Elders Limited v Holdsworth
[2001] VSC 501
•19 December 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2037 of 2001
| ELDERS LIMITED (ACN 004 045 121) | Plaintiff |
| v. | |
| JAMES MAXWELL HOLDSWORTH | Defendant |
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JUDGE: | HABERSBERGER, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 15 AND 19 NOVEMBER 2001 | |
DATE OF JUDGMENT: | 19 DECEMBER 2001 | |
CASE MAY BE CITED AS: | ELDERS LIMITED v. HOLDSWORTH | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 501 | |
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CATCHWORDS: Contract - Agreement by defendant to forward sell oats to another party – Plaintiff insisting on crop lien as security for loan to defendant – Agreement with other party cancelled – Whether plaintiff agreed to purchase oats from defendant – Objective intention of parties – Finding of no agreement to purchase.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J.R. Dixon | Harle Associates |
| For the Defendant | Mr D.P. Gilbertson | Corrs Chambers Westgarth |
HIS HONOUR:
In this proceeding, Elders Limited (ACN 004 045 121) ("Elders"), a stock and station agent and wool broker, is suing its customer Mr James Holdsworth for $376,072.32 plus interest. Elders also seeks possession of certain land and stock mortgaged to it by Mr Holdsworth. In his defence and counterclaim, Mr Holdsworth denies any indebtedness, pleads breaches by Elders of its duties as his agent and seeks a taking of accounts and payment by Elders of any amount found due to him.
I was informed by the parties that it was agreed that, prior to referring the dispute to an expert accountant, there was one issue which required adjudication. Accordingly, at the request of the parties, on 19 October 2001, I ordered that pursuant to r.47.04 of the Supreme Court Rules there be determined as a separate question the allegation contained in particular (g) sub-joined to paragraph 35 of the defendant's counterclaim. That particular read as follows:
"Elders arranged for a Contract of Sale of 1,000 tonne of oats at $170 per tonne to be cancelled but despite an agreement to do so, failed to sell the oats or credit Holdsworth's account with their value ($170,000)."
Pursuant to r.49.01(2)(b), I also ordered that Mr Holdsworth begin the trial of this issue.
On reflection, it seems to me that the above order was deficient in that it did not state the question to be determined. Nevertheless, the issue was clearly identified, in my opinion, in the witness statements and in the opening on behalf of Mr Holdsworth. It was whether Elders agreed to purchase from Mr Holdsworth 1,000 tonnes of oats at $170 per tonne. If it had, then it would follow that Mr Holdsworth was entitled to a credit to his account with Elders of the sum of $170,000 at some date early in 1998.
In final submissions, however, Mr Dixon, who appeared for Mr Holdsworth, sought to rely in the alternative on an equitable estoppel argument. Mr Gilbertson, who appeared for Elders, submitted that there was no reference in the pleading to equitable estoppel, because particular (g) was founded on an agreement. Mr Gilbertson also submitted that equitable estoppel was not opened by Mr Dixon and that if it had been the course of evidence may have been approached differently. He therefore opposed Mr Holdsworth being allowed to rely on equitable estoppel. In the end I ruled that Mr Dixon should prepare an amended pleading incorporating any reliance on equitable estoppel and that I would then decide whether I needed to hear further from Mr Gilbertson concerning the granting of leave to Mr Holdsworth to rely on the amended pleading. Accordingly, following the conclusion of the hearing, Mr Dixon delivered a document entitled "First Defendant's Points of Claim on Rule 47.04 Determination". It pleaded an agreement by Elders to purchase "1000 tonne of oats at $170 per tonne at or after harvest in 1998." In addition, it pleaded an alternative agreement by Elders "to procure the purchase by a third party" of the 1,000 tonnes of oats. Further, the Points of Claim pleaded that Elders was estopped from resiling from an expectation, which Elders induced Mr Holdsworth to adopt, that "a particular legal relationship existed between himself and Elders being that $170,000 would be paid to Holdsworth's account with Elders by 28 February 1998 for 1,000 tonne of his oats crop and that Elders was not free to withdraw from making that payment".
In the light of my findings on the facts, it was not necessary to give Mr Gilbertson the further opportunity to be heard on the question of granting leave to Mr Holdsworth to rely on that part of the Points of Claim which raised equitable estoppel.
Mr Holdsworth's Relationship with Elders
Mr James Holdsworth is a farmer at Westmere in the State of Victoria. On his property of nearly 600 acres he runs cattle and sheep and grows crops. In April and May 1997 he "sowed 130 hectares of oats", which he estimated would produce approximately 850 tonnes.
In 1997 Mr Holdsworth's financial position was not good. He said that the years before 1997 had been "hard years". He had received financing from Elders for a number of years and experienced difficulty repaying the Elders' seasonal facility in 1996. The Elders' statement for April 1997 indicated that Mr Holdsworth owed Elders just under $160,000. In addition, he had two mortgages from solicitors and a number of other debts. On the other hand, he had substantial assets in terms of land and stock.
By letter dated 17 July 1997, Mr Jim Glenwright of Goldenberg Associates, a financial adviser acting for Mr Holdsworth, wrote to Mr Rod Wilkinson, the Credit-Lending Manager for Victoria and the Riverina for Elders, regarding a strategy for getting Mr Holdsworth's "farming enterprise back on track". Enclosed with the letter was a list of Mr Holdsworth's outstanding creditors at 30 June 1997 and his anticipated expenses for the next three months. Mr Glenwright stated in the letter that if all expenses were paid with funds provided by Elders, Mr Holdsworth's debt to Elders would reach $315,018. The letter also contained the following passage:
"As you are aware there is substantial income to flow through in November and December from cattle sales and wool sales (current estimate - $114,000), and further funds to flow through in February 1998 from crop proceeds (current estimate $156,250)."
Mr Wilkinson said that he had several meetings with Mr Glenwright and Mr Holdsworth's accountant, Mr Mark Spencer, in August and early September 1997. Mr Holdsworth attended several of those meetings, although Mr Wilkinson's discussions were principally with Mr Glenwright.
