Crump v Equine Nutrition Systems Pty Ltd t/as Horsepower

[2006] NSWSC 512

CITATION:	Crump & Ors v Equine Nutrition Systems Pty Limited Trading As Horsepower & Anor [2006] NSWSC 512
HEARING DATE(S):	06/05/05, 09/05/05, 10/05/05, 11/05/05, 12/05/05, 13/05/05, 16/05/05, 17/05/05, 18/05/05, 19/05/05, 20/05/05, 10/10/05, 11/10/05, 12/10/05, 13/10/05, 14/10/05, 17/10/05, 18/10/05, 19/10/05, 20/10/05, 21/10/05, 05/12/05, 06/12/05, 07/12/05, 08/12/05, 09/12/05, 12/12/05, 14/12/05, 15/12/05, 16/12/05
JUDGMENT DATE :	6 July 2006
JUDGMENT OF:	Hoeben J at 1
DECISION:	Judgment is entered in favour of Equine Nutrition Systems Pty Limited against the plaintiffs. Judgment is entered in favour of the plaintiffs against George Weston Foods Limited in the amount of $71,113. In respect of her claim for personal injuries, judgment is entered in favour of Vanessa Crump against George Weston Foods Limited in the amount of $9,450. In respect of his claim for personal injuries, judgment is entered in favour of George Weston Foods Limited against Rodney Crump. In respect of his claim for personal injuries, judgment in favour of Bernard Crump against George Weston Foods Limited subject to him making an election as to the basis for his claim. Costs reserved.
CATCHWORDS:	TORT - liability of manufacturer and retailer of contaminated horse feed - factual issue as to whether feed purchased from retailer - TRADE PRACTICES ACT - whether conduct of retailer constituted misleading or deceptive conduct contrary to s52 - application of sections 74B, 75AD and 75AF to conduct of manufacturer. DAMAGES - method of valuing dead horse - method of valuing damaged horses - mitigation of damage - agistment costs for surviving horses - loss of profits from breeding program - claims for personal injury for nervous shock - aggravated and exemplary damages.
LEGISLATION CITED:	Civil Liability Act 2002 Limitation Act 1969 Sale of Goods Act 1923 Trade Practices Act 1974 (C’th)
CASES CITED:	Alpine Hardwood (Aust) Pty Limited v Hardys Pty Limited [2001] FCA 1876 Avenhouse & Anor v Hornsby Shire Council (1998) 44 NSWLR 1 Campbelltown City Council v Mackay (1989) 15 NSWLR 501 Costa Vraca Pty Limited v Berrigan Weed and Pest Control Pty Limited (1998) 154 ALR 714 at 722 Demagogue Pty Limited v Ramenesky (1992) 39 FCR 31 Fitzwood Pty Limited v Unique Goal Pty Limited (2001) 188 ALR 566 Fraser v NRMA Holdings Limited (1995) 55 FCR 452 Graham Barclay Oysters Pty Limited v Ryan (2002) 211 CLR 540 Gray v Motor Accident Commission (1998) 196 CLR 1 Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Limited (1978) 140 CLR 216 Hunter Area Health Service v Marchlewski (2000) 51 NSWLR 268 Johnson Tiles Pty Limited v Esso Australia Pty Limited [2000] FCA 1572 Lamb v Cotagno (1987) 164 CLR 1 March v E and MH Stramare Pty Limited (1991) 171 CLR 560 Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 142 CLR 191 Taco Co of Australia Inc v Taco Bell Pty Limited (1982) 2 TPR 48 at 72 Tame v State of NSW (2002) 211 CLR 317 Trend Management v Borg (1996) 40 NSWLR 500 Uren v John Fairfax & Sons Pty Limited (1966) 117 CLR 118 Vairy v Wyong Shire Council [2006] 80 ALJR 1 Wardley Australia Limited v Western Australia (1992) 175 CLR 514 Winterton Constructions Pty Limited v Hambros Australia Limited (1992) 39 FCR 97 Wyong Shire Council v Shirt (1980) 146 CLR 40
PARTIES:	Vanessa Crump - First Plaintiff Bernard Crump - Second Plaintiff Rodney Crump - Third Plaintiff Equine Nutrition Systems Pty Ltd t/as Horsepower - First Defendant George Weston Food Limited t/as Millmaster Feeds - Second Defendant
FILE NUMBER(S):	SC 20670/2001
COUNSEL:	A McQuillen - 1st, 2nd and 3rd Plaintiffs P Garling SC/Ms R Pepper - 1st and 2nd Defendants
SOLICITORS:	GH Healey & Co - 1st, 2nd and 3rd Plaintiffs Phillips Fox - 1st and 2nd Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Thursday, 6 July 2006

20670/01 – Vanessa CRUMP & Ors v EQUINE NUTRITION SYSTEMS PTY LTD t/as HORSEPOWER & Anor

JUDGMENT

1 HIS HONOUR: By the Fourth Further Amended Statement of Claim, which achieved its final form on 13 December 2005, the plaintiffs Vanessa Crump (VC), Bernard Crump (BC) and Rodney Crump (RC) allege negligence, breach of contract and breach of various provisions of the Trade Practices Act (1974) (C’th) (TPA) against Equine Nutrition Systems Pty Limited (ENS) the first defendant and George Weston Foods Limited (GWF) the second defendant in relation to the alleged negligent manufacture and supply of contaminated horse feed. The horse feed was known as “Horsepower Equestrian Pellets” (HEP).

Nature of Claim and issues in dispute

2 ENS was a wholesaler and retailer of various horse feeds. Included in its range was HEP. This was a product, which ENS through its managing director, Mr Greathead, had “formulated”. By this word (which is used in the pleadings) I understand that Mr Greathead had developed the product HEP on behalf of ENS. HEP was, however, manufactured and packaged by GWF and then delivered to ENS.

3 The plaintiffs allege that on either 30 or 31 July 1998 BC purchased 5-7 bags of HEP from ENS at its store at 1/3 Rob Place, Vineyard. They allege that the bags of HEP thus purchased were contaminated with monensin, a substance used in the production of cattle and poultry feed, which is extremely toxic to horses if consumed by them. The plaintiffs allege that as a result of consuming the contaminated HEP one of their horses died and five others were permanently damaged so that they could not thereafter be used.

4 As against ENS the plaintiffs have alleged:

(i) Breach of contract by breach of implied warranties under ss 71 TPA and 19 Sale of Goods Act (1923) (NSW) (SGA) – goods not reasonably fit for their purpose and not of merchantable quality.

(ii) Misleading and deceptive conduct in breach of s52 TPA for representing that the contaminated HEP was beneficial to horses and of merchantable quality.

(iii) Negligent misrepresentation.

(iv) Negligence in the supply of the contaminated HEP to the plaintiffs in failing to implement adequate quality control and in failing to properly recall the contaminated HEP.

5 As against GWF the plaintiffs have alleged:

(i) Breach of ss 74D, 75AD and 75AF TPA in manufacturing defective and unmerchantable horse feed.

(ii) Negligence in the manufacture of the contaminated HEP and in its failure to properly recall the product.

6 The plaintiffs claim the following damages:

(i) The value of the deceased and damaged horses.

(ii) The costs of maintaining the damaged horses.

(iii) The cost of acquiring replacement horses.

