Halfpenny & Halfpenny v Minnikin

[1993] QCA 483

IN THE COURT OF APPEAL

[1993] QCA 483

SUPREME COURT OF QUEENSLAND

Appeal No. 52 of 1993

Brisbane

Before The President
Mr Justice Davies
Mr Justice Moynihan SJA

[Re: Halfpenny v. The Public Trustee of Qld.]

BETWEEN:

EARNEST GEORGE HALFPENNY and
JACQUELINE HALFPENNY

(Plaintiffs) Appellants

AND:

JEAN MURIEL MINNIKIN

(First Defendant)

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND

(Second Defendant) Respondent

JUDGMENT OF THE COURT

Judgment delivered the Third day of December 1993

This is an appeal by the plaintiffs in an action in the
District Court at Rockhampton seeking to increase the amount
of damages which they were awarded. Judgment was given for
the appellants for the sum of $16,502.00 together with
interest of $4,792.00 and costs to be taxed. The
respondent, the second defendant in the Court below, is the

executor of the first defendant whose death occurred

subsequently to the events of principal significance.

On 1 March 1984, the appellants and the first defendant entered into a written agreement with respect to an 11.898 ha. rural residential block which the first defendant owned in the Cooberie area northwest of Yeppoon. The agreement was as follows:

"AGREEMENT FOR SHAREFARMING MADE THIS FIRST DAY OF MARCH 1984 BETWEEN MRS. J.M. MINNIKIN OF "NOVAR", YEPPOON AND MR & MRS. E.G. HALFPENNY OF 23 McBEAN STREET, YEPPOON, IN THE STATE OF QUEENSLAND.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS:-

(1) MRS. MINNIKIN SHALL AGREE TO ALLOW MR. & MRS.

HALFPENNY TO SHAREFARM ON HER PROPERTY.

(2) THE GROSS SALES FROM PRODUCTS AND FRUITS PRODUCED ON THE PROPERTY SHALL BE DIVIDED 2/3 TO MR. & MRS HALFPENNY, 1/3 TO MRS. MINNIKIN.

(3) MR. & MRS. HALFPENNY WILL PAY ALL OPERATING

EXPENSES FOR THE FARM.

(4) MRS. MINNIKIN WILL PROVIDE AS REQUIRED A SHED, TREES, BORE, WATER MAIN AND FITTINGS, EQUIPMENT FOR BORE AND FREE DWELLING FOR WHICH MR. & MRS. HALFPENNY WILL BE RESPONSIBLE FOR ELECTRICITY AND TELEPHONE.

(5) MR. & MRS. HALFPENNY WILL PROVIDE THE FOLLOWING

MACHINERY:-
TRACTOR, SLASHER, SPRAY EQUIPMENT, DISC AND OFFSET
PLOUGHS, FRUIT GRADING MACHINE, TRAILERS AND
PACKING & HANDLING EQUIPMENT, TOGETHER WITH TREE

PROTECTIVE MATERIAL.

(6) MR. HALFPENNY WILL BE ABLE TO WORK AWAY UNTIL

ORCHARD IS IN FULL PRODUCTION.

(7) NO SATURDAY WORK WILL BE CARRIED OUT ON PROPERTY.

(8) IN THE EVENT OF MRS. MINNIKIN SELLING THE PROPERTY, SHE WILL ENDEAVOUR TO PROTECT THE INTEREST OF MR. & MRS. HALFPENNY AND ENABLE THEM TO CARRY ON THEIR FARMING ACTIVITY.

(9) PRODUCTS WILL BE SOLD IN THE NAME OF MR. & MRS. HALFPENNY HOWEVER, ALL INVOICES AND STATEMENTS WILL BE MADE AVAILABLE TO MRS. MINNIKIN.

(10) MRS. MINNIKIN HAS THE RIGHT TO GRAZE LIVESTOCK WHERE IT WILL BE NECESSARY TO MAINTAIN GRASS GROWTH.

IN WITNESS WHEREOF THE PARTIES HERETO HAVE HEREUNTO SET OUT THEIR HANDS ON THE DAY AND YEAR FIRST HEREINBEFORE WRITTEN.

