Chambers v Brice

[2013] QSC 232

SUPREME COURT OF QUEENSLAND

CITATION:

Chambers v Brice [2013] QSC 232

PARTIES:

JOHN CHARLES CHAMBERS
(First plaintiff)

AND

DORRIGO PROPERTY PTY LTD
(Second plaintiff)

AND

HARROD HOLDINGS PTY LTD
(Third plaintiff)

v

ROBERT ANDREW CREETH BRICE
(Defendant)

AND

SUSAN MARGARET CHAMBERS
(Defendant by counterclaim)

FILE NO/S:

BS1317 of 2010

DIVISION:

Trial Division

PROCEEDING:

Claim

DELIVERED ON:

5 September 2013

DELIVERED AT:

Brisbane

HEARING DATE:

11–15, 18–20, 22, 25–28 February 2013, 6 March 2013; Judgment delivered on 27 March 2014.

JUDGE:

Peter Lyons J

ORDER:

1.  Judgment for the first plaintiff on his claim against the defendant in the sum of $2,086,700 together with interest to be determined.

2. Judgment for the defendant on his counterclaim against the second and third plaintiffs in the sum of $1,500,000 together with interest to be determined.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – where the first plaintiff is a qualified veterinarian and has practised as such for most of his working life – where the first plaintiff had developed an interest in Wagyu cattle – where the defendant had provided the first plaintiff with a range of accounting services since 1992 –– where around the end of August 2007 there were telephone calls between the defendant and the first plaintiff where  a number of transactions were discussed – where the content of the phone calls is contentious – where the first plaintiff alleged that during those telephone calls a contract was formed between the first plaintiff and the defendant – where the defendant alleged that no agreement was reached during the telephone conversations – where the defendant alleged that even if an agreement was reached it was not sufficient to constitute a binding and enforceable contract because the subject matter of some elements of it, and some of the terms, were not sufficiently identified – where the defendant alleged that the parties did not intend to be contractually bound or alternatively they did not intend to be contractually bound until the agreement was reduced to writing – where the defendant alleged that the agreement was uncertain – where the plaintiff alleged a number of matters after the end of August 2007 were carried out in part performance of the agreement – whether a binding agreement had been formed

DAMAGES – MEASURE AND REMOTENESS OF DAMAGES IN ACTION FOR BREACH OF CONTRACT – GENERAL – where the first plaintiff alleged that the appropriate date for the assessment of damages is the date on which the defendant either breached or repudiated the contract – where the defendant alleged the relevant date is the date identified under the contract for completion – where there was no express agreement about the time for delivery of the cattle – whether the appropriate date for the assessment of damages is the date the defendant either breached or repudiated the agreement

EQUITY – GENERAL PRINCIPLES – FIDUCIARY OBLIGATIONS – ASCERTAINMENT OF RELATIONSHIP – where the defendant had provided the first plaintiff with a range of accounting services since 1992 – where the defendant continued to provide advice to the first plaintiff until at least the end of 2007 – where in that period the first plaintiff continued to rely on the defendant for advice, in particular during the course of the August 2007 telephone conversations – whether the defendant was a fiduciary in relation to the first plaintiff

Evidence Act 1977 (Qld), s 92

400 George Street (Qld) Pty Ltd v B G International Ltd [2010] QCA 245
Alford v Ebbage [2004] QCA 283
Allen v Carbone (1975) 132 CLR 528
B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147
Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647
Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
Browne v Dunn (1894) 6 R. 67
Brunninghausen v Glavanics (1999) 46 NSWLR 538
Bulstrode v Trimble [1970] VR 840
Carmichael v National Power Plc [1999] 1 WLR 2042
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd  [2008] NSWCA 193
Emeness Pty Ltd v Rigg [1980] 1 Qd R 172
Ermogenous v Greek Orthodox Community (2002) 209 CLR 95
Film Bars Pty Ltd v Pacific Film Laboratories (1979) 1 BPR 9251
Grant v YYH Holdings Pty Ltd [2012] NSWCA 360
Hall v Busst (1960) 104 CLR 206
Hillan v Lewis [2012] NSWSC 640
Hospital Products v United States Surgical Corporation
Howard Smith & Co Ltd v Varaw (1907) 5 CLR 68
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Johnson v Agnew [1980] AC 367
Johnson v Perez (1988) 166 CLR 351
Love and Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475
Lym International Pty Ltd v Marco Longo [2011] NSWCA 303
Maguire v Makaronis (1997) 188 CLR 449
McDonald v Shoalhaven City Council [2013] NSWCA 81
Meehan v Jones (1982) 149 CLR 571
Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60
NCH v Western Australia [2013] WASCA 29
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Pagnan SPA v Feed Products (1987) 2 Lloyd’s Rep 601
Pasqualotto v Pasqualotto [2013] VSCA 21
Pilmer v Duke Group Ltd(in liq) (2001) 207 CLR 165
Robinson v Harman (1848) 1 Ex 850
Rossiter v Miller (1878) 3 App Cas 1124
Scammell & Nephew Ltd v Ouston [1941] AC 251
Securities and Exchange Commission v Chenery Corporation (1943) 318 US 80
Seven Cable Television Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 89
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
Van der Velde v Halloran [2011] WASCA 252
Watson v Foxman (1991) 49 NSWLR 315
WAQ v Di Pino [2012] QCA 283
Weemah Park Pty Ltd v Glenlaton Investments Pty Ltd [2011] QCA 150
York Air Conditioning and Refrigeration (A/sia) Pty Ltd v Commonwealth (1989) 80 CLR 11

COUNSEL:

D Kelly QC and E Goodwin for the plaintiffs and defendant by counterclaim

R Bain QC and G Beacham for the defendant

SOLICITORS:

Hopgood Ganim for the plaintiffs and defendant by counterclaim

Tresscox for the defendant

1. Peter Lyons J:  In 2007 and 2008, the first plaintiff, Mr Chambers, had dealings with the defendant, Mr Brice, in relation to sale of cattle and other matters.  The parties other than Mr Brice (Chambers parties) contended that those dealings resulted in an agreement, of contractual effect, primarily for the sale of cattle by Mr Chambers to Mr Brice, which agreement was subsequently terminated, on the basis of repudiatory conduct by Mr Brice.  Alternatively they alleged that Mr Brice is estopped from denying the existence of that contract.  They also alleged that Mr Brice is liable for damage for breach of his obligations as a fiduciary.  They also claimed other relief against him.

1. Mr Brice denied that he reached an agreement with Mr Chambers.  He denied that he is bound by an estoppel.  He also denied breach of fiduciary obligations. 

1. Mr Brice also claimed from the second plaintiff (Dorrigo Property) and the third plaintiff (Harrod Holdings) money advanced under a loan agreement, together with interest.  He claimed against Mr Chambers monies for agistment fees.  He also made a restitutionary claim against Mr Chambers, and his wife, the defendant by counterclaim (Mrs Chambers), in respect of monies paid for semen straws; and against Mr Chambers he made a similar claim in respect of monies paid for embryos.

Background

1. Mr Chambers is a qualified veterinarian and has practised as such for most of his working life.

1. In his early years he practised in Queensland.  In 1978 he married Mrs Chambers and, shortly after, moved to Darwin where he established a veterinary practice.  In 1988 he sold his practice and returned to Brisbane[1]. 

   [1]See ex 2.

1. In the same year, Mr Chambers was charged with two counts of operating a bank account in a false name.  He was sentenced to a term of imprisonment of three months, which he served.  It would appear that the offending was related to tax matters, but by the time of sentence Mr Chambers had resolved any related disputes with the Deputy Commissioner of Taxation.

1. After his release from prison, Mr Chambers did not return to work immediately.  His evidence was that in about 1990, a solicitor suggested that he contact Mr Brice to look after his bookkeeping and tax affairs for the future, so that they might be conducted in the normal fashion without further tax related problems[2]. 

   [2]See T2-23.

1. By this time, Mr Brice had been an accountant for quite a number of years.  He had been an auditor with the accounting firm, Arthur Anderson, for ten years.  In 1977 he commenced to practise as the principal of AH Jackson & Company (Jackson).  Although he subsequently took on partners, he remained a principal of Jackson until he retired on 30 June 2004. 

1. From about 1992, when Mr Chambers returned to practice in Darwin, Mr Brice provided Mr Chambers with a range of accounting services, including financial and tax-related advice.

1. In Darwin, Mr Chambers conducted his practice as the Darwin Veterinary Hospital[3].  On 11 June 1999, Darwin Veterinary Hospital Superannuation Fund (Superannuation Fund) was established, with Mr and Mrs Chambers as trustees[4].

   [3]T2-25/50.

   [4]Ex 1, tab 1.

1. Shortly after his return to Darwin, Mr Chambers entered into a partnership with another veterinarian, Mr Simon Coates, related to breeding and raising cattle.  By this time, Mr Chambers had developed an interest in Wagyu cattle, specifically in their breeding, the production of calves from embryos, and the raising of these cattle.  He considered that Mr Coates might assist him, because of his background in beef cattle raising[5].

   [5]T2-25/10.

1. In time, Mr Chambers came to conduct his veterinary practice from premises also referred to as the Darwin Veterinary Hospital (Hospital).  The Hospital is owned by Harrod Holdings, the shareholding in which was said to be under the control of Mr and Mrs Chambers[6].

   [6]See T3-10/10.

1. When Mr Brice retired as a partner of Jackson on 30 June 2004, he became a consultant to that firm. His pleaded case is that since late 2004 he has not undertaken accountancy work, or provided accounting or other financial advice, to Mr Chambers; and that those services have been provided by Ms Catherine Zammit[7].  He gave oral evidence that he ceased providing financial advice to Mr Chambers “in or about 2004”[8].

   [7]Defence para 6.

   [8]T10-26/5.

1. By the time of the trial, Ms Zammit had married; and she gave evidence under her married name of Mrs Catherine Bryant.  However, consistent with much of the evidence, it is convenient to refer to her as Ms Zammit.  On graduation from university in December 1999, she commenced employment at Jackson.  She became a partner in that firm on 30 June 2009[9].  From about the time when she commenced to be employed by Jackson, she worked on Mr Chambers’ affairs[10]. It would appear that until his retirement, Ms Zammit worked under the supervision of Mr Brice.  Thereafter, for times of present relevance, her work was supervised by Mr Mark Page, a partner of the firm. 

   [9]T8-2/35.

   [10]T8-22/40.

1. In August 2004, Mr Brice provided recommendations relating to the conduct of that part of the veterinary practice which involved the sale of pharmaceutical products. That part of the practice was to be conducted by a company, DVH Pharmaceutical Pty Ltd (DVH Pharmaceutical), as trustee of the DVH Pharmaceutical Trust.  Mr Brice made recommendations about the shareholding and directorship of the trustee, and arranged for solicitors to incorporate the trustee of the trust, with Mr Brice providing the settlement sum[11].  Subsequently, on 17 September 2004, Ms Zammit provided practical guidance about the conduct of the business of the trust[12].  That followed discussions the previous day involving Mr Brice, Mr Page and Mr Chambers[13]. 

   [11]Ex 1, tab 3.

   [12]Ex 1, tab 4.

   [13]Ex 1, tab 633, p 3602.

1. On 14 January 2005, DVH Pharmaceutical purchased a property at 61 Smith Street in Darwin (Smith Street).  It was a commercial property, purchased with the intention of letting it, but, because of its condition, attempts to do so were unsuccessful.  The purchase price was $2,000,000, of which $1,700,000 was borrowed on the security of a mortgage over that property and the Chambers’ family home[14].  The purchase was the result of advice given by Mr Brice, in about 2004, that Mr Chambers should buy some commercial real estate in Darwin[15].

   [14]T2-26 and 27.

   [15]See Statement of Claim para 8(d)(8); Defence para 10(d).

1. In the second half of 2005 and in January 2006, Mr Chambers was seeking advice about his cattle business, and in particular about a “structure to provide some form of asset protection”[16].  It is apparent that the discussions recorded in the timesheets of Jackson, to which Mr Brice was a party, related to the manner in which Mr Chambers’ cattle business was to be structured, as well as to asset protection and other matters[17].  Mr Brice also took part in discussions in May 2006, the only apparent explanation for which is the finalisation of tax returns for Mr Chambers[18].

   [16]Ex 1, tab 10 (which seem to relate primarily to exporting beef, and the QLW Group, but extended to Mr Chambers’ business structure) and tab 12.

   [17]Ex 1, pp 3605 to 3610.

   [18]Ex 1, p 3609.

1. Mr Norbury Schwennesen is Mr Brice’s son-in-law.  By late 2005, Mr Schwennesen had become interested in engaging in the business of cattle production.  Mr Brice telephoned Mr Chambers about this.   It is contentious whether in the course of this conversation Mr Chambers simply offered to provide some guidance to Mr Schwennesen[19]; or whether the basis of the discussion was that Mr Brice, Mr Schwennesen and Mr Chambers might use their joint efforts to enhance and grow a business for marketing Wagyu meat[20].  Subsequently, late in January 2006, at Mr Chambers’ suggestion, Mr Schewennesen and Mr Chambers went to a property called “Bogandilla”, near Dulacca.  A purpose of the trip was to enable Mr Brice and Mr Schewennesen to meet a Mr Takeda, who, the evidence indicates, was regarded as a significant figure in the Wagyu breeding industry.  It also gave them the opportunity to observe something of Mr Chambers’ Wagyu breeding business conducted on the property, and to meet Mr Sam Lingard, described by Mr Chambers as the technician responsible for the embryo transfers as part of Mr Chambers’ Wagyu breeding operation[21].

