Landmark Operations Ltd v J Tiver Nominees Pty Ltd - [2008] SASC 322

Supreme Court of South Australia
(Civil)
LANDMARK OPERATIONS LTD v J TIVER NOMINEES PTY LTD & ORS
[2008] SASC 322
Judgment of The Honourable Justice Sulan
21 November 2008
BANKING AND FINANCE - INSTRUMENTS - LOAN FACILITIES
MORTGAGES - MORTGAGES AND CHARGES GENERALLY - THE MORTGAGE - LIABILITIES SECURED
MORTGAGES - MORTGAGES AND CHARGES GENERALLY - REMEDIES OF THE MORTGAGEE - ENTRY INTO POSSESSION
Mortgages – loan facilities – plaintiff a rural financier – second to sixth defendants partners in a farming business (‘Flagstaff Proprietors’) – first defendant trustee of family trust – plaintiff and Flagstaff Proprietors entered into financial facility agreement (‘the Facility Agreement’) – Facility Agreement secured by real property mortgages and stock and crop mortgages (‘the Securities’), granted by first to fifth defendants in favour of plaintiff – first defendant guaranteed the obligations of second to sixth defendants (‘the Guarantee’).
Flagstaff Proprietors defaulted – Facility Agreement varied – further defaults – credit reviews conducted by plaintiff – further variations to Facility Agreement – sustained and repeated breaches of terms and conditions of Facility Agreement by Flagstaff Proprietors – notices of demand served – notices of default and intention to sell served – proceedings commenced – judgment sought for amount outstanding under Facility Agreement and interest, possession of real property the subject of the property mortgages and execution and enforcement of stock and crop mortgages.
Held: Judgment entered for the plaintiff – Facility Agreement, real property mortgages and Guarantee valid, binding and enforceable – plaintiff entitled to possession of real property securing the Facility Agreement and execution and enforcement of stock and crop mortgages.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS
Defence and counterclaim - contracts - oral and implied terms - whether terms and conditions of Facility Agreement wholly reduced to writing - whether written terms and conditions supplemented by oral and/or implied terms - whether plaintiff's offer of finance under Facility Agreement conditional upon Flagstaff Proprietors engaging in farming practices of a type and nature required by the plaintiff - whether provision of expert agronomic advice by the plaintiff to Flagstaff Proprietors an oral term of the Facility Agreement.
Held: The terms and conditions of the Facility Agreement are wholly comprised in the written terms and conditions of that agreement and any variations thereto are similarly completely reduced to writing.

BANKING AND FINANCE - BANKS - LIABILITIES OF BANKS - FRAUD, UNDUE INFLUENCE AND UNCONSCIONABLE CONDUCT
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT
EQUITY - GENERAL PRINCIPLES - REMEDIES AND PROCEDURE - FRAUD OR MISREPRESENTATION AS A DEFENCE OR ANSWER
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - RESCISSION OF CONTRACTS
Defence and counterclaim – unconscionability – misleading and deceptive conduct – financial claims – whether plaintiff took unconscionable advantage of Flagstaff Proprietors when negotiating entry into Facility Agreement – whether plaintiff acted unconscionably in the course of its relationship with Flagstaff Proprietors – whether plaintiff acted unconscionably in varying the Facility Agreement from time to time – whether plaintiff took unconscionable advantage of Flagstaff Proprietors for the purposes of the Fair Trading Act 1987 (SA) (‘FTA’), Trade Practices Act 1974 (Cth) (‘TPA’) and/or the Australian Securities and Investment Commission Act 2001 (Cth) (‘ASIC Act’) (collectively, ‘the Acts’) – whether plaintiff made representations to Flagstaff Proprietors which induced entry, or upon which reliance was otherwise placed in entering, into the Facility Agreement – whether valuations obtained by plaintiff in respect of real property the subject of the Securities constituted misleading and deceptive conduct, contrary to the ASIC Act – whether plaintiff should be precluded from enforcing the terms of the Facility Agreement on the basis of its conduct towards Flagstaff Proprietors.
Held: No evidence that Flagstaff Proprietors was suffering a special disadvantage at the time of entering into the Facility Agreement – no evidence to prove plaintiff acted unconscionably, or engaged in misleading or deceptive conduct – the variations to the Facility Agreement were in accordance with the written terms and conditions of the Facility Agreement – no basis for liability arising under the Acts – no evidence to suggest Flagstaff Proprietors suffered loss in connection with the valuations conducted by the plaintiff – no basis for setting aside Facility Agreement or rendering its terms unenforceable.
Defence and counterclaim – unconscionability – misleading and deceptive conduct – misrepresentation – agronomic claims – whether plaintiff acted unconscionably in provision of agronomic advice – whether agronomic advice provided to Flagstaff Proprietors by the plaintiff constituted misrepresentations, or amounted to misleading and deceptive conduct.
Held: No basis to conclude the plaintiff took advantage of, in any way acted unconscionably towards, made misrepresentations to, or engaged in misleading and deceptive conduct with respect to, Flagstaff Proprietors in the provision of any agronomic advice.

