Holdsworth and Ellison v RSPCA
[2015] VCC 653
•22 May 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-03-04358
| JAMES MAXWELL HOLDSWORTH AND HEATHER MUNRO ELLISON | Plaintiffs |
| v | |
| RSPCA (VIC) INCORPORATED | Defendant |
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JUDGE: | HIS HONOUR JUDGE BOWMAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | Various preliminary mentions and hearing from 2 March 2015 to 25 March 2015 | |
DATE OF JUDGMENT: | 22 May 2015 | |
CASE MAY BE CITED AS: | Holdsworth & Ellison v RSPCA | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 653 | |
JUDGMENT AS TO QUANTUM
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Catchwords: The Prevention of Cruelty to Animals Act 1986 – Judgment of 8 August 2014 to the effect that defendant responsible for the death of 131 Murray Grey cattle put down by or at the direction of an inspector of the defendant – finding that such animals wrongfully put down – finding that defendant not liable in respect of approximately 170 missing animals – assessment of damages in respect of the 131 cattle for which defendant to be liable – competing methodologies as to assessment of lost profit – whether approach based on replacement value should be adopted as an alternative – quality and value of the animals in question – calculation based upon possibility of plaintiffs engaging in profitable stud business – competing calculation based upon lost profit from commercial herd – whether plaintiffs would have made profit from artificial insemination project – approach to be applied in relation to discounting and percentages – reliability of estimates given by two financial experts –factors to be considered generally.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S Langslow with Mr P Berman | Maitland Lawyers |
| For the Defendant | Mr D Christie | Corrs Chambers Westgarth |
HIS HONOUR:
General background
1 This matter involves the wrongful putting down by the defendant of the cattle of the plaintiffs when they were agisting on property belonging to the Framlingham Aboriginal Trust at Framlingham, near Warrnambool in western Victoria (“Framlingham”). The cattle in question were of the Murray Grey breed. Proceedings in this extremely vexed and relentlessly contested matter – at times, some issues were contested almost to the point of the absurd – were issued in excess of 10½ years ago and concern events which occurred 12 years ago. The trial has been conducted over some 68 sitting days. One of the very few things about which there was agreement during the conduct of the matter was the splitting of the case, this occurring on 8 April 2014, being the thirtieth day of hearing. Instead of all issues being on the table, thereafter evidence was confined to the questions of negligence and, if negligence was established, the number of animals for the destruction or disappearance of which the defendant was liable.
2 The splitting of the case, which could be described as being done with the encouragement, if not at the instigation, of the parties, followed changing evidence as to the possible number of animals involved, this in turn involving the potential recalling of witnesses, and particularly expert witnesses. It was thought that, if I ruled as to liability and, if I found against the defendant, as to the number of animals involved, this would simplify the quantification of loss. Given the way in which events have subsequently unfolded, perhaps all that can be said about this is that it seemed like a good idea at the time.
3 On 8 August 2014, I handed down a very lengthy Judgment on the issue of liability and the number of cows involved. I found that the defendant was liable to the plaintiffs in respect of 131 animals (damages were being sought in relation to 311). These 131 animals consisted of 126 cows, 3 calves and 2 bulls.
4 On 11 December 2014 I handed down a lengthy Ruling in relation to a proposed Further Further Amended Statement of Claim, which would have had the potential effect of dramatically increasing the amount of damages sought. The plaintiffs were seeking leave to file such a document. The plaintiffs’ application was unsuccessful. The amount claimed by the plaintiffs remained at $2,466,100, together with interest and costs. Proposed amendments directed towards aggravated and exemplary damages were not allowed. A proposed amendment effectively trebling the amount sought by the plaintiff met a similar fate. As I pointed out in that Ruling, $2,466,100 was the maximum quantum of the case which the defendant had arrived to fight, and that maximum quantum was a matter of consent. I would refer to the details set out in paragraph 74(xvi) of my Ruling of 11 December 2014. Thus, as stated, the maximum amount of damages which the plaintiffs can recover continues to be $2,466,100, together with interest and costs. The approach to be adopted in relation to interest remains contentious. Much depends upon the method of assessing damages which is adopted.
5 Two other matters by way of general background should be mentioned. Firstly, another issue to be determined as part of the case on quantum concerns the quality of the cattle involved and the use to which they would be put. There are various possibilities in this regard, but one basic question is whether they could properly be described as being stud cattle or commercial cattle. Certainly, in my Judgment of 8 August 2014, I referred to the animals as being stud cattle. However, as I pointed out in my Ruling of 29 January 2015, clearly I had not ruled that the animals were stud animals. I accepted that the plaintiffs believed them to be such animals. This in turn had the potential to impact upon certain issues concerning liability. My Ruling of 29 January 2015 deals with this issue in some detail. I need not repeat it here, save to say that the quality of the animals, being an issue which relates to quantum of damages, remains to be determined and the parties were well aware of this before the hearing on quantum commenced on 2 March last.
6 Secondly, I made it clear that all evidence in relation to quantum given prior to the splitting of the case on 8 April 2014 remained as valid evidence which could be considered. It was evidence given at a time when all issues were “on the table”. It included evidence given by the plaintiffs’ financial experts and by witnesses, including the plaintiffs, as to the breeding and quality of the animals. It included evidence as to artificial insemination. The evidence of all such witnesses had been tested at length in cross-examination. Some were recalled during the recent quantum hearing. However, all relevant evidence given prior to the splitting of the case and at a time when quantum was still very much in dispute remains as evidence which can properly be considered by me.
7 For the duration of the quantum hearing (some 13 days, not counting a considerable number of days upon which preliminary points and the like were argued) Mr S Langslow of counsel with Mr P Berman of counsel again appeared on behalf of the plaintiffs. Mr D Christie of counsel appeared on behalf of the defendant.
8 A very considerable number of documents were tendered. Oral evidence was received from the following witnesses:
(i) Mr William Henderson (a financial expert recalled by the plaintiffs);
(ii) Mr Peter Sutherland (a prominent breeder of Murray Grey cattle, also recalled by the plaintiffs);
(iii) Mr Matthew Tol (another financial expert recalled by the plaintiffs);
(iv) Dr Ian Byrne (a veterinary surgeon called by the defendant);
(v) Dr John Webb Ware (a veterinary surgeon and consultant called by the defendant); and
(vi) Mr Joe Dicks (a financial expert called by the defendant).
9 In addition, counsel for each party made detailed and lengthy addresses, in part speaking to written submissions.
10 I turn now to a discussion of the central issues to be determined. Given the way in which the evidence unfolded, this seems to me to be a more satisfactory approach than summarising the oral evidence of each witness and the documents tendered, particularly as the situation involves the revisiting of evidence received before the splitting of the case.
What was the essential quality and condition of the animals in question and for what purpose were they to be used?
11 I accept that the cattle which went to Framlingham were of the Murray Grey breed and were pure-bred. Whilst, in my Judgment of 8 August 2014, I referred to my opinion that the plaintiff, Ms Ellison, appeared to be involved emotionally in the case, I accept her evidence as to the background of the herd of which the cattle in question formed a part. I accept that she has a long history of being involved with Murray Grey cattle, including the breeding and showing of same. I also accept her evidence that her entering into the partnership (JA Heath Inland Holdings) with the other plaintiff, Mr Holdsworth, resulted in the merging of part of her herd with part of his and that each part traced back to what is known as the Cloverdale line. This also led to the purchasing of property in southern New South Wales where the partnership herd was to be located. These cattle were Ms Ellison’s “pride and joy” – see Transcript (hereinafter referred to as “T”) 1164.
12 I shall now deal with the evidence of a number of witnesses, which evidence deals with or touches upon the nature and quality of the animals in question and the purpose to which they would probably have been put. Henceforth, I shall refer to the cattle which were put down by the defendant at Framlingham, and for which it is responsible, as “the Framlingham cattle”. One fact that does not seem to me to have been challenged by the defendant is that the Framlingham cattle were of the Murray Grey breed. Similarly, I can find no challenge to the proposition that they were pure-bred. Some question may exist as to whether the three calves which were put down were pure-bred. However, it seems to me probable that they were. Even if they were calves which were in fact born at Framlingham, their date of conception would have occurred prior to the herd arriving there. Thus, even if, despite the fencing that was put in place, there was some mingling of the plaintiffs’ herd with other animals agisting at Framlingham, the three calves that were put down in late May 2003 could not have resulted from a mating which occurred at Framlingham. The plaintiffs’ herd had arrived at Framlingham in late February. Even if some mating occurred as a result of some mingling of the plaintiffs’ herd with other animals, no calves resulting therefrom could have formed part of the stock put down in late May. I am satisfied that, prior to the plaintiffs’ herd going to Framlingham, they had been kept separate from other cattle and that includes during the period which, as shall be discussed, they were on the “long paddock”. It follows that the calves in question must also have been pure-bred. However, whether they would have become registered as stud cattle or sold on a commercial basis is another matter. In any event, I find that the 131 animals in question were all pure-bred Murray Grey cattle.
13 I turn now to a summary of the evidence given as to the particular breeding, quality and condition of the Framlingham cattle. The question of condition essentially relates to recovery. In other words, had the intervention by the defendant not occurred, would the animals have recovered from the lean to very lean condition which at least some of them were in as at the date of that intervention? I say now that I am satisfied that they would have recovered and there will be some references to this in the discussion which follows. Another issue which shall receive some attention concerns whether there was some mingling of the plaintiffs’ herd with other cattle at Framlingham and the effect of this. Again, there will be some discussion as to parts of the relevant evidence, but my conclusion will be that there was at least a risk of matings with bulls of other breeds. I say now that it seems to me that the effect of this would be that it is highly unlikely that calves born of cows that became pregnant at Framlingham could be registered as pure-bred stud animals. Bearing these matters in mind, I turn to a discussion of the evidence.
(i) Ms Heather Ellison
14 Ms Ellison stated that her cattle (as opposed to the partnership herd) were all registered with the Murray Grey Beef Cattle Society. They included cattle which had been successful at shows. When she first saw the cattle which Mr Holdsworth had, she became very excited because of the fact that the right genetics seemed to exist in the two herds — see T1156 and following pages. Whilst Ms Ellison and Mr Holdsworth kept some Murray Greys on the properties which they each owned, the herd at the purchased property at Carrathool in southern New South Wales was separate and had the specialised families in it — see T1163. She also stated that, after the drought and when the cattle which had been at Framlingham were taken back to Carrathool, they recovered to the extent that they fattened up and looked like cattle photographed before the drought. I accept this.
15 In her evidence-in-chief, Ms Ellison also described what is known as the “long paddock”, being, in this instance, the land and grass alongside certain roads in southern New South Wales. The “long paddock” is also at times referred to as “the route”. It is land used quite legally, particularly during droughts, upon which cattle can feed. However, compliance is required with certain conditions, including that the cattle are properly supervised, that they are moved a certain distance each day and the like. The partnership cattle were taken along the “long paddock” for a considerable period – in excess of a year – in 2001 and 2002. Ms Ellison emphasised how important it was to keep the best breeding stock going on the route, whilst selling off some other animals. Ms Ellison also stated that calves that had been born whilst the herd was on the “long paddock” were tagged in a different way. Another observation by Ms Ellison was that the lightness in weight of cows does not make any difference to their breeding capacity — see T1176. Indeed, Ms Ellison gave quite lengthy evidence about the valuable nature of the best animals in the herd and the lengths to which the partnership had gone to look after them and provide feed for them. She described the health of the animals as being fine at the time that the agistment proposal at Framlingham became available.
