Dairy Vale Foods v Manfield and Manfield No. Scgrg-95-2729 Judgment No. S6992

DAIRY VALE FOODS LIMITED V MANFIELD & MANFIELD

[1998] SASC 6992

Civil

LANDER J. The plaintiff, Dairy Vale Foods Limited (“Dairy Vale”) is incorporated in this State and carries on the business as a manufacturer and supplier of dairy products. The plaintiff acquired the undertaking of Dairy Vale Co-operative Limited in March 1995. In that month, pursuant to section 60(2) of the Co-operatives Act, the Corporate Affairs Commission directed the undertaking of Dairy Vale Co-operative Limited be transferred to the plaintiff and as from 9 March 1995 the plaintiff assumed all the rights, titles and liabilities of the Co-operative.
At all relevant times the defendants, who are husband and wife, carried on business as wholesale milk vendors in this State.
On or about 14 June 1994 the Co-operative and Mr and Mrs Manfield entered into a wholesale vendor agreement, the relevant terms of which were that the defendants accepted an appointment as exclusive re-sellers of milk products to various retailers for a period of 48 months from the date of execution of the agreement. The agreement provided for an extension of the term. Whilst the agreement provided for the nomination of the listed retailers, in fact no retailers were listed.
Clause 4.4 of the agreement limited the persons to whom the defendants were entitled to advertise, promote, distribute or sell the milk products without the prior written consent of Dairy Vale. The products provided for in the agreement, which the defendants had the exclusive right to sell, were white milk, flavoured milk, cream, cheese, yoghurt, custard, orange juice and spring water.
Clause 9 provided for termination of the agreement by Dairy Vale in the event of any of the events listed in that clause occurring. I will return to that in due course.
By Clause 17 the defendants agreed that, if at any time during the term of the agreement the defendants received an offer to purchase the business of wholesale milk vendors, which the defendants desired to accept, the defendants were to give fourteen days’ notice to Dairy Vale who would have the first option to purchase the business.
Clause 18 provided:
“This Agreement constitutes the entire agreement and understanding between the parties which shall have the effect to the entire exclusion of all or any prior arrangements and undertakings (express, implied or collateral) between the parties.”
On the same day the defendants also executed a milk vendors’ credit application whereby the defendants applied to Dairy Vale for a milk vendor credit account. The application provided that if Dairy Vale accepted the application by the defendants, it could provide credit on the terms set out in Clause 11 of the application.
Those terms included an obligation on the defendants to pay interest calculated on a weekly basis on any amounts overdue at a rate equal to the aggregate of 1.5% and the overdraft rate charged by Dairy Vale’s bank to Dairy Vale from time to time or such lesser rate of interest as Dairy Vale might fix from time to time.

The Claim

The plaintiff’s claim is for the sum of $254460, which the plaintiff claims is owed by the defendants to the plaintiff in respect of milk products delivered to the defendants during the period 15 June 1994 to 2 November 1995. The plaintiff also claims interest at the rate of 10 per cent per annum on the amount outstanding to judgment.
The defendants deny that they are indebted to the plaintiff in the sum claimed or at all.

The Counterclaim

The defendants not only deny any indebtedness to the plaintiff, but they have also counterclaimed seeking various declarations under the Trade Practices Act and Fair Trading Act and damages pursuant to section 82 of the Trade Practices Act or section 84 of the Fair Trading Act. Alternatively, or in addition, they seek an order for compensation pursuant to section 87 of the Trade Practices Act or section 85 of the Fair Trading Act. They also seek an order declaring that the credit agreement be declared void or, alternatively, unenforceable pursuant to section 87 of the Trade Practices Act or section 85 of the Fair Trading Act. In the further alternative, the defendants claim damages for breach of contract.
To understand the claim and counterclaim it is necessary to set out the facts in some detail which I propose to do before turning to the allegations made by each of the parties against each other.

The Facts

At the relevant time there were two producers of milk products in the Adelaide Metropolitan area, namely the plaintiff and National Dairies SA Limited, which marketed Farmers Union products. Prior to 30 June 1994 there were both wholesale and retail milk vendors. A wholesale milk vendor delivered milk to a retailer such as, for example, a supermarket or a delicatessen. A retail milk vendor delivered milk to the ultimate consumer.
Prior to 30 June 1994, both wholesale and retail milk vendors delivered products produced by both of the producers. For example, a wholesale milk vendor would deliver white milk produced by the plaintiff or Farmers Union to the same retailer. All that changed on 30 June 1994. I will return to that.
In February 1986 the defendants bought a wholesale milk vendor’s round for $125000. It was a relatively small round with a volume of about 12000 litres. Because it was such a small round and less than 15000 litres there was some delay in obtaining a wholesale vendor’s licence but eventually a licence was obtained by the defendants to conduct the round.
As I have said, they paid $125000 for the round. In addition they raised working capital which was spent on purchasing a truck and other equipment.
Like other wholesale milk vendors, they distributed both Farmers Union and Dairy Vale milk although the round they purchased was predominantly a Dairy Vale white milk round.
In about April 1987 they purchased a further round at a cost of $65000. In 1987/1988 the defendants purchased the right to service other outlets, the principal one being a Coles Supermarket at Edwardstown. The cost of those purchases totalled $31000. In February 1993 the defendants purchased some further outlets including the Woolworths Supermarket at Unley. The first defendant said that he paid $10000 to acquire the right to service Woolworths at Unley. Although the evidence is a little unclear on the topic I am prepared to accept that.
The defendants borrowed moneys from the Commonwealth Development Bank to purchase the rounds.
The evidence suggests that a total sum of $187000 was borrowed of which $30000 was repaid in July 1993. Other payments were made over the period of time such that as at the end of June 1994 only about $36000 was owing in respect of these acquisitions. However at the same time the defendants owed the Commonwealth Bank nearly $69000 in respect of the purchase of their house.
Over this period of time the defendants appeared to have repaid the bank about $120000 in total. However, over this same period they built up a debt to the two producers, the plaintiff and Farmers Union of about $145000.
The purchase of the rounds and the various outlets allowed the defendants to increase their deliveries from about 12,000 litres in 1986 to something near 40,000 litres by May/June 1994.
By June 1994 the product mix was 89 per cent white milk and 11 per cent flavoured milk. Of the white milk 71 per cent was purchased from Dairy Vale and 29 per cent from Farmers Union. Of the flavoured milk 74 per cent was purchased from Farmers Union and 26 per cent from Dairy Vale.
Wholesale milk vendors receive a better return on flavoured milk. Notwithstanding the high percentage of white milk delivered for Dairy Vale, 50 per cent of the defendants’ revenue came from Farmers Union products.
The information to which I have referred comes from records kept by the defendants which were tendered in these proceedings.

The Defendants’ Records

The defendants records were poorly kept. Some of their records were kept on a computer and others were kept in ledgers.
The records were not capable of being cross checked. In many respects they were internally inconsistent.
The computer records were kept on a Commodore 64 computer. It was an elementary computer record keeping program which had been developed by another milk vendor. The program required the defendants to enter the price paid for each of the products purchased from the two producers and the retail price recommended by each of these producers. The defendants would also enter the sales tax payable on those products which were subject to sales tax. The program required the name of each of the outlets on the round to be entered.
In respect of most (but not all) outlets, the defendants produced a shop order form. That form would indicate the retailer to whom the product was supplied and the date and the number of units ordered on each day in respect of each product.
That information would also be entered into the computer program. The program would then calculate the total price of the purchases, the total sales tax payable and the gross profit derived from the purchasers. That information was then produced on a weekly basis.
There were a number of other records kept. There was a book of current debtors for the period April 1988 to October 1995, group employers books, financial statements of a kind, cheque books, receipt books, accounts generated by the defendants and accounts received from the producers.
In the case of supermarkets, in addition to the order form, a receipt book was also filled out which would show orders placed by a supermarket on any given day. The receipt book was used as a check by the supermarkets against the goods delivered. At the end of each week an invoice would be sent to each of the supermarkets in respect of that week’s purchases.
The books and records were kept in such a way that there was little or no ability to cross check purchases and sales against each other.
Certain outlets were not recorded on the computer at all and therefore those outlets are not included in the summary of the invoices for the period 1990-1995.
The delicatessens in the Torrensville area paid in cash and as a result were not invoiced. The cash payments are recorded in the back of a book but those cash payments did not become part of the system of account keeping. Those cash payments seem to suggest some form of cash economy. They are an example, indeed a glaring example, of the lack of integrity in the books kept by the defendants.
For some reason, probably historical, Woolworths, Unley was dealt with separately. The transactions in respect of that supermarket were kept in two receipt books.
Another retailer which was dealt with separately and independently was the Adelaide Entertainment Centre. The revenue figures in respect of that retailer were apparently kept in a receipt book which has subsequently been lost.
The financial statements show internal inconsistencies. The plaintiff has submitted that there are significant discrepancies in the account summaries, the information provided by the defendants to Dairy Vale at the time of their application to become a sole vendor and what was told to the Commonwealth Bank in May 1994. Moreover, each of those are in turn inconsistent in part or in whole with the profit and loss summaries set out in the report of Mr McLaren. Mr McLaren was called as an expert in this matter.
The plaintiff put together a summary of the various discrepancies which I set out:

Year ended 30 June	1/11/95	1995 (D34/P57)	1994 (D32)	1993 (D31)	1992 (D30)
Revenue
Manfield spreadsheet (D33)	908,879
Computer sheets from client (D8)	1,059,926
Application to Dairy Vale (D20)	1,484,827	1,107,495
Financial statements (see above)	81,653	1,210,902	1,788,512	1,364,827
Giles & Giles financial statement summaries (D97)	121,379	1,248,253	1,818,463	1,342,158
Spreadsheet (D12)	106,354	1,277,501	1,765,627	1,331,396	1,157,389
CBA Memorandum (D21)	1,364,827	1,151,423
Cost of Goods Purchased
Manfield spreadsheet (D33)	817,297
Application to Dairy Vale (D20)	1,322,864	977,812
Financial Statements (see above)	93,680	1,200,850	1,719,588	1,305,569
Giles & Giles financial statement summaries (D97)	93,680	1,200,850	1,698,788	1,272,078
Spreadsheet (D12)	550,341	1,576,530	1,678,777	1,253,619	1,093,313

I have to say that I do not have much confidence in the records kept by the defendants. For example, when they refer to revenue they do not refer to actual receipts but the amount billed. They did not keep records of their invoices and they kept for themselves no copies of the invoices which were sent to various outlets. In identifying the cost of the products sold on some occasions they included sales tax and on other occasions they did not. Some of the cost of goods include interest paid to the producers.
The financial statements which were prepared by a bookkeeper, I think, are unreliable. I agree with the plaintiff’s submission that apart from the inconsistencies in cost of goods there is also doubt whether or not those financial statements include any cash transactions.
I have considerable reservations about the reliability of the defendants’ records.