   [19]T2-36.

   [20]T9-15/55 to 9-16/31.

   [21]See T2-37 and 38.

1. Thereafter, Mr Chambers provided detailed advice to Mr Schwennesen relating to the breeding and raising of Wagyu cattle[22].  By early 2006 Mr Chambers had entered into a Memorandum of Understanding with other parties relating to the fattening of Wagyu cattle in a feed lot, and the subsequent marketing of meat, under the label “Queensland Longfed Wagyu” (QLW).  He provided a copy of the document to Mr Schwennesen[23]. 

   [22]See for example ex 1, tabs 14 and 15.

   [23]Ex 1, tab 16.

1. In May 2006, the company Ywagyu Pastoral Co Pty Ltd was incorporated[24].  At about the same time a partnership called the Ywagyu Pastoral Co (Ywagyu) was established between a trust of which Mr Schwennesen and his wife were trustees, and a company which was the trustee of the RAC & JD Brice Pastoral Trust[25].  Ywagyu Pastoral Co Pty Ltd was then appointed manager of the partnership[26].

   [24]Ex 1, tab 23.

   [25]Ex 1, tab 24.

   [26]Ex 1, tab 27.

1. Throughout 2006, Mr Chambers continued to provide substantial advice to Mr Schwennesen.  Much of the advice was directed to a proposed breeding program.  However it extended to prices which might be received for Wagyu meat, information from Mr Chambers’ personal records relevant to the preparation of a cash flow projection, and other assistance with marketing. 

1. Mr Chambers gave evidence that in about the middle of 2006 he was considering the purchase of some Wagyu semen straws from Mr Takeda, using the Superannuation Fund. Some 911 semen straws were in fact purchased by Mr and Mrs Chambers as trustees of the Superannuation Fund, at $50 per straw, plus GST[27].  He gave evidence that he asked Mr Brice whether that could be done, and Mr Brice agreed[28].  He also gave evidence that Mr Brice then asked him whether he should also purchase some semen straws, which Mr Chambers recommended.  As a result Mr Chambers placed an order for semen straws on behalf of Ywagyu[29].  Mr Chambers identified a document as the order form[30].   Mr Chambers gave evidence that the details in the right column were filled in by Mr Schwennesen.  Essentially Mr Schwennesen gave evidence that he had completed the document and sent it to Australian Wagyu Beef[31].  Mr Chambers sent an email to Mr Schwennesen on 6 June 2006 which included the partly completed order, together with an order that Mr Chamber had placed for straws, at a price of $50 per straw.  In his evidence in chief, Mr Brice provided corroboration of this, to the extent that he said that Mr Chambers recommended the purchase of certain semen straws from Mr Takeda’s company; and Mr Chambers was to arrange the purchase[32].

   [27]Ex 1, tab 20.

   [28]T2-40 to 41.

   [29]T2-41.

   [30]Ex 1, tab 666.02.

   [31]T12-18.

   [32]T9-21/20-50.

1. On 12 July 2006, Ywagyu entered into an agreement to purchase 200 Wagyu embryos from Mr Chambers at a price of $500 per embryo[33].  The agreement was prepared by Mr Schwennesen, with Mr Chambers’ assistance. 

   [33]Ex 1, tab 666.01.

1. In August 2006, Mr Schwennesen visited Mr Chambers in Darwin where he observed the Herdmaster Computer Program being used by Mr Chambers in relation to his Wagyu herd, and demonstrated that he had been able to use Excel to record pedigrees[34].  There was subsequent email correspondence between Mr Chambers and Mr Schwennesen relating to these programs.

   [34]T6-19 to 20 and ex 1, tab 52.

1. At about this time Mr Brice had entered into a contract to purchase a property called “Lockerbie”, near Beaudesert.  The contract settled in October 2006[35].  Because Bogandilla was in drought, Mr Chambers agreed with Mr Brice to agist some of his cattle on Lockerbie.  Mr Chambers agreed to pay an agistment fee, and to make payments related to the management of property, but there was no written record of the agreement[36].  Mr Chambers’ cattle first arrived at Lockerbie on about 11 October 2006. 

   [35]Ex 1, tab 55; defence para 18(f).

   [36]Defence par 18(f); reply par (e) and (d); T11-40 to 41 and 11-66/20.

1. It is apparent that in the latter part of 2006, Mr Chambers was giving consideration to the purchase of a rural property in New South Wales[37].  In the first half of 2007, Mr Chambers was also giving consideration to the transfer of Smith Street to the Superannuation Fund[38].

   [37]See ex 1, tab 113; see also ex 1 p 3615, entry for 20/12/2006.

   [38]Ex 1, tab 130.

1. On 1 June 2007, Mr Brice, Mr Chambers and Mr Schwennesen travelled to Macquarie Downs to meet Mr Tony Fitzgerald.  A purpose of the meeting was to discuss the acquisition by Ywagyu of meat from cattle fattened there on behalf of QLW.  On 20 June 2007, Mr Schwennesen sent an email to Mr Fitzgerald offering to purchase some of the cattle. Subsequently, there was a telephone conference involving Mr Brice, Mr Schwennesen, Mr Fitzgerald, Mr Chambers and Mr Robert Bryett, representing another member of QLW.  In it Mr Bryett expressed concern about selling meat to Mr Brice and Mr Schwennesen, if they would in turn sell in competition with Australian Agricultural Company, an existing client of QLW[39].

   [39]T2-56.

1. About the middle of 2007, Mr Brice telephoned Mr Chambers. The terms of the conversation are in dispute, but it is clear it related to the possible acquisition of some of Mr Chambers’ Wagyu herd.  Early in August, Mr Brice and Mr Schwennesen travelled to Darwin.  They met with Mr Chambers at his veterinary clinic in Darwin.  It is not controversial that, at the meeting, the parties discussed how Mr Chambers’ herd might be valued, that Mr Schwennesen demonstrated the use of a cash flow model, and Mr Chambers expressed the view that his full blood Wagyu breeding cows were worth approximately $10,000 per head.  It is also not controversial that some discussion related to the sale by Mr Chambers of his veterinary practice in Darwin, though there was an issue as to whether he expressed a positive intention to do so[40].  Mr Chambers gave evidence, contradicted by Mr Brice, that Mr Brice said that if a substantial number of animals were involved in the purchase, a premium would attach because the number would permit a viable business operation[41].  Mr Chambers said that Mr Brice stated that he wanted to identify goodwill in relation to the possible sale, and a period, suggested as three years, over which information was to be transferred to himself and Mr Schwennesen[42]. This evidence is somewhat controversial. 

   [40]See statement of claim paragraphs 12 and 13, defence paragraphs 22, 23 and 24 and reply paragraphs 21 and 22.

   [41]T2-60/50.

   [42]T2-61/30.

1. On this visit, Mr Brice saw Smith Street, and was aware that it could not be leased[43].

   [43]T10-57/55.

1. On 19 August 2007, Mr Schwennesen sent an email to Mr Brice showing figures he had derived by means of a cashflow exercise, relating to Mr Chambers’ cattle[44].  The number of cattle referred to was 470 head; the calculated price per head ranged from $11,436 to $14,797; and the value of half the herd ranged from $2,687,000 to $3,477,000 (depending on the adopted discount rate).  These figures were compared to a calculated amount of $2,350,000 on the basis of the $10,000 per head for half the herd mentioned by Mr Chambers.  This reference was followed by the statement, “NB not including Bulls or straws”, the last word undoubtedly being a reference to semen straws. 

   [44]Ex 1, tab 148.

1. On 26 August 2007, Mr Schwennesen sent an email to Mr Chambers, with a copy to Mr Brice[45].  The subject line read, “Calculations behind pricing of herd”.  The email itself commenced with the statement, “Attached is the file which shows how I have come up with my valuation of the herd.”  It then stated that Mr Brice had requested Mr Schwennesen to show the difference resulting from the use of different discount rates.  Attached was a spreadsheet setting out details of the calculations and data, with resulting values.  The values were the same as those communicated to Mr Brice in the email of 19 August 2007.

   [45]Ex 3.

1. Around the end of August 2007 there were telephone calls between Mr Brice and Mr Chambers (August 2007 telephone conversations).  Mr Chambers’ case is that a contract, referred to as the first agreement, was formed in the course of them.  In significant respects, their content is contentious, and will be considered later in these reasons.  However it is convenient to record here that the plaintiffs alleged that Mr Brice agreed to pay $3,200,000 for half of Mr Chambers’ Wagyu business, being $1,000,000 for goodwill, $100,000 for embryos, $300,000 by three equal annual instalments, “to be treated as management fees”, $300,000 for semen straws, and $1,500,000 by three equal annual instalments, “to be treated as leasing payments”, to be paid in July 2008, 2009, 2010.  The herd was to be divided into two halves of equal quality, one half to be delivered to Mr Brice, with ownership to pass at the end of the third year.  Mr Brice would lend Mr Chambers $1,500,000, secured against the Hospital, and a property to be purchased in New South Wales, with interest on the loan to be met by additional amounts to be paid on the three annual instalments of $500,000, and the instalments themselves to be set off against the loan repayment.  The semen straws were those owned by the Superannuation Fund; and Mr Brice was to supply to Mr Chambers semen straws of equivalent value to those to be supplied from the Superannuation Fund[46].  Notwithstanding the description of one of the payments, no embryos were in fact to be transferred to Mr Brice[47].

   [46]Statement of claim para 20.

   [47]Statement of claim para 20A.

1. In his defence, Mr Brice alleged that in the course of the telephone calls, a number of transactions were discussed which might have resulted in a total payment of over $3,000,000 to Mr Chambers.  Those transactions included the purchase of semen straws for $300,000; the purchase of embryos for $100,000; the payment of $1,000,000 for the provision by Mr Chambers of his knowhow and expertise in relation to the Wagyu industry, referred to by the parties as “goodwill”; the acquisition of half the herd for $1,500,000 either by three instalments, or by payment pursuant to a lease; and a payment of $300,000 over three years as management fees.  There was also discussion about a loan to Mr Chambers to purchase property, to be secured against property owned by Mr Chambers.  The parties discussed the proceeds of the sale of the cattle being used to repay the loan. However the parties did not discuss the purchase of half of Mr Chambers’ business.  The discussion did not proceed to the point of agreement[48].

   [48]Defence para 30.

1. There are entries in the Jackson timesheets made by Ms Zammit and Mr Page of work activities undertaken by them at about this time in relation to Mr Chambers’ affairs.  They record that on 7 August 2007, Mr Brice, Mr Page and Ms Zammit had discussions dealing with the small business Capital Gains Tax concession; a sale of  a fifty percent interest in the primary production partnership; and the implications of this for tax, stamp duty, and superannuation[49].  They also record that on 30 August 2007 Mr Page discussed with Mr Brice the purchase of fifty percent of the cattle business, with reference to goodwill, stock value and prepaid management fees[50]

   [49]Ex 1, p 3620, 3622.

   [50]Ex 1, p3622.

1. On 5 October 2007 Dorrigo Property was incorporated.  On the same date, a discretionary trust was constituted, with Dorrigo Property as the trustee.  Mr Chambers was at this time considering the purchase of a property at Dorrigo, in New South Wales (Big Top).  On 24 October 2007, Ms Zammit sent an email to Mr Brice suggesting what parties should purchase that property[51].  She stated that the debt of $1,700,000 on Smith Street was “really bothering/stressing” Mr Chambers and inquired whether the debt should be reduced by the use of “funds from the sale of the business”.  She also sought Mr Brice’s views on a proposal relating to the payment of pensions from the Superannuation Fund.  On 30 October 2007 Ms Zammit sent an email to Mr Chambers stating that she had spoken to Mr Brice and “updated him with latest info.  He is cool with everything so I’ve got the ball rolling with the SF and commencing those pensions I was talking about”.

   [51]Ex 1, tab 180.

1. At this time, Mr Chambers was arranging funds for the purchase of Big Top.  Ms Zammit sent him an email advising that the Superannuation Fund had a cash balance of $1,040,000; and that amount “plus the $300k from the sale of embryos” would make $1,340,000 available for the purchase of the land (including associated costs).

1. It is clear that in the latter part of 2007, Mr Chambers had an expectation that Mr Brice would provide money to be used towards the purchase of Big Top.  On 19 November 2007, Ms Zammit sent an email to Mr Brice.  The subject line referred to that purchase.  The body of the document stated that Mr Chambers had asked Ms Zammit to let Mr Brice know that the vendor would like to exchange and sign the contract on 13 December, with settlement on 20 December.  Mr Brice replied on 22 November 2007.  The subject line contained the same reference.  The text of the email simply was, “need to confirm the no’s Catherine”[52].  Ms Zamitt’s billing worksheet records a discussion on 23 November 2007 with Mr Brice, for a period of an hour.  The subject is unidentified.  The worksheet also records a discussion for half an hour with Mr Brice on the 26 November 2007.  The subject matter was identified as “sale of jcc Cattle Business”.  On 28 November 2007 Ms Zammit sent an email to Mr Chambers[53], which set out the proposed terms of the loan between him and Mr Brice, including the amount ($1.5 million); the interest rate (payable annually in arrears on 1 July 2008, 1 July 2009 and 1 July 2010); the period of the loan (three years); a repayment schedule ($500,000 on 1 July 2008, 1 July 2009, and 1 July 2010); and specifying the security.  The letter stated that Mr Brice had drawn a cheque for $1,500,000 payable to the Trust Account of Stubbs Barbeler, a firm of solicitors, part to be available at settlement of the purchase.  The email asked whether Mr Chambers had any comments; and sought certain information if Mr Chambers agreed to the proposed security. The email envisaged that, of the funds provided by Mr Brice, $800,000 would be used for the purpose of the purchase of Big Top, and the remaining $700,000 would become available to Mr Chambers on settlement.