On 16 September 1997 Mr Holdsworth met with a solicitor Mr Tony Brown of Maddens in Warrnambool. Mr Brown's file note of this meeting records that he was told that Mr Holdsworth's former solicitor had recently retired. The main point of the discussion concerned a proposed loan by Elders to Mr Holdsworth. The loan, which was to be secured by a mortgage, had been under discussion for some time. Mr Brown recorded Mr Holdsworth's instructions that he had assets of $2,000,000 and liabilities of $700,000. However, "James is having considerable cash flow difficulties". The file note also recorded that "Holdsworth is distrusting of Elders".
On the following day Mr Brown wrote to Elders' solicitors, Harwood Andrews of Geelong, seeking clarification of Elders' willingness to fund Mr Holdsworth. The letter contained the statement that "[t]his matter has now become urgent".
On 18 September 1997, Mr Glenwright faxed a handwritten note to Mr Brown with copies to Mr Holdsworth and Mr Spencer. This note read as follows:
"At your request I contacted Rod Wilkinson at Elders. He will do the following:
1) Fax formal letter of offer tomorrow.
2)Make arrangements with James Holdsworth tomorrow, for signing of documents, hopefully on Monday in Ballarat.
3)Forward $9000 to CBA account tomorrow by telegraphic transfer, to cover the interest owed on the Palmer Stevens mortgage.
Suggest you confirm with Elders solicitor and/or James tomorrow soonest.
Other matters:
· The freehold mortgage is not the prime stamping document and will only be stamped to its market value, to save James costs.
· The documents should have included a crop lien as part of the Elders security. This seems reasonable as crop income is the major income item to pay down peak debt."
The Sale to Australlabs
Mr Holdsworth gave evidence that, in about August or September 1997, when the price of oats was high he had decided to forward sell his oats crop in order to reduce his debt. He said that he already had 285 tonnes of oats in storage so he decided to sell 1,000 tonnes of oats for delivery in late January or early February following harvesting of the current crop. Mr Holdsworth said that he was offered a price of $170 per tonne for his 1,000 tonnes by Mr Phillip Walter of Australlabs Environmental Pty Ltd ("Australlabs"). He accepted this offer as he thought this was a good price. He said that he agreed to give Australlabs "a lien over the crop as security". Mr Holdsworth also said that "shortly after talking to Walter I received a contract in the post for supply of 1,000 tonnes of oats at $170 per tonne". This was a reference to a typed invoice No. 95 dated 18 September 1997 which was apparently accompanied by a two page letter setting out in more detail the terms of the contract ("the second letter"). Mr Holdsworth said that he received these documents "about the middle of September or thereabouts".
Mr Walter said that he initially completed by hand an invoice No. 95 dated 18 September 1997. It was for 400 tonnes of oats at $170 per tonne. Mr Walter also prepared on 18 September a typed letter to Mr Holdsworth containing the terms of the contract, including a lien over the crop. In the two pages of this letter ("the first letter") there are two references to 400 tonnes, but there is also a reference to 400 acres. Mr Walter said that he had been confused between 400 acres and 400 tonnes and that when he spoke again with Mr Holdsworth, "he clarified the confusion". Mr Walter said that he then prepared the typed invoice and the second letter, but did not throw out the handwritten invoice or the first letter.
The Suggested Meeting in Ballarat
On Friday 19 September 1997, Mr Brown sent a facsimile to Harwood Andrews confirming that Elders were to fax to one of the firms of solicitors a formal letter of offer that day. The letter also reiterated that arrangements were to be made for Mr Holdsworth to sign the documentation on Monday – "possibly in Ballarat".
Mr Holdsworth's account of these events was set out in his witness statement:
"6.I was negotiating with Elders for a seasonal finance facility. In September, 1997, Elders contacted me and asked that I meet with Mr Wilkinson at the Elders' office in Ballarat about the seasonal facility. I attended this meeting which was after my dealings with Australlabs. Mr Wilkinson handed to me a copy of the Seasonal Facility document dated 19 September 1997. … I looked at it and saw that it provided for a crop lien over oats. I had never previously provided a crop lien over oats to Elders and I had had no prior discussion with any representative of Elders about providing such a lien. The first and only discussion that I had had about a lien over that crop had been the discussion with Philip Walter of Australlabs.
7.Because I had recently given Australlabs a lien over the oats crop, I immediately said to Mr Wilkinson that there was a difficulty with this crop lien. I said to Mr Wilkinson 'I have forward sold 1000 tonne of oats to Australlabs at $170 per tonne and that as part of that contract I gave a lien over the crops to Australlabs.' I told him I needed advice from my solicitor, Tony Brown of Maddens. Wilkinson said 'Don't worry about that I can fix it all up. You should sign the facility now.' I told Mr Wilkinson that I was not prepared to sign the document because I had already given a lien on the oats and that if he wanted to make an arrangement for the release of the lien he should talk directly to Australlabs. Mr Wilkinson said to me 'Elders will take over your contract with Australlabs on the same terms and pay you $170 per tonne for 1000 tonne of oats when harvested.' He said 'I will fix it'. I repeated that I was still not going to sign the document until I had advice from my solicitor.
8.I phoned Tony Brown to arrange a meeting with him and I explained the problem that had arisen was that I had sold a crop of oats and given a lien to the bloke purchasing it and now Elders wanted a lien over the same crop as security for a Seasonal Facility. I asked whether I was able to provide this lien and said this is the problem I want to discuss with him. The meeting was arranged for 2 October."
Mr Wilkinson said that he did not recall meeting with Mr Holdsworth in Ballarat to hand over the documents. If Mr Holdsworth had met Mr Wilkinson in Ballarat on the Monday, this would have been 22 September 1997. Mr Wilkinson said that his "best recollection" was that he did not find out about the forward sale and crop lien from Mr Holdsworth. Mr Wilkinson denied that he said to Mr Holdsworth: "Don't worry about that I can fix it all up. You should sign the facility now". He also denied that he said to Mr Holdsworth: "Elders will take over your contract with Australlabs on the same terms and pay you $170 per tonne for 1000 tonne of oats when harvested".
There are some contemporaneous documents which tend to support Mr Wilkinson's statement that he did not meet Mr Holdsworth in Ballarat to hand over the documents. By letter dated 22 September 1997, Mr Wilkinson sent to Mr Brown two documents – a Letter of Offer and Acceptance of a Seasonal Facility and a Crop Lien asking for one copy of each to be executed and returned. This letter was received by Maddens on 23 September 1997. The Budget Cash Flow on which the seasonal facility was based recorded anticipated income from oats in February 1998 of $128,250 and $26,000.