The Viability Of The Defendants’ Business

Having regard to the unreliability of the defendants’ records it is not easy to determine whether the business was profitable prior to 30 June 1994. The defendants’ own profit and loss statement for that period, which was prepared by their bookkeeper, discloses a loss for that period of $3076.25 based on a gross profit of $68924.34.
On the face of it the business does not appear to be particularly viable. The defendants’ own figures suggest at the very best a marginal business. The business was either trading at a loss or a marginal profit. Debt was increasing.
Any finding I make on the viability of the business as at 30 June 1994 depends to an extent upon any conclusion which I reach on the defendants’ assertion that over the whole of the period leading up to 30 June 1994 and after the plaintiff short delivered products to the defendants. That is to say the defendants assert that whilst it ordered and was billed and paid for products the products were never delivered. As a result, the defendants claim that the business was made less viable. Of course, they also claim that they are entitled to credit for the non delivery of products in the plaintiff’s claim. A decision on that matter is critical on the plaintiff’s claim but also important generally. If I accept that the defendants were short delivered then that will mean I ought to conclude the business prior to 30 June 1994 was more viable than the defendants’ own records show. Of course, if the defendants were being short delivered in relation to products, that fact would account for an apparent lack of viability of the business.
By 30 June 1994 the defendants had considerable debts. By that time they owed the plaintiff $115000 and Farmers Union about $30000. They had outstanding liabilities of about $110000 to the Commonwealth Bank. The defendants were, by this stage, indebted to the extent of a sum in excess of $250000. It was submitted by the plaintiff, the extent of the debt indicated the non viability of the defendants’ undertaking. That may be so but that also depends upon whether or not the defendants’ complaint that they were the victims of short deliveries is made out.
If, in fact, they were being short delivered to the extent to which the defendants claim then that would have affected the viability of the business and would account for the significant increases in borrowings by the defendants in relation to their business and the concurrent borrowings in relation to their home.
I do not think the outstanding liabilities as at 30 June 1994 is a separate indicator of the viability of the business at that stage.
As I have said, the viability of the business, at that stage, depends upon my acceptance or otherwise of the defendants’ assertion that they were subject to short deliveries.
The resolution of that matter requires a consideration of a good deal of evidence.

Abolition Of The Dual Vendor System

By the end of June 1994, the defendant was predominantly a vendor of white milk. Its product mix was about 89 per cent white milk and 11 per cent flavoured milk.
At that time about 71 per cent of the white milk which it delivered was purchased from Dairy Vale and the rest from Farmers Union. On the other hand of the flavoured milk which the defendants delivered more than 74 per cent was purchased from Farmers Union and the rest from Dairy Vale.
It appears again at 30 June 1994 that the defendants earned about the same revenue from each of Dairy Vale and Farmers Union. This is because, of course, the flavoured milk was significantly more profitable than white milk.
In or about June 1994, the white milk market was shared almost equally between the two producers. Farmers Union had about 51 or 52 per cent of the market, and Dairy Vale the rest. However, in respect of flavoured milk, Farmers Union had a significant competitive edge and held about 70 per cent of the market, and Dairy Vale held the rest.
In November 1993, the South Australian Government announced that it would deregulate the industry and in particular milk prices as at 1 January 1995.
Shortly after that announcement Farmers Union decided that it was in its best interests to abolish the dual vendor system. It thought it would obtain a competitive edge if it required both its wholesale and retail vendors to limit themselves solely to the promotion of its products. It believed that the vendors could not serve two masters at the one time.
On 3 December 1993, it wrote to the wholesale milk vendors seeking an expression of interest by them in being contracted as a distributor of Farmers Union products. It also sought information from the wholesale milk vendors. A copy of that letter was received by the defendants.
A week later the defendants received a further communication from Farmers Union. In that second letter Farmers Union advised the defendants and in particular the first defendant that they were dissatisfied with the defendant’s performance as casual vendors for their white milk products. It pointed out to the defendants that whilst the plaintiff’s overall market share of white milk was in the order of 52 per cent in the majority of the outlets supplied by the defendants, it’s product fell well below that level.
It claimed that the defendants were showing principal support for Dairy Vale white milk at the expense of Farmers Union products.
Farmers Union required a written plan by 23 December 1993, identifying opportunity areas where the defendants and Farmers Union representatives could work together to increase the sale of white milk. Farmers Union told the defendants that unless they received a plan supported by committed follow up action by the end of January 1994 it would review the defendants’ position as a casual vendor for Farmers Union.
The first defendant responded to the second communication from Farmers Union by a letter dated 24 December 1993. He accepted that sales of Farmers Union product were at a level of 30 per cent which was significantly below the 52 per cent market share held by the company. He pointed out, however, that he had built the Farmers Union sales up from nothing over a period of some years. However, he agreed to commence a formal program and to increase white milk sales at all outlets.
I do not think there is any doubt that the letter of 24 December 1993 is a response to the criticism contained in the Farmers Union letter of 10 December 1993. It is not an expression of interest in response to the first communication.
The defendants did not tender, as part of their case, any response to the letter seeking an expression of interest. The defendants did call Mr Laube, the contract manager for the company which markets Farmers Union products, but no attempt was made through him to prove any written expression of interest on the part of the defendants.

In April 1994, Farmers Union announced its termination of the dual vendor system and that as from 1 July 1994 it would only distribute its products through wholesale and retail milk vendors who were exclusively retained by Farmers Union. Again Farmers Union hoped to obtain a competitive edge by its announcement. In due course it did.
On 8 April 1994, the plaintiff announced that it too would move to the sole vendor system from 1 July 1994. Shortly after 8 April 1994, the defendants received a circularised letter from the plaintiff.
In that letter the plaintiff announced that it would cancel all distribution supply arrangements with wholesale vendors as at the close of business in June 1994. The letter was to be regarded as notice of such cancellation. The plaintiff announced that as from 1 July 1994 its products would be distributed by designated Dairy Vale vendors.
The letter invited all current wholesale vendors to apply for appointment as a sole Dairy Vale vendor from and including 1 July 1994. An application form was enclosed. The letter sought the return of that application form by no later than 29 April 1994.
The letter suggested that before the vendors entered into any binding arrangement with Farmers Union that they could complete and return an application which was enclosed in order that they could consider any offer that the plaintiff might be prepared to put to that vendor.
That letter indicates that Farmers Union had not, at that stage, concluded all its arrangements with its vendors. The letter demonstrates that it was still open to vendors to apply to Farmers Union as well as Dairy Vale to become a designated vendor for one or other of the companies.
The plaintiff submitted that the evidence indicated that the defendants never put themselves in a position where they could have become wholesale vendors for Farmers Union. The defendants, it said, left their run with Farmers Union too late. Therefore it was submitted that the defendants, if they wished to continue in business as wholesale milk vendors, never had any choice but to associate themselves with the plaintiff. I do not think that is so.
In my opinion it is clear that Farmers Union was still open to applications as at early April 1994. I think there is sufficient evidence to find that they remained open to applications to at least June of 1994.
The move by both Farmers Union and the plaintiff to end the dual vendor system was a matter of significance, of course, for all of the wholesale milk vendors. It meant that they had to seek to join with one or other of the companies before 30 June 1994. They also had to recognise that by joining up with one company they would immediately lose the volume of milk on their round for the other company.
Of course there were swings and roundabouts. If each of the companies contracted with about half of the wholesale milk vendors then, whilst each half would lose their entitlement to deliver the other company’s product, there would be available to each half, the product which would not be being delivered by the other half which had joined the competitor company.
Therefore one would suppose that each of the vendors would seek compensation in the way of an increased volume from the company with which that vendor contracted.
The other matter of importance of the events leading up to 30 June 1994 is the effect upon the market share of each of the plaintiff and Farmers Union. As I have already said Farmers Union took positive steps to end the dual vendor system because it thought it would give it a competitive advantage. It did so without consultation with the plaintiff, again for the purpose of obtaining competitive advantage.
It gained that competitive advantage. Figures indicate that prior to December 1993, Dairy Vale held between about 48 and 50 per cent of the white milk market. It would appear from figures tendered in the trial that it lost about 8 per cent of its market in the last four months leading up to 1 July 1994.
It is likely that that occurred because of the pre-emptive strike taken by Farmers Union and because Farmers Union, by reason of that pre-emptive strike, had first choice of the wholesale milk vendors. Farmers Union was also able to sign up more than 50 per cent of those wholesale milk vendors.
In fact Dairy Vale’s share of the market has continued to contract ever since Farmers Union took this initiative and as at today its share has slipped to something between 35 and 39 per cent of that white milk market. It always had, as I have already mentioned, a significantly lesser share of the flavoured milk market.
Farmers Union and the plaintiff adopted different strategies to put in place their own vendor system. Farmers Union sought to contract with about 170 of the 300 wholesale milk vendors. Dairy Vale sought a significantly lesser number, something in the order of 100.
Farmers Union sought to induce the vendors to join with it by adopting a single policy which was to ensure that those who signed with Farmers Union would retain the level of gross profit which they had enjoyed under the previous system. Mr Laube, who was called by the defendants and who was, in June 1994, the wholesale contracts manager of Farmers Union, said that Farmers Union asked the wholesale milk vendors to submit to the company the amount of gross profit that they had enjoyed under the dual vendor system. That company then attempted to make up the gross profit for each of those wholesale milk vendors by allocating to those wholesale milk vendors the portion of the Farmers Union product which had been previously sold by those milk vendors who joined with Dairy Vale. The aim of the company was to satisfy those wholesale milk vendors who continued with the company by raising their Farmers Union litreage to the equivalent litreage previously provided by both producers.
The plaintiff, on the other hand, targeted the wholesale milk vendors separately, attempting to deal with each of them individually and offering each of them a package of some kind tailored to suit their individual needs. Mr Thiele, who was the distribution manager for the plaintiff in 1994, said that the plaintiff’s approach from the beginning was to discuss the matters with the wholesale milk vendors individually. An example of that was a meeting held at the Cremorne Hotel where general matters were discussed with wholesale milk vendors but there was no discussion at the meeting about particular aspects that would assist individual vendors at that meeting. That, he said, was decided on a one to one basis. Some vendors did not require anything and in those circumstances did not get anything. (TX 1588)
On 26 May 1994, the defendants made an application to the Commonwealth Bank for $100000 for the purpose of repaying the outstanding debt to Dairy Vale.
It is recorded in that contemporaneous bank record:
“At this time Manfield is keen to stay with Farmers Union, as in 1995 franchise agreements will be set up which would assist in resale prospects and values.”
The document also states:
“Manfield supplies largely Dairy Vale products and present outstandings are $100,000 and we are required to provide overdraft arrangements to assist clear this amount.”
I think that application indicates that the defendants believed, at least as at 26 May 1994, there were still opportunities to become a designated wholesale vendor for Farmers Union. In that respect I think they were right. In my opinion it would have still been possible for the defendants to become a designated vendor for Farmers Union as at 26 May 1994.
I think that the application of 26 May 1994 is important for another reason. It tends to support the evidence of Mr and Mrs Manfield that at that time they were of a mind to contract with Farmers Union rather than the plaintiff.
I think the application is in such terms that it supports findings, which I make, that as at 26 May 1994 the defendants intended to apply to become designated wholesale milk vendors with Farmers Union. They intended to obtain sufficient finance to enable them to pay out their debt to Dairy Vale. Further, I am prepared to infer that the defendants would have obtained the necessary finance to enable them to pay out Dairy Vale.
I have already concluded that it would have been possible for the defendants to become designated vendors for Farmers Union as at 26 May 1994.
There is other evidence to support the proposition that wholesale vendors could have entered into arrangements with Farmers Union as late as 24 June 1994.
Apparently on 24 June 1994, the plaintiff was still negotiating with two vendors who eventually became vendors for Farmers Union. That would indicate, unless those vendors were acting in bad faith, that they had not finally decided, as at 24 June, with which producer they would sign.
The defendants also tendered a letter being a standard form circularised letter dated 23 June 1994 from Farmers Union addressed to those persons who were unsuccessful in their applications for appointments as a wholesale distributor with Farmers Union.
Mr Laube’s evidence was that that circularised letter would have been sent out at or about that time.
Both of those facts support the finding that it would have been possible for the defendants to become designated wholesale milk vendors with Farmers Union up to 23 or 24 June 1994 and I make this finding. I find that up until 24 June 1994, the defendants could have applied, and they were likely to be successful if they had applied, to become designated wholesale vendors with Farmers Union.
The finding is not unimportant. If, as the plaintiff has said, the defendants never had an opportunity of becoming a wholesale vendor for Farmers Union then it might be said that they did not rely upon a representation which was made to them in June of 1994. It could be said in those circumstances they did not rely upon any representations made prior to June 1994.
However, for the reasons I have given, I reject the submission that the defendants never had an opportunity of signing with Farmers Union.