16 In relation to the arrangements at Framlingham, Ms Ellison described how approximately four kilometres of electric fencing was set up. I say now that the evidence of Ms Ellison in relation to the fencing seems to me to be in accordance with the evidence of other witnesses and I have no reason to doubt it. As there were four bulls with the cows, single sire mating could not be guaranteed and the purity of the blood lines could be compromised. That is apart from the risk of some mingling with other cattle that were not Murray Greys. I am also satisfied that there was no mingling with cows from other herds whilst the partnership animals were on the “long paddock”, but there were the four bulls running with the cows and again single sire mating could not be guaranteed.
17 Ms Ellison stated that the cattle which were taken to Framlingham were the valuable ones — “we had to keep our families, we had to keep everyone together” — see T1187.
18 Ms Ellison asserted that, when she arrived at Framlingham after the intervention by the defendant, all the “good breeders” and weaners were gone. Of course, not all that were “gone” were the responsibility of the defendant. Ms Ellison claimed that “our studs had gone. We can’t operate, we can’t operate as we were operating before, we haven’t got the females and we haven’t got the bulls” — see T1218. The only income which the partnership now gets is essentially on the commercial market to “bring in a bit of income” — see T1219. Some very cheap replacement bulls had been bought, but the breeders were gone and it has subsequently been a situation of loss after loss. She repeated that they could no longer do the stud enterprise, and were being financially strangled. As I understand it, the commercial market involves the selling of cattle essentially for their meat value.
19 In cross-examination, Ms Ellison said that no heifers or bull calves went to Framlingham The four bulls that went to Framlingham were a continuation of the existing blood lines. At Framlingham, those bulls were left running with the cows.
20 Ms Ellison gave evidence that, as far as she knew, all cows and steers that went to Framlingham were ear-tagged, as were calves that went there. The last marking of calves had occurred in October 2002 at Corowa, apart from a couple marked prior to the trip to Framlingham. About 50 unmarked calves had been born at Framlingham. The calves born there were in good health. She also stated that the calves and their marking were recorded on a pad which she kept at Carrathool and which she used for the registration or records in relation to the calves. Ms Ellison said that they did not keep any bull calves. I might say that a considerable amount of time in cross-examination was spent in relation to the tagging system employed. Quite an amount of confusion resulted, this being at least in part contributed to by Ms Ellison’s quite profound deafness.
21 Another piece of evidence given by Ms Ellison was that the partnership had spent three-quarters of a million dollars on keeping their herd of pure-bred cattle together — see T1293. She subsequently said that the cows which were recovered from Framlingham were used for breeding, but could not be used for stud work or work involving artificial insemination because “our stock were gone and they took our goods but they didn’t take our debt” — see T1369. That the partnership had been left without any cows that were in the best breeding group was something that the witness mentioned several times. Ms Ellison also mentioned that calves, which I understood to be from Framlingham, fetched $600 when sold in November 2003. However, she could have been referring to calves that dropped subsequent to the intervention by the defendant and from the cows that had been retrieved.
22 Ms Ellison also gave evidence that one of the bulls in the photograph was either three or four years old in 2003. The other bulls were also approximately four years old. The bulls would have been registered as stud bulls — see T1385. The partnership brought pure blood line bulls that led back to “our progenies”. Ms Ellison also repeated that there were a number of partnership bulls running with the cows when they were on the “long paddock”. However, there were no bulls from her property at Bairnsdale, nor from that of Mr Holdsworth at Westmere. She identified one of the bulls in the photograph as being Thologolong Mile and, whilst it is not entirely clear, the other may well have been Thologolong Howzat. If this be so, these were two bulls sold to the partnership by Mr Peter Sutherland, to whose evidence I shall come shortly. Generally, I refer to the evidence of Ms Ellison at T2165 and following pages.
23 At T1405, Ms Ellison stated that their enterprise was not a commercial one. Vealers were used “for a fat market for a cash return”, but the breeders were kept to be used for stud purposes, shows and field days. All the Framlingham cattle were stud cattle. She also said that, to do shows, cattle had to be registered and all the requisite information had been recorded for the purposes of registration. Calves that had arrived since the drought and when the cattle were on the route were not registered, and apparently there was no intention to register them (presumably because a number of bulls were running with the cows and single sire mating could not be established). However, had the drought not occurred, registration could have been arranged. This issue was discussed at T1410 and following pages. The calves resulting from mating which occurred on the route were kept as commercial stock. However, once the cows returned to Carrathool, individual matings, artificial insemination and the like could have been supervised, as had been planned.
24 It was only during the time of the severe drought that the partnership had to sell the calves, or sacrifice them, to employ the wording used by Ms Ellison. Similarly, the heifers that came off the route could not be registered as stud cattle, and the same could be said of calves born at Framlingham. None of the breeding cows were born on the route and the cows travelled only with the four bulls that went to Framlingham subsequently.
25 Ms Ellison said that there were other breeds of cattle at Framlingham and that was also why calves from the breeders at Framlingham were to be used as commercial calves. They could not be stud cattle if the cows were running with another breed. The procedure, after leaving Framlingham, would have been to set aside cows that were not pregnant. Calves dropped by the pregnant animals would have been sold commercially. There would be a delay until the pregnant cows were empty, and then the program concerning artificial insemination and single bull matings could commence. The cattle that had ultimately returned to Carrathool after Framlingham were not re-registered as stud cattle because “we never had our breeders” — see T1423. Further, the cattle that in fact returned not only were not the breeders, but had to be used for immediate income. The partnership had a lot of debt.
26 After the intervention at Framlingham, the partnership could not produce stud cattle, because every calf had to be dealt with on a commercial basis so as to get money in to pay bank interest. The opportunity was lost — see T1432. Ms Ellison also explained that, if registered cows run with a number of bulls, the offspring cannot be registered. However, if the cows are registered, they remain so registered. All of the partnership stud cattle are eligible for registration. A good percentage have actually been registered.
27 Ms Ellison stated that, but for the intervention by the defendant, she believed that the herd would have remained at Framlingham (not much longer than November 2003) — see T1476. Ms Ellison also said that the stud cows that went to Framlingham each had the potential of producing calves that could be used either for commercial purposes or for stud purposes. However, the calves and weaners at Framlingham could never have been stud cattle. Ms Ellison again acknowledged the presence of other cattle at Framlingham, but never saw other cattle actually mixing with partnership cattle.
28 She also said that the plan was to put the one-third top cows into the stud herd. The partnership did not sell stud females. The partnership does not buy any stock. (Except, as Mr Holdsworth, a couple of bulls).
29 Ms Ellison further said that the full breeding history of each animal in the herd, going back generations, could be established and that there was documentation in this regard up to May 2003. She referred to the tattooing or tagging system. Each heifer that was retained had to be mothered correctly in the yards, where the mother’s ID was known. However, the partnership had been left with too few of their breeding animals to be able to carry on with the focus and formation of the partnership herd. She again referred to the necessity for selling after mid-2003 because of debt.
30 Since mid-2003, good stud calves which would have normally been kept have had to be sacrificed – that is, sold – see T1500 and following. Since 2003, female calves have not been kept for breeding purposes. Breeding from the cows returned from Framlingham has continued, but only in order to meet financial obligations. The youngest breeding cow that went to Framlingham would have been three years old at the time. Some female calves may have been retained. No cows have been purchased since mid-2003. However, some 30 of the mothers now have calves born at Carrathool – see T1503.
31 Ms Ellison also said that, in the financial year ending June 2003, because of the drought the partnership sustained a lot of loss and spent a lot of money saving cattle.
32 In re-examination, Ms Ellison confirmed that the stud cattle were earmarked by means of a tag in one ear and a tattoo in the other. Details would be written down on a pad. These would be later copied into a book. The calves that were to be retained and go back into stud were identified in the book. All those that were to be retained were heifers. Some later went to Bairnsdale. Some of the calves were later sold at Finley (presumably when the herd was on the route).
33 There was then considerable discussion concerning ear tags. Ms Ellison pointed out that calves born on the route were commercial calves and that the recording may not have been the same. She also confirmed that the drought had in fact broken during 2003 and things, at least at Carrathool, were then good.
34 In answer to a question of mine, Ms Ellison confirmed that, since 2003, the main purpose of the breeding program had been the commercial market. Numbers had to be built up in order to get more money because “we have lost everything” – see T1535.
35 The intention of the partners had been to build up the numbers in the herd to approximately 760. She also referred to the inability to purchase the property at Bairnsdale when it came on the market in 2004. That property would have been worked as a partnership asset.
(ii) Mr James Holdsworth
36 I turn now to the evidence of the plaintiff, Mr Holdsworth, in relation to issues such as the quality of the animals and the objects of the partnership. The evidence of Mr Holdsworth was more substantially directed towards the issue of liability, but a modest amount of his evidence did relate to the issues now being considered.
37 Mr Holdsworth, a farmer all his working life, first went into Murray Grey cattle in approximately 1968. The stock that he then acquired included a bull called “Cloverdale Dan”. Mr Holdsworth was also a long-standing member of the Murray Grey Beef Cattle Society. The aim of the partnership into which he entered with Ms Ellison was to improve the breeding and quality of the herd. When the property at Carrathool was obtained, the objective was to develop it and make it a selling ring for cattle.
38 By the time that a part of the herd was moved to Framlingham, the stud plans, including those for stud sales, had been partially completed. Probably, the commencement of the operation was approximately two years away as at the time – see T160. When the drought set in there was a culling of the herd, with some going on the “long paddock”. Records were kept of the markings of the cattle during this time. Mr Holdsworth also described the tagging and tattooing process, along with the recording of the relevant details.
39 Mr Holdsworth described the fencing off of the relevant part of the Framlingham property. There were other cattle on the property. He also identified a document (Exhibit C) as being a receipt from the Murray Grey Beef Cattle Society in the sum of $11,184, being the registration fee for the cattle, the date of it being 3 April 1996.
40 Mr Holdsworth gave evidence concerning the unannounced arrival of the witness, Mr Richard Keys, at the time an Animal Health Officer employed by the Victorian Department of Primary Industries, at Mr Holdsworth’s Westmere property in June 2003. I shall turn to the relevant parts of Mr Keys’ evidence shortly. Those parts essentially relate to the condition of the surviving cattle brought from Framlingham to Westmere.
41 In relation to Mr Holdsworth’s ambition of running a Murray Grey stud in conjunction with Ms Ellison, he stated that the effects of the destruction of the cattle was that they “Just can’t do it” – see T241. The partnership had purchased some stud bulls after the cattle were moved back to Carrathool in October 2003, but they were not as good. In recent times, a very well-bred bull has been purchased, but it is a matter of waiting and seeing how the calves look.
42 Mr Holdsworth subsequently repeated that they had not been able to recover from the loss of the animals in question. They had not been able to replace the genetics – see T399. The partnership had not been able to set up a stud operation from which sales could be run. They did not have the money or the cattle. Weaners had been sold to get some money. Some of the cows that had been retrieved from Framlingham had calves, which went with their mothers back up to New South Wales. In addition, one of the properties, “Piney Park”, also in southern New South Wales, had to be sold.
43 Mr Holdsworth stated that the cattle at Framlingham were stud cattle. However, the last time that any had been registered was 1996. The headquarters of the Murray Grey Beef Cattle Society had moved from Albury. In addition, there was the dispute about Breedplan (which shall be discussed subsequently), of which the partnership and others did not approve – see T495. However, records had been kept. Further, Mr Holdsworth said that one is still able to get progeny of registered cows also registered, regardless of age. Once an animal is registered, it is registered for life. In 1996, all the cattle were registered. Once cattle are registered, it is up to the owner to keep a book of details. Registration of offspring can then occur subsequently. He repeated that all the Murray Grey registrations had been brought up-to-date in April 1996. Thereafter the partnership kept a record of the cattle that could be registered, also doing their own culling and the like. Accordingly, the relevant cattle were stud cattle – see T498.
