Grainger v Williams

[2009] WASCA 60

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   GRAINGER -v- WILLIAMS [2009] WASCA 60

CORAM:   MARTIN CJ

WHEELER JA
McLURE JA

HEARD:   21 JULY 2008

DELIVERED          :   12 MARCH 2009

FILE NO/S:   CACV 16 of 2006

BETWEEN:   GEOFFREY OSMOND GRAINGER

JOAN HARRINGTON GRAINGER
Appellants

AND

RUTH EILEEN WILLIAMS
GALE CURTIS WILLIAMS
MARK CURTIS WILLIAMS
First Respondents

WESFARMERS DALGETY REAL ESTATE (WA) PTY LTD (ACN 090 238 993)
Second Respondent

ON APPEAL FROM:

For File No              :  CACV 16 of 2006

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :SIMMONDS J

Citation  :WESFARMERS DALGETY LTD & ORS -v- WILLIAMS & ANOR [2005] WASC 287

File No  :CIV 2156 of 2000

Catchwords:

Misleading and deceptive conduct - Contract for sale and lease of farming land - Whether multiple statements about an issue form a single representation  - Representations about clearing approvals may be misleading and deceptive where statutory authority retains discretion to prevent lawful clearing - Trial judge addressed different representation to that which was pleaded - Whether a statement is one of opinion or fact

Damages (1) - Principles of damages relating to misleading and deceptive conduct - Onus of proving that the misleading and deceptive representation caused or materially contributed to the damage - Whether damages should be awarded for losses incurred in farming both the area originally farmed by the first respondents and the area which they farmed due to the misleading and deceptive conduct - Impact of the farms being operated as a 'single enterprise' - Evidentiary onus to disaggregate losses - Lack of evidence on quantum of loss attributable to misleading and deceptive conduct

Damages (2) - Principles of damages relating to misleading and deceptive conduct - Causation - Mitigation - Remoteness - Illegality - Whether damages should be awarded for loss suffered after lease terminated - Effect of advice from solicitors - Reliance on erroneous legal advice - Knowledge of true position

Damages (3) - Legal costs incurred in connection with litigation

Damages (4) - Quantum of damages - Turns on its own facts

Evidence - Principles relating to the admission of expert opinion evidence 

Legislation:

Evidence Act 1906 (WA), s 79B
Fair Trading Act 1987 (WA), s 77
Soil and Conservation Act 1945 (WA), s 4, s 32(1)(b), s 32(1)(e), s 34A
Soil and Conservation Regulations 1984 (WA), reg 4
Soil and Conservation Regulations 1992 (WA), reg 4(1)
Trade Practices Act 1974 (Cth), s 82, s 87

Result:

Appeal allowed in part

Category:    B

Representation:

Counsel:

Appellants:     Mr M J McCusker QC & Mr M G Clay

First Respondents         :     Mr P Mendelow

Second Respondent      :     Mr A Metaxas

Solicitors:

Appellants:     Mark Clay

First Respondents         :     Blatchfords Lawyers

Second Respondent      :     Metaxas & Hager

Case(s) referred to in judgment(s):

Attorney‑General (NSW) v Peters [1924] HCA 31; (1924) 34 CLR 146

Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592

Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64

Fraser v NRMA Holdings Ltd (1995) 55 FCR 452

Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1

Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215

Grainger v Williams [1999] WADC 57

Grainger v Williams [2000] WADC 296

Grainger v Williams [2005] WASC 286

Henville v Walker [2001] HCA 52; (2001) 206 CLR 459

Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358

I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Jackson v Harrison [1978] HCA 17; (1978) 138 CLR 438

JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237

Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413

LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705

Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727

Medlin v State Government Insurance Commission (1995) 182 CLR 1

Middleton v AON Risk Services Australia Ltd [2008] WASCA 239

Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; (2000) 205 CLR 254

Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound (No 1)) [1961] AC 388

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257

Progress & Properties Ltd v Craft [1976] HCA 59; (1976) 135 CLR 651

Purkess v Crittenden (1965) 114 CLR 164

Ross v Caunters [1979] 3 All ER 580

Smith v Jenkins [1970] HCA 2; (1970) 119 CLR 397

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; (2002) 55 IPR 354

Thomas Brown & Sons v Fazal Deen [1962] HCA 59; (1962) 108 CLR 391

Travel Compensation Fund v Robert Tambree [2005] HCA 69; (2005) 224 CLR 627

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174

Watts v Rake (1960) 108 CLR 158

Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40‑940

Williams v Grainger [2002] WASCA 87

MARTIN CJ: 

Introduction

1. This appeal arises from a judgment which covers a substantial component of a complex series of issues which arose in interrelated proceedings in this court and the District Court.  The appellants are Mr Geoff and Ms Joan Grainger (collectively 'the Graingers') and the first respondents are Mr Gale Williams and Ms Ruth Williams, and their son, Mr Mark Williams (collectively 'the Williamses').

2. The proceedings under appeal were commenced in this court by Wesfarmers Dalgety Ltd, Dalgety Ltd and Primary Industry Bank of Australia Ltd (collectively 'the bank') against Ruth and Gale Williams, claiming repayment of monies advanced by way of loan, together with interest on those monies.  The Williamses counterclaimed against the Graingers, the bank and Wesfarmers Dalgety Real Estate (WA) Pty Ltd (the realtor), claiming damages and other relief as a result of misleading and deceptive conduct said to have been committed by the Graingers in relation to a transaction for the acquisition, by way of lease and part purchase, of their farming property, Kensey Park.  The counterclaim against the realtor was based upon the assertion that Mr Grainger was acting as its agent when he engaged in the alleged misleading and deceptive conduct.  The Graingers counterclaimed against the realtor seeking indemnity for any liability to pay damages to the Williamses on the basis of certain aspects of the employment of Mr Grainger by the realtor.

3. The Graingers had previously commenced proceedings against the Williamses in the District Court, seeking recovery of possession of Kensey Park following rescission of the transactions relating to the acquisition of that property, together with damages for trespass.  Those proceedings were remitted to the Supreme Court after the commencement of the substantive proceedings in this court to which I have referred.  Those proceedings were also dealt with by the judge whose judgment is under appeal.  It will be appropriate to refer to a portion of his judgment in those proceedings, because of their relationship to the proceedings under appeal.

4. By the time the hearing of the appeal had concluded, all the issues between the bank, the realtor and the Graingers had been resolved (ts 175).  Accordingly, although the realtor was a second respondent to the appeal, and had lodged grounds of appeal which substantially overlapped with the grounds advanced by the Graingers, counsel for the realtor advised the court that all issues between the realtor and the Graingers had been resolved, and the realtor simply adopted the grounds of appeal and submissions of the Graingers in relation to the claim by the Williamses.  During the hearing of the appeal, counsel for the Williamses advised the court that a cross‑appeal by the Williamses relating to the refusal of the trial judge to grant them indemnity for their liability to the bank was abandoned.  This meant that the only issues remaining alive at the conclusion of the hearing of the appeal were the issues between the Graingers (and the realtor) and the Williamses in respect of the misleading and deceptive conduct alleged, and the relief granted by the trial judge in respect of the misleading and deceptive conduct which he found.

Overview of the decision under appeal

1. It will be necessary in due course to consider in detail the reasons given by the trial judge that bear upon each ground of appeal.  However, in order to place those grounds in their context, it is appropriate to commence with a general overview of the decision of the trial judge.  The following narrative is taken from his findings.

2. In 1979, Gale and Ruth Williams acquired a property known as Lake Magenta which is situated about 60 km to the south‑east of Newdegate, and approximately 40 km from Kensey Park [16] and [30]. The property was used for the grazing of sheep and the production of grain. Their sons, Greg and Mark, assisted in the operation of the property, including its clearing. Although Mark Williams had moved away from the area, by 1995 he had returned to the farm to live with his parents. In early 1998, the Williamses concluded that expansion of their farming operations would enhance their viability [20].

3. By 1971 the Graingers had acquired Kensey Park. It comprises Kent Locations 1658 and 1659. Each location is the subject of a separate title. Location 1659 is slightly larger than Location 1658 [21].

4. In 1988, the Graingers gave notice to the Commissioner of Soil Conservation of their intention to clear about 400 ha of Location 1658 [137]. They received a reply from the commissioner advising that their 'application to clear land … is approved on the understanding that the clearing is done in accordance with' the notice of intention and the plan attached to that notice (exhibit 71). This letter was variously referred to during the trial as 'the approval' or 'the permit'.

5. The Graingers then proceeded to clear the relevant land by felling trees and shrubs using a chain strung between two tractors, and then burning the wood and foliage.  Only a small portion (approximately 47 ha (ts 1878)) of the cleared land was cropped after clearing, and then only for a limited period.  The cleared land was mostly used for grazing purposes, with the result that there was regrowth of native vegetation.

6. In 1992, Mr Grainger commenced work as a real estate agent, after which the farming operation at Kensey Park was conducted by his son, Peter [22]. In the latter part of 1997, the Graingers decided to sell Kensey Park. Kensey Park was advertised towards the end of 1997 and in the first half of 1998 [24] - [29]. The Williamses took an interest in the acquisition of the property. The property was inspected by members of the Williams family on two occasions, and discussions took place between the parties [73].

7. The Williamses allege that during those discussions, representations were made by Mr Grainger on behalf of the Graingers to the effect that the land which had been cleared in 1988 could again be cleared of the regrowth (the clearing representation) [125] and that the arable area of both Locations 1658 and 1659 together was at least 5,442 acres (the arable area representation) [202].  The precise extent of the representations made during the course of those discussions will be considered in more detail in the context of grounds 1 and 2. 

8. In the result, three agreements were entered into.  Two of those agreements were leases in respect of Locations 1658 and 1659 respectively, and the third was a contract for the sale of Location 1658.

The lease of Location 1659

1. The lease of Location 1659 was for a term of 21 months, commencing on 1 June 1998 and expiring on 28 February 2000 [81]. The parties to the lease were the Graingers, as lessors, and Mr Gale Williams and Ms Ruth Williams 'for and on behalf of the Brown Trust', as lessees [80]. There was a special condition in the lease in the following terms:

   b)Should the purchase of Kent location 1658 not be settled by the 18th December 1998 lease of Kent location 1659 will terminate on that date.  The Lessee to have the right of access to harvest any crop sown by them for the 1998/1999 Season.  Any Crop grown by the Lessee to remain their property.  [81] 

   The lease also contained an option for the lessees to acquire the land at a price of $680,000 [82].

The lease of Location 1658

1. The lease of Location 1658 was for a term of six months, commencing on 18 June 1998 and expiring on 18 December 1998. However, a special condition to the lease provided that the property was to be 'destocked' by 1 June 1998 and that the lessees were entitled to vacant possession from that date [83]. The parties to the lease of Location 1658 were the same as the parties to the lease of Location 1659.

The contract of sale

1. The contract for the sale of Location 1658 is between the Graingers, as vendors, and Mr Mark Williams as trustee for the Mallee Trust, as purchaser (exhibit 29).  The contract was subject to the provision of finance approval by 18 July 1998, although there was a document signed by Mr Gale Williams and Mr Grainger, which purported to extend the latest date for finance approval to 17 August 1998 (exhibit 30).  Nothing turns on the effect of that document.  The contract specified that settlement was to take place on 18 July 1998.  The grant of a lease over Location 1659 together with an option for the purchase of Location 1659, in the terms of the lease and option actually granted, is a condition of the contract of sale of Location 1658.

2. Following execution of these documents, the Williamses took possession of Kensey Park and crops were planted.  Inquiries were made of the Department of Agriculture on  behalf of the Williamses in mid‑August 1998.  As a result of these inquiries, solicitors acting on behalf of Mr Mark Williams sent a document entitled 'Notice of Rescission' to the Graingers, purporting to rescind the contract of sale of Location 1658, on the basis of misrepresentations relating to the ability to lawfully clear part of that property [110] ‑ [112].  There was no purported termination of the leases [112], in fact the Notice of Rescission expressly purported not to terminate the leases.

3. Each lease terminated on 18 December 1998 - in the case of Location 1658 by reason of the expiry of the entire term of the lease; and in the case of Location 1659, by reason of the operation of the condition specifying that the lease would terminate on 18 December 1998 if the purchase of Location 1658 had not been settled by that date.