BANKING AND FINANCE - BANKS - GENERAL - RELATIONSHIP OF BANKER AND CUSTOMER
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - SPECIAL RELATIONSHIPS AND DUTIES - BANKS
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - STANDARD OF CARE
TORTS - NEGLIGENCE - PROOF OF NEGLIGENCE - SUFFICIENCY OF EVIDENCE
Defence and counterclaim – negligence – financial claims – whether plaintiff assumed role of financial advisor to Flagstaff Proprietors – whether plaintiff gave Flagstaff Proprietors financial advice – whether plaintiff failed to conduct credit reviews in a timely manner – whether plaintiff owed duty of care to Flagstaff Proprietors – whether any duty breached.
Held: Plaintiff arm’s length financier of Flagstaff Proprietors – plaintiff did not assume role of financial advisor nor proffer financial advice – any delays in conducting credit reviews not the fault of the plaintiff.
Defence and counterclaim – negligence – agronomic claims – whether plaintiff assumed role of agronomic advisor to Flagstaff Proprietors – whether plaintiff rendered Flagstaff Proprietors agronomic advice – whether plaintiff owed duty of care to Flagstaff Proprietors – whether plaintiff’s agronomic advice was negligent – whether Flagstaff Proprietors relied on agronomic advice.
Held: Plaintiff provided agronomic advice to Flagstaff Proprietors – plaintiff owed Flagstaff Proprietors a duty of care in relation to the provision of agronomic advice and ought to have realised that Flagstaff Proprietors may rely on that advice – reasonable for Flagstaff Proprietors to rely on any agronomic advice from plaintiff – Flagstaff Proprietors did not rely on agronomic advice provided by plaintiff – negligence not proved.

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT - MEASURE OF DAMAGES - DAMAGE TO LAND AND BUILDINGS
DAMAGES - GENERAL PRINCIPLES - DIFFICULTY OF ASSESSING DAMAGES
Defence and counterclaim – whether business of Flagstaff Proprietors suffered economic loss as a result of plaintiff's conduct.
Held: No loss or damage proved.

EQUITY - GENERAL PRINCIPLES - FIDUCIARY OBLIGATIONS - CONFLICT OF INTEREST AND DUTY
Defence and counterclaim – fiduciary duty – whether plaintiff owed Flagstaff Proprietors a fiduciary duty – whether plaintiff breached that duty in obtaining inflated valuations – whether Flagstaff Proprietors increased indebtedness in reliance on inflated valuations of assets – whether plaintiff advanced monies to Flagstaff Proprietors in the knowledge that repayments could not be met – whether plaintiff acted in its own interest and for an improper purpose in inducing Flagstaff Proprietors to enter into the Facility Agreement.
Held: No fiduciary duty established – no evidence that Flagstaff Proprietors acted in reliance on the valuations to its detriment.
Defence and counterclaim – conflict of interest – whether solicitors acting for plaintiff and Flagstaff Proprietors, at the time of entry into the execution of the Facility Agreement, acting in conflict of interest – whether solicitors acting for the plaintiff in the present proceedings acting in conflict of interest.
Held: No cause of action against plaintiff.

EVIDENCE - ADMISSIBILITY AND RELEVANCY - OPINION EVIDENCE - EXPERT OPINION - QUALIFICATIONS OF WITNESS
Defence and counterclaim – expert evidence – agronomic claims – whether witness called by defendants an expert on relevant agronomic claims, and issues in respect thereof, falling for determination – weight to attach to reports and evidence of witness.
Held: Witness not qualified to give expert opinion on relevant agronomic claims or associated issues – witness not independent of the defendants – reports and evidence given by witness find no basis in admissible evidence – substratum of assumptions and/or facts on which opinions based not proved – opinions expressed unhelpful and/or unsustainable having regard to the evidence as a whole.

REAL PROPERTY - VALUATION OF LAND - METHODS OF VALUATION - COMPARABLE SALES
EVIDENCE - ADMISSIBILITY AND RELEVANCY - OPINION EVIDENCE - EXPERT OPINION
Valuations – expert evidence – methods by which valuations conducted – reference to comparable sales – whether sales actually comparable – weight to attach to evidence dependent on methodology employed.
Australian Securities and Investment Commission Act 2001 (Cth) s 12BAA, s 12BAB, 12BB, 12CA, s 12DA, 12GF; Civil Liability Act 1936 (SA) s 41; Evidence Act 1939 (SA) s 39; Fair Trading Act 1987 (SA) s 57, referred to.
Landmark Operations Ltd v J Tiver Nominees Pty Ltd & Ors [2008] SASC 133, applied.
Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd & Ors (2003) 214 CLR 51; Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253; Australian Securities and Investment Commission v National Exchange Ltd (2005) 148 FCR 132; Blomley v Ryan (1956) 99 CLR 362; BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; Breen v Williams (1996) 186 CLR 71; Bridgewater v Leahy (1998) 194 CLR 457; Canon Australia Pty Ltd v Patton [2007] NSWCA 246; Casley-Smith v FS Evans & Sons Pty Ltd and District Council of Stirling (No 1) (1988) 49 SASR 314; Clark v Ryan (1960) 103 CLR 486; Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Commercial Bank of Australia v Amadio (1982-1983) 151 CLR 447; Commonwealth Bank of Australia v Smith (1991) 42 FCR 390; David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 23 FCR 1; Deckana Pty Ltd v Northern Territory of Australia & Ors (1998) 145 FLR 71; Fraser v NRMA Holdings Limited (1995) 55 FCR 452; GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Limited (2002) 117 FCR 23; Hardy Wine Co Ltd v Tasman Liquor Traders Pty Ltd (in liq) (2006) 95 SASR 21; Hawkins v Clayton (1998) 164 CLR 539; Hospital Products Limited v United States Surgical Supply Corporation & Ors (1984-1985) 156 CLR 41; Hurley v McDonald's Australia Limited [1999] FCA 1728; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27; Jones v Dunkel (1959) 101 CLR 298; Kavanagh v Phlipot and Flinders Medical Centre (1998) 197 LSJS 411; Makita v Sprowles (2001) 52 NSWLR 705; National Westminster Bank Plc v Morgan (1983) 3 All ER 85; NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Pilmer & Ors v Duke Group Limited (in liq) & Ors (2001) 207 CLR 165; Pownall v Conlan Management (1995) 12 WAR 370; R v Associated Northern Collieries (1910) 11 CLR 738; R v Bjordal (2005) 93 SASR 237; R v Bonython (1984) 38 SASR 45; Radin v Commonwealth Bank of Australia [1998] FCA 1361; Rogers v Whitaker (1992) 175 CLR 479; San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; Slinger v Southern White Pty Ltd (2005) 92 SASR 303; Southern Equities Corp Ltd v Arthur Andersen & Co (No 9) [2002] SASC 118; Toll (FCTG) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Venning v Suburban Taxi Services Pty Ltd [1994] FCA 898; Wright v Sydney Municipal Council (1916) SR NSW 348, considered.