On 22 September 1997, Mr Holdsworth spoke with Mr Brown by telephone on several occasions. According to Mr Brown's notes, in one conversation Mr Holdsworth told Mr Brown that Elders could not have a "crop mortgage". He had forward sold all of his crop. Elders had not mentioned a crop mortgage "the other day". In another conversation on 22 September Mr Holdsworth advised Mr Brown that a farm adviser was "coming today" about Mr Holdsworth qualifying for the interest loan subsidy. In his notes of a telephone conversation with Mr Wilkinson on 22 September, Mr Brown recorded that:
"Wilkinson said that he was attempting to locate Holdsworth. I said that I understood that he was at his property today."
By letter dated 22 September 1997, which was faxed to Mr Holdsworth at 8.50 a.m. the next day, Mr Brown noted a number of matters including:
"Elders have requested a crop Mortgage to secure the further advances. You are not prepared to agree to this Mortgage as you have forward sold all of your crops."
On 23 September 1997, following receipt of this fax, Mr Holdsworth and Mr Brown again spoke by telephone. According to his file notes Mr Brown told Mr Holdsworth that one of the issues causing him great concern was:
"Holdsworth's refusal to consent to a crop lien over the crop. Holdsworth says that he cannot consent to the crop lien as he has already on sold 450 tonne of his oats crop at $170.00 per tonne. There is a lien in place over this produce. …"
In evidence, Mr Brown said that he believed this is what Mr Holdsworth told him and that there was no mention of a sale of 1,000 tonnes of oats.
On the same day Mr Brown wrote to Harwood Andrews as follows:
"… Our client is unable to agree to the crop liens sought as security. This is because he has agreed to forward sell 450 acres of his oats crop at $170.00 per tonne. This crop is now subject to a lien to the purchaser. Please obtain further instructions from Elders. In discussions which took place last week between Mr Holdsworth, Mr Glenwright and Rod Wilkinson Mr Holdsworth indicated that he proposed to forward sell the oats crop. This proposal apparently received the approval of Mr Wilkinson."
On 26 September 1997, Mr Glenwright sent a facsimile to another solicitor at Maddens as Mr Brown was on leave for a few days. Part of the facsimile read as follows:
"I confirm my telephone discussion with you today.
1.Rod Wilkinson at Elders has informed me the loan will not proceed without a crop lien.
2.Mr Holdsworth has stated to Mark Spencer and to me that he believes he cannot sign a crop lien in favour of Elders because he has sold the crop forward.
3.You have indicated that forward selling imposes no legal impediment to providing a crop lien.
4.You will contact Mr Holdsworth, inform him of the above, and obtain from him a decision as to whether he will sign the crop lien."
Copies were sent to Messrs. Holdsworth, Spencer and Wilkinson.
The Handwritten Invoice and the First Letter
It appears from the fax headings on the documents that Mr Walter's handwritten invoice and the first letter were faxed from Mr Walter's fax machine on 25 September 1997. It was suggested to Mr Walter that he had faxed those documents to Mr Spencer. Certainly, Mr Spencer received copies of them at some stage because he faxed the same documents to Mr Brown on 29 September. Mr Walter agreed that the number in one set of the fax headings related to his machine but he doubted that he had faxed them to Mr Holdsworth's accountant, because he said that he did not know Mr Spencer. Mr Walter said that if someone had rung up requesting the documents when he was out, his wife or son could have faxed them, but "most likely it was me".
As previously stated, on 29 September 1997, Mr Spencer faxed Mr Walter's handwritten invoice and the first letter to Mr Brown. On 30 September, Mr Brown spoke by telephone with Mr Wilkinson. He subsequently faxed to Mr Wilkinson the three pages he had received from Mr Spencer, which Mr Brown understood to be Australlabs' purchase contract. Mr Wilkinson and Mr Brown then spoke again by telephone. Mr Brown's file note of this conversation reads as follows:
"Wilkinson asked whether I had a copy of the lien. I said that I did not. He said that the lien was probably taken to guarantee delivery. Wilkinson said that he has seen it happen before that if there has been an agreement to sell at say $170.00 per tonne in advance, if the price went up to say $220.00 on the general market, Holdsworth may refuse to honour the contract. The lien ensures delivery. Wilkinson said that if the lien which Holdsworth has granted is only to ensure delivery it may well be that Elders can take a second lien in behind the first lien. Elders are interested in income and Austral Labs delivery.
Wilkinson said that he will speak to Austral Labs and ring me back this afternoon."
On 30 September 1997, having received Mr Walter's handwritten invoice and the first letter, Mr Wilkinson faxed them to Ms Judy Baker of Harwood Andrews. Her response to the impasse was to draft an irrevocable authority, which she faxed to Mr Wilkinson that same day. Her message to Mr Wilkinson read as follows:
"This authority is only of value if Holdsworth delivers the crop to Australlabs. Please confirm this is in order."
On 1 October 1997, Ms Baker spoke with Mr Brown and informed him that, notwithstanding the irrevocable authority, Elders still required a crop lien from Mr Holdsworth to "take effect as a second lien". Mr Brown then telephoned Mr Holdsworth. The relevant part of his file note states as follows:
"I explained to Jim the following:-
1.I had had discussions this morning with Judy Baker and she had faxed to me an irrevocable authority for signing by Holdsworth which required the proceeds of the oats crop to be remitted directly to Elders. I explained that I needed Holdsworth to attend upon our office to sign the irrevocable authority and the lien (which would be a second lien behind the lien to Austral Labs).
Holdsworth said that he had spoken to Austral Labs this morning and they had 'pulled the pin' on the acquisition of the oats crop. They said that they did not wish to be involved where there were second liens and Holdsworth had some obvious financial difficulties.
…
I said to Holdsworth that I urgently needed to see him to sign the crop lien to Elders. …"
The Discussions between Mr Wilkinson and Mr Walter
As he had suggested he would do in one of his telephone conversations with Mr Brown on 30 September 1997, Mr Wilkinson did speak to Mr Walter of Australlabs. In his witness statement Mr Wilkinson said:
"27.I spoke to Mr Walter from Australlabs in late September 1997 or early October 1997. I believe that I had one or two conversations with him. I told Mr Walter words to the effect that Elders insisted on taking a crop lien. I also told him that Elders wanted to ensure that the funds from the sale of the oats came directly to Elders. I said to him that Elders were about to advance considerable funds to Holdsworth and the taking of a crop lien was normal business practice.