... . "
In mid-January, 1988, the first defendant gave the

appellants notice of termination of the agreement and the appellants vacated the property in February 1988. In this Court, it was not argued by the respondent that the first defendant was entitled to give notice of termination at that time. The respondent accepted that the first defendant had, by her notice, repudiated the agreement and that the appellants were entitled to damages. However, the respondent submitted that the trial judge was correct in limiting the appellants' damages by reference to his assessment of the benefits which they would have enjoyed if the agreement had continued to February 1992. The appellants' contention was

that they should have been allowed damages quantified by reference to the benefits which they would have received up to February 1998. By that time, the first defendant would have been aged 77, the male appellant would have been aged 68, the female appellant would have been aged 65 and, according to the appellants, the trees planted by them would have reached "full production" a phrase used in clause 6 of the agreement in a different context. (In their pleading, the appellants selected 2001 as the year of full production, but nothing now turns on that). An alternative argument was advanced for the appellants that, even if the trial judge selected the correct period, he underestimated the amount to which they are entitled.

The appellants' primary submission, which was implicitly inconsistent with their acceptance that damages should be calculated by reference to the period to February, 1998, was that the agreement could not lawfully be terminated by notice. At its widest, the submission made was that the relationship created by the agreement was permanent. Although in the course of argument it seemed to be accepted that the agreement could be determined by supervening events such as the death of the appellants and perhaps a sale by the first defendant, at least provided that she had complied with clause 8, the appellants continued to assert that it could not be determined by a notice from one party to the other. In the alternative it was argued for the appellants that, on its proper construction, the agreement permitted termination by reasonable notice only when the orchard was "in full production", or alternatively only after a reasonable period which would not occur until the orchard was "in full production". The agreement makes no express provision for termination by notice and if such a term is to be found it must be implied. The law with respect to the implication of terms in contracts is now well settled (see, for example, Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales (1982) 149 CLR 337; Khoury v. Government Insurance Office of New South Wales (1984) 165 CLR 622; and Hospital Products Ltd. v. United States Surgical Corp. (1984) 156 CLR 41). These principles have been considered in connexion with the implication of a provision for the termination by notice of indefinite commercial agreements on a number of occasions. It is sufficient for present purposes to refer to Cribb v. Korn (1911) 12 CLR 205; Australian Blue Metal Ltd. v. Hughes (1963) AC.74; Barro Group Pty. Ltd. v. Fraser (1985) VR 577; Finnucane v. New South Wales Egg Corporation (1988) 80 ALR 486 and Crawford Fitting Co. v. Sydney Valve and Fittings Pty. Ltd. (1988) 14 NSWLR 438.

Nothing in the agreement or the surrounding circumstances justifies a conclusion that, on its proper construction, the agreement was to bind the parties permanently or should read as containing an implied term that it was terminable only when the orchard was in "full production". Clause 6 does no more than deal with the appellants' entitlement in respect of one specific matter in the event that the agreement continued until the orchard was in "full production". The only assumption underlying clause 6 was that the agreement might, not that it necessarily would, continue until that time.

The weight of authority supports the conclusion that the agreement was determinable after a reasonable period by reasonable notice, as the trial judge held. The two requirements of a reasonable period and reasonable notice interact.

What would be a reasonable point at which to give notice might be influenced by the length of notice given and what would be a reasonable notice might be influenced by the period which had expired when the notice was given. Overall, there are two objectives to be met. In combination, the total period, including the length of the notice, must be sufficient to meet the common purpose of the parties concerning what the agreement was to achieve. Secondly, even after a reasonable period, the notice itself must be adequate to permit the transaction to be finalised in an orderly and businesslike manner.

The appellants' case was not related to the length of the notice given; for example, on the footing that the appellants were wrongfully deprived of a crop which was due, or would soon be ready, for harvesting. Rather, their attack was focused on a finding made by the trial judge that "... a reasonable period would be until the time the planted avocados, lychees and mangoes delivered their first commercial crop for harvest." (Neither party pleaded that the "first commercial crop" marked the end of a reasonable period, although the notions of "commercial crop", "commercial production" and "commercially viable" were touched on, but not explained, in evidence at the trial).

As stated above, the appellants' alternative contention was that a reasonable period would not elapse until the orchard was in "full production". Before this Court, the argument concerning what was a reasonable period was substantially presented as a choice between those two alternatives, "first commercial crop" and "full production", a course which significantly complicated the resolution of this appeal.