Agreement To Become Vendors For Dairy Vale

The plaintiff’s case is that the first defendant approached the plaintiff in May 1994 and at sometime before 17 May 1994 to become a designated wholesale milk vendor. That can be gleaned, so it is said, from a document entitled ‘Questions To Vendors’ which was signed by the defendants.
There is no doubt that the defendants signed the ‘Questions To Vendors’ document prior to 17 May 1994. I think it is likely that they provided the information contained in that document on the date given on the document, namely 26 April 1994. That document provided information to Dairy Vale and included with it an application on the part of the defendants for appointment as a Dairy Vale wholesale distributor.
Notwithstanding that they signed that application on that day, I believe that they had not decided with which producer they would contract at that time.
I think that is clearly so because of the application to the Commonwealth Bank of 26 May 1994 which was made for obtaining a loan of $100000 to pay out the Dairy Vale indebtedness so that the defendants could enter into arrangements with Farmers Union.
I think the defendants intended that the application signed on 26 April 1994 should be considered by the plaintiff. However the defendants did not consider the application bound them at that time.
There are two handwritten notations on the front of that exhibit. The first is:
“17/5/94
Ross
Will Ring when
Ready to Sign.”
The handwriting was put on the document by Mr Hutchins.
The plaintiff has submitted that the note indicates that the first defendant had advised the plaintiff prior to 17 May 1994 that the defendants would sign with Dairy Vale and were therefore committed to doing so. I do not accept that to be the inference arising out of the document or the note on the document.
In my opinion that note, like the application itself, is equivocal. It means no more than Mr Manfield would sign when he is ready to sign. It does not mean that he was then ready to sign.
There is another note on the front of that exhibit and that contains the words:
“Will come to DV”.
It has been suggested by the plaintiff that I could infer that one or other of the defendants wrote that note on the document. There is no evidence to support that inference and I am not prepared to conclude that either of the defendants wrote those words on the exhibit. It was put that if I drew that inference that would be fatal to the defendants’ case on reliance. I do not agree with that submission. That submission would only be correct if those words were written on the document before the conversation with Mr Hutchins. There is no evidence when those words were written on the documents. It is equally possible they were written after the conversation and record the result of that conversation.
I shall recount the circumstances leading up to the subject matter of the counterclaim.
On 8 April 1994, the plaintiff wrote the standard letter to which I have referred to vendors setting out its policy in relation to both wholesale and retail vendors after 1 July 1994. It included with it the application form and information schedule to which I have referred and which, as I have already noted, the defendants signed and dated on 26 April 1994. On 27 April 1994, there was a meeting at the Cremorne Hotel which was attended by employees of the plaintiff and some proposed wholesale vendors.
A number of matters were discussed and questions were asked of the plaintiff’s employees in relation to Dairy Vale’s proposals for the future.
During April and May the plaintiff’s employees prepared a number of action plans for matters which they wished to discuss with proposed wholesale and retail vendors. At this stage there was keen competition between the two producers to obtain the services of the better wholesale and retail vendors.
At no time prior to the end of May, in my opinion, had the defendants finally decided with which company they would sign although as I have said I think on the balance of probabilities that as at 26 May 1994 they had reached the opinion that they were best served by signing with Farmers Union.
The document prepared by the Commonwealth Bank to which I have referred supports that finding. It was also the evidence of Mr and Mrs Manfield.

The Defendants’ Evidence

I shall digress to say something of those two witnesses, the defendants.
Prior to the purchase of the milk round the first defendant was employed by the Commonwealth Bank. He started with the bank at the age of sixteen in 1965 and worked his way up to a supervisory position which involved supervising a number of staff; organising and supervising tellers; and supervising enquiry counters. He also held positions as a loan officer. He worked for the bank for twenty-two years until he left in 1987.
The first defendant was not, in my opinion, a good businessman. Nor was he a good record keeper. Moreover, he was disorganised.
In his evidence he was imprecise and in some respects, non responsive. He did not listen closely to questions and in many respects did not answer them directly. I think that was mainly due to inattention. However, I did not reach the conclusion that the first defendant was doing anything but trying to assist. I believe that he gave his evidence to the best of his recollection and to the best of his ability. In a number of respects he tended to draw conclusions on facts rather than recount the basic facts. The conclusions which he tended to draw suited him. In summary, I believe the first defendant was an honest witness who gave his evidence to the best of his ability. However, for the reasons I have already stated, his evidence lacked some qualities which would otherwise have allowed the evidence to be accepted unreservedly. I have scrutinised his evidence quite carefully. I generally accept it but there are occasions where I believe that his evidence is not sufficiently reliable for it to be accepted unless it is corroborated by other oral evidence or contemporaneous written evidence.
The second defendant was a much better witness. She did not attempt to give evidence outside her knowledge. She did not exaggerate. Nor did she draw conclusions or raise inferences. She was a reasonable historian who gave evidence in a straightforward manner. I accept her evidence. Where her husband’s evidence is corroborated by her evidence, I accept his.
However there are some aspects of his evidence that I cannot accept. In particular I do not accept his evidence in relation to the short delivery of products. I shall return to that.

The Alleged Misrepresentations

The defendants claim that in June 1994 the first defendant had a conversation with Ross Hutchins in which Mr Hutchins made certain representations to the first defendant to induce the defendants to enter into an agreement with the plaintiff to act as a distributor of Dairy Vale products.
The defendants plead as follows:
“4.4.1 On or about 2 June 1994 at the plaintiff’s premises the plaintiff’s Vendor Liaison Officer Ross Hutchins (“Hutchins”) had a conversation with the first defendant in which Hutchins orally represented to the first defendant that if the defendants entered an agreement to distribute by wholesale the plaintiff’s product the plaintiff would provide to the defendants rounds which would enable them to sell not less than 42,500 litres per week of milk and further that the plaintiff would provide to the defendants rounds which would enable the defendants to sell an indeterminate further quantity of milk described as “a whole lot more”.
4.2The said representations were made with the intent of inducing the defendants to enter into an agreement with the plaintiff to act as a distributor of Dairy Vale products exclusively.
4.3The first defendant orally informed the second defendant of the said representations on or about 2 June 1994.”
The defendants further claim that on 14 June 1994, the defendants had a conversation with Mr Thiele wherein the first defendant repeated the representation made by Mr Hutchins on 2 June 1994. It is claimed that during that second conversation of 14 June 1994, Mr Thiele did not correct those representations.
Moreover, the defendants claim in their defence that, as a result of the representation, they entered into an agreement with Dairy Vale which included terms to the effect that:
“6.1the defendants would distribute and sell Dairy Vale products on (sic) the terms of the Vendor Agreement to outlets in the geographical area of their former round being the Unley/Edwardstown round (being the written part of the agreement).

6.2Dairy Vale would allocate to the defendants such further round or rounds, the outlets of which would have a volume of such allocation in combination with the outlets in the Unley/Edwardstown round purchased through the defendants of not less than 42,500 litres of Dairy Vale’s white and flavoured milk per week (being the oral part of this agreement and which was constituted by the matters pleaded in paragraphs 4 and 5 of this Defence).”

The defendants claim in their defence that those are oral terms of the agreement with the plaintiff.
The defendants claim that the representation made by Mr Hutchins and the silence of Mr Thiele amounted to misleading and deceptive conduct or conduct which was likely to mislead or deceive thereby in breach of s52 of the Trade Practices Act and s56 of the Fair Trading Act.
It is further submitted that a number of implied terms are said to arise out of the agreement entered into on 14 June. Those terms are implied, it is claimed, because they are reasonable and necessary and equitable in order to give effect to the intentions of Dairy Vale and the defendants and to provide business efficacy to the agreement pleaded in the defence.
It is claimed that the implied terms are that any new round or rounds would:
“8.1. be located within a geographical area such that the same could be serviced with reasonable efficiency;
8.2comprise such a mix of outlets as would enable any reasonably efficient and competent vendor to conduct the round in a manner which produced some profit to the vendor;
8.3not be so structured that by reason of the location, size and/or nature of the outlets within the round that any reasonably efficient and competent vendor would be unable to conduct the round other than at a loss;
8.4comprise outlets situated within such a proximity one to another as would enable all outlets in the round to be properly serviced in accordance with industry standards, the requirements of Dairy Vale and the provisions of the Vendor Agreement by one refrigerated van and driver;
8.5comprised outlets which would make usual weekly purchases of Dairy Vale white and flavoured milk products which would aggregate not less than 15,000 litres.”