   [52]Ex 1, tab 192.

   [53]Ex 1, tab 194.

1. A cheque from Mr Brice to Stubbs Barbeler Trust Account for $1,500,000 is in evidence[54].  It was originally dated 28 November 2007, but the date was later changed to 10 December 2007. 

   [54]Ex 1, tab 222.

1. The evidence does not identify the source of the instructions which led Ms Zammit to send the email of 28 November 2007.  However, the previous communications between Mr Brice and Ms Zammit, the terms of the email, and the existence of the cheque, lead me to conclude that the source was Mr Brice.

1. About this time, Mr Allan Barbeler, a Brisbane solicitor and partner in the firm Stubbs Barbeler, was engaged to act in relation to the loan.  His evidence was that he came to act for Mr Chambers as a result of a request from Mr Brice, who indicated he wanted to lend the money to Mr Chambers to purchase a grazing property in New South Wales which was to be a retirement project for Mr Chambers[55].  Mr Barbeler then attempted to arrange, and subsequently arranged, for other solicitors to act for Mr Brice. Nevertheless, Mr Brice continued to have personal communications with Mr Barbeler about the transaction[56].  The tax invoice from the solicitors acting for Mr Brice in the transaction was sent to Mr Barbeler, and not to Mr Brice direct; and the communication of some of Mr Brice’s instructions to those solicitors was communicated through Mr Barbeler[57].

   [55]T8-47/1.

   [56]See Ex 11, tab 4; Ex 1 tab 259, 271, 281, 297.

   [57]See Ex 11, tabs 17 and 18; see also tabs 19, 20, 21 and 22; and see Ex 1, tab 219.

1. On 3 December there was a telephone discussion between Mr Brice and Mr Barbeler, in the course of which arrangements were made for Mr Brice to provide a cheque to Mr Barbeler’s trust account, by 8 December 2012[58].  On 5 December 2007 Mr Barbeler sent an email to Mr Brice, reporting on his attempts to engage a solicitor to act for Mr Brice in relation to the loan and asking for him to agree to the appointment of a particular solicitor.  The email discussed what property searches would be required, and how security would be taken[59].  On 5 December, Mr Brice telephoned Mr Barbeler, approving his choice of solicitor and giving instructions about the searches required[60]. 

   [58]T8-57/1; ex 11, tab 6.

   [59]Ex 1, tab 208.

   [60]Ex 11, tab 7.

1. Mr Brice’s instructions were on occasion conveyed to Mr Barbeler by Ms Zammit.  On 10 December 2007, she caused cheques to be delivered to him[61].  She was authorised to give instructions to Mr Barbeler about the distribution of the $1,500,000 then held in his trust account.   On 23 and 24 January 2008 she gave such instructions[62].  The sum of $762,624.54 was to be transferred to the solicitors acting in the purchase of the New South Wales property; and the balance to the Dorrigo Property Trust.

   [61]Ex 1, tab 223; and see defence para 45.

   [62]Ex 1, tabs 253, 261.

1. A written loan agreement was executed by Dorrigo Property as borrower, and Harrod Holdings as guarantor, apparently by the end of December 2007.  It was not executed by Mr Brice until 15 July 2008[63].

   [63]See Ex 1, tab 443.

1. Shortly before settlement, it emerged that the mortgage erroneously included one of the titles for the New South Wales property.  Mr Barbeler discussed this with Mr Brice, proposing that the reference simply be omitted from the mortgage.  Mr Barbeler recorded Mr Brice’s response as being that he was relaxed, because the Hospital alone was worth $1,500,000[64]. 

   [64]Ex 1, tab 271; T8-63/10.

1. The purchase of Big Top, and part of the loan transaction, settled on 30 January 2008.

1. Mr Barbeler gave evidence that he did not give Mr Chambers advice about the loan transaction[65].

   [65]T 8-47/50.

1. In the meantime, a tax invoice dated 20 December 2007 from the Superannuation Fund to Mr Brice was prepared, for the sum of $330,000 for 911 semen straws.  Mr Brice signed a cheque of the same date for that amount, in favour of the Superannuation Fund.  Mr Chambers contended that this was pursuant to the agreement reached about the end of August 2007[66].  Mr Brice however alleged that the payment was the result of an offer made by Ms Zammit, on behalf of the Superannuation Fund, to sell semen straws, accepted by Mr Brice, in December 2007.  It is common ground that the semen straws were not given to Mr Brice[67].

   [66]See para 30 in the statement of claim.

   [67]See defence para 40, reply para 28.

1. In early 2008, Mr Brice negotiated the purchase of Hawkins, a property adjoining Lockerbie.  By this time, Ywagyu was conducting some of its business under the name “Scenic Rim Beef”.

1. On 28 March 2008, Mr Chambers, Mr Brice and Mr Schwennesen met at the offices of Jackson.  The evidence about this meeting is contentious.  It is, however, convenient at this point to record the parties’ pleaded cases.  Mr Chambers alleged that a second agreement was made at this meeting.  He alleged that the first agreement was varied, the three annual payments to be treated as instalments of the purchase price rather than lease payments.  He also alleged that it was agreed that a list would be prepared to divide the herd evenly; the process of moving the cattle to Lockerbie would commence; he would not pay further agistment or management fees for cattle at Lockerbie; each party would look after the cattle of the other, in that party’s possession, pending the division of the herd; and Mr Chambers and Mr Brice would share evenly the costs of the embryo production program for the entire herd which at that time was underway at Broadwater Downs[68].

   [68]Statement of claim para 42.

1. Mr Brice alleged that it was agreed that he would cease charging agistment and management fees to Mr Chambers, but that was pending finalisation of an agreement between them.  They would also share the costs of the embryo production program, on the basis that he would receive half of the embryos.  There was discussion, but not agreement, about the preparation of lists to divide the herd; and about whether payment for half the herd would be made by way of instalment, or lease payments[69]. 

   [69]See defence para 52 and 53.

1. It might be noted that it was common ground that the embryo production program was carried out through to October 2008, and the embryos which became available to the parties were then divided evenly between Mr Chambers and Mr Brice[70].  It was also common ground that, at the meeting in March 2008, mention was made of Mr Brice writing a cheque for $1M in relation to the goodwill which had been discussed in the telephone conversations in about August 2007.  Mr Brice alleged that the reference was sarcastic[71].

   [70]Statement of claim para 42A; defence para 53A.

   [71]Statement of claim para 45; defence para 57.

1. In the meantime, Mr Schwennesen continued to make arrangements for the conduct of a cattle breeding operation on the two properties near Beaudesert[72].

   [72]Ex 1, tab 315, 317.

1. A tax invoice dated 1 April 2008 was issued by Mr Chambers to Mr Brice for 100 Wagyu embryos for the sum of $100,000 plus GST.  Mr Brice provided a cheque dated 24 April 2008 to Mr Chambers in the sum of $110,000[73].  Again, it is common ground that no embryos were provided to Mr Brice.

   [73]Ex 1, tab 331.

1. In this period, Mr Chambers continued to provide assistance to Mr Schwennesen in relation to his cattle breeding activities[74].  In particular, the communications between them and Mr Brice show that on Sunday 8 June 2008, Mr Chambers met Mr Brice, probably at Lockerbie.  In their discussion, Mr Brice asked Mr Chambers to advise whether Mr Brice should continue with breeding Wagyu cattle.  On 12 June 2008, Mr Chambers advised Mr Brice to buy 10 bulls, probably Brahman, to put with his (Charbray) heifers, “and maybe don’t continue with wagyu.”  However in an email of 25 June 2008 to a John Doyle, a person with apparent expertise in cattle nutrition, Mr Chambers sought advice on an appropriate feeding regime for cattle, including the Charbray heifers, on the basis that they were to be implanted with Wagyu embryos, commencing about the end of July.  The email was copied to Mr Brice, who forwarded it to Mr Schwennesen.  In an email of 27 June 2008, sent to both Mr Chambers and Mr Brice, Mr Schwennesen thanked Mr Chambers for his enquiries of Mr Doyle, and expressed agreement with the “concepts” which Mr Chambers had communicated to Mr Doyle.  The email also referred to the Charbray heifers as “recips”, which in context was a reference to embryo recipients.

   [74]Ex 1, tabs 337, 338, 353, 355, 364, 367, 375, 376, 379.

1. Work had commenced on the division of the herd, Mr Chambers writing to Mr Schwennesen and Mr Brice on 20 May 2008 to inform them of that[75].  From time to time he provided further information to Mr Brice about this matter[76].  It was common ground on the pleadings that, in late July or early August 2008, Mr Chambers and Mr Brice had a telephone conversation regarding the division of the herd, during which it was agreed the herd would be divided into an X list and a Y list of the same quality; with that task to be done by Ms Jane Radeski[77].

   [75]Ex 1, tabs 350, 357, 367, 368.  Mr Brice continued to provide assistance.

   [76]Ex 1, tab 357, 442, 446, 447, 448, 451, 452.

   [77]Statement of claim para 49, defence para 61.

1. On 27 August 2008, Mr Brice sent an email to Mr Chambers[78] which included the following:

“Going thru all lists, checking the mechanics and using the exercise to understand the breeding (trying).  Before we decide what goes where and how and why we need to document the financial transactions.  We have had a couple of discussions around my desire to not spend more money and the possibility to sell stock to generate cash and thereby reduce the investment…ie. is there a commercial position whereby we could sell cattle to say the Hammonds and those Funds go to you and i get less cattle.

I do not want to put you in a position where you need to feed more cattle than you planned.

Appreciated that this has to be resolved ASAP.”

[78]Ex 1, tab 449.

1. In about late August 2008, Mr Chambers and Mr Brice had a telephone discussion relating to the preparation of sale documentation, in the course of which Mr Chambers told Mr Brice that Mr Barbeler was not prepared to act in the matter. Mr Brice suggested that Mr Chambers engage a solicitor from Darwin, or the solicitor from New South Wales who had acted in relation to the purchase of Big Top[79]. 

   [79]Statement of claim para 53, defence para 65, reply para 1.

1. The lists which had been provided to Mr Brice divided the cattle between lists referred to as the X list and the Y list.  On 9 September 2008[80] Mr Brice sent an email to Mr Chambers which included the following:

“My toss came up Y.  We will need to discuss the cattle that Jane did not include on either X or Y lists.  I am writing you to set a moratorium on the interest and repayments due under the loan agreement on 19^th July 2008 until 19^th October 2008.  Between now and then we need to engage Solicitors to document-the proposed acquisition of part of your Wagyu business. 

…

Between Norbury, Chris, Terry and myself we can manage cattle movement.  I have not got my head around the timing and logic of moving Cattle Group B < C or those at Ron Fitzgerald’s.”

[80]Ex 1, tab 466.

1. The reference to B and C cattle groups reflect the fact that letters of the alphabet were used to identify the birth year of each beast.  On 9 and 10 September Mr Chambers sent to Mr Brice further lists of the B cattle and the C cattle, one of which had allocated them between the X and Y lists[81].

   [81]Ex 1, tabs 471, 472, 473.

1. On 11 September 2008, Mr Chambers sent an email to Mr Brice, the subject line reading “split cattle”[82].  It included the following:

“For the Y cattle…blood will be available to vaccinate next Tues Wed & Thursday   these can then be moved in the window 21 to 30 days post vaccination. 

Ideally if after discussion a plan can be achieved for B, C, D, Ron’s, Bulls etc any of these can be vaccinated to window the same or otherwise as preferred.”

[82]        Ex 1, tab 481.       

1. On 2 October 2008 Mr Chambers sent an email to Mr Brice[83].  The subject line referred to “three decks (of cattle) from Shiro & Bogandilla to Lockerbie”.  The email advised that three decks could be sent from the following Tuesday, but would be “full decks to provide the most economical transport costs”.  Some other information relating to the movement of cattle was also provided, followed by the query, “Is this all ok Andrew”.  The email also recommended that B and C cattle should be left at Dulacca until after the birth of their calves. 

   [83]Ex 1, tab 486.

1. By email dated 8 October 2008, Mr Chambers advised Mr Brice that three decks of cattle arrived at Lockerbie on 7 October[84].  The email proposed discussing with Mr Brice a management strategy for cattle on Lockerbie, including embryo transfers.  Further flushing of embryos at “Ron’s” was dependent on Mr Brice’s wishes.  The email included a draft contract prepared by Northen Territory solicitors, Cridlands MB (Cridlands).  Mr Brice forwarded that email to Mr Schwennesen the following day[85].  Mr Brice then replied to Mr Chambers by email on 14 October 2008.  The email advised that Mr Schwennesen had done work to enable the prediction of Wagyu cattle available year by year as full blood cattle and pure bred Wagyu cattle, and differentiating between steers, heifers and bulls.  The email continued:

“Decisions about forward production should be made in light of this information.  Will forward you base information.”[86]

The email referred to the need to include, in the draft contract prepared by Cridlands, cattle numbers, values, timing “and other details”.   That did not occur[87].