Before proceeding further, it is desirable to note some additional facts, substantially by reference to the trial judge's findings.

When the agreement was entered into, the first defendant's property included a mature mango orchard of about 360 to 380 trees which had been neglected although about 130 trees had recently been pruned. The trial judge said: "These trees whilst producing fruit capable of harvest with some difficulty did require fairly severe cutting back and on-going pruning and management over a three to four year period to bring them to maximum production potential".

No challenge was made to that finding or to further findings by the trial judge in the following terms:

"The plaintiffs commenced to reside on the property pursuant to the agreement in March 1984. The first defendant provided the various capital items set out in clause 4 of the agreement. Either pursuant to the agreement, pursuant to further oral agreements with the plaintiffs or in any event she arranged and paid for bulldozing work on the property to clear land, she purchased and had transported to the property an irrigation tank and irrigation equipment for the orchard, she paid the male plaintiff for the laying out of the irrigation lines and the erection of the shed, she paid for the avocado trees, paw paw trees and mango trees planted by the plaintiffs and for the supply of wind break trees planted by the plaintiffs. She paid for the electricity to operate the bore and pump for irrigation although on the face of the agreement according to Clause 3 thereof, that, or at least a component of it, arguably, should have been the plaintiffs' expense, and she paid the plaintiffs the sum of $1,700 for cutting back and pruning a further number of the mature mango trees. This was in 1985.

This work seems to have been regarded as additional to farming the property although the plaintiffs were entitled to and sold fruit harvested from those trees and retained two thirds of the return from those sales. She lent the plaintiffs' $4,000 on the 13 December 1984 for the purpose of acquiring machinery and equipment they were to provide. She lent them a further $1,196.60 on 22 August 1986 for repairs to their truck.

Neither sum has been repaid. ...

The plaintiffs rearranged fencing on the property and in addition supplied some fencing material. It was erected or rearranged to protect orchard trees and a market garden they established from the first defendant's cattle. In all they rearranged and/or erected 140 metres of fencing. At their cost they ripped land in preparation for planting of orchard trees, and did some digging and levelling work to level a foundation for the irrigation tank. They planted fruit trees. There was a conflict in the evidence about how many were planted and how many survived. However, the difference was not great and in the overall circumstances of the case the exact number is not critical. I will use the numbers so far as I can follow them from the plaintiffs' evidence. Initially 300 avocado trees were planted about 130 of which died. They planted 1000 paw paw trees all of which died.

They planted a further 100 avocado trees some of which died (in all 254 of 400 avocado trees survived to the time the plaintiffs left the property). They marketed and planted about 220 lychee trees some of which died, planted 102 mango trees, planted wind break trees, perhaps performed some minor repair work on the cattle yards, planted 43 raelene trees which the first defendant had grown from seed, cleared wattle regrowth, built a greenhouse mainly for their own use and to an extent renovated the fowl run. They tended the newly planted trees and picked and packed fruit from the mature mango trees. They maintained a small market garden from which they sold produce and kept the proceeds with the agreement of the first defendant and supplied vegetables as required to the first defendant. They looked after the fowls and supplied eggs as required to the first defendant. She contributed to the cost of the fowls. I am also satisfied despite the evidence of the male plaintiff that the first defendant provided on four occasions, for the benefit of the plaintiffs, half a beast for meat. The male plaintiff also said he pruned trees from the old mango orchard; 130 in 1985, 96 in 1986 and 150 in 1987. He was paid he said $15 a tree for the 1985 pruning of 130 trees.

The first defendant in her statements exhibited in evidence said she paid the male plaintiff by cheque $500 on 7 June 1985 for the pruning of 50 of those trees and $1,200 on 1 July 1985 for the pruning of a further 120 of these trees. I accept the first defendant's evidence that she paid the plaintiffs as she says in 1985 and that she believed it was for the pruning of 170 of the mature mango trees. I cannot say whether the male plaintiff performed further pruning of those trees in 1986 and 1987 but I am satisfied that he did not make the first defendant aware of it and seek to charge her for it.

...

I am satisfied there was a market for fruit from the mature [mango] trees and they all could have been harvested both for fresh fruit and fruit for canning and/or drink making. Fruit from those mature trees part of the 1988 crop was picked by the plaintiffs and marketed as fresh fruit and they received their two thirds share. In fact 536 trays of fruit from the mature mango trees was said to have been marketed from the 1988 crop."