4. However, the Williamses refused to deliver up possession of the property on or after 18 December 1998.  Consequently, the Graingers commenced the District Court proceedings to which I have referred.  Summary judgment was granted in their favour by a deputy registrar of the District Court.  An appeal to a judge of the District Court was dismissed (Grainger v Williams [2000] WADC 296). An appeal by the Williamses to the Full Court of this court against that decision was dismissed for want of prosecution (Williams v Grainger [2002] WASCA 87). The Williamses remained in possession of Kensey Park until 29 February 2000 [116]. The Graingers received cheques for amounts equivalent to the monthly rentals for both locations during that period. As a result of orders restricting the use to which the Williamses could put the property, crops were not planted during the 1999 season. The property appears to have been used by the Williamses for grazing purposes following the harvest of the 1998 crop.

5. The trial judge found that representations made by the Graingers in respect of the Williams' ability to clear part of Location 1658, and as to the total arable area of land on Locations 1658 and 1659 were misleading and deceptive [170], [223]. He further found that the Williamses relied on those representations, in the sense that each was a material cause of their entry into the transactions to which I have referred [176], [178], [236]. He awarded damages to the Williamses which he assessed as the total losses incurred in the farming of both Kensey Park and Lake Magenta between June 1998 and February 2000 [273]. He further ordered that the Williamses were entitled to indemnity from the Graingers in respect of the costs incurred in unsuccessfully defending the proceedings in the District Court to which I have referred, and also in respect of any damages awarded against them in those proceedings by reason of their trespass on Kensey Park between 18 December 1998 and 29 February 2000.

Ground 1 - clearing representation

1. This ground challenges the finding of misleading and deceptive conduct made in respect of the capacity to further clear approximately 400 ha (or about 1,000 acres) of Location 1658.  During the hearing of the appeal, there was contention as to precisely what had been found by the trial judge in this regard.  It is appropriate to consider the trial judges' reasons in the context of the Williams' pleaded case.

2. On behalf of the Williamses it was pleaded that prior to execution of the leases and the contract of sale, Mr Grainger represented to Mr Gale Williams that:

   [A] purchaser of Kent Location 1658 could clear certain 'unfelled' land forming part of that property and comprising 400 hectares.

   Particulars of the representation are provided.  They identify the publication of an article in an edition of Farm Weekly (described in the proceedings as 'the advertorial') [126], a conversation in which (in response to a query by Mr Williams as to whether the land in question could be cleared for cropping) Mr Grainger stated that he had a letter granting approval to clear the land [127], and a further conversation in which (in response to a query by Mr Williams as to whether the letter in question had been found) Mr Grainger said that the letter had not been found but that it was 'okay to go ahead and clear the land' [128].

The reasons of the trial judge

1. The trial judge found that the advertorial was published in the edition of Farm Weekly dated 30 April 1998, which also contained an advertisement for Location 1658 (exhibits 22 and 23). The advertorial appeared as an article providing a narrative account of the property, and a photograph of part of the property. The advertorial described the property and its farming history, and concluded: 'This property is not fully cleared but represents a great expansion opportunity at $364,000' [29].

2. The trial judge refers to the evidence of the parties as to the oral representations made on this subject at a number of points in his reasons (see for example [36] – [37], [40] – [43]).  Conflicting evidence was given by Mr Grainger and Mr Gale Williams.  The findings made by the trial judge in the resolution of that conflict are perhaps best gleaned from the following portions of his reasons:

   48Mr Grainger's evidence was that Mr Williams did not then, or at any other time prior to signing the leases and the contract of sale, signings which I reach shortly, ask to see a copy of the approval to clear (Exhibit 108, witness statement, par 60).  However, in cross‑examination for WDRE, Mr Grainger testified, at variance with his witness statement (Exhibit 108, par 61), that he had in fact earlier asked his son Peter to endeavour to find the 'letter' of approval to clear in case Mr Williams did ask for it (TS 1940).  Gale Williams' evidence was that he had not pursued the matter of the written permission at the first inspection, as 'until Mark had had a look at it and could guarantee to me he could actually blade plough it there was really no point in me going any further at that particular point on that particular point' (TS 630, cross-examination for WDRE).  The fact that Mr Grainger recognised the potential importance of the permit or letter (which it appears to me Mr Grainger and Mr Williams treated in their discussions as the same thing), given Mr Williams' interest in the Graingers' permission to clear, and Mr Williams' testimony that he had not pursued the matter of the permit or letter at the first inspection, confirms me in the view I have previously expressed, that the existence of a permit or letter of approval was probably addressed in the first inspection.  I have also concluded that it is more likely than not that Mr Williams had asked to see a copy of the permit or letter, but had not in any way pressed the point, at that first inspection.  Below I will set out my finding and the reasons for it that a copy of the letter was also requested at meetings at Kensey Park on and 15 and 18 May 1998.

   49Mr Williams' evidence was also to the effect at no stage in the discussions between them did the Graingers make any qualifications of the written approval of the sort to which Mr Grainger's evidence referred.  It seems to me that it is unlikely there were any such express qualifications made, either then or at a later stage in the discussions between the parties.  The evidence of both Mr Williams and Mr Grainger was that the matter of clearing the 1000 acres was a matter of some significance to Mr Williams, as the family's ability to perform at least the blade ploughing of the land with the equipment acquired for his son's then dormant clearing business would also indicate.  Further, there is evidence, to which I will return, that Mr Williams did not obtain a copy of the written approval or in fact make inquiries of the relevant government department with respect to clearance before the conclusion of the lease or sale transactions.  I would have expected that he would have so proceeded if such qualifications had been expressly made that directed him to make his own inquiries.

   50Further, on the evidence I have described of the advertising of Kensey Park and its components and that advertising's background, as well as Peter Grainger's departure from Kensey Park in March 1998, it is evident to me the Graingers had reasons to achieve their purposes as soon as possible, and were acting on them.  The availability for those purposes of 1000 acres, not then sown to pasture or crop, and representing over one-quarter of the total area of Kent Location 1658, would have been important to a prospective purchaser (cross-examination of Mr Grainger for the Williams family, TS 1890).  These indicate to me that Mr Grainger might not, particularly in early discussions of the property but also afterwards, have spelt out the qualifications, as to the transferability of the permit, the change in the law, and checking on the utility of the permit with the relevant government department, which at least later it was obvious to him might be appropriate, even as a real estate licence holder concerned not to make 'untoward statements' that might have threatened his licence (the reason he gave for providing the qualifications, in cross-examination for the Williams family: TS 1881 - 1882).  This was given that he was dealing with some one with farming experience in the area, as Mr Grainger knew Mr Williams to be, based on a prior occasion in 1993 on which he had met Mr Williams (Exhibit 123, supplementary witness statement of Geoffrey Grainger, par 19).  It also seems to me this was the way in which, on Mr Grainger's evidence about the 'expansion opportunity' represented by the property, Mr Williams presented himself to Mr Grainger in their discussions in April and May 1998.

   …

   99The evidence of Gale Williams, confirmed by his wife Ruth, was that at the earlier meeting he asked for a copy of the clearance letter previously mentioned, and that Geoffrey Grainger said it was 'buried in his records somewhere' (Exhibit 21, witness statement of Gale Williams, par 49; Exhibit 38, witness statement of Ruth Williams, par 33; and as to the earlier meeting, the cross‑examination of Gale Williams for WDRE, TS 630, while at the second meeting he had asked if the letter had been found, and Mr Grainger had said words to the effect it had not, but that Mr Williams should just go ahead and clear the land (Exhibit 21, par 54; Exhibit 38, par 40).  I have some difficulty accepting that Mrs Williams in fact heard any such exchanges.  She admits that at both meetings she was sitting and talking with Mrs Grainger, apart from Mr Williams and Mr Grainger if not far from them, and not involved in the business they were discussing (Exhibit 38, par 30 ‑ 32; TS 930, cross-examination for WDRE)

   100However, that there was an exchange, at one of the meetings at least, that was something like the second of these at least, and that occurred between the two men, seems to me to be clear from the evidence of Mr Grainger.  That evidence was that he had said words, at what he said was the one meeting between the couples at Kensey Park, to a similar effect to those he used during one of the inspections, namely that, so far as he was concerned, Mr Williams could go ahead and clear, but he had to make his own inquiries (TS 1980 - 1981, cross-examination for WDRE).  The initial evidence of Mr Grainger is also that he was not asked for a copy of the letter until after the leases and the contract of sale had been executed (Exhibit 108, witness statement, par 60).  However, his later evidence was that he had been asked for the document at the signing of the contract of sale, on 20 May 1998 (TS 1940 - 1941, cross-examination for WDRE).  His initial evidence was also that it was only after the request he had asked his son Peter to look for the document (Exhibit 108, par 61); however, his later evidence was that he had asked Peter to look for it before the request, as he acknowledged Mr Williams' interest in the Graingers' permission to clear (TS 1940, cross-examination for WDRE), on the basis 'if he was to purchase the place he would need full documentation as to what we had done with the place' (TS 1941).

   101With the aid of this evidence, I have concluded that it is more likely than not that Mr Williams, renewing a request made but not pressed at the first inspection, at the earlier of the meetings, on 15 May 1998, had asked for the letter of clearance.  It is more likely than not that then Geoffrey Grainger replied with words to the effect that it was buried in his papers somewhere, but that so far as he was concerned Mr Williams could go ahead and clear.  I have concluded that the request was repeated at the later meeting on 18 May when Mr Grainger, after having had his son Peter look for the document without success, replied it had not been found, but repeated that so far as he was concerned, Mr Williams could go ahead and clear.  It seems to me that this exchange or something like it occurred at the 18 May meeting rather than the 20 May one, as it was at the former that the document for lease of Kent Location 1658, on which the land to be cleared was located, was executed, and it was at that meeting that it had become clear a contract of sale, on particular terms that were complete except for the name of the purchaser, would be signed shortly.

   102I have also concluded that it is more likely than not that Mr Grainger did not, either at the 15 May or 20 May meeting, or at any other point before the execution of the contract of sale of Kent Location 1658, provide any one or more of the qualifications of his statement that, so far as he was concerned, Mr Williams could go ahead and clear, qualifications that are referred to in Mr Grainger's evidence.  Those qualifications were, as I have said, that clearance might not be transferable, that the law had changed, and that Mr Williams ought to make his own inquiries, or words to a similar effect.  It seems to me that Mr Grainger might well have concluded that such qualifications were unnecessary, for the reasons I gave earlier when considering whether the qualifications were given when the matter of clearance was first addressed, at the first inspection.  It also seems to me to be unlikely that Mr Williams would not have pursued the matter further before completion of the transaction had these qualifications or any of them been given, repeatedly as Mr Grainger's evidence indicated. 

1. The trial judge separately assessed the question of whether the advertorial was capable of supporting the representation pleaded. He concluded that it was not [132]. The separate and discrete assessment of each portion of the conduct which was, as a whole, said to have given rise to the pleaded representation was an error - the conduct had to be considered as a whole (Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 [39]).

2. The trial judge then addressed the question of whether or not the representation with respect to the letter or permit which had been obtained in September 1988 carried with it an implied representation that the letter or permit was transferrable to the Williamses.  The trial judge dealt with that issue in the following terms:

   As to the second representation, as to the Graingers having a letter of approval to clear, or a permit to do so, as I will shortly explain, the Graingers had indeed, in September 1988, been issued with a letter from the relevant government department saying that they had approval to clear in accordance with the notification of their intention to clear that the Graingers had lodged not long beforehand.  It was put to me for the Williams that the Graingers' representation that they had such a letter or permit carried with it the implication that the letter or permit was transferable.  However, this is not an implication I would readily draw.  There is evidence from Mr Grainger from which, in the face of my findings as to Mr Williams' interest in the permit or letter, the inference might be drawn Mr Grainger was of the view Mr Williams might have considered the permit or letter was transferable (Exhibit 108, witness statement, par 60.2).  However, it was established that any such view was contrary to that of the government department which issued the letter in this case, the Department of Agriculture.  In 1997, that view as that any ability to clear under the process which I will shortly explain was not transferable (Exhibit 79, Department of Agriculture booklet, 'The Protection of Remnant Vegetation on Private Land in the Agricultural Region of Western Australia', September 1997, p 2, and other evidence to which I will return below).  Nor is the evidence of Mr Williams to the effect that he did in fact infer from Mr Grainger's references to a permit or letter that the permit or letter was transferable.  Had he done so, I would have expected him to have gone further in seeking to ensure a transfer was secured.  Instead, it appears to me, from my findings as to his exchange at the second meeting with Mr Grainger involving both couples, that he was content to rely on Mr Grainger's assurances that from his standpoint the Williams could go ahead and clear.  [134] 

3. With respect, in this paragraph the trial judge appears to confuse the question of the meaning reasonably conveyed by the conduct, with such things as Mr Grainger's view of the effect which the conduct had upon Mr Williams, the view of the Department of Agriculture on transferability, and Mr Williams' evidence of the effect which the conduct had upon him.  The question of whether or not conduct is misleading and deceptive is a question to be addressed objectively (Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40‑940, 50, 251; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452, 467 and Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 199). It is not to be confused with the question of reliance, which is, in the first instance, to be addressed from the subjective perspective of the party or persons said to have been affected by the misleading and deceptive conduct, at least until the point where it might be argued that their reliance was so unreasonable as to break the chain of causation (Seddon NC and Ellinghaus MP, Cheshire and Fifoots Law of Contract (9^th ed, 2008) 11.32 and Attorney‑General (NSW) v Peters [1924] HCA 31; (1924) 34 CLR 146).