28.Mr Walter told me during one of those conversations words to the effect that he did not wish to proceed with the forward contract and lien. He said that he did not want to get involved; it was all too hard for him. I replied that if he did not want to proceed with the contract, that was a matter between him and Mr Holdsworth.
29.I refer to paragraph 6 of the draft witness statement of Philip Kevin Walter. I deny that I asked Walter if he could cancel the contract with Holdsworth. I did say to him words to the effect that Elders needed the proceeds of the crop because Holdsworth owed Elders a lot of money.
30.I deny that I said to Walter that James would not lose or that Elders would pay Holdsworth the same amount for the crop. I also deny that I said 'could [you] see [your] way clear to cancel this contract and allow Elders to purchase the crop'. I had no interest in Elders purchasing Holdsworth's crop. The fact that the oats were forward-sold was attractive to me so long as Elders had control of the proceeds of sale."
In his witness statement, Mr Walter referred to the making of his contract with Mr Holdsworth and continued:
"6.About a week or so later I was telephoned by Mr Rod Wilkinson from Elders. He asked if I could cancel this Contract with Holdsworth because Elders needed the grain to sell to offset some of Mr Holdsworth's debts. Mr Wilkinson said:-
'We need this crop because James Holdsworth owes Elders a lot of money. James will not lose though. We will pay him the same amount for the crop.'
' Could I see my way clear to cancel this contract and allow Elders to purchase the crop.'
I told Mr Wilkinson that I would ring James Holdsworth and discuss the matter with him and if he had no problems with it, it could be done.
7.My family had dealt with Elders for many years and I was surprised that Mr Wilkinson was telling me that Mr Holdsworth was indebted to Elders. Also, although I was not a friend of Mr Holdsworth I was a good friend of his son Andrew. I was prepared to consider cancelling this crop for several reasons, first it would not be difficult to dispose of the other pig food additives which I had contracted to buy. Second if James Holdsworth was prepared to cancel the contract and this was in his interest in his dealings with Elders I was happy to return the favour because he had assisted my family with agistment of stock after the Lara fires and his son is my friend.
8.I rang James Holdsworth and told him what Mr Wilkinson had said to me about the cancellation of the contract. I explained to James that Mr Wilkinson said that he would pay James the same price for the oats as I was prepared to pay and asked him whether he wanted to proceed with or cancel the contract. James said as long as it does not cost me or him anything he was prepared to go along with the arrangement being suggested by Mr Wilkinson. We agreed that our contract would be cancelled. I explained to James that I would be able to deal with the other product I had purchased for the pig food without any loss to me.
9.After speaking with James Holdsworth I rang Mr Wilkinson back and told him that Mr Holdsworth would agree to the cancellation of the contract and I was prepared to do it. I have been shown a handwritten copy of Invoice No. 095 with an attached 2-page letter, each signed by me which I was told was produced by Elders. This is the first draft of the Contract which I produced prior to the typed version. I can only assume that it was given to Elders by error. I have no personal knowledge of the circumstances in which those documents were provided to Elders in the first place.
10.At no time was there any discussion with me about an arrangement whereby the price I paid for the oats was to be paid directly to Elders."
The Telephone Conversation on 2 October 1997
Mr Holdsworth met with Mr Brown at his office between 11.45 a.m. and 1.30 p.m. on 2 October 1997. Mr Brown's handwritten notes of this attendance as well as his typed file notes were in evidence. Mr Brown said that his practice at that stage was to take short diary notes and then dictate his file notes following the meeting expanding where necessary. Although there was some dispute about this it seems clear to me that Mr Holdsworth and Mr Brown conferred for some time, before Mr Brown rang Mr Wilkinson on a speaker telephone. The relevant part of the handwritten notes reads as follows:
"Doesn't want to sue
Astral Lab [sic] happy for Elders to take over
Holdsworth agreed to rescission of a/g.
…
Rod Wilkinson.
…
No need to sign irrev authority.
…
Rod Wilkinson may be able to find a mkt for the oats.…"
The relevant part of the typed file note reads as follows:
"We considered the following issues:-
1.An action against Austral Labs for breaching the agreement to purchase the oats. Holdsworth said that he most definitely does not wish to sue Austral Labs. This is because he released Austral Lab [sic] from the agreement. This is because Elders were happy to take over. Holdsworth reiterated that it was he who agreed to rescind the contract.
…
3.Execution of security documentation. Holdsworth signed the security documentation before me. I telephoned Rod Wilkinson and had a lengthy discussion with him. With Wilkinson I went through where the documentation had to be signed. In particular we discussed the crop lien. Wilkinson said that he accepted Holdsworth's view that action should be not be taken against Austral Labs. Wilkinson said that he would assist Holdsworth to try and sell the crop.
Wilkinson said that there was no need to sign the irrevocable authority. I said that I would forward these documents in the DX to Harwood Andrews today. …"
Mr Holdsworth said in his witness statement that during the telephone conversation between Mr Wilkinson, Mr Brown and himself:
"9.When I saw Mr Brown on 2 October, 1997 he made a phone call to Mr Wilkinson of Elders he placed the phone in the middle of the table so that he and I could both speak to Mr Wilkinson and hear him through the speaker on the phone. Mr Wilkinson told us that Elders would provide the moneys I had requested when I had signed the Seasonal Facility and Crop Lien documents. I asked Mr Wilkinson if he had spoken to Philip Walter of Australlabs about cancelling my contract with Australlabs and Mr Wilkinson said that he had discussed the matter with Walter who had agreed to cancel the contract and lien over my oat crop. Mr Wilkinson and Tony Brown said that I could sue Australlabs to which I replied 'what for … I would not have a bar of it because Elders were taking over the contract from Australlabs lock stock and barrel'. Nothing further was said by Mr Wilkinson in my presence at that stage and Tony Brown turned off the speaker on the phone and took the phone over to the other side of the room and I heard him discussing aspects of the documents I was to sign. After the phone call Tony Brown told me that it was now appropriate for me to sign the Seasonal Facility and Crop Lien. … Mr Brown told Mr Wilkinson that if Australlabs would provide a document formally releasing me from the lien that I had given to them, he was happy to advise me to sign the Elders documents. Mr Wilkinson told Mr Brown that that was what the arrangement was and that that letter would be coming through shortly.