His Honour also generally accepted the evidence of the first defendant's witness, Vernon, who inspected the property at the request of the first defendant in January 1988. He said:

"Evidence was given by the witness Vernon regarding the establishment and the growing of these types of fruit trees and regarding the marketing of fruit from them and the established orchard. I am satisfied that overall I could accept the evidence he gave. I add I also found the evidence of the grower Groves helpful in the area of lychee growing. ...

Vernon was called to the property by the first defendant in mid January 1988. He inspected it including the mature orchard of mangos and the more recently planted trees. He found the mango trees planted by the plaintiffs were in reasonably good condition. A lot of the avocado trees in the western paddock were in his opinion not healthy and had the appearance of being affected by root rot. It was his opinion there was insufficient mounding around those trees. He also expressed the opinion that the particular area where they were being grown was not suitable for long term avocado productivity because of the sensitivity of avocado trees to climatic and soil requirements. Later he made an examination of the soil in the particular area where the trees were planted by digging holes. This confirmed his view. Specifically there was much less than an ideal depth of free draining soil. In January 1988 he also saw young lychee trees. He considered they lacked vigour. They were smaller than he considered they should be for their age. He thought they were not getting enough water.

The evidence also disclosed there are a variety of problems which may beset the orchardist of avocados, lychees and mangoes. Apart from insects, diseases and bird and flying fox attack, one particular year can be different from another because of the elements.

I am not satisfied on the evidence that it is proven the plaintiffs were in breach of the agreement ... . It is obvious there was serious conflict between the first defendant and the plaintiffs. I think it likely that had its genesis in the plaintiffs' farming practices which are referred to above. I do not intend to make a judgment about those practices. I do not think that the evidence I have would justify it. So far as the avocado and lychee trees are concerned the plaintiffs could only effect some of the matters which would affect a tree's development. So far as the mature mango trees are concerned there is room for conflicting opinions regarding the economic viability of collecting and transporting of the 1988 crop fruit for canning and/or drink making."

Later his Honour said:

"Pursuant to the agreement the capital input required
of the plaintiffs was almost entirely comprised of
moveable farming equipment which would remain their
property. The capital input of the first defendant
included orchard trees and other necessary more
permanent or fixed equipment such as shed, bore and
watering equipment together with the cost of putting
them in place except for the orchard trees. The
plaintiffs were to pay farm operating expenses and to
perform the orchard work. So far as farm operating
expenses were concerned that would reasonably include
items such as fertiliser and material to prevent or
discourage insect, fungal and bird attack. The
plaintiffs were to receive two thirds of gross sales of
produce which means they were entitled to and did share
immediately in the harvest from the existing mature
mango trees. This had a value. The plaintiffs in their
evidence sought to minimise this value. I have already
noted these trees had already been neglected and were
on somewhat difficult terrain. However, there were a
significant number of them and potentially, depending
on seasonal conditions and management, they were
capable of producing a not insignificant return to a
grower. The male plaintiff was entitled to work
elsewhere until the orchard was in full production
whatever the precise meaning of that phrase. The
plaintiffs were to be provided with rent free
accommodation on the property by the first defendant.

Obviously enough at the time of execution of the agreement so long as the first defendant continued to own the property and so long as each party satisfactorily performed their side of the agreement the parties contemplated the arrangement established by the agreement would continue into the future with an orchard being developed. This is not surprising.

Obviously also eventually any trees planted assuming they survived and were well husbanded would achieve their maximum production potential. When that was and what that would be would depend upon a number of factors including the date of planting, the suitability of the area for growing that particular fruit, necessary inputs and the expertise of a grower. The parties also recognised and acknowledged that in the future the first defendant may wish no longer to be the owner of the property and in that event would use her best endeavours to look after the plaintiffs' interests.

The trial judge, having rejected the appellants' claim that the agreement entitled them "... to farm the property until (at least) the orchard was in full production ..." said:

"... it is necessary to determine what in the circumstances of the case as disclosed by the evidence is reasonable. In doing that I have considered both the content of the agreement and its actual application including the situation pertaining at the date the plaintiffs left the property.