44 From 1996 onwards, the partnership did not buy cows. Growth in the herd came from breeding and not purchasing – see T582. Bull calves were cut and ultimately sold. A few heifers, which were to become the breeders, were retained. Numbers were allocated to cows and calves and those numbers were recorded. Mr Holdsworth stated that the long-term plan of the partnership in relation to its herd was to produce the best line of cattle. He had been successful in competitions and Ms Ellison had done very well in shows – T656.
45 After the merging of the herds, the breeding of the cattle improved. His and her cattle “just sort of gelled together” and were exceptionally quiet animals. They would probably have shown the cattle, but first had to build the complex at Carrathool. Yards were being purchased from a neighbour. Of course, the drought intervened. At T672 details of the breeding of certain animals sold by Mr Holdsworth in 1996 were introduced into evidence. These were essentially extracted from an auctioneer’s brochure and list the names of original sires and females. These were stud animals, including the Cloverdale line.
(iii) Mr Peter Sutherland
46 Mr Peter Sutherland is a farmer and breeder of Murray Grey cattle. His family were the foundation breeders of such cattle, commencing in 1905. He has continued farming on the same establishment in an area in north-eastern Victoria, such area being called Thologolong. He gave evidence before the splitting of the case and was subsequently recalled.
47 His evidence in relation to these issues before the splitting of the case could be summarised as follows.
48 Mr Sutherland gave evidence that he was on the first Board of the Murray Grey Beef Cattle Society, has shown cattle very successfully and has judged them at cattle shows, including Royal Shows. He was familiar with the partnership cattle and described them as top quality cattle, “back to the true Murray Grey type” – see T1913. He believed that this type of cattle would make top price. The Murray Grey Beef Cattle Society grew very quickly, so that by 1968 it had some 200 breeders. Mr Holdsworth was in fact the 200th breeder to be admitted into the Society.
49 Mr Sutherland said that Murray Grey cattle are very quiet, which is a big selling point. Also, they are animals which have very little calving trouble – see T1914 and following.
50 In relation to Breedplan and the move of the Murray Grey Beef Cattle Society from Albury to Armidale, there was then some decrease in the value of Murray Greys. However, subsequently the breed has been very successful, including sales overseas. Mr Sutherland also confirmed that, if the appropriate details were recorded, registration with the Society could be done.
51 Mr Sutherland was of the opinion that, whilst things had been more difficult because of a move towards cross-breed cattle, in the last two to three years there had been a dramatic return to original Murray Grey cattle. He believed that the perils of cross-breeding had emerged and were responsible for the swing back to the original Murray Grey cattle.
52 In relation to the Cloverdale line, Mr Sutherland said that this was one of the original herds shown in Melbourne. Their blood lines are still very much sought after in Australia. In answer to a question of mine, Mr Sutherland expressed the opinion that, on the basis of a recent sale at Casterton, Murray Greys were the highest selling of all breeds on a percentage basis. In addition, at a recent sale in Western Australia, female Murray Greys reached $4,500. He also went on to describe other successful lines of Murray Grey cattle which the plaintiffs had combined with the Cloverdale line. In relation to the combination of lines involved in the cattle owned by the plaintiffs and merged into the partnership, Mr Sutherland thought that both came out of very good herds of cattle. The partnership cattle were very saleable “all the time” – see T1922.
53 Mr Sutherland said that he had sold two bulls, namely Thologolong Mile and Thologolong Howzat, to the partnership for $3,000 each. A cheaper herd bull would cost $2,000. Those bulls should have lasted until they were 9 or 10 years old. It would seem that both were sold to the partnership in approximately 2000 as three year old bulls.
54 Mr Sutherland was recalled to give evidence as part of the hearing directed to the issue of quantum, his evidence concerning the quality of the animals being relevant to this. Essentially he confirmed his earlier evidence that the bulls in the herd were top quality and that the partnership bred top quality cattle going back to the true Murray Grey type. He agreed that two specific studs, namely The Glen and Williluka, had left the industry of Murray Grey breeding, one of them being defunct. He disagreed with the proposition which would be put by Dr Byrne that there was a lack of commercial demand for Murray Grey genetics, saying that the demand now is probably as good as it was 10 years ago. Sales records had been broken in the last month.
55 I should say that the essential purpose for the recall of Mr Sutherland was to allow him to comment upon reports prepared by Dr Byrne and Dr Webb Ware and made available since Mr Sutherland had last given evidence. Essentially his further evidence was permitted because of those reports and so that counsel could ensure compliance with the rule in Browne v Dunn. Discussion of that rule arose particularly as a consequence of the splitting of the case and the obtaining of further expert reports after such splitting.
56 Mr Sutherland also disagreed with an effectively unfavourable comparison made by Dr Byrne between the sale at Casterton where 27 Murray Grey bulls had been offered and sold and a much larger sale conducted at a stud which he described as being one of the leading Angus studs in Australia. Mr Sutherland believed that such a comparison was completely wrong. Other aspects of Dr Byrne’s report were put to Mr Sutherland and essentially he disagreed with them. He disagreed that the sort of cattle that the partnership had was good 50 years ago, but that things, basically because of Breedplan, had changed. He strongly disagreed with the proposition that Angus animals have superior genetics to Murray Grey cattle.
57 Similarly, passages from the report of Dr Webb Ware dealing with Mr Sutherland’s earlier evidence were put to him. None of this caused Mr Sutherland to alter his opinion.
(iv)Other plaintiffs’ witnesses whose evidence only partially touched upon the issues of the quality of the animals, quantum and the like
(a) Mr Richard Keys
58 The only significance of evidence given by Mr Keys in relation to quantum concerns the condition of the remaining cattle shortly after they had been removed from Framlingham to Westmere. As stated, Mr Keys, then an Animal Health Officer, made an unannounced visit to the Westmere property, this being at the request of Mr (then Inspector) Nicholls of the defendant. Whilst he was uncertain as to whether he had in fact seen the animals that had been at Framlingham, I found in my Judgment of 8 August 2014 that in fact he had seen them. I would refer to paragraphs 126 and 133 of that Judgment.
59 In essence, he found the condition of the cattle to be satisfactory and none were in such a condition that he was worried about them.
60 The point of this is that, had there not been the wrongful putting down of animals by the RSPCA, there is nothing to suggest that those animals could not otherwise have been in a satisfactory condition by the time of the visit of Mr Keys in June 2003. In other words, while some of the Framlingham cattle may have been in a lean condition at the time of the intervention by the defendant, there is no reason to think that they would not have recovered, as did those removed to the property at Westmere, some, or all, of which were later returned to Carrathool.
(b) Mr Geoff Clark
61 Mr Geoff Clark gave some evidence concerning the fact that various parts of the Framlingham Estate were fenced off. The possible relevance of this concerns whether or not the partnership herd in fact mixed with other cattle. However, because there were four bulls running with the cows in the partnership herd in any event, perhaps not a great deal of significance attaches to evidence concerning the fencing. In other words, single sire mating could not be established, so that offspring of cows which became pregnant at Framlingham could not be registered as stud cattle.
(c) Mr Len Clark
62 Mr Len Clark also gave evidence concerning the fencing, including the electric fence put up by Mr Holdsworth. The power for this came from Mr Clark’s house. In relation to the last few cows that were found in the forest area of Framlingham by Mr Holdsworth and others and were taken to Mr Clark’s property, he said that they were in excellent condition. This has some potential relevance to the rate of recovery of the animals.
(d) Mr Robert Rentsch
63 Mr Robert Rentsch, who is an agricultural contractor, also gave some evidence concerning the fencing. He had been involved in the erecting of some fencing along the Forest Road and the closing of the gap at the southern end of it by the use of the electric fence. However, he was also aware that some 100 cows, not belonging to the plaintiffs, had at one stage escaped and got into the bush area where some of the plaintiffs’ cows were. This seems to have occurred because of a gate being left open.
(e) Dr Grant Kuseff
64 Only a small amount of the evidence of Dr Grant Kuseff, a veterinary surgeon, is relevant to the issues now under consideration. When shown a photograph of a herd of cattle (not the Framlingham cattle) which rated as between a “1” and a “2” on the rating system which had been described in evidence, Dr Kuseff stated that, if conditions changed, rain fell and grass grew, he would expect such drought-affected animals to recover perfectly well. It was also apparent that Dr Kuseff had previously examined the photographs and the video material and seemed to be of the view that the situation in relation to the Framlingham cattle was similar to that of the herd depicted in the other photograph which he saw.
65 In relation to the bull shown in photograph 35 of Exhibit H, Dr Kuseff said that what was shown was definitely not a prolapse of the penis. It is to be remembered that such photograph was amongst those taken of the livestock in the yards at Framlingham on the afternoon that cattle were put down. Thus, as no bulls were subsequently retrieved, it is highly likely that such bull was in fact put down and is an animal in relation to the destruction of which the plaintiffs now seek damages. I would refer to the evidence of Dr Kuseff at T1059.
(f) Mr David Ellison
66 Mr David Ellison is the son of the plaintiff, Ms Ellison. Whilst he is now a Customs Officer, he has lived with cattle, and particularly Murray Grey cattle, throughout his life. That work includes such things as husbandry, stud work, preparation for shows and the like. He stated that his mother had enjoyed “enormous success” at various shows, including the Sydney and Melbourne Shows – see T1122.
67 He attended at Framlingham after the defendant’s intervention and assisted in rounding up the remainder of the cattle. He believes something in the order of 180 dry cows, weaners and calves were retrieved. He was present when they were ultimately loaded and taken to Westmere.
68 No other evidence of significance was called by the plaintiffs, either before or after the splitting of the case, in relation to the quality of the cattle and like issues.
Evidence called by the defendant in relation to the quality of the cattle and associated issues
(a) Dr Ian Byrne
69 Dr Byrne holds a Degree of Bachelor of Veterinary Science. He is a life member of the Australian Veterinary Association and has other memberships and accreditations. His evidence was given solely after the splitting of the case and a lengthy report prepared by Dr Byrne, such report being dated 20 February 2015, was placed in evidence (Exhibit D8). Dr Byrne has also had some first-hand experience as a stud master, in addition to conducting a veterinary practice involving some studs, essentially around the Albury area. It had been indicated that Dr Byrne’s evidence was to be taken as solely relating to matters such as the quality of the animals and not accountancy matters.
70 In cross-examination, Dr Byrne was taken through his practical farming background, including an acrimonious split in the family partnership running the farm, this resulting in a Supreme Court Judgment. The possible relevance of this was whether the plaintiff had in fact been a farm manager or, as apparently described in the judgment, a farm hand. However, he maintained that he made the decisions.
71 Dr Byrne agreed that, in compiling his report, he had made searches on the internet, this being in the context of questions put to him concerning sales of cattle and addenda to his report. He supplied such material to the defendant’s solicitors.
72 Dr Byrne was cross-examined at some length about consulting veterinary work which he had done in relation to cattle. He further said that the judging of animals at shows says nothing about their genetic worth. Animals at shows are judged purely on their appearance. Again, implicit in this statement is a comparison with Breedplan, which shall be discussed subsequently. The real economics of the situation involves the amount of meat that can be produced. In answer to a question of mine, Dr Byrne said that he had closer contacts with, and a greater interest in, sheep genetics.