LANDMARK OPERATIONS LTD v J TIVER NOMINEES PTY LTD & ORS
[2008] SASC 322
Introduction
The Tiver family business
History of the proceedings
Assignments
The pleadings
The Statement of Claim
The Defence and Counterclaim
Preliminary observations
The events prior to 1 November 2001
The farming enterprise and Flagstaff Proprietors’ major creditors
Dairy deregulation - the DSAP monies
The engagement of Hower Corporation
Application to PIBA
Elders’ Irrevocable Authorities
The purchase of Koonoona
Application to Wesfarmers Dalgety in April 2001
The engagement of Wallmans Lawyers – the dispute over the Irrevocable Authorities
The ongoing work of Hower Corporation in seeking refinance packages
Debt forgiveness sought from National Australia Bank
The engagement of Ward & Partners
Ward & Partners negotiations with National Australia Bank – the Forbearance Arrangement
The group of private lenders organised by Hower Corporation
Ward & Partners negotiations with Elders – the Associated Deeds of Priority and Release
Mr Luke Rowley’s involvement
Mr Luke Rowley’s work of 19 October 2001

The introduction of the Tivers to Landmark – who referred the defendants to the plaintiff?
Confidential information
The defendants’ financial conduct during the negotiation of their refinance in late 2001
Ben and James Tiver’s awareness of Flagstaff Proprietors’ financial position in 2001
Meetings between Mr Peter Robinson of Landmark and John and Margaret Tiver
The first meeting
The cashflow forecasts
Flagstaff Proprietors’ cropping programs for 2001 to 2002 and 2002 to 2003
Further evidence supporting the contention that John and Margaret Tiver intended to retire from dairy farming
The events after the first meeting
The Facility Agreement
The role of Ward & Partners in the preparation and registration of documents
The discussion about agronomic advice
The events after entering into the Facility Agreement – 2002
Variations to the Facility Agreement
The March 2002 credit review
The Tivers’ conduct following the 5 March 2002 meeting
The April 2002 credit review
The events of June 2002
July 2002 – the aftermath of the 30 June 2002 default
August 2002 – further extension of the Tivers’ facilities
September 2002 – the North Adelaide property
The acquisition and development of the North Adelaide property

The events of October 2002
The events of November 2002
2003
January 2003 – discussion of the Tivers’ refinance
The events of February 2003
March 2003 – a continuation of cash cropping
The events of April 2003
The 2003 credit review
Dealings with other creditors
2004
January 2004 – refinance of La Trobe
Review of the Facility Agreement
The 2004 credit review
Dealings with other creditors
Refinancing the facilities
Revocation of revised Facility Agreement
2005 – proceedings issued
Assessment of the principal witnesses about financial dealings
Mr Peter Robinson
Mr Phillip Dibben
Mrs Margaret Tiver
Mr John Tiver
Mr Ben Tiver
Mr James Tiver
The claim in contract
Terms of the contract
The claimed oral and implied terms
Breach of duty of care and contractual duty
Banker’s negligence case – does Landmark owe the defendants a duty of care?
A fiduciary relationship?
Conflict of interest
The agronomic claim
The defendants' expert evidence – the agronomic claim and calculation of loss
Mr Glen Hillebrand
Mr Robbie Calaby
Mr Ian Aberdeen

Expert evidence – the law
The Aberdeen reports
Duty of care
The first meeting
The second and third meetings
The 2003 year
The application of 323 fertiliser
The 2004 year
Crop yields 2002 to 2004
The valuation claim
Misleading and deceptive conduct – the valuations – s 12DA of the Australian Securities and Investment Commission Act 2001 (Cth)
The unconscionable conduct claims
The legislation
Unconscionable conduct in the management of the facilities
Unconscionable conduct in the provision of agronomic advice
Mrs Mary Oldfield – ownership of stock
Conclusions
Crop mortgages
Stock mortgages
Possession of secured land holdings
Annexure A
Annexure B