As to a reasonable period I have already referred to the expenditure and labour of the plaintiffs. With respect to their expenditure there was little detailed evidence before me. It is apparent there was considerable expenditure by the first defendant including a loan of money to the plaintiffs so that they may provide items which they were required to provide to enable them to undertake their responsibilities under the agreement and apparently to repair their truck. The first defendant also paid for some items which strictly speaking were the responsibility of the plaintiffs for instance some fruit cartons and fertiliser and the electricity costs for the dwelling in which the plaintiffs resided rent free. This seems to have been either by express arrangement or the first defendant was simply prepared to do it. The plaintiffs received their two thirds share of the fruit from the mature mango trees. I will not set out again in detail how the arrangement worked during the four years the plaintiffs lived on the property. Giving due consideration to those matters and to the fact that the farming was to involve the planting and husbanding of fruit trees which would take time to produce a crop it seems to me that a reasonable period would be until the time the planted avocado, lychees and mangos delivered their first commercial crop for harvest.

As to reasonable notice once the agreement had continued for a reasonable period the notice required would only need to be sufficient to allow the removal and relocation of equipment and the movement to another dwelling."

No further explanation was given concerning why the "first commercial crop" marked the end of a reasonable period, no explanation whatever was given by his Honour concerning what was meant by the "first commercial crop" or why the crop in (or prior to) February 1992 was the "first commercial crop", and the latter finding may have been somewhat inconsistent with findings which he had earlier made that commercial crops of each type of fruit were to be expected within 4 to 5 years of planting. However, as will be seen, the trial judge relied heavily on Exhibit 2 for his final calculations, and that exhibit provides a clue as to what was meant. A perusal of the schedules which comprise Exhibit 2 establishes 1992 as the first year in which marketable quantities were obtained from all avocado, lychee and mango trees which the appellants had planted. Although there is some difficulty in determining profitability on the evidence adduced at the trial, it seems that 1992 was also the first year in which the appellants would have received more than a nominal return; that is to say, the first year in which two-thirds of the gross sale income would have been significantly more than "operating expenses", including costs of production and sale but excluding the value of the appellants' labour.

It is important to recognise that the trial judge did not decide that, on its proper construction, the agreement permitted termination by reasonable notice after the "first commercial crop". What he decided was that the agreement was terminable by reasonable notice after a reasonable period and that, in the circumstances, a reasonable period coincided with the "first commercial crop". In addition to the passages quoted, this is confirmed by the following extract from his Honour's reasons for judgment which demonstrate that he considered that, with their share of the income from the "first commercial crop", the appellants would have been adequately compensated if the agreement had been terminated by a notice allowing an orderly withdrawal given at that time. He said:

"In the circumstances what must be attempted on the evidence is an assessment of the value of the loss to the plaintiffs of the chance to benefit from a crop or crops from the orchard trees on the property. This will involve consideration of the net return they could reasonably have expected from their activities on the property up until and including the first commercial crop from the orchard trees they planted. I have Exhibits 2 and 29 as guides. Because of the uncertainties and/or contingencies involved in growing these fruits and the returns per tray which are discussed in the evidence I will use the more conservative figures in Exhibit 2. Accordingly the gross return would be:-

1989	Avocados	$ 1,120
Lychees	$ 738
1990	Avocados	$ 6,800
Lychees	$ 2,952
1991	Avocados	$10,880
Lychees	$ 4,428 $ 558
1992	Avocados	$13,600 $ 1,244
Lychees	$ 5,535

(calculated at 15 kilograms per tree rather

than 28)

$ 2,232

Mangos $ 2,020

The projected gross returns from the orchard of established mango trees can only be assessed by having regard to returns in previous years. An average of the four previous years results is 337 trays per year. One of those years was a very poor year. The gross return to February 1992 using 337 trays a year would be 1348 trays at $10 per tray $13,480.

The total gross return then would be $65,687.
I have already made brief reference to some of the
problems which may beset the orchardist. I have
mentioned Vernon's opinion regarding the avocado and
lychee trees he saw in January 1988. In my view the sum
for the total gross return should be discounted by a
further 15% to take account of contingencies. This
results in a sum of $55,833.

