Budd v Kambah Tea Tree Plantations Pty Ltd

No judgment structure available for this case.

CITATION: Budd & Ors v Kambah Tea Tree Plantations Pty Ltd & Ors [2001] NSWCA 180

FILE NUMBER(S): CA 40627/00

HEARING DATE(S): 5 June 2001

JUDGMENT DATE:
20 June 2001

PARTIES :

Dany Malcolm Budd, Yvonne Mary Budd, Palmer Milling Engineers Pty Ltd trading as Palmer Plantations and Wayne Palmer Pty Ltd (Appellants)
Kambah Tea Tree Plantations Pty Ltd, Norma Holding and Keith Holding (Respondents)

JUDGMENT OF: Heydon JA at 1; Davies AJA at 131; Rolfe AJA at 149

LOWER COURT JURISDICTION : District Court

LOWER COURT
FILE NUMBER(S) : DC 7323/98

LOWER COURT
JUDICIAL OFFICER : Susan J Gibb DCJ

COUNSEL: P J McEwen SC/S A Benson (Appellants)
M H Southwick (Respondents)

SOLICITORS: Mackenzie & Vardanega (Appellants)
Macquarie Lawyers (Respondents)

CATCHWORDS: Contracts - Termination - Whether repudation wrongful - Quantum of damages - Practice and procedure - Bias - Fairness of trial - D

CASES CITED:
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Vakuata v Kelly (1989) 167 CLR 568

DECISION: See para 130

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40627/00
DC 7323/98

Wednesday, 20 June 2001

Danny Malcolm BUDD, Yvonne Mary BUDD,

PALMER MILLING ENGINEERS PTY LTD

trading as PALMER PLANTATIONS AND

WAYNE PALMER PTY LTD v

KAMBAH TEA TREE PLANTATIONS PTY LTD,

Norma HOLDING and Keith HOLDING

Contracts - Termination - Whether repudiation wrongful - Breach - Quantum of damages.

Practice and procedure - Bias - Fairness of trial.

In March 1995 the first defendant, through the second defendant (both respondents to the appeal), contracted with the plaintiffs (the appellants) to procure 1.3 million tea tree seedlings and to sell them to the plaintiffs at 13 cents per seedling (the “First Supply Contract”). Pursuant to a “Second Supply Contract” made in July 1995 the first defendant, through the second defendant, agreed to procure and supply a further 2 million tea tree seedlings at 13 cents each. The plaintiffs would later contend that the defendants had told them that they (the defendants) would retain 2.5 cents per seedling out of the 13 cents price received from the plaintiffs, and would pay the seedling nursery supplier the balance of 10.5 cents. The defendants would later deny discussing with the plaintiffs any breakdown in the 13 cents per seedling price. By mid September 1995 the plaintiffs had paid the full price of the first contract and had paid $30,000 towards the Second Supply Contract.

On 19 September the first plaintiff was told by the second defendant that the seedlings were some distance away and had been destroyed by frost. On 25 September the first plaintiff told the second appellant that he did not believe that all the seedlings were affected by frost and wanted to know where they were. The second defendant did not disclose their location and stated that she had been forwarding the progress payments for the 1.3 million seedlings and the $30,000 payment for the 2 million seedlings to the relevant nursery. The first plaintiff then made the following remarks to the second defendant:

“…You have not paid Vella, and you have touched me for 2.5 cents per

seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedling, otherwise all bets are off and I will seek legal advice”.

On 27 September 1995 the first defendant’s solicitors wrote to the first plaintiff stating that the first defendant had elected to accept the first plaintiff’s “wrongful repudiation” in relation to the first contract for 1 million seedlings, but had elected not to accept the “wrongful repudiation” in relation to the Second Supply Contract for 1.3 million seedlings. During the following year the first defendant delivered 1.3 million seedlings to the plaintiffs, and the plaintiffs planted them.

In 1998 the plaintiffs commenced proceedings against the defendants for alleged breaches and wrongful repudiations of the alleged First and Second Supply Contracts. The defendants cross-claimed for wrongful repudiations of the alleged First and Second Supply contracts by the plaintiffs. The trial judge found in favour of the defendants/cross-claimants. The plaintiffs/cross-defendants appealed.

Held by Heydon JA (Davies AJA and Rolfe AJA concurring), allowing the appeal:

1. The plaintiffs did not establish error on the part of the trial judge:

(a) In finding that there were no contract terms about the break-up

of the 13 cents per seedling price.

(b) In finding that the first defendant was not in breach of either

contract, and in finding that the plaintiffs were in breach of both

of them.

(c) In finding that on 7 September 1995 the first defendant placed

orders by phone for a total of 2 million seedlings (including

800,000 from Bridestowe).

(d) In finding that the plaintiffs did not enter the Second Supply

Contract in reliance on a representation by the first defendant

that it had already paid $30,000 to preclude a 1 cent price rise

on 1 September 1995.

(e) In making credit findings adverse to various of the plaintiffs’

witnesses and favourable to the second defendant.

2. The plaintiffs did not establish that the trial judge had exhibited either actual bias or apparent bias, or that the trial had not been fair.

3. The damages awarded for the plaintiffs’ breach of the Second Supply Contract were excessive, essentially by reason of a failure to allow for the cost of propagating seedlings and for the cost of seeds.

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40627/00
DC 7323/98

HEYDON JA
DAVIES AJA
ROLFE AJA

Wednesday, 20 June 2001

Danny Malcolm BUDD, Yvonne Mary BUDD,
PALMER MILLING ENGINEERS PTY LTD
trading as PALMER PLANTATIONS and
WAYNE PALMER PTY LTD v
KAMBAH TEA TREE PLANTATIONS PTY LTD,
Norma HOLDING and Keith HOLDING

JUDGMENT

1 HEYDON JA:

This is an appeal by the plaintiffs against orders made by Susan J Gibb DCJ on 14 July 2000 after an eleven day trial. She found a verdict for the defendants. She awarded damages in favour of the first defendant on its cross-claim against the plaintiffs in the sum of $357,662.86. She ordered the plaintiffs to pay the costs of the defendants on an indemnity basis. The appeal is brought by the plaintiffs seeking to reverse the trial judge’s findings of liability on the cross-claim, and in the alternative to reduce the damages awarded on the cross-claim. No attempt is made to contend that the failure of the trial judge to award damages in favour of the plaintiffs on their Statement of Claim is erroneous, and no appeal is brought against the indemnity costs order.

Procedural background

2 The plaintiffs’ Notice of Appeal, dated 15 November 2000, claimed no relief. It contained no ground of appeal referable to two matters to which their written submissions of 16 May 2001 devoted considerable attention, namely the contention that the plaintiffs did not receive a fair trial because of the trial judge’s “observations, interventions and comments” and the contention that damages should be reduced. Further, the Notice of Appeal did not comply with the Supreme Court Rules, Pt 51 r 11(c), which requires the grounds relied upon to be briefly but specifically stated: it was argumentative, lengthy and replete with evidence references.

3 When the plaintiffs filed their written submissions on 16 May 2001, they attached an Amended Notice of Appeal in the following terms:

“1. Her Honour erred in rejecting and failing to rely upon evidence corroborative of the Plaintiff’s claims.

2. Her Honour erred in reaching conclusions contrary to independently corroborative evidence, and compelling inferences therefrom.

3. Her Honour erred in not allowing the Plaintiff a fair trial due to:

(a) the frequency of her Honour’s observations, interventions

and comments;

4. Her Honour erred in calculating damages, by equating ‘damages’ with cost, and failing to allow credit for various items in the accounting.”

specifically

4 A further difficulty related to the absence of key pleadings from the Red Book. Counsel for the defendants said that the last version of the Amended Cross-Claim was not in the Red Book because it had been lost, but said that nothing turned on the omission: the plaintiffs agreed. The court drew attention to the fact that the last version of the Statement of Claim was apparently not in the Red Book: its absence is suggested by various indications in the “Defence to 2nd Further Amended Statement of Claim” and in the trial judge’s reasons for judgment. This defect was not remedied. In the circumstances this Court proceeded on the basis that the case which the plaintiffs wished to be considered on the appeal was reflected in the documents in the Red Book.

The factual circumstances

5 In brief, the plaintiffs alleged and the trial judge in large measure found that by reason of a “First Supply Contract” made in March 1995 and varied in May, June and August 1995, the first defendant (through the second defendant, Mrs Holding) agreed to procure from a seedling grower 1.3 million tea tree seedlings and supply them to the plaintiffs at 13 cents per seedling. Further, the plaintiffs alleged and the trial judge found that pursuant to a “Second Supply Contract” made in July 1995, the first defendant (through Mrs Holding) agreed to supply a further 2 million tea tree seedlings at 13 cents per seedling. Mrs Holding lived near Casino and the plaintiffs planned to plant the seedlings on a farm in that area.

6 It was common ground that by mid September 1995 the plaintiffs had paid for 1.3 million seedlings to be supplied under the First Supply Contract, and had paid $30,000 in relation to the 2 million seedlings to be supplied under the Second Supply Contract.

7 On 19 September 1995, according to Mr Budd, the first plaintiff, he had an acrimonious telephone conversation with Mrs Holding. In that conversation, according to him, she told him his seedlings were not in the Casino area but at Leppington and the majority had been lost by reason of frost.

8 On 25 September 1995 Mr Budd and Mrs Holding had another telephone conversation. According to him, he said that he did not accept that all the trees had been affected by frost. He wanted to know where they were. She said she had been forwarding the progress payments for the 1.3 million seedlings and a $30,000 payment for the 2 million seedlings to the relevant nursery. She refused to disclose the name of the nursery. He then said he had been to a nursery at Leppington run by a Mr Jim Vella.

“He has told me the full story. You have lied to me. You have not paid Vella, and you have touched me for 2.5 cents per seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedling, otherwise all bets are off and I will seek legal advice.”

9 On 27 September 1995 solicitors retained by the first defendant wrote a letter to Mr Budd which was in part as follows:

“We are instructed that on 25 September, 1995 you had a telephone discussion with Norma Holding of our client in which you purported to terminate two contracts with our client. We understand that the first contract, entered into on or around March 1995, was for our client to supply and plant into your property 1 million tea tree seedlings. The number of seedlings was subsequently increased to 1.3 million seedlings. The second contract related to a subsequent order placed by you for supplying and planting 2 million additional tea tree seedlings.