(iv) The cost of maintaining the replacement horses.

(v) The loss of profit from breeding from the damaged horses.

(vi) The loss of opportunity to achieve success in competition with the damaged horses.

(vii) Damages for personal injury to each of the plaintiffs in the nature of nervous shock.

(viii) Aggravated and exemplary damages against each defendant in relation to the claims in negligence.

7 In its defence, which was filed with the leave of the court on 12 May 2005, ENS denied that the plaintiffs bought contaminated HEP from it. It denied that it breached the duty of care, which it owed to the plaintiffs. In relation to the personal injury claims it relied upon the limitation provisions in the TPA, the Limitation Act 1969 (NSW) (LA) and the Civil Liability Act 2002 (NSW) (CLA).

8 In its defence GWF admitted that it manufactured the contaminated HEP, that some of the plaintiffs’ horses had ingested the contaminated HEP and that it had breached the duty of care it owed to the plaintiffs in supplying and manufacturing the contaminated HEP. It did not admit breach of duty in relation to the recall, nor did it admit breach of the TPA. It also relied upon the same limitation provisions as ENS by way of defence to the personal injury claims.

9 In relation to damages, the defendants not only challenged quantum but the basis of much of the claim. They disputed the entitlement to both the value of the damaged horses and the cost of the replacement horses. They disputed the entitlement to the maintenance of the damaged and replacement horses in that the plaintiffs failed to reasonably mitigate their loss in that regard. They disputed that any of the plaintiffs had suffered a psychiatric illness sufficient to give an entitlement to damages. The entitlement to aggravated and/or indemnity damages was denied.

Factual background

10 Although there were a number of factual disputes, it is important to understand the background against which the plaintiffs’ claim is made. I have indicated those matters which are disputed. Except as otherwise indicated, I find the factual background to be as set out in the following paragraphs.

11 BC, the second plaintiff, was born on 22 March 1939 and was therefore 59 at the time when the horses ingested the contaminated feed. He first rode a horse at the age of three, and thereafter maintained a strong interest in horses. He is now 67.

12 He left school in 1953 at the age of fourteen. Between 1953 and 1956 he worked in racing stables at Randwick, on a cattle station in Queensland and for Bruce Carnes, who trained show horses. In 1956 he joined the Army and served in the Corps of Engineers for three years. He drove trucks while in the Army.

13 Upon his discharge in 1959, he worked for an asphalt contractor. In 1961 he commenced working at the Mona Vale Markets as a driver/salesman and in 1969 commenced working at the Flemington Markets as a fruit buyer. He has continued to work at the Flemington Markets for various employers since that date. He usually commenced work at 4 am and was finished by lunchtime. Throughout this period he maintained his close association with horse riding, in particular show riding in the hack category. His hours of work enabled him to spend afternoons preparing, riding and grooming horses. On most weekends during summer there was a show being conducted and he used compete at those shows in the hack category.

14 In 1974 he married the first plaintiff, VC. She shared his interest in riding and preparing show horses in the hack category. In either 1974 or 1975 they purchased their property at Cattai. That property comprised six acres. From that time BC and VC maintained approximately five horses on the property. It was also at about that time that BC reduced his involvement in showing horses and began participating in camp drafting. He would assist VC in preparing and showing her horses. That was generally the situation with BC during the 1980’s and the early part of the 1990’s.

15 The activity of camp drafting is quite different to showing a horse. Stock horses, rather than thoroughbreds, are usually used. A camp drafter is a horse that works cattle. In competition seven or eight cattle are placed in a yard and the rider has to pick out a beast, take it to the front of the pen and thereafter hold and manoeuvre the beast through a figure of eight course. The activity is significantly more vigorous and physically demanding for a horse than performing in the show ring.

16 The first plaintiff, VC, is the wife of BC. She was born on 20 August 1948 and was 49 when the contaminated feed was consumed. She reached intermediate level in her schooling and in 1963 completed a secretarial course. Between that date and 1966 she occupied secretarial positions with Pearl Assurance Company and the Government Insurance Office of New South Wales. In mid 1966 she commenced employment as a secretary with a firm of solicitors, Messrs G J Sharah Henville & Co. She left that firm in 1976 because it was difficult to commute from Cattai. She worked for Messrs Grech & Bannerman, another firm of solicitors, until 1978. She ceased employment to have her first child, Nathan, who was born in June 1978.

17 VC from an early age had a keen interest in horses. She commenced riding on a regular basis from the age of twelve. She was particularly interested in showing horses and paid for lessons to improve her riding skills for show purposes. By the time she met and married BC she had already achieved a measure of success as a show rider. BC provided advice and assistance to her and helped her to further develop her skills.

18 Exhibit R sets out the achievements of VC in show riding competitions. It is apparent from that document that her most successful period as a show rider was during the 1980’s and early 1990’s. She achieved considerable success on a horse “Protégé” at Royal Shows between 1982 and 1985. “Protégé” was owned by Mr and Mrs Crump. The significance of a good performance at a Royal Show is that a hack was not eligible to compete at a Royal Show until it had achieved first placing at five regional or agricultural shows. “Protégé” performed well in 1982 and 1983 at the Sydney Royal Show and at the Brisbane Royal Show. It achieved first placing at the Canberra Royal Show 1984, the Adelaide Royal Show 1984 and the Canberra Royal Show in 1985.

19 The high point of VC’s show riding career occurred between 1986 and 1990. The horses concerned were “Persian Gem” and “Persian Amber”. These horses were not owned by Mr and Mrs Crump but had been loaned to them by a friend, Colleen Boyce, to be prepared, trained and shown in competition. “Persian Gem” gained numerous first placings in agricultural and regional shows between 1986 and 1989. Between 1987 and 1989 she achieved two first placings at the Canberra Royal Show and two first placings at the Brisbane Royal Show. In 1988 she was the runner up in the Crane Trophy at the Sydney Royal Show and in 1989 she won the Crane Trophy. “Persian Amber”, a younger sister of “Persian Gem”, was runner up in the Crane Trophy at the Sydney Royal Show in 1990.

20 The Crane Trophy is a very prestigious award in hack show riding. It is an event for mares, showing thoroughbred qualities, which are between 14.2 and 15.2 hands in height. The competition is conducted annually at the Sydney Royal Show.

21 On 20 June 1985 VC was injured when she was thrown from a horse. The accident occurred on a road near her home when the horse was frightened by two dogs belonging to a neighbour. The precise injuries suffered by VC were an issue in the proceedings. In particular the nature, extent and duration of any emotional and psychological sequelae to the accident was disputed. What was not in dispute was that she suffered a fracture of the left collarbone and an injury to her left shoulder with some psychological consequences.

22 Although VC retained Messrs GJ Sharah Henville & Co to act on her behalf in relation to that incident, those solicitors did not commence proceedings within the six year limitation period and consequently VC’s claim against her neighbour became statute barred. She then commenced proceedings against the solicitors. Those proceedings came on for hearing in the Supreme Court on 28 June 1999 before Acting Justice Davies. VC was successful and judgment in the sum of $279,869 was entered in her favour by his Honour on 2 September 1999. I will have more to say about those proceedings and the emotional and/or psychological consequences of the 1985 injury when dealing with the claim by VC for nervous shock.