4. The trial judge went on:

   There is, however, a related issue.  It is whether or not, given that the Williams had been told by the Graingers they had successfully gone through the process of securing the relevant right to clear, and had begun the clearance itself, the Williams reasonably inferred a representation that they could complete the clearance without having to go through the process of securing the relevant right to clear again.  If it were necessary for me to do so, I would conclude, from the exchanges between Mr Williams and Mr Grainger as I have found them, and the actions of Mr Williams subsequently, that he did so infer.  However, that is not necessary as I have found that Mr Grainger in fact indicated that from his standpoint Mr Williams could go ahead and clear.  This in my view covers much the same ground, on the basis it was a representation in the context of what had gone before that, either there was no need to go through the process of securing the relevant right again, or securing it would be straightforward.  [135] 

5. This is, with respect, a difficult paragraph to construe.  It appears to reason towards the effect of Mr Grainger's conduct by way of the inferences actually drawn by Mr Williams.  Further, the last sentence of the paragraph is ambivalent as to the precise content or effect of the conduct which the trial judge had found.  However, it is significant that the trial judge qualifies his assessment of the inference drawn by Mr Williams with the requirement that it be reasonably drawn.  That qualification, and the reference to Mr Grainger's representation to the effect that 'from his standpoint Mr Williams could go ahead and clear', suggest to me that the trial judge was in fact applying an objective test to his assessment of the effect of the conduct which he had found.

6. The process of reasoning undertaken by the trial judge was, with respect, an unnecessary distraction from the pleaded issue which he had to resolve.  The Williams' case was clearly and unequivocally pleaded.  It was to the effect that Mr Grainger had represented that the relevant land could be cleared.  The trial judge found an express representation was made in those terms, qualified only by Mr Grainger's observation that the representation was made 'from his standpoint' or 'so far as he was concerned'.  As the trial judge found, this was not a significant or meaningful qualification. 

7. The trial judge went on to assess the question of whether or not the conduct was misleading or deceptive by reference to evidence given by representatives of the Department of Agriculture as to the practices of that department, and their likely attitude towards a hypothetical notification.  Following that analysis he concluded:

   [O]n the 'objective' facts of this case, it seems to me that the Commissioner, properly instructed, would have had a basis for the conclusion, expressed by both Mr Watson and Mrs Holyoake, that the clearing by blade ploughing of the land would be notifiable.  [158]

   The 'Commissioner' is the Commissioner of Soil and Land Conservation.  Mr Watson and Ms Holyoake were employees of the department who gave evidence.

8. With respect, given the conduct which had been found, the question which had to be resolved was whether the representation to the effect that the relevant land could be cleared was misleading and deceptive.  That question was to be resolved by applying the facts found by the trial judge to the law governing the clearing of land.  It was not to be resolved by reference to the question of whether a particular view would have been open to the Commissioner, or, in the context of the representation found, the evidence of departmental officers.  That is because of the unequivocal nature of the representation found to have been made.  That representation would be properly characterised as misleading and deceptive if, as a matter of law applied to the facts of the case, there was an obligation to notify the Commissioner of an intention to clear and the Commissioner had a discretionary power to prevent lawful clearing.  If that was the position, it would be misleading to say, without meaningful qualification, that the land could be cleared.

Analysis of issues to be resolved - clearing representation

1. In my respectful opinion, the proper analysis of the issues which had to be resolved in order to determine whether the conduct found by the trial judge was misleading and deceptive is as follows.  At all material times, the relevant regulation (Soil and Land Conservation Regulations 1992 (WA) and Soil and Land Conservation Regulations 1984 (WA)) promulgated under the Soil and Conservation Act 1945 (WA) required that:

   The owner or occupier of any land in the State which it is proposed to clear shall, where that clearing will result in a change in the use of that land, at least 90 days before the commencement of the clearing, give notice to the Commissioner of his intention in that behalf.

   After receipt of such a notice, the Commissioner has 90 days within which to notify the party lodging the notice of any objection to the intended clearance. In the absence of objection the clearing could proceed. In respect of notifications given after 29 November 1991, a party giving notice to the Commissioner, but who had failed to commence clearing within the period of two years from the date of notice, was required, 90 days prior to clearing, to give another notice (reg 4 and reg 5 of Soil and Land Conservation Regulations 1992).  In respect of notices given prior to 29 November 1991, there was no such temporal limitation. 

2. For the purposes of the relevant regulation, the term 'clear', has, at all material times, been defined to mean:

   … to cut down, destroy or otherwise damage trees, shrubs, grass or other plants on that land but does not include the cutting of trees for firewood, posts or timber.

3. The Graingers gave notice of intention to clear the relevant land in 1988.  The Commissioner did not object to the clearing work proposed.  That clearing work was undertaken.  The land was chained and burnt.  Plainly, as a consequence of that activity, the land was 'cleared' within the meaning of the regulations.  Accordingly, the clearing work the subject of the notice given in 1988 was carried out, without objection.  Put another way, that which had to be notified under the relevant regulations was a proposed activity – the activity of clearing in order to change land use.  If no objection was taken, the activity could proceed lawfully, which in this case it did.  This process does not result in a particular portion of land being immutably and forever able to be cleared and recleared.  If, as a result of regrowth, further clearing work is proposed, that proposed activity must also be notified, if it results in a change of use.  Therefore, there is no question of transferability of any 'permit'. 

4. Further, the fact that the clearing work of the Graingers did not extend to blade ploughing of the area is, with respect, not to the point.  The issue of blade ploughing the land was mentioned in the context of this issue numerous times during both the trial and appeal (eg ts 155 of the appeal transcript).  As emphasised above, the question really posed by the representation was whether clearing land, not necessarily by blade ploughing, would have been a change in use. 

5. Subsequent to the chaining and burning of the relevant land, with the exception of a relatively small area, the land had not been cropped (ts 1878).  Rather, the land had been used for the grazing of sheep (ts 1878).  As a result of the limited use to which the land was put, since the clearing work in 1998, regrowth had occurred.  At points this regrowth was up to eight feet high, with a good recovery of the understorey (ts 1877 ‑ 1878).  Removal of that vegetation would, in 1998, plainly have constituted 'clearing' within the meaning of the Soil and Land Conservation Regulations 1992.  Accordingly, notice of that clearing was required to be given if it would 'result in a change in the use of that land'.

6. In the context of the representations found to have been made by Mr Grainger, it was clear that those representations were directed to the question of clearing the land for the purpose of undertaking cropping activities.  The relevant land was already being used for grazing although, as seen above, a small portion had been cropped in the past.  Accordingly, in this context, the representation was directed at clearing for the purpose of changing the use of that part of the land which had never been cropped from grazing to cropping, perhaps combined with grazing of the stubble after harvest of the crop.  In the context of the conduct said to have been misleading and deceptive, that conduct extended to and embraced a representation to the effect that the Williamses could clear the relevant land, for the purpose of changing its use from grazing to cropping, perhaps combined with grazing.

7. That representation was misleading and deceptive.  Under the regulations to which I have referred, clearing of the relevant land could only occur after notice had been given to the Commissioner, and only then if no notice of objection to the clearing work was received.  That circumstance is materially different, from the perspective of somebody who might wish to clear the land, from an unqualified representation to the effect that the relevant land could be cleared.  Accordingly, although I would apply a different process of reasoning to that engaged by the trial judge, based on the findings of fact which he made, he was correct to conclude that the conduct of the Graingers relating to the clearing of land on Location 1658 was misleading and deceptive.

Challenges to findings of fact

1. Included within the particulars of ground 1 are challenges to findings of fact made by the trial judge.  The first such challenge relates to the conclusion drawn from Mr Grainger's statement that clearing of the land was okay 'so far as he was concerned'.  The Graingers assert that the trial judge should have concluded that such a representation was nothing more than a statement of Mr Grainger's subjective belief and that it was not found that Mr Grainger did not hold that belief.  However, the trial judge was plainly correct to conclude, in the context of the continuing course of conduct which he found in relation to the clearing of the land, that the qualification to the effect that the representation was made from Mr Grainger's perspective was of no significance.

2. The second factual challenge is based on the trial judge's failure to specifically refer to the evidence of Mr and Mrs Grainger in relation to other qualifications which Mr Grainger asserts that he imposed upon the representations made.  However, in the passage which I have set out above at [23], the trial judge refers to the evidence to the effect that Mrs Grainger and Mrs Williams were undertaking discussions separately and apart from the two men.  Further, the trial judge has carefully evaluated the conflicting testimony of the two men in the passages which I have set out above.  No substantive challenge has been directed towards that process of reasoning, which should therefore stand.

3. For these reasons, ground 1 should be dismissed.

Ground 2 - arable area representation

1. The trial judge found that the clearing representation was a material cause of the Williams' entry into the transactions relating to Kensey Park [171] ‑ [181].  There is no challenge to that finding.  It follows that my conclusion that ground 1 should be dismissed is sufficient to sustain the conclusion of the trial judge to the effect that misleading and deceptive conduct on the part of the Graingers caused the Williamses to enter into the transactions relating to Kensey Park, irrespective of the outcome of ground 2 (Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [14]). However, in case others take a different view of ground 1, it is appropriate for me to deal with ground 2 in full.

2. As with the clearing representation, during argument on the appeal, there was contention as to precisely what had been found by the trial judge in relation to the arable area representation.  It is therefore appropriate to place his reasons in the context of the Williams' pleaded case on this subject.  That case was simply that there had been a representation to the effect that the total arable area of Kent Locations 1658 and 1659 was at least 5,442 acres, whereas in fact the total arable area was only 4,596 acres.  The representation is alleged to have been made by the provision of a hand sketched map of both properties from Mr Grainger to Mr Gale Williams.

3. The findings of the trial judge in respect of the hand sketched map, which he and the witnesses described as a 'mud map', were as follows:

   58The evidence of both Mr Williams and Mr Grainger was that at the second inspection Mr Grainger gave him a 'mud map' for Kensey Park, comprising both Kent Location 1658 and 1659.  This was part of a hand drawn document.  Two copies of the document were put into evidence.  One copy was the document as created by the Graingers (Exhibit 25).  The other, which had annotations made on it at the meeting by Mr Grainger, as well as certain other markings at least some of which were made by Mr Williams, was a copy of the one handed to Mr Williams at the second inspection (Exhibit 26).

   59The originally created form of the mud map is a document with three elements.  The first element is the map itself, which is a rendering of Kensey Park made up for the most part of areas designated with circled numbers, the highest of which is 19, numbers which it was accepted before me correspond to paddock numbers given by the preparer of the document to the areas.  Near each of the circled paddock numbers appears a number (or in the case of the paddock numbered 12, two numbers).  There is also one area bounded in such a way as to appear to be a paddock without a circled number, but including a number 75.  There are also three contiguous areas at the lowest point on the map with numbers but no circled paddock numbers, although there is a designation '2B' in one of them.  At the right hand border of two of the areas there is an area without a circled paddock number and without a number like the other areas.  At the top left of the map, there is a large cross hatched area divided by a 'Track', with an area on the left side of that divider carrying the legend '600 Hec' and 'chained and burnt'.

   60The second element of the document is a column to the right of the map.  The column's numbers correspond with the numbers that appear near the circled paddock numbers (or in the case of paddock 12, a number which corresponds with the sum of its two numbers), with the exception of one number, '120', which does not correspond to any number on the map, but may have been a rounding down of, or transcription error for, a '121' which does not otherwise appear in the column.  In addition, the column includes the number 75 in the area for which there is no circled paddock number, and the three numbers appearing in the contiguous marked areas at the lowest point of the map, for which again there is no circled paddock number.  At the foot of the column there is a number, which is the sum of the numbers above it, '2177 HA', and immediately below that '5442 ac'.  This latter number, it was accepted before me, was the conversion of the former number to acres using a multiplier of 2.5, although it was also accepted before me that the more accurate multiplier for hectares to acres is 2.47, which meant the acreage figure was inflated by 1.2 per cent.  I note that the acreage compares with Geoffrey Grainger's estimation to Gale Williams, at the first inspection, of the total acres that could be cropped or pastured of 5,350 acres.  The third element of the map is an annotation appearing immediately below the '5442 ac'.  The annotation reads 'another 200 ac grazable approx'.