In respect of the contract for supplying and planting 1.3 million tea tree seedlings, your purported termination constitutes a wrongful repudiation of the contract. Our client elects not to accept the repudiation and accordingly the contract remains binding on you. Please let us know when your property will be ready to have the seedlings planted.

In respect of the contract for the supply and planting of 2 million tea tree seedlings, your purported termination constitutes a wrongful repudiation of the contract. Our client has committed itself to acquiring from its suppliers the 2 million seedlings and these arrangements cannot be cancelled. Accordingly, our client accepts your repudiation of the contract which is hereby terminated. Our client intends to hold you accountable for any losses incurred as a result of the wrongful repudiation. Our client will endeavour to sell the 2 million seedlings and will recover from you the difference between the agreed sale price of the seedlings to you and the price at which our client is able to sell the seedlings to other buyers. In the event that our client is unable to resell the seedlings, then our client will hold you accountable for the whole of the contract price for which you agreed to buy the seedlings. Our client will also recover from you any interest payable by our client on monies which our client must borrow in order to pay its suppliers for the seedlings ordered on your behalf, if this becomes necessary. In addition, our client is entitled to receive payment for the planting of the seedlings.”

10 In the first half of 1996 the first defendant delivered 1.3 million seedlings. They were planted on the plaintiffs’ farm by the plaintiffs, not the first defendant.

11 On some date in 1998, after an unexplained delay, the plaintiffs commenced proceedings. As their claims are formulated in the Further Amended Ordinary Statement of Claim in the appeal papers, they alleged the “First Supply Contract” in relation to the 1.3 million seedlings made in March 1995 and varied in May, June and August 1995. They also alleged the “Second Supply Contract” in relation to 2 million seedlings. They alleged that certain of the terms contended for were breached: because of errors in the cross-referencing, it is not entirely clear which they are. However, the essence of the allegations lay in three points:

(a) that the first defendant was not supposed to charge the plaintiffs more than 1.5 cents per seedling for its own services, the remaining 11.5 cents being payable to the seedling grower;

(b) that the first defendant was in breach by not having the seedlings available for planting in September-October 1995, or at all; and

12 The plaintiffs alleged that on 25 September 1995 they accepted a repudiation by the first defendant, namely being informed by the second defendant:

“that the tea tree seedlings under the First Supply Contract would not be available for delivery or planting in September or October 1995, and that the First Defendant did not intend to supply the seedlings in accordance with the terms of the contract” (Further Amended Ordinary Statement of Claim, paragraph 15).

13 In relation to the Second Supply Contract for the 2 million seedlings, the plaintiffs alleged that it was repudiated by the second defendant when the plaintiffs were informed:

“by the Second Defendant that the tea tree seedlings the subject of the First Supply Contract would not be available for delivery or planting in September or October 1995, and that the First Defendant did not intend to supply the seedlings in accordance with the terms of the First Supply Contract” (Further Amended Ordinary Statement of Claim, paragraphs 18 and 19).

14 The Further Amended Ordinary Statement of Claim contains numerous allegations of misrepresentations in breach of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW), but no argument based on these provisions was advanced to this Court, and accordingly they may be put aside.

The trial judge’s reasoning

15 At first sight the reasons for judgment of the trial judge are lengthy and complex. She attributed this to “the need to review the evasive and contradictory evidence by Mr Budd and submissions by the plaintiff/cross-defendant”. An examination of the materials before this Court, particularly Mr Budd’s evidence and the plaintiffs’ submissions, together with repeated readings of the reasons for judgment, supports the correctness of the trial judge’s view. It also suggests that, though on a first reading the reasons for judgment are not easy to follow, she in fact fulfilled all the essential obligations of a primary judge in reviewing the evidence and making findings about it.

First Supply Contract

16 In relation to the First Supply Contract, the trial judge found that an oral contract was made in March 1995 for orders totalling 1 million tea tree seedlings, in June for a further 200,000 and in August for a further 100,000.

“It is common ground that the arrangements were that the plaintiff partnership would pay 13 cents per seedling, whatever the internal break-up of that cost. That was what the plaintiff partnership was charged. If the contract for the supply of the 1.3 million seedlings had not been terminated, the seedlings would have been planted by the defendants.”

“The contract included the following terms:

1. The defendants/cross-claimant would provide high quality seeds for propagation.

2. The tea tree seedlings would be propagated by third parties (seedling growers).

3. The defendants/cross-claimant would select the nurseries/seedling growers.

4. The defendants/cross-claimant would deliver the seeds to the seedling grower for the purpose of propagating the seedlings.

5. The seedlings were to be available for planting in or about September 1995.

6. The plaintiff partnership would clear and prepare its land ready for cultivation and plantation of tea tree seedlings by the defendants/cross-claimant.

7. The defendants/cross-claimant would deep rip the ground in preparation for planting.

8. The defendants/cross-claimant would plant the tea tree seedlings on the plaintiff partnership’s land with the assistance of the plaintiff partnership’s representative (Mr Hicks) who would supply labour and assist on the planting machine.

9. The plaintiff/cross-defendant would pay for the purchase in three instalments: a 30% deposit on the order, a 30% part payment during propagation; and the balance of 40% upon delivery.

10. The defendants/cross-claimant would be granted the right to harvest all tea tree/procure all tea tree oil produced on the plaintiff’s plantation and charge the plaintiff at the rate of $5.00 per kilo of oil produced, representing milling costs (assuming that the defendants/cross-claimants had the relevant ability).”

17 The plaintiffs in fact completed performance of the term about payment early, before the seedlings were delivered. The sum of $78,000, being the third payment for 1.2 million seedlings, was paid on 31 July (the first and second payments having already been made), and the sum of $13,000 for all three instalments in relation to the last 0.1 million seedlings was paid on 14 September 1995.

18 The trial judge gave two reasons for rejecting the plaintiffs’ claim for breach of the First Supply Contract. The first reason was:

“The plaintiff partnership’s land was not ready for plantation in August/September 1995. That was through no action or omission on the part of the defendants/cross-claimants. The defendants/cross-claimants say that they were otherwise ready, willing and able to perform the contract. I find that this was so. But the plaintiff/cross-defendant was not ready to accept the seedlings.”

19 The second reason which the trial judge advanced for rejecting the plaintiffs’ claim that the first defendant had breached the supply contract could have been expressed narrowly or broadly.

20 A narrow approach would have focused on the inquiries suggested by the Further Amended Ordinary Statement of Claim. In September 1995, did Mrs Holding tell Mr Budd, in the words of paragraph 15 of the Further Amended Ordinary Statement of Claim, that the tea tree seedlings under the First Supply Contract would not be available for delivery or planting in September or October 1995, and that the first defendant did not intend to supply the seedlings in accordance with the terms of that contract? And did the plaintiffs accept that repudiation on 25 September? Mr Budd gave evidence of three telephone conversations he claimed to have had with Mrs Holding on 5, 19 and 25 September 1995. In none of his evidence - whether in his statements of 10 May 1999, 18 August 1999 or 25 May 2000, or in his affidavit of 10 July 2000, or in his oral evidence - did he attribute to himself on 25 September 1995 words to the effect that the plaintiffs were terminating the First Supply Contract because of any statement by Mrs Holding that the first defendant did not intend to supply the seedlings in accordance with the terms of the contract. It follows that there was no evidence to support the crucial allegation in paragraph 17 of the Further Amended Ordinary Statement of Claim: “On or about 25 September 1995, the Plaintiff accepted the repudiation set out in paragraphs 15 and 16 above.” The repudiation in question was Mrs Holding’s allegedly having informed the plaintiffs that “the First Defendant did not intend to supply the tea tree seedlings under the First Supply Contract” (Further Amended Ordinary Statement of Claim, paragraph 16). Rather, on Mr Budd’s evidence in his statement, the following took place. On 5 September 1995 Mrs Holding said it was dry, that it was getting late for planting, and that the seedlings ordered should be resold. He said he did not want that. On 19 September 1995 she said that the majority of seedlings, which were at Leppington, had been lost due to frost. She also said:

“I am getting sick and tired of you and Leigh [Hicks] not trusting me. We can’t do business with people who don’t trust us to do the right thing by them, so I suggest you get Leigh to do all your work from now on. Goodbye.”

“Well Norma, I must tell you that I have been to Leppington and spoken to Jim Vella. He has told me the full story. You have lied to me. You have not paid Vella, and you have touched me for 2.5 cents per seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedling, otherwise all bets are off and I will seek legal advice.”

“You will not be getting anything out of me. Leigh is now doing your work. You and I are finished!”

21 It is to be noted, first, that on this account it was Mrs Holding who terminated the First Supply Contract, not Mr Budd: he appeared to be willing to let her retain 8 cents per seedling and to accept delivery of the seedlings in due course, which on the plaintiffs’ construction of the contract accorded with its terms. Secondly, the items of conduct complained of (lies about whether Mr Vella needed payment or had been paid, overcharging to the extent of 2.5 cents per seedling, and, if it was still pursued, the question of frosting) are not alleged in the Further Amended Ordinary Statement of Claim to be breaches characterised as repudiations which were accepted by the plaintiffs. Thirdly, if Mrs Holding’s words were words of breach, Mr Budd does not attribute to himself language accepting the breach.

22 It follows that even taking Mr Budd’s evidence at its highest, the pleaded case had not been established.

23 However, the trial judge went much further, and dealt with the plaintiffs’ claim that the first defendant had breached the First Supply Contract on a much wider basis. She rejected Mr Budd’s evidence of the September 1995 conversations. In particular, she preferred Mrs Holdings’ version of the 25 September 1995 conversation which she summarised as follows:

“She says that Mr Budd told her that he did not ‘want you people to do any more work for me’ because he did not ‘like the way’ the Holdings had been treating the Hicks. She says that Mr Budd wanted to take the tea tree seedlings he had paid for; but that he wanted his money back on the others. That she declined to do: she had already placed the orders.”

24 The trial judge declined to find that the first defendant had refused to supply the tea tree seedlings or had in any other way repudiated the First Supply Contract. She found it was not a term of the contract that the first defendant should not be able to charge the whole 13 cents less whatever had to be paid to the seedling grower. She rejected an allegation made late in the trial by the plaintiffs that the first defendant was in breach of the First Supply Contract in that “Mrs Holding and Kambah Tea Tree were incapable of preparing Palmer Plantations’ land and planting in a satisfactory manner as per the industry norm”. She rejected an allegation that the first defendant had, by holding monies paid by the plaintiffs and not instantly passing them to the seedling grower, retained a “secret commission”, because she said that no term that the monies be instantly dealt with in that fashion could be implied, and there was no term limiting the first defendant to 2.5 of the 13 cents as distinct from 5. Finally, she found that the plaintiffs had breached the contract, and ordered $23,012.52 as damages for that breach.