SULAN J
Introduction

The plaintiff, Landmark Operations Limited (“Landmark”), is a rural financier which lent money, by way of loan facilities (“the Facility Agreement”), to the second to sixth defendants who trade in partnership as Flagstaff Proprietors. The first defendant is the trustee of the John Tiver Family Trust. The first defendant guaranteed the borrowings of Flagstaff Proprietors under the Facility Agreement (“the Guarantee”). The first to fifth defendants are the registered proprietors of various parcels of land at Burra on which the farming business of Flagstaff Proprietors is conducted.[1] The facilities were secured by property and stock mortgages granted by the first to fifth defendants. The property mortgages provided for the execution of crop mortgages by Flagstaff Proprietors in Landmark’s favour, if so required. The Facility Agreement was originally made between the second to sixth defendants, as the borrowers, and Wesfarmers Dalgety Limited, Dalgety Limited and the Primary Industry Bank of Australia Limited (“PIBA”); collectively, “Wesfarmers Dalgety”. Wesfarmers Dalgety Limited changed its name to Landmark Operations Limited; the plaintiff. Dalgety Limited changed its name to Landmark (Qld) Limited and PIBA changed its name to Rabobank Australia Limited (“Rabobank”). All three companies were named as plaintiffs when these proceedings were instituted. On 21 June 2007, by reason of an assignment to which I will later refer, a Judge of this Court ordered that Landmark (Qld) Limited and Rabobank cease to be parties to the proceedings. Since that time, Landmark has been the sole plaintiff in the action. Throughout these reasons, any reference to the plaintiff or Landmark should be taken as a reference to Wesfarmers Dalgety, where appropriate.
[1] Annexure A, Exhibit P229, is a map which identifies the land.
Landmark seeks repayment of its facilities which, together with interest, exceed $10 million. Flagstaff Proprietors first defaulted on the Facility Agreement in February 2002, about three months after entering into the Facility Agreement. Landmark continued to support the Tivers for approximately four years, despite Flagstaff Proprietors continuing to breach the Facility Agreement, and remaining in default of the agreement throughout that time.
In 2004, Landmark offered to extend the facilities, despite Flagstaff Proprietors’ continuing defaults. A condition of Landmark extending the facilities required Flagstaff Proprietors to sell land to reduce its total indebtedness. Flagstaff Proprietors refused to sell land to reduce its debt. In March 2005, Landmark gave notice to the Tivers that they were required to refinance. In April 2005 and May 2005, notices of demand were served on Flagstaff Proprietors. Flagstaff Proprietors has declined to make any payments since that time.
Landmark seeks orders for the enforcement of the Guarantee and securities under the Facility Agreement, and that the defendants execute crop and stock mortgages in its favour. The defendants admit monies owing under the Facility Agreement have not been repaid. The defendants deny liability to repay the monies. They seek orders that the Facility Agreement is unenforceable. In the alternative, they seek to set off the debt said to be owing by way of counterclaim. The Tivers claim that Landmark has substantially contributed to the failure of their farming business. They claim that Landmark required them, as an oral term of the contract, to change their farming operation from a successful dairying enterprise to a cropping business, a farming practice in respect of which they had little or no knowledge, expertise or experience. The Tivers claim that it was a further oral term of the contract that Landmark would provide them with agronomic experts to advise and assist in Flagstaff Proprietors’ cropping business. The Tivers claim that Landmark failed to assist them or give them proper or adequate agronomic advice.