   61The evidence of both Mr Williams and Mr Grainger was that they understood the numbers in the column shown in the second element of the map were "combine acres", which were acres based on the area returned by the clock on the machinery used to distribute seed (Gale Williams: Exhibit 21, witness statement, par 40; Geoffrey Grainger: Exhibit 108, witness statement, par 68).  The figures shown on the map as returned by the clock were, on the evidence of the conversion of their total into acres, in fact hectares and would have been so understood.  The distribution of seed would have been by the Graingers in this instance (Mr Williams, cross-examination for the WDRE, TS 639; Mr Grainger, cross-examination for the Williams family, TS 1824).

   62The character of the numbers in the second element as combine acres is confirmed by the form of the document as delivered to Mr Williams and marked up by Mr Grainger at the second inspection (Exhibit 26).  It was agreed by the parties that Mr Grainger marked up the document with the word 'Combine' alongside '5442 ac', as well as putting a further three figures below that number, of '5442', '1900' and '3542'.  That last figure is the difference between the first two (TS 543, examination-in-chief of Mr Williams).  An inspection of the mud map figures in the column and the locations on the map from which they came would seem to indicate that the figure of '3542' was Mr Grainger's estimation of the minimum portion of the combine total of 5,442 acres represented by Kent Location 1659.  I also note that the second two figures are close to those, to which I have previously referred, and to which I will return, which Geoffrey Grainger testified he indicated to Mr Williams, at the first inspection, were those for the areas of those two locations he believed could be cropped or pastured ('about 1850 acres for [Kent Location] 1658 and about 3500 acres for 1659': Exhibit 108, par 65, opening words, and par 65.1). 

1. The trial judge further found that during discussions, Mr Grainger made clear to Mr Gale Williams that 80 ha of the area of 5,442 acres could not be easily cropped, with the result that the effect of the 'mud map' was qualified by the deduction of 80 ha (approximately 200 acres) from the represented arable area, producing a net arable area of 5,242 acres [64] ‑ [66].

2. In the portion of his reasons dealing with the question of whether the arable area representation was misleading and deceptive, the trial judge accurately summarised the pleaded case [202]. He went on to refer to a submission to the effect that the word 'arable' was equivalent to the word 'combine' which was the word used on the 'mud map' [203]. The trial judge referred to the definition of the word 'arable' in the Macquarie Dictionary, 3^rd ed as:

   … capable, without much modification, of producing crops by means of tillage, or arable land that can be ploughed.  [203]

   The trial judge went on:

   Whether or not arable and combine acres are equivalents, it is clear on the pleadings what representation is sought to be relied upon.  [204]

   This observation was plainly correct.  The representation relied upon was a representation as to the arable acres on the property.  It is therefore difficult to see how the trial judge went on to conclude:

   It does not seem to me that, given the purpose for which I have found the mud map was known to Mr Grainger to have been sought, it would be appropriate to include those areas or at least all of those areas which were, or might have been, arable over which Mr Grainger indicated his family's combine would likely not have passed.  [207] 

3. Thereafter, the trial judge directed his attention to the evidence as to the area of land over which a combine had recently passed, rather than the area of land which was arable. That is evident in his acceptance of (with some adjustment, see [231]), and reliance upon, the evidence given by Mr Hams, who purported to express an opinion as to the area of Kensey Park which was arable exclusively by reference to his estimate of the area which had been recently cropped [215]. As the trial judge found:

   … Mr Hams was concerned with land that had not been ploughed for cropping or cropped within the time period referred to, rather than land that could not be ploughed or cropped.  [216]

   The trial judge also relied upon the evidence given in cross‑examination by Mr Grainger, as to the areas that had been passed over by the combine [224].

4. Any uncertainty as to the approach taken by the trial judge in this regard is resolved by reasons given by him in the proceedings commenced by the Graingers against the Williamses in the District Court and which had been remitted to the Supreme Court (Grainger v Williams [2005] WASC 286). In those reasons, he summarised the approach which he had taken to these issues in the judgment under appeal in the following terms:

   In my judgment in CIV 2156 of 2000, I make findings as to the area of Kensey Park that represents its 'combine acres'. Combine acres represent the area over which a combine had been run in recent times for the purpose of sowing the acres for crops. During the discussions that led up to the contract of sale of and leases over the farm, the Graingers had provided to the Williams family a 'mud map' showing the combine hectares for each of the paddocks in Kensey Park. In my judgment in CIV 2156 of 2000, I outline the basis for and extent of my finding that the total derived from that document was an overstatement of the combine acres of Kensey Park. For present purposes, and for the reasons appearing in that judgment, the combine acreage I found would be less than the acres cleared, over which a combine might be run [32].

5. It follows that in assessing the question of whether the arable area representation was misleading and deceptive, the trial judge erred by addressing a different representation to that which was pleaded. The pleaded representation relied upon was clear and unequivocal, and concerned the arable area of land on the two properties. The trial judge has addressed the question of whether or not that representation was misleading and deceptive by reference to evidence given in respect of the area over which a combine had recently passed. They are plainly two different things. Land can be properly characterised as 'arable' without having been recently passed over by a combine, as Mr Hams conceded in his evidence [215].

6. There are other reasons why the conclusion of the trial judge in respect of the arable area representation must be set aside.  The evidence upon which the trial judge relied for his conclusion that the arable area representation was misleading and deceptive came from four sources - Mr Grainger, Mr Hams, Mr Tasker and Mr Rees.  As I have mentioned, the evidence of Mr Grainger upon which the trial judge relied was cross‑examination directed to the question of the area of land over which a combine had recently passed.  That evidence was not directly germane to the pleaded representation and could not, of itself, lead to the conclusion that the pleaded representation was misleading and deceptive.

7. Mr Hams is a surveyor.  A report which he had produced and which purported to describe the total 'arable' area of Kensey Park was tendered in evidence.  Counsel for the Graingers objected to the evidence presented in the report on the basis that Mr Hams was not qualified to express that view (ts 1323).  The trial judge overruled the objection on the ground that the limited experience of Mr Hams went to the weight, rather than to the admissibility of his evidence.

8. The evidence given by Mr Hams was to the effect that his agricultural experience was essentially limited to his childhood on a farm near Katanning (ts 1322). He apparently lived on that farm until he was 17 years old. He relied upon that childhood experience to interpret aerial photographs of Kensey Park in order to express a view as to the area of that property which was arable, and that which was not (although in the result, it was clear from his evidence that in fact all he looked for on the aerial photographs was evidence of recent cropping). Mr Hams never visited the property [214].

9. The principles relating to the admission of expert opinion evidence were reviewed and analysed by Heydon JA in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705. The conclusions at which he arrived are conveniently summarised in the following passage, which is often cited [85]:

   In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of 'specialised knowledge'; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be 'wholly or substantially based on the witness's expert knowledge'; so far as the opinion is based on facts 'observed' by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on 'assumed' or 'accepted' facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v The Queen (at 428 [41]), on 'a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise'.

10. There has been controversy as to whether the requirements enunciated in this passage are conditions of admissibility (see Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; (2002) 55 IPR 354 [9] (Branson J)). However, for present purposes, the passage from Makita illustrates the many deficiencies in the evidence adduced from Mr Hams.

11. The representation asserted by the Williamses in their pleading to be misleading and deceptive was a representation as to the arable area of Kensey Park.  There are two steps required in the process of fact finding to demonstrate the falsity of the representation relied upon.  The first is the identification of those portions of Kensey Park which are arable, as compared to those which are not.  The next step is the measurement of the arable areas identified. 

12. There is no doubt that Mr Hams, as a surveyor, was qualified to undertake the second step, that is, measurement of an identified portion of Kensey Park.  However, the first step in the process, the identification of that portion of Kensey Park which was arable, is not an inquiry which falls within the field of surveying, but rather within the field of agriculture or agricultural science.  A childhood spent on a farm falls manifestly short of the training or expertise required in order to admissibly express an opinion in such a field.

13. There is another fundamental problem with the evidence given by Mr Hams.  As I have mentioned, he did not make a site inspection, but relied entirely upon opinions formed from an inspection of aerial photographs.  No evidence was led of any field of study or science which would enable a person to identify and distinguish arable land from non‑arable land purely on the basis of inspection of an aerial photograph.  Despite the terms in which Mr Hams' opinion was expressed, that is, as to the area of arable land on Kensey Park, in fact, he did not attempt to undertake that process.  Rather, as I have mentioned, he used the aerial photographs to attempt to identify those areas of Kensey Park which had recently been cropped.  Again, no evidence was led of any field of study or science in which Mr Hams was qualified which would enable such an assessment to be reliably undertaken from an aerial photograph.

14. Mr Hams was qualified to give evidence of the measurement of the area of Kensey Park which he had identified.  However, he was not qualified to express an opinion as to whether that area was arable or had been recently cropped.  Without that evidence, his evidence as to measurement was irrelevant.  The trial judge should have upheld the objection to the evidence of Mr Hams.

15. Mr Tasker, who is a surveyor, was called to give evidence by the Graingers. His evidence was of the measurement of that portion of Kensey Park which he described as 'cleared' [221]. Mr Tasker defined 'uncleared' land as 'all land that has dense vegetation and areas of apparent water inundation such as salt lakes' and 'cleared' land as all land that was not 'uncleared' [221]. Plainly, this differentiation of areas of Kensey Park did not correspond to the pleaded issue, which concerned the portion of Kensey Park which was arable. Further, Mr Tasker expressly disclaimed any qualifications or experience which would enable him to distinguish areas of arable land from non‑arable land [221]. It follows that his evidence as to the measurement of 'cleared' land was as irrelevant as the evidence given by Mr Hams.

16. The trial judge referred also to evidence from Mr Rees, which he described as relevant to this issue [232]. The trial judge summarised that evidence in the following terms:

    There was also relevant evidence from a witness called for the Graingers, a David Rees, a farm consultant who had prepared farm plans and budgets for the Graingers in relation to Kensey Park and had thereby gained 'an intimate knowledge' of the farm 'over a period of about 15 years' (Exhibit 140, substance of expert evidence, par 8), later explained as 11 years of providing advice to the Graingers and prior experience of the property of an 'informal' kind (cross-examination for WDRE, TS 1929 - 1930).  In cross-examination for WDRE Mr Rees indicated that in his view Kensey Park, prior to the use of it by the Williams, had about 4,000 acres of 'arable' land (TS 1931).  This was for the purposes of the figure of about $200 per acre he put as its sale value then.  He appeared to understand 'arable' land as land that could be cropped, in the sense of cleared or pastured land that could be cropped, including previously cleared land 'with some tree or brush cover' or that 'has been left to allow some tree or brush regrowth but which can be cleared away without the need to obtain permits' (Exhibit 140, par 11).  Using a conversion to hectares based on 2.47 acres to the hectare (see above), this would produce a figure of about 1,619 hectares.  This of course is much lower than Mr Hams' figure for combine acres, or hectares, and at $200 per acre produces a value of $800,000 that is significantly less than the value put on Kensey Park by the contract of sale of Kent Location 1659 and the option for Kent Location 1658 ($680,000 plus $320,000 respectively, as I have indicated, for a total $1,000,000). 

17. With respect, this paragraph significantly overstates the evidence given by Mr Rees.  The portion of evidence referred to by the trial judge (at ts 1931) was concerned with Mr Rees' evidence of the detrimental effect upon the value of the farm caused by excessive weeds in the paddocks on the farm.  His evidence was to the effect that the excessive weeds would reduce the value of the farm by as much as 10%.  He was then asked to provide the figure from which that 10% should be deducted.  His answer was:

    Yes.  So, if you will accept a ballpark figure, at that time land was perhaps worth $200 an acre in that part of the world, give or take, but if it was $200 an acre - and what are we working on, was it about 4000 acres arable?  So $800,000 farm value - - -

    If you can be more specific than that, Mr Rees, you really should be?---Look, I could be more specific but I'd go through my notes and prepare it properly, go back to my files and - - -

    You haven't done that before now, I take it, from what you are saying?---No, no.  I have just prepared a - - -

    Could you tell his Honour then again, as best you can, what the figure 10 per cent means in dollars?---10 per cent means - - -

    You are going through the process and you're saying it was about $200 an acre?---$200 an acre; 4000 acres arable.  That's an $800,000 farm.  10 per cent of the value of the farm would be $80,000, I've said, and the - it could possibly be as much as 10 per cent due to the reduced income potential. 