[84]Ex 1, tab 489.

[85]Ex 1, tab 490.

[86]See Ex 1, tab 491.

[87]Defence para 71(e); reply para 42(b).

1. On 15 October 2008 Mr Chambers sent an email to Mr Brice.  It dealt with an embryo transfer program being conducted on cattle at Beaudesert.  However, it continued:

“As a side issue can you give some thought re embryo production at Ron’s…I have enough embryos in the can and would like to stop .  but if you want to do more we can…only difference would be 100% production costs to you rather than 50% and you get all the production .”[88]

[88]Ex 1, tab 493.

1. On 16 October 2008, Mr Schwennesen sent an email to Mr Chambers[89], confirming the number of cattle which had arrived on 7 October (72 head) and asking the expected calving date for these cattle.  On 24 October, Mr Schwennesen sent an email to Mr Brice relating to the cattle that had arrived at Lockerbie[90].  The email stated:

“These animals should all check off against the y list you picked.”

[89]Ex 1, tab 494.

[90]Ex 1, tab 502.

1. On 3 November 2008, Mr Chambers sent an email to Mr Brice.  It discussed the recipient heifers being used for the embryo transplant program at Lockerbie; and the Wagyu cattle there which were to be pregnancy tested, with some to be subject to artificial insemination.  The email referred to removing “my cattle” to Dorrigo; with the consequence that the only cattle Mr Chambers would then have at Lockerbie would be some steers and “recips”, apparently recipients of embryo transplants[91].

   [91]Ex 1, tab 519.

1. On 7 November 2008 Mr Schwennesen sent an email to Mr Chambers, with a copy to Mr Brice, relating to cattle at Lockerbie, to be the subject of artificial insemination.  It identified 27 head which were to be treated in this fashion.  The herd tag numbers for several of these cattle coincided with the herd tag numbers for cattle shipped on 7 October 2008[92].  Mr Chambers replied by email on 8 November enquiring as to whether, for some of the animals, Mr Schwennesen was wanting to produce calves where females would be suitable for future breeding purposes, or was wanting to produce steer carcasses, no doubt for sale.  He also enquired as to “what you see as your AI options…” and suggested breeding females for further breeding, with commercial production to occur when the herd numbers were sufficient[93].  Mr Schwennesen replied on 10 November 2008, accepting the recommendation for producing females for breeding, and identifying the options for artificial insemination as well as the possibility of purchasing other semen[94].  Mr Chambers responded by an email of 13 November 2008, with some recommendations, including a recommendation to use “mop up bulls”, especially for “that group of your cattle Andrew which are the longer residents at Lockerbie”[95].  On 16 November 2008, Mr Chambers sent a further email to Mr Schwennesen with his recommendations for the mating of these cattle.  A note on an earlier document, attached to the email, showed that the recommendations were based on a preference of Mr Brice and Mr Schwennesen (consistent with Mr Schwennesen’s email of 10 November 2008); but recorded that the recommended use of a mop up bull had not by then been confirmed[96].  Each of these emails was copied to Mr Brice, no doubt the “Andrew” referred to in the email of 13 November. 

   [92]See Ex 1, tab 527, page 3156 and tab 502.

   [93]Ex 1, tab 528.

   [94]Ex 1, tab 530.

   [95]Ex 1, tab 531.

   [96]Ex 1, tab 539.

1. With respect to these communications, it is convenient to note that Mr Chambers alleged that some time after 9 September 2008, Mr Brice undertook an artificial insemination program in relation to some Y list cattle at Lockerbie.  In response, Mr Brice alleged that, after the emails of 7 and 8 November 2008, 15 of the Y list cattle at Lockerbie were inseminated using straws owned by Ywagyu, but otherwise denying the allegation[97].

   [97]Statement of claim para 78A; defence para 79A.

1. On 7 November 2008, Mr Chambers wrote to Mr Brice providing information relating to costs to be paid by Mr Brice, including some invoices[98].  One class of cost specifically identified was the cost of transporting Wagyu cattle to Lockerbie.  On 14 November 2008 Ms Zammit sent to Mr Chambers tax invoices addressed to Mr Brice, for the cost of the embryo flushing program and for the transport of cattle from Bogandilla to Beaudesert.  The tax invoices were supported by accompanying invoices.  For the embryo flushing program, costs were apportioned until 11 September 2008.  Recipient costs were not apportioned, nor were the transport costs.  Mr Brice received these invoices[99]; and he paid the amount claimed by cheque dated 17 November 2008. 

   [98]See Ex 1, tab 525.

   [99]Statement of claim para 47; defence para 59; T 5-20, ll 3-40; T 9-66.

1. Thoughout 2008, Mr Chambers continued to provide assistance to Mr Brice and Mr Schwennesen in relation to their cattle business[100].

   [100]Statement of claim para 48, defence para 6.

1. On 20 January 2009, Mr Chambers sent an email to Mr Brice.  The email included Mr Chamber’s version of the telephone call made about the middle of 2007, relating to Mr Brice making an offer for some of Mr Chamber’s cattle.  It asserted an agreement for the sale of the cattle, including payment for a goodwill component.  Reference was made to the loan from Mr Brice, including a statement that the “concept was the loan would be paid out by funds from part of the cattle sale”.  The email stated that, with the passage of time, the value of the goodwill component was decreasing, and that it might now be difficult to justify.  It stated that Mr Chambers thought that it existed “primarily to increase the nett benefit to me”, and asked Mr Brice “to see your way clear Andrew to complete the arrangement to the dollar value agreed on previously in such a way that neither party is advantaged or disadvantaged by the passage of time”[101].

   [101]Ex 1, tab 554.

1. On 11 February 2009 Mr Chambers sent a confidential email to Ms Zammit, stating that he was “having trouble seeing a way to progress this situation”[102].  The letter included a draft email to Mr Brice.  Ms Zammit responded on 11 February 2009, in an email mildly supportive of the approach expressed in the draft[103].  Later that day, Mr Chambers sent to Ms Zammit a further draft of an email to be sent to Mr Brice, her response being “sounds good…..”[104].  The draft proposed that Mr Brice “brief” Ms Zammit on what he wanted to do.  Mr Chambers then sent that email to Mr Brice[105].  He then sent a further email to Ms Zammit stating, “Its been sent…so we wait????”; and enquiring whether Ms Zammit felt she was in an awkward situation[106]. Ms Zammit replied, “…it should be fine”[107].

   [102]Ex 1, tab 564.

   [103]Ex 1, tab 565.

   [104]Ex 1, tab 567.

   [105]Ex 1, tab 568.

   [106]Ex 1, tab 569.

   [107]Ex 1, tab 570.

1. After having his secretary check some matters in his records, Mr Brice responded to Mr Chambers on 21 February 2009.  He stated that the involvement of Ms Zammit would be inappropriate.  He advised that, in his opinion, there was no legally binding contract for the acquisition of half of Mr Chambers’ herd.  He said that “legal processes” of determining warranties and a number of other matters, as well as due diligence, had not been completed; and until they were, and documented, “there is no agreement with binding terms and conditions”.  He said, however, that there was a legally binding contract to repay the loan, with interest.  He suggested they should “attempt to come to a commercial agreement that is acceptable to both you and myself”.  He concluded by stating that he had always understood that “business and benefaction are mutually exclusive and should not be mixed”[108]. 

   [108]Ex 1, tab 572.

1. On 3 March 2009, Mr Brice sent an email to Mr Chambers, saying that the 72 heifers sent to Lockerbie and their calves had not been branded with the Ywagyu brand, and remained in Mr Chambers’ ownership, and asking Mr Chambers to make a decision about the castration of the male calves[109].

   [109]Ex 1, tab 573.

1. On 10 March 2009, Mr Chambers forwarded to Ms Zammit a copy of Mr Brice’s email of 21 February 2009[110]. Later that day, in response to an email from Ms Zammit, Mr Chambers provided information relating to the sale, including information that had been sought by her for the preparation of a tax estimate. In providing the information, Mr Chambers suggested working on a number of scenarios in relation to the goodwill component of the sale price. He also suggested that the number of head of cattle be taken as 250 females, though it was supposed to be one half of the herd. He also stated that “most of the termed intellectual property has been transferred but further available if required…”. He sought advice about the treatment of interest, stating that the lease payments were to offset the loan and interest. He did not know when the sale date would be. The information was provided with the statement, “Thankyou for working a couple of scenarios for tax estimates so I can work to resolve cattle sale to ARB” [111]. On 14 March 2009, Mr Chambers sent a further email to Ms Zammit suggesting that she did not need to make a great effort with the tax estimates “cause…..a deal is a deal”[112].

   [110]Ex 1, tab 580.

   [111]Ex 1, tabs 581, 582.

   [112]Ex 1, tab 587.

1. Early in April 2009, Mr Brice sent to Mr Chambers an invoice for the agistment and management fees for the cattle at Lockerbie for the previous twelve months.  A covering letter stated that Ywagyu Pastoral Co Pty Ltd was willing to negotiate the purchase of cattle at specified prices per head.  Those prices would have produced a total payment dramatically lower than that which had been discussed in the August 2007 telephone conversations.  The letter also stated that Ywagyu would consider the acquisition of straws and embryos, but would need to know the quantity and heritage[113].  Thereafter, Mr Brice continued sending invoices for agistment and management fees for the cattle at Lockerbie.  Mr Chambers continued to provide some advice, acknowledging there was a dispute about the ownership of the cattle[114].

   [113]Ex 1, tabs 595, 596.

   [114]See for example ex 1 tab 609.

1. On 10 November 2009, Mr Brice sent to Mr Chambers a calculation of the amount owing in respect of the loan.  It included interest charged monthly from December 2007, initially at 8.5 percent; and subsequently at a default rate of 10.5 percent from 19 July 2008[115]. A further calculation was sent on 1 December 2009[116].  On 29 March 2010 Mr Brice gave notice to Dorrigo Holdings of a default under the loan agreement, and made demand of Harrod Holdings as guarantor of the total amount said to be owing under the loan agreement[117].

   [115]Ex 1, tab 626.

   [116]Ex 1, tab 629.

   [117]Counter-claim paras 113, 116; answer paras 64, 67.

The pleaded cases

1. I have previously mentioned the allegations made by Mr Chambers to the effect that a contract was formed in the August 2007 telephone conversations, and made some reference to Mr Brice’s pleaded defence.  In addition to alleging that no agreement was reached[118], Mr Brice pleaded that if an agreement was reached, it was not sufficient to constitute a binding and enforceable contract because the subject matter of some elements of it, and some of the terms, were not sufficiently identified.  It was also said that the alleged agreement relating to the semen straws was “a commercial nonsense” and was illusory[119].  It was further alleged that the parties did not intend to be contractually bound; or alternatively they did not intend to be contractually bound until the agreement was reduced to writing[120].  It was also alleged that the agreement was uncertain, by reason of the matters not sufficiently identified[121].

   [118]Defence para 31.

   [119]Defence para 33.

   [120]Defence para 34.

   [121]Defence para 35.

1. With respect to the alleged second agreement, save in respect of the cessation of charges for agistment and management fees, and the sharing of the costs of embryo production at Mr Ron Fitzgerald’s property at Wandoan, Mr Brice alleged that there was discussion, but no agreement, about a number of matters.  He denied there was discussion, or agreement, about moving cattle to Lockerbie.  He also alleged that if an agreement was reached in March 2008, it did not constitute a binding and enforceable contract; the parties did not intend to be contractually bound by the agreement; or alternatively, they did not intend to be so bound unless and until the agreement was reduced to writing.  He also alleged the agreement was uncertain, in respects similar to those alleged in respect of the first agreement[122].

   [122]See defence paras 52, 53 and 54.

1. Mr Chambers alleged that the following matters were carried out in part performance of the agreement as relied and subsequently varied with Mr Brice:

(a)      The division of his herd;

(b)     The selection by Mr Brice of the Y list cattle;

(c)      The transport of Y list cattle to Lockerbie;

(d)     The acceptance of the delivery of some Y list cattle to Lockerbie;

(e)      The sharing of costs of the embryo production program carried out in the latter part of 2008;

(f)      Entry into the loan agreement;

(g)     The payment of $300,000 plus GST by Mr Brice to Mr Chambers (for semen straws);

(h)     The payment of $100,000 plus GST by Mr Brice to Mr Chambers (for embryos);

(i)      The provision by Mr Chambers of management services and goodwill to Mr Brice and Mr Schwennesen[123].

[123]Statement of claim para 77.

1. To the extent that Mr Brice admitted some of the factual matters referred to, he denied that they were acts of part performance of the agreement alleged by Mr Chambers.

1. With respect to the provision of “goodwill”, Mr Brice pleaded that Mr Chambers had not moved from Darwin, or become involved in the management of “the Wagyu herd” or put himself in a position to assist Mr Schwennesen over the following three years; nor had he given any indication he was prepared to do these things[124].  However he did not allege that these matters were specifically discussed, or agreed. 