10.After that conversation, and accepting that the letter from Australlabs would come as promised, I signed the Seasonal Facility Agreement and a Crop Lien at Mr Brown's office."
Mr Wilkinson denied that in the telephone conversation Mr Holdsworth had said: "Elders were taking over the contract from Australlabs lock stock and barrel."
The Signing of the Documents
On 2 October 1997, Mr Holdsworth signed the crop lien in the presence of Mr Brown. When that document had been forwarded by Elders, attention had been drawn to information which was required to be inserted in the crop lien document. In this respect, Elders' letter of 22 September 1997 stated:
"Page 12, Item 2, Hectares of crops to be grown.
Page 12, Item 6, Where crops are to be delivered (and grower number if applicable.)"
On Mr Holdsworth's instructions, Mr Brown completed those parts of the crop lien by hand. In Item 2 he crossed out the word "hectares" and added "400 acres", so that it read: "Nature of crops Oats Approx 400 acres". In Item 6, Mr Brown added after the typed words: "Deliver Crops to" the words "Unknown at this stage. Elders to be advised."
Item 6 referred back to cl. 5.29 of the crop lien. This clause required Mr Holdsworth as the lienor to:
"Deliver the Crops to Elders at the place specified in Item 6 of the Schedule or other place as Elders may from time to time specify. …"
Cancellation of the Sale to Australlabs
By an agreement typed on Australlabs letterhead and dated 10 October 1997, Australlabs and Mr Holdsworth agreed to "cancel" their agreement for the sale of oats. This document read in part:
"After discussions with Elders representative Mr R. Wilkens [sic] and yourself to this company, We have come to the mutual agreement to forego the lien on your crop and to cancel any and all existing agreements with you in respect of your crops."
After the Oats Crop was Harvested
Mr Holdsworth said that in the telephone conversation with Mr Wilkinson on 2 October 1997 or later, Mr Wilkinson told him that when the oats were harvested and ready for delivery he was to contact Mr Tom Blood of Elders who would then make the necessary arrangements to collect the oats. Mr Holdsworth said in his witness statement that, after the oats were harvested in January 1998, he contacted Mr Blood by telephone -
"… and told him that the oats had been harvested and were ready to be picked up. Mr Blood replied 'What oats?' I then explained to Mr Blood the arrangements that had been made with Mr Wilkinson and the dealings that had occurred back in September and October 1997. Mr Blood said he knew nothing of these arrangements and would contact Mr Wilkinson.
14.A few days later I rang Mr Blood back but he told me that he had not yet had a chance to contact Mr Wilkinson. During the course of the next month I contacted Mr Blood on quite a number of occasions (approximately 10) enquiring when the oats were going to be collected and $170,000 credited to my account. I was being put off by Mr Blood with excuses. After about the 7th or 8th call I decided to phone Mr Wilkinson directly. I said to Mr Wilkinson 'Tom Blood is telling me he knows nothing about this arrangement, the oats are ready and I am keen to get rid of them and get my money'. Mr Wilkinson said he would get on to it straight away and would speak to Mr Blood. No dispute about the arrangement was raised by Mr Wilkinson in this conversation.
15.Later I contacted Mr Blood on several further occasions, when he still appeared ignorant of the arrangements and made excuses. At this time the price of oats was well below $170 per tonne. Mr Blood eventually told me that it would be necessary for Elders on my behalf to advertise the oats for sale in their Journal. I was surprised at this and told Mr Blood that the oats had already been sold by me to Elders and that I did not see why it was necessary for the oats to be advertised by me at all. I told Mr Blood that it was of no interest to me what they did with the oats, Mr Wilkinson had told me that Elders had taken over my contract with Australlabs and agreed to buy 1000 tonne of oats. I was entitled to my money and he should come and collect the oats and pay me. Mr Blood said he would get back to me.
16.By late March early April, the oats were starting to deteriorate. In particular, part of the oats were stored in a bunker. It did not provide suitable long term storage particularly moving into Autumn with the prospect of increased rainfall. I spoke by telephone to both Mr Blood and Mr Wilkinson and told each of them that I was going to sell the oats myself and each of them said I was not allowed to do that because Elders had a contract and a lien. I replied 'Well the oats are ready they have been here for ages, come and get them'.
17.Elders never came and gradually the quality of the oats deteriorated till they spoiled completely and became unsaleable. I have not received a single cent for that crop."
Mr Wilkinson denied telling Mr Holdsworth to contact Mr Blood when the oats were ready. He also denied ever being contacted by Mr Holdsworth about the oats or telling Mr Holdsworth that he was not allowed to sell the oats because Elders had a contract and a lien. Mr Blood also denied any discussions with Mr Holdsworth about oats. He said that he dealt in wool and would not have known what to do about an oat crop.
On 4 December 1997, a rural counsellor, Mr John Marriott, from the South Western Rural Counselling Committee, wrote to Mr Glenwright concerning Mr Holdsworth's financial position. That letter included the following passage:
"The oat crops have suffered quite a lot from a lack of weed control and except for 65 ha. of Echidna oats on Murrays, yields will be affected. James assures me that all the oat crops, except the Home block one will be stripped. The Home block crop has been grazed."
Mr Marriott then set out his anticipated yields from wheat and oats, with a return of income of $7,770 for wheat and $50,415 for oats. Mr Holdsworth said that he was given a copy of this document as he was leaving a meeting held on 12 December 1997 between Messrs. Holdsworth, Glenwright, Spencer, Wilkinson and Marriott. When he subsequently read the document he realised that Mr Marriott had confused hectares and acres and had thus understated the yield by a factor of three. He produced a document which purported to be a copy of his corrections of Mr Marriott's calculations. Mr Holdsworth also said that it was correct that the home stock crop had been grazed but that there had been late rain and the oats had improved and they were harvested.
Subsequent Events
By letter dated 9 April 1998, Mr Brown wrote to Mr Wilkinson referring to the question of some insurance monies totalling $5,500 which had been raised with him that morning by "an irate Mr Holdsworth". The letter further referred "to the meeting which took place on 18 March 1998 at Elders" and then set out four matters concerning payments and credits which Elders were to attend to. There is no reference anywhere in the letter to Elders' delay or failure to collect the oats crop or to any credit of $170,000 in favour of Mr Holdsworth.