Second Supply Contract

25 The trial judge found that the contract was made when the plaintiffs ordered 2 million tea tree seedlings from the first defendant. It was not entered, and the deposit of $30,000 paid on 14 September 1995 was not paid, in reliance on a misrepresentation. The Second Supply Contract was in the same terms as the First Supply Contract save for the number of seedlings and save for the fact that the delivery date was March 1996, not September 1995. She found that the Second Supply Contract was wrongfully terminated by the plaintiffs on 25 September 1995. She awarded $312,251.40 for that breach. She could have based her conclusion about wrongful termination on the narrow basis that Mr Budd gave no evidence attributing language to himself on 25 September 1995 accepting any breach by the first defendant. She in fact based her conclusion on the wider basis that Mr Budd’s evidence of the September 1995 conversations should be rejected.

The structure of the plaintiffs’ arguments on appeal

26 The plaintiffs’ arguments on appeal can be divided as follows.

27 One head of argument was devoted to the proposition that the First Supply Contract was a contract only entitling the first defendant to 2.5 cents per seedling, on the basis that it had allegedly been represented that nursery propagation charges were 10.5 cents. If successful, this head of argument would lead to the conclusion that the first defendant had committed breaches of contract. But that conclusion would lack point, since they were not breaches of contract which the plaintiffs relied on to terminate the contract. Even if that were not so, there would be left standing and unchallenged the trial judge’s first reason for concluding that the First Supply Contract had not been terminated by the plaintiffs.

28 A second head of argument was devoted to the trial judge’s conclusions about the events of and before 25 September 1995. This too, even if sound, would be futile, at least in relation to the First Supply Contract, in the absence of a challenge to the trial judge’s first reason for rejecting the plaintiffs’ case that the First Supply Contract had been terminated by the plaintiffs, namely that they could not do so since they themselves were in breach.

29 A third head of argument related to a finding by the trial judge that she accepted Mrs Holding’s evidence that before 25 September 1995 she had placed orders with four nurseries to fulfil the Second Supply Contract, and in particular that one of them, Bridestowe (later known as Tea Tree Distributors), had accepted an order for 0.8 million seedlings. The significance of this line of argument was that if correct it undercut the first defendant’s claim to damages for breach of the Second Supply Contract.

30 A fourth head of argument (only put in writing) related to the trial judge’s finding about an allegation made by the plaintiffs that when the plaintiffs entered the Second Supply Contract and paid $30,000 as a deposit, Mr Budd relied on a representation that Mrs Holding had already paid $30,000 to preclude a price rise of 1 cent per seedling which would otherwise take place on 1 September 1995, and that that representation was false. The trial judge found that Mr Budd did not rely on that representation.

31 A fifth head of argument advanced apparently to bolster the arguments in relation to the first four heads was, in the language of Ground 5 of the Notice of Appeal, that the trial judge “made findings on credit which were unreasonable, contrary to the evidence and unsupportable”.

32 A sixth head of argument was that the trial judge exhibited actual bias and apparent bias, and by reason of her conduct of proceedings denied the plaintiffs a fair trial. This was largely the subject of Ground 3 of the Amended Notice of Appeal.

33 The seventh head of argument related to alleged errors in the calculation of the quantum of damages recoverable by the first defendant.

34 It appeared to be accepted by the plaintiffs that if they enjoyed success on any of the first six heads, that would only lead to a new trial because of the heavy dependence of the trial judge’s reasoning on credit findings and the inability of this Court to make credit findings of its own, but that if they enjoyed success on the seventh head, this Court could re-assess the damages.

35 If one were to set out each of the particular submissions deployed as part of each of the plaintiffs’ arguments, were to set out the reasons for accepting it, rejecting it, or qualifying it, and were to assess how far any successful argument should lead to the relief sought, these reasons for judgment would be of unconscionable length.

36 The fact is, as the plaintiffs said to the trial judge and as the trial judge agreed, victory or defeat for the plaintiffs on liability turned entirely on whether Mr Budd was accepted as a witness or whether Mrs Holding was. The trial judge heavily criticised Mr Budd. She said he was “a person of no credit”. His evidence was the opposite of “direct and consistent”. It was “evasive and contradictory”. In numerous specific respects he was disbelieved. Parts of his evidence were “contrived and deliberately untrue”. When he appeared in person on behalf of the plaintiffs for three days he put “propositions to witnesses that were directly contradictory of his own and other evidence and inconsistent with the (much amended) April 2000 Further Amended Ordinary Statement of Claim.” The trial judge said:

“Mr Budd had a distinct tendency to add or vary matters in a way that he considered would assist the claim by the plaintiff partnership. I do not believe Mr Budd’s evidence on any matter where it is not supported by an independent corroboration. I gave [sic] accepted some of his evidence where it is against his interests or those of the plaintiff partnership. There were very few points on which Mr Budd’s evidence enjoyed support from any witness, including those whom testified for the plaintiff. I find much of Mr Budd’s evidence to be contrived and deliberate fabrication.”

37 On the other hand, the trial judge said of Mrs Holding:

“I find that Ms Holding is an honest witness. She made various errors and misstatements - in both her correspondence with the plaintiff/cross-defendant and her evidence. Her propensity to accept matters put to her in cross-examination when she did not know the answer was unhelpful; and she was occasionally confused and a confusing witness. But I found her to be an honest witness, whose evidence was direct and consistent.”

“I accept as credible, although somewhat contradictory and some time unreliable, the evidence of the primary witness for the defendants, Ms Holding. She accepted and acknowledged errors, of which there were many, particularly in respect of the details for orders and payments. She admitted that her representations about payment of the $30,000 were false (‘in error’). She was prone to agree with suggestions put to her in cross-examination, and to guess at answers to questions to which she did not know the answer. Although that carelessness was unhelpful to any adjudication of the case, I did not find that it arose from dishonesty, deliberate or otherwise ….

On occasion Ms Holding was indeed confused. But I reject the plaintiff/cross-defendant’s submissions that she is a person of no credit.”

38 The plaintiffs submitted:

Agbaba v Witter

On examination, most of the “independently corroborative” evidence was not independent; or, if it was, it collided with other independent evidence which the trial judge was entitled to choose in preference to it; or it had particular flaws which the trial judge was entitled to highlight and to use as a reason for not accepting it. Once it is apparent that there are strong reasons for the trial judge’s conclusions on general credibility, it becomes correspondingly harder to overthrow her conclusions on particular points. It will be seen that the trial judge did have very strong reasons for her view of Mr Budd’s credibility.

Did the First Supply Contract entitle the first defendant to only 2.5 cents per seedling?

39 The trial judge said:

“As noted, much of the dispute centred on the plaintiff/cross-defendant’s claim that the purchase price was broken up and terms of the payment arrangements. The plaintiff alleged that the contract included the following terms:

1. The plaintiff would pay to the first defendant the amount charged by the seedling grower to the first defendant for the propagation of the seedlings, being 11.5 cents per seedling (the Mr Hicks version) or 10.5 cents per seedling (the Mr Budd version). …

I find that there were no contract terms about the break-up of the purchase price. The contract was only a single line price: 13 cents per tea tree seedling planted. …

The plaintiff claimed that later contracts or variations contained a number of express terms, including that:

1. The plaintiff would pay the first defendant for the supply of seed an amount of 1.0 cent per seedling delivered;

2. The plaintiff would pay to the first defendant the amount charged by the seedling grower to the first defendant for the propagation of the seedlings being 10.5 cents per seedling;

3. The sums that the plaintiff was required to pay were payable when the first defendant was called upon to make an instalment payment to the seedling grower.

I find that there were no such contract terms. … It was a term of the contracts that payment be made in 3 instalments, but none by reference to payments to nurseries.”

40 She made these findings after a detailed analysis of the evidence of Mrs Holding, Mr Budd, Mr Hicks and Mr Palmer.

41 Mr Leigh Hicks was a farmer. He and his wife had known the Holdings for 15 years. Mr Crawford was a farmer, and he and his wife had known the Holdings for 40 years. The Holdings were specialists in tea tree farming. The Hicks and the Crawford family decided to commence tea tree farming, and the Holdings agreed to help them. Mr Hicks planned to visit Casino to look at suitable farms. He discussed his plans with Mr Budd. Mr Budd was attracted to the advantages of tea tree farming when Mr Hicks sought his advice, and the plaintiffs’ partnership (which in substance consisted of Mr Budd, Yvonne Mary Budd, Mr Palmer and Mrs Palmer) was formed. The activities of that partnership were to be quite distinct from the activities of the Hicks family and the Crawford family. It was agreed that Mr Hicks, though not part of the plaintiffs’ partnership, would act on its behalf for certain purposes.

The March conversations

42 Mrs Holding’s evidence was that on about 13 March 1995 she said, in the presence of Mr Holding, her son, Mr and Mrs Crawford and Mr and Mrs Hicks, in response to a request to supply tea tree seedlings to Mr Hicks and to the plaintiffs’ partnership:

“Well, we can do it for about 15 cents for each seedling. That will include the supply of the seedlings, the ripping, the hoeing and the planting but you will have to clean the land and pick up the stumps first.”

“We can do the work for 13 cents per seedling, provided you are prepared to assist by driving the tractors and sitting on the planters and helping with the labour.”

43 On the other hand, Mr Hicks deposed in his affidavit that on or about 14 March 1995, apparently in the presence of Mr and Mrs Crawford, Mrs Hicks, Mr Holding and an estate agent, Mrs Holding said:

“Look, we have to move fast. If you want to be able to plant and then harvest in 1996 we need to get the seedlings ordered as they need months to grow.

I have got contacts with a lot of tea tree growers.

I can supply seedling to you at a price which would include preparing the ground and planting.

I will charge 1.5 cents for the preparation and planting and 11.5 cents for the seedling which is what the nursery is charging me.

For anyone else I would charge 15 cents a plant but for you I will do it for 13 cents.