18. It is clear from the transcript that Mr Rees did not purport to undertake any detailed assessment of that portion of Kensey Park which was arable, nor did he attempt to measure it.  Rather, he seems to have made an assumption, in the witness box, of the arable area of the property for the purposes of producing a hypothetical estimate of value.  That assumption was not admissible evidence of the area of Kensey Park which was, in fact, arable.

19. It follows that even if the trial judge had addressed the correct question, that is, the identification of that portion of Kensey Park which was arable, as compared to that portion of Kensey Park which had been recently cropped, there was no admissible evidence from which he could have made a finding of fact which would support the conclusion that the pleaded representation was misleading and deceptive.  Therefore, ground 2 should be upheld, and the finding of the trial judge to the effect that the arable area representation constituted misleading and deceptive conduct set aside.

20. However, as I have indicated, that conclusion is not, of itself, sufficient to disturb the conclusion of the trial judge to the effect that the Williamses were induced to enter into the transactions relating to Kensey Park by the misleading and deceptive conduct of the Graingers.

Ground 3 - award of damages

1. This ground asserts that the trial judge erred by awarding damages in respect of losses incurred by the Williamses farming both Lake Magenta and Kensey Park when he had found that the misleading and deceptive conduct of the Graingers only induced the Williamses to farm Kensey Park.

2. The approach taken by the trial judge is evident in the following portion of his reasons:

   239Having found that there was reliance on the conduct I have found to be misleading or deceptive within the Fair Trading Act s 10 and the Trade Practices Act s 52 the next stage in the analysis is to examine whether a sufficient link between the forms of reliance and the loss claimed has been established for the purposes of claims under Fair Trading Act s 77 and s 79 and Trade Practices Act s 82 and s 87: Associated Protective Electronics Pty Ltd v Pabflow Pty Ltd (1996) ATPR 410-524, at 42,736, per Parker J, Kennedy and Murray JJ agreeing; Lockhart, (supra) at [10.9].

   240The loss claimed is the expenditures made, less income earned, and liabilities incurred in the farming of Kensey Park together with the Williams family's Lake Magenta property.  No attempt is made to distinguish between expenditures, income or liabilities particular to each property.  The claim is made for the expenditures made and liabilities incurred from the time of entry into the leases (late May 1998) to the time they left Kensey Park (the end of February 2000).  Below I will note the controversy between the parties as to whether or not any such loss has been proved.  For now, I consider whether or not any loss, if proved, would be sufficiently linked to the reliance I have referred to.

   241In the particulars of the Williams filed on 23 December 2002 in response to the request for particulars of the Graingers, the Williams state that Kensey Park and Lake Magenta 'were farmed as a single farming enterprise' and also that "but for the acquisition of the right to farm [Kensey Park] the Williams would not have farmed Lake Magenta at all" (1.1(b) and (c)).

   242The evidence of the financing arrangements entered into with Wesfarmers Dalgety, as well as the evidence of income and expenditures which I reach below, support the first response.  It is true that, while Lake Magenta was owned by Gale and Ruth Williams (witness statement of Gale Williams, Exhibit 21, par 6)), Kent Location 1658 was to be owned by Mark Williams as the trustee for the Mallee Trust (Exhibit 29), and the leases for Kent Location 1658 and Kent Location 1659 were to be owned by Ruth Williams as the trustee of the Brown Trust (Exhibits 27 and 28).  The two farms were also some 40 kilometres apart, as I have already indicated.  However, it is not in contest that from the first inspection Geoffrey Grainger was aware that Gale Williams saw Kensey Park as a potential expansion of the existing property he farmed.  While this does not unambiguously indicate the two farms would be farmed as a single enterprise, it is certainly strongly indicated by it.  I find that the first response in the particulars is established on the evidence.

   243However, the evidence before me is clear that the Williams family would have continued to farm Lake Magenta, at least for a time, even if they had not acquired the right to farm Kensey Park.  I have noted the concerns about the viability of Lake Magenta to support all three of Gale, Ruth and Mark referred to by Gale (his witness statement, Exhibit 21, par 10 and par 11).  However, all three testified that they would have continued to farm Lake Magenta even if they had not acquired the right to farm Kensey Park (cross‑examination of Gale Williams for the Graingers, TS 599 - 601; cross-examination of Ruth Williams for the Graingers, TS 701; and cross-examination of Mark Williams for the Graingers, TS 1116 - 1117).

   244However, I do not consider the evidence that they would have continued to farm Lake Magenta as inconsistent with the evidence they operated the two farms as a single enterprise.  This indeed was their pleaded case:  see further amended substituted defence and counterclaim 13 September 2004, par 2.5C and par 2.14.7.  There is evidence that the acquisition of the right to farm Kensey Park was expected to contribute to the viability of Lake Magenta, as I have indicated.  There is also the evidence as I have indicated at a number of points that their interest in Kensey Park was in significant part because of the opportunity it represented to expand their existing farm at Lake Magenta, and this was made known to Geoffrey Grainger.  Indeed, the terms in which Kent Location 1658 had been advertised highlighted the 'expansion opportunity' (Exhibit 22), by which Geoffrey Grainger testified was meant it represented an opportunity for farmers to add to their existing holdings (TS 1809), evidence I have previously discussed.  Reliance on representations of the sort I have found here to acquire the ability to farm Kensey Park as a single enterprise with an existing holding in the area would then it seems to me be a fair inference: Gould (supra) at 256, per Wilson J and at 250 – 251 per Brennan J.

   245Thus, to the extent that losses might have been sustained in farming Lake Magenta as part of a single enterprise with Kensey Park, it seems to me that such losses arise directly out of reliance on the misleading or deceptive conduct I have found.  I note that in determining the loss to be compensated for where there has been entry into a project in reliance on the relevant conduct, the loss should be the entire loss from the project subject to considerations of supervening events and a loss suffered not being entirely due to the contraventions:  Henville v Walker [2001] HCA 52, at [36] and [41], per Gleeson CJ, at [66], [67] and [70], per Gaudron J, at [94], [106] and [121], per McHugh J, at [153] per Gummow J and at [166] per Hayne J; Lockhart (supra) at [10.21].

   246I do not consider that it has been shown that there was a particular element of the overall loss attributable to particular causes other than the contraventions.  Such cases are 'likely to be rare':  I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41, at [62], per Gaudron, Gummow and Hayne JJ. However, supervening events are a different matter, to which I return below.

1. In summary, the trial judge found that the Williamses would have continued to farm Lake Magenta irrespective of their acquisition of the right to farm Kensey Park.  The Williamses do not challenge that finding.  It follows that losses incurred by the Williamses in farming Lake Magenta were not caused by the misleading and deceptive conduct of the Graingers.  The trial judge was therefore wrong to award damages on the basis of the losses incurred farming both properties.

2. The principles governing the award of damages for misleading and deceptive conduct are well established.  Generally speaking, the amount awarded is the sum required to put the plaintiff, as nearly as possible, in the position in which he or she would have been if the misleading and deceptive conduct had not occurred (see Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1, 14 and Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215, 220 ‑ 221). The trial judge found that, if the misleading and deceptive conduct had not occurred, the Williamses would have continued to farm Lake Magenta. However, as a result of the misleading and deceptive conduct of the Graingers, the Williamses farmed Kensey Park and Lake Magenta. Therefore, according to the trial judge, the sum required to restore them, as nearly as possible to the position in which they would have been but for the misleading and deceptive conduct, was the difference between their financial position if they had farmed Lake Magenta alone, as compared to their financial position after farming Lake Magenta and Kensey Park.

3. In the passage I have set out above [66], the trial judge relied upon the decisions of the High Court in Henville v Walker and I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109. With respect, those cases are concerned with a quite different question to the question which was presented in this case. Henville v Walker was concerned with a single indivisible financial venture which was motivated by multiple causes, including the misleading and deceptive conduct.  That case and I&L Securities Pty Ltd were also concerned with the issues arising when a single loss is caused by multiple factors, including factors not directly related to the misleading and deceptive conduct.  Neither of those issues arise here. 

4. This matter concerns two farms 40 km apart.  Any losses incurred farming Lake Magenta were entirely unrelated to the misleading and deceptive conduct and had to be excluded from consideration.  The assessment required was of the difference between the financial result if only Lake Magenta had been farmed, as compared to the financial result derived from farming Lake Magenta and Kensey Park.  The amount assessed in this way is the loss suffered by the Williamses as a result of farming Kensey Park in conjunction with Lake Magenta, instead of farming Lake Magenta alone.  It is the loss caused by the misleading and deceptive conduct.

5. In the passage I have set out above, the trial judge appears to have considered it to be significant that the two farms were operated 'as a single enterprise' [242]. However, with respect, it did not follow from this conclusion that the Williamses were entitled to recover all the losses incurred in that enterprise. Rather, what was required was a comparison of that enterprise with the enterprise which they would have conducted but for the misleading and deceptive conduct, namely, the enterprise of farming Lake Magenta. That comparison was never undertaken.

6. During argument on the appeal, counsel for the Williamses properly conceded that the evidence that was led at trial does not distinguish between the expenditure that was incurred on Kensey Park, and the expenditure that was incurred on Lake Magenta, nor does it distinguish between the revenue received as a result of farming operations on the different properties (appeal transcript ts 40 – 41).  I have reviewed the evidence that was led with respect to costs incurred and revenue derived.  Counsel's concession was quite properly made.

7. Counsel for the Williamses also conceded, during argument on the appeal, that there was no evidence that the nature of the farming operations conducted at Lake Magenta changed because of the acquisition of Kensey Park (even though it was emphasised by counsel that the purpose of the lease was to expand existing farming operations, appeal transcript ts 138).  Accordingly, it could not be suggested the segregation of the costs incurred and revenue derived as a result of operating the two separate properties was impossible.

8. It follows that the evidence does not permit any comparison to be made between the financial position in which the Williamses would have been had they only operated Lake Magenta, as compared to their position as a consequence of operating both Lake Magenta and Kensey Park.  They therefore failed to adduce evidence from which any estimate could be made of any damage which they may have suffered as a consequence of the misleading and deceptive conduct established.  It follows that they are not entitled to an award of damages, nominal or otherwise (Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 524 ‑ 525). For these reasons, ground 3 must be upheld, and the judgment awarding damages to the Williamses set aside.

Ground 4 - damages for farming operations conducted after leases terminated

1. Ground 4 asserts that the trial judge erred by awarding damages in respect of farming operations conducted after December 1998, when the leases of Kensey Park terminated.  If ground 3 is upheld, this ground is superfluous because the award of damages will be set aside in any event.  However, for the sake of completeness, I will deal with this ground.

2. Recapping briefly, the trial judge correctly found that the Williams' leases of each of the locations which comprised Kensey Park terminated on 18 December 1998 [112] – [114].  However, he awarded damages in respect of farm operations conducted on Kensey Park and Lake Magenta until 29 February 2000, which is when the Williamses vacated Kensey Park.

3. The trial judge relied heavily upon the legal advice given to the Williamses in order to arrive at the conclusion that they were entitled to damages covering the period in which they operated Kensey Park as trespassers.  Evidence was given in respect of that legal advice, on the basis that the Williamses had waived their privilege.

4. Written advice was given to the Williamses by their then solicitors, Solomon Brothers, on 17 December 1998 (exhibit 53).  The letter of advice acknowledges that the leases of both Locations 1658 and 1659 will terminate on 18 December 1998.  The letter also records that the lease with respect to Location 1659 confers a right of access for the purpose of harvesting any crop sown during the 1998/1999 season, notwithstanding the earlier termination of the lease.  Further, the letter records that there is no equivalent provision in the lease relating to Location 1658.  The letter then provides:

   You have indicated that as there are a number of lambs located on Kent Location 1659, you would like to remain in possession of both properties for as long as possible, but preferably at least to the end of February 1999.

   As we indicated to you over the telephone, the most appropriate course of action is to simply remain in possession of the property after the 18 December 1998 and contest any claim for possession in the meantime.

