRODUCTS PTY LTD, ROBERT LESLIE RUSSELL,
CHRISTOPHER LESLIE RUSSELL and GEOFFREY WILLIAM KIRTON
No. G43 of 1987
FED No. 315
Trade Practices Act

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Von Doussa J.(1)

CATCHWORDS

Trade Practices Act - allegation of misleading and deceptive conduct - representations about suitability of dairy farming operation for a feed conservation system - predictions about future feed requirements and production - representations and predictions alleged either not proved or not proved to be wrong application dismissed.

Trade Practices Act 1974, s.52

HEARING

ADELAIDE

#DATE 9:6:1989

Counsel for the Applicants: Mr H.C. Williams QC with Mr A.I. Fairbank

Solicitor for the Applicants: Ross & McCarthy

Counsel for the Respondents: Mr R. Macaw QC

Solicitor for the Respondents: Hunt & Hunt by their South Australian Agents Fisher Jeffries

ORDER

The application be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The applicants claim damages for contravention of s.52 of the Trade Practices Act 1974 by the first respondent (Australian Harvestore). It is alleged that the second, third and fourth respondents (R. Russell, C. Russell and Kirton respectively) were knowingly involved in the contravention. The applicants plead that the respondents were guilty of misleading and deceptive conduct which induced them to enter into leases with Kimberley NZI Leasing Pty Ltd for a "harvestore", and associated plant and equipment, including a substantial shed and a tractor. The harvestore consisted of a large steel silo with an automatic loader and unloader to be used for the preservation and storage of cattle fodder. The applicants own and operate a 361 acre Holstein-Friesian stud and dairy farm at Myponga, south of Adelaide.

Australian Harvestore is the Australian distributor of harvestores which are manufactured overseas. The concept of the harvestore system is that pasture and crops are harvested at their most nutritional stage, preserved at high nutritional value in the harvestore, and later fed out to stock. Feed preserved in a harvestore is known as "haylage". The harvestore system is promoted as being a method of conservation superior to that of hay or silage because the feed retains a higher nutrient value and is more palatable. The haylage-making process involves cutting the feed source, allowing it to wilt in the paddock to a moisture content of about fifty per cent, foraging the material with equipment that precision chops it into very short lengths, then loading it into the harvestore silo. As the feed is required, it is automatically unloaded, and by conveyor spread in feed troughs - this is virtually a push button operation. A novel feature of the harvestore is that it preserves the haylage in an oxygen free environment which limits and controls fermentation. The system avoids the loss of nutrient value which occurs in the drying process in haymaking or through fermentation in wet silage. Both the palatability of haylage, and its fine chop, is said to enable cows to consume larger quantities of nutritional material from haylage than from other sources of feed. The harvestore system was developed overseas in the late 1940's. It is in widespread use in the U.S.A. where there are some seventy to eighty thousand silos, and in the United Kingdom and Japan. The introduction of the silos into the Australian beef and dairy industries has been more recent.
Prior to November 1984 the applicants milked on average about one hundred cows. Their property consisted of high quality pasture land, some eighty acres of which was irrigated. The property included some low lying land that became water logged and boggy in winter. Their cows were high yielding, and the applicants sought to achieve and maintain high yields of butter fat to bolster the reputation of their stud name. The cows were maintained by a combination of natural pasture, hay and grain based pellet "concentrates". Hay was made by the applicants in large quantity on their property in spring, and on other land over which hay cutting rights were held. Some of this hay was sold, and better quality hay bought in. The concentrates were bought in from feed merchants. Hay and concentrates were fed as supplementary feeds virtually throughout the year. The cost of concentrates alone was approximately $3,000 per month.
The applicants allege that they acquired the harvestore plant and equipment in the belief, induced by statements from the respondents, that by using the harvestore system, they would improve the efficiency and profitability of their operation, and, most importantly, that they would either eliminate the use of concentrates, or with a very small quantity of concentrates, would increase milk and butter fat production. The savings, or savings and extra revenue, which would thereby result provided the economic justification for acquiring the harvestore. The anticipated costs of the unit, along with associated equipment, was in the order of $200,000.
The applicants allege that the statements which constitute the misleading and deceptive conduct were made to them by Kirton and R. Russell on their farm in November 1984 and by R. Russell, in the presence of Kirton and C. Russell, at a meeting at the offices of the Engineering and Water Supply Department ("E. & W.S.") in Adelaide on 5 December 1984. It is common ground that on 20 November 1984 the applicants agreed with R. Russell and Kirton to acquire a harvestore system, and handed R. Russell a cheque for $13,000 as a deposit. I find that on 20 November the applicants also signed a written order form evidencing that agreement. Shortly afterwards the applicants realised that as their farm was in a watershed catchment area they required E. & W.S. approval for the installation of the harvestore. They stopped payment of the deposit cheque and advised R. Russell that they were seeking E. & W.S. approval. The respondents apparently raised no objection to the condition of E. & W.S. approval. After the meeting with the E. & W.S. of 5 December the applicants anticipated approval and confirmed the agreement to acquire the harvestore. The applicants commenced to plant crops in December 1984 in anticipation of the installation of the harvestore. The harvestore was installed on their property during March and April 1985. The shed was to be supplied and built by the applicants and they did so at about the same time. The purpose of the shed was to provide an undercover feeding area. They built one of elaborate design including sleeping stalls. The foraging of crops commenced on 28 April 1985. The harvestore was first used to feed the cows on 28 June 1985. Haylage ran out in mid-August 1985. The cows were then returned to the old feeding regime. Foraging of spring rye-clover pastures commenced in October 1985. Feeding from the harvestore resumed in early November 1985. One of the features of the harvestore is that it can be loaded with fresh forage from the top whilst at the same time being unloaded from the bottom. Filling and feeding can occur simultaneously. Foraging of red quin clover crops and irrigated pasture grown for this purpose occurred through the summer months, but the haylage again ran out in April 1986. By February 1986 it was obvious to the applicants that their cows were doing badly. They were losing condition; their production had fallen; and some were sick, suffering acetonaemia. This was reported to the respondents whose office is in Sydney. Analysis of the haylage showed it to be of poor nutritional value.
On 22 April 1986 the applicants sought advice from Dr Baker, a local veterinary surgeon, as the cows were not conceiving. Dr Baker found the cows to be very skinny and in poor health which he attributed to under nourishment. He advised that they should be returned to natural pasture and fed high quantities of concentrates. This occurred and the applicants have not again used the harvestore.
The applicants allege that the harvestore is valueless to them as their pastures are unsuitable for its use, and that a haylage diet will not support their high yielding cows unless supplimented with large quantities of concentrates. The feeding shed is now of little value to them, as are items of plant purchased for foraging. The applicants seek damages for the leasing costs, for other costs thrown away, for a downturn in production which is alleged to have occurred in the years 1985, 1986 and 1987, for the death of several stud quality cows, and for extra feed and operating costs. The formulated claim exceeds $500,000.
There can be no doubt that the harvestore system did not work for the applicants. The evidence establishes that the cows by April 1986 were in very poor condition due to poor nutrition. But the reason why the harvestore was a failure is one of the issues between the parties. The applicants make no complaint about the physical capabilities of the harvestore or about the ensiling process which it employs. They experienced a few mechanical breakdowns early in the piece, but these were not of a kind which could support the reliefs now claimed. The allegations of mechanical failure in the pleadings were abandoned at the commencement of the trial. The applicants' complaint is not about the quality of the harvestore but about the oral advice and predictions which they allege were given to them as to its suitability for their farm and stud dairy cows. In particular they complain that the prediction that they could eliminate concentrates not only proved to be wrong in the events which followed, but was a prediction for which there could be no reasonable basis. The statement of claim alleges that the respondents knew or ought to have known that the representations (which include the predictions) were misleading or deceptive or likely to mislead or deceive. During the trial, allegations in the statement of claim of fraud and recklessness were withdrawn against R. Russell and C. Russell, and against Kirton, save in respect of an allegation against him regarding the existence of a telex message. There has been considerable debate between counsel as to the circumstances in which a prediction or opinion may amount to misleading or deceptive conduct within the meaning of s.52, but in the end both counsel accepted the following summary of the law given by Burchett J. in Bateman & Anor v. Slatyer & Ors (1987) 71 ALR 553 at 559:

"It is of course clear law that a statement of opinion cannot be regarded as false or misleading, or as misleading or deceptive, simply because it turns out to be incorrect: Global Sportsman Pty Ltd v. Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88. But such an opinion may convey that there is a basis for it, that it is honestly held, and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise: see James v. Australia and New Zealand Banking Group Limited (1986) 64 ALR 347 at 372; Geale v. Glenhoun Holdings Pty Ltd (1985) 7 ATPR 46, 970 at 46,978-9."