But we have to move soon though to make sure that we can get seedlings for you to plant in August and Danny [Budd] in September.”

44 Mr Budd said in his first statement that Mr Hicks said to him in mid-March 1995:

“Norma and Keith Holding are the directors of Kambah Tea Tree Plantation Pty Ltd and they have experience in the planting of tea trees. Norma and Keith will be able to supply the seed and plant the seedlings. Norma said the cost of the seedling planted is normally 15 cents, however she would be able to do it for us for 13 cents.”

“Okay Leigh that sounds fine, I’m in. Make whatever arrangements you have to with Norma for our first planting - say about 100 acres”.

45 The plaintiffs filed a statement by Mrs Hicks; it did not deal with the March conversations; in any event it was not read; and she did not give oral evidence.

46 The Crawfords did not give evidence.

47 Mr Holding said he could recall his wife saying to Mr Hicks words to the effect “that the work could be done for 13 cents per seedling, provided he was prepared to assist by driving the tractors or sitting on planters and helping with labour”.

48 The Holdings’ son did not give evidence, and nor did the estate agent.

49 In cross-examination Mrs Holding denied saying anything in mid-March about charging 1.5 cents for preparation and planting or charging 11.5 cents per seedling, being what the seedling grower was charging her: she gave a price of 13 cents per seedling “to do the ripping, the hoeing, supply the seedlings and plant them” without any break up in price.

The 1 May conversation

50 On 1 May 1995 Mr Budd said that Mrs Holding told him and Mr Palmer the following:

“I can provide the seed at a cost of 1 cent per plant. You know I will arrange for the propagation of the seedlings on your behalf with a nursery, as I have got the contacts in the industry. With my connections I can get the plants propagated for 10½ cents per plant. The nurseries normally charge about 12 cents but for a large order such as yours, I can get them down to 10½ cents. I would charge you what the nursery charged me. You know we are only here to help you …. We would charge you 1½ cents per plant, the same as we are charging the Hicks ….”

“No, there’s no increase. The 13 cents was always the case, as I said it’s only the mix. So in the first instance in March, Mr Hicks was led to believe and Mr Crawford was led to believe, and they led me to believe, that the propagator was getting 11.5 cents in March. It wasn’t until the 1st of May that we were told that the propagating only cost 10.5 cents, she’s charging us one cent for the seed.”

51 Mr Palmer’s version was that Mrs Holding said:

“I will charge you 1 cent for the seed. I will also arrange for the propagation of the seedlings and pay the nursery their charges. The nursery charges ten and a half cents per seedling for propagation. We will then prepare the land and plant the seedlings for one and a half cents a seedling. So the total cost to you is 13 cents per seedling.”

52 Mrs Holding was cross-examined on the conversation of 1 May. She denied any discussion of the breakdown in the 13 cents per seedling; or getting the nurseries to charge as little as 10.5 cents per seedling; or of charging only what the nurseries charged.

The trial judge’s reasoning

53 The trial judge accepted that Mr Hicks might believe he had been told of an 11.5 cent component payable to the nurseries, but did not accept that he had in fact been told that. She said:

“On Mr Hicks’ version, Ms Holding was to provide seeds free of any charge, which Mr Budd says was not the case. Mr Hicks ultimately received a 1.5 cent refund on the contract sums when he terminated his own arrangements with the Holdings and undertook his own planting. The defendants submitted that this had coloured his recollection of the events and led him to believe that there were two elements to the price: 1.5 cents for planting and 11.5 cents for seedlings. That submission has some force. Whatever the explanation, I do not accept Mr Hicks’ evidence on this point.”

“Ms Holding said that there was no further discussion of the price after the 13 cent per seedling charge was nominated. I accept that evidence. I accept that Ms Holding assumed that all subsequent orders were on the same basis as the initial one. That was a reasonable assumption ….”

54 The reasoning of the trial judge supporting her findings may be organised into the following categories.

55 First, as a matter of objective fact, the first defendant did not propagate the seedlings which it proposed to deliver on its premises. It had tea trees, and from them it gathered seeds. It proposed to send them to a seedling grower for propagation. It did so after the March 1995 conversations. The seeds were then put in potting mix. The plants were then thinned out some weeks later. In due course it was intended that they would be delivered to the property in which they were to be planted by the first defendant. It follows that there were at least two stages at which the first defendant had an opportunity to make a “profit”. First, the generation of seeds by the first defendant gave the first defendant an opportunity to charge for them. Secondly, the process of arranging for a seedling grower to propagate the seeds, and in due course the planting of the seedlings, caused the first defendant to incur costs independently of whatever the seedling grower charged and gave it an opportunity to charge.

56 Secondly, though the Holdings had been friendly for a long time with the Hicks family and the Crawford family, they had not been friendly with Mr Budd or his interests, or Mr Palmer and his interests. To them they were strangers.

57 Thirdly, it was unrealistic to suppose that the defendants would give up their high quality seed, go to the trouble of making arrangements with seedling growers, and plant the seedlings for nothing.

58 Fourthly, the proposition that Mrs Holding would commit the first defendant to a contractual obligation to charge no more than 1.5 cents (in March 1995) or 2.5 cents (in May 1995) more than the seedling growers would charge was unrealistic for a reason she explained in cross-examination thus:

“you seen the way Mr Vella’s price fluctuates, how can you price a job on saying to your client well I’ll - I’m only charging you what the nursery charged me. You don’t know what the nursery is going to finish up charging. That’s why we put a 13c per seedling supply and plant to cover everything, so how could I put - say to you, look I’m only charging you 8 cents because that’s all the nursery’s charging me. Vella’s started off at 8.5, they went down to 8, they went to 7, and if I got caught with Danny’s seedlings and I had to fork out another 13,000, where was I going to get an extra one cent per seedling if I didn’t cover myself by charging 13 cents per seedling, that covered everything.”

59 Fifthly, in numerous respects Mr Budd’s entire position was unsatisfactory.

(a) He was a plaintiff who, with the other plaintiffs, was suing on a series of contracts described in detail in the Further Amended Ordinary Statement of Claim, beginning with a contract made orally in March 1995. He was also a plaintiff who said in his first statement that on the strength of the bare proposition that the first defendant would supply the seedlings for 13 cents, he instructed Mr Hicks to proceed in the following words: “I’m in, make whatever arrangements you have to with Norma for our first planting - say about 100 acres”. Through Mr Hicks, the plaintiffs thereupon placed an order in March for 1 million seedlings. Yet at some points Mr Budd denied the existence of any contracts. He said he did not instruct Mr Hicks to proceed, “this was just a general conversation. There was nothing in a contract of early March, we had no land, there was no talk about planting, there was no talk about time frames, there was no talk of anything”. He also said that there was no contract because there was no writing. He said further that there was no contract because the arrangements were only in the nature of family arrangements.

(b) He denied that Mrs Holding had a cost to bear for the seeds because “she has found the seed from the mother tree, she has gathered it, there’s no cost to her. She has not procured the seed from anybody.”

(c) He said that Mrs Holding, no friend or relative of his, said on 1 May: “You know we are only here to help you.”

60 Sixthly, Mr Palmer’s evidence of the 1 May conversation was suspect in that part of it was to the effect that Mrs Holding would prepare the land: this was in the face of much contrary evidence that it was not for the first defendant to prepare the land by removing stumps, clearing it, levelling it, carrying out drainage and road works, and removing unwanted fences. The first defendant’s role was merely to carry out the process of planting by inserting the seedlings after ripping and hoeing. Mr Palmer’s evidence was further suspect in that he said Mrs Holding said: “I will not make a profit, I will help you, I will make the profit out of the planting, out of preparing the land and sowing the plants.” He estimated the profit level at 1.5 cents. The trial judge said:

“On the basis of Mr Budd’s July evidence about the cost of planting, Ms Holding would have made a profit of between 0.365 and 0.265 cents per seedling, if her operational costs were not more than Mr Budd’s. The defendants/cross-claimant offered a slightly lower estimation of the cost of plantation for the purposes of quantifying its claim for damages on the cross-claim. That would have yielded a ‘profit’ of somewhere in the order of $4,000 for her services on behalf of the plaintiff partnership/s venture, inclusive of planting 1.3 million tea tree seedlings. Mr Palmer’s suggestion that he believed that she would ‘make’ 1½ cents out of planting is not credible. He is an experienced businessman. I do not believe that he thought that planting would cost the Holdings nothing. Even if she were to donate her labour, it is difficult to see how he could fail to notice that there would be actual out of pocket costs, such as for fuel and insecticide and equipment depreciation.

It is possible that Mr Palmer genuinely believes his evidence. But it is unlikely. It has the distinct tone of a fabrication. I do not believe Mr Palmer’s evidence. I note that this evidence was not relied upon to particularise any alleged representation about not making a profit, although submissions were made to this effect (albeit without reference to this evidence).”

The evidence of Mr Budd about the cost of planting in July 1996 was that the cost was 1.135 cents per seedling without taking into account depreciation costs, and 1.235 cents if they were taken into account.

The plaintiffs’ contentions

61 On what basis did the plaintiffs contend to this Court that the trial judge’s reasoning and conclusions were inconsistent with other evidence pointing “inescapably” to a different conclusion? To use other language commonly used in this type of inquiry, how did she fail to use, or palpably misuse, her position of advantage? In what way did she rely on evidence which was inconsistent with the facts “incontrovertibly” established by the evidence, or evidence which was “glaringly” improbable? How was it not “reasonably open” for her to make the findings she did?

62 The plaintiffs submitted that the break up of the 13 cent charge was corroborated by four independent witnesses - Mr Hicks, Mr Palmer, Mrs Clark and Mr Crawford. However, the persons described as independent corroborative witnesses were in some respects not independent, in others not corroborative, and in one case not a witness at all. One of the witnesses was probably not a witness whose evidence was, in the end, admitted.

63 Mr Hicks could scarcely be described as independent. He had acted as agent on behalf of the partnership in March. He had had an acrimonious falling out with Mrs Holding in September. He attended the trial in the company of Mr Budd. Further, Mr Hicks’ evidence about the March conversations was not directly corroborative of Mr Budd’s and Mr Palmer’s evidence of the 1 May conversation. Mr Budd did not narrate to the court any report by Mr Hicks of a break up in the 13 cents during the March conversations. Mr Hicks did not “corroborate” any other evidence in the March period before 1 million seedlings were ordered; rather, his evidence stood alone and itself called for corroboration. The trial judge gave reasons for doubting the reliability of Mr Hicks’ evidence which were not irrational. Further, she said of another part of his evidence that his recollection was false. “He was open about his difficulty in recalling details five years after the events and that it was not easy to remember details ‘if you haven’t got things written down and a good memory’, which was the position in which he found himself.”