   Mr and Mrs Grainger may well attempt to retake possession of the property. You must ensure that they do not exercise the right of self help and retake possession. If they seek the assistance of the police you must simply inform the police that you will hand over possession to Mr and Mrs Grainger only upon production of a court order granting Mr and Mrs Grainger possession; otherwise, you claim the right to remain under the holding over provisions in the lease, coupled with your right to the crops.

   As we indicated to you, this will create a delay as Mr and Mrs Grainger's lawyers will be required to prepare the necessary documentation, file it and then serve it.

   As we have indicated, we will notify Mr and Mrs Grainger's solicitors on the 18 December 1998 that you will not be handing over possession to Mr and Mrs Grainger and you dispute Mr and Mrs Grainger's right of possession and that further our office will not accept service of any writ. This will then mean that Mr and Mrs Grainger will have to serve you personally which will create a further delay. If you are served with a writ, you must send it to us and request us enter an appearance, to prevent a default judgment being entered. If you do receive a writ, please tell us the date or dates of service.

   Given the time of the year, we anticipate that the matter may not be resolved by an order for possession (if your defence should be unsuccessful) well into the start of the new year thereby enabling you to fatten the lambs on the property in the meantime.

   Further as we previously advised, pursuant to section 72 of the Property Law Act if Mr and Mrs Grainger allow you to hold over on the existing lease then they will be required to give you at least 30 days notice before terminating. This will once again give you a further extension of time.

5. During cross‑examination, Mr Gale Williams acknowledged that the letter was written after oral advice had been given to the effect that the Williamses were required to vacate the property on 18 December 1998. The Williamses had, however, indicated to their solicitors that they nevertheless wished to remain in order to at least fatten the lambs on the property [253].

6. In that context there are a number of aspects of the letter of advice that merit attention.  Firstly, reference is made in the letter to 'the holding over provisions in the lease, coupled with your right to the crops'.  However, there is no holding over provision in the lease – only a right of access provided by one of the leases (Location 1659), for the purpose of harvesting crops.

7. The letter does not provide advice to the effect that the Williamses have any legal right to remain on the property.  Further, the letter does not indicate any basis upon which the Williamses might successfully defend a claim for possession brought by Mr and Mrs Grainger.  Rather, the clear thrust of the letter is to the effect that the practical objectives desired by the Williamses can be achieved by remaining in possession illegally and making it as difficult as possible for the Graingers to utilise the processes of the court in order to have them removed.

8. The solicitors concerned have not been heard on the subject of this letter and, accordingly, one should hesitate before arriving at a final conclusion as to their conduct.  However, on the face of it, the letter is a conspicuous departure from appropriate standards of professional conduct.  The letter recommends a course of illegal conduct, without advancing any apparent justification for that course, other than the commercial objectives of the Williamses.  Despite the duties owed to the court by the legal practitioner who wrote the letter, it recommends a course of action which is clearly designed to impede and frustrate the processes of the court.

9. On 18 December 1998, the then solicitors for the Williamses sent a facsimile to the solicitors for the Graingers asserting that:

   … our client is entitled to remain in possession of the abovementioned lots under the holding over provisions contained in the leases for Kent Locations 1658 and 1659, coupled with their respective rights to the crops sown on the land.

10. This assertion was disingenuous.  The author of the letter had, the previous day, advised the Williamses that there was no provision in the lease for Location 1658 expressly entitling access to that location for the purpose of harvesting any crop sown on the land.  Further, there are no 'holding over provisions' contained in either lease.  As seen above, at the highest, there is a provision in one of the leases conferring a right of access for the purpose of harvesting the crop.  That is, quite obviously, a very different thing to a provision which enables a tenant to 'hold over'.  This obvious point was expressly enunciated in a facsimile from the solicitors acting on behalf of the Graingers to the solicitors acting on behalf of the Williamses on 23 December 1998.  That facsimile demanded that the Williamses immediately vacate the property and advised that proceedings would be commenced immediately for the purposes of recovering possession.

11. Further advice was given to the Williamses by their solicitors by letter dated 29 January 1999.  That letter records that by this time, Mr Mark Williams had advised that the Williamses  would like to remain in possession of Kensey Park for as long as possible, but preferably to the end of March 1999 when livestock and grain prices will have improved.  The letter also records further instructions that had been given by the Williamses with respect to their commercial objectives.  The letter concluded with advice in the following terms:

    In the short term we confirm our advice to you, as in our facsimile letter of 17 December 1998, that you remain in possession of the property and contest any claim for possession in the meantime.  At this stage, your claim to remain in possession is based on the holding over provisions in the Agreement to Lease for Kent Location 1659, coupled with your rights to the crops.

    As such we recommend that you forward a cheque to the Graingers for rent for the month of January as required.

    As to your entitlements in the longer term, this is somewhat more difficult and complex.  We note that you still keen to purchase Kent Location 1658 but for a reduced price to take into account the reduced area of arable land.  Obviously the preferable approach would be to negotiate a new contract for the new purchase of the land.  Further, it would be important to get a commitment from the Graingers that the Lease for Kent Location 1659 be extended to 18th February 2000.  If a new contract cannot be agreed, your remedy at common law is limited to damages for the loss sustained by you.  It is possible to seek remedies in equity being specific performance.  In order for us to assess your position, we require copies of full documentation relating to this matter.

12. This advice suffers many of the flaws of the advice earlier given.  The reference to 'holding over provisions' in the lease for Location 1659 is specious, as had been expressly pointed out in correspondence from the solicitors for the Graingers.  Again, no remotely arguable defence to the Graingers' claim for possession is identified in the letter.  Rather, the thrust of the letter is to recommend that the Williamses remain in illegal occupation of the land in order to further their commercial objectives, and perhaps secure the renegotiation of the transaction for the acquisition of Location 1658.

13. As I have noted, the Graingers commenced proceedings against the Williamses in the District Court for recovery of possession.  Summary judgment of those proceedings was granted in favour of the Graingers (Grainger v Williams [1999] WADC 57). The Williamses were sent a copy of the reasons of the deputy registrar for granting judgment in favour of the Graingers under cover of a letter from their solicitors dated 24 August 1999. It must have been apparent from those reasons that the deputy registrar had formed the view that there was no arguable defence to the Graingers' claim. The letter to the Williamses from their solicitors baldly asserts that the deputy registrar was clearly wrong, without providing any reasons for that assertion, other than as could be enunciated from draft grounds of appeal which were enclosed with the letter.

14. It seems that the principal ground relied upon to resist summary judgment before the deputy registrar, and again on appeal to a judge of the District Court, was a proposition to the effect that there was a term to be implied into both leases to the effect that if the Williamses rescinded the contract for the acquisition of Location 1658 because of some fault of the Graingers, both leases should run until February 2000.

15. No proposition to this effect was identified in the advice given to the Williamses in December 1998 or January 1999.  There is a clear inference to the effect that it is a proposition that was designed to provide some arguable basis for resisting summary judgment because there was simply no justification for the Williamses remaining in possession.  The argument is plainly untenable.  The implied terms advanced are contrary to the express provisions of the leases, which are clear and unequivocal as to the circumstances in which they are to come to an end.  Each of the deputy registrar and the judge to whom an appeal was brought concluded that the argument was entirely without substance and summary judgment was affirmed.  As I have mentioned, a further appeal from the decision of the judge to the Full Court was dismissed for want of prosecution.

16. The trial judge characterised the advice given to the Williamses by their solicitors as advice to the effect that 'there was a basis for staying' [262], that 'they had the right to be there' [264], and 'that they had at least an arguable legal right to remain after 18 December 1998' [269]. This is, with respect, not an accurate characterisation of the advice established by the evidence. The decision to remain in occupation was made in December 1998, and confirmed in January 1999, notwithstanding the commencement of proceedings to recover possession by the Graingers. The Williamses did not receive legal advice to the effect that they had a right to remain in possession at that time. Rather, the advice they received was that, in order to achieve their commercial objectives, they could frustrate and impede the Graingers' use of legal process to secure their removal.

17. The trial judge considered that the Williams' purpose in remaining illegally in possession of Kensey Park was 'to mitigate the loss consequent on the reliance on the relevant conduct' [266]. That is not, with respect, the conclusion properly drawn from the evidence to which I have referred. Rather, the proper conclusion from that evidence is to the effect that the Williamses desired to remain in possession of Kensey Park because it suited their commercial purposes, including their purpose in fattening lambs and waiting until prices improved, and they were using their occupation as a lever to endeavour to renegotiate the contract for the acquisition of Location 1658.

18. The trial judge relied upon the decision in Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174 [75] for the proposition that reliance upon erroneous legal advice did not necessarily break a chain of causation. However, the distinguishing feature of this case is that the thrust of the advice given by the letters of 17 December 1998 and 29 January 1999 was not to the effect that the Williamses had a right to remain in possession but rather was to the effect that steps could be taken to impede and frustrate the legal process of removing them from possession in order that they could pursue their commercial objectives.

19. In any claim for damages for misleading and deceptive conduct, the first step in the process of assessment must be the identification of the conduct or events which were induced or caused by the misleading and deceptive conduct established by the evidence.  In this case, the conduct which was induced by the clearing representation that was found to be misleading and deceptive was entry into the various transactions relating to Kensey Park.  The Williamses became aware of the falsity of the clearing representation by mid‑August 1998, and relied upon that conduct to terminate the transaction for the acquisition of Location 1658.  That meant that the leases terminated on 18 December 1998, as they well knew.  The termination of the leases on 18 December 1998 was confirmed by the legal advice which they received on the previous day.  The transactions which were induced by the misleading and deceptive conduct had come to an end on 18 December 1998.  Further, the Williamses had been aware of the facts which rendered the conduct of the Graingers misleading and deceptive since August 1998.  They therefore had almost four months within which to take the steps necessary to vacate Kensey Park when the leases expired.

1. Based on the evidence adduced by the first respondents and the findings of the trial judge, there was no prima facie case that the appellants' misleading or deceptive conduct caused all of the loss the subject of the claim.

2. The remaining question is whether there is any proper evidentiary basis to award substantial damages to the first respondents.  A plaintiff has the onus of establishing both the fact and the amount of the loss suffered:  Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, 80. Generally, mere difficulty does not relieve a court from estimating damages as best it can (see the review of authorities in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237, 241 ‑ 242).

3. However, a plaintiff must prove the amount of the loss it sustained on the balance of probabilities and with as much precision as the subject matter reasonably permits:  Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 [37]. Hayne J said:

   It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind [38].

4. Where damages are uncertain for lack of evidence, difficulties of assessment are in general resolved against the party who could or should have provided the evidence:  LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 [12].

5. The first respondents rely on the net profit/loss from the farming operations at Lake Magenta in the financial years ending 1996, 1997 and 1998 as evidence of the financial position in which the Brown Trust would have been if it had continued to farm Lake Magenta alone.  It is appropriate to defer consideration of that submission until the remaining grounds of appeal on damages are determined.

Ground 4

1. The trial judge awarded losses incurred by the Brown Trust after 18 December 1998 on the basis that they were incurred in an attempt to mitigate its loss.  The appellants contend the trial judge erred in awarding damages for losses incurred as a result of remaining in possession of Kensey Park after 18 December 1998.  The trial judge made the following factual findings on that issue:

   I have thus concluded that over the period from the date of the notice of rescission, 17 August 1998, until they vacated Kensey Park on 29 February 2000 the Williams sought to remain there, to recoup expenditures made and meet obligations incurred, to endeavour to have the Graingers negotiate with them for revised terms of acquisition of the farm, and because they believed on the advice they were receiving from their solicitors on varying bases that they had the right to be there. They vacated Kensey Park when, consistently with the argument put to the District Court that the leases continued, which I have concluded was at least part of the later form of the advice to them, they had no legal basis for remaining [264].

   I find they also believed they had advice they could remain on Kensey Park until February 2000, and 'all the way through' they were trying to 'salvage' their financial position (ts 1082) [265].

   It is evident from this that they were seeking to mitigate the loss consequent on the reliance on the relevant conduct [266].

    … 

   [I]t seems to me it would not have been unreasonable for the Williams family to act on professional advice that they had at least an arguable legal right to remain after 18 December 1998 [269].

2. The appellants do not in their grounds of appeal challenge the factual findings made by the trial judge concerning the first respondents' reasons for remaining in possession of Kensey Park until February 2000.