Assessment of the Evidence of the Parties

Before turning to the particular allegations made by the applicants, I give my assessment of their evidence. Strong criticism was made of the credit and reliability of each of the applicants, Mr Brown in particular, by counsel for the respondents. The applicants obviously are people dedicated to their animals and farm. They have worked very hard to acquire and build up a well recognised stud property. Expenses incurred by them in connection with the harvestore, and subsequently, have placed them in very difficult financial circumstances. Their evidence shows that they now blame all their adversities on the harvestore, and in turn on the respondents. They adhere to this attitude even though the undisputed facts indicate the likelihood that other factors have contributed to their predicament. I mention two examples. They have persisted with an assertion that their losses should be based on production figures for the year ended 31 March 1984 (which were particularly good) rather than on lower figures returned in the year ended 31 March 1985, as they blame the harvestore for poor production in the 1985 year saying its installation caused them to neglect their cows. They maintain this attitude even though they know that the cows had responded adversely to the unrelated installation of a new dairy in May 1984 and were showing declining production prior to November 1984, and notwithstanding that in the 1985 year there had been a significant change in the age of the herd by the introduction of heifers whose production would lower the average yield. The other example relates to the poor qualitiy of the haylage about which I shall say more later. It is clear on the evidence that the quality was in part at least due to it being harvested too late, and in early 1986 the quality was further reduced by the addition of chicken litter to a harvest of red quin clover. These management decisions were made by the applicants yet they make no allowance for them in their criticism of the harvestore system. The applicants, particularly Mr Brown, exhibit anger and hostility towards the respondents. In March and April 1986 Mr Brown made threats on the life of Kirton. His response to his difficulties has not always been a balanced one. The applicants' evidence exhibits many examples of reconstruction to reach positions about the facts which are favourable to their cause. Whilst a measure of reconstruction is to be expected when people are required to recount facts some years after the event, against the background of the attitudes of the applicants which I have mentioned, it is necessary to treat their reconstruction, and indeed their evidence generally, with caution.
I do not think that the applicants have deliberately endeavoured to mislead the Court, but I am satisfied on several important issues that whatever recollections they had of the events of 1984 when they realised in early 1986 that the harvestore was proving a disaster for them, those recollections have been warped and elaborated in the course of reconstruction to paint a picture very favourable to their case and adverse to the respondents. I mention in particular Mr Brown's evidence that in November 1984 he was reluctant, and that he expressed his reluctance to Kirton and R. Russell, to consider the acquisition of a harvestore; the evidence of the applicants that Kirton said he had obtained telex advice from the United Kingdom that the applicants' cows would maintain production on haylage alone; Mrs Brown's insistence that the death of eleven cows was due to the harvestore, and her evidence about exhibit A67. I am quite satisfied that their evidence on these topics is based on reconstruction, and that the events did not happen as they say.
The evidence of Kirton and B. Russell in my view also exhibits signs of a good deal of reconstruction on some topics. I do not doubt their honesty, but care must be taken in evaluating the weight to be given to their evidence. A sustained attack was made on the credit and reliability of Kirton. He was cross-examined at length as to his reasons for leaving Australian Harvestore in March 1986, and about his reaction to the threat on his life by Mr Brown. It was suggested that his real reason for leaving lay in the fact that harvestores could not achieve the level of performance which the respondents had been representing to clients, and that the death threat was being falsely used as his explanation for resigning shortly after it was made. I reject those suggestions. The explanations given by Kirton in his cross-examination are, in my view, readily understandable. I do not treat Kirton's responses to the attacks on his credit in cross-examination as indicating any lack of truthfulness. I assess Kirton to be basically an honest man who has attempted to relate what happened from a poor memory. At times this led to reconstruction. Whilst the evidence of both Kirton and B. Russell contained reconstruction, they did not exhibit the obvious bias which affected the applicants' evidence. In my opinion the evidence of Kirton and B. Russell is entitled to more weight, generally speaking, than the evidence of the applicants, but on crucial issues I would hesitate to make positive findings on their evidence alone where it is in stark contrast to that of the applicants. Fortunately, on issues which must be decided there are undisputed events, or other evidence, which can be called in aid to reach a conclusion.
Mr C. Russell's evidence as to events involving the applicants and the respondents I accept, subject to the qualification which he conceded that his memory of detail in many respects has faded. Unfortunately he was not present during the November 1984 discussions, and can throw no light on them. He was however present at the E. & W.S. meeting.
Of the other witnesses, I make specific criticism where necessary when discussing the particular topics to which their evidence was directed.
The Pre-contract Negotiations
The pre-contract negotiations during which the alleged misleading and deceptive conduct occurred fall into two stages. The first stage was at the farm in November 1984, and the second was at the E. & W.S. meeting on 5 December 1984. The respondents concede that the applicants were not contractually bound to acquire the harvestore until after the E. & W.S. meeting.
November 1984.
I find that Kirton had been known to the applicants for many years. He was a friend, more than just an acquaintance as Mrs Brown suggested in her evidence. It is common ground that Kirton called on the applicants without prior arrangement on a Sunday. By a process of reconstruction Mr Brown says that it was on 11 November 1984, but I am satisfied that it was 18 November 1984. I accept Kirton's evidence that he had been in the district on unrelated business and took the occasion to make a social visit. I reject the suggestion made to Kirton in cross-examination that he attended the farm with a view to persuading the applicants to buy a harvestore. In the course of conversation during the visit Kirton explained the nature of his employment as a "consultant" with Australian Harvestore, and this led him to produce promotional films which he carried in his car and a machine to view them. Some of the films were viewed at that time, and there was general discussion about the harvestore system. The films extolled its virtues, but they were not introduced into evidence. It is also common ground that at some stage early in the November discussions, Mr Brown said to his wife "that is what we need". I think it is probable that this first happened on the Sunday, prompting Kirton to say, as I find he did, that he would return the following day with Mr R. Russell as they would both be in the area anyway. I reject the evidence of Mr Brown that he expressed resistance to this suggestion by saying that he was not interested in purchasing a harvestore. The films were left that night with the applicants who viewed them several times.
The following day R. Russell and Kirton returned late in the morning. I accept their evidence that Mr Brown was then expressing enthusiasm about the harvestore system. The events which followed over the next two days show the likelihood of this being the case. R. Russell and Kirton remained at the applicants' farm discussing the system for several hours. They returned the following day and continued their discussions. During this time Kirton made calculations and gave explanations. During the afternoon of Tuesday 20 November 1984 the applicants' bank manager, Mr Harrison, attended the farm at their request and was involved in further discussion with the applicants and the respondents. After Mr Harrison left, the applicants signed an order form. The applicants allege that the advice and predictions offered by the respondents were in important respects repeated in the presence of Mr Harrison. It is also alleged by Mr Brown that on 20 November, before they agreed to acquire the harvestore, Kirton said that he had received a telex from London which was then in the Sydney office, confirming that the cows could maintain production on haylage alone. (Mrs Brown says that the statement about the telex was not made by Kirton until 5 December 1984).
E. & W.S. meeting.

On 5 December 1984 the applicants met C. Russell for the first time before the E. & W.S. meeting. The purpose of the meeting was to persuade the Department that the installation of a harvestore would not introduce a "feedlot" in contravention of the Regulations, and would not present a pollution problem. The applicants say that at the meeting when the Department questioned whether the applicants' dairy operation with a harvestore would be economically viable, R. Russell repeated the statement that the harvestore would eliminate the use of concentrates. At the end of this meeting the Department asked that a written submission be lodged. This was done shortly afterwards, the document being prepared by C. Russell with input as to factual descriptions about the farm and its operation from Mrs Brown. That document, exhibit A1, provides an important indication of many of the topics discussed at the meeting, but unfortunately does not state precisely what savings were anticipated in concentrates or in other aspects of the dairy operation if the harvestore were installed.
The technical evidence
It is convenient at this point to briefly summarise aspects of the technical evidence. The nutritional requirements of cows, as a result of much research by ruminant nutritionalists, can be calculated. There are recognised publications containing formulae and tables of feed values. The South Australian Department of Agriculture publish Fact Sheets containing information about feed values, and the applicants were able to produce one such Fact Sheet to Kirton during their November discussions (see exhibit R39, a Fact Sheet published in December 1983). The daily energy requirements of a cow are calculated, in the metric system, in mega-joules. The diet must provide energy for the maintenance of the cow, for the production of milk, and for a growing foetus if the cow is pregnant. The higher the butter fat content of the milk, the higher the energy requirement. The energy in the feed consumed by well fed cows, after providing for their maintenance, will be apportioned between milk and increase in body weight. The ability of cows to produce milk is limited by the amount of feed they consume. Intake is limited by physical capacity, the nature of the feed, and its palatability. The intake of feed is measured in terms of the dry matter (DM) intake, that is the notional intake of material after excluding the moisture content. For example, if a cow is to achieve a 15 kilogram per day DM intake on a ration of 50% moisture haylage, the cow would have to eat 30 kilograms of haylage. A DM intake of fresh pasture with an 80% moisture content would require an actual intake of 75 kilograms. The capability to consume feed will vary from cow to cow, according to its size in particular, and will also vary from time to time during different stages in the lactation cycle. Ideally the lactation cycle will extend over 300 days at the end of which the cow should be seven months pregnant so that it will calf once each twelve months. Milk production from a given quantity of feed will also vary from breed to breed and from cow to cow within a breed, depending on the genetic potential of the animal and the efficiency of each cow to convert feed to energy. Cows with a high genetic potential in early stages of lactation produce more milk than they can eat feed to produce. These cows "milk off the back", i.e. they convert body tissue to milk and lose weight as they do so. How much milk a cow can and should produce in this way is a matter in dispute. Within a herd there will be a wide variation in production. The recognised degree of variation is in the order of forty per cent from the average. So in a herd averaging 7,000 litres per head for the first 300 days of lactation, there are likely to be some cows producing 9,800 litres, some producing only 4,200 litres, and there will be the odd cow producing above or below this range.
The convertible energy value of feed is referred to as the metabolizable energy (ME) and the ME value is measured in mega-joules per kilogram. On a DM basis, the Fact Sheet, exhibit R39, indicates the following ME values:

Pasture

early - grass - dominant 11 MJ/kg early - clover - dominant 11 grass - dominant (flowering) 10 clover - dominant (flowering) 11.8 Maize

immature 10 cobs maturing 9.2 Lucerne

immature 10 10% flowering 9.6

These ME values are for pasture as it would be grazed in the paddock. There is a recognised loss in ME value during wilting. This is caused by respiration when volatile carbohydrates are lost. Losses of this kind are much higher with hay, but with haylage wilted to only 50% moisture content, the loss should not exceed 0.5 MJ/kg and may well be less. Once the wilted material is placed in the harvestore the oxygen free atmosphere preserves it without fermentation losses. It remains at the energy value at the time of storage.
Evidence touching on likely energy values for different pastures and crops, and the likely effect of their conversion into haylage was given on behalf of the applicants by Dr Hynd (a ruminant nutritionalist); Mr Prance (an agronomist); Mr Bartsch (an agricultural research scientist) and Mr Valentine (a dairy research officer) who were co-authors of Fact Sheet, exhibit R39, and Mr Threlfall (a dairy adviser); and on behalf of the respondents by Dr Hamilton (a dairy nutritionalist) and by C. Russell whose contribution was mainly a review paper summarising published articles on the subject. By the end of the trial there was little dispute about the agronomic evidence, likely feed values of pastures, and the likely losses of energy in the haylage making process. The evidence was very helpfully summarised with references by Mr Macaw QC, counsel for the respondents, in written submissions forming part of his final address. The evidence supports a finding on the evidence of the South Australian experts with local knowledge that the haylage made from rye-clover pasture, of the kind which was grown on the applicants' property, if harvested at its peak nutritional stage (just before flowering), would have an ME of 10.5 MJ/kg or better. I so find. I also find that "cornlage" (maize processed through a harvestore) made with mature cobs should have an ME of at least 10.5 MJ/kg.
Of all the expert witnesses, Dr Hamilton impressed me most. His experience and research was directly relevant to the topics in issue, and on nutritional values of haylage and the likely response of high yielding dairy cows to a haylage diet, I prefer his evidence to that of Dr Hynd. The careful cross-examination of Dr Hynd demonstrated a misunderstanding and lack of practical experience on his part about the properties of haylage as opposed to silage. I also record that I do not accept Dr Hynd's conversion into ME values of the various haylage analyses set out on p 1 of exhibit A42. Those values are lower than estimates given by other witnesses and in the report of Dr Dryden. I prefer the other estimates, although probably nothing turns on this finding.
Dr Hamilton considered that rye-clover and maize crops would have significantly higher ME values at peak nutrition than the values shown in Fact Sheet exhibit R39. In part his experience could reflect that his methods of analysis are more likely to give higher and more accurate results than the methods of analysis used by the authors of the Fact Sheet, but in part his evidence could also reflect different climatic conditions at his research station and generally higher than average quality pastures. I think it would be more appropriate to decide the case on the ME values estimated by the scientists from the Department of Agriculture. Their evidence reflects local conditions and average qualities that can reasonably be expected in the farming environment.
By way of comparison with the natural pastures, the pellet concentrates used by the applicants had an ME value of about 12.5 MJ/kg.
A balanced diet also requires appropriate levels of minerals, fibre, and digestible crude protein. The minerals and digestible crude protein levels in a diet of rye-clover pasture or haylage should be well above minimum requirements, but with maize and cornlage the digestible crude protein levels are too low to sustain cows. A diet of cornlage must be supplemented with fresh pasture, a high protein supplement, or both.
Against this background I turn to the specific allegations made in the statement of claim.
Suitability of Pastures
Paragraph 11(c) of the statement of claim alleges that:

"The representations that the pastures of the applicants' dairy farm were suitable to harvest for a Harvestore were wrong as the pastures of the applicants' dairy farm were unsuitable to harvest for a Harvestore."

It is alleged that in November 1984 representations were made in the following conversations:

"Mr Brown. 'Our seasons are too short and forage would be

difficult'.

Kirton. 'They (a Harvestore) operate successfully in

wetter climates.'

Mr Brown. 'But we cannot grow lucerne here.'

Kirton. 'But your pasture forage is equally as good.'

R. Russell to Kirton in Mr Brown's presence.

'Are the pastures suitable.'

Kirton. 'Yes. Ten to fifteen acres should be renovated

each year. We would only need three fills a year.'

Mr Brown. 'If my pastures cannot maintain the Harvestore

it is not on.'

Kirton. 'But your pastures will, but you will have to

renovate ten to fifteen acres a year.'"

In the further and better particulars it is alleged that:

"The respondents instructed and/or advised the applicants to forage their pastures at the most nutritional stage of growth. The pastures consisted in part of rye grass. At the most nutritional stage of growth the pastures were uneconomic to forage and the presence of rye grass made foraging difficult."

There is no dispute that the topics alleged were discussed in November 1984, and that statements to the effect alleged were made. There was general discussion about the harvestore system and the benefits which other users had experienced. Kirton also says he advised the growing of maize as a good autumn crop that could be reaped late to fill the harvestore for the winter months. The applicants acknowledge that maize crops were recommended, and in fact even before the harvestore was erected, the applicants had sown about seven acres of maize in preparation for an autumn harvest.
The evidence is really all one way on the accuracy of these statements. The applicants' land had excellent fertility. The seasons are quite suitable for growing rye-clover pastures and autumn crops such as maize. (To the extent that Mr Brown suggested the contrary, his views are overwhelmed by expert opinion). Rye-clover is an excellent forage material with a higher ME value than lucerne. With the irrigation facilities on the farm, large amounts of rye-clover pasture could be grown and there is no evidence to suggest it would have an ME level less than the levels shown in the Fact Sheet. With an autumn crop of four to five hectares of maize, properly grown, there should be no difficulty in filling the harvestore in autumn. Ground cultivated for maize reaped in autumn would then be sown to pasture as part of the renovation process the following spring. The paper, exhibit A44, prepared by Mr Prance shows the potential of the applicants' farm to produce very large quantities of pasture, much more than could be consumed by the applicants' cows. There would be a large surplus in spring, and a further surplus during the irrigation period. The maximum production programme envisaged by the paper would require the cultivation of much more land than ten to fifteen acres a year. However if the over production were pruned back and a regime adopted which was designed to match the requirements of the herd and the harvestore system, the applicants' property appears to be well able to support the system as a supplementary feed system in the manner envisaged by the proposal to the E. & W.S., exhibit A1. This appears from the cross-examination of Mr Prance, and from a reworking of his paper to match the requirements of the harvestore as estimated in exhibit R35. It is, however, sufficient to find that the evidence does not prove that the representations as to the suitability of the applicants' pastures were wrong.
In support of the further and better particulars, it was suggested that the rye-clover pastures did not grow high enough for economic foraging, and Mr Brown spoke of driving the forager around the property in summer recovering only "lawn clippings" (i.e. small uneconomical quantities). Again the evidence establishes that rye-clover pastures do reach heights at peak nutritional value that are economic to forage, indeed that are ideal for foraging. At one early stage the applicants did encounter difficulty foraging pasture as the rye grass was not chopping properly. This turned out to be due to blunt blades on the chopper which the applicants had acquired from a source unrelated to the respondents. With sharp blades properly set, rye grass is an appropriate pasture for foraging. If the applicants encountered a shortage of forageable pasture in the summer, it is just as likely, on the evidence, that this was due to their management decision to cut back on irrigation and to their decision to operate the harvestore as a feed lot system in which cows were excluded from grazing pasture, as to any error in the respondents' prediction. The latter decision meant that the cows were eating two to three times as much haylage as was envisaged by the respondents through the summer months.
The feedlot usage
It is a strange feature about the applicants' operation of the
harvestore that they used it in this way. Instead of allowing the cows to graze after access to ad libitum feeding of haylage night and morning as they left the dairy, the cows were confined to relatively small holding paddocks of a few acres. Apart from small quantities of concentrates which were still fed during milking, virtually the only source of feed was haylage. Natural forage from the small paddocks would have been negligible. The applicants do not assert that they were told directly by the respondents that the harvestore could be operated in this way, but they say that the respondents should have realised that they had gained, and were proceeding under, the misapprehension that the cows would virtually live in the new shed and be fed only haylage. The evidence does not support this allegation. In November 1984 there were drawings made by Kirton showing basic dimensions of the proposed shed as a 30 ft wide feed pad covered by a simple roof. This plan (exhibit R7) has been changed by Mr Brown at some stage to widen the structure to include sleeping stalls. I am not satisfied that Kirton was involved in the drawing of these alterations. I think it is more probable that Mr Brown made the decision to adopt a more elaborate shed without reference to the respondents. The evidence suggests that Mr Brown is a person who acts on impulse, and having settled on an idea, is loathe to seek or heed advice from others. The decision to adopt the elaborate shed I suspect flowed from what he saw in the U.S. promotional films produced at the outset by Kirton. Other examples of this kind of impulsive behaviour are his use of chicken litter as a feed supplement in January 1986, his decision to surrender leases on other lands where dry stock were agisted, and his failure to closely read written information supplied to him by the respondents before acting. The proposal for the elaborate shed came to the notice of R. Russell before the E. & W.S. meeting, but in itself that proposal indicates only that the applicants were proposing to provide a more luxurious facility for the cows than was necessary. It is a long step from there to the conclusion that the respondents must have realised that the applicants intended to restrict their cows to the shed and to a haylage diet. In any event, the evidence is clear that the applicants were told, and well understood, that the harvestore was intended only as a supplementary feeding system. Kirton says that in the presence of the applicants he made calculations to determine the necessary size of the harvestore. This is not disputed by the applicants and is probable. I think it is also probable that the applicants were at the least involved in oral discussion about these calculations, which would have indicated that the cows would have been reliant on natural pastures to a significant extent. I also find that newspaper clippings, including an article about a Mr Kerber, were shown to the applicants by Kirton. These articles report on the experience of other harvestore owners, and make it clear that the system is one for supplementary feeding. If there were any room for confusion, which I doubt, the confusion must have been removed at the E. & W.S. meeting, and later by the written submission, exhibit A1. The submission makes it quite plain that the system is one for supplementary feeding. The summary on page 1 commences:

"It is proposed to install a Harvestore feed storage system for the supplementary feeding of the dairy herd on the above farm. The feeding of Haylage is required as a supplement to the natural grazing when this pasture is unable to support the maximum levels of production we require...The feeding is proposed to be carried out on a concrete feed pad, covered to prevent run-off, and with free access to the paddocks... The 40 acres of grazing land which goes partially under water and/or becomes waterlogged in the winter would not have to be grazed at these times due to the supplementation by the Haylage."

Further, in 1986, when the applicants were seeking expert evidence to support their allegations against the respondents, Mr Brown wrote to Dr Dryden saying the respondents had stressed that the harvestore would maintain their cows "solely without grazing for four months" during the winter. That is a very different proposal from the one implemented when the harvestore came on stream in November 1985. The fact that the cows were excluded from pasture meant that they were deprived of the opportunity to supplement their feed with high nutrient "picks" that they would select during natural grazing, and that the harvestore lacked the capacity for this type of operation. It must have been apparent to the applicants by autumn 1986 that they did not have enough crops to continue their operation through the winter of 1986. The need to have the harvestore full at the end of autumn may provide the explanation for Mr Brown foraging short pasture. I suspect that the realisation in about April 1986 that insufficient crops had been established to fill the harvestore for the forthcoming winter played a part in the decision which the applicants reached in about April 1986 to abandon the harvestore.