64 Mr Palmer, two of whose corporations were plaintiffs, could not be described as independent either. And just as Mr Hicks’ evidence about the March conversations did not directly corroborate Mr Palmer’s evidence about the 1 May conversation, so his evidence about the 1 May conversation did not corroborate Mr Hicks’ evidence of the March conversations. The plaintiffs submitted that it was never suggested to Mr Palmer that, as the trial judge said of his evidence, it had the “distinct tone of fabrication”. Mrs Holding’s version was, however, squarely put to him. The trial judge was entitled to reject his denial for the reasons she gave, which were far from irrational. There was great improbability in Mrs Holding working for nothing, as Mr Palmer would have it on his version.

65 Mrs Clark’s evidence was not corroborative. It was about another contract, not the contract between the plaintiffs and the first defendant. It was of questionable relevance. Mrs Clark’s statement was tendered on 3 July 2000. The defendants objected to it as irrelevant. Mr Budd did not demonstrate its relevance. The trial judge ruled that it was irrelevant (Black 2/373D). On 4 July its re-tender was foreshadowed, and the trial judge was told that Mrs Clark had driven all evening from northern New South Wales to get to court in Sydney. Mr Budd again did not demonstrate the relevance of Mrs Clark’s statement. The trial judge said (Black 2/453V-454K):

“HER HONOUR: Mr Southwick, we could spend hours debating this, and it is going to be rerun every morning. My inclination is to admit it. It would seem to me to be completely irrelevant because I cannot see any circumstance in which a contract with someone unrelated is of any relevance. Now, it seems to me that rather than debate this every morning, we will end up taking more time, so the simplest course is to admit it. Mr Southwick, is there any prejudice in that?

SOUTHWICK: The most significant difficulty of course is that my client is in the witness box and I can’t take instructions from her.

HER HONOUR: We will defer it until your client has finished cross-examination.

SOUTHWICK: Beyond that, I agree with the proposition your Honour has put. It seems tragic to have Mrs Clark waiting around over something which is irrelevant and can’t be cross-examined on.

HER HONOUR: We are going to have this conversation every morning because every matter will be revisited by a subsequent application.

SOUTHWICK: If it is allowed in we will deal with it on that basis.

HER HONOUR: I will defer the decision until your client has finished cross-examination and you can seek instructions.”

“HER HONOUR: Mr Southwick, the statement has already been put before me. We deferred the tender. This witness is now available for cross-examination. The statement, do you have any specifics aside from a generalised objection as to relevance?

SOUTHWICK: Well, your Honour, paragraph 5, paragraph 6, basically end up repeating the same material, your Honour, paragraphs 7, 8. I am sorry, your Honour, I end up objecting to everything again. It is not really possible to do anything else.

HER HONOUR: I think the simplest course is I will note the objection as to relevance.

EXHIBIT #V STATEMENT OF JENNY CLARK UNDATED TENDERED: ADMITTED WITHOUT OBJECTION.”

66 As for Mr Crawford, he too was dealing with a contract other than the one in suit. He did not give sworn evidence. His “evidence” consisted of unverified statements which were bad in form. They were annexed to an affidavit of Mr Budd sworn on 10 July 2000 in support of an application to reopen the plaintiffs’ case by calling Mr Crawford and Mr Evans. After it was read, the plaintiffs indicated that they no longer wished to call Mr Crawford. It is highly questionable whether those statements were, or if they were, ought to have been, received as evidence of the truth of the facts asserted. That they were not so received is suggested by the following remark of the trial judge on 12 July 2000:

“I think for the record in the interests of expedition I will reopen the case, reopen it on the application to call Mr Lewis and Mr Evans, note that the application was made to recall Mr Crawford, who has since vanished back into the ether, and Mr Lewis and that Mr Evans appeared from left field. Case reopened and I will admit the rest.”

67 Finally, the plaintiffs submitted that the break-up of the 13 cents charge was corroborated by the fact that Mrs Holding agreed to repay Mr Hicks 1.5 cents per seedling. But this does not prove that she was only to charge the plaintiffs 2.5 cents. The figure of 1.5 cents was agreed in conversations between Mr Hicks and Mrs Holding, but the terms of them are not in evidence and hence they cast no light on the basis of the calculations.

68 The submissions of the plaintiffs do not suggest sufficient doubt about the trial judge’s conclusions on the break up of the 13 cents to justify ordering a new trial.

The 25 September 1995 events and their prelude

69 The plaintiffs’ submissions on this subject criticise the trial judge’s preference for Mrs Holding’s version of the 25 September 1995 telephone conversation over Mr Budd’s version. They also criticised her for relying on some parts of the evidence of the Vellas to conclude that “Mr Budd had decided to make alternative [arrangements] some time before 19 September”. They submitted that the pattern of events in September, and other parts of the Vellas’ evidence, made Mr Budd’s version more probable.

70 First, the plaintiffs pointed out that Mrs Holding was not cross-examined as to the 5 September, 19 September or 25 September conversations. Mr Budd did put to her that one sentence in the 25 September 1995 conversation was not said, but no others: she denied that. Mr Budd asked her what else she could remember: she repeated her evidence in chief. Since it was the plaintiffs who had the right and the responsibility to cross-examine Mrs Holding on the conversations, their substantial failure to do so points strongly towards, rather than against, the trial judge’s conclusion.

71 Secondly, the plaintiffs pointed out that on 11 September 1995 Mr Budd forwarded $43,000 to the first defendant, being the last $13,000 owing on the First Supply Contract, and a $30,000 “deposit” on the Second Supply Contract. They said this does not “fit easily or well” with the trial judge’s finding that prior to 19 September 1995 Mr Budd had decided to make alternative arrangements. It is possible that the decision to do so was after 11 September 1995 and just before 19 September 1995. In any case, the critical date is 25 September 1995.

72 Thirdly, the fact that on 26 September 1995 the Vellas supplied Mr Budd with a quote of 7.8 cents per tree for 2 million tea trees suggests there must have been some prior contract inviting that quote: quite possibly before 19 September 1995, but if not before 19 September, at least soon after. There was evidence from Mr John Vella, to which the plaintiffs did not refer, that it would take a couple of days to a week to generate such a quote, and that it would only be issued after a discussion with the purchaser and an internal decision within the company, and after credit checks on the purchaser had been made.

73 A fourth matter relates to the quality of the Vellas’ evidence. The trial judge relied on Mr Jim Vella’s view that his meeting with Mr Budd was “during the colder months, about the winter time, some time in the winter”. The trial judge said that was difficult to reconcile with a meeting after 19 September (which Mr Budd said was on 22 September). The plaintiffs put two arguments about the Vellas’ evidence. First, they pointed to features of it which were consistent with Mr Budd’s account of his visit on 22 September 1995. However, these similarities do not negate the conclusions of the trial judge on the fact that Mr Budd had made alternative arrangements before 19 September. Secondly, the plaintiffs, somewhat inconsistently with the first argument, said that their evidence was “At best conjecture” and “speculation”. They said that neither of the Vellas provided a statement or affidavit of their evidence; each was called at short notice; with limited access to contemporaneous, but undated, documents, they were asked to recall events occurring 4½ years earlier; each had difficulty in recalling when the relevant meeting occurred, and each were vague and inaccurate in their evidence. However, the Vellas were certainly entirely neutral witnesses; whatever the grounds on which the trial judge might not have accepted them, the fact is that she did accept them; and her conclusions are not so irrational as to justify a new trial.

74 Fifthly, the plaintiffs submitted:

“Relevantly, her Honour’s ‘alternative arrangements’ analysis was never put to Budd and he had no opportunity to answer it; at no time was Budd cross-examined to suggest that his contact with the Vellas was as perceived by her Honour in her judgment; i.e. a decision to make alternative arrangements before 19 September 1995 …, and that the arrangements themselves with the Vellas began before 28 September … ; nor (unfortunately) were the Vellas cross-examined to that effect.”

“Q. Now, when you went and visited the Vellas, you found out the price for which you could obtain propagated seedlings?

A. Yes.

Q. And indeed, after 25 September you placed an order for some two million seedlings?

A. Yes.

Q. With the Vellas?

A. Yes.

Q. At 7.5 cents per seedling?

A. Plus 3 cents freight, 7.8.

Q. 7.8. Was it the case that you supplied seed to the Vellas?

A. Yes.

Q. Did you obtain that seed from somewhere else?

A. Yes.

Q. Where was that?

A. Seed was obtained from a Sally Stewart.

Q. What was the price that you paid Sally Stewart for seed?

A. For two kilos of seed I paid $8,000.

Q. $8,000?

A. Yes.

Q. I think the rule of thumb that you mentioned previously was you get one million seedlings from each kilo?

A. Something like that, yes.

Q. Does that translate to something like 2 cents a seed from Sally Stewart?

A. No.

Q. Perhaps you can work it out for me?

A. Yes.

HER HONOUR: So the price per seed was? What is the price per seed?

SOUTHWICK: He just agreed with me about two cents, your Honour. I don’t know whether he is calculating it again?

A. I am having difficulty with this jolly machine. 8,000 divided by two million, isn’t it? I keep getting 4.03.

Q. Do you think you paid 4 cents per seedling?

A. No, that’s not right. I think it is point 04.

HER HONOUR: Q. That means 4 cents per seed, does it?

A. No, .04.

SOUTHWICK: Q. Just under half a cent per seed, is that right?

A. Yes.

Q. So you are paying to Mrs Holding at 13 cents $260,000 pursuant to the order for the two million seedlings; is that correct? You indicated that a few minutes ago?

A. Yes.

Q. Plus if you are not ready to receive them until after July when you planted the 1.3 million you could claim holding costs; is that right?

A. No.

Q. You were asked to pay holding costs from Leppington with respect to the 1.3 million seedlings?

A. I am denying that there was an order.

Q. You are denying that there was an order placed at all for the two million seedlings?

A. Yes.

HER HONOUR: Q. Let’s for a moment take the unusual step, because you have alleged there is a breach of contract for failing to supply the two million seeds in your statement of claim, that there was an order for two million seeds. Let’s take that as a working assumption?