Having regard to the evidence of Vernon and Groves, for the costs of production and sale and ignoring the cost of capital equipment I adopt:-

Avocados and Mangos	$ 4 a tray
Lychees	$4.50 a tray (carton)

Cost of production and sale therefore will be:-

Avocados	4218 trays	$16,872
Lychees	5481 kilograms	$ 4,932
or 1096 trays (cartons)
Mangos	1550 trays	$ 6,200 Total$28,004

According to Clause 2 of the agreement "the gross sales from products and fruits produced on the property shall be divided two thirds to Mr and Mrs Halfpenny and one third to Mrs Minnikin". Clause 3 of the agreement provided that the plaintiffs "will pay all operating expenses for the farm". That includes in my view the costs of production and sale. On that basis the first defendant was entitled to one third of the gross sales of $55,833 or $18,611 and the plaintiffs' $37,222. From the plaintiffs' amount there must be subtracted the costs of growing and sale. Using the figures above the result is $9,218.

Pursuant to the agreement the plaintiffs' were living rent free in a house on the property. Adopting a rental value from February 1988 to and including February 1992 which is the final month used for the crop periods in Exhibits 2 and 29 of $60 per week the result is $12,480". [According to the appellants, an additional $240.00 should have been allowed.]

"The total of the two sums is $21,698.

I assess the plaintiffs' damages for the premature repudiation of their licence to farm the first defendant's property in the sum of $21,698."

After deducting counterclaims totalling $5,196.00 (the loans earlier referred to), plus interest, judgment was given for the appellants for the amount stated at the outset. (The respondent did not on appeal pursue the further elements in the counterclaim which were disallowed by his Honour).

As has been pointed out, the parties conducted the appeal on the basis that the Court should decide what was a reasonable period by reference to two alternatives, namely, the "first commercial crop", which was found by the trial judge and supported by the respondent, and "full production" which was contended for by the appellants. The difference between these choices can be readily illustrated by reference to part of Schedule 4 of Exhibit 2, which is as follows:

" SCHEDULE 4

TOTALS FOR AVOCADOS, LYCHEES AND MANGOS

YEAR ENDING	RETURNS
1/2/89	$ 1, 858.00
1/2/90	$ 9, 752.00
1/2/91	$ 15, 866.00
1/2/92	$ 29, 528.00
1/2/93	$ 39, 983.00
1/2/94	$ 56, 658.00
1/2/95	$ 72, 435.00
1/2/96	$ 88, 544.00
1/2/97	$ 99, 868.00
1/2/98	$110,548.00"

Based on that schedule not only would there would have been little return to the appellants until 1992, given the 2/3:1/3 division and the appellants' obligation to pay all of the "operating expenses", but thereafter the sales proceeds, and hence profitability, would have expanded considerably each year until 1998 which, as earlier explained, is put forward by the appellants as "full production". The financial consequences would be far greater still if the appellants' complaint was upheld that the trial judge erred in using the "more conservative" figures in Exhibit 2 in preference to Exhibit 29 and in discounting a further 15% for contingencies. In imposing this further 15% discount, his Honour drew attention to, and proffered in support, Vernon's opinion of the lychee and avocado trees he saw in January 1988 when on inspection at the first defendant's request and Groves' assessment of the likely lychee yield.

While the course followed by the trial judge was available to him, not least given the witnesses' experience and qualifications, there are, unfortunately, flaws in what has been decided.

Firstly, the two alternatives presented with respect to a reasonable period, namely, "first commercial crop" and "full production", by no means exhaust the relevant possibilities. A reasonable period may not have been 1992 or 1998 but date in between. The parties' arguments not only did not discuss this possibility omitted to explain the basis for their rival contentions. As has already been noted, the trial judge did not explain his reason for choosing the "first commercial crop" as marking the end of a reasonable period beyond a general indication that he considered that the appellants would then have been adequately compensated for the time, effort and money which they had expended. He did not elaborate on his reasons for that view. Nor did the appellants explain the basis for their contention that a reasonable period would not elapse until "full production". Further, neither in the context of mitigation of loss or otherwise, was any mention made of the appellants' income-earning capacity once they were no longer bound by the agreement; it seems to have been overlooked that the termination of the agreement left them free and fully able to pursue income from other activities and that, had the agreement continued, it would have been necessary for the appellants to continue to contribute time, effort and money to farming the first defendant's property.