The defendants further claim that the conversation with Mr Hutchins and the subsequent conversation with Mr Thiele entitle the defendants to counterclaim for breaches of various provisions of the Trade Practices Act and Fair Trading Act.
I will identify the sections more precisely in due course.
The conversations between the first defendant and Mr Ross Hutchins on 2 June, and the defendants and Mr Thiele on 14 June, are critical to the outcome of these proceedings. I will examine these conversations in detail.
It was the first defendant’s evidence in chief that on 2 June he was talking to two or three other vendors at the Edward Street Depot when Mr Hutchins approached the group of men and said to the first defendant: (TX 148)
“You haven’t signed up yet.”
The first defendant said that he responded by saying:
“...National Dairies offered us 42,500 litres...”
Mr Hutchins then said:
“We can do that and a whole lot more, come and sign with us.”
The first defendant said that he replied:
“That’s what we were waiting for.”
He said that they then went off to make an appointment for the defendants to sign up with Dairy Vale.
The first defendant said that he reported that conversation to his wife later that night. Up until that point of time he said the defendants had intended to sign up with Farmers Union. The first defendant’s evidence was that the representation made by Mr Hutchins induced him to sign with Dairy Vale.
Mr Hutchins was called by the defendant. He was a rather abrupt witness. He answered each question directly but very shortly. He was in a sense taciturn. However, it cannot be said that he was evasive. His answers were, as I say, directly responsive to every question put to him. Short direct answers to questions cannot be a matter for adverse comment.
The defendants did not submit that Mr Hutchins or in fact Mr Thiele lacked any candour in the evidence they gave. The defendants put their submission this way:
“Both Mr Hutchins and Mr Thiele had a very limited recollection of the events surrounding their dealings with the Manfields. There is no basis for suggesting that they lacked candour in the evidence which they gave. It was clear however, in the case of Mr Thiele, that he was inclined to express opinions which favoured Dairy Vale and which prejudiced the Manfields. However that is not to say that he failed to give his evidence honestly.”
I agree with that submission. I believe that Mr Hutchins and Mr Thiele gave their evidence honestly. I also agree that both men only had faint recollections of the conversations in June 1994. Both men were at that time particularly busy. They were important personnel in a company which was reacting to a pre-emptive strike by its only competitor. They were under considerable pressure to enrol as many wholesale milk vendors and retail milk vendors as possible. Unless they were able to set up, in a very short time, a distribution network for both wholesale and retail, their employer would be at risk of losing part of its market. I do believe that they were both under intense pressure as was the plaintiff at that time.
I do, however, accept that they did attempt to help me in determining the issues in this case but the help that they were able to offer was limited by reason of their recall.
As can be seen it was put by the defendants that Mr Thiele was inclined to express opinions which favoured Dairy Vale and which prejudiced the Manfields. In a sense that is right. His evidence did support his employer and to that extent was adverse to the defendants. I think in the end, however, it does not matter much. I think his evidence has to be weighed by having particular regard to his lack of recollection rather than his association with the plaintiff.
Mr Hutchins was the vendor liaison officer. Whilst Mr Hutchins can recall having a conversation with Mr Manfield in June of 1994 he would not admit that it occurred in the circumstances recounted by the first defendant.
He said that he did meet with the first defendant at the request of the first defendant and at that meeting the first defendant asked him if he could sign a contract. Mr Hutchins said that shortly after the first defendant said that, he (Mr Hutchins) stepped outside the reception area and had a conversation with the first defendant and during that conversation made an appointment for Mr Manfield to see Tom Thwaites. He could recall the subject of the conversation. His evidence was as follows: (1406)
“Q.... Between 28 March and 23 June did you have any conversations with Mr Manfield.
A      Yes.
Q      Can you recall those conversations or conversation.
A      Yes.
Q...... What was the subject of that conversation or conversations. (NOT ANSWERED)
HIS HONOUR
Q      Firstly, how many conversations were there.
A      I can recall one.
Q      Just one some time between that date.
A      Yes.
XN
Q      Can you recall the subject of that conversation.
A...... Yes. Bill Manfield asked if he could sign a contract with Dairy Vale.
QIn relation to that subject, can you recall what was said by Mr Manfield, or the effect of what was said by him.
A...... All I can recall is words to the effect that Bill Manfield asked me if he could sign a contract with Dairy Vale.
Q      What did you say, if anything.
A...... Words to the effect that I would have to make an appointment for him to see Tom Thwaites.
QWas there anything else said by either of you in relation to that topic during that conversation.
A      No, I don’t recall.
Q      How long did that conversation take.
A      Very short space of time.
Q      Minutes or quarter of an hour, or what.
A      1, maybe 2 minutes.
Q      Where did that conversation take place.
A      Just outside of the reception area of our sales department.
Q      Is that near the Edward Street depot.
A      Yes.
Q      Can you recall the time of day when the conversation occurred.
A      No, I’m sorry.
Q...... Can you recall how you came to have a conversation with Mr Manfield.
A      I can recall that Bill asked to speak to me.
Q...... Can you recall whether he asked you that directly, or was that message conveyed to you.
A      No, directly.
Q      Was anyone else present during this conversation.
A      No.
Q...... When Mr Manfield asked to speak to you was that at the same place or at a different place from where the conversation you told us about occurred.
A      No, I recall he asked me to step outside and speak to him.
Q      Did he say why.
A      No, I don’t recall why.
Q      Did you make an appointment for Mr Manfield to see Mr Thwaites.
A      Yes, I did.
Q      When did you make that appointment.
A      Straight after speaking to Mr Manfield.
Q...... Was there any other discussion in the course of this conversation outside of reception.
A      No.
Q...... In particular, was the topic of the litreage of Mr Manfield’s business discussed.
A      I’ve no recollection.
Q...... Was the topic of round or rounds to be allocated to Mr Manfield discussed.
A      I don’t recall that.
Q...... Was the topic of what had been offered to vendors by Farmers Union discussed.
A      No, I don’t recall that.”
The position is that the first defendant has given evidence asserting particular matters were raised in the conversation. Mr Hutchins’ evidence is that he does not recall those matters. He did not deny that the topic might have been addressed. He simply has no recollection.
As I have said earlier I have some reservations about the first defendant’s evidence. The question is whether his evidence is capable of supporting her finding which the defendants seek even in the absence of a denial by Mr Hutchins of the first defendant’s claims.
The first defendant was, of course, cross examined about this matter.
Specifically it was put to him in cross examination that Mr Hutchins never said words to the effect that if you sign up Dairy Vale will provide you with a round to enable you to sell not less than 42500 litres per week. Mr Manfield said in answer to that challenge that that was the effect of what Mr Hutchins said. I set out his evidence in cross examination: (TX 564).
“Q.... You said ‘Ross Hutchins said to me that you would give me 42,500 litres and a whole lot more’.
A      Yes, that would be correct.
Q...... Isn’t it the case that Mr Hutchins at no time referred to 42,500 litres in his discussion with you at the end of May 1994.
OBJECTION     Mr O’Brien objects.
HIS HONOUR: What is the ground of objection?
MR O’BRIEN:   The question assumes that the meeting took place in May 1994.
HIS HONOUR: It doesn’t matter, May or June 1994.
XXN
Q...... Isn’t it the case that Mr Hutchins never mentioned the number 42,500 litres per week.
AI believe he did, yes, that he answered by saying 42 and a half thousand, we can do that and a whole lot more.
Q...... I am asking you a very specific question. Just pay attention to the question and I would be grateful if you would answer it directly. I am suggesting to you that Mr Hutchins did not use the figure 42,500 litres in the course of this conversation, do you agree or disagree.
A      I disagree with that.
Q...... I am suggesting to you that the 42,500 litres is something that you had assumed during the course of this conversation with Mr Hutchins.
A      No, that is not correct.
Q...... I am suggesting to you that you had a belief, on whatever basis, that you needed 42,500 litres per week to meet you financial commitments.
A      No, again that is not the case.
Q...... I am suggesting to you that Mr Hutchins did not say to you that Dairy Vale would provide you with a round with a whole lot more milk than 42,500 per week.
A      That was the effect of what he said.
Q      Did he says (sic) ‘A whole lot more’ or didn’t he.
A      Yes, he did.
Q      So you disagree with what I’m putting to you.
A      Yes, I am.”
I think Mr Manfield’s evidence in cross examination is consistent with what he said in evidence in chief. He did not depart in any material particular from what he had previously said. On this topic, and on the next topic, he was able to focus upon the question and answer the questions directly.
Mr Robertson, who appeared for the plaintiff, then put to Mr Manfield Mr Hutchins’ account of the conversation. Whilst the first defendant was prepared to agree that he understood that Mr Hutchins did not have authority to sign a contract with him and that was the purpose of making an appointment to see Mr Thiele, he was not otherwise prepared to agree with Mr Hutchins’ account of the meeting.
In particular, he was not prepared to agree that the conversation occurred in the circumstances suggested by Mr Hutchins. He said he had no recollection of a conversation with Mr Hutchins where he met Mr Hutchins at reception and was asked to go outside and where a conversation ensued.
The first defendant was then challenged in respect of an affidavit which he had sworn in these proceedings, apparently on 31 January 1996. It was put by Mr Robertson that he had said in that affidavit that he told Mr Hutchins on the occasion of this alleged conversation “we’re doing about 42,500 litres a week in total”. Mr Manfield was then challenged on other differences in the affidavit and his evidence in this trial.
Apparently in the affidavit he said the date of the conversation was 9 June 1994. He could not explain the difference in dates.
It was also pointed out to him that he had said in his affidavit that he told Mr Hutchins said “Farmers Union have offered to match each vendor’s litreage”. Whilst he conceded he may have said that he could not recall that now.
It was also put that his affidavit evidence was that he said to Mr Hutchins: “About half our income comes from you and half from Farmers Union”. He agreed he must have said that and also agreed that he had been wrong in his earlier cross examination in denying that he had said that.
He also agreed that in his affidavit evidence he said that he had said to Mr Hutchins: “We are doing about 42,500 litres a week in total.” He maintained those words were to the same effect as his evidence in chief.
I cannot agree that the words are to the same effect. The topic is the same, i.e. the 42500 litres but in the first defendant’s evidence in chief he said that he told Mr Hutchins Farmers Union had offered 42500 litres. In cross examination he admitted saying that he said we are doing 42500 litres. I do not think it is right to say that the words are to the same effect.
However, and more importantly, the statements are not inconsistent. Indeed, in a sense they complement each other. It would not be surprising if the conversation which the first defendant claimed in his evidence in chief took place for the first defendant also to have said that that was the litreage then being achieved by the first defendant. Mr Robertson cross examined the first defendant in relation to litreages attained up until June 1994. He pointed out, in his cross examination, that the defendants had never achieved litreages of 42500 per week at any time prior to this conversation.
I do not, with respect, think that is very important. The defendants were achieving deliveries of near 40,000 litres at this time. They were in a position where they were negotiating with both Farmers Union and the plaintiff. One would have expected they would have put the best gloss upon their deliveries in order to achieve as much litreage as they could with the producers. If Farmers Union, at that stage, were offering to match existing deliveries one would expect that a wholesale milk vendor would paint his deliveries in the very best light.
I do not think the fact that, to this point of time, the defendants had not achieved deliveries of 42500 litres, is important.
The affidavit was not tendered. There were probably good reasons for why the affidavit was not put in.
Mr Manfield was vigorously but fairly cross examined in relation to this matter but he was not prepared to resile from his evidence in chief. He maintained that Mr Hutchins had said words to the effect that he would have 42500 litres of milk and a whole lot more.
I am not prepared to conclude on the cross examination that there were serious discrepancies between Mr Mansfield’s account in his evidence in this trial and a previous account he had given in an affidavit which has not been tendered.
Mr Hutchins, on the other hand, was not cross examined about his account of the conversation at all.
That was explained upon the basis that as he had no recollection of the topics upon which Mr Manfield gave evidence, there was no point in challenging him. He said, in cross examination, he had no recollection of the various topics. Mr O’Brien, who appeared for the defendants, submitted that that closed the matter and no further challenge was necessary.
I thought at the time that perhaps it was unwise of the cross examiner to leave Mr Hutchins’ evidence completely untouched on this matter but on reflection I think probably that course was permissible. Mr Hutchins said he had no recollection of this conversation occurring. It was not necessary to put to him that he had a recollection nor was it necessary to put the topics of the conversation. The topics of the conversation had been put in evidence in chief and his evidence was that he had no memory. For reasons which I shall mention when I consider the second conversation with Mr Thiele on 14 June 1994, I think the cross examiner was not being unfair not to challenge Mr Hutchins in relation to these matters.
Having regard to my reservations about the first defendant’s evidence, it is necessary to examine whether there is any other evidence that supports or tends to support his account.
Mr O’Brien referred in his submissions to two conversations the first defendant had after that conversation with Mr Hutchins. The second defendant said that the first defendant told her of the conversation he had with Mr Hutchins on that same night.
That evidence is not admissible for the purpose of establishing the truth of what the first defendant said but it is admissible for the purpose of establishing that he said it and for the purpose of establishing Mrs Manfield’s state of mind prior to her entering into the contract of 14 June 1994.
The second conversation was a conversation between the first defendant and his daughter Sally Horlock. It was submitted that this conversation occurred after the conversation between the first defendant and Mr Hutchins and before the defendant signed the contract on 14 June 1994. Mrs Horlock said that her father said to her that Ross had promised him 42500 litres, which he already had, plus a whole lot more.
I am prepared to accept those witnesses’ evidence of the two conversations. The evidence, however, is not only did the first defendant recount the conversation to his wife and his daughter, but he also recounted the conversation to persons employed by the plaintiff. Over the months that followed and into 1995 on a number of occasions the first defendant complained to officers of the plaintiff of the representations made by Mr Hutchins in early June 1994. I shall examine those complaints in detail in due course but there is no doubt that Mr Manfield consistently claimed that Mr Hutchins had said what he now claims throughout the latter part of 1994 and in 1995.
Apart from repeating the representation to Mr Thiele on 14 June 1994 the first defendant probably complained in the latter part of the same month: June 1994. Thereafter he complained to a number of employees including very senior employees such as Mr Connor who was at the time acting managing director of the plaintiff throughout the period he acted as a wholesale milk vendor. He also complained to Mr Hutchins on about six occasions about the plaintiff’s failure to make good that representation.
It was never suggested to the first defendant that his account of the conversation was wrong.
It seems to me that there is evidence consistent with his account of the conversation with Mr Hutchins. I am prepared to accept that Mr Hutchins did say to him that Dairy Vale would provide him with 42500 litres of milk per week and a whole lot more.
The first defendant said that after that meeting with Mr Hutchins he wanted to become a wholesale milk vendor for Dairy Vale. His evidence, however, was that his wife was not of the same mind. She still wanted to join with Farmers Union. Mrs Horlock said that she also was of the view that the respondent should contract with Farmers Union.
I find, therefore, that the state of the defendants’ mind on 14 June, immediately before the meeting with Mr Thiele, was that the first defendant was keen to enter into a contract with the plaintiff but the second defendant was still of a mind that the defendants should contract with Farmers Union. The first defendant was keen to contract with the plaintiff because he believed the plaintiff would supply them with 42500 litres and a whole lot more. He relied upon that representation.
There was no dispute about the second defendant’s state of mind at that time. The plaintiff submitted, in fact, that after the conversation with Mr Hutchins, “the second defendant wanted to go with Farmers Union”. The very fact that the second defendant still wanted to go with Farmers Union, which is the plaintiff’s case, supports the finding that I have previously made that an opportunity was available, up until 24 June 1994, for the defendants to contract with Farmers Union.
The purpose of the meeting of 14 June 1994 was for the defendants to meet with Mr Thiele and sign a contract with Dairy Vale.
Mr Thiele was known to the first defendant as an executive of Dairy Vale. The first defendant believed that Mr Thiele had previously been managing director of the company but had resigned from that position to take some lesser position. He also expected Mr Thwaites, who was an accountant at Dairy Vale, to be present. More importantly the defendants believed that Mr Thiele had the plaintiff’s authority to enter into a contract on behalf of the plaintiff with them. In that respect they were right. Mr Thiele undoubtedly had authority to enter into contracts, binding upon the plaintiff, with persons who wished to become designated wholesale milk vendors for the plaintiff. He had the authority to speak for the company and to agree to the terms of the contract. That is clear because that day he signed the contract on behalf of the plaintiff. His authority to do so has never been in question.