The confinement of the cows also probably caused them unnecessary stress. It was a radical alteration to their routine, and any alteration was likely to adversely affect their milk production.
Concentrates - elimination or reduction
Paragraph 11(d) of the statement of claim alleges:

"The representations that the feeding of haylage alone to the applicants' cows would maintain the previous average production level of the applicants' cows in the absence of concentrates also being fed to the applicants' cows were wrong as the feeding of haylage alone to the applicants' cows was not reasonably capable of maintaining the previous average production level of the applicants' cows in the absence of concentrates also being fed to the applicants' cows."

This allegation raises the crucial question in the case: whether a prediction in absolute terms was made that the applicants "will eliminate concentrate". The representations are said to arise from the following conversations. It will be noted that there is an inconsistency in the terms of the statements alleged:

"November 1984 -

Kirton to the applicants (and others)

'...With feed out of the Harvestore you will eliminate concentrate feeding and the cows production will increase by seven per cent.'"

The E. & W.S. meeting:

"R. Russell to the applicants (and others)

'The Browns will eliminate concentrates. They will save time in the dairy, and will have more family life. An adviser will be calling on them every six weeks. The Browns will milk less cows. This is the only way farmers are going to get through the hard times by trying to be more efficient and self reliant. It will bring about less time in the dairy and being all push button operation would give you more time with the children.'"

The allegation regarding the telex from England is also related to the topic of the elimination of concentrates, but is dealt with separately.

The conversations alleged do not predict that the feeding of haylage alone would maintain the cows at any particular level. The statements are that concentrates would be eliminated, leaving open the prospect that the cows would be fed pasture as well as haylage. I find that no statement was made at any time by the respondents that haylage alone would maintain the cows. For reasons already given, the evidence is against the notion that the respondents said the system could be used as the only source of feed.
The applicants say the absolute prediction that concentrates would be eliminated made both in November and at the E. & W.S. meeting, was critical to their whole thinking about the harvestore. It was essential to their decision to acquire it. Concentrates were costing about $3,000 per month and that money would meet the proposed leasing charges for the first couple of years, and substantially meet the charges in later years.
The respondents who were present on the different occasions say that no such statement was made. Further, they concede such a prediction would not be a reasonable one in a stud herd of high yielding cows. Kirton says he did not believe that high yielding cows such as the applicants' herd would maintain production without any concentrates, and C. Russell says that he would advise against budgeting on that basis as, whilst eventual elimination or near elimination of concentrates might be possible once the management of the system had been perfected, it was unlikely in the early stages. Experience shows that new owners of harvestores take a year or so to adjust to the management of the system, and the applicants concede that they were told this. The respondents say it was stressed that the harvestore was a management tool and the success of its operation would depend on the quality of the feed material placed in the silo. The applicants concede they were so informed. With the performance of the harvestore so much in the hands of the operator it is unlikely - in the absence of frankly fraudulent conduct - that an assurance in absolute terms as alleged would be given. On the other hand, whatever was said in November about the harvestore caused the applicants to believe at the least that the system had the potential to make the substantial investment worthwhile for them. In the written submission to the E. & W.S. they say:

"The installation of the Harvestore storage system and supplementary feeding, we are convinced will have a dramatic effect on our efficiency and profitability as well as reducing the pugging of our pastures by the forced grazing of boggy areas in times of feed shortage. It will improve our pasture management and make the farm a far more pleasant and 'tidy' environment in which to work".

In their evidence the applicants stressed that the inducement to acquire the harvestore was the saving that would flow from the elimination of concentrates, and they played down suggestions made during their cross-examinations that there were other reasons which led to their decision. Kirton and R. Russell on the other hand say that there was no reference to precise amounts of money that could be or might be saved on concentrate purchases. The discussion was far more general. It concerned potential savings of cost in a number of areas, and the applicants were expressing most interest in benefits apart from the potential saving in concentrates. Mr Brown was concerned about the lack of time which he had with his family. His children disliked their workload and were expressing disinterest in the farm. The haymaking season was particularly stressful. He was keen to cut down on the labour intensive work in haymaking. The respondents said that making haylage involved more tractor work but less physical labour. Haylage was significantly cheaper per kilogram of dry matter feed to produce. There would be savings arising from the preservation of feed as haylage rather than as hay. The use of the harvestore would permit better planning and efficiency in the operation of the farm.

I am satisfied that the applicants were expressing interest in these other considerations, and that their evident enthusiasm for the system, and their decision to proceed, was based on a combination of the many potential advantages which they anticipated. Potential savings in the cost of concentrates was but one advantage. Support for this conclusion appears in the pleadings: see the terms of the conversation as alleged at the E. & W.S. meeting (above). Support is also to be found in exhibit R22, a note made by the bank manager Mr Harrison about a conversation with the applicants on 25 November 1985. This was a year after the pre-contract discussions. The applicants were then experiencing cash flow difficulties, and had already encountered difficulties with the harvestore and with the quality of the haylage which was fed in July 1985. Mr Harrison's note records a conversation in which the applicants gave reasons in support of a request for an increase in their overdraft limit. By that time the applicants were, I find, already reconstructing their recollection of events in the preceding year in a way that diverted blame for their predicament from themselves to others. In these circumstances it is significant that the applicants gave Mr Harrison a range of reasons for acquiring the harvestore - an expected increase in production, a likely reduction in irrigation costs, better farm management with less labour involved - and reported (as Mr Harrison has noted it) "prepared feed has been cut to $500 per month and may possible (sic) cut out altogether." In evidence Mr Harrison said that at some stage the applicants had mentioned a desire to improve their quality of life.
Even though I find there were many factors which influenced the applicants to proceed, it is clear that one of the advantages stated was that the applicants could expect a reduction in the use of concentrates. The applicants were informed that other owners had experienced savings in bought-in feeds and increased production. I find that the applicants were informed that if the harvestore were properly operated with feeds foraged at peak nutritional value, it would be capable of producing benefits in terms of either lower costs or increased production or both. I am satisfied that such statements were made to the applicants by the respondents in November, and repeated both to Mr Harrison and at the E. & W.S. meeting as the justification for the harvestore. Whether the statements were made on the last two occasions by the respondents, or by Mr Brown is, I think, immaterial as the respondents agreed with them. The applicants may well have had in mind that they could achieve substantial savings in concentrates, and that belief would be consistent with what the respondents said. However I find that it was not said at any stage that the applicants "will eliminate concentrates", that is, eliminate all concentrates.
There is evidence from a number of sources which leads to this conclusion:
(a) Exhibit R14.

This exhibit comprises seven foolscap pages of writing by Kirton. Four pages are in pencil, and three in biro. Mr Brown said at first that these notes, which were produced from the applicants' possession, were made by Kirton in November 1984, but later said that the biro notes may have been made in about January 1985. Mrs Brown however is emphatic that the biro notes were made in April 1985. Kirton says that they were all made in November when he was explaining the harvestore system. The biro notes quite clearly show that the use of concentrates was contemplated as part of the feeding programme.

A great deal of time was spent at the trial debating when the biro pages of exhibit R14 were made. I think Mrs Brown is probably correct in her recollection that the biro pages were written in April 1985. The figures used in calculations on the first page of the notes do suggest that information which became available at the end of March 1985, particularly the cost of pellets, was incorporated into the calculations. However I reject her explanation as to the circumstances in which the notes were made as unlikely. She says the question of the use of concentrates in conjunction with feeding haylage was not raised in discussions between Kirton and the applicants prior to April 1985 (which is inconsistent with those parts of the claim which allege a pre-contractual representation that with half a tonne of concentrates an increase in production would be obtained). She says that in January 1985 during the family vacation she and her husband called on a Mr Arnold, a harvestore owner at Loxton. In November 1984 the respondents had suggested the applicants contact him. Mrs Brown says they learned that Mr Arnold was still feeding concentrates with his haylage. This worried her. In April 1985 she therefore challenged Kirton about the possible need to use concentrates. This led to Kirton for the first time introducing the notion of half a tonne of concentrates a week. The biro notes, she says, were part of his explanation why the concentrates could be necessary. If Mrs Brown were concerned by information learned from Mr Arnold in January (and I am sure the applicants would have been most concerned had they previously been told all concentrates would be eliminated) I find it very surprising that she said nothing to Mr R. Russell when he called on the applicants in February 1986 when the foundations were being dug, or during telephone conversations that were taking place between the applicants and the respondents from late January through to March, or when Kirton visited the farm on 5 February

1985. I find it even more surprising that if Kirton first mentioned the need to use concentrates in April 1985 that no vigorous protest was made to any of the respondents about the inaccuracy of their earlier representations until April 1986. Kirton was at the applicants' farm for two days on 28 and 29 April 1985 to assist with the first foraging of crops and the maiden fill of the harvestore. I think it is highly likely that on this occasion he discussed in detail the nutritional requirements of the cows, and the preparation of feeding rations. Maize was known to be deficient in digestible crude protein. Prudence would require that he explain (again) how to compensate for this deficiency in the preparation of a ration. It is understandable that he would have explained how to cost different alternative supplements. I think this is the likely explanation for the biro notes. The finding which I have made about the biro notes does not cause me to reject the evidence of Kirton about the November discussions. I think it is likely that in November he gave a similar explanation to the applicants about the preparation of rations, and that he made notes whilst doing so, which have since been misplaced. That kind of explanation was part of the information routinely given by him to potential purchasers. In November 1984 he may well have done the arithmetic which he said he did from invoices in the applicants' possession to obtain information as a basis for his calculations. The pages of exhibit R14 which are in pencil were made in November 1984. That is common ground. Those pages record nutritional information about various feed supplements. In my opinion these pages of exhibit R14 provide very strong evidence that the use of some supplementary feeds in conjunction with haylage and cornlage was explained as a necessary part of ration preparation. No other possible explanation for the pencil notes has been suggested. Mrs Brown's evidence also sought to link exhibit A26, a printed copy of a paper written by Kirton on the preparation of rations, with the occasion on which the biro notes were prepared. The point of doing so was that exhibit A26 was posted to the applicants under cover of a note which speaks of the applicants being worried. The covering note shows that the document was posted from Sydney by Kirton in response to a telephone conversation between one of the applicants and R. Russell on some unidentified topic. There is nothing in the note, or in the nature of the paper, to link them with April 1985. I think exhibit A26 was more likely to have been sent either after the first analysis of haylage in August 1985, or in about March 1986. I am not persuaded that the applicants were expressing worry in April 1985. On the contrary, the evidence suggests that they were in a state of enthusiasm.