The Tivers say the cropping business has failed, in part, due to the improper and negligent agronomic advice given to them by Landmark. They seek a declaration that Landmark is estopped from claiming capital, interest and costs associated with the agronomic advice. They claim that Landmark owed them a fiduciary duty in respect of the management of the Facility Agreement, and that it has failed in that duty, thereby causing them loss. The Tivers claim that officers of Landmark misled members of Flagstaff Proprietors, resulting in the partnership making decisions which resulted in loss and damage to the business. The Tivers seek an account to establish what, if any, amounts of capital and interest are recoverable, and a variation of the Facility Agreement to that effect. They seek to set off the monetary award from any amount they owe.
Landmark’s response is that it owed no duty of care or fiduciary duty to the defendants in the management of the Facility Agreement. Landmark contends that the financial demise of Flagstaff Proprietors is due to the Tivers’ mismanagement of the business, and their continued deceit of Landmark and other creditors.
Landmark says it was never a term of the contract that Flagstaff Proprietors pursue a particular farming practice, or that Landmark would provide agronomic advice. Landmark says that, insofar as it gave agronomic advice to Flagstaff Proprietors, that advice was not incorrect nor negligent. Further, Landmark says that Flagstaff Proprietors did not rely on the advice, nor follow the advice.
Over several generations, the farming business of the Tiver family, which began as a modest operation, expanded into a large commercial enterprise, with significant assets and a turnover in the millions of dollars. The nature of the business changed over the years. For a long time, it concentrated on sheep, cattle and cropping. This changed to dairy farming in the late 1980s and early 1990s, and eventually reverted to cropping and beef cattle farming shortly after the turn of the century. In recent years, the business of Flagstaff Proprietors became overladen with debt. To remain viable, stringent measures needed to be taken to enhance its growth and control its expenditure. This was especially so, given the uncontrollable effect that drought and the market value of assets have on such a business.
For Flagstaff Proprietors to survive, it required difficult decisions to be made about the sale of assets and the direction of the business. John and Margaret Tiver, who were primarily responsible for the financial management of Flagstaff Proprietors, needed to devise a business plan by which the debts of the business were reduced and managed. That required the assistance and cooperation of their financiers. The evidence reveals that Landmark, and other financiers of Flagstaff Proprietors, often went to great lengths to support the business and accommodate its changing needs, having regard to the fact that the fortune of those on the land is subject to seasonal conditions and other factors beyond their control.
The Tivers, however, chose not to cooperate nor deal openly and frankly with Landmark. They made promises which were broken. They repeatedly defaulted. They clandestinely dealt with their financiers to hide their financial position from other creditors. They misstated their income and financial position. They did not disclose dealings to Landmark which the terms of the Facility Agreement required them to so disclose. They directed substantial monies to personal, discretionary and luxury items when Landmark, and other creditors, were continually extending time for repayment and the position of the business was dire. All of these actions were the choice of the Tivers, specifically, John and Margaret Tiver. They chose to cease making repayments of capital and interest to Landmark. They chose not to sell land. They steadfastly refused to deal adequately with their financial difficulties, which spiralled out of control. Litigation was an inevitable result of their conduct, despite a number of attempts to avoid it.
This judgment deals with the claims and counterclaims of the parties. I have not dealt with every issue the defendants sought to ventilate. This is primarily because many collateral issues which the Tivers, Margaret Tiver in particular, sought to pursue were irrelevant or found no foundation in the evidence. I have considered each of the defendants' claims, many of which were not supported by evidence and, therefore, doomed to fail. I observe that today, what was once a prosperous business, is now a depressed business with reduced stock, reduced crops and a significantly reduced turnover, laden with debt and embroiled in litigation.
The Tivers seek to blame everyone but themselves for the present position of Flagstaff Proprietors.
As will become evident, I consider that much of the responsibility for the destruction of what was once a thriving business is due to the conduct of John and Margaret Tiver, who controlled it throughout the relevant time. I accept that drought played its part. I accept that there were factors beyond their control which played a part. With hindsight, it may be said that their financier should have acted sooner to bring matters to a head. Landmark continued to advance monies when the Tivers’ position was such that others may have declined to continue to support the business.
Ultimately, however, the responsibility of what has now occurred must rest with John and Margaret Tiver. Their sons, James and Benjamin (“Ben”) Tiver, chose to maintain a common defence to the action, with the result that they must also bear their share of responsibility for the result.[2]
[2] Phyllis Blanche Tiver, the third defendant, is the mother of John Tiver. She has taken no role in the proceedings, nor in the events the subject of the proceedings. At all relevant times, John Tiver has held an enduring power of attorney for Phyllis Tiver, which Phyllis Tiver executed on 3 March 1997.
The plaintiff has succeeded in proving that debts owing to it are due and payable. The defendants have failed to prove that Landmark is not entitled to recover debts outstanding, or that those debts should, for any reason, be set off due to Landmark’s conduct.