The meeting again took place at the Edwards Street Depot of Dairy Vale. It took about thirty minutes, the first defendant said, and it was at that meeting that the defendants signed the wholesale vendor agreement which was dated the same day. Mr Thiele signed the agreement on behalf of Dairy Vale. Mr Thiele’s and the defendants’ signatures were witnessed by Mr Thwaites.
The defendants’ evidence was that there was a conversation with Mr Thiele prior to the execution of that contract. The first defendant said that he asked Mr Thiele whether the contract which was to be signed had been approved by the Milk Vendors Association. It is clear from the first defendant’s evidence that he must have previously had a copy of the contract and understood the terms of that contract. He said that Mr Thiele told them that the contract which they were about to sign had not been approved by the association. The contract which had been approved by the association was then with the printers. The first defendant said that they wished to sign a contract which was approved by the association. He said that Mr Thiele told him that they should sign this agreement because it indicated an acknowledgment and a commitment on the part of the defendants to Dairy Vale.
The first defendant said the next topic raised with Mr Thiele was in relation to the commitment made by Mr Hutchins regarding the volume of business the defendants were to be given if they signed with Dairy Vale. He said he raised that topic and said to Mr Thiele: (TX 580)
“Ross had promised us 42,500 litres, and a whole lot more.”
He said that Mr Thiele did not respond to that statement at all.
There was then some discussion about the city of Adelaide. The first defendant told Mr Thiele, so he said, that the defendants were interested in serving the South West corner of the city and that they had had discussions with a milk vendor about that particular area. He said that Mr Thiele told him that they were looking at somebody else for that area and that he could not allocate any particular area to the defendants until such time as all the vendors had signed.
The first defendant was asked whether either Mr Hutchins or Mr Thiele said anything to him upon the topic of profitability with respect to any additional rounds. He said neither had spoken to him on that topic. He also said that no one else at Dairy Vale said anything to him on that topic prior to 14 June 1994.
His evidence was that if he had been told by Mr Thiele, Mr Thwaites or Mr Hutchins that any additional round or rounds which would be allocated to him would not add to the profitability of his business, he would not have signed the contract.
Mrs Manfield’s evidence was that the meeting between her husband, herself and Mr Thiele occurred at mid morning. She had expected the meeting to take place and had known about it for some days. No one else was present at the meeting except for Mr Thwaites when he came in to witness the signatures on the contract. At the time that she went into the meeting she was of the opinion that they should not sign with Dairy Vale. After the meeting she was satisfied that the decision to go to Dairy Vale was the right one.
She confirmed that the topics relating to the contract being at the printers and the allocation of rounds being discussed. She had no recollection of there being any discussion in relation to 42500 litres.
In that respect her evidence, of course, did not support her husband’s.
The defendants pleaded in paragraph five of the defence which, by reason of paragraph one of the counterclaim, also formed part of the counterclaim:
“5..... On 14 June 1994 at the premises of Dairy Vale the defendants had a conversation with Thiele a senior executive of the plaintiff. The first defendant stated the facts alleged in paragraph 4.1 hereof, namely that Hutchins had promised the defendants a round or rounds which would enable them to sell not less than 42,500 litres per week, and further the first defendant indicated to Thiele that he held a firm belief that the plaintiff would give the defendants a round or rounds which would enable them to sell not less than 42,500 litres per week.”
The plaintiff asserts that the defendant’s evidence did not make out that pleading. Certainly Mrs Manfield’s evidence did not support the pleading. She had no recollection of any mention of 42500 litres.
However, I believe that Mr Manfield’s evidence is capable of supporting the matter pleaded. I think his evidence is to the same effect as the pleading at least in respect of what he told Mr Thiele, that Mr Hutchins had told him.
I think his evidence would support the further part of the pleading, namely that he indicated to Mr Thiele that he held a firm belief that the plaintiff would give the defendants a round or rounds which would enable them to sell not less than 42500 litres per week. I think that is inherent in the repeating of Mr Hutchins’ representation.
The question is, of course, whether I am prepared to accept the first defendant’s evidence, uncorroborated as it is by the second defendant’s evidence.
Before determining whether Mr Manfield’s evidence is of itself sufficient to enable a finding to be made consistent with the defendant’s pleading it is necessary to consider Mr Thiele’s evidence.
Mr Thiele said he could remember a meeting with Mr and Mrs Manfield but could not remember who was present. He said that Mr Thwaites was there for some of the time but he was not able to say whether Mr Thwaites was present for the whole of the time.
He said the topic of Mr and Mrs Manfield becoming sole vendors for Dairy Vale was discussed.
He was asked this:
“Q.... At this meeting at which the contract was signed was the topic of Mr and Mrs Manfield becoming a sole vendor for Dairy Vale discussed.
AYes it was.
Q...... Can you now recall what was said on that topic and by whom, or alternatively the effect of that conversation.
AThe effect of the discussion would have been that they had signed and that they would be allocated a particular area.
Q...... You said “would have been”, what do you mean by that.
(Not Answered)
HIS HONOUR
QWas it said or can you remember it being said.
A...... On signing this there would - an area would have been allocated to Manfields.
QPerhaps so, but was there a discussion about an area being allocated to them.
A...... I don’t have a clear recollection of it.
QYou don’t recall anything said on that.
A...... No.”
His attention was then directed to the topic of an allocation of rounds. He did not have any recall as to whether or not that topic was discussed. Next he was asked whether the topic of a promise made by Ross Hutchins was discussed. His evidence on that topic was:
“Q.... And in this meeting was the topic of a promise made by Ross Hutchins discussed.
AI don’t have a recollection of that at this meeting.”
His attention was then directed to the topic of an area West of the city. He had no recollection of that being discussed. Next he was asked whether Mr and Mrs Manfield’s litreage was discussed at the meeting but again he was unable to recall that.
He also was not able to recall whether the topic of the signing of a further contract was discussed at the meeting. Lastly he was unable to say whether the topic of the provision of a list of outlets to be serviced by Mr Manfield was discussed.
He said his understanding at the time was that if further outlets became available in the area they would be allocated to Mr Manfield.
His evidence was that Mr Manfield was signing this contract on the basis that he would retain his existing outlets but without any certainty of obtaining any further outlets.
I asked him at that point in his evidence whether he understood that that would mean that Mr Manfield was signing a contract which would mean inevitably, unless matters changed in the future, a significant loss to him. He said that signing the contract would have meant a reduction to Mr Manfield but he said that Mr Manfield was one of the last people to sign and many others had already signed long before and milk had been already allocated to those other persons.
In fairness to Mr Thiele he was then offering an explanation for why the first defendant would have contracted on adverse terms. The explanation, however, is inconsistent with the facts that unfolded subsequent to the signing of the contract. Both the defendants and the plaintiff behaved, after 14 June 1994, as if the defendants were entitled to an additional round or additions to the existing round. That behaviour belies Mr Thiele’s explanation. Mr Thiele was one of the plaintiff’s officers who did behave in that way. I will return to that.
Mr Thiele really had no recollection at all of the meeting and his evidence therefore does not in any way contradict the evidence of the first defendant.
Mr Thiele did admit that he later became aware of the first defendant’s claim that Mr Hutchins had made a representation to the first defendant prior to 14 June 1994. His evidence was that he became aware of that claim between July and November of 1994. Later he said he was not sure whether he became aware of it in 1994 or 1995 and later still he said that it was towards the end of Mr Manfield’s period as a vendor for Dairy Vale.
He said that Mr Manfield claimed that Mr Hutchins had made such a representation and asked for Mr Hutchins to be present at a meeting. Mr Thiele told Mr Manfield that Mr Hutchins would not be present although he cannot recall any specific reasons being given for Mr Hutchins non attendance.
I will deal with this matter in more detail later but his evidence in relation to conversations with the first defendant in early 1995 and on this topic of Mr Hutchins’ representation is instructive. His evidence was:
“Q.... Was the topic of a promise said to have been made by Ross Hutchins discussed in this period.
AI recall this topic being raised at meetings in this period.
Q...... Was the topic of Mr Hutchins attending meetings to explain his position discussed.
AI have a recollection of Mr Manfield requesting that.
Q...... What was your response, if any.
AThe response was that Mr Hutchins - it was felt Mr Hutchins would not attend these meetings.
HIS HONOUR
QThat is what you told Mr Manfield.
A...... Mr Manfield was told that, yes.
QWas he given a reason as to why he wouldn’t attend.
A...... The meetings that I refer to were dealing with finance and it was felt that Mr Hutchins had -
OBJECTION..... Mr O’Brien objects on ground that answer is not responsive to the question.
OBJECTION UPHELD
HIS HONOUR
Q...... What was said to Mr Manfield.
AThat Mr Hutchins would not attend those meetings.
Q...... What reason, if any, was given to him.
AI don’t recall the specific reasons.
Q...... But he was told that Mr Hutchins would not attend in response to his request for Mr Hutchins to attend in relation to what he said was something that Mr Hutchins said to him. Is that right. I will put it to you again in a different way. Mr Manfield asked for Mr Hutchins to attend.
AYes.
Q...... In asking for him to attend had he told the meeting, or members of the meeting in your presence, that Mr Hutchins had previously said something to him.
AYes, he had.
Q...... Did he say that was why he wanted Mr Hutchins to be present.
AThat would have been the 10th.
Q...... That was the effect of what he said.
AYes.
Q...... Was it your decision that Mr Hutchins not attend.
ANo.
Q...... Whose decision was that.
AMy recollection is that it was a group decision.
Q...... Did you take part in that decision.
AYes.
Q...... Did you agree with it.
AYes.
Q...... What was your reason for not attending.
ABecause I believed there were adequate people there to attend to the matters that had to be discussed.
Q...... Mr Manfield was asking for his presence for a particular purpose about which only Mr Hutchins could speak, is that right.
AMr Manfield was asking for his presence, the specific reason, I mean, I recall that Mr Hutchins wasn’t normally, didn’t normally attend meetings that dealt with the indebtedness of a particular person.
XN
QDo you recall how often in that period - that is from December 1994 to the end of June 1995 - Mr Manfield made that request for Mr Hutchins to attend.
A...... No, I don’t.
QWas it more than once.
A...... I’m not sure.
HIS HONOUR
Q...... You knew why he wanted him to attend.
AYes, I knew why he felt he should attend, yes.
Q...... What did you know.
AThe reason was that Mr Manfield was suggesting that Mr Hutchins had made an offer to him.
Q...... Did he tell you what it was that he had offered.
AYes, he did.
Q...... What did he say.
AHe said that he had been offered 42,000 litres of milk.
Q...... And he wanted Mr Hutchins to be present at the meeting when he said that.
AYes.
Q...... What was your reason for why Mr Hutchins shouldn’t be present.
ABecause Mr Hutchins said he didn’t ever say that.
XN
QDid you say that to Mr Manfield.
A...... I don’t recall saying that specifically to Mr Manfield, no.
QWas that said whilst you were present.
A...... Yes.
HIS HONOUR
Q...... By whom.
AI don’t recall.”
That evidence demonstrates that there can be no doubt that Mr Manfield made a number of complaints about what he said he had been told by Mr Hutchins. It is clear that he wanted the plaintiff to honour the representation made to him. There is no doubt, on the evidence of Mr Thiele, that Mr Manfield wanted to confront Mr Hutchins, in the presence of his superiors, with that representation. Equally there is no doubt that Dairy Vale was keen to avoid that occurring.
I have already found that Mr Hutchins made the representation at the meeting in early June. I find that the evidence led by the plaintiff, namely that after 14 June 1994 the first defendant made a number of complaints to senior persons employed by the plaintiff about Mr Hutchins’ representation, is consistent with that finding.
That representation was important to the first defendant. Prior to being told that Dairy Vale would provide 42500 litres and a whole lot more, the first defendant was of a mind to become a designated wholesale milk vendor with Farmers Union. The importance of the representation is shown in the evidence of Mr Thiele to which I have just referred.
Notwithstanding that Mrs Manfield has no recollection of the subject of 42500 litres being mentioned, I believe it is probable and I so find that Mr Manfield did mention that subject to Mr Thiele. I believe that the representation was so important to him that it is likely that he would have brought that to Mr Thiele’s attention at that time.
Again Mr Thiele was not cross examined on this matter for the same reason that Mr Hutchins was not cross examined in relation to the first meeting.
Mr Robertson submitted that in the absence of cross examination it was not open to the defendants to suggest that Mr Thiele was told by the first defendant of the alleged promise at the meeting of 14 June. In support of that submission he referred me to Reid v Kerr (1974) 9 SASR 367 at 374. In that case Wells J discussed the principle in Browne v Dunn (1894) 6 R. 67 (HL). Wells J said:
“Speaking generally, it is essential to the fair conduct of a trial that a party should put to each of his opponent’s witnesses in turn so much of his own case as concerns that particular witness, or in which that witness took some part. As a corollary to this, it must also be borne in mind that where it is intended to suggest that a witnesses is not speaking the truth on a particular matter, his attention should be drawn to what is going to be suggested about it, so that he may have an opportunity of explanation. Once again, I emphasize that such a rule, as I understand it, in no way derogates from the right of cross-examining counsel to use all the fair arts and devices of cross examination, but, in the final analysis, it is manifestly unfair to leave unchallenged part of a witness’s evidence and then, through another witness, called by the side represented by the cross-examining counsel, to suggest something that is contrary to the first mentioned witness’s testimony, which have never been covered by him.”
There can be no disagreement with the dictum of Wells J. Indeed Wells J has, with his usual clarity, set out the rule in Browne v Dunn.
In this case, however, Mr Thiele’s attention was drawn in evidence in chief to the very topic of conversation which the first defendant had said, in his evidence, was discussed. Mr Thiele said he could not recall it. It seems to me that his counsel gave him an opportunity in evidence in chief of commenting upon the matter in dispute. In that respect the topic was covered by Mr Thiele.
It was apparently no part of the defendant’s case that Mr Hutchins or Mr Thiele were being untruthful. I have already set out the submission made by the defendants in relation to the evidence of those two witnesses.
It was therefore not necessary for the defendant’s counsel to put to Mr Thiele that his evidence that he could not recall the topic of conversation was untruthful. What else was left to put to him? I suppose it could have been suggested in cross examination that the topic might have been discussed but that is self evident if Mr Thiele had no recollection of the topic at all. It must have been possible that the topic could have been discussed.
I think some counsel would have put in cross examination the very words which the first defendant said he uttered to Mr Thiele and specifically asked Mr Thiele if he was prepared to deny that the first defendant had used those words, but I think the failure to do so in the circumstances of this case, where the topic has been covered in evidence in chief, was not unfair to Mr Thiele.
There seems to me to have been no infringement of the rule in Browne v Dunn in the failure to cross examine either Mr Hutchins or Mr Thiele.
I think the defendants are entitled to persist in their claim that Mr Thiele was told by the first defendant of Mr Hutchins’ statement at that meeting.
I therefore find that the first defendant did say to Mr Thiele that he had been told by Mr Hutchins that Dairy Vale would provide him with 42500 litres and a whole lot more, or words to that effect. I also find, as the first defendant claims, that Mr Thiele did not correct that statement and indeed made no comment upon it.
The defendants claim that Mr Thiele’s silence, in the face of the first defendants’ assertion, gives rise to two representations. They were pleaded in paragraph 5.2 as being:
“(i)... The additional round or rounds in combination with the Edwardstown round would provide outlets with an average weekly demand of 42,500 litres or thereabouts; and
(ii)in the alternative, that the additional round or rounds would be economically viable that is that they would add to the net profits of the defendants’ business.”
I am not sure that I agree that the statement made by Mr Hutchins, which I have found was made and which was repeated by the first defendant to Mr Thiele, and to which Mr Thiele made no reply, gives rise to either of the matters pleaded. I think the statement by Mr Hutchins means that in some way Dairy Vale would provide the defendants with 42500 litres per week and significantly more than that. In that respect the defendants’ plea in subparagraph (i) might underestimate the effect of the representation made.
I do not think that it can be inferred from what was said and not said that the additional round or rounds would be economically viable in the sense that they would add to the net profits of the defendant’s business. The profitability of the defendant’s business was for the defendants, not for the plaintiff. There was nothing, in my opinion, in what Mr Hutchins said that went to the question of profitability. The defendants, no doubt, equated profitability with the size of the round and the larger round with profitability, but that is not necessarily inherent in Mr Hutchins’ statement.