It was not until 2 April 2001 that the issue of the oats crop was raised with Elders. On that day, Mr Holdsworth's solicitors wrote to Elders' solicitors disputing that their client owed anything to Elders. Included in that letter were the following statements:
"… your client … has caused our client to lose $170,000.00 on the sale of 1000 tons of oats …"
and
"We also enclose copies of contract in relation to the aborted sale of oats for $170,000.00. And have [sic] photographic and other evidence of the existence of the oats which we are happy for you to inspect."
Findings
After fully considering all of the evidence, both oral and documentary, I have decided that I prefer the account of the events given by Mr Wilkinson and Mr Blood, on behalf of Elders, to that of Mr Holdsworth and Mr Walter. I have reached this conclusion for a number of reasons.
First, it makes no sense that Mr Wilkinson, on behalf of Elders, would ask Mr Walter of Australlabs to cancel his contract to purchase Mr Holdsworth's oats. The price to be paid by Australlabs was a good price and so long as Elders could be sure of receiving the proceeds this was a very satisfactory outcome for it. Two methods were proposed by Elders to give it this certainty – the lien and the irrevocable authority. Both of them would have worked well as far as Elders was concerned. Why then would Mr Wilkinson agree to buy the oats? Elders was not in the business of trading in grain. (The invoice tendered by Mr Dixon which showed that Elders had sold three 40 kilogram bags of "Graza Oats" at a cost of $90 to Mr Andrew Holdsworth in June 1997 does not contradict this conclusion).
Secondly, I do not accept Mr Holdsworth's evidence concerning his alleged meeting with Mr Wilkinson in Ballarat. He said that Mr Wilkinson handed him a copy of the Seasonal Facility document dated 19 September 1997 and asked him to sign it at that meeting. Yet this document was forwarded by Mr Wilkinson to Mr Brown on 22 September 1997. Further, it appears to me from Mr Brown's file notes that Mr Holdsworth was at his property on 22 September 1997, which was the day suggested for the meeting in Ballarat. Finally, the content of Mr Brown's file notes concerning his discussions with Mr Holdsworth on 22 and 23 September and 1 and 2 October 1997 (in particular, the last date) do not support the claim that Mr Holdsworth had recently met Mr Wilkinson in Ballarat. The lack of any reference to such a meeting is significant. Mr Wilkinson said that for him to have gone to Ballarat "to do a signing of documentation would have been highly unlikely".
Thirdly, the finding that there was no meeting in Ballarat is extremely damaging to Mr Holdsworth's case because the critical statement by Mr Wilkinson that: "Elders will take over your [Mr Holdsworth's] contract with Australlabs on the same terms and pay you $170 per tonne for 1,000 tonne of oats when harvested" was alleged by Mr Holdsworth to have been made at that meeting. Mr Holdsworth conceded that he did not actually tell Mr Brown that Elders had agreed to buy the oats in any of their discussions prior to 2 October 1997. I therefore find that the alleged statement was not made by Mr Wilkinson.
Therefore, the highest that Mr Holdsworth could put his case against Elders was that Mr Wilkinson said nothing to contradict or query Mr Holdsworth when the latter allegedly said in the telephone conversation on 2 October 1997 that: "Elders were taking over the contract from Australlabs lock stock and barrel". Mr Wilkinson denied saying this and no repetition of this quotable phrase can be found in either Mr Brown's handwritten note or his typed file note of this conversation. There is a reference in the handwritten notes of this conversation to: "Astral Lab [sic] happy for Elders to take over". In the typed notes this reads "Elders were happy to take over". However, it is clear, in my opinion, from the way in which both sets of notes read, that this statement was made to Mr Brown alone, before the telephone conversation with Mr Wilkinson commenced.
In his witness statement, Mr Brown said that Mr Holdsworth had informed him on 2 October 1997 that both "Australlabs and he were happy with Elders taking over the oats contract". However, he readily conceded in cross-examination that neither his handwritten notes nor his typed notes referred to Elders taking over "the contract" or "the oats contract" and that neither set of notes referred to Mr Holdsworth being "happy" with this outcome. Mr Brown was obviously an honest witness doing the best he could to recollect the detail of these conversations. Although, not surprisingly, he was largely dependent on his notes, he did say in evidence: "I would say that it was certainly Mr Holdsworth's understanding that Elders were going to take over the oats contract, but my … diary notes do not record that Mr Wilkinson said that to me directly". On one view, this evidence could be important for Mr Holdsworth's claim.
However, Mr Brown's diary notes not only do not record Mr Wilkinson saying that Elders were going to take over the oats contract, they also record a statement by Mr Wilkinson to the contrary. The handwritten notes include the following:
"Rod Wilkinson may be able to find a mkt for the oats."
In the typed notes, the same reference reads:
"Wilkinson said that he would assist Holdsworth to try and sell the crop."
Mr Brown said that he regarded both statements as "accurate" and that there was no difference "in sentiment" between the two of them. He agreed that they represented the full extent of what Mr Wilkinson said about Elders selling the crop or finding a market for the oats. In my opinion, these references in Mr Brown's notes clearly establish that Mr Holdsworth did not say to Mr Brown alone or to Mr Brown and Mr Wilkinson on 2 October 1997 that "Elders were taking over the contract from Australlabs lock stock and barrel." If he had, Mr Wilkinson's comments about assisting Mr Holdsworth to sell the crop or find a market for the oats would not have made any sense and would have been queried by either Mr Holdsworth or Mr Brown. I also consider that this indication of assistance from Mr Wilkinson was not a legally binding promise. On my view of the facts there was no consideration for such a statement. Certainly, Mr Holdsworth never suggested that this was the contract he had with Elders. The case was opened on the basis that, and Mr Holdsworth's evidence was that, Elders had agreed to purchase the 1,000 tonnes itself, not "to procure the purchase by a third party". Either Mr Holdsworth succeeds on the agreement he says he made or his allegation of an agreement fails.