This leads to another problem.
The two issues concerning (i) the determination of a

reasonable period after which termination by a reasonable notice was permissible and (ii) the determination of the appellants' loss as a result of the wrongful early termination of the agreement are logically sequential, although both are related to the nature and extent of the appellants' contribution of time, effort and money to the establishment and operation of the orchard. The first question, but not the second, assumes continued input into the orchard by the appellants until it is legitimately terminated; the second question, but not the first, accepts that, once the agreement was terminated, legitimately or otherwise, the appellants were in a position to earn other income which they could not otherwise have earned (subject to clause 6 of the agreement).

In selecting the "first commercial crop" (in 1992) as marking the end of a reasonable period, the trial judge (i) ignored the continued expenditure of time, effort and money which would have been required of the appellants had the agreement continued until the end of 1992 and based his conclusion as to what was a reasonable period only on their input prior to the time when the agreement was wrongly terminated and they left the property and (i) ignored the parties' anticipation of future profit at the time they entered the agreement as a factor in determining what was a reasonable period. The subject of the parties' bargain, sharefarming an orchard, necessarily involved a substantial delay between initial outlays of time, effort and

money and consequential returns from sales; the initial years would involve losses and profitability would come later on an increasing basis each year until "full production" was achieved.

Because of the way in which the case was fought and decided, this Court is not well-placed to determine what would have been a reasonable period having regard to (i) the appellants' continuing outlays of time, effort and money throughout the period and (i) increasing profitability.

Neither the findings made by the trial judge nor the evidence, which is conflicting and confused, enable this Court to do more than determine what would have been a reasonable period on a broad and somewhat arbitrary basis.

So far as the evidence reveals, the appellants were not reaping any rewards during the initial years when they promoted the parties' common purpose in creating the conditions for future financial benefit. Further, the evidence did not establish what, if any, income the male appellant earned in accordance with clause 6, what income the appellants earned while on the property from such activities as the market garden and the fowls or what income the appellants earned after the agreement was wrongly terminated. Nor was the appellants' expenditure fully demonstrated and analysed. Nor was there clear evidence of the property's production and profitability after the appellants left.

Doing the best we can on the material presented, we consider that, judged by reference to what was known or could be anticipated at the time when the parties entered the agreement, a reasonable period would not have elapsed until February 1996 by which time the appellants would have put in 12 years of effort and financial contributions and the orchard would have been profitable for a 5 year period, subject to the vicissitudes which might have influenced production.

We would prefer not to send the matter back to the District court for the appellant's damages to be recalculated on this footing but that may be unavoidable. For the moment, however, we will give the parties an opportunity to agree on the amount recoverable by the appellants in accordance with these reasons or, failing agreement, to make further written submissions concerning the assessment of that amount.

The only formal orders made at this time are that the appeal is allowed, the judgment below is set aside and, in lieu thereof, judgment is given for the appellants for damages to be assessed by this Court or, if the Court so decides, by the District Court. The respondent must pay the appellants' costs of and incidental to the appeal to be taxed.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 52 of 1993

Brisbane
[Halfpenny v. The Public Trustee of Qld.]

BETWEEN:

EARNEST GEORGE HALFPENNY and
JACQUELINE HALFPENNY

(Plaintiffs) Appellants

AND:

JEAN MURIEL MINNIKIN

(First Defendant)

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND

(Second Defendant) Respondent

The President
Mr Justice Davies

Mr Justice Moynihan SJA

Judgment delivered 3/12/93
Reasons for Judgment of the Court.

APPEAL ALLOWED. THE JUDGMENT BELOW IS SET ASIDE AND, IN LIEU THEREOF, JUDGMENT IS GIVEN FOR THE APPELLANTS FOR DAMAGES TO BE ASSESSED BY THIS COURT OR, IF THE COURT SO DECIDES, BY THE DISTRICT COURT. THE RESPONDENT MUST PAY THE APPELLANTS' TAXED COSTS OF AND INCIDENTAL TO THE APPEAL.

CATCHWORDS CONTRACT - Implied terms - sharefarming agreement - whether applied term that agreement terminable on reasonable notice after a reasonable time - whether reasonable period was "first commercial crop" or "full production".

Counsel:  J Curran for the appellants
G Britton for the respondent

Solicitors: Stephen Comino & Cominos town agents for

Robert Harris & Co for appellant

Rinkevich & Stickley for respondent

Hearing date: 27 July 1993