23 Between 1974 and 1998 Mr and Mrs Crump were not conducting a business. Their interest in horses and horse related competitions was purely a hobby. This is despite the fact that it occupied a significant amount of their time and was expensive. They prepared and trained their own horses and the horses of others and engaged in competition for the enjoyment of doing so and for the prestige associated with being successful.

24 At no time before 1998 did Mr and Mrs Crump breed their own horses. They acquired and disposed of horses so as to maintain a relatively steady number of five-six on the Cattai property. Some of those horses were purchased and subsequently sold, others were acquired by way of loan or gift and others were made available to them for training and showing such as was the case with “Persian Gem” and “Persian Amber”.

25 That was the situation leading up to 1998. As Exhibit R reveals, VC had not enjoyed the same success with her show riding in the mid to late 1990’s, as she had in the second half of the 1980’s. In August 1993 she resumed fulltime employment as an Administration Officer with the Commonwealth Rehabilitation Service at Blacktown. She was in that employment during 1998 and at the date of trial.

26 RC, the third plaintiff, was the second son of BC and VC. He was born on 1 September 1980 and was almost eighteen and completing his HSC year at high-school when the horses consumed the contaminated feed. Despite his family’s commitment to showing horses and engaging in equestrian competition, he only became interested himself in about 1995. He was never particularly interested in showing horses, but became enthusiastic about camp drafting. In 1997 and 1998 he had some success at junior level in camp drafting competition.

27 At the time of the contaminated feed incident, the following horses were located on the property at Cattai. I will hereafter refer to these horses as the “original horses”:

(i) “Noelene” (“Noeleon”) (“Serenade”) - an 11 year old mare purchased on 29 October 1995 for $1,000 and used as a show hack.

(ii) “Al” (“Vaudeville”) – a 7 year old gelding purchased on 1 February 1996 for $1,500 and used as a show hack.

(iii) “Topsy” – a 6 year old mare purchased on 1 August 1996 for $1,200 and used as a show hack.

(iv) “Subiaco” – a 4 year old mare purchased on 1 January 1998 for $1,200 and used as a show hack.

(v) “Jimmy” – a 13 year old gelding purchased on 23 November 1997 for $5,250 and used in camp drafts.

(vi) “Cracker” – a 16 year old gelding acquired by loan in early 1997 from John Smith and used in camp drafts.

28 There was also a small pony on the property at that time. His name was “Timmy” and he was aged 23. His position was that of a family pet. Since no claim was made in respect of that pony, there is no need to say anything more about it except that the plaintiffs alleged that it also consumed HEP contaminated with Monensin.

29 There was a dispute between the parties as to the level of success and potential of these horses at the time when the contaminated horse feed was consumed. I will deal with that issue when assessing the loss suffered by the plaintiffs in respect of the original horses.

30 VC used feed the horses in the morning and BC would feed them in the afternoon. This was because of their respective hours of work. They had started using HEP as a food for their horses at the beginning of 1997. The first purchase of HEP was said to have taken place at the ENS warehouse at Rob Place, Vineyard. Thereafter purchases were said to have been made weekly with quantities of six-eight bags being purchased at a time.

31 The evidence of BC was that HEP would be purchased on either a Thursday or a Friday since Thursday was his pay day. He would usually pick up RC from school and buy the feed on the way home. BC usually paid for the feed in cash, although occasionally a cheque was used. Having paid for the feed at the office, he would receive a docket, take the docket into the warehouse and the storeman would then pick up the feed on a forklift and it would be loaded into the back of his utility. Each bag weighed 40 kgs. BC said that he did not buy any type of feed other than HEP in the 18 months leading up to the consumption of the contaminated feed. He said he did not purchase HEP from any location other than the ENS store at Vineyard.

32 This evidence was largely corroborated by that of RC. In respect of the purchase of the contaminated HEP, BC said that although he had no specific recollection of the actual purchase, he knew that it had occurred a little over a week before 8 August 1998 after he had returned from holidays and that is why he was able to identify 30-31 July 1998 as alternative dates for the purchase. In accordance with his usual practice, such purchase would have taken place on either the Thursday or Friday of that week. The importance of 8 August was that this was the day on which one of the horses died.

33 That evidence as to the fact of purchase and as to the date was disputed by ENS. It asserted by reference to its records and other evidence that no purchase of HEP by BC from the Vineyard store had taken place in May, June, July or August 1998. Since this factual issue is fundamental to the plaintiffs’ claim against ENS, I will deal with it separately.

34 What is not in dispute is that HEP was consumed by some of the plaintiffs’ horses in the week before 8 August 1998 and that the HEP so consumed contained Monensin.

35 The evidence of the plaintiffs was that contaminated HEP was fed to the horses on the Friday night, and that on Saturday morning it was observed that none of the horses had eaten their feed. That feed was then tipped out and new feed from the feed bin was given to the horses on the Saturday morning. On Saturday afternoon it was observed that the horses had once again not eaten their feed. In order to make it more palatable, BC and VC mixed molasses with the feed on the Saturday afternoon. On Sunday morning BC observed that “Jimmy”, “Cracker” and “Topsy” had eaten all their feed but that “Al”, “Subiaco” and “Noelene” had eaten some but not all of their feed. That pattern of mixing the horse feed with molasses was followed throughout the following week with the horses “Jimmy”, “Cracker” and “Topsy” eating all of their feed and the other three horses eating about seventy percent of it.

36 BC gave evidence that on the Thursday of that week (6 August) he and RC again attended the Vineyard store of ENS and purchased six-eight bags of HEP as feed for the next week. BC thought that he had paid cash as was his usual practice, but could not specifically recall. Although he believed he was given a receipt, he did not retain it. BC agreed under cross-examination that he said nothing to anyone at the ENS store about the problems he was having with the horses not eating all their feed. The fact of this transaction was also disputed by ENS.

37 On the Friday night (7 August) “Topsy” was observed to be unwell and was brought from her paddock to a stable near to the house. She was very lethargic and wasn’t interested in consuming any feed even with molasses added. BC went to work at approximately 3am on Saturday, 8 August.

38 The evidence of VC was that at approximately 6.15 or 6.30am on Saturday, she was awakened by what she described as a “very shrill whinny”. When she looked towards the stable:

“I saw her trying to scramble over the back of the stable so I rushed down and I couldn’t go in because she was thrashing around making funny noises, whinnies, trying to climb over the back fences. Her back legs were going underneath her, it would have been dangerous to go into the stable with her. And I called out to Nathan “Quick come down”. Nathan came down. We just stood and watched, she was just in such a horrible state.
She was trying to climb over, she didn’t appear to know what she was doing and eventually she fell down a couple of times and got up and then she fell, had a couple of breaths and that’s it.” (T.417)

These events occurred over a period of about five minutes.

39 The only persons present when this occurred were VC and her son Nathan. BC and RC were away from the property at work. Nathan did not give evidence. Although the above description is somewhat dramatic, VC has consistently described the incident in similar terms since that date. Veterinarians have confirmed that such a description is consistent with death by heart failure as a result of Monensin poisoning. Accordingly, I generally accept the description of VC as accurate and I accept that it was very distressing to her.

40 VC tried to contact her local veterinarian but because of the time, all she could do was leave a message on the answering machine. In due course Dr Robson, the veterinarian, returned her call and she explained what had happened. In the course of that conversation, Dr Robson mentioned to her that he was aware of a problem with HEP. VC said that she would arrange for the horse to be taken to Dr Robson’s surgery so that an autopsy could be carried out.