3. The entire substance of the appellants' written submissions on ground 4 is as follows:

   Whether or not the Williams family remained in possession [after 18 December 1998] on their solicitor's advice, as they claimed, is irrelevant (although the advice appears to have been how they could stall the appellants' attempt to recover possession, rather than that they were lawfully entitled to remain) …  

   The Williams family decided to remain because they wanted to, despite advice that they were obliged to leave on 18 December 1998 (transcript references).  It was not for the purpose of 'mitigating losses'.  Losses (if any) suffered by them after 18 December 1998 when they ceased to be lawfully entitled to possession, were not caused by the alleged misleading or deceptive conduct, and since no losses were proven to have been incurred solely by farming Kensey Park in the period up to that date … the claim should have been dismissed.

4. If an appellant wishes to challenge a factual finding made by a trial judge on the ground that it is against the weight of the evidence, the party is required to specify the finding in issue and identify all relevant evidence concerning that matter. The appellants in their written submissions make incidental assertions as to positive findings they say should be made based on selective transcript references. The first respondents in their written submissions do not respond in a fashion that suggests they were aware of an indirect challenge to a factual finding made by the trial judge on the basis that it was against the weight of the evidence. I propose to deal with ground 4 on the basis of the factual findings made by the trial judge. However, it is apparent from the finding at [269] and the terms of the legal advice to the first respondents that there was no reasonable basis for a positive belief that they were entitled to remain in possession of Kensey Park. At best, there were reasonable grounds for the first respondents to believe that they had an arguable claim to that effect.

5. When the first respondents remained in possession after 18 December 1998 the appellants commenced legal action against them in the District Court for (inter alia) damages for trespass:  Grainger v Williams [1999] WADC 57 (the District Court action). It was determined in the District Court action that the leases terminated on 18 December 1998, from which date the first respondents remained in possession of Kensey Park as trespassers. Those findings bind the appellants and the first respondents. The first respondents did not in the action the subject of the appeal claim relief under s 87 of the Trade Practices Act 1974 (Cth) (s 77 of the Fair Trading Act 1987 (WA)) for an order extending the terms of the leases.

6. The issue for the court is whether the loss incurred by the decision of the first respondents to continue farming on Kensey Park after 18 December 1998, during which time they were in fact trespassers, was caused by the contravention. 

7. The appellants did not put their submissions by reference to the application of any principled legal framework.  The determination of this ground at common law would depend upon the application of the principles relating to causation, remoteness and mitigation.  I propose to commence with the relevant common law principles and then use them as a guide in relation to the statutory claims. 

8. As noted earlier, factual causation is a necessary but not itself sufficient condition of legal causation.  That is, not all 'but for' causes are legal causes.  The application of the 'but for' test of factual causation is limited by considerations of policy and value judgments.  One example of such a restriction is the doctrine of novus actus interveniens.  The doctrine of remoteness of damage also has the practical effect of limiting the application of the 'but for' test.

9. Policy issues arise in this case primarily because the first respondents claimed damages for consequential loss, the immediate cause of which was their own tortious conduct after the accrual of the cause of action against the appellants.  A plaintiff's deliberate or negligent conduct may (but not must) prevent a finding that a defendant's breach was the legal cause of the loss.  This was the outcome in Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727. Mallesons acted as solicitors for the vendor of business premises leased to a tenant. Mallesons negligently prepared documents which failed to disclose a side arrangement whereby the tenant paid less rent than shown in the lease. This enabled the vendor to conceal the side arrangement from the buyer. After the buyer discovered the true position, it sued the vendor and obtained rescission of the contract of sale and damages for deceit. The vendor sued Mallesons for damages in respect of the loss incurred as a result of the rescission. The court held that, while the solicitors' negligence was a necessary precondition to the vendor's loss, the cause of the loss was the vendor's own deliberate and wrongful act. Alternatively, if the solicitors' negligence was a link in the chain of causation, the chain was severed by the vendor's fraud.

10. An event cannot be relied on as breaking the chain of causation if the risk of its occurrence was created or enlarged by the breach itself:  Medlin v State Government Insurance Commission (1995) 182 CLR 1. Many of the authorities cited in the reasons of the Chief Justice fall within this category. Moreover, subsequent conduct will not break the chain of causation if it was foreseeable as a serious possibility or a not unlikely occurrence of the breach in question: Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, 427 [25].

11. Reasonable foreseeability is the test of remoteness of damage:  Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound (No 1)) [1961] AC 388, 423. If the test of reasonable foreseeability is the same as that required to establish a tortious duty or breach, damage will not be too remote if the consequences are the result of the occurrence of a risk that a reasonable person would describe as real, not farfetched. What has to be foreseeable is the type or kind of injury rather than its exact extent or manner of occurrence. Sometimes the test of remoteness is framed in terms of whether the claimant's conduct could reasonably be expected or whether it was reasonable in all the circumstances: Gould v Vaggelas (1983) 157 CLR 215, 222 ‑ 223, 227 ‑ 228; Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653, 667 ‑ 669, (Wilson, Deane & Dawson JJ), 672 ‑ 674 (Brennan J).

12. The common law principles relating to factual and legal causation apply to s 82 of the TPA (s 79 of the FTA) save to the extent expressly or impliedly modified by the TPA: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, 525; Henville v Walker [61].

13. The common law principles of novus actus interveniens, remoteness of damage and mitigation, although not controlling, provide guidance in the determination of issues arising under s 82: Henville v Walker [18]; I & L Securities v HTW Valuers (Brisbane) Pty Ltd (2002) 192 ALR 1, 20 [84]. The High Court said in HTW Valuers [85] ‑ [86]:

    Just as s 82 is free from the restraint of common law rules regarding measure of damages, so also is it free from doctrines that reduce those damages at common law. In Pavich v Bobra Nominees Pty Ltd, French J held that the primacy of the causation principle in s 82 seemed to exclude reliance upon concepts such as mitigation or contributory negligence. His Honour thought that contributory negligence was irrelevant unless it could be shown that the applicant's carelessness or disregard for their interest was the cause of all or some part of the claimed loss.  He also correctly held that, although the contravening conduct may be the sine qua non of the loss claimed, there may come a point where the applicant's own conduct was 'so dominant' in the causal chain as to constitute a novus actus interveniens.

    In a number of cases, courts have been able to find that part of the loss sustained by an applicant was not attributable to the contravening conduct of the respondent, but to some other cause.  In Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd, the applicant sustained losses in purchasing a restaurant because of the respondent's misrepresentations. Wilcox J held that trading losses suffered by the applicant, subsequent to the purchase, were not sufficiently connected with the contravening conduct of the respondent for the loss to be characterised as caused 'by' the respondent's conduct.  His Honour held that those trading losses were occasioned by factors that were not 'directly attributable' to the misrepresentations.

14. In my view, the first respondents' deliberate decision to remain in possession of, and to farm, Kensey Park after 18 December 1998 was so dominant in the causal chain that the loss after that date cannot be characterised as having been caused by the appellants' contravention.  Moreover, the risk of the first respondents choosing to remain in possession after the agreed termination date was not created or enlarged by the contravention, nor was such conduct reasonable or reasonably foreseeable.  My reasons for those conclusions are as follows.

15. First, the appellants and the first respondents had, by the terms of the leases, identified and agreed on what was to occur if the sale of KL 1658 did not eventuate.  It was the intention of the parties that both leases would terminate on 18 December 1998.  Secondly, at the time of termination of the contract of purchase, the Brown Trust also had the right to elect to terminate the leases but chose not to do so.  At the time of making the election, the first respondents knew the agreed term of the leases expired in December 1998.  Thirdly, the first respondents became trespassers from 18 December 1998.  They knew their right to remain in possession was hotly disputed.  An associated uncertainty was, if they were trespassing, how long before a court would order them to vacate.  Despite their precarious legal position, they continued to borrow funds for farming purposes notwithstanding that by 1 April 1999 they had been injuncted from burning (and thus cropping) Kensey Park. Fourthly, the trial judge found that one of the reasons for them continuing in possession was to have the appellants negotiate with them for revised terms of acquisition for Kensey Park.  That is not a proper basis for the first respondents to seek to hold the appellants responsible for the loss arising from their decision to remain in possession.  Finally, the first respondents did not establish that the contravention (the entitlement to clear the new land) had any direct connection with the income producing capacity of Kensey Park during the balance of the agreed term of the leases or thereafter.  I would uphold ground 4.

Ground 5 

1. The appellants challenge the quantum of the award of damages which was in the sum of $544,985.  The first respondents had counter‑claimed for damages in accordance with a schedule to the pleading (schedule A).  The broad background is as follows.  The first respondents claimed as damages the net operating loss during the period of their possession of Kensey Park which commenced in the financial year ending 30 June 1998 and ended in the financial year ending 30 June 2000.  Lake Magenta had about 3,600 cleared acres.  The Brown Trust carried out the farming operations on Lake Magenta and Kensey Park.  The Trust also carried on mining activities on Lake Magenta.  A partnership known as 'GC & RE Williams' carried on a business of clover seed growing. 

2. Neither side adduced expert evidence at trial on the question of damages.  Ruth Williams' evidence is the primary source of the respondents' evidence on that subject.  Three schedules were attached to her witness statement being a schedule of Bankwest statements (A), a schedule of Wesfarmers Dalgety statements (B) and statements of a Wesfarmers Dalgety Financed Account (C).  The schedules provide a summary of debits and credits to the Brown Trust accounts with Bankwest and Wesfarmers Dalgety (Wesfarmers).

3. Exhibits 40, 49 and 50 are financial statements for the Williams family (the Brown Trust, the partnership and each of the partners) for the financial years 1998, 1999 and 2000. Mrs Williams gave evidence that the financial statements were prepared by accountants who relied on her notations on cheque butts and bank statements to characterise payments and receipts that were for private purposes. The accountants were not called to give evidence and, according to the appellants, not all of the source materials used by the accountants were discovered or produced at trial. However, statements, invoices and cheque butts were tendered at trial (exhibit 43 ‑ 48, 106). The trial judge admitted exhibits 40, 49 and 50 as business records under s 79B of the Evidence Act 1906 (WA) [276].

4. After the first respondents had closed their case they applied to reopen to substitute the schedule A losses in the counterclaim (the first schedule A) with a new schedule A (the second schedule A).  The trial judge reserved on the application.  He relied on the second schedule A in his assessment of damages [272] ‑ [299].  As concluded by the trial judge [274] and demonstrated at the hearing of the appeal, the second schedule A is also based on the source documents in exhibits 43 ‑ 48 and 106.

5. Before the first respondents closed their case, the appellants' counsel had prepared a 'flow of funds' analysis of the information in the financial statements prepared by the accountants.  This document was (unfortunately) entitled 'counsel's document A' which was tendered in evidence by consent. 

6. After comparing the total income and expenditure the subject of the first schedule A, the second schedule A and the financial statements, the trial judge concluded that the appropriate measure of loss was the lowest figure in the comparisons, being the total net loss shown in the financial statements of the Brown Trust in the relevant period, a figure of $544,985 [299].

7. I turn now to the appellants' particular complaints. First, the appellants claim the trial judge erred in awarding damages that included expenditure incurred pursuant to obligations entered into before the making of the representations, such as hire purchase payments on vehicles acquired in previous years [295]. Such expenditure is clearly not caused by the contravention and was wrongly awarded. However, the appellants made no attempt to identify the quantum of payments of that nature.

8. Secondly, the appellants claim the trial judge erred in granting leave to rely on the second schedule A.  The appellants also contend the trial judge failed to give reasons for granting leave.  That is incorrect.  It is apparent from the reasons [274], [275] and [280] that the trial judge understood the appellants objection went to weight which objection he dismissed because he regarded the second schedule A as amending the first in minor respects and that both schedules were based on the schedules to Mrs Williams' witness statement which in turn was based on the source documents adduced in evidence.  The appellants have not discharged their onus of establishing error.

9. Thirdly, the appellants claim the trial judge erred in admitting exhibits 40, 49 and 50 into evidence.  The trial judge notes in [289] of his reasons that the appellants withdrew their objections to the financial statements.  They cannot now raise the matter on appeal.  In any event, the trial judge addressed the alleged failure to disclose all of the source materials used by the accountants [277] and [293].  The trial judge concluded that the appellants had been able to adequately test the evidence and had suffered no prejudice.  He said:

   … Although Ruth Williams had acknowledged there were documents with the accountants for the Brown Trust, it appears to me from her evidence that she is referring primarily to the annotated bank statements, and the invoices and cheque butts, that are before me as parts of exhibits … and cross‑examination for the Graingers … Although she did concede there might be other documents with the accountants … and that she had not pressed her accountants to find all of the documents 'buried' in their storage facilities … I do not conclude from that there were significant further documents in relation to the annotated bank statements and the financial statements of which discovery could be given. To the extent there were further documents, it is not apparent to me that they might have added information to what appeared in the annotated bank statements, which were to enable the accountants to make the allocations [between farming and other uses] … On this basis, and given the opportunity counsel had over the cross-examination of Ruth Williams to test her system of record keeping, I do not conclude that prejudice has been shown [293].