This judgment traces the events leading to the parties entering into the Facility Agreement. The Tivers had reached a point in the first half of 2001 when their then financiers required them to obtain alternative finance. In November 2001, Landmark agreed to refinance Flagstaff Proprietors. I have concluded that the Tivers, in particular John and Margaret Tiver, failed to deal with Landmark in good faith. I have described a number of events which have led me to that conclusion. I have dealt with specific allegations that the Tivers have made against employees of Landmark. In particular, the Tivers’ claims that they received negligent advice, and that Landmark failed in its duties to the Tivers. I have considered specifically a claim that the Tivers received negligent agronomic advice, and I have concluded that claim has not been made out. I have dealt with claims that Landmark mismanaged the Facility Agreement and was responsible for the Tivers over committing themselves to further debt. There can be no doubt that Landmark continued to extend the facilities, despite its credit department being aware that the Tivers were in default and had misled them. Although criticism of Landmark’s continued support of the Tivers may be justified, I have concluded that the various complaints against Landmark have not been made out. This judgment deals with the role of solicitors who have acted for the Tivers. Those solicitors are not parties to this litigation. The Tivers complain that their solicitors acted against their interests and provided confidential information to Landmark. Those allegations have not been made out. I have made observations about the role the solicitors played.
I now turn to the events which led to this litigation, and to the claims and counterclaims made by the plaintiff and defendants.
The Tiver family business
John Tiver joined his father and grandfather in the business of farming at Burra when he was 17.[3]   At that time, the family farming business consisted of four share farmers who carried on cash cropping on the Tivers’ land. In addition, John Tiver, his father and other members of the Tiver family were engaged in cropping and sheep farming.[4] John, Margaret and Ben Tiver drew a distinction between cash cropping and growing crops which were retained as feed for stock. Mr Glen Hillebrand, an agronomist who worked for Landmark and who advised the Tivers, gave evidence that there is no relevant distinction between cropping for sale, (“cash cropping”), and cropping to provide feed, (“feedlot cropping”). In both cases, farmers attempt to achieve the maximum yield from their crops. In his opinion, the procedure and process is the same whatever the ultimate purpose may be for the use of the crop. For convenience, I shall use the term “cash cropping” to distinguish between crops grown for sale and crops grown for feeding cattle. John Tiver learnt the practice of cash cropping from one of the share farmers. Ultimately, the Tivers took over the cropping enterprise in its entirety.
[3]    T 1051.
[4]    T 1051.
In 1970, Margaret and John Tiver married. At that time, the business consisted of sheep farming and cash cropping.
In or around 1989, the Tivers changed their farming practice.[5] They ceased cash cropping and sheep farming. They commenced to operate a feedlot dairy. A feedlot dairy is a dairy in which the cows are fed in a lot, rather than grazing in open fields. John Tiver gave evidence that, prior to establishing a feedlot dairy, he had travelled to the United States of America to investigate and learn about the process. He and Margaret Tiver gave evidence that feedlot dairying was a new process in Australia, and that they were one of the first dairy farms to employ that process. John Tiver described the process as a more efficient method of milk production, because the cows were not required to walk in a paddock to obtain their feed. The farmer is able to determine the mix of the feed. The cows fatten more than cows which feed in a paddock, and they produce more milk and higher quality milk. The farm can also carry more cows because the land required to run the cows is less if they are fed from a feedlot.[6] The Tivers grew crops on the property for the feedlot. This meant that they did not have to purchase all feed from external sources. However, they relied on external sources on occasion.
[5] T 443-5.
[6] T 1055.
In 2001/2002, Flagstaff Proprietors reverted to cash cropping. The Tivers allege this was done at the insistence of Landmark.
Margaret Tiver asserted that, during the early 1990s, an event occurred (“the toxic tallow event”) which had a significant effect on Flagstaff Proprietors’ dairy farming business. Mrs Tiver said many cattle suffered substantial adverse health problems as a consequence of having been exposed to contaminated feed. It is not necessary to describe that event. It is sufficient to note that, according to Margaret Tiver, a great number of cattle were affected, with the consequence that milk production and the number of cows was reduced. Flagstaff Proprietors issued proceedings against those it considered responsible for the contaminated feed. Flagstaff Proprietors was paid a settlement sum of $1,000,000, of which approximately $500,000 was received by the business after payment of legal fees and other expenses.
The defendants sought to amend their pleadings prior to trial before me. The gravamen of the proposed pleading was that the toxic tallow event had caused substantial adverse health problems in the dairy herd. It was sought to be alleged that Landmark, which was involved in the live cattle export trade, had an interest in ensuring that the toxic tallow event did not become public knowledge and was thus motivated to offer the Tivers refinance, on condition that they switch from dairy farming to cash cropping, so as to keep the toxic tallow event secret and avoid adverse publicity for the Australian agricultural export trade. No particulars of the allegations, nor any material or evidence to support the allegations, were provided. The defendants also sought to amend their pleadings to allege that, had they been permitted to remain in dairy farming, they would not have suffered the loss of income and profits which they incurred in seasons subsequent to the 2001/2002 season. They had sought to similarly amend their pleadings in earlier hearings before Nyland J and Anderson J. These applications were refused. I refused leave to the defendants to plead the allegations concerning the toxic tallow event.[7]
[7] Landmark Operations Ltd v J Tiver Nominees Pty Ltd & Ors [2008] SASC 133.
Nevertheless, during the trial a number of witnesses called by the defendants, and the defendants themselves, referred to the toxic tallow event. Their evidence was that the Tivers were competent farmers who had suffered an adverse event, which had caused financial and legal problems for their business, but that they were recovering. The evidence was also led to demonstrate that the Tivers were constrained at the time that they were negotiating with Landmark in late 2001, by reason of their weakened financial position and because of their reluctance to sign a deed of release required by one of their then lenders, Elders Limited (“Elders”), which was, according to the Tivers, related to Elders’ desire to conceal the alleged toxic tallow event.[8]