A. Okay.

SOUTHWICK: Q. What I am putting to you, Mr Budd, if you allow for a cost of roughly half a cent per seed across two million seedlings, that translates to a cost of $10,000 for that seed?

A. Yes.

Q. And that if you allow for the purchase of the propagated seedlings from the Vellas at 7.8 cents per seedling, including the delivery charges, that works out at $156,000, and that if you allow planting costs at 1.235 cents per plant, that works out at $24,700. Do you want to check those numbers?

A. I accept the figures.

Q. If you add those amounts together, 10, the 156 and the 24, 7, you get the figure of $190,700 as the cost that you ultimately paid for the two million seedlings?

HER HONOUR: The difficulty I have with that proposition is that the charges raised according to the document put in evidence last time has different costs; 8 cents, sometimes 7 cents.

SOUTHWICK: I am taking a figure that the witness has provided. I appreciate the difficulty For these purposes the approximate figure is sufficient.

Q. What I am suggesting to you is at approximately $190,000 to plant, to have the seedlings in the ground, that represents a substantial saving over the $260,000 Mrs Holding was going to charge you?

A. Of course.

Q. Indeed, it represents an even greater saving than the mere difference between those figures if there are additional holding costs charged to you for not being ready to accept the seedlings?

A. Your point?

Q. What I am putting to you is that you had substantial financial reasons for wanting to get out of this second contract once you knew you could have the seedlings propagated by Mr Vella for around seven-and-a-half cents per seedling?

A. That was only after the first contract was terminated.

Q. But you see, you were aware, in September when you first spoke to Mr Vella of the prices, that he was charging for propagating seedlings?

A. In conversations. He sent a fax, yes. It wasn’t at 25 September, though.

HER HONOUR: Q. Do you say on oath on 25 September you did not know the prices?

A. Sorry, 22 September.

Q. Do you say on oath that you did not know on 25 September?

A. No, I do not. I withdraw that.

SOUTHWICK: Q. You say, as I understand it, that there was no second order placed for two million seedlings?

A. Not by me, no, or any partner of Palmer Plantations.”

75 As for the argument that the Vellas were not cross-examined about Mr Budd’s alternative arrangements with them, Mr John Vella was cross-examined to establish the procedures which would have had to have been carried out before the 26 September 1995 quote was issued. His evidence is strongly suggestive of dealings between the Vellas and Mr Budd on cost either before or just after 19 September 1995. It was therefore unnecessary to question Mr James Vella in the same way. Obviously neither of the Vellas could be questioned about Mr Budd’s personal mental processes. They were both questioned on matters of timing.

Bridestowe order

76 Mrs Holding said that on 7 September 1995 she placed orders by phone for a total of 2 million seedlings; 800,000 seedlings were ordered from Bridestowe (later known as Tea Tree Distributors). She adhered to that evidence in cross-examination. The trial judge accepted it. It was supported by the fact that it corresponded with contemporaneous instructions to her solicitor, since the solicitors’ letter of 27 September 1995 to Mr Budd said:

“Our client has committed itself to acquiring from its suppliers the 2 million seedlings and these arrangements cannot be cancelled.”

77 The first two arguments of the plaintiffs were:

“(i) $30,000 worth of seed would amount to 6 kilograms (per Mrs Holding’s evidence, Black Book 431U); a kilogram planted 1 million seedlings (Black Book 189K also Red Book 66F-J); hence the $30,000 worth of seed Mrs Holding said she delivered for the 2 million order would have in fact propagated 6 million seedlings.

(ii) However, Mrs Holding’s sworn evidence was that she gave a Mr Richard Long at Bridestowe 2 kgs of seed, the equivalent of 2 million seedlings (Black Book 431R-U); but she only ordered 800,000 seedlings from Bridestowe.”

78 These arguments attack her evidence that in July she sent seed to propagators in relation to the 2 million order. The fallacy in these arguments is that she made it clear that the $30,000 worth of seed (equivalent to 6 million seedlings) was not all for the 2 million order.

79 The next argument of the plaintiffs was:

“(iii) Mrs Holding’s evidence of placing the order with Bridestowe for 800,000 seedlings was contradicted by Mr Lewis and Mr Evans:

(b) Mrs Evans, a Horticulturist, was the Farm Manager for Bridestowe from 1993 to about June 1996 and in that capacity was responsible for all of Bridestowe’s seedling propagation (Blue Book 433H-K). Although he did not take orders for seedlings, he was in daily contact with the owner, Mr Aldwell (Blue Book 433N).

Mr Evans said that in 1995 no propagation of seedlings was done for anyone other than Bridestowe itself (Blue Book 433Q-R); all propagation was for Bridestowe’s own purposes (Blue Book 433V-W and 434I-J). He said it was not only not unusual for seed to be sent for propagation, but ‘it never occurred’ (Blue Book 434F and 435E-G).

Mr Evans said that as the ‘person in charge of all seed planting and propagation activities’ for Bridestowe, he would have had to know about any seed allegedly sent for propagation, and by inference, any order (Blue Book 435I-J). He was not cross-examined to suggest there could be orders he would not know of.

old

96

95

80 Orally it was submitted that Mrs Holding was never recalled to deal with certain statements which she was said (in evidence which was rejected) to have made about Bridestowe.

81 This group of submissions advanced by the plaintiffs was directed to the following findings about Messrs Evans and Lewis. Neither had the benefit of any records. Taking orders was not Mr Evans’ role, he being farm manager. A separate office handled orders. His knowledge of orders depended entirely on what he was or was not told by Mr Aldwell, who was not called.

105 Finally, there are other matters indicating that the trial judge was not biased, and matters indicating to a reasonable observer that she was not apparently biased. Not only did she grant the plaintiffs a longer adjournment than they requested, and put in place a regime enabling the plaintiffs’ new counsel to represent their interests effectively, she also granted them leave to reopen their case on 12 July despite the difficulties this might have caused the defendants. She permitted a late amendment to the Further Amended Ordinary Statement of Claim despite its gross improbability and the want of evidence in support of it. She explained many procedural matters to Mr Budd. She stated frankly the numerous deficiencies in Mrs Holding’s evidence, and the less numerous deficiencies in her commercial behaviour.

106 The submissions directed to criticism of the behaviour of the trial judge fail.

Damages

107 It is regrettable that none of the submissions put by the plaintiffs to this Court in criticism of the trial judge’s reasoning on damages appear to have been put to her. It is hard to see how a judge can be criticised on appeal by a party for not doing something she was not invited by that party to do at trial.

First Supply Contract

108 The trial judge allowed $23,012.52 for damages for breach of the First Supply Contract as follows:

“$16,665 for loss of revenue on or about 1 September 1996 (on the assumption that the tea tree seedlings should have been planted in September 1995 and had been ready for harvesting 12 months later); and interest on that sum of $6,347.52.”

109 The plaintiffs advanced two criticisms of this reasoning.

110 First, they submitted that:

“The cost planting had been represented by Mrs Holding to the Plaintiffs at 1½ cents per seedling (albeit her Honour rejected this evidence); that cost of 1½ cents per seedling was the figure accepted by Mrs Holding when she agreed with the Hicks not to carry out the planting of the Hicks’ seedlings as had been previously contracted, and repaid the Hicks $10,500 (Blue Book 45T-U, 59H, 63R; Mrs Holding’s evidence at Black Book 275D).

Here, where the Defendants did not carry out the planting of the Plaintiffs’ seedlings, a credit should be allowed for that component in the contract for 1.3 million, i.e. $19,500.”

111 The submission has the following difficulties. Though the first defendant did not carry out the planting, it did not terminate the contract; the plaintiffs therefore remained liable to permit them to perform it; the first defendant was entitled to perform it at a cost of less than 1.5 cents per seedling if it could; and Mrs Holding estimated the cost of planting for the 1.3 million seedlings and the 2 million seedlings together at $22,894; accordingly, an appropriate cost would be, not 1.5 cents per seedling, but 1.3/3.3x$22,894. The submission that 1.5 cents per seedling was the correct figure must be rejected because it assumes the validity of the plaintiffs’ submissions on the break-up of 13 cents, and relies on evidence in relation to Mrs Holding’s dealings with Mr Hicks which has not been shown to have significance for the first defendant’s dealings with the plaintiffs. Strictly speaking the trial judge should have deducted, as indicated above, 1.3/3.3x$22,894 from the figure for the First Supply Contract damages and the balance from the Second Supply Contract damages. She made no deduction for the First Supply Contract damages in this respect, but it does not matter, because she deducted the whole $22,894 from the gross income under the Second Supply Contract.

112 Secondly, the plaintiffs submitted:

“It is further submitted that the ‘loss of profits on harvest’ allowed by her Honour at $16,605 (Red Book 97M) was speculative, being dependent upon successful propagation, and the weather, resulting in a full crop available in September 1996; it is submitted that that loss should have been markedly discounted on account of those contingencies.”

113 Apart from a reference to “the last line” of Mr Murtagh’s evidence in oral argument, the plaintiffs did not point to any evidence which would justify a marked discount. Nothing has been located in Mr Murtagh’s evidence which justifies it.

114 Accordingly, since these two criticisms advanced by the plaintiffs fail, no adjustment should be made to the trial judge’s figure for damages in relation to the First Supply Contract.

Second Supply Contract

115 The trial judge awarded $312,251.40 on the following basis:

“$207,106 for the loss of the benefit of the contract of sale and plantation as at 1 March 1996; $25,694 for loss of revenue on or about 1 March 1997 (on the assumption that the tea tree seedlings should have been planted on about 1 March 1996 and had been ready for harvesting 12 months later); and interest on the loss in the sum of $79,451.40.”

116 The reasoning underlying this was set out thus:

“… the defendants/cross-claimant are entitled to be restored to the position in which they would have been had the [contract] for the purchase of the 2 million tea tree seedlings been performed. Taking into account the likely expenditure that would have been involved in performance of the contract as calculated and identified by Ms Holding, the position would have been this:

· supply and plantation of 2 million tea tree seedlings at 13 cents each ($260,000);

· deduct cost of fuel and wages involved in plantation ($22,894, yielding a sub-total of $237,106);

· deduct sums received from plaintiff/cross-defendant ($30,000, yielding a sub-total of $207,106).