(b) The allegation is inconsistent, as I have observed, with

Mr Brown's evidence that in November there was a further representation that the use of half a tonne of concentrates would increase production. I discuss this representation separately. See also exhibit R15, p 2, which gives yet another version of the alleged prediction.

(c) The allegation is inconsistent with the feeding

practices in fact adopted by the applicants when the harvestore came into use. They continued to feed concentrates, although in reduced quantities.

(d) On 20 November 1985 the applicants held a field day at

the request of local dairy farmers. The respondents attended at the applicants' request. Mr Brown spoke about the harvestore. He was asked in cross-examination about that:

Q. Did you at some stage during the field day on November 22, 1985 speak glowingly about the harvestore system?

A. Glowingly to the effect that what our criteria was in reducing concentrates and that the cows were not walking on the land I was pleased because the land we had renovated were like billiard tables and I was enthusiastic to get results.

There Mr Brown volunteered that the criteria was "reducing concentrates".

(e) In a letter (exhibit R13) dated 20 February 1986 to the

applicants' bank seeking deferment of a loan payment, written by Mrs Brown and signed by Mr Brown, they said "Our intention with the Harvestore was to reduce costs of prepared feed and become more self sufficient in an industry with daily rising costs..."

(f) The conduct of the applicants in relation to the first

analysis of haylage which was received from Agri-Services Laboratory in U.S.A. in early August 1985 is significant. A number of free analyses were available. Their purpose, which I am sure the applicants well understood, was to ascertain the nutritional qualities of the haylage and to recommend a balanced ration of supplements. The applicants submitted two samples, one of haylage, and the other of pellets early in July 1985. The selection of pellets is, I think, further evidence of the applicants' understanding that some ration of pellets would be necessary. The results of the analysis were received in Sydney on 6 August 1985 and forwarded to the applicants. The composition analysis of the samples may not have been meaningful to the applicants, but the ration recommendations were clear enough. A ration to produce 20 or 25 litres of milk per day (a production average of the order sought by the applicants) required besides the haylage, 7 lbs per cow per day of pellets plus 13 or 13.9 lbs of barley plus 1.3 or 2.1 lbs of cotton seed meal. This was a substantial requirement for supplementary feed. The analysis concluded: "COMMENTS: THE ENERGY LEVEL OF THE HAYLAGE IS TOO LOW TO SUPPORT PRODUCTION BY ITSELF." Notwithstanding Mr Brown's reluctance to acknowledge receiving the ration recommendations, I am sure that he did. Had the harvestore been bought on the assurance that concentrates would be eliminated, again a strong and immediate protest to the respondents could have been expected. But none was made. Instead the applicants sought agronomical advice from the Department of Agriculture. Mr Prance visited the farm on 22 August

1985. Mr Threlfall converted the American values in the analysis report to figures that the applicants could understand. The ME value of the haylage on a DM basis was 9.4 MJ/kg, and of the pellets 12.4 MJ/kg. After consultations with the Department, the applicants accepted that the low energy value of the haylage reflected the poor quality of the material that had been loaded into the harvestore. In September Mr Brown contacted C. Russell seeking information about chicken litter, which can be ensiled in a harvestore and used as a high crude protein source. C. Russell posted a paper on the use of chicken litter (probably on 2 September 1985) and warned that Mr Brown should ensure he understood it if chicken litter were to be used. Presumably Mr Brown was seeking a cheaper alternative source of supplement than pellets and cotton seed meal.

Notwithstanding the evidence summarised above counsel for the applicants contends that the prediction alleged is proved by the following evidence which, it is urged, should be considered in this order: The oral evidence of Mr Harvey (an officer of the E. & W.S. who was present at the meeting on 5 December 1984); exhibit R14; exhibit A26; statements contained in a circular letter sent by Australian Harvestore to people making postal enquiries; and finally Mr Harrison's evidence. It is contended that in combination this evidence so strongly supports the applicants that their evidence about the prediction should be accepted.
Mr Harvey was an impressive witness who appeared to retain an excellent recollection of the meeting. One of the points of concern to the E. & W.S. was that the harvestore system might not be viable. He explaine:

"We have seen on numerous occasions that systems which are not viable finish up resulting in poor management and normally the first thing to be neglected is the waste disposal system. Therefore, we have a significant interest in whether a system is viable to know - to give us some guidance as to whether in the long term this system can work."

In his evidence in chief he said the Department was given to understand that the harvestore could provide a supplementary feed system to supply the "whole feeding requirement from the property by better managing to feed the cattle". In cross-examination one answer he gave, I think, fairly summarises his evidence and recollections on this topic:

"Q. Am I correct in thinking that the discussion, to the extent that it dealt with the economics, was general?

A. It was general but I was left with a very firm impression that the system would negate the requirement to import feed and concentrate to the property and thereby would be economically justified."

His impression of the conversation was clearly expressed and is entitled to weight. I shall return to it after considering the other evidence.

Exhibit R14 I have already discussed. I do not think it supports the argument that the notion of using concentrates was first developed with the applicants in April 1985. Whatever may be said about the biro pages, I think the pages of pencil writing are squarely to the contrary. Similarly, exhibit A26 does not, in my opinion, lend any weight to the argument.
The proforma letter relied on was put to C. Russell in his cross-examination. It was used in 1984 as a reply to people making an expression of interest in a harvestore, and was sent with additional literature about the system. After saying that in dairy farming, Australian Harvestore expects increases in milk production from a diet of haylage, the letter goes on:

"We would also expect a considerable reduction or, if desired, complete elimination of concentrate feeding in the bales, plus up to 50% or more increase in cows milked on the same area - or alternatively, area released for other enterprises."

It is not suggested that a similar letter was given to the applicants, but it is suggested that the letter indicates the probability that the applicants could have been advised that a harvestore would eliminate concentrates. I think this suggestion makes too much of a statement taken out of context, and pays insufficient regard to the wide range of dairy farming operations to which such a prediction could be appropriate. Once a harvestore agent with nutritional knowledge, such as C. Russell or Kirton, attended a property and was asked to advise on a specific application it is to be expected that the advice would be modified as necessary to fit the circumstances. At the most, the letter provides evidence that the notion of an elimination of concentrates on a dairy farm was not foreign to Australian Harvestore officers in 1984.

The evidence in chief of Mr Harrison about his recollections of the meeting on the farm on 20 November 1984 gave support to the applicants' claim. He said one of the statements made to him was that:

"...it would eliminate the necessity to feed concentrates because of the food value, the cows would not need the concentrates which was a large saving in money to Allan per month of approximately $3000."

The purpose of his visit, it is reasonable to assume, was for the applicants to seek his approval to acquire the harvestore having regard to their existing commitment to the bank, and to approve the clearance of a cheque for the deposit. The bank was not being asked to give finance for the harvestore. It can be assumed that Mr Harrison considered, at least in a general way, the financial viability of the proposal.