41 VC telephoned BC at his place of work and told him what had happened. She also arranged for someone to attend the property in order to transport “Topsy” to Dr Robson’s surgery for autopsy. She removed all of the uneaten feed from the other horses. Some of this feed she subsequently placed in bags, which she labelled and took to Dr Robson’s surgery for analysis. This was done at the request of Dr Robson.

42 Later in the morning RC arrived home and was told by VC what had happened. Not long afterwards a Mr Malcolm arrived to remove the dead horse. Because the ground was wet it was not possible for him to bring his vehicle to the stable, so it became necessary to place a cable around the horse’s neck, which was connected to a winch on the back of the truck. VC found this distressing and went inside the house. RC remained. He observed the horse as it was pulled across the ground and then winched onto the truck. He found that sight distressing. The horse was then taken to Dr Robson’s surgery.

43 When BC returned from work, he and VC went to another horse food store, Robank Feeds, to obtain alternative feed for the horses. VC then had a number of telephone conversations with persons in the neighbourhood, including Frank the proprietor of Robank Feeds, on the Saturday and Sunday. The only significant matter to arise from those conversations was that VC became aware that other horse owners, Mr and Mrs Blunt, had experienced problems with HEP about two or three weeks earlier. She also had a conversation with Greg Murphy, an employee of ENS, on that Sunday.

44 On Monday, 10 August the feed samples requested by Dr Robson were delivered by VC to his surgery. By that time VC had been told the results of the autopsy of the dead horse. The mare had died from a heart aneurysm, consistent with Monensin poisoning.

45 VC purported to record in a diary the events of the next few months, including telephone conversations. Extracts from that diary were tendered by consent (Exhibit BBB), otherwise the diary was used to refresh the memory of VC or extracts from it were read onto the transcript. There were problems with the diary. It was not comprehensive in that it did not record all telephone conversations and events. To the extent that conversations were recorded in it, they were on occasions clearly self serving and intended for use in litigation. In that regard the plaintiffs had consulted solicitors in relation to this matter not long after 8 August 1998. Accordingly, I regard the diary and extracts from it as being reasonably accurate as to dates and the fact of conversations having taken place as recorded in it, but not as to the content of those conversations. For reasons not explained, only some diaries in respect of subsequent years were available.

46 VC had conversations with Mr Greathead from ENS in mid August as to the testing of the uneaten feed, which had been delivered to Dr Robson, and also blood testing of the surviving horses. On 15 August Mr Greathead went to the plaintiffs’ property and said that he was sorry for what had happened and that he would do what he could to help. He said that he would pay for the blood tests on the horses and would arrange a meeting with Millmaster (GWF), the manufacturer of the contaminated HEP.

47 The results of the testing of the uneaten feed became available on 13 August. No trace of Monensin was found in two of the samples described by their labels as “mare’s feed” and feed “bottom of bin 3” but relatively high amounts in two of the samples – “leftover feed” 4.5 ppm and “feed (not eaten 4)” 31.2 ppm (Exhibit FF). The blood test results for the horses became available on 18 August. The results were normal for “Jimmy”, “Cracker”, “Noelene” and “Vaudeville”. In relation to “Subiaco” and “Timmy” there was evidence of some muscle damage.

48 On 18 August a meeting took place at the plaintiffs’ property between VC, Dr Robson, Mr Murphy and Mr Pittolo from Millmaster (GWF). Mr Pittolo said at that meeting “We need to have all your remaining horses stress tested at the University”. Mr Pittolo agreed that Millmaster would pay for the cost of the blood testing, the cost of the pellets to be tested and the cost of transporting the horses to and from the university for the stress tests. Mr Pittolo asked VC to think about what price she wanted for the dead mare and when doing so, to take into account the stress which she had suffered. Mr Pittolo offered to pay for the agistment of the remaining horses until they were tested. Alternatively he offered to provide feed free of charge for those horses for that period. Mr Pittolo also agreed to pay all veterinary costs associated with the horses.

49 VC did not respond, except to refuse the offer of horse feed. Later in August there were two telephone conversations between VC and Mr Pittolo in which Mr Pittolo again requested VC to advise how much she wanted for the dead mare. On the last occasion VC responded that she would put in writing the amount she wanted.

50 On 28 August the following was faxed by VC to Mr Pittolo:

“Further to our discussions I confirm that you want me to put a price on my mare “Topsy Turtle” who died on 8 August 1998.
“Topsy Turtle” was purchased by myself and my husband for the purposes of showing and then breeding from. I have spent two years training her and have incurred the cost of purchase, feeding, training, shoeing, horse dentist, worming etc and I now have to replace her with a trained horse of equivalent standard who is able to have foals.
Payment of expenses to replace her and the reimbursement of the cost of her feed, training, shoeing, teething etc to date would only be accepted on the basis that it didn’t limit or any way restrict any claims I may have as to my losses in respect of our six other horses or in relation to her death.
I confirm that I am still waiting to see the position of the other horses.
I understand that you will attend to payment of vet fees, blood testing, autopsy and food analysis and continue to attend to the costs associated with blood testing, vet fees, university testing of our other six horses.
On this basis I have calculated the cost of replacement and reimbursement for all my expenses associated with “Topsy Turtle” to date at an amount of $23,350.
Yours faithfully” (Exhibit T.)

51 In a fax from VC to Mr Pittolo of 7 September the figure of $23,350 was broken into its components, one of which was “cost of replacing with thoroughbred mare of equivalent standard $10,000”. (Exhibit U.) That figure was confirmed in a subsequent fax of 29 September 1998 (Exhibit GG). By letter dated 15 October 1998 Robertson & Co, Loss Adjustors acting on behalf of GWF, offered VC $10,000 for the dead mare plus payment of veterinary and autopsy accounts and the cost of the removal of the carcass (Exhibit HH). This offer was not accepted.

52 On 9 October 1998 the plaintiffs’ horses were tested at the University of Sydney Veterinary campus at Camden. Ultrasonography and stress tests were carried out by Professor Hodgson and Dr Hoffman from the university. VC and RC were present when the tests were carried out. The results of those tests are set out in Exhibit J. All the ultrasound results were normal.

53 The stress test was carried out by the horses being restrained and then placed on a specially constructed treadmill. The speed of the treadmill was gradually increased so as to eventually cause the horses to gallop. Echocardiographical results were recorded throughout the test.

54 The stress test involving “Jimmy” had to be stopped shortly after commencement when significantly abnormal heart rhythm was detected. Although “Cracker” completed the test, some heart dysfunction was detected. Some heart dysfunction was also detected in “Subiaco” at the end of her stress test. No abnormalities were detected in either “Noelene” or “Al” following their stress tests. RC was upset by the tests, particularly when “Jimmy’s” test had to be stopped.

55 There was a dispute as to exactly what Dr Hoffman said to VC and RC following these tests. The evidence of VC (T.496.8) was that Dr Hoffman told her that the horses should never be ridden. In this regard I accept the evidence of Dr Hoffman that she did not use those words about any of the horses, but that what she said was that the horses should not be ridden for twelve months. I found Dr Hoffman to be an impressive witness, with no motive to tell anything but the truth.