   [124]Defence para 57.

1. With respect to the agreement to purchase further embryos, Mr Brice pleaded that that was the result of an agreement reached in a telephone conversation late in March 2008[125].  I have previously mentioned his allegation about the purchase of semen straws.

   [125]Defence para 58.

1. With respect to the delivery of the cattle to Lockerbie, Mr Brice alleged that he did not complain or inquire about the delivery of the cattle because he anticipated a contract under which he would purchase them; and that the cattle remained on Lockerbie on the basis of an agistment[126].  With respect to the allegation that he had undertaken an artificial insemination program on some of the Y list cattle using semen straws owned by him after 9 September 2008, Mr Brice alleged that that occurred as a result of an email exchange of 7 and 8 November 2008 between Mr Schwennesen and Mr Chambers[127].

   [126]Defence para 70.

   [127]Defence para 79A.

1. Mr Chambers alleged that the agreement was repudiated by Mr Brice’s emails of 21 February and 3 March 2009; by the sending of agistment charges and the proposal to negotiate on 8 April 2009; and by the subsequent charges for agistment and management at Lockerbie[128].  Mr Brice denied these allegations, on the basis that he denied the existence of any agreement[129].

   [128]Statement of claim para 67 to 75.

   [129]Defence para 77.

1. In the course of the hearing, Mr Chambers’ counsel informed the court that Mr Chambers accepted Mr Brice’s conduct as terminating the contract.   Mr Chambers claims damages for breach of contract.

1. Mr Chambers alleged that from about 1990 Mr Brice was his accountant; that from about 1992 Mr Brice provided him with ongoing taxation, business and corporate structuring and advice; and that consequently by about late 2005 he had acquired an intimate knowledge and understanding of Mr Chambers’ financial and business affairs[130].  As a consequence, he had come to trust and rely upon Mr Brice to advise him about his business affairs[131]; and Mr Brice owed him fiduciary duties not to place himself in a position of conflict with the interests of Mr Chambers, and not to make any unauthorised personal profit from their relationship[132].  Mr Chambers alleged that in the August 2007 telephone conversations, Mr Brice gave advice relating to the documentation of the lease and the loan aspect of their agreement; and about a tax benefit in respect of the payment for goodwill[133].  He alleged that (in the event there is not found to be a binding contract) Mr Brice breached his fiduciary obligations by failing to advise him that he should obtain his own valuation in respect of the cattle; that he should seek independent commercial and legal advice; and that Mr Brice was no longer acting to protect Mr Chambers’ interest but was acting rather with regard to his own self interest[134].  Mr Chambers alleged that he suffered damage, by reason of the management services he provided; because he caused Dorrigo Property to enter into the loan agreement, and Harrord Holdings to give the guarantee and support of it; and because, if they are required to met obligations in relation to the loan agreement, they and Mr Chambers will be forced to sell assets.   He alleges that he is accordingly entitled to equitable compensation, particularised in the Fourth Further Amended Statement of Claim in an amount of $109,264[135].

   [130]Statement of claim para 8(c), para 8(d) and para 8(e).

   [131]Statement of claim para 9(a).

   [132]Statement of claim para 10.

   [133]Statement of claim para 22.

   [134]Statement of claim para 96.

   [135]Statement of claim  para 97 and para 98.

1. Mr Brice alleged that since late 2004, he had not undertaken accountancy work for Mr Chambers, nor provided accounting or other financial advice to him[136]. As at late 2005, he had not been a professional advisor of Mr Chambers for at least twelve months, and any knowledge he had about Mr Chambers’ financial and business affairs was at least twelve months old, except to the extent they had discussed such matters in casual conversation, they remaining good friends, with a mutual trust and regard for each other[137].  By July 2007, it had been approximately 2 ½ years since Mr Brice had been a professional advisor of Mr Chambers, or had had any knowledge of his financial and business affairs in that capacity[138].  Mr Brice alleged that it was unreasonable for Mr Chambers (apparently at least by late 2005) to trust and rely upon him, and that it was not obvious to Mr Brice nor would it have been to a reasonable person in his position, that Mr Chambers did so[139].  Mr Brice alleged that in the August 2007 telephone conversations, and at the meeting on 28 March 2008, he told Mr Chambers that he would need to consult with Ms Zammit about the structure of any agreement that was reached between them[140].  He denied any breach of a fiduciary obligation owed to Mr Chambers[141].

   [136]Defence para 6(a).

   [137]Defence para 7.

   [138]Defence para 8.

   [139]Defence para 11.

   [140]Defence para 28(b); see also para 37(b).

   [141]Defence para 29.

1. Insofar as Mr Chambers claimed that he has suffered loss as a result of providing his time, skill and expertise to Mr Brice, Mr Brice alleged that Mr Chambers provided these things gratuitously, in the hope or expectation of making an agreement for the sale of his cattle[142].

   [142]Defence para 95.

1. Mr Chambers alleged that the loan agreement “did not exclude or diminish the right of set off”, an agreement having been reached in the August 2007 telephone conversations that any interest payable on the loan would be met by equivalent amounts to be paid by Mr Brice in addition to the cattle instalments[143].  He alleged in the alternative that he and Mr Brice entered into the loan agreement in the mistaken belief that it was consistent with this agreement; and that Mr Brice was aware of circumstances indicating that both Dorrigo Property and Harrod Holdings entered into the loan agreement and the guarantee under that mistake.  He alleged that, for that reason, the loan agreement is liable to be set aside, or to be rectified by the omission of cl 5.4(4), which denies any right of set off[144]. 

   [143]Statement of claim para 33.

   [144]Statement of claim para 34.

1. Mr Brice, in addition to his denial of an agreement reached in the August 2007 telephone conversations, denied any construction of the loan agreement contended for by the plaintiffs and relied on cl 5.4(4) of the loan agreement.  He also alleged that he was entitled to assume that the plaintiffs had taken advice in relation to the terms of the loan agreement, as they were represented by a solicitor; and accordingly that they were under no mistake about, and were satisfied with, the terms of the loan agreement[145].

   [145]Defence para 40.

1. Mr Chambers made an alternative claim for the management services he has provided to Mr Brice[146].  In part, he alleged that the effect of the second agreement was that $300,000 became due and owing as a debt at that time[147].  He also sought a declaration that nothing was due to Mr Brice under certain agistment invoices[148].  Mr Brice denied the allegations made by Mr Chambers[149]. 

   [146]Statement of claim para 85 to para 90.

   [147]Statement of claim para 87(b).

   [148]Statement of claim para 91.

   [149]Statement of claim para 85 to para 89.

1. The plaintiffs alleged that under the first agreement, as varied by the second agreement, Dorrigo Property and Harrod Holdings are entitled to set off against the sum owing under the loan agreement, amounts payable in respect of the Y list cattle[150].  In part because of matters earlier pleaded, and in part because he alleged that the loan agreement varied or discharged any earlier agreement before any acceptance of the benefit of it by Dorrigo Property or Harrod Holdings, Mr Brice denied these allegations[151].

   [150]Statement of claim para 92 to para 94.

   [151]Defence para 91; see also para 92.

1. Mr Chambers also made an estoppel claim.  Broadly stated, it was that in the August 2007 telephone conversations Mr Brice represented that he would be bound by a contract in the terms discussed, on which Mr Chambers acted, with the result that Mr Brice was estopped from denying the existence of an obligation to pay $3,200,000 for half of Mr Chambers’ Wagyu business[152].  Generally on the basis of matters pleaded earlier, Mr Brice denied the allegations, including the estoppel. 

   [152]Statement of claim para 100 to para 108.

1. Mr Chambers alleged that by reason of Mr Brice’s refusal to accept some of the Y list cattle, he incurred agistment and management costs, which are payable by Mr Brice[153].  Again, generally relying upon matters pleaded earlier, Mr Brice alleged that he was entitled to refuse delivery of those cattle; and accordingly denied that he is liable for these costs; as well as disputing the amounts claimed[154].

   [153]Statement of claim para 109.

   [154]Defence para 106A and 106B.

1. Mr Brice made a counterclaim for the amount of the loan and interest, against Dorrigo Property as borrower, and Harrod Holdings as guarantor, alleging default from 19 July 2008[155].  The plaintiffs denied that money was payable under the loan agreement, essentially because of the alleged right of setoff[156].

   [155]Counterclaim para 107 to para 117.

   [156]Answer par 61ff.

1. Mr Brice pleaded an agreement made with Mr and Mrs Chambers for the purchase of semen straws for $300,000, which had not been delivered, and which he, by his pleading, terminated.  He also pleaded an agreement with Mr Chambers for the purchase of embryos for $100,000 plus GST, which he by his pleading terminated.  He claimed recovery of the sums paid under both agreements[157].  By reason of matters earlier alleged in respect of these transactions, the plaintiffs and Mrs Chambers denied the allegations on which these claims are based.

   [157]Counterclaim para 118; see the Prayer for relief on the counterclaim.

1. Mr Brice alleged that some of Mr Chambers’ cattle were agisted on Lockerbie until June 2010, and claimed agistment fees[158].  Mr Chambers denied liability by reason of the second agreement[159].

   [158]Counterclaim para 119.

   [159]Answer para 70.

General matters relating to credit

1. For the Chambers parties, it was submitted that Mr Brice was an extremely unsatisfactory witness.  Reference was made to some 20 records from the AH Jackson timesheets, relating to discussions involving Mr Brice, of which he claimed to have no recollection.   It was also submitted that he resisted a number of simple questions and reasonable propositions.  It was submitted that he made up things to support his position.  One example related to his gift of Wotif shares to the University of Queensland.  In cross-examination it was suggested that his attitude to his agreement with Mr Chambers was, in August 2008, affected by the significant reduction of his considerable fortune.  Mr Brice sought to rely on the gift, said to be made around that time, when in fact it was made almost 12 months earlier.  Another example was said to be his evidence that he was not considering charging Mr Chambers agistment fees when he sent his email of 21 February 2009 (having earlier stated that he could not remember when he had first decided to demand agistment).  He was said to have maintained untenable denials of his knowledge of and involvement in Mr Chambers’ financial affairs.  The submissions were critical of his evidence that he “did nothing” in response to the email from Ms Zammit of 24 October 2007 (plainly seeking his advice in relation to a number of matters, including the reduction of debt on Smith Street, and the commencement of pensions from the Superannuation Fund).  It was submitted that his version of the transaction relating to the purchase of semen straws in late 2007 was a recent invention, and his evidence that he then had no idea of the value of the straws was incredible.  He was criticised for his failure to provide an “honest and upfront” response to Mr Chambers’ email of 2 October 2008, advising of the proposed delivery of some of the Y list cattle to Lockerbie.  Reference was made to the fact that under cross-examination, Mr Brice had to concede that his email of 8 April 2009, asserting that Mr Chambers had requested Mr Brice to make a new offer for his cattle, was untrue[160].

   [160]T10-16 to 17.

1. Mr Brice’s denial of a statement, during his dealing with Mr Chambers in about August 2007, that the purchase of half of Mr Chambers’ breeding herd would command a premium, because he thought such a purchase would be “cheaper by the dozen”, was contrasted with his pleaded non-admission on the ground that he was uncertain about the truth or falsity of the allegation that he had made the statement.  He was criticised for suggesting his consultant fees from Jackson related to services associated only with another client.  His evidence and conduct in relation to the gift of shares to the University of Queensland was also the subject of criticism. 

1. For reasons to which I shall refer a little later, I place some substantial weight on the entries made by Ms Zammit and Mr Page in the Jackson timesheets[161].  They disclosed that Mr Brice played a significant role in the provision of financial and accounting advice to Mr Chambers, well beyond Mr Brice’s retirement as a partner of Jackson on 30 June 2004[162].  The entries generally speak for themselves, though in some cases further light is shed on them by communications from Ms Zammit[163].  Thus, it is apparent that in the latter part of 2004 Mr Brice gave advice, and was involved in discussions for the providing of further advice, to Mr Chambers about the establishment of the DVH Pharmaceutical Trust, and the purchase of Smith Street.  In the second half of  2005 and in January 2006, Mr Chambers was seeking advice about his cattle business, and in particular about a “structure to provide some form of asset protection”[164].  It is apparent that the discussions, as recorded in the timesheets, related to the manner in which Mr Chambers’ cattle business was to be structured; and that Mr Brice was a party to them.  He was also involved in discussions relating to the finalisation of tax returns in May 2006. 

   [161]Ex 1, tab 633. I understood that Mr Brice’s case was conducted on the basis that these entries were evidence of any facts they recorded; in any event they were admissible for that purpose under s 92 of the Evidence Act 1977 (Qld).

   [162]See in particular the entries for 23 June 2005; 8 December 2005; 3 & 6 January 2006; 22 March 2006; 12 May 2006; 7 August 2007; 23 October 2007 (especially Mr Page’s entry); 23, 26, 27 and 28 November 2007.

   [163]Some have been relied on by the Chambers parties from an early stage of the trial as evidence of facts asserted in them, without objection. Many were directed to Mr Brice, generally without his disagreement as to statements of fact in them. In any event they are admissible as proof of what they record under s 92 of the Evidence Act 1977 (Qld).

   [164]Ex 1, tab 10 (which seem to relate primarily to exporting beef, and the QLW Group, but extended to Mr Chambers’ business structure) and tab 12.