Further, I consider that Mr Holdsworth may have misunderstood what Elders was proposing to do because he was clearly confused about the meaning of a crop lien. He said in evidence that he believed that a contract to sell and a lien "were the same thing as I see it". Later, he said "if you get a lien you're bound to sell that article to whoever, if you've got a contract you're bound to fulfil that contract whatever, you're still bound". Thus, when Mr Wilkinson informed him that Elders was insistent that it be given a crop lien over the oats, in his confusion he may have thought that this meant that Elders were agreeing to purchase his crop of oats. This is in effect what he said at one stage in his evidence: if he signed the crop lien "Elders would take the grain". But, I find that Mr Wilkinson said or did nothing to induce this confusion in Mr Holdsworth's mind. The references in Mr Brown's notes to Elders "taking over" are consistent, in my opinion, with Mr Holdsworth saying that Elders was taking over Australlabs' crop lien. Mr Gilbertson submitted, correctly in my view, that it was immaterial that Mr Holdsworth might have thought that Elders was agreeing to purchase the oats. Determined objectively, the parties only agreed to enter into a crop lien. (See generally Codelfa Construction Pty Ltd v. State Rail Authority of New South Wales[1] and Halsbury's Laws of Australia, Volume 6 at paragraph 110-230 and specifically for a case concerning oats Smith v. Hughes[2].)
[1](1982) 149 CLR 337
[2](1871) LR6 QB 597
Next, Mr Wilkinson's evidence concerning his discussions with Mr Walter is strongly supported by Mr Brown's file note of his conversation with Mr Holdsworth on 1 October 1997. Mr Wilkinson said that once he had told Mr Walter that Elders insisted on taking a crop lien from Mr Holdsworth, Mr Walter said that he did not wish to proceed with his forward contract and lien. He did not want to get involved. It was all too hard for him. Mr Walter denied this and said that Mr Wilkinson asked him to cancel his contract with Mr Holdsworth. Mr Brown's file note of his telephone conversation with Mr Holdsworth on 1 October 1997 is worth quoting again because it accords with Mr Wilkinson's evidence about what Mr Walter had said to him:
"Holdsworth said that he had spoken to Austral Labs this morning and they had 'pulled the pin' on the acquisition of the oats crop. They said that they did not wish to be involved where there were second liens and Holdsworth had some obvious financial difficulties. …"
Moreover, Mr Holdsworth's evidence in paragraph 9 of his witness statement that in the telephone conversation on 2 October 1997 Mr Wilkinson said to Mr Holdsworth that "he had discussed the matter with Walter who had agreed to cancel the contract and lien over my [Holdsworth's] oat crop" is not credible in my opinion. It is not supported by either Mr Brown's notes or his evidence. It is particularly difficult to accept when Mr Holdsworth goes on to state that Mr Wilkinson and Mr Brown said that he could sue Australlabs. I cannot imagine Mr Brown suggesting to his client that he could sue Australlabs if Mr Brown had just been told that Australlabs had agreed to cancel its contract at Elder's request. Discussion about suing Australlabs does make sense, however, if Australlabs had "pulled the pin" on the acquisition of the oat crop, which is what I find Mr Holdsworth told Mr Brown the previous day.
In addition, I have to say that I have some concern about the reliability of Mr Walter's memory. In particular, this arises out of his evidence concerning the history of the production of the handwritten invoice and the first letter and the typed invoice and the second letter. Mr Walter said that during the day he wrote out the handwritten invoice and then retyped it that night after clarifying his confusion over the tonnage with Mr Holdsworth. He also said that he typed up the two pages of the first letter "that night". However, the first letter twice refers to an order of "400 tonne", although there is also a reference to "a lien over your 400 acres of crop". That is, the confusion between 400 tonnes and 400 acres was repeated in the first letter, even though it was said to have been typed on the night of 18 September 1997 after Mr Holdsworth had clarified Mr Walter's confusion over the tonnage. Mr Walter's only explanation was that it was "a mistake".
Further, there is no credible explanation of how it came about that the handwritten invoice and first letter were apparently faxed to Mr Spencer on 25 September 1997, and not the typed invoice and the reworded second letter. Although Mr Walter claimed that "the date on the fax machine was never right" and doubted that he had faxed any documents to Mr Spencer because he did not know him, I find that Mr Walter did fax the handwritten invoice and first letter to Mr Spencer on or about 25 September and before 30 September 1997. As Mr Walter conceded: "most likely it was me.". All of this suggests to me that the typed invoice and the second letter may have been prepared some time after the handwritten invoice, not the same day. Moreover, I am strengthened in this belief by the wording of the second letter. It started:
"As per our discussion Sept 97 regarding the sale of your crop of 1000 tonnes of oats …"
To me, this does not read like a reference to a conversation held that very day. By way of comparison, the first letter started:
"As per our discussion of the 18th Sept 1997 …"
Mr Gilbertson submitted that Mr Walter had prepared the typed invoice and the second letter on or after 25 November 1997. He based this submission on the fact that the address of Australlabs on the stationery used for the second letter was "3 Walker St Rippleside". The historical company extract of Australlabs showed that this address did not become the principal place of business of Australlabs until 25 November 1997. For over three years before that date, it had been at Mr Walter's house at 86 Fairbairn Drive, Corio. This was the address of Australlabs on the stationery used for the first letter. Mr Walter agreed that he had moved house and thus his principal place of business to 3 Walker Street, Rippleside on or about 25 November 1997. His explanation of why he would be using stationery with the Walker Street address before he had moved there was unconvincing. He first said that the Walker Street address was on stationery which was computer generated and that this was designed by his wife, which really did not answer the criticism. Then he said that he may have used the Walker Street address because "that's where my friend used to live, it was part of my company, that's why we took the house over." But he still could not say why he would have used stationery with the Walker Street address before he moved there. Having first accepted that it was he who was responsible for lodging the documents with the authorities and that the date of the change to the Walker Street address was accurate, he then said the accountant did all that. Further, I note that the cancellation document of 10 October 1997 which was prepared on Australlabs' stationery also had the Fairbairn Drive address. This document had been faxed to Mr Holdsworth from Mr Walter's fax machine at 11.46 a.m. on 10 October 1997. Mr Walter said that he had not used that fax number since he left Fairbairn Drive. This confirmed that Mr Walter was still at Fairbairn Drive in October 1997 and further damaged the credibility of Mr Walter's various explanations. I have therefore concluded that the typed invoice and second letter were prepared after 25 November 1997.