73 Dr Byrne gave a description of how he had used an internet search in relation to the plaintiffs and the Murray Grey Beef Cattle Society. Details obtained were used in the preparation of his report.
74 Dr Byrne stated that he had never looked at the transcript of the evidence of Ms Ellison, but had looked at some notes. Essentially Dr Byrne could not challenge the evidence of Ms Ellison in relation to the quality of the cattle in question, in that he could say neither “yes” or “no” to what she had said. He stated that the quality of animals had improved dramatically since approximately 1980. Dr Byrne also conceded that he could not recall ever previously producing a written report in relation to cattle breeding. He had no experience of show judging. The present case is the only one in which he had prepared a written report in relation to the breeding of cattle, he adding that “I haven’t been doing it for any length of time” – see T4309.
75 Dr Byrne was not able to say whether or not the relevant herd was comprised of animals which were pure-bred Murray Greys. He could not dispute that Ms Ellison and Mr Holdsworth had adopted a tattooing system which enabled them to identify each individual animal and its parentage. A considerable part of the evidence then given by Dr Byrne in relation to verification of parentage seems to have been based upon conversations which he had with others – see, for example, T4322. There was some discussion towards the end of cross-examination concerning whether or not the herd was free of Bovine Johne’s Disease (“BJD”). That any of the relevant animals suffered from BJD is something that was not put to the plaintiffs. Ms Ellison gave evidence, in passing, that the herd was free of BJD (misspelt in the transcript) and there was no challenge to this. This does seem to me to be a Browne v Dunn situation. In the circumstances, the weight which I attribute to the possible existence of BJD, being a proposition that was not put to either plaintiff or to their witnesses, will not be great. Indeed, when the existence of this disease was mentioned in brief during evidence-in-chief of Ms Ellison, as I understand it she emphasised that the herd was free (not 3, as appears in the transcript) of BJD. Thus, they were very, very careful that their herd did not mix with other cattle.
76 In re-examination, Dr Byrne said that he had been on a steering committee of the Department of Agriculture in relation to the setting up of the Beef Improvement Association.
77 I have problems in accepting that Dr Byrne, as an expert witness, approached the giving of evidence with an impartial mind. I appreciate that he has firm beliefs in the merits of Breedplan and, as an expert, can give evidence as to why it represents the preferred approach to cattle breeding. However, his whole approach and demeanour was very much that of a zealot. He freely admitted that he was passionate about Breedplan and could speak all day about it. As stated, the dispute concerning Breedplan shall be discussed shortly. In addition, his qualifications in relation to cattle breeding seem to be somewhat limited – see, for example, paragraph 74 above. I might say that the conclusions of Dr Byrne in his very lengthy report of 20 February 2015 are basically consistent with his oral evidence. I would refer to page 4 of that report (Exhibit D8) at which his findings are summarised. In the body of the report, the same enthusiasm for Breedplan is evident.
(b) Dr John Webb Ware
78 Dr Webb Ware is a veterinary surgeon who has worked in private practice. He has also completed a master’s degree, being a Master of Veterinary Studies. Having worked as a veterinary surgeon in South Australia, he is now at the University of Melbourne working with the MacKinnon Project, a consulting service based at the Faculty of Veterinary and Agricultural Science at Werribee. He consults with beef cattle and sheep producers in south-eastern Australia and does a little teaching. Essentially, he has been with the MacKinnon Project since 1987. He also has a mixed sheep and beef cattle farm just north of Melbourne.
79 Dr Webb Ware gave some evidence perhaps more related to quantum of damages rather than to the quality of livestock. He explained that the Eastern Young Cattle Indicator is a compilation of cattle prices taken from a variety of sale yards in eastern Australia and provides some sort of benchmark of average prices on the day of sale. Dr Webb Ware gave some evidence concerning BJD, to which, bearing in mind my earlier observations, I shall not return, save for the following. At T4482, Dr Webb Ware stated that the whole scheme concerning BJD was “a load of rubbish”. However, he also referred to the Market Assurance Program. He regarded this as being an important issue, particularly in relation to the trading at the higher end of the market – see T4373.
80 Given the existence of the well-established studs, Dr Webb Ware was of the view that the business plan of the plaintiffs was very optimistic, particularly bearing in mind the competitive nature of the industry. In relation to the herd run by the plaintiffs, he considered a difficulty arose from the cattle being on the road and at Framlingham, where single mating might not be able to be established. This can create a restriction for a number of years.
81 Dr Webb Ware was also of the view that the relevant bulls were reasonably old. He stated that, in commercial herds, the working lifecycle of a bull averaged three and a half years. There is an increasing risk of a breakdown from all sorts of causes. The Breedplan statistics show some deterioration. In essence, he was also of the view that four bulls, sent with 270 cows to Framlingham, was an inadequate number. He raised the issue of the difficulty of tracking parentage and the level of record-keeping that is required. However, he said that it was hard to be categorical in this regard. He thought that there could be no confidence that, whilst the herd in question might be reasonable cattle, they could become amongst the elite of the industry. Dr Webb Ware believed that it would have been extremely difficult for the plaintiff to hold a stud sale in autumn, 2005, particularly bearing in mind the possibility of multiple matings. There was also the effect of the drought. Dr Webb Ware also stated that it is not reasonable to assume that all progeny would be sold at the level of stud quality. He also referred to the fact that, on the basis of statistics which he possessed, the number of registered cattle of the Murray Grey breed has reduced by about 34 per cent between 2003 and 2012. However, actual bull values from listed stud sales had increased by about 15 per cent. Bearing in mind other figures, the value of Murray Grey cattle had just kept pace with declining demand.
82 Dr Webb Ware was shown the picture of the bull with an apparently damaged penis – that is, photograph 35 of Exhibit H. He was of the view that what the photograph revealed was bruising of the prepuce, which was abnormal and raised a considerable concern in relation to the animal’s future as a breeder. He stated that it was impossible to have a strong opinion from the photograph, but it was quite clear that there was some pathology present which was not normal. However, he repeated that the animal itself would have to be seen.
83 Dr Webb Ware agreed that there needed to be some turnover in the placement of bulls in herds so as to prevent inbreeding. Bulls can be kept for a longer period if the number of cows is considerable and parentage is tracked. Some bulls are kept longer, but the average would be kept for approximately three and a half years. A lot of bulls start to breakdown once they get to over five years of age. In relation to the bull with the damaged prepuce, Dr Webb Ware considered the prognosis for such an injury to be guarded.
84 Dr Webb Ware said that he worked full-time with the McKinnon Institute and also spent some hours working on his farm. He had gathered some information from the Murray Grey Beef Cattle Society website and also had a meeting with the defendant’s solicitors. In addition, he made some enquiries from, and sent an email to, the Murray Grey Beef Cattle Society when trying to ascertain the value of stud cattle. On the Murray Grey Beef Cattle Society website, Dr Webb Ware researched some individual animals to which reference had been made.
85 Dr Webb Ware agreed that the Sutherland family were the originators of the Murray Grey breed and that Mr Peter Sutherland had, for a long time, been a show judge of cattle and exhibitor of cattle all over Australia. He also agreed that, at shows and the like, there were methods of testing involving the use of ultrasound. He agreed that, if the records retained were correct, the Framlingham cattle could have been registered with the Murray Grey Beef Cattle Society.
86 Dr Webb Ware was not able to comment on whether the animals in question were from a particularly good line of Murray Grey cattle. He had no personal, detailed knowledge of the lines in question.
87 In re-examination, Dr Webb Ware said that the fact that cattle can be registered with a society bears no resemblance to the commercial reality. He considered that selling animals at a price towards the higher end of the breed average, such animals having gone from unregistered to registered status, was “a very optimistic call” – see T4479. He said that it takes a long time for a stud to build a reputation. Registration is a start.
88 Whilst Dr Webb Ware did not dispute Mr Peter Sutherland’s statement that these were A Grade Murray Grey cattle, in his opinion there are some caveats. A lot of hurdles have to be cleared after registration and before a large business exists.
Other witnesses of the defendant whose evidence might have touched upon these issues
(a) Ms Alyssa Heck
89 Ms Heck is a health officer for the Department of Environment & Primary Industries, and was stationed in the Western District at the relevant time. As is apparent from her evidence commencing at T1996, she was present during the putting down of the relevant cattle. Her evidence largely was directed to the issue of liability. However, she was of the opinion that one, or possible two, Murray Grey bulls might have been put down, a recollection which in essence coincides with the finding which I have previously made. She was not asked to express an opinion about the photograph of the bull with the damaged prepuce. I mention this because she did give evidence concerning the cattle that were placed in the yards when the relevant livestock was put down. I am not suggesting that, in any way, she was in the position to give any expert evidence concerning the condition of the bull in photograph 35 of Exhibit H. Rather, it underlines that two bulls were amongst those gathered to be assessed and, if neither survived, it seems logical to assume that the one with the damaged prepuce was put down. Whilst not completely certain, Ms Heck confirmed in re-examination that she was reasonably confident that two bulls were put down.
(b) Dr Callum Irvine
90 Dr Irvine is a veterinary surgeon who was present at the putting down of the livestock. He asserted with some confidence that two bulls were put down. On balance, when the evidence of Ms Ellison is also taken into account, I see no reason to conclude that these were other than Thologolong Howzat and Thologolong Mile and that one of these was the bull shown in photograph 35 of Exhibit H – that is, the bull with the allegedly damaged or bruised prepuce.
(c) Mr Jason Nicholls
91 Mr Nicholls could be described as the officer of the defendant who attended at Framlingham on 27, 28 and 29 May 2003. An Inspector, he was the officer “on the ground” who was in charge of and responsible for the defendant’s actions in relation to the putting down of cattle. His evidence, given after the splitting of the case, was lengthy and very little of it was addressed to issues relating to quantum. Mr Nicholls did say that he saw no cattle other than Murray Greys on the property. Mr Nicholls also said that, from memory, he saw two bulls, one of which he thought had a prolapsed penis. Of course, it was not suggested that Mr Nicholls had veterinary qualifications, and it would appear that he was simply repeating something that he had heard – see T2553.
92 As a matter of interest, Mr Nicholls gave evidence that he had also made an unannounced trip to Mr Holdsworth’s property at Westmere after the removal of the cattle from Framlingham and believed that he saw there some of the Framlingham cattle. This would tend to underline the conclusion that I have already reached to the effect that the cattle seen by Mr Keys included the animals from Framlingham.
93 Mr Nicholls also gave some evidence concerning the fact that the relevant cattle were fenced off. He also said later in his evidence, and this appears to be somewhat contradictory to what he had said earlier, that he did observe other cattle on the property that were not Murray Greys. It is also apparent that Mr Holdsworth had described the animals to Mr Nicholls as being stud cattle. Mr Holdsworth had also mentioned to Mr Nicholls the electric fencing. Mr Nicholls subsequently seems to have seen this – see T2655. He also gave further evidence as to other cattle, which he believed to be Herefords, on part of the property to which the partnership cattle did not have access.
(d) Mr John Kelly
94 Mr Kelly is a stock and station agent who attended at Framlingham on Thursday, 29 May 2003. He took part in the selection process as to which animals were going to be put down. I observed in my Judgment of 8 August 2014 on liability that, whilst I accepted some of Mr Kelly’s evidence, I did not find him to be a particularly satisfactory witness – see, for example, paragraph 478. In any event, Mr Kelly identified the cattle in question as being Murray Greys – see T2983. He also stated that there were two bulls that were shot.