The claim for damages for breach of contract is pleaded in paragraph 11.4 of the counterclaim. That claim expressly picks up the plea in paragraph 6.2 of the defence which is incorporated in the counterclaim by reference to paragraph 1 of the counterclaim. The damages claim, however, goes further than the term pleaded in paragraph 6.2. In paragraph 11.4.1 the claim is for damages for the “loss of net income from an additional 20000 litres per week in an economically viable round”. The term in paragraph 6 does not refer to an economically viable round. That is the implied term in paragraph 8 of the defence which I have rejected. The plea in paragraph 11.4.3 has the same problem inherent in it.
I do not understand the plea in paragraph 11.4.4. The sum claim is not the consequence of the breach of the contract.
Paragraph 11.4 does not articulate, in my opinion, a claim for damages for breach of the term of the contract in paragraph 6 of the defence. Damages are awarded in contract to put the injured party in the position the party would have been if the contract had been performed. The party is entitled to both expectation and reliance losses. I do not understand the pleading in paragraph 11.4 to be put forward on that basis. Certainly there is an element of a claim for reliance damages in paragraph 11.4.3. The expectation losses claimed in paragraph 11.4.1 and 11.4.3, however, relate, I think, to the alleged implied term which I have rejected. The plea in paragraph 11.4.4 is not self evidently a claim for damages in contract.
I therefore believe that the claim for damages in contract has some considerable difficulties about it.
That seems to me to leave only a consideration of 11.1 and the consequential relief sought in paragraph 11.7.
The defendants identified their damages pursuant to the Trade Practices Act and/or Fair Trading Act in paragraph 11.1. It was only in paragraph 11.3.6, which was said to be damages which flow pursuant to paragraph 9.7 of the counterclaim, that the defendants sought, in the alternative to the loss recoverable for the loss of value of business, the loss of the value of an opportunity to become an exclusive wholesale milk vendor, and in that claim they sought $500000.
I have already said, of course, that the defendants are not entitled to damages pursuant to paragraph 9.7 of the counterclaim so logically the alternative claim in paragraph 11.3.6 should fall with the dismissal of that cause of action.
In so far as the defendants sought damages for a contravention of s52, the defendants limited themselves to the loss of value of the business; trade losses between 1 July 1994 and 2 November 1995; the loss of profit from conducting an economically viable round of 42500 litres per week for seventy weeks; in the alternative to that last mentioned head of damage the unremunerated labour of W J and C J Manfield on the Torrensville round over a short period of time to 30 June 1995; and lastly interest payable on the overdraft which was used to fund trading losses at 13.5 per cent per annum and compounding.
There is no claim in paragraph 11.1, which was the only claim for damages, which survives for the loss of the value of the opportunity to become an exclusive wholesale milk vendor with Farmers Union.
Notwithstanding the pleading, the defendants’ in their written submissions claimed as their primary relief:
a)..... The value of the loss of the opportunity to be a Farmers Union vendor.
b)The trading losses which the defendants incurred in the period from 1 July 1994 to 1 November 1995.
c)..... The loss of the value of the business which the defendants would have had had they become Farmers Union vendors and have continued in the business up to the age of sixty-five.
d)The loss of the remuneration which they could have derived from their alternative employment during the period 1 July 1994 to 1 November 1995.
That claim was based upon my finding that there was a misrepresentation made by Mr Hutchins and a further misrepresentation made by Mr Thiele by his silence.
In the alternative they claimed that if I found there was a breach of the implied term as to viability:
e)..... The value of the loss of the business in respect to the Edwardstown round.
f) Trading losses of $111,726 and
g) Loss of remuneration.
The alternative claim need not be examined because I have already found that there was no implied term.
Therefore the defendants’ claim for their primary relief is restricted to the matters referred to in a, b, c and d above.
That relief, however, is different to that which is pleaded. It was no part of the plaintiff’s plea under paragraph 11.1 that the plaintiff would be entitled to the value of the loss of the opportunity to be a Farmers Union vendor, or that they would be entitled to the loss of the value of the business which the defendants would have had had they become a Farmers Union vendor, or the loss of remuneration which they could have derived from their alternative employment. Nor is there any claim in paragraph 11.4 to that effect.
I think, with respect, the claim as presented at trial indicates a lack of forethought on the part of the defendants as to exactly the causes of action which were available to the defendants and the relief which would be available in the event that the causes of action were made out.
I think the pleadings demonstrate that the defendants had very great difficulty articulating their position, both on liability and damages.
I will return to the claim as presented in the trial, but first I will indicate the position taken by the plaintiff in relation to the defendants’ claim for damages.
The plaintiff made a number of general submissions in relation to damages. The overriding submission was that there were no factual matters proved which established an entitlement to damages on the part of the defendants. First, it was put that the defendants’ business was in a precarious financial position prior to June 1994 and the gross margins achieved in the business were not sufficient to sustain the business into the future. Secondly, the cash economy operated by the defendants was such that it is now impossible for the Court to determine what the defendants’ position was prior to June 1994. Thirdly, the defendants were offered and apparently agreed to accept a settlement of their dispute with Dairy Vale. That settlement would have left the defendants in a position where they owed no debt to Dairy Vale but were able to sue Dairy Vale as they have now done. It was put that in failing to honour the settlement arrived at the defendants have failed to mitigate their loss. Fourthly, it was said that the loss associated with the operation of the Torrensville round was not capable of quantification. It is said that it is impossible to determine the income arrived from Torrensville and the expenses properly associated with the Torrensville round. Fifthly, the plaintiff submitted that the defendants have not proved that they could and would have been appointed as sole vendors to Farmers Union. In particular, it was submitted, the defendants have not proved that they applied to Farmers Union to become a sole vendor and have not proved that by the date of the alleged promise they could have still applied to Farmers Union to become a sole vendor. Accordingly, it was submitted, the defendants have not proved an opportunity and are not entitled to seek damages in respect of any lost opportunity; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 353 and 365; Malec v J C Hutton Pty Ltd (1990) 169 CLR 638.
It would be as well to deal with those five general submissions before dealing with the question of damages, more particularly.
Whilst I agree that the defendants’ business prior to June 1994 was in a sense unstable, I am not prepared to find that it was in a precarious financial position. I think because of a combination of tight margins and perhaps business mismanagement the defendants’ business was incapable of generating any significant profits. I think the defendants, as I have already said, had no capacity to organise the affairs of the business so as to minimise costs and expenses. They had no capacity of budget or to construct budgets or forecasts. They did not attempt to analyse income against expenditure. I think they rather ran the business upon a cash flow basis. If they were receiving cash then it could be used to meet expenses. It is clear that up to June 1994 the defendants’ indebtedness to the two producers for which it delivered, was increasing. That indicates, in my opinion, that the business was only marginally profitable to that point of time. As I indicated earlier, the determination of the viability of the defendants’ business depends very much upon the finding in relation to the defendants’ claim that they did not receive credits and were short supplied as they pleaded in paragraphs 17 and 18 of their defence.
In my opinion, therefore, it has to be said that the defendants’ business was not particularly viable as at June 1994. Inevitably, in my opinion, unless it was better run, it would have continued to generate insufficient growth margins and, as a result, its indebtedness to its bankers and the producer to which it was attached would have increased.
That does not mean, however, that the defendants are not entitled to damages.
There is no doubt that the defendants did operate a cash economy and there is no doubt that the cash economy complicates a consideration of the defendants’ true financial position. That, however, is only one factor in a number of factors which makes the assessment of damages particularly difficult. However, the fact of the cash economy cannot disentitle the defendants to damages as the plaintiff submits.
It is true that the defendants were offered a settlement in October 1995. I believe the defendants agreed to settle upon the basis proposed. I also believe that the defendants thereafter failed to honour their agreement to settle. The settlement would have left them without debt to Dairy Vale and with a right to sue Dairy Vale as they have done in relation to the claim for misrepresentation which is the only claim they have made out. I think the proposed settlement would have prevented them claiming that they were entitled to $70000 worth of credits, but in any event that claim has failed.
I do not, however, agree that a failure to settle upon that basis amounts to a failure on the part of the defendants to mitigate their loss. It was no part of the trial that the defendants failed to mitigate their loss. Indeed the plaintiff has not pleaded a failure to mitigate on the part of the defendants which would be enough of itself to dispose of this argument.
However, the argument is in any event not sound. If the defendants had settled, as the plaintiff claims they should have done, the defendants would have been relieved of their debt to the plaintiff. It is only in that respect on the plaintiff’s argument that they have failed to mitigate their damages. The plaintiff, however, has claimed the full amount of that debt together with interest at the rate of 10 per cent and, as I have found, has become entitled to that sum.
The only saving grace that the defendants would have had by “mitigating their loss” would be to save the amount of interest payable by them to the plaintiff in respect of the plaintiff’s debt. That is no part of the counterclaim in any event. It seems to me that the defendants stand in exactly the same position as they would have done if they had settled the matter. It may have been commercially wise for them to settle the matter. That would have relieved them of the interest payable to the plaintiff. But that is not part of the claim for damages on the counterclaim. Therefore, it seems to me that it cannot be said that they have failed to mitigate their damages. I do not think, therefore, that even apart from the failure to plead mitigation there is anything in the point that the defendants have failed to mitigate their loss.
As to the fourth general matter raised by the plaintiff, I agree that it is difficult to identify the loss associated with the operation of the Torrensville round but that, in my opinion, does not make it incapable of quantification. I simply have to do the best I can on the information provided to me with the assistance of the expert evidence called by both parties. The second aspect of the fourth general point raised by the plaintiff was that it is unclear from the defendants’ case whether they claim compensation for any period after 1 January 1995. That is not my understanding. I understand the defendants to be claiming damages for the whole of the period to the time when they ceased to trade. I think that is clear from paragraphs 11.1.2, 11.1.4 and 11.4.2 of the defendants’ counterclaim.
Lastly, it was put, that the defendants had not proved that they could and would have been appointed as sole vendors to Farmers Union. My earlier findings have closed out this argument. In my opinion, shortly before Mr Hutchins made his representation, the defendants intended to apply to Farmers Union to become sole vendors for that producer. In my opinion, if they had made that application, which they did not make because of the representations made to them, they would have become sole vendors for Farmers Union.
In those circumstances the representations made by Mr Hutchins and Mr Thiele induced the defendants to sign with the plaintiff and specifically induced them not to sign with Farmers Union which they would have done but for those representations.
I have already referred to the defendants entitlement in damages for breach of contract.
Damages for misleading and deceptive conduct under s52 of the Trade Practices Act and s56 of the Fair Trading Act are assessed as in tort. The defendants therefore are entitled to damages upon the basis of the position that they would have been in but for the misrepresentations made by the plaintiff; Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR1.
The difficulty I have in respect of the claim for damages both in contract and under s82 of the Trade Practices Act and s84 of the Fair Trading Act is that the defendants do not appear to have addressed their claim for damages in the pleadings in accordance with principle.
The further difficulty I face is that evidence led in support of the defendants’ claim for damages cannot easily be identified as referring to expectation or reliance losses in contract or the losses similar to reliance losses in tort or, more particularly, under the Trade Practices Act or the Fair Trading Act.
I think the difficulties have come about because of the multiplicity of claims brought by the defendants relating to so many different events over so long a period.
Now that the parties can be aware of the causes of action which have been successful and how and when the causes of action arise the defendants may be better able to articulate which losses are attributable to the successful causes of action.
I intend therefore to allow the defendants an opportunity to identify the damages which they say flow and I will do that by entering a declaration in accordance with paragraph 2 of the prayer for relief and make an order for damages to be assessed in relation to paragraphs 4 and 7 of the prayer for relief.
I do not mean by this to allow the defendants an opportunity to call further evidence in relation to the damages but simply to identify, from the evidence already before the Court, the damages which they say flow.
I therefore make the following orders.
On the claim there will be judgment for the plaintiff for the sum $332918 which sum includes interest.
On the counterclaim there will be;
1...... A declaration that Dairy Vale engaged in conduct constituting a contravention of s52 of the Trade Practices Act and s56 of the Fair Trading Act.
2...... An order that the defendants have judgment for damages to be assessed pursuant to s82 of the Trade Practices Act and s84 of the Fair Trading Act.
3...... An order that the defendants have damages to be assessed for the breach of contract identified in paragraph 6.2 of the defence.
I will hear the parties as to the precise order.