That would yield a loss of $207,106 as at the date on which the contract should have been completed, in March 1996. Adding the loss of revenue on harvesting 2 million seedlings approximately one year later (which Ms Holding calculated as being a sum of approximately $25,694), would yield a loss of $232,800 as at 1 March 1997.

The defendants/cross-claimant mitigated its losses in various ways. Some seedlings were re-sold at a return of $47,500 plus plantation yielding a total of $70,000). If the contract had been performed, the defendants/cross-claimant would still have received this sum since the re-sale took effect by cancellation of another order and substitution of the seedlings ordered for the plaintiff partnership. Effectively, therefore the defendants/cross-claimant lost the profit it would have made on the unrelated contract that was cancelled.

Some of the seedlings did not take, and the nurseries therefore levied no charge (reducing the defendants/cross-claimant’s loss). In the result only 1.14 million tea tree seedlings were delivered by the nurseries. 500,000 seedlings were re-sold; but 640,000 seedlings went to waste.

The defendants/cross-claimant calculated their loss on the second contract by reference to the sums paid for seedling propagation less the sums recovered by re-sale of 500,000 tea tree seedlings by virtue of substitution of that order for the order required for unrelated contract. On that basis, the defendants/cross-claimant’s damages schedule was calculated as nett loss $18,625 plus cost of seedlings (incorrectly estimated as $87,024 - should be $119,632 on my findings). That had the effect of treating as mitigation the defendants/cross-claimant’s decision to (in effect) [forgo] the earnings from another, unrelated [contract]. The defendants/cross-claimant was also denied the benefit of the profit that would have been made by the completion of the contract. Had the plaintiff/cross-defendant not breached the contracts, the defendants/cross-claimant would have had the benefit of both contracts.”

117 The plaintiffs submitted:

“(i) Of the contract for 2 million seedlings the Defendants paid for and took delivery of 1.14 million (Black Book 410H); for those 1.14 million seedlings the Defendants paid $87,024 (Blue Book 374N).

(ii) Of the 1.14 million seedlings delivered to the Defendants they used 500,000, for which they were resold/paid $70,000 (Red Book 96S); hence the Defendants suffered no loss of profit on that 500,000 seedling component. The balance of 640,000 seedlings (of the 1.14 million) ‘died’ (Black Book 433I).

(iii) The Defendants having paid $87,024 for the 1.14 million seedlings, thereby paid approximately 7.63 cents per seedling.

(iv) In looking to the ‘loss of profit’ suffered by the Defendants, the ‘used’ 500,000 seedlings ought to be ignored; the basis for any damage ought be limited to the 1.5 million on which the Defendants would have enjoyed ‘profit’.

(v) The 1.5 million seedlings, at 13 cents per seedling, would have grossed the Defendants $195,000. However, from that gross figure, the following costs and outgoings need to be deducted:

(a) cost of seed at 1 cent per seed $ 15,000.00

(b) cost of propagating at 7.63 cents $114,450.00

(per above)

$ 22,500.00

(vi) Hence, the profit which the Defendants would have enjoyed on the 1.5 million is $43,050 ($195,000 minus $151,950).

An alternative analysis of the costs to be deducted before arriving at the Defendants’ ‘profit’ on the transaction is to allow:

(a) Cost of seed - at $5,000 per 1 kilogram, $ 7,500.00

for 1.5 million seedlings

(b) Cost of propagation (same as 7.63 cents) $114,450.00

(c) Cost of planting (using a pro rata of the
figure used by her Honour) 22,894 (Red
Book 96O) $ 17,170.00

(On this analysis the profit which the Defendants would have enjoyed on the 1.5 million seedlings is $55,880 ($195,000 - $139,100).

(vii) Against this, credit needs to be given for the Plaintiff having paid $30,000 ‘deposit’ against the order for the 2 million seeds - resulting in a net loss to the Defendants of either $13,050 or $25,880.”

118 The first defendant conceded that in one respect the trial judge erred. Its submissions were:

“Had the contract proceeded the Respondent would have received the benefit of a sale of 2 million seedlings. They would also have received the benefit of the sale of the 500,000. Accordingly there is no reason to deduct this amount. See judgment 97.E.

The evidence is that the Respondent supplied the seed so no deduction should be made for that amount in calculating her loss.

The Respondent actually paid for the cost of propagating 1.4 million seedlings $87,024 (Blue Book 374N) but it is conceded would have had to pay for the additional 0.6 million at 7.63 ie $45,780.

Accordingly the calculation (with the variation from her Honour’s calculation underlined) is:

a. Supply and planting of 2 million seed @ 13 cents each ($260,000).

b. Deduct cost of fuel and wages ($22,894 yielding $237,106).

c. Deduct sums from respondent ($30,000 yielding $207,106).

Deduct cost of propagating 600,000 seedlings $45,780 yielding $161,326.

Yield loss is therefore $161,326

Add loss of revenue $25,694

Gives a loss on the second contract of $187,020 as at 1 March 1997 to which should be added interest.”

119 It is true that the first defendant has the benefit of a finding that had the Second Supply Contract proceeded, the first defendant would have performed both it and the contract to sell another 500,000 seedlings. Accordingly the first defendant is correct in resisting the deduction of the $70,000 received for those 500,000 seedlings.

120 For the plaintiffs to contend that the cost of seed at 1 cent per seed should be deducted, apart from cutting across one of their earlier arguments, involves a repetition of the view that the 13 cent figure in the First Supply Contract was broken up into components, one of which was 1 cent for the seed. That view was rejected by the trial judge and the appeal has failed so far as the challenge to that reasoning is concerned. The trial judge thought that the Second Supply Contract in this respect had the same terms as the First Supply Contract. Mr Budd denied in evidence that Mrs Holding had to bear any cost for the seeds: “she has found the seed from the mother tree, she has gathered it, there’s no cost to her.” But no reliance can be placed on that unsatisfactory piece of evidence. Since the first defendant supplied its own seed, the fact that its price for retailing seed was $5,000 per kilo is not determinative. However, it must be recognised that the first defendant saw the seed it supplied as an asset by offering it for sale at $5,000 per kilo. Further, growing the seed must have involved it in some cost, albeit not a cost which the evidence permits ready calculation of. The fact that the first defendant charged $5,000 does not mean that that was what it cost the first defendant. It seems just to make some allowance for the seed, and a fair allowance would be $2,500 per kilo, totalling $5,000.

121 There are probably other costs to be borne in mind if the parties had ever devoted close attention to the question. One is the cost of transporting the seedlings to the plaintiffs’ farm. The evidence is unclear about whether that cost would be included in the 7.63 cents paid to the seedling growers. Another may relate to insecticides. The evidence is silent on what they cost. A third question is depreciation. But the plaintiffs made no complaints along these lines and the evidence reveals virtually nothing about these topics. In the circumstances no allowance should be made.

122 The concession by the first defendant that the cost of propagating seedlings, being the difference between the quantity actual propagated and 2 million should be deducted (at 7.63 cents per seedling) is sound. (The mathematics appearing in the first defendant’s written submissions are wrong: the first defendant paid for the cost of propagating, not 1.4, but 1.14 million seedlings, leaving an extra 0.86 million, not an extra 0.6 million, to be propagated at 7.63 cents each, i.e. $65,618.) But if that concession is sound, why should the cost of propagating the whole 2 million seedlings not be deducted at 7.63 cents per seedling? To earn the right to receive $260,000 (2 million seeds at 13 cents each), the first defendant would have had to have procured the propagation of the whole 2 million seeds. A concession of that broader kind, affecting the whole 2 million seedlings, not just 1.14 million seedlings, was in fact made by the first defendant at the trial (Black 3/646H-J). To deduct $65,618 for propagating 0.86 million is an insufficient deduction: there needs to be a deduction of an additional $87,024, being the sum actually expended on the 1.14 million seeds. That totals $152,642.

123 Accordingly in lieu of the sum of $207,106 for the loss on the Second Supply Contract in March 1996 on the day on which it should have been completed there should be substituted $54,464, made up as follows.

Supply and plantation of 2 million tea tree seedlings
at 13 cents each - $260,000

Less cost of fuel and wages involved in plantation
$22,894) - $237,106

Less cost of 2 million seeds ($5,000) - $232,106

Less

124 The trial judge added $25,694 for loss of revenue as at 1 March 1997, and the plaintiffs did not challenge that figure. The sum of $49,464 and $25,694 is $75,158. To that sum must be added interest. The interest on $49,464 will run for a year longer than the interest on $25,694. It is convenient to leave the calculation of interest figures up to the date of the trial judge’s judgment to the parties so as to arrive at the judgment sum which she ought to have arrived at. That sum will bear interest at appropriate rates from that date until the date of payment.

125 The aggregate of the first defendant’s damages is thus:

(a) First Supply Contract - $ 23,012.52

(b) Second Supply Contract

126 The orders proposed below provide for the parties to agree on the interest and file a minute of an appropriate judgment sum; in default of agreement, the parties are to file written submissions within a further seven days on the interest question with a view to enabling the court to determine the correct judgment sum.

Costs

127 The second and third defendants were joined to the appeal, but apart from an order for a new trial, no relief was sought against them, because the damages awards against the plaintiffs were in favour of the first defendant, not them. Since the plaintiffs have failed in their contention that there should be a new trial, they have failed wholly against the second and third defendants.

128 The first defendant has been unsuccessful in the appeal to the extent that the damages have been reduced. If one leaves out of account the lateness of the damages challenged, the frankness of the first defendant in accepting that a substantial reduction was appropriate (though less substantial than that actually made, and less substantial than that made at the trial), and the fact that the arguments on damages which were advanced on appeal by the plaintiffs were not put at the trial, the plaintiffs might well be entitled to an order that the first defendant should pay their costs of the appeal at least in relation to damages, but perhaps generally.

129 However, the arguments advanced by the plaintiffs in support of the damages challenge were not put to the trial judge. No complaint about damages was made in the Notice of Appeal. The first complaint came in three pages to be found at the end of the substantive parts of the plaintiffs’ written submissions (which in all occupied fifty-six pages). In the plaintiffs’ oral argument in chief very little time was devoted to the question. Then, after the defendants’ oral submissions had started, the plaintiffs asked for leave to put some further brief argument. But even taking into account that further time spent on damages and taking into account the time spent on damages in the first defendant’s argument, a very small fraction of the written and oral submissions on either side was devoted to the issue on which the plaintiffs enjoyed partial success. In the balance of the appeal the plaintiffs were essaying a very difficult task of challenging conclusions which flowed from credit-based findings. In that they failed. They also failed in quite serious allegations of misconduct on the part of the trial judge. In all the circumstances it is just that the plaintiffs be ordered to pay the defendants’ costs of the appeal (but not on an indemnity basis). The trial judge’s indemnity costs order will stand, as will all her orders except the damages award in Order 3 made on 14 July 2000.