1. The generality of the appellants' submissions on this issue make it impossible to effectively challenge the trial judge's finding.  I would dismiss this complaint.

2. Fourthly, the appellants complain that the trial judge overlooked counsel's document A.  That document was prepared by counsel apparently with assistance from his wife, an accountant.  However, neither the appellants nor the first respondents adduced expert evidence on the quantification of the first respondents' loss.  The trial judge noted:

   The accuracy of [counsel's] Document 'A''s transcription of amounts from the financial statements was accepted by counsel for the Williams family, and I admitted this document into evidence on the basis of what it showed as to the entries in the financial statements (Exhibit 157) [289].

3. The forensic purpose of counsel's document A is not apparent from its terms.  It was relied on in the appeal to demonstrate that the maximum net loss from the farming operations was $142,437.  That matter was not expressly addressed by the trial judge in his reasons.  This court was provided with two further documents explaining the purpose and effect of counsel's document A.  They are an annexure to the appellants' written submissions which state the propositions said to be established by counsel's document A and a further document detailing the calculations underlying the annexure to the submissions.

4. Before proceeding further it is necessary to explain the basis for the trial judge's calculation of the damages. Relying on the financial statements for the financial years ending 30 June 1998, 1999 and 2000, he found that the total income, the total expenditure and the net loss were $462,675, $1,007,660 and $544,985 respectively. The reasons do not disclose the various inputs into the total amount of income and expenditure. A quick mathematical exercise shows that the trial judge did not simply add the income and expenditure figures from the Brown Trust profit and loss statements for the financial years 1998, 1999 and 2000. I infer he excluded all the income but included all the expenditure for the 1998 financial year. I also infer he included all the income (and expenditure) for the financial year ending 30 June 2000 because he accepted the evidence of Mark Williams that no, or no significant, farming operations were carried on after the first respondents vacated Kensey Park [282]. There is no challenge to this finding notwithstanding combined income from barley and wheat of $169,948 in the financial year ending 30 June 2000 (which is not shown as crop on hand in the 1999 financial statements). On my calculations, the trial judge appears to have included rebates and recoveries in the income for the financial years ending 30 June 1999 and 2000, excluded depreciation from the expenses but included legal costs and interest paid to Wesfarmers.

5. The appellants calculation of a maximum loss for the three years of $142,437 includes, inter alia, all the income for the financial year ending 30 June 1998 and all recoveries and rebates but excludes from expenditure depreciation, interest costs to Wesfarmers and legal costs.  In summary, on my analysis of all the information, the difference between the trial judge's finding of a net loss of $544,985 and the maximum loss claimed by the appellants is primarily attributable to the trial judge excluding income but including all expenditure for the financial year ending 30 June 1998 and including as expenditure interest costs to Wesfarmers and legal costs.  Based on the financial statements the interest costs total $133,245 and legal costs total $83,966.

6. The trial judge was correct to exclude the income for the financial year ending 30 June 1998. The first respondents acted in reliance on the representation on 18 May 1998 when the Brown Trust entered into the leases and on 20 May 1998 when Mark Williams signed the purchase contract. None of the expenditure incurred between mid‑May 1998 and the end of the financial year is arguably connected with any income in that year. By the same token, it was erroneous to bring to account in the assessment of damages all the expenditure incurred in that year. The nature of the expenses associated with Kensey Park before 30 June 1998 can be identified. On or about 22 May 1998 spraying of Kensey Park began preparatory to putting in a crop of barley [103]. Before the end of the 1998 financial year Mark Williams began seeding and laying fertiliser at Kensey Park (primarily on KL 1658 in areas which had been previously cropped) [109]. Further, in May 1998 the Brown Trust executed a chattel mortgage with RAC Finance Ltd to acquire plant with which to conduct the combined farming operations [104]. The costs of the RAC loan are separately identified in the accounts. However, it is not possible to isolate the costs of spraying, seeding and fertilising Kensey Park.

7. The legal costs are shown in the financial statements as having been incurred in the financial years ending 30 June 1999 and 2000.  In January 1999 the appellants commenced District Court proceedings against the first respondents for possession and damages.  In March and April 1999 the appellants sought and obtained injunctive relief restraining the first respondents from burning on Kensey Park.  On 24 August 1999 the District Court granted summary judgment to the appellants requiring the first respondents to deliver up possession.  That judgment was the subject of an appeal to a judge of the District Court which appeal was dismissed in November 2000.  An appeal to this court was unsuccessful.  The respondents commenced a Supreme Court action against the appellants (CIV 1258 of 1999) on 15 March 2000.  It is clear from the reasons that Solomon Bros acted for the first respondents from August 1998. 

8. Legal costs incurred in connection with litigation are not recoverable as damages in that or related litigation:  Ross v Caunters [1979] 3 All ER 580, 600 ‑ 601; Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358, 365 ‑ 366. Costs are awarded by orders made in the relevant litigation and are quantified in accordance with established rules and procedures. Insofar as the legal costs relate to the District Court action and the Supreme Court action, the trial judge erred in including those costs in the award of damages. Moreover, the appellants failed to establish that the costs incurred prior to the commencement of the District Court action were not incidental thereto and thus covered by the litigation scale (see O 66 r 1). The legal costs arising from the first respondents' decision to remain in possession of Kensey Park after 18 December 1998 are not recoverable in any event.

9. The next major item relates to the interest costs on advances from Wesfarmers.  It is said that counsel's document A and exhibits 40, 47, 49, 50 and 106 show that none of the interest costs on the loan from Wesfarmers related to the farm operations in that:

   (1)the loan capital amount borrowed (before interest) was $606,423;

   (2)$22,887.98 of loan capital was pre‑existing debt under an existing bill of exchange facility;

   (3)$605,894 of the loan capital amount could not be attributed to any farming purpose in that:

   (a)$160,049 was transferred out of the Brown Trust and used to repay an existing debt to National Australia Bank (NAB);

   (b)$273,292 was transferred out of the Brown Trust and paid or used for the benefit of GC and RE Williams for personal or other non‑farm uses;

   (c)$133,877 was used to purchase plant and equipment that was not used for farming purposes; and

   (d)a $38,676 discrepancy between the accounts of the Brown Trust and those of GC and RE Williams remained unaccounted for and therefore could not be attributed to any farming purpose.

10. I am satisfied that the sum of $22,887.96 was a pre‑existing debt under an existing bill of exchange and that the sum of $160,049 which formed part of a Term Loan of $250,000 was used to repay a pre‑existing debt to NAB. 

11. The sum of $273,292 was advanced by the Brown Trust to the partnership 'GC & RE Williams' and accounted for as drawings to the partners.  Mrs Williams accepted the accuracy of the financial statements as to the extent of the advances by the Trust to the partnership and the consequential drawings by the partners.  She also accepted that the farming operations on Lake Magenta and Kensey Park were conducted solely by the Brown Trust.  However, she was unable to offer any explanation as to the facts behind the accounting treatment.  Moreover, there was no expert or other evidence to the effect the trust loans were paid, via the partnership, to the partners for farming purposes.  The first respondents failed to discharge their onus on this matter and interest on the sum of $273,292 should not have been awarded. 

12. The only basis for the assertion that the sum of $133,877 was for plant and equipment not used for farming purposes is an admission by Mrs Williams that the only plant and equipment purchased for the farming operation was that financed by RAC in May 1998 and a single line in the Brown Trust's taxation return for 2000 referring to depreciable assets purchased for that sum (GAB 362).  The matter could have been cross‑checked by the appellants against the source documents.  The appellants have not discharged their onus on this item.

13. As to the final item, I am not satisfied that the discrepancy of $38,676 in the 1997 accounts for the Trust and the partnership relating to the moneys owed by the partnership to the Trust is material as the interest paid to Wesfarmers in the 1998 financial year was only $5,000.

14. Moreover, the appellants contend the financial statements should not be taken at face value in other respects.  First, they contend it is not possible to conclude what income was earned in relation to the crop harvested on Kensey Park in December 1998 (that sown by the first respondents in May 1998).  Mrs Williams gave evidence that Mark Williams had a private arrangement with a harvesting contractor in relation to harvesting the crop (ts 910).  Mr Williams gave no evidence as to the nature of the arrangement.  The cost of harvesting the crop is not shown in the accounts and there was no direct evidence to confirm that the income from the crop is reflected in the accounts.  I have been unable to locate any positive evidence from Mrs Williams that all farming income was recorded in the statements from the bank and Wesfarmers. 

15. Further, the evidence is that a barley crop was sown on Lake Magenta in both financial years ending June 1998 and 1999.  The financial statements for the year ending 30 June 1999 reveal that income from barley in that year was only $11,005 more than in the previous year (1998) when there was no income from farming Kensey Park.  However, there were very dramatic increases in expenditure on fertiliser ($19,709), seed and treatment ($24,243) and spraying ($29,795).  Weather and/or market factors in 1999 may be possible explanations but that is pure speculation.  The financial statements of the Brown Trust were prepared on an accruals basis.  Apart from clover, there is no crop on hand shown in the 1999 balance sheet.  The absence of an explanation in combination with the unexplained private arrangement as to harvesting satisfies me that the first respondents failed to discharge their onus of providing that the income from the crop is reflected in the accounts. 

16. Finally, Mrs Williams admitted that the accounts did not make any allocation for the private use of vehicles, fuel and services such as telephone.  Any attempt at allocation would be pure speculation.

17. In summary, the damages award of $544,985 is inflated by the erroneous inclusion of the following:

    (1)legal fees totalling $83,966;

    (2)interest paid on the sum of $160,049;

    (3)interest paid on the sums of $22,887.98 and $273,292;

    (4)expenditure made pursuant to obligations incurred before the entry into the leases and contract of purchase (unidentified and unquantified); and

    (5)all expenditure in the financial year ending 30 June 1998.

18. The failure to make a private use allocation in respect of expenditure on motor vehicles, fuel and telephone (unquantified) and the failure to prove that the income from the crop had been accounted for must also be taken into account in the assessment.

19. There are other significant complications.  I have concluded that the losses incurred as a result of remaining in possession after 18 December 1998 are not recoverable.  Subject to one qualification, it may be possible on the evidence adduced by the first respondents at trial to identify the net loss in the period 18 May 1998 to 18 December 1998.  The information in exhibits 43 ‑ 48 and 106 together with schedules A, B and C to Mrs Williams' affidavit and second schedule A and its supporting documentation should permit that.  The qualification relates to the error the subject of ground 3, namely the failure to prove the net operating position in the same period if the first respondents had carried out farming operations on Lake Magenta alone. 

20. The first respondents' counsel conceded that it was not possible to identify the actual income and costs attributable to farming Magenta in that period.  However, the first respondents contend the financial position of farming on Lake Magenta alone can and should be inferred from the net profit and loss in the financial year ending June 1996 (a loss of $5,440), the financial year ending 30 June 1997 (a profit of $5,765) and the loss of $21,387 for the year ending 30 June 1998 (bearing in mind that it includes the costs of spraying, seeding and fertilising Kensey Park).  The profit and loss statement for the Brown Trust for the year ending 30 June 1998 shows that fertiliser costs were up by $5,104, spraying costs up by $4,037 but the cost of seed and treatment down by $5,049.  I note this is inconsistent with second schedule A which allocates costs in different financial years.

21. However, weather and market conditions play a significant role in the financial fortunes of farmers.  If there was evidence that these factors would not have materially affected the financial outcomes in the following financial half year to 18 December 1998 I would have been prepared to rely on the profit and loss statement for the financial year ending 30 June 1998 as the basis for assessing what the Trust's position would have been if it had farmed Lake Magenta alone in the relevant period.  However, we were not referred to any evidence of that nature.  Further, the first respondents failed to prove that they had accounted for the income from the crop on Kensey Park with the consequence that the court cannot be satisfied the first respondents suffered any loss.  There is no obvious reason why the first respondents were unable to adduce evidence to prove the extent of the Trust's loss.  In all of the circumstances, I am satisfied that this is one of those rare cases in which the gaps in the evidence pose an insurmountable difficulty in assessing damages.  For these reasons I would uphold grounds 3 and 5. 

22. Accordingly I would order that the appeal be allowed and that orders 4, 7 and 15 made by the trial judge be set aside.  I would hear from the parties on the balance of the orders required to give effect to these reasons.