Conclusions as to the quality and condition of the relevant animals and associated matters
95 On the balance of probabilities, I have come to the following conclusions in relation to the matters which have been discussed above.
(i) All the relevant cattle were of the Murray Grey breed. That includes the three calves. They were pure-bred, with no cross-breeds amongst them.
(ii) Not only were they pure-bred, but they were bred along good lines. In this regard, I accept the evidence of Ms Ellison and Mr Peter Sutherland, although at times each appeared to be somewhat emotionally involved in the matter and their enthusiasm for Murray Grey cattle made it difficult to say that they were dispassionate about the case. I am leaving to one side for the moment the debate about Breedplan and the advantages and disadvantages of having cattle comply with it. I regard Ms Ellison’s background, training and experience over the years with Murray Grey cattle as making her something of an authority in relation to the breed. Mr Peter Sutherland has a background which would also make him an authority. His family originated the breed. He was on the original Board of the Murray Grey Beef Cattle Society. He has bred them, shown them and judged them. Mr Sutherland described the partnership cattle as being of top quality, being of the true Murray Grey type and cattle that would make top price. Ms Ellison described the importance of the bloodlines which these cattle had. Even allowing for their enthusiasm, I accept that these were good quality Murray Grey cattle.
(iii) I accept that the cattle were not registered with the Murray Grey Beef Cattle Society after 1996. However, I also accept that, if proper records are kept, registration can be effected at any time. Once cattle are so registered, they remain so for life, regardless of subsequent matings. Thus, if the partnership kept proper records – and I am satisfied that it did – all cattle of which the parentage could be established could have been registered at any time. If the parentage was thus established, the cattle would be classified as stud cattle. This does not include the three calves to which reference has been made or calves the conception of which took place at Framlingham.
(iv) Whilst the cattle were on the “long paddock”, there were four bulls running with them. I am satisfied that each was a Murray Grey bull, so that no issue of cross-breeding arises. However, because of the presence of four bulls, single sire mating could not have been established for calves conceived whilst the animals were on the “long paddock”. Ms Ellison stated that calves resulting from such matings on the route were kept as commercial stock.
(v) Whilst this has to be taken into account, I accept that the female cattle sent to Framlingham were considered to be the best prospects as breeders. It is evident that the partnership spent a lot of money and put a lot of endeavour into trying to preserve them.
(vi) Overall, my conclusion is that the Framlingham cattle were pure-bred Murray Greys of good quality bloodlines. Sufficient records were kept to enable them to be registered with the Murray Grey Beef Cattle Society at any time. I leave to one side the Breedplan debate, which I shall now discuss. There were some immediate problems concerning calves conceived whilst the animals were on the “long paddock” and whilst they were at Framlingham, such problems being caused by the difficulty in establishing single sire mating and because of possible mingling of herds at Framlingham. Of course, these were difficulties which would exist for only a comparatively short period.
The Breedplan debate
96 As the evidence unfolded, it became apparent that the introduction and operation of Breedplan has been something of a divisive issue, particularly in relation to the breeders and owners of Murray Grey cattle. If this case is any barometer of what is going on in the wider Murray Grey community, if not the cattle community generally, quite strong views are held by both proponents and adversaries of Breedplan. The system itself involves the collation of various statistics relating to individual animals, these statistics being provided by the owners or breeders of such cattle. Quite a number of these statistics concern cattle weight. A genetic evaluation system is employed and Estimated Breeding Values, referred to in the literature and on the website as EBVs, are estimated. Thus, it is alleged that prospective buyers can visit a website and obtain this data. The EBVs will then assist the prospective purchasers and indeed it was said by Dr Byrne that some buyers now do not even bother with a visual inspection of livestock. Rather, and whilst there was certainly not unanimous support for this proposition, they can purchase cattle unseen, relying entirely upon the EBVs and the Breedplan system.
97 As shall be discussed, an important and fundamental plank in the Breedplan system is a secret and somewhat mysterious algorithm. As I understand it, apart from being a key ingredient of Breedplan, it assists in the detection of any false or misleading information which is supplied by owners or breeders.
98 I should add that, another feature of it is that at least some information can be obtained in relation to certain animals, even if their owners have not registered them with Breedplan. Such information becomes available by reason of relatives of such animals being registered, although, as expected, the amount of information so available may well be less than that for registered livestock. Another aspect of Breedplan is that animals can be registered with it at any time. In other words, if an owner or breeder becomes a convert to Breedplan, the stock belonging to such person can be registered, even if the animals involved had not been registered since birth. However, whether complete data could be supplied in relation to such animals appears doubtful. The above is a brief summary of what is apparently a complicated and controversial system, which, as I understand it, began to achieve popularity in the 1990s.
99 Breedplan is potentially relevant in a number of ways. It is suggested that owners or breeders who have embraced the system have a financial advantage over those who have not, because the attributes of the individual animals can be readily assessed. It is said that the statistical approach is preferable to the showing and judging of cattle, as the latter practice involves the artificial “feeding up’ or fattening of animals for show purposes. It has also been suggested that vendors of animals not registered with Breedplan are cutting themselves off from a portion of the market. There is also the suggestion that cattle that are not so registered are “yesterday’s animals” and have been left behind commercially and, possibly, genetically.
100 There is also some strong opposition to such suggestions and to the scheme itself. Essentially the adversaries of Breedplan, such as Mr Peter Sutherland, argue that the show and judging system is the proven and acceptable method of evaluating livestock. It is argued that Breedplan depends upon the provision of accurate and honest statistics by owners, a requirement that may not always be met. This includes the recording of weights of animals at different times. Further, essentially it is argued that there is no substitute for visual inspection. It would seem that there is something of an “old school” versus “new school” aspect in relation to this whole debate.
101 I turn now to a summary of the evidence given by some important witnesses in relation to the Breedplan issue.
(i) Ms Ellison
102 Ms Ellison is clearly not a supporter of the Breedplan program. It was when the Murray Grey Beef Cattle Society moved from Albury to Armidale and effectively adopted Breedplan that she and Mr Holdsworth ceased registering cattle with the Society.
(ii) Mr James Holdsworth
103 Mr Holdsworth gave very little evidence concern Breedplan. He mentioned it in the context of no longer registering stock with the Murray Grey Beef Cattle Society when its headquarters moved to Armidale and when they “went into Breedplan … which we didn’t approve of, a lot of owners didn’t too” – see T494‑5.
(iii) Mr Peter Sutherland
104 The Murray Grey Beef Cattle Society was based in Albury for some 25 years, before a majority vote caused it to move to Armidale. It was at about this time that the influence of Breedplan was felt. According to Mr Sutherland, only 25 per cent of Murray Grey breeders use Breedplan, but a subsidy is put on the remainder.
105 In the opinion of Mr Sutherland, the deficiency with Breedplan is that it is based upon figures relating to weights and measures. The accuracy of these depends upon the honesty of the owner of the animals.
106 Mr Sutherland also said of Breedplan that it is common knowledge that it is only about 60 per cent correct. He stated that he had studied Breedplan, but opted not to go into it. He spoke of his own practical experience. He was of the view that Breedplan did not supply the criteria in relation to animals being structurally correct, something which he considered to be the most important aspect of the industry. Breedplan is not used in the judging ring today.
107 Further, Mr Sutherland said that he would not accept that 70 per cent of cattle producers in southern Australia use Breedplan. He agreed that over 80 per cent of the larger herds might adopt some of the Breedplan program to a degree. However, the figure of 80 per cent was not confined to Murray Grey herds. Mr Sutherland was of the view that, in relation to Murray Grey herds, there would not be 40 per cent acceptance. Mr Sutherland would not accept the proposition advanced by Dr Webb Ware that Breedplan uses the world’s most advanced genetic evolution system. He pointed out that the system used in America, where there was a much larger cattle population, was completely different and preferable. He also stated that genetics do not come from figures on paper, but “from the ancestries of those cattle generations back” – see T4005.
(iv) Dr Ian Byrne
108 Very considerable portions of Dr Byrne’s evidence and report involve Breedplan. As I made reasonably clear from the Bench in subsequent discussions, Dr Byrne struck me as being an advocate for Breedplan, and a zealous advocate at that. It is apparent that Breedplan has its adherents and its critics. Some on each side of the divide have strong views. Mr Peter Sutherland could be put in this category. Dr Byrne impressed me as having views that could be described as passionate, his approach bordering on fanaticism. In assessing the evidence, I shall bear this in mind.
109 Dr Byrne gave evidence concerning the advantages of Breedplan, as well as pointing to disadvantages of the long-standing system, which involves the showing of cattle and subsequent auctions. One such disadvantage to which he pointed was that owners would feed up the stud cattle to be paraded into extremely good condition, which did not reflect the true state of affairs. Breedplan depends upon various figures and the like being supplied and recorded, so purchasers can buy animals without even seeing them. The Breedplan system, according to Dr Byrne, is a better way of estimating the genetic worth of an animal. I might say that one of the criticisms of Breedplan by Mr Peter Sutherland was that false or erroneous data could be supplied. The supporters of Breedplan essentially say that such false information can, ultimately, be readily detected. Dr Byrne claimed that 95 per cent of stud animals that are registered with the various breed societies are in the Breedplan analysis. He referred to the American system as being “slightly different” – see T4221. It would appear that a basic or fundamental underpinning of the Breedplan system is an algorithm which, because of its commercial worth, is not revealed. However, access to the various assessments can be done through the websites of the different societies.
110 I have given a brief outline of Breedplan. I shall not go into the somewhat complex details referred to by Dr Byrne, but a discussion of this can be found at T4223 and following pages. It is interesting that, at T4229, Dr Byrne admitted that he was “quite passionate” about Breedplan. Dr Byrne also said that Breedplan does sort out cheats, presumably by means of the secret algorithm, but those operating it will not tell anyone how it happens, because they do not wish to give away information.
111 In relation to the almost fanatical devotion to the Breedplan system which Dr Byrne seems to have, at T4231 he stated that he could talk about Breedplan all day. I readily accept both this statement and his admission that he is quite passionate about it. I should add that Dr Byrne also said that he knows many people in Breedplan.
112 Dr Byrne said that it was erroneous to equate the partnership herd with the cattle at some of the leading Murray Grey studs. He thought that those that had been mentioned by the plaintiffs’ financial experts in fact had vastly superior cattle compared with the plaintiffs’ herd. However, at least in part, the reasoning for this seems to lead us back to Breedplan. He asserted that traditional breeding had been left completely behind by the users of Breedplan. Bloodlines were still important, but the only credible, objective measurement of the genetic worth of the animal in question was Breedplan. No importance attaches to the opinion of a show judge. There was considerably more cross-examination concerning Breedplan, with further references to the algorithm which has not been released. There was then even further cross-examination basically involving Breedplan and, if the questions did not involve Breedplan, many of the answers did. The bottom line is that, basically, Dr Byrne would not concede any weakness in the Breedplan system.
113 Dr Byrne also said that there was no information released by the breed societies that gave actual figures as to the percentage of the breeders involved that used Breedplan. He could only speak as to the number of calves that were registered for all breeds. Dr Byrne also stated that he was not prepared to reveal the source of the information that 95 per cent of calves of all breeds were in Breedplan.
(v) Dr John Webb Ware
114 Dr Webb Ware is also a believer in and advocate for Breedplan. However, his approach and presentation was markedly different to that of Dr Byrne. He did not present as a zealot. He made appropriate concessions. His evidence struck me as being far more balanced than that of Dr Byrne.