[8] T 223-5, T 285, T 469-70, T 544, T 557, T 579-84, T 689-94, T 910, T 1063, T 1069, T 1962-5 and T 3595-8.
It is not necessary for me to make any findings regarding the alleged toxic tallow event. Later in these reasons I will deal with the financial position of the defendants at the time that they entered into the Facility Agreement.
History of the proceedings
Proceedings were commenced on 22 July 2005, under the Real Property Act 1886 (“the RPA”). Orders were sought pursuant to Part 17 of the RPA for possession of the properties securing the Facility Agreement. The action proceeded to trial before David J. That trial continued until 23 October 2006 (“the first trial”). On that day, the parties advised the Court that a settlement had been negotiated and consent orders were entered (“the consent judgment”).
On 21 June 2007, the consent judgment was set aside for reasons which I will discuss in more detail shortly, relating to assignments of the various loans and facilities and the securities thereunder. Landmark took the necessary steps to cure the problems which had formed the basis for the consent judgment being set aside. A second trial before Nyland J commenced on 4 February 2008 (“the second trial”). That trial continued until 19 February 2008, when Her Honour was unable to continue hearing the matter. A third trial commenced before me on 2 June 2008.
Assignments
Over 2005 and 2006, the liabilities of the defendants, together with the securities for repayment of those liabilities, were assigned from Wesfarmers Dalgety to Permanent Custodians Limited (“Permanent Custodians”), and then back to Landmark solely and absolutely.[9]
[9] Further Amended Statement of Claim, [21A] – [21L].
Pursuant to a deed of assignment, dated 30 November 2005, Wesfarmers Dalgety assigned all of their right, title and interest in respect of the loans and credit facilities made under the Facility Agreement, together with the relevant securities, to Permanent Custodians (“the PCL Assignment”).[10]
[10] Exhibit P56, Clause 3(a). See also Exhibit P26, Exhibit P53, Exhibit P54, Exhibit P55 and Exhibit P57 which, together, confirm the correlation between the loan numbers for the Term Loan, the Seasonal Facility and the Cattle Account facility with those numbers appearing in the Schedule to the Deed of Assignment, which has been partially redacted on the basis of commercial sensitivity.
Shortly thereafter, Landmark notified Permanent Custodians of its intention to re-purchase the right, title and interest in the Facility Agreement and related securities. Permanent Custodians then assigned all of its rights, title and interest in the Facility Agreement and related securities, and the Guarantee, to Landmark by deed of assignment, dated 22 May 2007 (“the LOL Assignment” or “re-assignment”).[11]
[11] Exhibit P60.
The plaintiff pleads that the re-assignment of the defendants' debts from Permanent Custodians to it occurred almost immediately after the PCL Assignment. Counsel for the plaintiff submits that Permanent Custodians, having assessed those debts, did not want them.[12] The plaintiff alleges that the transactions in respect of the re-assignment occurred in and around March 2006.[13] The transfer of the legal title of the loans and securities, however, was overlooked by the plaintiff and not attended to until May 2007, at which time these proceedings were the subject of the consent judgment. As a result of legal title not having been transferred and the plaintiff not being in a position to prove that the defendants had received notice of the assignment, the consent judgment was set aside, and the plaintiff took the steps, which I have outlined above, to effect the transfer of legal title and notify the defendants accordingly.
[12] T 2836-7.
[13] Further Amended Statement of Claim, [21F].
During the trial, Margaret Tiver denied that the defendants had been given notice of the PCL Assignment. She said the first time she saw such a notice was when it was shown to her by one of the lawyers representing the Tiver interests during the first trial.[14] John Tiver, initially, also denied having received notification of the PCL Assignment. He too indicated that such a notice was first shown to him by a former legal representative.[15] John Tiver subsequently gave evidence that he was confused as to which documents counsel for the plaintiff was referring and confirmed that he had received notification of the PCL Assignment by letter to the second to sixth defendants, dated 16 December 2005.[16]
[14] T 920-1.
[15] T 1742-3.
[16] Exhibit P59, T 1745-6.
By their response to a notice to admit,[17] the Tivers admit having received the 16 December 2005 letter notifying them of the PCL Assignment. They say that by the use of the word ‘sold’ in that letter, the legal effect of the arrangements between Wesfarmers Dalgety and Permanent Custodians was not clear to them.[18]
[17] Exhibit P87, Exhibit P87A, Exhibit P88 and Exhibit 88A.
[18] T 126-7.
Be that as it may, by letter of 16 December 2005, the plaintiff wrote to Flagstaff Proprietors notifying them of the PCL assignment.[19] Written notice of the LOL Assignment was served on the defendants on 23 May 2007, the day after the legal transfers in respect of that re-assignment had been effected.[20] The defendants admit receiving notice of these assignments. The assignments were permitted under the Facility Agreement.[21]
[19] Exhibit P59.
[20] Exhibit P62 and Exhibit P63.
[21] Exhibit P2, General Terms and Conditions, Sub-Clause H6.
In consequence of the LOL Assignment and the subsequent registration of the relevant securities, including the property and stock mortgages, I conclude that the plaintiff became legally and beneficially entitled to recover from the defendants the full amount outstanding under the Facility Agreement and its associated securities.[22]
The pleadings
[22] Law of Property Act 1936, s 15 and Real Property Act 1886, ss 150 and 152.
The Statement of Claim
The plaintiff pleads that it lent monies to the second to sixth defendants, trading as Flagstaff Proprietors, in accordance with the terms and conditions of the Facility Agreement. The plaintiff pleads that these monies have not been repaid and that the defendants have failed to comply with this and other obligations arising under the Facility Agreement.