56 Negotiations were continuing between Robertson & Co, the loss adjustors for GWF, and VC in relation to the payment of compensation not only in relation to “Topsy”, but also for the other horses. On 4 December 1998 GWF offered to pay for the agistment of the original horses at Shipton Lodge between 7 December 1998 and 7 February 1999 whilst negotiations took place. It was common ground that Shipton Lodge was something of a deluxe location for the agistment of horses. The cost was $11 per horse per day. In fact GWF paid for the agistment of the horses at Shipton Lodge until 7 March 1999.

57 In relation to the agistment of the original horses, VC and RC prepared a schedule of locations where their horses were agisted, apart from the time at Shipton Lodge. (Exhibits Y and Z) There was little supporting documentation, other than an agistment agreement and some cheque butts, to support the information contained in Exhibits Y and Z. Those documents appear to have been prepared for the trial from the unaided recollection of VC and RC. Although diary entries were referred to, these were restricted to July – December 1999 and intermittent entries in the years 2002 – 2004. The evidence as to the location of the horses and the payment of agistment fees and other expenses relating to the original horses was incomplete and unsatisfactory. My conclusion as to agistment is set out in my consideration of this head of damage.

58 In relation to the claim for agistment, it should be noted that “Cracker” died of unknown causes in June 2000 and that “Noelene” died of a condition unrelated to Monensin poisoning on 13 October 2004.

59 The plaintiffs’ claim included the purchase cost of replacement horses. It became obvious from the evidence that between August 1998 and the date of trial, more than fifteen horses had been acquired and disposed of by the plaintiffs. From those horses five were nominated as “replacement horses”. The basis for identifying those horses as “replacement horses” was not clear. The identification of them as “replacement horses” seems to have been somewhat arbitrary in that four show horses and two camp drafters were replaced with four camp drafters and two show horses.

60 The following horses were nominated as replacement horses:

“Willow” – a 9 year old mare purchased on 18 November 1998 for $4,000 for camp drafting.

“Rowley” – a 10 year old gelding purchased on 25 January 1999 for $5,750 as a show horse.

“Kate” – a 9 year old mare, purchased on 25 May 1999 for $4,000 for camp drafting.

“Modicum” – a gelding purchased on 13 September 1999 for $7,000 as a show horse.

“Tia” – a 6 year old mare, purchased on 18 April 2000 for $4,000 for camp drafting.

“Cloudy” – a 2 year old gelding purchased on 18 May 2001 for $1,500 for camp drafting.

61 I don’t propose to deal with the performance of the “replacement horses” because I regard it as irrelevant to the claim. I do, however, make this observation. The plaintiffs, in particular VC, deliberately sought to downplay the performance of the “replacement horses” by comparison with the original horses. Insofar as show horses were concerned, what seems clear is that “Modicum” considerably out performed any of the original horses in the show ring. “Rowley” was at least equal in performance to “Al”.

62 The original horses, less “Cracker”, were tested again at the University of Sydney campus at Camden on 15 November 2000. Professor Hodgson and Dr Hoffman carried out the tests. The horses were subjected to ultrasonography and stress tests. The only horse to show any abnormality was “Subiaco”. The following opinion was expressed by Professor Hodgson and Dr Hoffman in relation to the horses:

“In summary, the results of the tests performed indicate that all horses have good exercise capacity, although untrained at the time of the examination. Additionally, none of the horses demonstrated evidence of cardiac dysrhythmias in response to exercise. Three of the horses (“Jimmy”, “Vaudeville” and “Noeleon”) performed the tests as would be expected for normal horses. Similarly results of all other tests performed were within normal ranges. As such we were unable to determine any residual effects of exposure to Monensin in these animals and therefore recommend that they might be considered “fit” to resume normal athletic activity. As mentioned, “Subiaco” had a consistently low cardiac contractility, possibly reflecting decreased ventricular function. Despite this the horse had relatively good exercise capacity. As we have no baseline measurement of this horse prior to exposure to Monensin we are unable to comment as to whether this apparent low left ventricular contractility has any relationship to eating contaminated feed. Given the results of these tests we recommend that the horse should be suitable for low-level athletic activities – eg trail-riding and might be expected to function in other ways eg breeding.” (Exhibit RR)

63 The original horses were not ridden by the plaintiffs nor were they used for any other purpose after 8 August 1998. They were agisted on the properties of neighbours and friends, sometimes for a fee, sometimes free of charge. On occasions one or other of them was kept at the plaintiffs’ Cattai property. Of the three original horses which are still alive, “Subiaco” and “Jimmy” are agisted on a neighbour’s property near to that of the plaintiffs at Cattai and “Al” is agisted on a property at Lithgow. The plaintiffs are presently not paying anything for this agistment, although it has been necessary for them to provide supplementary feed for “Subiaco” and “Jimmy”.

64 It was the plaintiffs’ case that having seen what happened to “Topsy” and not being able to obtain a clear guarantee from Professor Hodgson or Dr Hoffman that the original horses were safe to ride, they were not prepared to ride them themselves or allow others to ride them. The plaintiffs were concerned that if ridden, any one of the original horses could suddenly collapse and seriously injure the rider. It was for that same reason that they were not prepared to sell or give away any of the original horses.

65 The plaintiffs said that they were confirmed in that decision by the opinion of Professor Hall, a veterinarian from the United States, with particular expertise in Monensin poisoning. The plaintiffs gained access to an opinion of his in December 2000.

66 It was the defendants’ case that it was reasonable for the plaintiffs not to ride or use the original horses for twelve months following the testing by the University of Sydney in October 1998. Thereafter, and certainly following the further testing by Professor Hodgson and Doctor Hoffman in December 2000, there was no reason why any of the original horses should not be ridden and no reason why the mares should not be used for breeding. The only qualification was in respect of “Subiaco” which should not have been put into heavy work. The defendants relied not only upon the opinions of Professor Hodgson and Doctor Hoffman but also on the fact that owners of other Monensin affected horses had resumed using them for riding. The reasonableness or otherwise of the plaintiffs’ decision in this regard is one of the issues to be decided. It is fundamental to the plaintiffs’ claim for the cost of agisting the original horses, both in the past and in the future for their anticipated life spans.

67 After August 1998 VC’s participation in show riding continued but at a reduced level. She last participated in a hack showing competition at the Sydney Royal Show in Easter 2002 when she competed on “Modicum”. Thereafter her participation in competition has been infrequent and has been restricted to stock horses used for camp drafting. It was the evidence of VC that after August 1998 and the death of “Topsy” she lost interest in hack showing.

68 This also was disputed by the defendants. They pointed to VC being active as a judge and as a participant in hack showing, particularly during 1999 and 2001 as not indicating such a loss of interest. Their suggested explanation was that VC had simply changed her focus and was now concentrating on camp drafting and that the discontinuance of her hack showing had nothing to do with the events of August 1998. This issue will need to be determined when VC’s claim for nervous shock is considered.

69 The plaintiffs claim that as a result of the Monensin poisoning of their horses they suffered a recognised psychiatric illness, being a form of post-traumatic stress disorder. The plaintiffs claim that they continue to suffer the effects of this psychiatric condition. This is a matter disputed by the defendants and I have reviewed the evidence on this issue in more detail when dealing with that head of damage.