115 Dr Webb Ware described Breedplan as a means of specifically evaluating the genetic merit of an animal. He regards it as a very important tool to assist beef producers in the selection of livestock. It is a very good guide that has been used by significant players in the industry. He said that there was certainly a number of studs which use the show circuit as a means of promotion, some actually using it as the major component of the business of the stud. However, commercial producers do not rate the stud circuit very highly. I might add that this, perhaps, may underline the distinction between commercial herds and stud herds.
116 A point made by Dr Webb Ware which seemed to me to be logical was that owners who did not use Breedplan effectively removed a proportion of potential buyers of livestock who rely upon it. How great that proportion might be could be a matter of dispute, but it seems to me to be logical that, if there are some potential purchasers who use Breedplan as the exclusive means of assessing animals, that section of the community is removed from the list of potential buyers if the vendor’s animals are not listed with Breedplan. Dr Webb Ware then gave some detailed and lengthy evidence concerning the operation of Breedplan. Incidentally, Dr Webb Ware described Breedplan as “a highly sophisticated project” – see T4364. It is certainly something the workings of which are not easy to understand, particularly if the algorithm which lies at its heart is secret.
117 Dr Webb Ware was also of the view that something in the order of 80 per cent of the top producers (all breeds) use Breedplan. However, there were still some who did not use it.
118 Dr Webb Ware also conceded quite fairly, the following propositions. Essentially all stud managers engage in some visual assessment of the relevant cattle. Personal assessment is an important part of the overall assessment. A proportion of the industry regard Breedplan as being of no great assistance. In relation to those not using Breedplan cutting themselves off from part of the potential market, there was nothing to stop them from starting to use Breedplan if this situation became apparent. However, he maintained that the advancement of breeds had been greater since the adoption of Breedplan.
Conclusions as to Breedplan
119 Of the two expert witnesses called by the defendant, I far prefer the evidence given by Dr Webb Ware. Whilst he is a supporter of and advocate for Breedplan, as previously stated, his evidence was balanced. He seemed to me to make logical and proper concessions.
120 I also have no difficulty in accepting the thrust of the evidence of Mr Peter Sutherland. Whilst he may be more from the “old school” of Murray Grey owners and breeders, his knowledge of that particular breed and matters involving it seems to me to be very considerable. I accept his fundamental proposition that, particularly in relation to Murray Greys, there are those in the industry who prefer and adhere to the older system of visual inspections and the showing and judging of cattle. They prefer this as the more accurate indicator of the stock which they should purchase. Mr Sutherland stressed the vital importance of structural soundness, something which he felt could only be ascertained by visual assessment.
121 As stated, I see the logic in the proposition of Dr Webb Ware that cattle vendors whose stock is not registered with Breedplan are cutting themselves off from part of the market. Some strong Breedplan adherents may well ignore such cattle. For example, it is hard to imagine Dr Byrne purchasing animals that are not recorded in the Breedplan system. Whilst this is clearly a factor to be considered, there are two other aspects to be borne in mind. One is the concession by Dr Webb Ware that there is nothing to stop owners from starting to use Breedplan if it became apparent that such owners were suffering financially from not having their stock in the Breedplan system. How long it would take such owners to bring their herd up to date within the Breedplan system is another matter, given the statistics, including the weighing of animals at various stages of their development, that are to be provided.
122 The other is that I accept the evidence of Mr Peter Sutherland to the effect that there is still a market for top quality Murray Grey cattle which are not included in the Breedplan system. He gave evidence that in the last two to three years there had been a dramatic return to original Murray Grey cattle, although there did not seem to be any statistical basis for this assertion. He was of the opinion that the plaintiffs’ cattle, with its combination of bloodlines including the Cloverdale line, were cattle which were very saleable “all the time”. He also stated that demand for Murray Grey genetics was as good as it had been 10 years ago, with recent breaking of sales records. It may be that Mr Peter Sutherland, given his lifetime involvement with the Murray Grey breed, is viewing the situation through “rose-coloured glasses”. However, I accept the overall proposition that some Murray Grey breeders have not registered their stock in the Breedplan system or are not enthusiastic about it and that there is still a market for good quality Murray Grey animals outside that system.
123 My ultimate conclusion in relation to what could be described as the Breedplan factor is as follows. Whilst there may have been a fluctuating market in relation to the demand for Murray Grey cattle and whilst some Murray Grey breeders and owners may not have placed their stock in the Breedplan system, there is still a market for well-bred, good quality Murray Grey animals. That market, which may be limited in the sense that strict Breedplan adherents are not part of it, exists regardless of whether the cattle in question are in Breedplan. Further, if owners such as the partnership came to the conclusion that the prices on offer for their cattle were suffering because of a failure to be a part of Breedplan, an attempt could be made to remedy the situation. How long it would take to do this and whether a full range of statistics could be supplied for existing stock are matters which are unclear.
124 I might add that I can appreciate that, particularly in the case of some of the long-time breeders of Murray Greys, such as Mr Peter Sutherland, their fears that Breedplan is open to cheating or the provision of inaccurate information are hardly assuaged by reference to a secret algorithm.
125 Whilst argument about Breedplan consumed a considerable amount of time, ultimately it does not seem to me to be a decisive factor fatal to the case of the plaintiffs. I will take into account the fact that the partnership, by not having its stock in Breedplan, may be cutting itself off from part of the market. However, the fact remains that there is still a market for good quality Murray Grey cattle not registered with Breedplan. That part of the overall market may be lost to the plaintiffs is a discounting factor, although perhaps not one of overwhelming magnitude.
Are the plaintiffs entitled to any damages in respect of losses relating to artificial insemination?
126 Another area of very considerable dispute in this matter concerns the question of whether the plaintiffs are entitled to any, and if so what, damages by reason of loss of profits from a foreshadowed artificial insemination enterprise. It could be said that the options in this regard range from the artificial insemination project being almost a pipedream to the massive losses calculated by one of the plaintiffs’ financial experts, Mr Tol.
343 In relation to the two bulls, there is the clashing evidence as to whether a particular photograph (No 35 of Exhibit H) shows damage to the prepuce or penis of one of them. I say now that it is one of the two bulls for which the defendant is responsible. In the photograph, it appears to be one of the two bulls destined for destruction. Mr Langslow submitted that the evidence of Dr Webb Ware concerning the bruised prepuce had not been put to witnesses such as Dr Kuseff and that the rule in Browne v Dunn should be applied accordingly. Of course, Dr Webb Ware was not involved in the case at that time. It is almost impossible for me to say which of the various views in relation to the possible damage to this bull is correct. That is leaving to one side issues as to whether the damage was permanent. It may be that some small discount for risks associated with that bull should be included, but I am certainly not convinced that it should be of any great magnitude.
344 There have been separate estimates of quantum by the financial experts founded upon presumptions that the animals should be assessed as being of commercial value; as being assessed on the basis of average prices for stud animals; as being assessed on the basis of previous sales prices achieved by the plaintiff; and as being assessed on the basis of the animals being of high quality bloodlines (which assessment is close to that based upon previous prices). As shall be discussed, I prefer assessment on the basis of average prices for stud animals. Issues such as the argument concerning the value of a bull which might or might not be damaged can be borne in mind when overall discounting figures are considered. The comparatively minor amount in relation to the calves can also be taken into account as part of the general “broad brush” discounting procedure.
The various methodologies used to assess the loss and the resultant figures
345 In summarising the competing methods of assessing the loss, I shall leave to one side the issue of whether any, and if so what, allowance should be made in respect of loss of profits from any artificial insemination business. Otherwise, I turn now to the possible methods and the resultant figures.
(a) Replacement value
346 This method was not favoured as representing the best approach by any of the financial experts. It was not contended for by either party. In the circumstances and whilst this method is an available option, it is not an approach which I am going to adopt. Assessment of lost profit or opportunity seems to me to be fairer and more logical in the circumstances of this case. I turn now to the alternative approaches that may be adopted in this regard.
(b) Assessment on the basis of herd regeneration
347 This methodology was, in essence, adopted by both Mr Tol and Mr Dicks, although the bases of their calculations, and thus the results, differed. This approach involves a “with intervention” and “without intervention” comparison and allows a certain period for the restoration of the herd to the size that it might have been were it not for the intervention. This method fits within the general description of loss of profit or loss of opportunity. To state the obvious, it is not based upon replacement of the original asset.
(i) Mr Tol
348 Mr Tol’s estimate of loss of profit is $1,610,130. As is apparent, this assessment is based, at least in part, upon the estimates of Mr Peter Sutherland concerning the value of the animals. Apart from arguments about his independence, the methodology adopted by Mr Tol was criticised by the defendant in that he has allegedly assumed stud quality sale prices from 2004 onwards and does not assess the losses by discounting back to the time of the intervention with an appropriate risk factor and then grossing them up to 2012 figures, at which point Mr Tol’s assessment ceases. He allows for the herd to be regenerated as at that year.
349 In any event, whatever its alleged failings and whatever might be said of Mr Tol’s independence, the end result of his assessment method is, as stated, a loss of $1,610,130.
(ii) Mr Joe Dicks
350 Mr Dicks adopted the same general approach of herd regeneration, allegedly placing the plaintiffs back in the position where they would have been but for the intervention. However, he clearly discounted losses back to 2003 figures and then grossed them up again. The regeneration model employed by Mr Dicks goes through to 2014. As previously stated, a number of mistakes were disclosed in the calculations. In addition, it is readily apparent that some of the work and the provision of substantial parts of the information upon which the reports are based were provided by persons who did not give evidence, including Mr Leigh.
351 Leaving those matters to one side, the ultimate calculation of Mr Dicks was that the loss of profits was, after various revisions, $436,966.
(c)Valuation (notional liquidation or sale of the herd) as at the time of hearing
352 This method of calculation was adopted by RMCG and was criticised by Mr Dicks. Apart from the expertise of Mr McGuckian, who has had experience of note in relation to the assessment of livestock losses and the fact that both he and Mr Henderson were impressive witnesses, one thing favouring this particular approach is that it takes some account of reality. On the evidence, the plaintiffs would have had to take various substantial steps to meet the financial demands put upon them as a result of the loss of stock caused by the intervention. It was also argued on behalf of RMCG that the discount rate applied in the calculations of Mr McGuckian and Mr Henderson had built into it an allowance for risk. Whether this allowance is sufficient or whether a further discount should be applied is another matter.
353 The RMCG reports are based on more than one set of figures.
354 Using the notional sale or liquidation model, the estimate of lost profit, using the average prices was, as at June 2014, $1,141,742. It seems to me that RMCG was applying compound interest for the period June 2012 to June 2014. If simple interest is applicable, the appropriate figure as at June 2014 was $1,132,306. When taken through to the end of May 2015, again applying simple interest, the lost profit, using average prices, would be $1,218,802. If the average penalty rate of 10.6 per cent for the period June 2014 to the end of May 2015 is applied, again using simple interest, the ultimate lost profit figure is $1,235,313.
355 The other calculations of RMCG are based upon the figures that had been obtained in relation to certain sales of the plaintiffs’ animals. On this basis, the loss of profit as at June 2014 was $4,009,327. When taken through to the end of May 2015, that loss becomes $4,376,849.
356 In each of the above calculations, from June 2012 onwards, Messrs McGuckian and Henderson had applied an interest rate of 10 per cent. It seems to me that, in making their calculations since 2012, Messrs McGuckian and Henderson have again applied compound interest. If simple interest were applied, the loss as at June 2014 would be $3,976,192. If that number was then taken at the same rate up to the end of May 2015, interestingly, the figure would be identical with the loss of profit shown in their calculations as at June 2014 – namely, $4,009,327. Of course, if the current penalty interest rate of 10.5 per cent was applied, the figure would be increased. By my calculations it would be $4,027,551.