This finding also reflects on Mr Holdsworth's recollection of events because it was put to him by Mr Gilbertson that he had not received the typed invoice and the second letter until after he received the cancellation letter in October 1997. Mr Holdsworth strongly denied the suggestion. He said he had the typed invoice before he met Mr Wilkinson in Ballarat between 18 and 24 September 1997.
All of this means that I prefer Mr Wilkinson's evidence to that of Mr Walter concerning the telephone conversations between them. Moreover, the fact that, according to both Mr Holdsworth himself and Mr Brown's notes of the conversation on 2 October 1997, the question of Mr Holdsworth suing Australlabs was discussed in that conversation lends some support to the evidence that Australlabs pulled out of the contract with Mr Holdsworth because it was all too difficult once Elders became involved. On the other hand, it also has to be said that Mr Holdsworth was clearly saying he had released Australlabs because Elders were "taking over". Nevertheless, I find that Mr Walter did say to Mr Wilkinson that he did not wish to proceed with his forward contract and lien as Elders was now involved and that he also informed Mr Holdsworth of this preference.
The next point is that, in my opinion, the words added to the crop lien by Mr Brown on behalf of Mr Holdsworth do not support Mr Holdsworth's claim that 1,000 tonnes of the oat crop had been forward sold to Elders. Rather, to my mind, the phrase "Deliver crops to – Unknown at this stage. Elders to be advised" suggests to me that the purchaser is unknown. Elders had to be advised not because it was the purchaser but because it wanted to obtain payment of the proceeds of any sale, to which it was entitled as the holder of a crop lien.
I also consider that Mr Holdsworth's evidence concerning his many alleged conversations with Mr Blood and Mr Wilkinson after the crop was harvested is difficult to accept in the face of the absence of any reference to the oat crop in Mr Brown's letter of 9 April 1998. I put to one side the fact that Mr Blood would have been an unlikely person to have been nominated by Mr Wilkinson as the contact concerning collection of the 1,000 tonnes of oats, when he dealt only in wool. On Mr Holdsworth's account of events in his witness statement, by 9 April 1998 he had spoken with Mr Blood about the oats at least 15 times and with Mr Wilkinson at least twice, all to no effect; his account had not been credited with the $170,000 sale price; Mr Blood had told him Elders would have to advertise the oats for sale; when he said to Mr Blood and Mr Wilkinson that he was going to sell the oats himself, he was told he could not do so because Elders had a contract and a lien; and "by late March early April, the oats were starting to deteriorate". Yet despite all of this, there is no reference in Mr Brown's letter to any complaint about Elders' conduct in respect of the oat crop. Mr Holdsworth agreed that it was not discussed in the meeting at Elders on 18 March 1998. His explanation was that at that date he felt "the oats were quite safe because Elders were going to pick the oats up … I had no concern about Elders taking the grain because in the past they've always done what they said they were going to do". Later, Mr Holdsworth said that he "was very anxious" for Elders to come and get the oats and that when he raised it with Elders at the time he became "bad tempered about it". This contradiction was not explained. Further, the "irate" Mr Holdsworth, who had complained to his solicitor about Elders' conduct concerning a $5,500 insurance payment, apparently did not raise with Mr Brown a credit of $170,000, which is now said to have been over a month overdue by the date of the letter. Mr Holdsworth said that he knew that the amount of $170,000 was owed to him. It seems inconceivable to me that nothing was said by Mr Holdsworth to Mr Brown in early April 1998 about an alleged credit of $170,000, even if Mr Holdsworth had not been concerned on 18 March about Elders not taking the grain. By "late March early April", according to Mr Holdsworth, the oats were starting to deteriorate. I can only conclude that nothing was said to Mr Brown because Mr Holdsworth did not at that time believe Elders had purchased the oats. If he had mentioned the issue Mr Brown would certainly have raised it in his letter of 9 April 1998.
Next, there is the absence of any complaint by Mr Holdsworth about Elders' failure to credit his account with the sum of $170,000 for the purchase from him of 1,000 tonnes of oats, until his new solicitors wrote a letter to Elders' solicitors about a different dispute on 2 April 2001. Mr Holdsworth said that during this period of three years he had no money and therefore:
"had no chance of supporting a solicitor or … getting anybody to do anything for me …"
While this may be some explanation, it does seem extraordinary that no one, not Mr Holdsworth himself, nor his accountant Mr Spencer, nor even Mr Glenwright or Mr Marriott, considered it appropriate to contact Elders to complain about Elders' failure to credit the $170,000 purchase price.
Finally, when Mr Holdsworth's solicitors did write on 2 April 2001 the letter did not allege that Elders had agreed to purchase the oats. Rather, the complaint was that Elders had caused Mr Holdsworth "to lose $170,000.00 on the sale of 1000 tons of oats" in respect of an "aborted sale of oats for $170,000." The enclosed "copies of contract" presumably referred to the typed invoice and the second letter from Australlabs. Thus, it would seem that, even at that stage, Mr Holdsworth was confused about exactly what claim, if any, he had against Elders. This just does not fit with Mr Holdsworth's evidence that Elders agreed to pay him $170,000 for 1,000 tonnes of oats when harvested.
Conclusion
For all of these reasons I find that Elders did not agree to purchase 1,000 tonnes of oats from Mr Holdsworth and that Elders had no involvement with the oats other than taking a crop lien over them. Accordingly, I find that Mr Holdsworth has failed in his claim against Elders in respect of the 1,000 tonnes of oats, whether it is based on an agreement to purchase the oats or on an equitable estoppel argument. However it is put, I find that Mr Holdsworth's claim fails. In the circumstances, it is not necessary to consider further the question of granting leave to Mr Holdsworth to rely on that part of the Points of Claim which raised equitable estoppel. Even if my findings had been more favourable, there would still have remained the question of whether Mr Holdsworth should be permitted to change the way he put his case at such a late stage in the proceeding, particularly when the proceeding is in the Commercial List.
Subject to hearing from counsel the orders I would propose are:
1.Leave to Mr Holdsworth to deliver "Points of Claim on Rule 47.04 Determination" raising equitable estoppel refused;
2.Declare that Mr Holdsworth is not entitled to a credit to his account with Elders of $170,000 or any other sum in respect of his oat crop harvested in January or February 1998;
3.Order that Mr Holdsworth pay Elders' costs of and incidental to the determination of this separate question.
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