1. The timesheet entries record discussions between Ms Zammit, Mr Page and Mr Chambers between November 2006 and February 2007 in relation to the purchase of a new property, including whether it could be purchased by the Superannuation Fund.  That resulted in a written letter of advice from Ms Zammit on that topic of 23 February 2007[165].  In that period, Mr Page recorded on 20 December 2006 he had discussions with Ms Zammit on that and other topics, as well as with Mr Brice.[166] Ms Zammit’s timesheet entry of 31 May 2007 refers to the transfer of Smith Street into the Superannuation Fund, without reference to the involvement of Mr Brice. However, her email of the same day to Mr Chambers[167], records comments (in truth, recommendations) from her and Mr Brice relating to the rental of Smith Street and its transfer into the Superannuation Fund. 

   [165]Ex 1, tab 113.

   [166]Ex 1, tab 633, p 3615.

   [167]Ex 1, tab 130.

1. Both Ms Zammit and Mr Page made entries for 23 October 2007, which, read together, record discussions with Mr Brice and (by telephone) with Mr Chambers, relating to the structure for the purchase of the new property (Big Top), the funding of it, and the role of the Superannuation Fund and a unit trust in its purchase.  This resulted in a relatively detailed email from Ms Zammit to Mr Brice of 24 October 2007[168] dealing with that topic, and a number of other topics, including succession planning, wills, Mr Chambers’ concern about the level of debt in relation to Smith Street, and the commencement of pensions from the Superannuation Fund.  The letter plainly sought Mr Brice’s advice.  Her email of 30 October 2007 to Mr Chambers[169] records that she had had a communication with Mr Brice and that he was “cool with everything”; as a result of which she has taken steps to commence the pensions from the Superannuation Fund.  It also might be observed that the timesheets record that in August and November 2007, Mr Brice took part in discussion relating to capital gains tax (CGT) concessions for the sale of Mr Chambers’ cattle business, including the structuring of the sale[170].

   [168]Ex 1, tab 180.

   [169]Ex 1, tab 183.

   [170]Ex 1 pp 3620 to 3622.

1. I also note that at the time of Mr Brice’s retirement as a partner, Ms Zammit was not a partner in Jackson, and was herself relatively junior.  Her work was “managed” at this time by Mr Page, a continuing partner in Jackson.  However Mr Page gave evidence that he did not himself take part in substantive discussions with Mr Chambers about tax planning and consulting matters[171].  On the other hand, even in 2007, Ms Zammit sought Mr Brice’s views about a number of matters[172]; and on two occasions when communicating advice in that year, referred to his involvement (on one occasion, describing him as “the boss”)[173].

   [171]T 8-43  ll 45-60. 

   [172]See ex 1 tab 180.

   [173]See ex 1 tabs 130, 183.

1. In those circumstances, Mr Brice’s denials of the provision of accounting or other financial advice or being the professional advisor to Mr Chambers, or of knowledge of Mr Chambers’ financial and business affairs (current in 2007), and his evidence which is generally consistent with those denials, are not to be accepted. In my view, this is a matter of some significance in considering Mr Brice’s credibility.  Similarly, his evidence that he had no recollection of discussions recorded in the timesheet where he is said to be a party is not to be accepted.  His evidence of an absence of recollection might be contrasted with his positive assertion that he “did nothing” in response to Ms Zammit’s email of 24 October 2007 (the day after a discussion as recorded by her involving Mr Brice, and recorded by Mr Page as relating to the structure for Dorrigo, the funding thereof, and the use of the Superannuation Fund and a unit trust for its purchase).  His positive assertion cannot be regarded as the product of an honest recollection; and is inconsistent with Ms Zammit’s email of 30 October 2007.  Nor do I accept the honesty of his denials of the provision of advice to Mr Chambers, or current knowledge of his financial and business affairs, after 2004.

1. Likewise, I do not accept Mr Brice’s evidence that as at 27 August 2008 he did not know that Mr Chambers had made plans which would involve keeping fewer cattle than he had.  It is contradicted by Mr Brice’s email of that date.  As was suggested in cross-examination, the likely explanation is that if Mr Brice accepted he had that knowledge, it would suggest he appreciated he had made an agreement with Mr Chambers to purchase some of his cattle[174].

   [174]See T10-21 to 22.

1. Mr Brice was cross-examined about the circumstances in which he became involved with Wotif.  He denied that that was the result of one of his accounting clients taking him into his confidence; and sought to suggest that the client was not the original creator of the idea.  However, further cross-examination made plain that his involvement arose from the fact that a client of his had the original idea (to register certain domain names, and better to utilise inventory); and Mr Brice became involved because that client sought his advice[175].  In my view, Mr Brice attempted to give evidence on this topic which was less than frank.

   [175]T10-46 to 47.

1. Mr Brice was cross-examined about a large gift of Wotif shares to the University of Queensland Endowment Fund, and the treatment of this transaction in his tax returns.  It appears that the shares were owned by his superannuation fund, but the gift was made from him to the University.  It resulted in an audit of his 2008 Income Tax Return, which did not contain a disclosure of the CGT event.  Mr Brice gave evidence that the event was disclosed in documents which he produced, and which became exhibit 23.  Mr Brice was asked whether he was required in his tax return to identify the market value of the shares as having been received by him in substitution for the shares given to the Endowment Fund.  He was not prepared to accept that proposition, but said that when he acquired the shares from the superannuation fund, he did so at a capital gains tax base, and disposed of them by way of a gift which would give rise to a (notional) consideration, with no effect on his taxable income; and that that position was confirmed by the audit[176].

   [176]T11-5 to 11-8.

1. It is more than a little surprising that the transactions were not disclosed in Mr Brice’s tax return, given his long experience as an accountant. Nor does the material in exhibit 23 provide a clear explanation of what occurred; it simply includes a receipt to Mr Brice from the Fund.  Mr Brice’s evidence on this topic was at times argumentative, and at times evasive. However, in a general assessment of his credit it seems to me somewhat less significant than other matters that have been raised against him.

1. As mentioned earlier, on 2 October 2008, Mr Chambers sent an email to Mr Brice advising of the proposed delivery of Wagyu cattle to Lockerbie.  Mr Brice gave evidence that he did not respond to the email, because he did not want to be seen to be accepting delivery of Mr Chambers’ cattle[177].  In my view, that answer is not to be accepted.  It followed the advice of Mr Brice of 9 September 2008 that he had chosen the Y list.  A little later, on 8 October 2008, Mr Chambers emailed Mr Brice advising of the arrival of the cattle at Lockerbie.  Mr Brice did not protest; rather, he forwarded the email to Mr Schwennesen, and on 14 October replied to Mr Chambers, discussing “forward production”.  Subsequently some embryos were implanted in some of these cattle, using straws owed by Ywagyu.  It must have been obvious to Mr Brice that the fact that the cattle were delivered to Lockerbie, and that no protest was made, would indicate acceptance by him of the delivery.  It seems to me that that acceptance is confirmed by the use of Ywagyu semen straws to impregnate some of these cattle.  Moreover, the email communications between Mr Chambers as to the artificial insemination program to be undertaken for cattle at Lockerbie (no doubt, Wagyu cattle), in particular in relation to the types of calves sought, strongly indicate that the relevant decisions were to be made by Mr Brice and Mr Schwennesen, again showing acceptance of the delivery.  Mr Brice’s evidence as to his reason for not responding to the email of 2 October 2008 can not be accepted.

   [177]T9-65/40-50.

1. It is clear that at the meeting at Jackson’s offices in March 2008, Mr Brice and Mr Chambers agreed that Mr Brice would receive half of the embryos from the embryo flushing program being conducted at the property of Mr Ron Fitzgerald, on the basis that he would pay half of the associated costs.  That agreement was carried out.  No sensible explanation was given for this arrangement by Mr Brice. I note that in July 2006, Ywagyu had purchased 200 embryos at $500 each; and in April 2008, paid $100,000 (plus GST) for 100 embryos.  It seems to me that the likely explanation for the agreement in relation to the sharing of embryos from female breeders in Mr Chambers’ herd is that the parties had by then reached an agreement involving a series of transactions, under which Mr Brice (or his associated interests) would acquire one half of the female breeding herd, some parts of which had been carried out, and the remainder of which was expected to be carried out in the relatively near future. 

1. It is also clear that at this meeting, Mr Brice said he would cease charging agistment fees for the cattle which had earlier been taken to Lockerbie.  Indeed, the effect of Mr Schwennesen’s evidence was that each party would look after the cattle under his control as if there were his own.  These things are consistent with the parties taking the view that Wagyu breeders on agistment at Lockerbie included cattle which would remain the property of Mr Chambers, though some would become Mr Brice’s cattle; and that the remaining breeders for which Mr Chambers was responsible included cattle which would become Mr Brice’s. While Mr Brice’s explanation may not be improbable, it seems to me to be less likely.  It also sits uncomfortably with his statement in his email of 21 February 2009, in relation to his dealings with Mr Chambers, that business and benefaction are mutually exclusive and should not be mixed[302].  For these reasons, in view of my conclusion about the credit of the parties, and in light of the other matters which in my view support a conclusion that there was a concluded agreement as alleged by Mr Chambers, I reject this explanation.

   [302]Ex 1, tab 572.

1. In my view, the fact that there was discussion at this meeting about the means by which the herd was to be divided is itself some evidence of the existence of a concluded agreement.  It seems to me that what was under discussion was the means by which the agreement might be implemented.  Otherwise, there was no need for concern about whether a fair division of the herd took place; rather Mr Chambers could have identified the cattle which he wished to sell, and Mr Brice could then have decided what amount he was prepared to pay for them.    

1. In April 2008, Mr Brice paid $100,000 plus GST for 100 embryos.  Mr Brice alleged that this payment was not made pursuant to the agreement alleged by Mr Chambers; rather it was the result of an agreement made by telephone late in March 2008, against the background of the purchase made in July 2006[303].  His evidence was that this was discussed in the meeting at Jackson’s offices[304].  Mr Chambers gave evidence that the payment was discussed at this meeting, Mr Brice saying of it that “it’s just a way to get $100,000 into your hands”[305].  There are some features of this transaction which should be mentioned.  The embryos were not identified.  There was no evidence of any discussion about arrangements for providing them to Mr Brice.  Nor was any attempt made to obtain the embryos until 31 March 2011[306].  This transaction is, in a number of respects, similar to the transaction relating to semen straws.  It seems to me to provide some support for the existence of the agreement alleged by Mr Chambers.

   [303]Defence para 58.

   [304]T 9-58.

   [305]T 3-38/45.

   [306]See the letter of that date from the solicitors for Mr Brice to the solicitors for Mr Chambers, found in Ex 6. 

1. Likewise, Mr Brice’s communication on 9 September 2008 of his decision to take the Y list seems to me to be a step in the performance of the agreement.  That conclusion is reinforced by the discussion in that email, and by Mr Chambers’ email of 11 September 2008, relating to movement of cattle.  The subsequent movement of cattle to Lockerbie, and the fact that Mr Brice paid the cost of the transport, seems to me also to indicate that the parties were then carrying out an agreement previously reached relating to the sale of cattle.

1. The email correspondence in October and November 2009 relating to the management of Wagyu cattle at Beaudesert, including a breeding program, indicated that the Wagyu cattle which had been delivered by Mr Chambers to Mr Brice’s properties, or which Mr Chambers had earlier placed there on agistment and were to remain there, would be Mr Brice’s.  That in turn points to the existence of the agreement alleged by Mr Chambers.

1. It is clear that the breeding program carried on at Lockerbie in the latter part of 2008 included the insemination of Y list Wagyu cattle, some of which had been delivered on 7 October from Shiro and Bogandilla.  As has been mentioned, Mr Brice’s pleading indicates Y list cattle were inseminated at this time, using straws owned by YWagyu.  It seems to me that the only sensible explanation for these events is that the delivery of the cattle in October 2008 was accepted by (or on behalf of) Mr Brice; and the cattle were thereafter treated as his.  That, in turn, demonstrates the existence of the earlier agreement for the transfer of the cattle to him.

1. The submissions made on behalf of Mr Chambers relied on the assistance, information and help he provided to Mr Schwennesen after August 2007 as evidence of the existence of the contract.  While I ultimately accept that by then he was doing so pursuant to the agreement, I do not consider that this is of assistance in determining whether a contract had been formed.  He had provided similar assistance over a period of time before the August 2007 telephone conversations.

1. Further, Mr Brice’s email of 21 February 2009 did not deny the parties had reached agreement.  It simply asserted there was no legally binding contract.  It provides some support for the fact that agreement had been reached in the August 2007 telephone conversations.

1. Some of the conduct of the parties after the August 2007 telephone conversations could be said to indicate that a binding agreement had not been made.  Mr Brice’s email of 27 August 2008 is to some extent ambiguous.  On the one hand, the suggestion that stock might be sold to generate cash and thereby reduce the investment, with the result that Mr Chambers would still get the sale proceeds, and Mr Brice would get fewer cattle, rather suggests an attempt to negotiate away from an existing agreement.  On the other hand, Mr Brice’s expressed reluctance to put Mr Chambers in a position where he had to feed more cattle than he planned, suggests a degree of freedom about the performance of the contract.  On the whole, this email does not seem to me to weigh strongly against the existence of an earlier agreement.  Indeed, in part it points to the existence of the agreement asserted by Mr Chambers.