(d) Conclusion as to the method of assessment to be adopted
357 Having considered the various methods of assessing the damages, I have come to the conclusion that the approach adopted by Messrs McGuckian and Henderson of RMCG is to be preferred.
358 I have come to this conclusion because their method seems to me to be sensible and logical. I am of the opinion that as much realism as possible should be injected into the assessments and comparisons. That seems to me to be an approach which is in accordance with that adopted in other cases, and indeed both Mr Dicks and Mr Tol did this to at least some extent. An example is found in Falls Investments where Ipp JA clearly had regard to the prior successful business history of the property in question. This is also in accordance with what was said in Johnson v Perez.
359 Mr Henderson made it clear that the assumption had been made that the plaintiffs were unable to re‑establish the herd and would have to sell some of the cattle for cash flow. This fits in with the evidence of each plaintiff. Without going through the summary of the plaintiffs’ evidence again, Ms Ellison stated that the partnership could not operate as it had previously, and that the only income which it was getting was essentially on the commercial market. Mr Holdsworth said that the partnership did not have the necessary money and that weaners were sold in order to get some cash.
360 Returning to Mr Henderson, he gave evidence that the loss scenario did not allow for the re‑establishment of the herd, because of instructions received to the effect that the plaintiffs could not afford so to do. In relation to the “with intervention” case, he and Mr McGuckian had tried to rely upon what had actually happened to the extent that they could. The plaintiffs were not able to restore the herd, and were forced to make sales. They needed to sell cattle to maintain their cash flow. Stock was sold to make ends meet. He said in re‑examination that he had attempted to bring some reality into the comparison. As stated, the methodology used by RMCG seems to me to be logical and appropriately realistic. I prefer it.
361 Further, both Mr McGuckian and Mr Henderson were impressive witnesses and their method of preparing reports and presenting evidence was superior to that of Mr Tol and Mr Dicks.
362 Mr McGuckian and Mr Henderson worked on the reports as a team. Mr McGuckian was the project supervisor, with Mr Henderson doing most of the work. Mr McGuckian was prepared to sign-off on the report of 27 October 2014 on the basis that he had prepared it. Both Mr McGuckian and Mr Henderson gave evidence. Mr Christie stated that there was no challenge by the defendant to the independence of RMCG – see T4069. It also seems to me that Messrs McGuckian and Henderson prepared their reports with minimal attempts to pursue their own lines of enquiry, gather evidence, and speak to witnesses or the like. Indeed, Mr McGuckian gave evidence that he had deliberately not read the reports of Mr Tol prior to he and Mr Henderson compiling their report. They wanted to start with “a clean sheet”.
363 Further, Mr Henderson struck me as a very well qualified economist. Mr McGuckian seems to me to be ideally qualified to be the project supervisor in a situation such as this, and to sign-off on the ultimate report. As earlier stated, he is an agricultural consultant who, over the years, has analysed the profitability of various farming and grazing businesses. He has been an expert witness and independent loss assessor in relation to bushfire losses, including loss of livestock. Both also gave evidence in a measured and careful manner. Both were credible and impressive. For the moment, I leave to one side Mr Tol.
364 By way of comparison, several criticisms could be made of the evidence of Mr Dicks, called by the defendant. As earlier described, quite an amount of the input into the reports of PPB Advisory seems to have come not from Mr Dicks, but from other persons. His Brisbane partner, Mr Leigh, clearly had considerable input into the report of 20 February 2015. In that report, he is described as being responsible for providing opinion and commentary on the input and variables used in calculating the loss as set out. His curriculum vitae refers to his having been involved in large beef cattle enterprises in Queensland. The report contains references to “our assumptions”, “we have ... prepared this report”, “we believe” and the like. Indeed, Mr Leigh signed-off on the report, having made, with Mr Dicks, an expert’s declaration. Mr Leigh did not give evidence.
365 Mr Leigh did not sign-off on the subsequent reports. They appear over the name of Mr Dicks alone. He said in evidence that the model contained in the spreadsheets had been developed by “some staff of ours in Brisbane”. Mr Dicks gave evidence that he was not an expert in relation to stud cattle and that there were staff in Brisbane that specialised in cattle. Subsequently he referred to two people, Mr Mason and Mr Lester. Their level of expertise is unknown. Mr Dicks said that they were people that he had spoken to before he gave evidence and after the discovery of the substantial mathematical error. Neither was called to give evidence.
366 There were other references to discussions by Mr Dicks with colleagues. Further, one of his colleagues, the identity of whom is unclear, spoke to unnamed stock agents concerning the costs of agistment. This information seems to have then been used by Mr Dicks. In addition, unnamed staff in the Brisbane office had spoken to relevant people in the area where the partnership’s farm is located, but Mr Dicks was not able to say who these “relevant people” were. Indeed, he was not even certain whether the “relevant area” in fact meant the whole of New South Wales or just the area in the vicinity of the farm.
367 All of the above compares unfavourably with the far more professional approach adopted by Messrs McGuckian and Henderson. It undermines confidence in the accuracy and correctness of the approach adopted by PPB Advisory. This is in addition to the fact that the methodology adopted by RMCG seems to be more realistic and more logical. Indeed, Mr Henderson referred to the approach adopted by Mr Dicks as being “bizarre”.
368 Any remaining confidence which I had in the reports of PPB Advisory was further eroded by the number of errors that plagued the reports and calculations. There were no fewer than four different “bottom lines”. The ultimate assessment of loss was just on 125 per cent greater than the amount for which Mr Dicks and Mr Leigh had signed-off approximately a month previously. In other words, ultimately $242,536 had been added in stages to the initial assessment of $194,340.
369 Errors of this magnitude may not lead to the automatic conclusion that the evidence from PPB Advisory must be rejected in its entirety. However, as stated earlier, they do not inspire confidence. I might add that there were two or three other calculations in the PPB Advisory reports concerning which Mr Dicks said that he would have to “double check”. One of these was the error already discussed in relation to the 2003 year in which no money resulting from sales was allowed, but a substantial figure for selling expenses was shown.
370 My overall conclusion is that, for a number of reasons, I prefer the evidence and methodology advanced by RMCG to that of PPB Advisory. As shall be discussed, that does not mean that I accept the optimum figures put forward by Mr McGuckian and Mr Henderson. However, as is obvious, I prefer their evidence.
371 I turn now to Mr Tol. As is probably evident from earlier observations, I do not regard him as being an independent expert witness. That may not mean that his evidence is to be rejected in its entirety. However, it is difficult to view him as giving independent, expert evidence.
372 As stated earlier, Mr Christie submitted that Mr Tol was “hopelessly conflicted”. Certainly, there seems to me to be adequate reason to be extremely concerned about his independence. Obviously, at one stage, the solicitors for the plaintiffs were of a similar view. However, they proceeded to call him and get further reports from him. I am prepared to accept that the current view of Mr Tol is that the plaintiffs are entitled to some amount of damages in respect of artificial insemination losses and believe that he is correct in that regard. I am certainly not prepared to accept the figures that he has proposed. In relation to lost profit, his methodology bears some similarities to that of Mr Dicks, save that, whilst regenerating the herd, he has not discounted back to 2003 figures. The operational loss, excluding artificial insemination, is shown in his report of 24 October 2014 as being $1,610,130.
373 I am of the view that the expertise of Mr McGuckian and Mr Henderson exceeds that of Mr Tol. They are clearly independent, whereas he is not. He has adopted a modified version of what can be described as the regeneration of the herd model, a model which I do not favour. In short, I do not regard his evidence in relation to operational losses or loss of profit as being preferable to that of RMCG.
374 Overall, I prefer the methodology of RMCG, being that of Messrs McGuckian and Henderson. There is then the question of the animal values to which the methodology should be applied.
What should be the basis upon which the value of the loss is assessed?
375 This dispute essentially resolves into three competing propositions. Should the loss be assessed on the basis that:
(i) The animals were and would have been of commercial value only; or
(ii) The animals should be assessed as being stud animals, but with their value assessed as at average stud prices; or
(iii) The animals would have attracted a price higher than the average for stud cattle?
376 The first basis for the valuation – commercial prices – was favoured by Mr Dicks, and the EYCI was employed for this purpose. Ultimately RMCG worked out losses assessed both on average stud prices and what were described as plaintiffs’ prices, these being achieved in relation to a comparatively small number of animals sold in the years prior to the intervention. Mr Tol based his loss assessment on prices at the upper end of market values. I should add that RMCG allowed a two-year gap before the plaintiffs’ stud operation was commenced – that is, starting from 2005. Whilst commencing stud operations in 2005 seems to have been part of the plaintiffs’ overall plan, that two year gap would, perhaps by coincidence, also allow time for any calves conceived whilst the cattle were on the “long paddock” or at Framlingham. It fits with the evidence of Ms Ellison in relation to waiting for any pregnant cows to become empty.
377 Again I prefer the approach of RMCG, and in particular the loss assessment based upon average stud prices.
378 Mr Dicks made it clear that he had assessed the loss solely on the basis that the cattle in question were commercial. He was not an expert in relation to stud cattle and could not take matters much further in that regard. It would seem that PPB Advisory was not asked to make the base calculations upon an assumption that the animals would form part of a stud cattle herd but, using the EYCI, looked at the situation in terms of meat sales, carcass weights and the like.
379 In relation to this, firstly l have already expressed my misgivings concerning the reliability of the evidence of Mr Dicks. I need not repeat them. Secondly, the assumption that this was going to be a commercial herd and not a stud one seems to me to be misplaced. These were pure-bred animals. They were of established bloodlines. The whole idea of the partnership had been to go into a stud enterprise. Property had been purchased. The partnership herd was, in essence, a distinct entity, kept separate from the herds run by the plaintiffs as individuals. The yards had been bought, and it was the intention of the partnership to conduct stud sales. A great deal of time, money and endeavour had been put into the preservation of the breeding stock during the difficult times of the drought. It was the intention of the partners to move on with the development of the stud project when the drought ended and the cattle had returned to Carrathool. It seems to me to be unrealistic and contrary to the evidence to assume that the stud project would not have gone ahead and to not even give mathematical consideration to losses on a possible stud cattle basis. Overall, I again prefer the approach taken by Mr McGuckian and Mr Henderson.
380 As stated, RMCG estimated the lost profit on two alternative bases. The average prices were derived from the average of Murray Grey stud sales around the time of the loss for both females and bulls. The end result of using the average stud prices as a base and applying a 10 per cent discount or “grossing up” figure was, as stated, $1,141,742. That is also after allowing for the plaintiffs to commence fully-functioning stud operations in autumn, 2005. It is not entirely clear whether RMCG allowed for the fact that the three calves in question were destined to be commercial animals because of the inability to establish single sire mating. In the overall scheme of things, the difference that this would make to the figures is not great and is something which, amongst other matters, can be taken into account when some general discounting is being undertaken.
381 In short, the calculations done by Mr McGuckian and Mr Henderson on the basis of average prices for stud animals prevailing at the time of the loss and with a two-year delay prior to the commencement of stud operations and sales strikes me as a fair and reasonable, if not conservative, approach. I appreciate that Dr Webb Ware regarded the setting up of the stud enterprise as being somewhat optimistic, but then again Mr Peter Sutherland spoke in glowing terms of the bloodlines and of their marketability.