The cross-examination of Mr Harrison however undermined the reliability of his evidence. It became clear that the reference to $3,000 in the above answer was an embellishment made from his own knowledge about the applicants' affairs. He said no monetary figure was mentioned. It became quickly clear that his evidence had been rehearsed by him from exhibit R22 (his notes of the meeting of 22 November 1985). What he related as the subject matter of the conversation on 20 November 1984, was in fact what he recorded as the Browns telling him on 22 November 1985. I was left with the impression at the end of his cross-examination that Mr Harrison had no more than a vague recollection of the meeting, and no useful recollection that could help resolve the case, apart from what he had recorded in contemporaneous notes. I regret to say that I also thought Mr Harrison was being evasive about his recent consideration of the bank file. Given the enthusiasm which the Browns were displaying at that time for the acquisition of a harvestore, and given the statements which the respondents concede were made about the potential advantages of the system, I find it understandable that the bank manager would authorise the deposit cheque without going into detail about the exact sources of saving on the existing operation of the farm. The amount of the deposit would be recovered from the leasing company within a few months when the leasing arrangements were complete.
Apart from the evidence of Mr Harvey there is, therefore, not much evidence in support of the applicants' case, apart from their own. Mr Harvey's evidence can, I think, be explained in a way consistent with the respondents' case. He was concerned about economic viability. The potential advantages of the harvestore had been explained. I am satisfied that he was told that there would be substantial savings on the cost of bought-in feeds including concentrates. It would be a small step - particularly for someone not versed in the detail of feeding cows - to be left with the impression that a saving on concentrates, or a reduction in costs on concentrates, meant an elimination of concentrates, whereas those better versed in the system would recognise that the cost saving would not entail a complete elimination of supplementary feed. I think such an interpretation of Mr Harvey's evidence is supported by the evidence of C. Russell who believes that whatever was said about savings - and clearly there was a discussion on the topic - it was not said that there would be a total elimination. In any event, even if I were to accept Mr Harvey's evidence as establishing that the E. & W.S. was informed that there would be a total elimination of concentrates, I would still find that in November 1984 the applicants were clearly given to understand that the cows would need some concentrates, and that the events after 5 December 1984 proved that they were not influenced to think otherwise by whatever was said to the E. & W.S. to persuade them to consent to the applicants' proposal.
For completeness I should say that I think Mr Harvey was in error in his recollection that R. Russell was the principal spokesman for the applicants' side at the meeting. It is common ground that R. Russell spoke first and introduced those in the applicants' party, but I am satisfied that most of the information was thereafter given by other people, particularly by Mr Brown.
In the result I find that the respondents did not say that the applicants would totally eliminate concentrates. The applicants were given information about the system that promoted potential advantages which could include an expected reduction in concentrates, a virtual elimination of the need to feed hay, a saving in labour costs, an improvement in farm management and efficiency, and more time for Mr Brown to spend with his family. It was the prospect of all these possibilities that I find induced the applicants to agree to acquire the harvestore.
On 19 November 1984 Kirton and R. Russell gave the applicants the name of other harvestore owners to contact, and urged them to make their own enquiries. The applicants contacted Mr Kerber and Mr Fisher, and ascertained that neither of them were using concentrates. That information may have caused the applicants to take an optimistic view of the potential savings that they could effect, but if this were so, the applicants were not relying on information supplied by the respondents.
The second limb of para 11(d) of the statement of claim is that a prediction that the cows could maintain "the previous average production" on haylage alone is wrong. Much of the technical evidence was directed to this question, which is partly tied up with the question of the suitability of the pastures. There was no agreement between the parties as to "the previous average production". The applicants contend that the relevant production was the rolling herd average for the year ended 31 March 1984, which was 6,798 litres producing 284 kilograms of butter fat (BF) (at a test of 4.1% BF) per cow. The respondents say that the relevant average production was either the rolling herd average for the period 1 April 1984 to 8 November 1984, or the average production figure over the twelve month period ending in November 1984. The former production was 6,669 litres producing 266 kilograms of butter fat (at a test of 3.9% BF), and the latter was 6,248 litres producing 252 kilograms of butter fat (at a test of 4.03% BF). The years and dates chosen relate to the year adopted by the "Hiscol" herd testing agency. In my opinion the relevant average production figures must be found in information which was supplied to Kirton by the applicants when he was examining their production figures in the course of discussions in November 1984. It is common ground that he was shown the monthly computer printed summaries from Hiscol (exhibit A16). It was also common ground that he spent quite some time going through them. There is confirmation that the November 1984 summary received the attention of both Mrs Brown and Kirton. Mrs Brown thought the rolling herd average figures were slightly inaccurate, and she recalculated them on the printout for the benefit of Kirton. I also find that Kirton has underlined the printed rolling herd average in pencil.
The applicants' contention rests mainly on Mrs Brown's evidence when she was recalled during the respondents' case to prove exhibit A67 which is a calculation by her of the rolling herd average for the year ended 31 March 1984. She said she had just discovered this document, and recognised it as one shown to Kirton in November 1984. Her cross-examination on this topic makes it clear that she was reconstructing events. I do not accept her evidence that she brought that document to the attention of Kirton. I find that the "previous average production level" that was made known to Kirton was the rolling herd average for the period from 1 April 1984 to 11 November 1984 (as corrected by Mrs Brown). These figures take into account the production of cows that completed lactation in that period, and therefore includes production over a substantially longer period. I think it would have been reasonable for Kirton to have accepted that production level as the appropriate one to work from.
The ration calculations prepared by Dr Hamilton, exhibit R34, as expanded by his evidence, show that if the ME value of the haylage was 10.5 MJ/kg, a haylage only diet was capable of maintaining the herd. Such an ME level should have been achieved if crops and pastures were properly maintained and correctly harvested. If the cows were allowed access to the paddocks to supplement their feeding, the result would have been more readily achievable. So even if the absolute statement alleged had been made, the applicants have not proved that the prediction was wrong.
The conclusion just expressed, based on exhibit R34, involves the dismissal of two contentions on the facts agitated at some length in the course of the trial by the applicants. The first concerns Dr Hamilton's estimate that in early lactation cows in a herd with the characteristics assumed in exhibit R34 would, and could safely, lose up to 1.5 kilograms of body weight per day in the first month and up to 0.75 kilograms of body weight per day in the second month. In my opinion Dr Hamilton's evidence provides ample justification for accepting that proposition. The suggestion in Technical Bulletin 33 that the weight loss of a cow should not exceed 0.5 kilograms per day is, I am satisfied, no longer regarded as authoratative by leaders in the field, and in any event has no direct application to large Holstein-Friesian cows which are bred to have a genetic potential to produce large quantities of milk. The contention that Dr Hamilton's experience with his experimental herds should not be relied upon as it is not yet established by research that a loss of 1.5 kilograms of body weight per day has no detrimental effect on fertility misunderstands the effect of his evidence. The large body weight losses noted by him were not the result of experimental conditions in which the cows were maintained. The cows lost this weight notwithstanding excellent and unrestricted food. What was being noted was part of the normal production cycle in selected samples of cows.
The other contention concerns exhibits A58, A59 and A60. From information in the first two documents a profile of a "model cow" was constructed in exhibit A60. The model constructed bore little resemblance to a production pattern that could be expected, and reflected a selection of cows that had a significant bias in favour of above average production. An attempt was then made to show that the model cow, fed ration quantities calculated by reference to herd averages, could not maintain production. This was an attempt to undermine the use of average figures in ration preparation, an approach which the applicants' principal witness Dr Hynd had adopted. I am satisfied by the evidence of Dr Hamilton, supported as it is on this score by Dr Hynd, that it is appropriate to calculate rations by reference to herd averages. The reality is that all cows do not eat the same quantity of food. Lower producing cows are likely to eat less leaving more for the higher producers. Then factors such as the size of the cow, its genetic potential, and its conversion efficiency, account for different production levels from animal to animal.
Finally, I record that I do not think Kirton's concession in his evidence that he would not have recommended a haylage only diet to the applicants should be treated as proof against the respondents that the herd could not maintain production on such a diet. Whilst Kirton holds a Diploma of Dairying from Massey University, New Zealand, his knowledge about nutrition is basic. It permitted him to apply formulae from the technical books but his cross-examination disclosed that he did not understand the scientific basis for them. His writings in exhibit R14 illustrate this. As Dr Hamilton's evidence disclosed, the calculations he made for small quantities of supplement arrived at approximately the correct result but for the wrong reasons. Kirton does not have the scientific expertise to make a judgment of the kind expressed by Dr Hamilton.
Increased Harvest
Paragraph 11(e) of the statement of claim alleges:

"The representations that the use and operation of a Harvestore would result in an increased harvest of haylage by forty per centum were wrong as the use and operation of a Harvestore (insofar as was possible) was not reasonably capable of an increased harvest of haylage by forty per centum."

The alleged representations arise from the conversation pleaded as follows:
"November, 1984
Kirton. ...'Because the cows aren't walking and grazing

you gain forty per cent more feed because there is no fouling and the cows are not lying on it."

In its terms, the pleading in para 11(e) is a literal nonsense as there had been no prior harvest of haylage, but presumably the paragraph is intended to allege a prediction of an increased harvest of pasture. So understood, this prediction is literally correct according to the applicants' expert witnesses Dr Hynd and Mr Prance. And there is no evidence to the contrary.
It is not disputed that a statement to the effect alleged was made by Kirton, nor is it disputed that an advantage of the system was said to be that cows were not required to walk so far (thereby saving on energy requirements). These were some of the benefits mentioned in general terms. The potential to utilise more of the pasture was a factor making possible a potential reduction in bought-in feed (including concentrates) and a potential increase in production. The cows could receive a greater intake of energy from the natural resources of the property.
Unfortunately it seems that the applicants misunderstood the import of the statement. They apparently assumed that they could take advantage of the whole of the extra pasture for purposes other than feeding the dairy cows. For this reason they surrendered the leasehold of additional land used to run dry stock, namely 120 acres at Sellick's Beach and 40 acres at Myponga Beach. This relinquishment brought additional cows back on to the dairy property. These extra cows would not only consume a good part of the saved pasture, but would add to management difficulties in rotating and organising paddocks for forage and paddocks for grazing. The applicants' misunderstanding may also account for a decision they made to reduce irrigation (see exhibit R22). This decision would have reduced fresh pasture available for forage and grazing during the summer of 1985 - 1986. The decisions to increase cow numbers on the main farm, and to reduce the area of irrigation, were not decisions recommended by the respondents, or even made known to them at the time. The first of those decisions was contrary to discussion which had taken place at the E. & W.S. meeting in the presence of the respondents, and to the statement in the written submission exhibit A1, that stock numbers would not be increased on the property. The area of the farm established for irrigation was one of the matters discussed with Kirton when the suitability of the pastures was under consideration. It was because of the irrigation that the farm was said to be capable of producing enough forage to fill the harvestore. The evidence does not support a view that conduct by the respondents induced the applicants to make these two decisions, which, I think, materially contributed to the failure of the harvestore.
The Telex
Paragraph 11(f) of the statement of claim, which I shall not set out, alleges that a statement by Kirton that he had received written confirmation by telex from London that the applicants' cows would maintain production on haylage alone was untrue. This allegation against Kirton is the only allegation of fraud that was pressed at trial. The applicants allege that Kirton said he would telex England to confirm that the cows could be so maintained after Mr Brown questioned whether his rye-clover pasture was suitable. On Mr Brown's evidence, it was this statement which finally persuaded him to proceed on 20 November 1984. I have already commented that Mrs Brown says the conversation she overheard about the telex was on 5 December 1984. She described the conversation as having occurred in circumstances very similar to those described by Mr Brown.
It is common ground that no such telex ever existed, and that no advice was sought from England. Kirton denies that there was any discussion at all about a telex. R. Russell also denies hearing any of the conversation alleged about a telex, although on the applicants' case he was at the farm with Kirton when the conversation occurred. Strangely Mr Brown does not suggest that R. Russell would have overheard any of the conversation - in fact his evidence gives a picture of the conversation having occurred in circumstances when R. Russell was just out of earshot. The presentation of the respondents' case at one point implied that the circumstances of the conversation described by the applicants were so unlikely, and so bore the hallmark of careful concoction, that the story should be rejected as deliberate fabrication. However at the end the respondents' submission was couched in terms that it is sufficient to say that the applicants have brought themselves to believe in a false version of the events. As I indicated earlier, that is the view which I take. I am satisfied by the evidence of the respondents, which I accept on this point, that there was no discussion about a telex in the terms alleged. I am satisfied that had Kirton wished to check nutritional advice which he had given, he would have done so with C. Russell in the first instance. This did not happen. There was no practice in Australian Harvestore of seeking advice from England. Sample analyses and nutritional advice on rations came from the U.S.A. Had Kirton falsely represented that he had obtained advice it is unlikely therefore that he would have referred to telexing England. If the statement were made about the telex, it is very odd that neither of the applicants mentioned the telex confirmation to either R. Russell or C. Russell before April 1986.
I am, however, satisfied that there was discussion on 19 or 20 November 1984 between the applicants and R. Russell when a telex was mentioned. R. Russell said he had received a telex from England advising that a price rise was about to occur. I can only assume that the applicants, in their reconstruction of events, have remembered the mention of this telex and developed in their minds the beliefs to which they have deposed. This conclusion indicates just how unreliable I believe their evidence to be.
Production Increase
Paragraph 11(g) of the statement of claim alleges:

"The representations that the average production level of the applicants' cows would increase by seven per centum upon being fed in addition to haylage one half of one tonne of concentrate per week were misleading as the average production level of the applicants' cows was not reasonably capable of increase by seven per centum upon being fed in addition to haylage one half of one tonne of concentrate per week and in fact the said average production level fell and in addition the health of the applicants' cows deteriorated."

The conversations alleged supporting this plea are:
"November 1984
Kirton. '...you will eliminate concentrate feeding and the

cows production will increase by seven per cent'.

Kirton. 'With a Harvestore you would be able to escalate

your production to 340 kilograms...'.

Kirton. 'If you work on 100 cows being fed haylage with no

walking and half a tonne of concentrate per week, you will get half a per cent of fat increase and a seven per cent increase to the average 308 kilograms...'.

Different versions of the alleged prediction by the respondents of increased production may be found in the evidence: see for example exhibit R8 and exhibit R15. In cross-examination Mr Brown acknowledged that the figure of 308 kilograms (a reference to kilograms of butter fat per annum per cow) was a matter of reconstruction. No evidence was advanced to support the statement as to 340 kilograms. The different versions about the predicted increase do nothing to give confidence in the applicants' evidence on this point.

Kirton does not deny that he may have spoken of the potential to obtain a seven to ten per cent increase in production, and whatever he said would, on his evidence, have been said in conjunction with his advice and predictions about feeding, including feeding concentrates. It is most unlikely that the respondents would have made an absolute statement predicting a precise increase in production for the same reason that it is unlikely that they would have guaranteed the elimination of concentrates. The success of the harvestore depended on proper management decisions by the applicants over which the respondents had no control. I am not satisfied on the evidence that the respondents or one of them said that any particular increase in production would occur.
The respondents concede that they would have said that one of the potential advantages was an increase in production - subject of course to the haylage being made from feed foraged at the peak nutritional stage. The respondents' statements to this effect were made on the premise that some concentrate would be used. On these bases, the evidence does not establish that the predictions were wrong. The evidence of Dr Hamilton is to the effect that on a ration of haylage with an ME value of 10.5 MJ/kg plus half a ton of concentrates per week, the herd should have averaged a production of seven thousand litres per head per lactation at a butter fat test of 4.1 per cent on less than their likely DM intake. This production level represents a 6.5 per cent increase in production over the rolling herd average for the period 1 April 1984 to 8 November 1984. When allowance is made for the possibility of additional DM intake and for the cows picking green pasture of high nutritional value whilst grazing, an increase in the order predicted is not unlikely.
More Leisure Time
In para 11(h) of the statement of claim it is alleged:

"The representations that a Harvestore would allow the applicants to work less hard and long and to have more leisure time with their children were without foundation as the system reasonably required that the applicants had to work harder and longer than previously..."

The conversations to this effect are alleged to have occurred both in November and at the E. & W.S. meeting. There was little evidence from the applicants led in support of this allegation. Mr Brown in examination in chief said that on one occasion whilst he and R. Russell were talking at the dairy in November he said:

"Listen, I'm not really interested in one of these things. I (have) got to spend more time with the kids. We have worked hard enough to get where we have got." Bob said, " This would make life easier for you, I can assure you."

In cross-examination he said it had been suggested to him in November 1984 that other harvestore owners did enjoy a better family life and:

"Q. I suggest that what Mr Russell said to you in substance was that the harvestore system was a farm management tool that if used properly could enable you to spend more time with your family? A. Right.

Q. It is a system that involves you doing a lot more work from the tractor seat? A. Yes.

Q. Alleviating for example the need to make and stack bales for your own farm. Did he say that to you?

A. Yes.

Q. And as it involves operating the farm according to a programme would enable you and your family to incorporate holidays into the programme? A. Yes.

Q. He said that to you.

A. Yes.

Q. You have got no reason at all to doubt that that was a thoroughly sensible prediction on the stated assumption that the harvestore system was to be operated properly, have you? A. No."

It is conceded by the respondents that they did say the things put to Mr Brown in the above passage from the cross-examination, but the evidence does not prove that the predictions were wrong if the system were properly operated.

For these reasons I find that none of the matters alleged in para.11 of the statement of claim have been proved against the respondents.
The Operation of the Harvestore
It remains to comment on the reasons which appear from the evidence as to why the harvestore system failed on the applicants' farm. It may be accepted that the poor performance of their cows whilst fed from the harvestore was due to the poor quality of the haylage and their confinement in a "feedlot" situation without access to pasture. The stress caused by their confinement probably aggravated their poor performance. At the outset the applicants were informed that pasture had to be foraged at the most nutritional stage. I am satisfied that they would have been advised that this was just before the grasses flowered. Mr Brown however proceeded, initially at least, under the impression that the grasses should be harvested when in flower. For the first fill of the harvestore in the autumn of 1985 this mistake probably affected quality. So to would the fact that the general state of the maize crop was poor due to inadequate ground preparation for part of the crop and inadequate weed control. The first fill served as a learning process on the techniques of foraging and on moisture control. For part of the fill it was necessary to add hay to correct a moisture imbalance. This would have reduced the ME level of the haylage a little. The respondents at the outset had warned the applicants that it took a new owner some time to understand and perfect the operation of the system. The newspaper articles produced in November 1984 by Kirton, if they had been read by the applicants, would have emphasised this. I am satisfied the applicants understood that there would be a learning period. Mr Brown was appropriately philosophical about the poor quality of the haylage when the analysis came back in August 1985. He realised the low energy values reflected the quality of what had been put in. He did not blame the respondents at that time.
This experience, and the ration recommendations from Agri-Services Laboratories should have stressed to him the need to improve quality and to supplement the cows' ration at least until the good quality of the haylage was assured. The respondents invited the applicants to seek advice whenever necessary. Their letter of 22 May 1985 (exhibit A5) sums it up at the end:

"The last suggestion is 'When in doubt ask]' We are here to help you make the system work, and we have found all the existing owners are always only too happy to help those starting out. Take advantage of that...".

Mr Brown however was inclined to go his own way and either make his own decisions or seek advice elsewhere.