Exhibit P58

Period 21/02/89 - 15/11/89
Credit Claim Nos 33001 - 33050

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
21/02/89	33001	1 lt skimmer	short	1
30 V/malt	empty	1
600 max	short 12/2	1
600 max	short 11/2	1
600 skim	short 14/2	4
3 lt thick cream	short 17/2	2
1 lt skimmer	short 19/2	6
1 lt skimmer	leakers	17
1 lt homo	leakers	9
15/03/89	33006	1 lt skim	short 15/3	2
1 lt cream thick	short 15/3	2
22/03/89	33010	1 lt skimmer	short in crate 31/3	1
1 lt skim	short in crate 5/4	2
1 lt skim	leakers	?
1 lt homo	Leakers Arrows & Coles etc	?
12/04/89	33012	van malt 600	short	1
homo 600	short 13/4	1
yog 500	short 13/4	1
1 lt homo	leaker	2
2 lt skim	leaker	1
1 lt skim	leaker	1
18/04/89	33013	600 van malt	short	1
600 max	short 20/4	28
1 lt skimmer	short 21/4	2
24/04/89	33016	1 lt skimmer	short	23
1 lt skimmer	leaker	1
1 lt homo	ripped	1
27/04/89	33017	1 lt skimmer	short	1
20 lt bag	leaker	1
1 lt homo	leaker	2