382 In this regard, RMCG adopted another approach based upon some average sales achieved by the plaintiffs over the five years prior to the loss. In their report of 28 September 2012, Mr McGuckian and Mr Henderson did not use such figures, as they seemed to be considerably higher than the industry averages. They thought that such prices probably reflected sales of the plaintiffs’ best led stud animals, rather than of the overall herd. However, in their post-judgment report of 27 October 2014, they included an alternative valuation based upon the plaintiffs’ sales. It is clear that the evidence of Mr Peter Sutherland, which had been provided to them, played a role in their thinking in this regard.
383 On balance, I prefer the valuation founded upon average stud prices. This was based upon information provided by three studs in different parts of Australia and from the National Sale conducted during April 2003. This seems to me to provide a more reliable foundation than the somewhat patchy information relating to sales by the plaintiffs. I appreciate that the plaintiffs had some support, in general terms, from Mr Peter Sutherland. However, the average price approach adopted by RMCG seems to me to be more reliable. It also seems to be the approach which Mr Henderson, and presumably Mr McGuckian, preferred.
384 Furthermore, as it is possibilities that are to be considered in relation to hypothetical events, the chance that the plaintiffs may have achieved some higher sales prices is something that can be taken into account when percentage adjustments are made in the final calculation. Of course, the possibility also exists that they would not have achieved average stud prices, and the herd would have been sold on a commercial basis. However, bearing in mind the evidence about the quality of the bloodlines and the existence of at least some market for cattle with them, I consider that the possibility that the cattle would only ever have achieved commercial prices is less than the chance that they would have achieved above average stud prices.
385 I might add that I also prefer the average stud price figures selected by RMCG to those used by Mr Tol. I have already expressed my opinions in relation to Mr Tol’s evidence generally.
The basic calculation of lost profit
386 Preferring as I do the methodology adopted by Mr McGuckian and Mr Henderson and the average stud price approach which forms the basis of their calculations, as well as my preference for them as witnesses, I turn now to their fundamental calculation of lost profit based upon that preferred evidence.
387 Leaving to one side the prices “as per the plaintiffs’ sales”, the value of the lost profit as at June 2012 was calculated by RMCG to be $943,588. A 10 per cent rate was then applied to bring the loss up to June 2014. The resultant figure is $1,141,742. However, that appears to be applying compound interest for the second of those two years. If simple interest was applied for each year, the figure would be $1,132,306. If simple interest at the rate of 10 per cent was again applied to bring the lost profit up to the end of May 2015, the total figure would be $1,218,802. If, however, the average penalty interest rate of 10.7 per cent was applied from June 2012, again on a simple interest basis, the loss as at the end of May 2015 would be $1,238,066. Arguments can be mounted for either approach. My preference is for applying simple interest and at the 10.7 per cent rate. I appreciate that there may be a possible argument that compound interest could be allowed pursuant to the decision in Hungerfords v Walker (1989) 171 CLR 125, but it seems to me that the calculation based upon simple interest and the average penalty interest rate is the fairest in the circumstances. I am aware of the operation of ss58 and 60 of the Supreme Court Act 1986. Allowing for the fact that this Judgment will be handed down approximately one week before the end of May 2015, I fix the amount of lost profit, inclusive of interest, in the sum of $1,240,000.
Should any percentage adjustment be applied?
388 Reference has been made earlier to the approach adopted by courts in relation to percentage adjustments which can be made so as to allow for various contingencies or vicissitudes. Such adjustments can be either by way of an increase or a decrease of the figures involved – see, for example, what was said in Burger King Corporation and referred to above. This is consistent with the “doing the best I can” and “broad brush” approach described in Falls Investments. Further, obviously the application of such percentage adjustments will vary from case to case. Again, I would refer to what was said in Burger King Corporation.
389 Adopting this approach, which, of necessity, involves a combination of findings in relation to past alleged facts on the balance of probabilities and a consideration of past and future hypothetical developments as possibilities, I have reached the conclusion that an overall discounting factor of 20 per cent should be applied. That would result in a primary figure for lost profit of $992,000.
390 In arriving at such a discount percentage, I have tried to balance the various competing figures based upon hypothetical events, some of which could indicate a percentage increase in the basic assessment, whilst others would suggest that a discount should be applied. Dr Webb Ware seemed to be of the view that it was optimistic on the part of the plaintiffs to think that a successful stud enterprise could have been operating within a couple of years of the intervention. The potential loss of market share associated with the cattle not being registered with Breedplan, at least in the short term, must also be borne in mind. There are then the hazards generally associated with commencing any business against established competitors and particularly when the fortunes associated with this particular product – Murray Grey cattle – seem to have been fluctuating. Further, as was clearly evident from 2001 to 2003, this is an industry which is at the mercy of the elements. In addition, it is to be remembered that there was the “second intervention” – that is, the loss of the missing cattle for which the defendant is not liable. This may also have had a negative or delaying effect upon the stud enterprise. On the other hand, there is evidence to suggest that this particular herd had carefully selected bloodlines and offspring may have been in demand, selling at prices above average Murray Grey stud prices. The potential existed that these cattle may have fetched the prices described by Mr Peter Sutherland. They may have fetched prices equivalent to those which formed the foundation for the calculations done by RMCG on the basis of the “plaintiffs’ sales”. That would have the potential to take the figure for lost profit well above the agreed maximum amount of damages for this action, the RMCG assessment on such a basis being in excess of $4,000,000.
391 The above is not a list of all the factors involved. Other factors would include a small adjustment in relation to the three calves that were sold on a commercial basis and for the somewhat uncertain matter of possible damage to one of the bulls. The RMCG figures have allowed for expenses, but it may be that some greater or unforeseen expense could occur. On the other hand, whilst the stud operation was not to commence until 2005, the partnership business was one that was “up and running”. The taxation material referred to by Mr Dicks and subsequently put in evidence indicates that sales were being effected and income produced. In addition, various items of documentary evidence and the oral evidence of Mr Peter Sutherland would indicate that a certain amount of goodwill was attached to the names of both Mr Holdsworth and Ms Ellison. The stud enterprise aspect of the partnership may have taken off more rapidly and become more successful than foreshadowed, with figures exceeding the more conservative estimates of RMCG.
392 However, as stated, on balance I am of the view that a discount, rather than a percentage increase, should be applied. This was a stud enterprise which, whilst possessing well-bred Murray Grey cattle, as well as possessing property and yards, had not actually commenced such stud operations. The partnership may have had the potential to create profits far in excess of the figure at which I have arrived. However, it also faced the prospect of not achieving that figure. After weighing up the competing possibilities and doing the best I can, I am of the view that the figure at which I arrived should be reduced by 20 per cent. This would mean that my finding in relation to lost profit associated with running the stud enterprise is $992,000, as set out above.
Should any allowance be made for loss of profits associated with artificial insemination?
393 This is an even more vexed question, with the hypothetical range being from zero to a figure in excess of $6,000,000, well beyond the agreed maximum amount of damages in this case. The latter figure is that of Mr Tol, who is the only financial expert to have allowed any amount for this item. It is to be remembered that RMCG did not make a zero assessment, but rather did not consider the topic, as it was being dealt with by another expert. Despite the fact that it was drawn to the attention of Mr Dicks (see letter of instructions which is Appendix B to Exhibit B10), I can find no indication in the reports of PPB Advisory that any conclusion, one way or the other, was reached as to the proposed artificial insemination business. Thus, the situation seems to be that there is a very large, if not huge, assessment of lost profit of the artificial insemination business given by Mr Tol and effectively no comment from RMCG or PPB Advisory.
394 I am prepared to accept the proposition that there is a loss associated with the proposed artificial insemination business, but I am not prepared to accept the assessment given by Mr Tol. Apart from reservations which I have about him as a witness, his assessment appears to me to be unrealistically high, particularly bearing in mind other evidence concerning the potential market for artificial insemination. However, he is clearly of the view that there is such a loss and the contrary proposition is not clearly spelt out by the other financial experts.
395 I am satisfied that the plaintiffs have discharged the onus of establishing that some loss resulted from interference with, or postponement of, the proposed artificial insemination business. That loss is attributable to the intervention, although, of course, the loss of only two of the four bulls is the responsibility of the defendant. I am also bearing in mind that one of the bulls may have been in a damaged condition, although if this was the case, the degree of interference with the extraction of semen, as opposed to normal stud duties, is not entirely clear.
396 In any event, I am satisfied that it was the intention of the plaintiffs to set up an artificial insemination business and that the two bulls, for the death of which the defendant is responsible, were to be part of this business. Yards had been purchased. I am satisfied that there is a market for semen straws. I refer in particular to the evidence of Mr Wagstaff. Amongst other things, he said that there were some seven firms supplying the market. I am satisfied that the breeding of the bulls was such that some sales could have been achieved. I should add that I do not take into account any prospective sales of semen from the tank owned by Ms Ellison. Whether or not it was the intention of the partnership to use some of this semen to impregnate the partnership cows, such semen was destroyed for reasons unassociated with the intervention by the defendant.
397 Thus, it would seem to me that the partnership has suffered a loss in this regard. It is a loss resulting not only from the destruction of the two bulls, but also from the financial stress placed upon the partnership. I would refer to the evidence of Mr Holdsworth and Ms Ellison in this regard, and would point out that, as stated by Mr Holdsworth, it is only recently that a higher quality bull has been purchased. Whether it not it will be satisfactory is still unknown.
398 I would refer again to what was said by Jagot J in Haviv Holdings to the effect that, where there has been a loss of some sort, the common law does not permit difficulties of estimating a loss to defeat the only remedy, namely an award of damages. I would also refer again to the approach of Ipp JA in Falls Investments. Doing the best I can, I am allowing $175,000 for losses relating to artificial insemination. This permits a few years – perhaps five – for the setting up of the project, advertising, the attraction of customers and the like. It allows for sales thereafter to date and for a few years into the future. Mr Wagstaff, who is in the business, said that essentially the price range for straws of semen from Murray Grey bulls was $10 to $25. If the average price of $17.50 was selected and sales of 1,500 straws per year allowed for 10 years, the end result would be $262,500. However, whilst some discounting has already been built into the above figures by reason of using an average price, modest sales and a period before a suitable replacement bull or bulls could be found and afforded and the business set up, it seems to me that some further discounting is required. This is a prospective enterprise, the success of which could certainly not be guaranteed. Some overheads would exist. Doing the best I can and adopting a broad brush approach, I am further discounting the figure of $262,500 by one-third. The result is that, in relation to lost profits from the intended artificial insemination business, I allow the sum of $175,000.
Conclusion
399 My finding is that I fix the damages to be paid by the defendant to the plaintiffs in the sum of $1,167,000, being the sum of $992,000 lost profit in relation to the stud enterprise and $175,000 lost profit in relation to the artificial insemination business, the above amounts being inclusive of interest.
400 I shall hear from the parties as to any ancillary orders that are sought. I would point out that, during the conduct of this lengthy case, there have been various reservations of costs. There may be some costs issues with which I can deal. There may be many which are best dealt with by the Costs Court. In any event, I shall hear the parties as to what is sought, including any other ancillary orders. I shall also hear the parties as to the timing of any further argument.
Footnote: I ruled on 31 March 2015 that a bundle of financial documents of the plaintiffs and the 2007 partnership tax return could be tendered. Because this Ruling occurred after the plaintiffs’ case was otherwise closed (I granted leave to re-open for the purpose of tendering all such documents), an exhibit number was not allocated to them. The bundle of financial documents, including the 2007 partnership return, is Exhibit DG. I might add that I saw no reason why limited weight should not be attached to such documents in the limited circumstances described above concerning some realism being employed as to an established, although not a stud, enterprise.
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