70 The factual analysis so far has focused upon the plaintiffs and the events with which they were directly involved. Although the defendants did not call oral evidence in their case on liability, there was other evidence which enables some findings to be made as to the conduct of the defendants.

71 It is tolerably clear from the pleadings and from exhibit ZZ that on either 29 or 30 June 1998 GWF unknowingly manufactured HEP that was contaminated with Monensin. The factory in which GWF manufactured HEP was also used to manufacture cattle feed and chicken feed, which contained Monensin. The same equipment was used for the manufacture of cattle feed and HEP. On either 29 or 30 June 1998 Monensin had not been properly removed from that equipment before it was used for the manufacture of HEP. As a result five tonnes of potentially contaminated HEP was manufactured and dispatched by GWF in bags with ticket numbers 013648 – 013781. As indicated by the pleadings, GWF accepted that it was negligent in that regard.

72 It is not clear whether all of the bags of potentially Monensin contaminated HEP were delivered to ENS or only some of them. Certainly a significant number were so delivered. From its accounting records it is clear that ENS operated mainly as a wholesaler and sold to retailers of horse feed. It did have as customers some individuals such as BC.

73 There is no evidence that ENS knew that the HEP, which it received shortly after 29-30 June 1998, was contaminated with Monensin. It is, however, clear that ENS through its managing director Mr Greathead, who was himself a veterinarian, was aware from 1996 of the harmful effects of Monensin if consumed by a horse. ENS also seems to have been aware, at least by May 1998 that the factory of GWF which was producing HEP for ENS, was also producing other feeds which contained Monensin. Document 28 of Exhibit ZZ is a handwritten note produced by ENS on discovery dated 16 May 1998 in which the following is recorded:

“Phil Pittolo 16/598
1. 1-2d separat of Horse feeds FORMALIZED
2. M free Mill unlikely.
3. Other Ionophores – can test.
HPLC – gets all Ionophores/other substances

<.5ppm is classed as – ve)

2 ½ hrs of manufacture ) all
Contin Sampling appendix – may not get enuff
May do both ① Trickle ② Begin mid, end – Test
?Tamworth:- ”

74 Other documents make it clear that Monensin is an ionophore. A later document (42 of Exhibit ZZ) suggests that the reference to “trickle” may be a reference to trickle sampling, which is a method of testing for contamination problems in production and was one of the methods under consideration by GWF and ENS as a way of eliminating any recurrence of Monensin contamination after this incident had occurred.

75 The authorship of document 28 in Exhibit ZZ is unknown. Its meaning is unclear. It was not explained by either side in evidence. No interrogatories were administered by the plaintiffs in relation to it. Mr Murphy, an employee of ENS, was available to give evidence but neither side called him. Mr Greathead was not called in the case for ENS. On that state of the evidence I can only draw broad inferences from document 28 in Exhibit ZZ. I infer that as of May 1998 ENS was aware that Monensin was being used in the manufacture of other feeds in the GWF factory which manufactured HEP for it. For reasons unknown, the author of the document concluded that a Monensin free mill was unlikely. The only other inference I am prepared to draw is that a discussion had taken place between someone from ENS and Mr Pittolo of GWF about methods of testing horse feed possibly because of the potential danger from Monensin.

76 It is clear from the evidence of Mr Nathan Noonan, a storeman and forklift driver who was employed by ENS between 1995 and April 2000, and from Exhibit 12 (invoices indicating the replacement of HEP) that by 14 or 15 July 1998 ENS had become aware that some of the HEP sold by it was contaminated with Monensin and that by 16 July 1998 it had implemented a recall process. That is confirmed by the evidence of Mrs Blunt and Mr Van Nieuwboer.

77 The method initially used by ENS was to supply Mr Noonan with a list of customers likely to have purchased the contaminated HEP and to have him telephone the customer and arrange for the collection of any bags of HEP which came within the specified range of ticket numbers which had been given to ENS by GWF. The identity of such customers could be obtained from the ENS accounts system. Within a week of the recall being commenced, most but not all of the contaminated HEP had been returned to ENS. On 14 August 1998 a recall notice was published by ENS in the Hawkesbury Gazette (Exhibit H).

Did Plaintiffs purchase HEP from ENS on 30-31 July 1998

78 The plaintiffs’ evidence on this issue came primarily from BC. To some extent the evidence of BC is corroborated by RC. No corroboration is provided by the evidence of Mr Noonan. Although Mr Noonan in chief agreed with the proposition that he remembered BC purchasing HEP in July 1998, when that was tested under cross-examination it was clear that Mr Noonan had no actual recollection to that effect but could only generally remember BC attending the ENS Vineyard store from time to time during 1998 to purchase HEP.

79 The specific evidence of BC on this issue was:

(a) He commenced purchasing HEP about 18 months before the incident (T.63.51).

(b) He usually purchased 6-8 bags a week (T.64.02).

(c) Such purchases usually took place on Thursdays or Fridays after RC was picked up from school on the way home at around 3.30 pm (T.65.20).

(d) He had only ever purchased HEP from ENS at Vineyard (T.65.35, 68.55).

(e) His practice was to go to the office first and pay, usually with cash, get a receipt and then go into the warehouse where the storeman would pick up the feed on a forklift and it would be loaded into the back of his vehicle (T.66.58-68.15).

(f) He always got a receipt which had his name on it (T.316.46-317.07, T.317.45-317.57).

(g) The storeman’s name was Nathan and he would show Nathan the receipt to indicate how many bags had been paid for (T.96.35).

(h) Upon arriving home the bags would be tipped into the master feed-bin in the shed straight away (T.68).

(i) He could specifically recall purchasing HEP on either 30 or 31 July. He went to the ENS Vineyard Store to buy food for the following week. He went to the office, paid one of the ladies in the office, backed his van into the warehouse where the bags were loaded. He probably paid cash because it was pay day. He received a receipt but did not keep it (T.95.20, 95.30, 95.35, 319.25)

(j) He could also specifically recall going to ENS at the end of the first week in August and buying HEP (T.325.55) but could not recall seeing Mr Greg Murphy on this occasion, or Mr Greathead (T.95.55, 96.07).

80 Although RC did not have the same specific recollection as to 30-31 July 1998, his evidence corroborated an attendance at ENS at about that time. He corroborated BC’s evidence as to the usual procedure when purchasing HEP from ENS. (T.825) He said that the receipts had the Horsepower logo on them (T.826.29). It was his recollection that the number of bags purchased from ENS varied from between 5 and 12. (T.900.45) RC was unable to tell the court how many bags had been purchased on the Thursday or Friday in the week before “Topsy” died (T.900.50-901.01).

81 The plaintiffs were not able to produce any documentation to substantiate this evidence. That is not surprising. BC pointed out (quite reasonably) that once the HEP had been collected and paid for, he saw no reason why he should keep any of the documents. Somewhat strangely, however, the plaintiffs were able to produce their chequebook up to May 1998 but not for the period thereafter, in particular June and July 1998.

82 The plaintiffs appear to rely upon the fact that conversations took place between Mr Murphy, an employee of ENS, and Mr Greathead, its managing director, and VC following the death of “Topsy” as an admission that the HEP had been purchased from ENS. I do not draw that inference. The conversations with and statements attributed to Mr Greathead after 8 August 1998 are equally consistent with the concern of the managing director of a company in which a product developed by it and bearing its name had become contaminated. The direct involvement of Mr Greathead is further understandable in the context of earlier complaints of a similar kind concerning HEP having been made by other customers such as Mr and Mrs Blunt.