Orders

130 The orders proposed are as follows.

(1) That the appeal be allowed.

(2) That Order 3 made by the trial judge on 14 July 2000 be set aside, and that in lieu thereof there be an order that the plaintiffs pay the first defendant/cross-claimant damages in a sum to be agreed, after calculation of interest in the light of the reasons for judgment.

(3) That the parties file within seven days an agreed minute of order reflecting the damages figure referred to in Order 2 above, inclusive of interest up to 14 July 2000, in the following form: “The plaintiffs/cross defendants are to pay the first defendant/cross-claimant damages in the sum of $ “.

(4) In lieu of agreement on, and filing of, the minute of order referred to in Order 3 above, the parties are directed to file written submissions within a further seven days on the figure which it ought to contain.

131 DAVIES AJA: I have had an opportunity to read the reasons for judgment prepared by Heydon JA. I agree with them but would add a few words of my own.

132 Senior counsel for the appellants contended, with some vehemence, that the appellants' allegation at the trial was that the cost of the propagation of the tea-tree seedlings would be "passed on" to the respondents, that is, that the respondents would make no profit from the propagation. Counsel submitted that Mr Budd's evidence in this respect had been corroborated by several independent witnesses who ought to have been accepted by the trial Judge.

133 However, the case as put below was based on the following alleged statement by Mrs Holding, as set out in Mr Budd's witness statement:-

"HOLDING: '… With my connections I can get the plants propagated for 10½ cents per plant. The nurseries normally charge about 12 cents but for a large order such as yours, I can get them down to 10½ cents. I would charge you what the nursery charged me. …' "

134 That allegation was repeated more than once in the statement of claim. In para 5, the following term of the first contract was alleged:-

"(c) that the Plaintiff would pay to the First Defendant the amount charged by the seedling grower to the First Defendant for the propagation of the seedlings;"

135 That case contained a fundamental flaw. During the course of the trial, it became common ground that the respondents had charged a fixed price of 13 cents for the provision of the seed, for the propagation of the seedlings and for the planting of the seedlings. There is no doubt about the fixed price. The trial Judge had before her a document in Mrs Holding's handwriting which stated, inter alia, "Danny, 1,000,000 Seedlings @ 13c ea". There was no mention in the statement of claim or in Mr Budd's witness statement of such a price.

136 Her Honour necessarily determined the case in light of the claims made in the statement of claim. The contract, as pleaded and as verified by Mr Budd's statement, was not established, it being common ground that a fixed price of 13 cents was charged. The claim for misrepresentation also failed. It had not been represented by Mrs Holding that the appellants would pay the amount charged by the seedling grower for the propagation of the seedlings. The only charge made by the respondents was a charge of 13 cents for the provision, propagation and planting of each seedling.

137 The statement of claim alleged that the termination of the contracts was brought about by the following breaches of contract by the respondents:-

"13. The First Defendant breached the terms of the First Supply Contract in the following respects:

(a) the First Defendant charged the Plaintiff an amount per seedling in excess of that set out in para 5(c), (d) and (f);

(b) the seedlings were not available for planting in September or October 1995, or at all;

(c) the First Defendant failed to plant the seedlings to be available in September or October 1995, or at all;

(d) the First Defendant was charged at a rate of 8 cents per seedling by the seedling grower, but had charged the Plaintiff at the rate of 11.5 cents per seedling;

(e)

the Second Defendant advised the Plaintiff that the seedlings were not available to the Plaintiff at all.

14. The First Defendant breached the conditions of the First Supply Contract in the following respects:

(a) that the amounts paid in accordance with paragraph 5(j) were not immediately paid by the First Defendant to the seedling grower; and

138 The allegations made in para 13(a) and (d) and in para 14 failed because the appellants were not charged any amount in excess of the agreed price of 13 cents per seedling. No amount had to be paid over by the respondents or held on trust. The allegations made in para 13(b), (c) and (e) failed because, in September and October 1995, the appellants' land was not ready for planting. When, subsequently, it was ready for planting in 1996, the respondents supplied the necessary seedlings. The respondents did not plant the seedlings, but that was because the appellants did not wish them to do so.

139 There was a further allegation in para 15 that Mrs Holding had informed Mr Budd that the tea-tree seedlings would not be available for delivery or planting in September or October 1995 and that Kambah Tea Tree Plantations Pty Ltd ("Kambah") did not intend to supply the seedlings in accordance with the terms of the contract. In paras 16 and 17, it was said that, by so informing Mr Budd, Kambah repudiated the contract and treated the contract as at an end and that Mr Budd, on behalf of the appellants, accepted the repudiation. This claim failed because the appellants were not ready to accept the plants in September or October 1995. When they were ready to do so, the seedlings were delivered. Mr Budd conceded in cross-examination that, in September 1995, the seedlings had in fact been propagated and were at the nursery.

140 The crux of Mr Budd's witness statement, in so far as it dealt with the issue of termination, was this conversation of 25 September 1995:-

"BUDD: 'Well Norma, I must tell you that I have been to Leppington and spoken to Jim Vella. He has told me the full story. You have lied to me. You have not paid Vella, and you have touched me for 2.5 cents per seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedlings, otherwise all bets are off and I will seek legal advice.'

141 There were three problems with this evidence. One was that Mrs Holding owed no duty to the appellants to pass on funds to Mr Vella. Another was that the appellants were being charged a fixed fee of 13 cents and no separate charge was made for the propagation. Another was that it was Mr Budd who terminated the contracts.

142 The trial Judge held that Mr Budd had sought to terminate the contracts because, after investigation, he had found that he could obtain the seedlings at a cheaper price if he dealt with Mr Vella.

143 The trial Judge's finding in this respect was well supported by the material before her. The evidence showed that Mr Budd had been making enquiries of the propagators and that, on 26 September 1995, the day following his conversation with Mrs Holding, Mr Budd obtained from Mr Vella a formal quotation for the supply of 2,000,000 tea-tree seedlings at a cost of 7.8 cents each. Mr Budd subsequently accepted the quotation. Moreover, on 27 September 1995, the respondents' solicitors wrote to Mr Budd stating, inter alia:-

"We are instructed that on 25 September, 1995 you had a telephone discussion with Norma Holding of our client in which you purported to terminate two contracts with our client. …

In respect of the contract for supplying and planting 1.3 million tea tree seedlings, your purported termination constitutes a wrongful repudiation of the contract. Our client elects not to accept the repudiation and accordingly the contract remains binding on you. Please let us know when your property will be ready to have the seedlings planted."

144 In my opinion, the findings of the trial Judge were well based on the material before her and accorded with the probabilities of the case.

145 I need not discuss Mr Budd's oral evidence. It was argumentative, talkative and contained half-truths. I am not surprised that the trial Judge considered that she could not rely upon Mr Budd's evidence. As I have already mentioned, the overall effect conveyed by his witness statement was false, because it did not mention the price of 13 cents. His oral evidence was equally unreliable.

146 Counsel for the appellants sought a new hearing on the basis that the trial Judge had actual bias or that there was an appearance of bias in her handling of the proceedings. In my view, these submissions must be rejected. Her Honour certainly displayed signs of irritation with some of Mr Budd's evidence, his questioning of witnesses and his submissions. However, she was, in my opinion, entitled to do so. The trial Judge gave the appellants a full and fair opportunity to present their case and she decided the issues of liability having regard to the probabilities of the case. Her finding that she could not rely upon Mr Budd's evidence was well founded.

147 However, on the issue of damages, the trial Judge overlooked costs which should have been taken into account. I agree with the adjustments proposed by Heydon JA.

148 I agree with the orders proposed by Heydon JA.

149 ROLFE AJA: I agree with Heydon JA.

**********

Key Legal Topics

Areas of Law

Contract Law
Civil Procedure
Negligence & Tort

Legal Concepts

Breach
Damages
Procedural Fairness
Appeal
Duty of Care

Actions

Download as PDF Download as Word Document

Citations

Budd v Kambah Tea Tree Plantations Pty Ltd [2001] NSWCA 180

Most Recent Citation

Anderson v National Australia Bank [2007] VSCA 172

Cases Citing This Decision

7

Hunt v Radio 2SM Pty Ltd (No. 3) [2010] NSWDC 57

CHARISTEAS and CHARISTEAS [2016] FCWA 106

TABB & TABB [2019] FamCAFC 22

Cases Cited

3

Statutory Material Cited

0

Suttor v Gundowda Pty Ltd [1950] HCA 35

Vakauta v Kelly [1989] HCA 44

CITATION:	Budd & Ors v Kambah Tea Tree Plantations Pty Ltd & Ors [2001] NSWCA 180
FILE NUMBER(S):	CA 40627/00
HEARING DATE(S):	5 June 2001
JUDGMENT DATE:	20 June 2001
PARTIES :	Dany Malcolm Budd, Yvonne Mary Budd, Palmer Milling Engineers Pty Ltd trading as Palmer Plantations and Wayne Palmer Pty Ltd (Appellants) Kambah Tea Tree Plantations Pty Ltd, Norma Holding and Keith Holding (Respondents)
JUDGMENT OF:	Heydon JA at 1; Davies AJA at 131; Rolfe AJA at 149

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 7323/98
LOWER COURT JUDICIAL OFFICER :	Susan J Gibb DCJ

COUNSEL:	P J McEwen SC/S A Benson (Appellants) M H Southwick (Respondents)
SOLICITORS:	Mackenzie & Vardanega (Appellants) Macquarie Lawyers (Respondents)
CATCHWORDS:	Contracts - Termination - Whether repudation wrongful - Quantum of damages - Practice and procedure - Bias - Fairness of trial - D
CASES CITED:	Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Vakuata v Kelly (1989) 167 CLR 568
DECISION:	See para 130

[2001] NSWCA 180

20 June 2001

Key Legal Topics

Areas of Law

Contract Law

Civil Procedure

Negligence & Tort

Legal Concepts

Breach

Damages

Procedural Fairness

Appeal

Duty of Care