1. The draft contract produced by Cridland in about October 2008 does not sit comfortably with the agreement alleged by Mr Chambers.  Mr Chambers explained his conduct by reference to his concern about Mr Brice’s attitude to carrying out the agreement[307].  His email to Mr Brice enclosing the contract indicated that it differed from his instructions, but stated it would provide a basis for a revised draft. 

   [307]See T3-52;7-30 to 7-32.

1. The submissions made on behalf of Mr Brice contended that the absence of any attempt to bring about completion at an earlier point in time showed that no agreement had in fact been formed.  The submission is not without some force.  However, if my conclusion about the loan agreement is correct, that agreement demonstrates some relatively early action, based on the agreement alleged to have been reached in the August 2007 telephone conversations.  Moreover, it seems to me that the delay may well have a different character.  In the period up to and including those telephone conversations, Mr Brice had displayed some enthusiasm for purchasing one half of Mr Chambers’ breeding herd.  On his case, no definite position was then reached, and he did nothing to further the transaction until the following March.  His case provides no explanation for leaving the proposal unresolved for so long.  On the other hand, if an agreement had been reached, delay in progressing the purchase of the cattle could well relate, as Mr Chambers’ evidence suggests, to the fact that Mr Brice wished to secure another property to accommodate them.  That occurred in the early part of 2008.  In the meantime, having taken the loan, it would have been difficult for Mr Chambers not to proceed with the transaction.

1. It might also be observed that Mr Chambers’ email to Mr Brice of 20 January 2009 is somewhat diffident in asserting an existing contract.  However, it seems to me that when read as a whole that is its effect.

1. The submissions for Mr Brice placed some weight on communications between Mr Chambers and Ms Zammit resulting in the provision of information by him to her in an email of 10 March 2009[308].  The communications indicate that he had sought a “tax estimate”; and to provide it, Ms Zammit asked for further information.  It seems to me that these communications simply reflect an attempt by Mr Chambers to obtain information with a view to seeking to resolve the dispute which had arisen because Mr Brice denied the existence of a binding contract.  Some of the language used by Mr Chambers reflected the existence of an earlier agreement.  Moreover, it seems to me that Mr Chambers’ email to Ms Zammit of 14 March 2009[309] sheds light on the email of 10 March.

   [308]Ex 1, tab 582.

   [309]Ex 1, tab 587.

1. When considered overall, it seems to me that the conduct of the parties subsequent to the August 2007 telephone conversations points strongly to the existence of an agreement between them, intended to be binding.  That view is consistent with the evidence of Mr Chambers about these telephone conversations.   Accordingly, I find that the parties intended, in those telephone conversations, to make a binding agreement; although I also find that it was intended that at least some of the elements of that agreement were to be the subject of subsequent documentation.  However, I find that it was not intended that the agreement as a whole be recorded in a single document.  Accordingly, I am satisfied that the parties reached agreement in the August 2007 telephone conversations, generally as alleged by Mr Chambers, save with respect to the allegation that payments to be made for cattle and repayments under the loan could be set off against each other.  I shall return to that matter later.

1. I also accept that the agreement was varied at the meeting on 28 March 2008, as alleged by Mr Chambers.

1. Mr Brice’s pleaded case, generally supported by the submissions made on his behalf, is that either there was no agreement about a number of matters alleged by Mr Chambers; or that any agreement reached was of no effect because it was uncertain with regard to those matters.  A number of these matters related to the identity of the cattle said to be the subject of the transaction, including the proportion of heifers, steers and bulls; the treatment of progeny; and how the herd would be divided.

1. I should commence by saying that I accept Mr Chambers’ evidence that bulls were not included in the agreement reached in the discussions which took place in the August 2007 telephone conversations; nor in the agreement reached at the Jackson offices in March 2008.  The total amount to be paid by Mr Brice was arrived at after the valuation carried out by Mr Schwennesen.  That was done by reference only to the female breeders owned by Mr Chambers.  Each was specifically identified.  Bulls were not included in the exercise.  The total amount offered by Mr Brice was within the range of values for half the herd resulting from Mr Schwennesen’s valuation.  Although at the meeting on 28 March 2008, there was discussion about the preparation of lists to divide the herd, there was no discussion about the identification of bulls to be transferred to Mr Brice.  The lists which were subsequently sent to Mr Brice referred only to female cattle[310].  No complaint was made by Mr Brice about the failure to undertake a process of dividing bulls between him and Mr Chambers.

   [310]See generally the evidence of Ms Radeski, T7-55 to 7-63; although in her work she identified two steers, they were under the heading “PROBLEM CATTLE”; and appear to have been referred to because they were erroneously included in the artificial insemination list: see Exhibit 1 opposite page 2608.

1. It seems to me that the method by which the herd would be divided into two halves of equal quality was a matter about which the parties expected to be (and were) able to reach subsequent agreement.  The dealings between Mr Brice and Mr Chambers in the period around August 2007, including the process by which Mr Brice came to a price, proceeded without regard to how the herd might be divided.  The mechanism for doing this did not appear to be of any particular significance to either of them; though no doubt it can be assumed they expected it to be fair.  It seems to me that, had the parties not reached subsequent agreement, a court could, if necessary, give effect to the agreement reached in the August 2007 telephone conversations.

1. The subject matter of the agreement was female breeders.  So far as a lease was contemplated, its obvious purpose was to permit Mr Brice to have the benefit of the calves which they produced during the period of the lease.  The absence of any specific agreement about ownership of the calves would not, in my view, affect the question whether the parties entered into a binding agreement.  Moreover, the lease proposal was abandoned at the meeting in March 2008. 

1. So far as a sale was contemplated, similar considerations would apply.  Under the general law, a calf is the property of the owner of its mother[311].  Absence of express agreement about this matter would not ordinarily prevent the formation of a binding contract; and there is nothing in the circumstances of the present case which would lead to a different conclusion.  Although the case pleaded by the plaintiffs alleged that ownership of the cattle was not to pass until the end of the three year period, the evidence did not demonstrate that.  If, however, property in the breeders was not to pass for three years, it seems to me that the intention of the parties was that from the time of delivery of the cattle, Mr Brice was to have the benefit of their calves.  He was paying to have the benefit of half of a herd of female breeders.  As Mr Chambers knew from at least 1 June 2007, he and Mr Schwennesen were anxious to secure a supply of Wagyu meat.  Mr Chambers also knew that the price had been developed by reference to a discounted cash flow, which took into account the value of calves from the first year of the period under consideration[312].

   [311]See Grant v YYH Holdings Pty Ltd [2012] NSWCA 360 at [37]; Big Top Hereford Pty Ltd v Thomas [2006] NSWSC 1159 at [35].

   [312]See Exhibit 3.

1. The agreement which was reached between Mr Chambers and Mr Brice resulted from the fact that Mr Chambers was not prepared to sell half his herd for $2.5 million, and accordingly Mr Brice sought to develop a structured agreement which would have made available to Mr Chambers the amount of money he wanted.  That resulted in a substantial amount being included for what was described as “goodwill”.  Moreover, Mr Brice wished to have the benefit of Mr Chambers’ continued assistance in relation to the effective use of the cattle Mr Brice was purchasing; and the continuation of the assistance he had received in the past.  Against that background, it seems to me, that there was sufficient definition of what was to be provided by Mr Chambers in relation to what the parties described as goodwill; and as to the management services to be provided by him; although there was no clear definition between the two.  I do not accept the submissions advanced on behalf of Mr Brice, that no binding agreement was reached, or that any agreement was of no effect by reason of uncertainty, in relation to these matters.

1. The semen straws were in my view, sufficiently identified.  At the time of their agreement, they were known by both parties to be those owned by the Superannuation Fund.  The identity of the embryos was not, on the evidence, a matter of importance to Mr Brice at the time of the agreement.  So much is confirmed by Mr Brice’s willingness to pay $100,000 in April 2008, without any identification of the embryos.  Nor was the identification of further terms necessary for a binding agreement in relation to each of these items.  Again, Mr Brice’s subsequent conduct confirms this.

1. The submissions made on behalf of Mr Brice also relied upon the absence of express agreement about payment of GST.  For Mr Chambers it was submitted that the amounts subsequently paid in respect of semen straws and embryos demonstrated an agreement that the purchaser would pay GST.  It seems to me that this conduct is more likely to demonstrate a tacit agreement that the purchaser would pay GST.  That is consistent with their agreement for the sale of embryos in June 2006; and Mr Brice’s intention to make an offer that would enable Mr Chambers to have available to him the amount of money he sought.  Even if it were not correct to find that the parties reached agreement about payment of GST, the result simply would be that they agreed on amounts to be paid, but that they did not agree that Mr Brice would provide additional funds to meet Mr Chambers’ liability for tax on the transactions.  It would not mean that they had not reached a binding or certain agreement. 

1. As previously mentioned, it has been submitted on Mr Brice’s behalf that the transactions relating to embryos and semen straws, as alleged by Mr Chambers, amount to a “sham”; and were unlikely to have been entered into by Mr Brice.  It may be accepted that one would start with a predisposition not to accept that an experienced accountant would enter into a transaction which involved a payment for property which was not in fact to be transferred; or where the transfer is to be matched by a transfer, without further consideration, of similar property from the accountant.  Some aspects of the evidence would reduce the significance of that predisposition.  I refer in particular to Mr Brice’s evidence in relation to the gift to the University of Queensland; and the evidence about how he came to be involved in the Wotif venture.  I also take into account the fact that monies were paid in respect of the semen straws and embryos, without any arrangement for their transfer or delivery; and that no effort was made by Mr Brice to obtain the straws or the embryos for a long time, and indeed until well after the action commenced.  In the end, I have come to the view that Mr Chambers’ evidence about this aspect of the transaction is to be accepted.  It must be borne in mind that the question for me to determine is whether an agreement was reached in the terms alleged by Mr Chambers; and not what view might be taken by the Commissioner of Taxation about the significance of the transactions for income tax purposes.  I also note that the case is not one about a number of separate contracts; so that the obligations imposed on Mr Brice to pay the sums of $300,000 and $100,000 do not necessarily fail for absence of consideration.  

1. Accordingly I find that Mr Chambers and Mr Brice entered into a binding contract in the August 2007 telephone conversations, varied at the meeting in March 2008.  Mr Brice repudiated that contract on 21 February 2009, since which date his attitude to its performance has remained unchanged.  The contract came to an end when the repudiation was accepted as having that effect, in the course of the trial.  Mr Brice is accordingly liable for any damages for its breach.

Contractual damages

1. The statement of claim alleged the damage as the amount resulting from the reduction from the total sum of $3.2 million, the sum of $400,000 already paid by Mr Brice, and the value of the Y list cattle at 21 February 2009, said to be $561,000.  The written submissions for the plaintiffs varied the amount by deducting a greater sum for the value of the Y list cattle at 21 February 2009, with that deduction being $713,300; and by also deducting the sum of $409,192.80, held in trust from the sale of some of the Y list cattle.  The valuation of the Y list cattle is detailed in Annexure B to the plaintiffs’ submissions, and is based on the valuation of Mr David Blackmore[313].  The deduction of the sale proceeds was said to be based on a statement in a supplementary report by Mr Blackmore[314] to the effect that he has not valued cattle which had been sold.  As I read that statement, that is a reference to cattle sold by 1 January 2013[315].  It is clear from exhibit 14 that the value of the Y list cattle at 21 February 2009, included the value of cattle later sold.  After the hearing, I arranged for my Associate to draw these matters to the attention of Counsel for all parties.  No one took issue with my understanding of the effect of Mr Blackmore’s evidence.

   [313]Exhibit 14.

   [314]Exhibit 15, p 9.

   [315]It is apparent from Ex 14, vol 2 tab 3, that the value of all Y list cattle as at 21 February 2009 is included in the sum of $713,300.

1. The plaintiffs’ written submission identify 21 February 2009 as the appropriate date for the assessment of damages, on the basis that is the date on which Mr Brice either repudiated or breached the contract.  Moreover, the date is said to be the most reliable date, because with the lapse of time, the herd has changed due to sales, death and age.

1. The submissions for Mr Brice helpfully refer to some principles and authorities.  I accept that the damages are to be assessed by reference to the difference between the contract price, and the value of the cattle.  With respect to the date of assessment, it was submitted that the relevant date is the date identified under the contract for completion; though, by reference to Johnson v Agnew[316] and Emeness Pty Ltd v Rigg[317], a different date might be chosen by the court in order to avoid injustice.  The submissions however do not contest 21 February 2009 as the appropriate date, or contend for some different date.

   [316][1980] AC 367 at 400-401.

   [317][1980] 1 Qd R 172.

1. The general rule at common law is that where a party sustains a loss by reason of a breach of contract, that party is, so far as money can do it, to be placed in the same situation as if the contract had been performed[318].  Where the contract involves the sale of property, the value of which might fluctuate over time, the amount might vary depending on date chosen. Neither party referred me to s 51 of the Sale of Goods Act 1896 (Qld), and accordingly, I do not need to consider the potential difficulties which might arise in the application of s 51(3).  In any event the measure of damages it identifies is said in the subsection to be “prima facie”, and is accordingly not an absolute rule[319].  At a practical level the difficulties which might seem to be raised by s 51(3) sometimes disappear.