83 I do not take the involvement of Mr Greathead after 8 August 1998 as in any way confirming that a purchase of HEP by BC from ENS took place on either 30-31 July or 6 August 1998.

84 The plaintiffs also relied upon the evidence of Dr Robson (T.1085.37) as to what VC said to him in August 1998:

“Then I mentioned to her that Monensin had previously been identified a few weeks previously in feed samples from this same feed she was feeding and she was very distressed and said “Why didn’t they tell us when we bought feed there recently?” “Why didn’t Horsepower?”
Q. What did you say?
A. She said “Why didn’t Horsepower tell us when we bought feed there recently?” She was very upset.”

85 That evidence if VC were telling the truth at the time, is certainly consistent with VC believing that the contaminated HEP had been purchased from ENS “recently” but it does not, however, support the actual fact of purchase. VC could have been told that by BC even though he may have acquired the HEP from another source.

86 It was submitted on behalf of the plaintiffs that an adverse inference should be drawn against the first defendant because neither Mr Murphy nor Mr Greathead was called to give evidence on this issue. I am not prepared to draw such an adverse inference. There is nothing in the evidence of BC or RC as to seeing or talking to Mr Murphy or Mr Greathead on either 30-31 July or 6 August 1998. Accordingly, it is difficult to see what evidence either of those persons could have given on this issue if they were not present on the occasions that the plaintiffs allege the contaminated HEP was purchased. The plaintiffs had the opportunity to call Mr Murphy (he having attended court to produce documents in answer to a subpoena) but declined to do so.

87 The plaintiffs also relied upon the affidavit of Mr Greathead of 7 May 2004, which was attached to the Defence of 11 May 2004 of ENS, and in particular the affidavit’s endorsement of paragraph 4 of that Defence which read:

“4. Admits paragraph 4 only insofar as the second plaintiff entered into a contract with the first defendant with respect to the goods (as defined) in or about July 1998 but otherwise does not admit the allegations contained therein.”

88 Until May 2004 there had been a blanket denial by ENS of all of the allegations in paragraph 4 of the Statement of Claim. The plaintiffs submitted that the combination of the pleading and the affidavit in support constituted an admission of a sale of HEP to BC by ENS on some date in July 1998.

89 That submission by the plaintiffs is clearly correct, ie that although the pleading disputes the nominated dates of 30-31 July 1998, it does admit a sale on some earlier date in July 1998. In that regard it should be noted that I gave leave to ENS to amend that Defence in May 2005 so as to place in dispute any sale of HEP to BC or any other of the plaintiffs after May 1998.

90 Although the plaintiffs are entitled to rely upon that submission, its force is not decisive. It is clear from the whole of the evidence that sales of contaminated HEP by ENS to other persons (Mr Murphy and Robanks Feed) had taken place in early July 1998. Those sales were the subject of the recall action, which took place on 16 July 1998. In that context one can see how in May 2004 the legal advisers of the first defendant might consider it important to challenge a sale on 30-31 July 1998 (which impacted on the indemnity and aggravated damages question) but not be too concerned about sales which took place before 15 July 1998 when ENS first learned of the contamination problem. This is particularly so since I suspect that the legal advisers of ENS in May 2004 did not appreciate the effect of the accounting records of ENS.

91 ENS submitted that the evidence of BC was essentially unreliable and on an issue as important as this, it should not be accepted without some corroboration.

92 ENS relied upon the following matters to support that submission:

(i) It was clear from the analysis of the residual horse feed, particularly that taken from the bin used by “Topsy”, that feed other than HEP was being fed to the plaintiffs’ horses in the week before 8 August 1998. Exhibit 7, which deals with the analysis of the feed samples delivered to Dr Robson by VC made it clear that stud mix a product of Pauls Stock Feed was being fed to some of the plaintiffs’ horses including “Topsy” in that week, contrary to BC’s assertion that the only food given to them was HEP.

(ii) There were some inconsistencies in his evidence as to whether he purchased the contaminated HEP on 30 July or 31 July. Initially he said he purchased the HEP on 30 July 1998 but later said he went on Friday 31 July (T.154.34) but then could not remember whether it was the 30th or 31st (T.319.35). It then turned out he had no specific recollection and his identification of those dates was based on his usual habit and on some reconstruction (T.320.50).

(iii) The records of the first defendant as to purchases by BC of HEP between January 1998 and 30 April 1998 indicated that weekly attendances to purchase HEP were the exception and that normally BC’s attendance at the ENS Vineyard store was fortnightly.

(iv) His failure to make any complaint to Mr Murphy or Mr Greathead concerning the HEP when the horses refused to eat it in the week leading up to 8 August 1998 is not only surprising but incredible, particularly on the occasion of his alleged visit to ENS at Vineyard on 6 August 1998. This is to be contrasted with the conduct of the Blunts who immediately contacted Frank from Robanks Feeds when their horses refused to eat HEP. In the same category is BC’s subsequent failure to complain to either Mr Greathead or Mr Murphy in terms about the sale to him of the contaminated feed and the failure to request his money back for the contaminated HEP thus purchased. (T.326.30, 326.50-327.15, 340.10-340.35)

(v) BC’s evidence was that he emptied the newly bought feed immediately into the master feed bin and that it did not get stored in bag form in the shed. In contrast an explanation as to why the horses were off their feed was that BC thought their dog “Wally” may have urinated on the feedbag (T.325.35, 405.10). This evidence was inconsistent with that of VC that there were present in the shed bags of HEP unopened for a number of weeks before they were emptied into the master feed bin (T.705.05) and RC to similar effect (T.943.30).

93 A similar attack was directed at the evidence of RC. ENS submitted that his evidence was unreliable because:

(i) He had no specific recollection of purchasing the feed on 30 or 31 July but relied essentially on his father’s usual course of conduct (T.825.24).

(ii) If his father received a receipt in July (T.825.51) then according to the evidence of Ms Skye Smith and Mr Brian Waterhouse there should have been a corresponding invoice, payment and stock entry in the accounting records of ENS which there was not.

(iii) Although RC said the receipts had the Horse Power logo on them (T.826.29), the receipts in evidence which were issued at that time (Exhibits AAA and 28) did not have any such logo.

(iv) RC was not able to tell the court how many bags had been purchased in the week before “Topsy” died (T.900.50-901.01).

(v) He agreed that there were weeks when he and his father did not go to ENS to purchase HEP and that they could have gone only twice a month (T.904.29-.34).

94 The principal challenge by ENS to the plaintiffs’ claim that contaminated HEP was purchased on 30-31 July 1998 was based on its accounting records. Those records, it was submitted, were inconsistent with any purchase of HEP from ENS by BC having taken place in May, June, July or August 1998.

95 ENS relied upon the evidence of Ms Skye Smith, its clerical and accounts officer at the time:

(i) The last transaction recorded in the “Debtor Account Inquiry” for BC occurred on 21 May 1998. That transaction was a payment in respect of a purchase which had taken place in April. The “Debtor Account Inquiry” recorded all of the purchases and payments made under customer number 200153 which was the customer number for BC (Exhibit 16 and T.1605.17).