On 5 December 1985 Mr Prance (Department of Agriculture) attended the farm and gave advice about crops. On 6 December 1985 the applicants had samples of haylage tested by Redcomb the feed company which supplied concentrates. Mr Brown says that Redcomb reported that the haylage was good quality. The evidence does not disclose what advice Redcomb gave about supplementary ration, but the inference is that Redcomb would have been asked. A letter from Mr Gordon Dryden (Department of Animal Science, Queensland) to the applicants in November 1986 assessed the ME value of the two samples of haylage taken in December by Redcomb at 10.4 MJ/kg and 9.8 MJ/kg respectively although he said those estimates could be a bit high. If the first estimate is correct, at least part of the haylage was close to the desired energy level. There is no clear evidence about the performance of the cows in November and December 1985. On 13 December Dr Beath, a veterinary surgeon, visited the farm and conducted pregnancy tests on eight cows. He gave evidence about the condition of the cows, and did not suggest anything untoward about the herd then. In January 1986 the applicants went on holiday. The people who looked after the cows at this time were apparently concerned about their ration as they turned them into a fresh paddock for additional feed.
It will be remembered that in September 1985 Mr Brown obtained a pamphlet from Australian Harvestore about chicken litter. Australian Harvestore were not further consulted on that topic. Mr Brown either did not closely read, or did not follow, the recommendations of the pamphlet. He obtained chicken litter which was not as the pamphlet recommended, and mixed it with red quin clover forage in the harvestore in early January 1986. By the time this material reached the feeding troughs it was early February. Samples were taken of the haylage with chicken litter, and of the chicken litter alone, and sent for analysis by the Browns on 18 February 1986. At this time Mr Brown told C. Russell that 3 per cent of the herd had acetonaemia. This condition of distress was probably a sign of poor nutrition. From this time on things seem to have deteriorated rapidly. Even before the analyses came back, Mr Brown rang R. Russell and complained for the first time that the cows were doing badly. Then, or a little later, Mr Brown said he did not know which way to turn. Whilst Mr Brown sought to play down the significance of the chicken litter, there is evidence which suggests the chicken litter haylage was fed to the cows for much more than four days as Mr Brown suggested. His evidence shows that the cows would not eat the chicken litter. Rather they picked through the haylage eating only the grass component and Mr Brown had to shovel the residual litter from the trough. The analyses received later showed that the litter was very high in iron, probably as it had a high dirt content. This would render the haylage unpalatable. During this time the cows were not only being offered a diet almost entirely from the harvestore, but one that was low in energy and unpalatable. This would account for the cows going downhill rapidly. To compound the problem the evidence suggests that from February Mr Brown began to despair. He could not meet a commitment to the bank (exhibit R13), the cows were beginning to show physical signs of not doing well, milk production was down during February on previous months, the cows were eating haylage at a greater rate than he could forage new material for the silo, and he had not planted an autumn crop of maize to fill the silo for the winter months. The farm was placed on the market on 19 February 1986. The threats made by Mr Brown to Kirton on 5 March 1986 and 13 April 1986 are, I think, indicative of his despair. There were crops of pasture ready for foraging, but no more foraging was done. When the analyses came in from the U.S.A., C. Russell telephoned but Australian Harvestore was requested to delay a visit, probably I think because the applicants hoped they could sell the farm and walk away from the problem. If this is so, it could explain why constructive steps were not taken by the applicants to get advice to arrest the decline in the conditin of the cows before 22 April 1986 when Dr Baker was asked to attend. By then the cows were in very poor condition. No reason for the delay in seeking veterinary guidance has been suggested.
Dr Baker advised that the cows should be returned to their former feeding regime - pasture and high quantities of concentrates. The harvestore emptied either just before or at that time. The condition of the cows by then was so bad that their fertility was impaired, and it took the herd about a year to recover. By 28 April 1986 when C. Russell visited the farm, the applicants were reluctant to try again. Shortly afterwards they confirmed their decision to abandon the harvestore system. This description of events shows that the harvestore system was not given a fair trial, and the events which happened cannot be taken as an indication of the potential of the system if properly operated.
There is one other matter. Late in the trial counsel for the applicants, Mr Williams QC, raised an issue about the fact that no written feasibility study was prepared for the applicants by the respondents before they purchased. It is clear enough that the respondents normally did prepare a written feasibility study for a potential purchaser. The preparation of the study served several purposes. The exercise of recording details of the customer's farming operation, which were then checked by the farmer, ensured that Australian Harvestore was not making a recommendation on incorrect information. The information then enabled a calculation to be made as to the size of the appropriate unit, and as to the capacity of the farm with and without a harvestore. The latter information no doubt was useful to demonstrate the likely advantages of the system. Incidentally the written report would record the predictions made by the respondents thereby lessening the chance for later dispute of the kind which arose here.
In the circumstances of the present case I think nothing turns on the fact that a feasibility study was not prepared. The Browns were enthusiastic customers. They were told that Australian Harvestore prepared written feasibility studies if required, but one was not requested. It is reasonable to think that one was not requested as it was not felt to be necessary in the context of the lengthy discussions which were taking place. In these discussions Kirton obtained the same information about the farm as he would have done for a written study, and he went through the same process of calculation to arrive at his recommendation about the size of the silo. He discussed with the applicants information about the energy value of haylage and about crops and pasture renovation - information that would have been in a written study. Had Kirton's calculations been formally recorded there is no evidence which warrants the conclusion that Kirton would have made any different recommendation about the size of the silo or different predictions about the potential of the system. Nor is there any reason to think that the applicants' decision would have been any different had the respondents' oral statements been repeated in a formal study.
For these reasons I consider the applicants' claim based on s.52 of the Trade Practices Act must fail. It was conceded on the applicants' behalf that if the claim under that section failed, so too must the claim under s.7 of the Misrepresentation Act 1971-1972 (S.A.)
In case the matter goes further I shall discuss briefly the question of damages. Particulars of the amounts claimed are recorded in a letter from Messrs Edwards, Marshall & Co. dated 17 February 1989 to the applicants' solicitor. The heads of loss are numbered in accordance with para 14 of the statement of claim. The largest single head of damage is in respect of the harvestore lease. The parties were agreed that if the applicants succeeded, damages under this head should be adjourned to enable discussions to take place with the lease company. The assessment of the remaining heads of damage is not easy as the evidence in many respects is sparse. The assessment has been approached on a broad axe basis by Mr Kennedy, a chartered accountant, called by the applicants. In some respect his calculations can be criticised because they are broad, yet in the end it might be that the broad approach is as accurate as any other can be. Where the evidence is lacking in detail a conservative approach should be adopted. My assessment on the remaining heads of damage would be:
14.1.2 Lease of shed and tractor
The respondents argue that less than the full calculated loss under the lease should be awarded as the shed was more substantial than the respondents recommended. I am satisfied however that the respondents were aware of the nature of the shed proposed by 5 December 1984, and the expenditure on the shed flowed naturally from the decision to install the harvestore. I would therefore allow ... $50,161
14.2.1 Fuel
I would allow ... $2,000
14.2.2 Abandoned
14.2.3 Abandoned
14.2.4 Pasture renovation - seed
Some allowance must be made for the capital improvement brought about by the renovated pastures at the end of the cropping
period. I would allow ... $4,700
14.2.5 Fodder
There is a claim for the cost of extra concentrates necessary to restore the health and production of the herd. On the footing that damages are payable, I think the evidence would justify a claim under this head for concentrates to about 31 March 1987. The cost of feeding concentrates to additional cows that were added to the herd should not be allowed.
I would allow ... $4,500
14.2.6 Telephone
Very little of the amount claimed under this head is proved to relate to the installation of the harvestore. A good part of the additional costs could be due to the increased social activity of the applicants' children and to seeking evidence in relation to the litigation. For telephone costs directly related to the installation of the harvestore I would
allow ... $150
14.2.7 Light and Power
I would allow ... $2,663
14.2.8 Veterinary Fees
This head of damage is barely proved but it is reasonable to assume that from April 1986 for a year or so there were veterinary attendances related to the ill-health of the cows in addition to every day matters that required veterinary attention.
I would allow ... $1,500
14.2.9 Bank Expenses
This head of damage is very difficult to quantify. The approach adopted by Mr Kennedy is in my view inappropriate as it does not make due allowance for the fact that bank borrowings were being increased whilst other loans were being paid off. The nature of the applicants' borrowings appears from the current and non-current liabilities summary in one of Mr Kennedy's schedules. The evidence does not identify the purpose of particular borrowings. In so far as the borrowings are to make good cash deficiencies for losses which are the subject of this claim, if interest is allowed under this head, effectively at commercial rates, no further pre-judgment interest should be allowed under the Rules of Court in respect of the heads of loss met by the borrowings. The summary of current and non-current liabilities shows that the applicants' total outstandings were, in round figures, $234,000 at 30 June 1984 and also at 30 June 1985. Above the 30 June 1985 base, the borrowings increased by $25,000 to 30 June 1986 and by $46,000 to 30 June 1987. I assume that these borrowings were to make good the losses now claimed. I think it would be reasonable to allow interest on those amounts, and the interest should run to the date of judgment. In broad terms I think the claim for additional interest on borrowings would be fairly assessed if interest were allowed on $25,000 for one year and on $46,000 for two and a half years at sixteen per cent. That would give a figure of $22,400 to which I would add a further $1,600 for general bank fees other than interest and
allow ... $24,000
14.2.10 Abandoned
14.2.11 Abandoned
14.3.1 Losses from relinquishment of leases.
In my view this head of damage cannot be established as caused in any relevant sense by conduct of the respondents which induced the acquisition of the harvestore. The abandonment of the leases was directly associated with the decision to increase stock numbers on the main farm. This decision was contrary to the assurance given to the E. & W.S., in the presence of the respondents, that stock numbers were not to be increased.
14.3.2 Stock Losses
Evidence was given by Mrs Brown under this head. She sought to relate the death of eleven cows to the harvestore. Her evidence in many respects was unrealistic. At best I think there was some connection, probably sufficient to amount to a causal connection in law, between the feeding of haylage and the demise of five cows. It is argued that these cows should be valued at $5,250 each, that being the agreed value of one heifer that was sold on 15 March 1985. In my opinion that sale does not provide useful evidence of the value of the milking cows that died, some of which were elderly. In a submission to the bank manager in October 1984 (exhibit R3) the cows were valued at $1,500 per head average. If that figure were adopted I think justice would
be done. I would therefore allow ... $7,500
14.3.3 Machinery Sold
There is no real dispute that a forage cart was sold at a loss.
I would allow the sum claimed ... $5,000
14.3.4 Sale of Stock
In my opinion the loss claimed under this head is not proved to be causally related to the harvestore. The loss alleged seems to be due to the applicants' perception that the market at which the animals were auctioned was a poor one. I do not think the respondents are responsible in law for the state of the market on the day when the applicants choose to sell.
14.3.5 Loss of Production
This loss is calculated by adopting as the base year the production levels in the Hiscol year ended 31 March 1984. That year production was significantly higher than in the year ended 30 March 1985. I can see no justification for adopting the 1984 year as the base. It is suggested that the drop in production was an expected incident of the installation of the new system. If the loss were due to neglect whilst the applicants attended to the installation of the harvestore, rather than to the season, to the introduction of numerous heifers into the herd, and to a new dairy - factors which on the evidence appear to be the cause of the drop - that neglect was not caused in a legal sense by conduct of the respondents or by the applicants' decision to acquire the harvestore. I consider the 1985 year should be adopted as the base. Clearly there was a drop in production thereafter. I do not think that it is proved that the loss attributable to the haylage diet continued beyond the end of the Hiscol year ended 31 March 1987. In exhibit A56, Mr Kennedy calculated the drop in production in the 1986 and 1987 years below the base of the 1985 year, adjusted for price variations, to be $32,761. The difficult question however is whether the whole of that loss was caused by the harvestore system or whether part of the loss was caused by the addition of the chicken litter, and the failure of the applicants to seek advice and treatment for their cows to arrest their decline much sooner than they did. These decisions contributed to the overall extent of the depression in the production of the cows, but I am unable to say that the decisions were such as to break or dislocate the chain of causation nor am I able to dissect part of the loss and say that the real essential substantial direct appreciable or effective cause for it lies elsewhere: see Elder's Trustee and Executor Co. Ltd v. EG. Reeves Pty Ltd & Ors (1987) 78 ALR
193 at 243.
I would therefore allow under this head ... $32,761

It is agreed that the sum of $22,000 should be offset as a credit against the above losses for a saving in hay not bought in during the 1985 and 1986 seasons.
However for the reasons given I consider the application must be dismissed with costs.

[1989] FCA 315

09 JUNE 1989