   [318]See Robinson v Harman (1848) 1 Ex 850 at 855; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80, 98, 117, 134, 148, 161; see also Carter, Contract Law in Australia (5^th Ed) [35-04].

   [319]Johnson v Agnew [1980] AC 367, 400-401; Johnson v Perez (1988) 166 CLR 351, 386.

1. In the present case, there was no express agreement about the time for delivery of cattle.  Some cattle were delivered in October 2008.  It seems to me the correct view of the agreement reached between the parties is that cattle were to be delivered at a time to be agreed between the parties subsequent to their agreement about how the the herd was to be divided; and, failing agreement, within a reasonable time.  There is no reason to think that 21 February 2009 is a date materially different from the date when the cattle should have been accepted.  On the other hand, if the proper construction of the agreement was that no time was fixed for acceptance, then 21 February 2009 represents the date when Mr Brice made clear his refusal to accept the further delivery.  Accordingly, it seems to me to be an appropriate date on which to assess damages.

1. As I read Mr Blackmore’s evidence, that would result in an assessment of damages at $2,086,700.  No question of mitigation has been raised, and it is unnecessary therefore to make any adjustment under that head.  I note that Mr Blackmore’s valuation includes 253 Y list cattle; and some 154 progeny of those cattle.  The number of Y list cattle might be thought to be generous having regard to numbers under discussion when the contract was formed.  It might also thought to be generous by inclusion of all of the progeny, since it would seem that these were born, at least in most cases, prior to the time for delivery.  Nevertheless, in view of the plaintiffs’ submissions, I am content to proceed on this basis. 

1. Accordingly, I assess the damages which flow from Mr Brice’s breach of the agreement in the sum of $2,086,700. 

Alternative claims

1. One claim made by Mr Chambers, described as an alternative claim, is for agistment and management fees for Y list cattle after 21 February 2009.  No meaningful submissions were made in support of it.  In truth, it seems to be a claim for damages for wrongful refusal of delivery.  The proposition advanced on behalf of Mr Chambers, and accepted by me, that damages should be assessed on the basis of the value of the cattle as at 21 February 2009, carries with it the notion that Mr Chambers could, as from that date, have disposed of the cattle.  That is inconsistent with this claim, which I reject.

1. In view of my earlier findings, it seems to me there is no scope for making further findings in relation to the estoppel claim.

1. I am satisfied that Mr Brice continued to provide financial advice to Mr Chambers until at least the end of 2007.  Indeed, the fact that Mr Brice engaged Mr Barbeler to act on behalf of Mr Chambers in the loan transaction, and continued thereafter to deal with Mr Barbeler, says something of the unusual nature of the relationship between Mr Brice and Mr Chambers.  In this period, Mr Chambers continued to rely on Mr Brice for advice.  In particular, that occurred in the course of the August 2007 telephone conversations, in relation to the way the agreement would be structured.

1. The submissions on behalf of Mr Brice, relying on a statement by Mason J in Hospital Products v United States Surgical Corporation[320], contended that there were three essential requirements for the imposition of a fiduciary obligation.  They were: an undertaking or agreement to act for or behalf of other persons; the undertaking or agreement was given or made in relation to the exercise of a power or discretion; and the exercise of the power or discretion would affect the interests of the other person in a legal or practical sense.  It might be observed that in this case, there is no suggestion that Mr Brice was to exercise a power or discretion. 

   [320](1984) 156 CLR 41 at 96-97.

1. The difficult with considering in isolation the question whether one person stood in a fiduciary relationship to another was identified some time ago by one of the leading writers in this area of the law[321]:

“In the following pages it will be suggested that it is meaningless to talk of fiduciary relationships as such.  Once one looks to the rules and principles which actually have been evolved, it quickly becomes apparent that it is pointless to describe a person – or for that matter a power – as being fiduciary unless at the same time it is said for the purposes of which particular rules and principles that description is being used.  These rules are everything.  The description ‘fiduciary’, nothing.”

[321]Paul Finn, Fiduciary Obligations, Law Book Co Ltd 1977 at p 1.

1. To similar effect is the passage from the judgment of Frankfurter J in Securities and Exchange Commission v Chenery Corporation[322], adopted in Pilmer v Duke Group Ltd(in liq)[323]:

“But to say that a man is a fiduciary only begins analysis; it gives direction to further enquiry.  To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?”

[322](1943) 318 US 80, 85-86.

[323](2001) 207 CLR 165 at [77].

1. A great variety of relationships may be classed as fiduciary.  As Finn’s work points out, a significant class consists of those entrusted with a power to be exercised for the benefit of another, discussed at length in the first section of his book[324].  For others, the fiduciary character of their relationship is derived from some other feature; and results in the invocation of different rules, and makes available different remedies.  Thus, where a relationship of influence can be established, a contract between the parties to the relationship might be set aside[325].  The statement from Hospital Products, it seems to me, while relevant to the first class discussed by Finn, is not decisive in all cases where it is alleged a party owes fiduciary obligations.  Here, Mr Brice was a trusted adviser, on whom Mr Chambers relied.  I would be prepared to hold that Mr Brice was a fiduciary in relation to Mr Chambers.

   [324]Finn at p 3; Pt 1 of his work deals with this class.

   [325]Finn at p 82-83; 84-85.

1. The submissions for the plaintiffs do not explain the calculation resulting in the amount claimed as equitable damages for breach of fiduciary duty.  The starting point is what is said to be half of the agreed value of the herd at September 2007.  It is by no means obvious that this is an element of any loss, as the claim is based on the proposition that Mr Chambers retained the herd.  It also includes an amount said to be the value of management services provided from September 2007.   It seems to me that the provision of management services would be recoverable in a claim for unjust enrichment, whether or not a fiduciary relationship existed[326]; though that may not preclude its recovery as damages for breach of fiduciary obligation.  No allowance is made for interest on the mortgage.  While the mortgage may be liable to be set aside if it were the result of a breach of fiduciary obligation, that would only be on terms that it be repaid with interest[327]. 

   [326]See Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9^th Aust ed) para 26.1.

   [327]Maguire v Makaronis (1997) 188 CLR 449, 475-477.

1. In the circumstances, there is, in my view, no utility in making further findings in relation to the claim for breach of fiduciary duty.

Set-off

1. This part of the claim depends upon my finding that an agreement was made between Mr Chambers and Mr Brice relating to the sale of cattle.  Since Mr Chambers has now accepted Mr Brice’s conduct as terminating the contact, and that he remains the owner of the Y list cattle, there is no utility in dealing with this part of the case.  However, it was pressed by the plaintiffs.

1. It arises out of the allegations in the statement of claim that, in the 2007 telephone conversations, Mr Chambers and Mr Brice agreed, in respect of the loan, that interest payable on it would be met by equivalent amounts to be paid by Mr Brice in addition to and at the same time as each of the payments of $500,000 to be made by Mr Brice for the cattle in July 2008, July 2009 and July 2010; and that the payments to be made by Mr Brice, including amounts equivalent to interest on the loan, would be set-off against any amounts, including interest, payable under the loan.[328]

   [328]See statement of claim para 20(f) and para 20(g)

1. The plaintiffs alleged that, on its proper construction, the loan agreement did not exclude the right of set-off which they alleged formed part of the agreement made in the August 2007 telephone conversations. Alternatively, they alleged that the loan agreement is liable to be set aside or rectified, by reason of the mistaken belief on the part of Dorrigo Properties and Harrod Holdings that the loan agreement gave effect to the earlier agreement[329].

   [329]See statement of claim para 34.

1. The plaintiffs also alleged that they were entitled, pursuant to the agreement made in the August 2007 telephone conversations, to set-off any sums owing under the loan agreement, damages for breach of the agreement by Mr Brice[330].  The plaintiffs also alleged that there were mutual dealings between Mr Chambers, Dorrigo Properties, Harrod Holdings, and Mr Brice; that Mr Brice’s failure to honour the agreement impeached his entitlements under the loan agreement; and that Dorrigo Properties and Harrod Holdings were entitled to set-off against monies owing under the loan agreement, the amount to be paid for the Y list cattle, or damages payable by Mr Brice for his breach of the agreement[331].

   [330]See statement of claim para 93.

   [331]See statement of claim para 94.

1. The plaintiffs also claimed rectification of the loan agreement, in the event that the right of set-off which they allege would otherwise be defeated[332]. 

   [332]See statement of claim, prayer for relief paras 7 – 12.

1. There was no evidence of a conversation in the terms pleaded by the plaintiffs.  Mr Chambers gave evidence that Mr Brice said that the payments to be made by Mr Brice would “wipe out” the payments to be made on the loan[333].  However, the evidence seemed to me to be directed to the practical effect of the proposed transactions; rather than to a promise that one liability can be set-off against the other. 

   [333]T6-63 to 6-64.

1. No subsequent conduct by the parties was identified in performance of an agreement in the terms alleged by the plaintiffs.  Clause 5.4(4) of the loan agreement required Dorrigo Property to make payment under it “in full without any set-off or counterclaim and without any deduction in respect of taxes …”   The loan agreement is inconsistent with an earlier agreement for setoff.  Accordingly, I find that the agreement between Mr Chambers and Mr Brice did not include the term alleged, relating to a set-off.

1. The language of clause 5.4(4) is quite clear.  I find no basis for construing it other than as excluding a right of setoff in respect of the payment obligations for which it provides.

1. The right of set-off on which all of these aspects of the plaintiffs’ claim is made appears to be a right to have any indebtedness under the loan agreement reduced by amounts to be paid by Mr Brice in respect of the purchase of the cattle.  The obligation to make those payments was interdependent with Mr Chambers’ obligation to deliver the Y list cattle.  With the exception of the cattle delivered in October 2008, he did not perform that obligation; and his acceptance of Mr Brice’s repudiatory conduct as terminating the agreement means that he no longer has an obligation to do so.  There is, accordingly no surviving obligation of Mr Brice to make the payments pursuant to the agreement; and no scope for the operation of the set-off.

1. In view of my finding about the agreement reached in the August 2007 telephone conversations, there is no basis for rectification of the loan agreement. 

1. Absent any current obligation on Mr Brice to make payments for the cattle, I consider that there is no basis for saying that his right to enforce the loan agreement is impeached by his breach of his agreement with Mr Chambers.  There is accordingly no equitable right of set-off. 

1. In the circumstances, I reject the claims by the plaintiffs in relation to set-off.

Counterclaim

1. Mr Brice claimed for the recovery of the amount lent to Dorrigo Properties, with interest, including default interest.  One of the failures to repay alleged by Mr Brice, was a failure to pay the sum of $500,000 by 19 July 2008.  The defendants to the counterclaim have alleged that nothing was then due and payable under the loan agreement[334].  No basis was identified for that allegation, other than matters relating to the right of setoff.  My findings on those matters mean that there is no basis for rejecting Mr Brice’s claim. It is inconsistent with the terms of the loan agreement, and the terms of the earlier agreement between Mr Chambers and Mr Brice.  Accordingly, I find that the sum of $500,000 became due and payable on 19 July 2008. 

   [334]See para 61 of the answer.

1. Accordingly I propose to give judgment on the counterclaim for the amount of the loan, together with interest, pursuant to the loan agreement. 

1. Mr Brice has made claims based on the failure of Mr Chambers to provide embryos, and the failure of the Superannuation Fund to provide semen straws.  I have found that Mr Chambers was not obliged to provide embryos under the agreement.  I have also found that Mr Brice was required to provide equivalent semen straws to Mr Chambers.  There is no suggestion that he has done so.  In my view, he has suffered no loss in respect of the semen straws.

1. Mr Brice has claimed from Mr Chambers the sum of $96,525.00 as agistment fees for the period from April 2008 to June 2010.   The amount claimed is based on a monthly rate of $3,575 (including GST).  That in turn is said to reflect the weekly rate of $750 referred to in an email from Mr Schwennesen to Mr Chambers of 19 September 2006[335].

   [335]Ex 1, tab 58.

1. Mr Chambers pleaded that the agreement reached in March 2008 included a term that no further fees would be charged by Mr Brice (no doubt with respect to cattle of Mr Chambers on Mr Brice’s properties at Beaudesert) “because (Mr Chambers) would be looking after some of (Mr Brice’s) cattle while the division occurred”[336].  Mr Brice pleaded that he and Mr Chambers agreed that he would cease charging these fees to Mr Chambers “pending the finalisation of an agreement”[337].

   [336]See statement of claim para 42(d).

   [337]Defence para 52(c).

1. I have accepted the substance of Mr Chambers’ evidence as to the effect of the meeting on 28 March 2009.  Accordingly, I find the agreement reached in the August 2007 telephone conversations was varied, one of the variations being an agreement by Mr Brice not to charge agistment fees until the herd had been divided between them.  For Mr Brice it was submitted that, on his evidence, this agreement was not supported by consideration.  However, I have accepted Mr Chambers’ evidence.  That submission fails.

1. Accordingly, I dismiss Mr Brice’s claim for agistment fees.

Conclusion

1. I propose to give judgment for Mr Chambers against Mr Brice in the sum of  $2,086,700.  I also propose to give judgment for Mr Brice against Dorrigo Property and Harrod Holdings for the outstanding amount of the loan, together with interest.  I shall invite the parties to make submissions as to further orders, including costs.