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
1 lt thick cream	top open	1
2 lt homo	leaker	2
2 lt skimmer	leaker	1
600 homo	off	1
30/04/89	33019	1 lt swiss	short	2
1 lt homo	leaker	2
1 lt skim	leaker	1
600 skim	leaker	1
600 max	empty	1
06/05/89	33021	1 lt skim	short	2
2 lt Falland OJ fruit juice	swollen	1
1 lt skim	leaker	4
1 lt homo	leaker	4
200 yog	split	1
1 lt homo	short in crate Coles	4
1 lt skim	short 9/5	1
20 lt bag	leaker	1
16/05/89	33026	2 lt skimmer	short (18/5)	1
1 lt skimmer	leakers	9
22/05/89	33028	1 lt thick cream	open	1
1 lt homo	short in crate	4
23/05/89	33029	1 lt skim	short in crate	3
2 lt homo	leaker	2
2 lt skim	leaker	1
1 lt skim	leaker	8
1 lt homo	leaker	5
600 choc	leaker	11
07/06/89	33033	1 lt homo	leakers	6
1 lt skimmer	leakers	15
1 lt skimmer	short in crate 6/6	3
15/06/89	33035	200 thick cream	short in corder	9
1 lt skim	leaker	2
600 swiss	mile	2
19/06/89	33036	2 lt homo	short	1
2 lt skim	short	3

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
600 homo	short	3
1 lt skim	short in crate	4
300 homo	short 20/6	10
26/27/06/89	33039	300 max	empty	1
2 lt homo	leaker	1
300 I/C	mile	1
1 lt homo	leaker	3
2 lt homo	short 29/06	2
20/07/89	33044	500 cult cream	short 20/07	1
02/08/89	33047	1 lt homo	short	160

Period: 02/09/92 - 23/12/93
Credit Claim Nos: - 107001 - 107050

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
23/12/93	107015	1 lt homo	shot in crate	2

Period: 22/06/92 - 17/05/94
Credit Claim Nos: - 090404 - 090450

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
11/07/92	090408	600 max	short	1
19/08/92	090413	500 cux cust	short 19/8	1
600 skim	short 18/8	6
1 lt pro active	short in crate 18/8	1
14/10/92	090418	600 max I/C	short in crate	4
500 lite I/C	short in crate	5
11/11/92	090424	1 lt Take Care	short in crate 12/11	1
2/12/92	090428	600 light choc	short date rec’d Tues	10
300 light straw	short date rec’d Mon	12

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
29/12/92	090432	300 straw	short dated rec’d today	12
300 choc	short dated rec’d today	16
31/12/92	090433	1 lt Take Care iced coffee	short	6
600 max	short	2
500 custard van	short	2
07/01/93	090436	500 Straw	short dated 11/1 Rec’d 7/1	2
21/01/93	090437	200 Yog-Rhubarb/Ban	short dated returned rec’d today	12

Period: 23/02/93 - 09/11/94
Credit Claim No: 120001 - 120050

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
23/02/93	120001	200 gm Eve Yoghurt	short	12
24/03/93	120003	1 lt homo	short in crate half crate contents upside down	4
06/04/93	120005	1 lt skim	short in crate (2 crates)	2
10/05/93	120006	1 lt skim	short in crate	2
16/06/93	120021	600 Fallands banana	short dated	6
02/11/94	120043	gold 300 ml	returned by (?)	10
600 ml gold	short dated when received	6
01/11/94	120046	300 ml gold	returned by Entertainment Centre, short dates	35
300 ml choco	replaced with fresh stock	4
09/11/94	120047	600 ml Max I/C	Returned by	3
600 ml I/C	Sandwich	7

Date	Credit Claim No.	Product Name &	Claim Details		Quantity
300 ml gold			Tree	6
300 ml choco			short	3
300 ml straw			dates	2

Period: 04/05/93 - 01/11/94
Credit Claim Nos: 120051 - 120100

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
06/09/94	120078	300 ml flavours	short dated returned by Entertainment Centre	96
(no date)	120082	600 ml choco	short dated	1
300 ml choco	when received	3
11/10/94	120083	1 lt skimmer	short dated	16
1 lt homo	damaged leaking	13
1 lt Take Care skimmer	short dated	16
12/10/94	120089	600 ml banana	Returned	1
600 ml vanilla	by	1
600 ml coffee	Sandwich Tree	1
300 ml vanilla	short	4
300 ml banana	dated	2
31/10/94	120096	1 lt egg nog	short	8
600 ml trad creamy	dated	3
600 ml homog	and	2
300 ml vanilla	damaged	9
300 ml egg nog	when	1
300 ml straw	received	1
300 ml homog	1
1 lt choco	1
300 ml cream	2
01/11/94	120097	max I/C 600 ml	returned	8
300 ml choco	by	9
300 ml I/C	Sandwich	11
300 ml max	Tree	4
500 ml Take Care I/C	short	1
500 ml Take Care choco	dates	1

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
01/11/94	120099	600 ml max	returned by (?)	18
300 ml coffee	short	3
300 ml choc	dated	10

Period: 03/03/94 - 24/08/94
Credit Claim Nos: 140651 - 140700

In this book no credit claim invoices marked as ‘short’.

Exhibit P59

Period 09/01/95 - 21/04/95
Credit Claim Nos 155351 - 155400

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
09/01/95	155351	1 lt tasty skim	damaged	12
1 lt egg nog	and short	2
600 ml gold	dated	7
300 ml gold	when	4
2 lt froth milk	received	23
10/01/95	155353	2 lt banana/coffee	short	9
2 lt homo	dated	1
2 lt homo	and	1
500 ml Take Care	leaking	3
300 ml choc	when	3
600 ml gold	received	1
1 lt Take Care	1
200g custard	1
10/01/95	155354	600 ml Buttermilk	damaged	12
600 ml skim	and	1
1 lt skim	leaking	1
600 ml trad creamy	short	2
500 ml Take Care Choc	dates	16
300 ml choc	6
600 ml vanilla	3
600 ml gold	1
300 ml banana	1
09/10/95	155357	600ml Iced coffee	returned	28
1 lt egg nog	by	6
300 ml egg nog	Stevos Shop	7
300 ml banana	short	6
300 ml vanilla	dated	6
(No Date)	155361	500 ml Take Care	short	4
600 ml choc	dated	2
600 ml straw	when	1
300 ml banana	received	2
300 ml choc	1

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
300 ml Max	2
1 lt homo	1
600 ml Gold	22
300 ml Gold	2
13/01/95	155362	600 ml banana	short	6
1 lt banana	dated	1
600 ml straw	when	3
300 ml banana	received	1
300 ml choc	and	1
300 ml max	leaking	1
300 ml egg nog	1
1 lt homo	6
600 ml trad creamy	8
(No date)	155363	1 lt skimmer	short	2
1 lt egg nog	dated	2
1 lt trad creamy	when	1
1 lt Take Care	received	1
2 lt homo	and	3
2 lt Take Care	leaking	1
600 ml I/C	2
600 ml Gold	1
300 ml flavours	5
18/01/95	155365	300 ml Gold	short	40
300 ml egg nog	dated	24
300 ml banana	when	6
300 ml straw	received	4
18/01/95	155366	600 ml Gold	short	7
600 ml banana	dated	6
600 ml choc	and	1
600 ml van	leaking	1
500 ml Take Care	2
600 ml trad creamy	4
300 ml egg nog	9
18/01/95	155370	1 lt skim	short dated	32
2 lt homo	when	6
600 ml trad creamy	received	8
1 lt tasty skim	returned	7

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
200 gm Eve yoghurt	by food	2
200 g custard	discount	2
23/01/95	155371	600 ml flavours	returned	53
Sandwich Tree
short dated
(No date)	155372	1 lt plain	short	34
600 ml plain	dated	6
600 ml trad creamy	returned	3
2 lt plain	by	7
300 ml flavours	Coles	17
500 ml Take Care flavours	8
1 lt flavours	1
1 lt egg nog	2
2 lt flavours	?
23/01/95	155373	2 lt gold choice orange	short dated when received	2
01/12/95	155376	300 ml banana	short	44
600 ml flavours	dated	10
600 ml egg nog	and	2
500 ml Take Care choc	damaged	6
200g cream	when	8
300g cream	received	3
200g custard	3
200g yoghurt	2
21/03/95	155385	300 ml flavours	short	120
2 lt plain	damage	9
600 ml flavours	and	112
1 lt plain	returned	19
500 ml Take Care	by	10
2 lt flavours	St	10
23/03/95	155386	1 lt plain	returned	10
2 lt plain	by	4
2 lt flavours	Foodland	?
1 lt egg nog	short	4
300 ml egg nog	dated	13
600 ml flavours	when	14

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
300 ml gold	received	30
300 ml flavours	23
500 ml take care	8

Period: 04/04/95 - 09/05/95
Gold Claim Nos. 162301 - 162350

Date	Credit Claim No.	Product Name &	Claim Details	Quantity
04/04/95	162301	300 ml flavours	short	142
500 ml Take Care	dates	20
1 lt flavours	return	6
600 ml plain	by	21
600 ml flavours	when	98
1 lt plain	received	43
2 lt flavours	8
2 lt homo	3
09/05/95	162308	2 lt flavours	short	10
dates
when
received

Period: 06/09/95 - 27/10/95
Stock Adjustment Claim Nos: 02801 - 02850

Date	Stock Adjustment Claim No.	Product Name &	Claim Details	Quantity
06/09/95	SA 02801	2 lt plain	short	27
1 lt flavours	dates	4
600 ml flavours	56
600 ml flavours	18
500 ml Take Care	8
1 lt plain	64
300 ml flavours	26
500 custard (4 boxes)	24
2 x 3 kg shredded
03/10/95	SA 02808	1 lt Take Care	short dated	64
2 lt Take Care	on	1
2 lt skim	shelf	2
2 lt homo	leaked	1
1 lt homo	5
600 skim	damaged	2

Date	Stock Adjustment Claim No.	Product Name &	Claim Details	Quantity
300 homo	leaking	5
500 Take Care flavoured	8
600 egg nog	2
05/10/95	SA 02810	1 lt Take Care	short in crate	3
09/10/95	SA 02812	600 max	Various	48
600 gold	short	60
600 choc	coded	14
600 van	taken	12
600 banana	off	6
2 lt skim	shelf	1
1 lt Take Care	leakers	1
2 x 200g Custard	21
300 flavours	96
500 flavours	12
24/10/95	SA 02813	2 lt skim	leakers	9
2 lt homo	shot	8
2 lt frothing	dated	3
2 lt Take Care	removed	1
1 lt homo	etc	11
1 lt skim	4
1 lt creamy	4
1 lt Take Care	25
27/10/95	SA 02816	600 flavours	Various promotions	127
300 flavours	etc. Mainly Charcoal Chicken promotion	60
1 lt flavours	short dated	21
2 lt flavours	super mtrs	6
600 ml egg nog	Foodtown	7
500 ml Take Care flavours	T’ville and others	42

[1998] SASC 6992

4 December 1998