(ii) The miscellaneous cash sales were accounted for in a specific ledger bearing account number 200208 (Exhibit 30, T.1612.45). The “cash book and bank deposit” lists and “cash book transaction” lists for 30 and 31 July 1998 did not indicate that BC purchased, by cash, any HEP on either of those days (Exhibits 18-22, 26-28).

(iii) There were entries for BC under his customer account number (200153) and of a payment by BC to the NSW cash account (200208). This seems to have occurred because the person accepting cash from BC was not aware that he had a separate “customer account number”. Nevertheless the identity of BC when paying cash was entered against the NSW cash account and was at all times clearly set out in the accounting records identifying BC as the payer (T.1624.50).

(iv) A review of the bank deposit lists and the transaction lists of ENS for the period May 1998 to the end of July 1998 and from the end of August 1998 through to October 1998 revealed that no invoice was issued to or payment was recorded as having been made by BC for the purchase of HEP from ENS in the months of July and August 1998 (T.1667.05-1668.06).

96 ENS also relied upon the evidence of Mr Brian Waterhouse, its accountant as follows:

(i) The system used was the Arrow Accounting System. On that system once an entry is made it cannot be removed. It can only be reversed by a journal entry. Thus a record of the entry is always available (T.1731.35).

(ii) The stock ledger for July and August 1998 contained no record of BC’s customer number appearing (200153) as having purchased any HEP (Exhibit 31, T.1737.23).

(iii) The “Debtor Account Inquiry” referred to by Ms Skye Smith (Exhibit 16) showed the total of entries from 1 October 1997 to 14 April 2005 for customer number 200153 (T.1741.50 –1742.13). There was no entry after May 1998.

299 Because such distress, upset and anger fall well short of a recognised psychiatric illness, the damages to be awarded for it must of necessity be modest. I propose to award an amount of $7,500. Since most of the upset and distress was caused in the year following the death of “Topsy”, I award interest on those damages at a rate of 4% per annum commencing 1 January 2000, ie $1,950. .

300 As a result of the leave which I granted to the plaintiffs to amend their statement of claim (T.89.48) the Civil Liability Act 2002 (CLA) would not have applied even if the plaintiffs had been successful in establishing that they had developed a recognised psychiatric illness. In any event, the application of Part 3 CLA relates to a plaintiff suffering “mental harm”, which is defined as “impairment of a person’s mental condition”. The findings which I have made of distress and upset would not come within that definition since they do not involve the impairment of a person’s mental condition. The CLA does not apply to this claim.

301 Subject to proving personal injury VC has established a breach of s75AD TPA on the part of GWF. I am of the opinion, however, that the distress and upset which I have found was experienced by VC does not amount to personal injury such as is envisaged by s75AD. It follows that the claim by VC under s75AD against GWF fails.

Aggravated and exemplary damages

302 The plaintiffs’ submissions as to both exemplary and aggravated damages assume a finding in their favour that BC purchased the bags of contaminated feed from ENS on 30-31 July 1998. The submissions are directed at ENS. In view of the finding which I have made as to the acquisition of the contaminated feed, those submissions must fail.

303 For completeness and because these matters have been pleaded, I will briefly deal with them as against GWF.

Exemplary damages

304 The classic description of conduct which merits an award of exemplary damages is “conscious wrongdoing in contumelious disregard of another’s rights”. (Lamb v Cotagno (1987) 164 CLR 1 at 8-9.) It follows from that statement that awards of exemplary damages would be extremely rare in a case based on negligence.

“They will ordinarily not be appropriate where the negligence consists in the failure, notwithstanding bona fide endeavours, to achieve the standard of care towards the plaintiff which the situation or the defendant’s professed skills required that they attain …” ( Trend Management v Borg (1996) 40 NSWLR 500)

And:

“… Exemplary damages could not properly be awarded in a case of alleged negligence in which there was no conscious wrongdoing by the defendant. Ordinarily, then, questions of exemplary damages will not arise in most negligence cases be they motor accident or other kinds of case.” ( Gray v Motor Accident Commission (1998) 196 CLR 1 at [22])

305 As against GWF there is no evidence which would justify exemplary damages. The actions of GWF were careless but not deliberate. No basis has been made out for an award of exemplary damages against GWF.

306 In view of that finding I do not need to consider the other problems confronting the plaintiffs in relation to an award of exemplary damages, ie the need to have a “host” award of compensatory damages on which the exemplary award is then said to be “parasitic” and whether s21 CLA would prevent an award of such damages in any event.

Aggravated damages

307 The classic description of aggravated damages remains that of Windeyer J in Uren v John Fairfax & Sons Pty Limited (1966) 117 CLR 118 at 149:

“… Aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done: exemplary damages, on the other hand, are intended to punish the defendant and presumably to serve one or more of the objects of punishment – moral retribution or deterrence.”

308 As with the claim for exemplary damages, there was nothing in the conduct of GWF in negligently manufacturing HEP which caused any special harm to the plaintiffs so as to attract damages of this kind. In any event, there is a real doubt concerning the award of aggravated damages in claims based on negligence:

“The upshot is that I find no clear guidance in Australian case law on the broad question whether aggravated damages are capable of being awarded in a negligence action. In point of principle, I seriously doubt the need to engraft an award of aggravated damages upon a negligence claim. Compensatory damages would normally include damages for mental distress or injured feeling so long as they can be linked to the tort through existing principles of causation and remoteness of damage. To speak of aggravated damages as a separate component can only have the capacity to confuse and run the risk as to double compensation.” ( Hunter Area Health Service v Marchlewski (2000) 51 NSWLR 268 at [110].)

309 The evidence does not establish any basis for an award of aggravated damages against GWF.

Conclusion

310 As a result of the above findings, the plaintiffs’ entitlement to damages is as follows:

Damage to and loss of property:

Value of deceased and damaged horses	$30,500.00
Interest on that loss	$12,558.00
Cost agisting/maintaining damaged horses	$ 5,015.00
Interest on that loss	$ 1,400.00
Future agistment and maintenance costs	$10,140.00
Loss of profit from breeding	$11,500.00
$71,113.00


Personal injury claims:

Bernard Crump - $6,300.00 (common law claim)
Or $18,900.00 (s75AD TPA claim)
Rodney Crump N i l
Vanessa Crump $ 9,450.00

311 I make the following orders:

1. Judgment is entered in favour of Equine Nutrition Systems Pty Limited against the plaintiffs

2. Judgment is entered in favour of the plaintiffs against George Weston Foods Limited in the amount of $71,113.

3. In respect of her claim for personal injuries, judgment is entered in favour of Vanessa Crump against George Weston Foods Limited in the amount of $9,450.

4. In respect of his claim for personal injuries, judgment is entered in favour of George Weston Foods Limited against Rodney Crump.

312 In respect of the claim for personal injuries by Bernard Crump, I enter judgment in his favour against George Weston Foods Limited. The amount of that judgment is subject to the taking of submissions on the question of election between the two alternative claims brought by him.

313 I reserve the question of costs.

314 Leave is granted to the parties to approach the court on two days’ notice for the purpose of fixing a time for the taking of submissions on the entitlement to damages of Bernard Crump and on the question of costs.

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