It is not in dispute that there exists a contract, the Facility Agreement, between Landmark and Flagstaff Proprietors, nor is it disputed that the monies owing have not been repaid, and that no repayments have been made since this action was commenced in 2005. There is a dispute about the terms of the contract. The plaintiff pleads that the contract was entirely written. The Tivers plead that the written terms are supplemented by oral and implied terms.
The Defence and Counterclaim
The Tivers plead that Landmark’s conduct has been unconscionable and that, as a consequence, it should not be entitled to enforce the written terms of the Facility Agreement.[23] They plead that because of various breaches of duty, the total monies advanced by the plaintiff have been inflated as a consequence of unnecessary and negligent advice.
[23] Further Amended Defence and Counterclaim, [46].
Alternatively, the Tivers by way of counterclaim, plead that the plaintiff owed them various duties, that those duties were breached, and that they are entitled to various remedies in respect of those breaches.
First, the Tivers claim that Landmark owed them a duty of care to manage the Facility Agreement so as to minimise the cost of the defendants' borrowings.[24] They claim that Landmark owed them a duty of care to avoid them suffering loss of a purely economic kind. The Tivers claim that Landmark breached this duty by varying the terms of the Facility Agreement and by failing to pay La Trobe Finance.[25] I will deal with the La Trobe loans and related financial arrangements later in these reasons.
[24] Further Amended Defence and Counterclaim, [38.1.2] – [38.1.4].
[25] Further Amended Defence and Counterclaim, [39] – [41A].
Secondly, the Tivers plead that it was an oral term of the Facility Agreement that they would change their farming practices to cash cropping.[26] They plead that it was also an oral term that Landmark would supply expert advice pertaining to cash cropping,[27] or that there were additional contracts for the provision of agronomic advice,[28] or that Landmark was under a duty of care to provide competent and comprehensive agronomic and associated advice.[29] The Tivers plead that Landmark breached these duties by providing negligent and inaccurate agronomic and associated advice.[30]
[26] Further Amended Defence and Counterclaim, [13.2].
[27] Further Amended Defence and Counterclaim, [13.3].
[28] Further Amended Defence and Counterclaim, [42A].
[29] Further Amended Defence and Counterclaim, [38.1.1].
[30] Further Amended Defence and Counterclaim, [43].
Thirdly, the Tivers plead that Landmark owed them a duty to conduct annual credit reviews of their facilities promptly, to enable Flagstaff Proprietors to sow crops at the optimum times.[31] The Tivers plead that Landmark was dilatory in conducting these reviews and that this constituted a tortious breach of duty and unconscionable conduct.[32]
[31] Further Amended Defence and Counterclaim, [38.1.4].
[32] Further Amended Defence and Counterclaim, [41B].
Fourthly, the Tivers plead that Landmark made certain representations to them at the time the contract was entered into,[33] and that they accepted the offer of finance in reliance on these representations.[34]
[33] Further Amended Defence and Counterclaim, [25A].
[34] Further Amended Defence and Counterclaim, [25B].
Fifthly, the Tivers plead that Landmark owed Flagstaff Proprietors a fiduciary duty.[35] They plead that Landmark breached its duty by obtaining two valuations of the properties which were inflated.[36] The Tivers claim that they relied upon the valuations,[37] and that, had they realised the valuations were inflated, they would not have increased their indebtedness, would not have continued to draw down on the facilities and would have sold land or other assets to reduce their indebtedness to Landmark.[38] The Tivers seek equitable compensation.
[35] Further Amended Defence and Counterclaim, [25C].
[36] Further Amended Defence and Counterclaim, [43B], [43E].
[37] Further Amended Defence and Counterclaim, [45C], [45F].
[38] Further Amended Defence and Counterclaim, [45D], [45G].
Sixthly, the Tivers plead that the plaintiff’s conduct constitutes misleading and deceptive conduct, contrary to provisions of the Fair Trading Act 1987 (“FTA”), the Trade Practices Act 1974 (Cth) (“TPA”) and the Australian Securities and Investment Commission Act 2001 (Cth) (“ASIC Act”).First, the Tivers plead that Landmark caused persons employed by it to provide agronomic advice relating to how best to carry out the cash cropping enterprise, and related advice, including forecasts of the harvest value of the crops.[39] They plead that this advice was given without reasonable basis and misrepresented the anticipated yields.[40] Secondly, the Tivers plead that the provision of the valuations, to which I earlier referred, constituted misleading and deceptive conduct, contrary to the ASIC Act.[41]
[39] Further Amended Defence and Counterclaim, [27] – [30].
[40] Further Amended Defence and Counterclaim, [43].
[41] Further Amended Defence and Counterclaim, [45I], [45J].
Seventhly, the Tivers claim that Landmark took unconscionable advantage of Flagstaff Proprietors by imposing the oral and implied terms, by taking security to a value that greatly exceeded the value of the finance provided, by including in the Facility Agreement a right to vary the terms of the Facility Agreement[42] and by engaging in the conduct also pleaded to constitute a breach of the duties arising in tort and contract.[43] The Tivers plead that this conduct was unconscionable, as Landmark took advantage of their circumstances at the time of entering into the Facility Agreement. The Tivers say Landmark took advantage of the pressure Flagstaff Proprietors was under from its then primary lender, National Australia Bank (“NAB”), which had issued notices of default and required Flagstaff Proprietors to refinance. The Tivers further plead that the plaintiff’s conduct was unconscionable within the meaning of the relevant provisions of the FTA, TPA and ASIC Act.
[42] Further Amended Defence and Counterclaim, [37].
[43] Further Amended Defence and Counterclaim, [38] – [41B].
Preliminary observations
The defendants were unrepresented in the trial before me. At various times during the trial, Ben Tiver, Margaret Tiver and John Tiver appeared in person, and on behalf of all the defendants with leave of the Court. John, Margaret, Ben and James Tiver all gave evidence.
Mindful that the defendants were unrepresented, I permitted many documents to be tendered, the relevance of which was not clear at the time of tender. I did so to ensure that witnesses were not restricted in their evidence. I took a liberal approach to objections based upon grounds of relevance. I was mindful of the Tivers’ difficulties in presenting their case. I permitted them to lead evidence and cross-examine on topics when it was not altogether clear to what issue the evidence related.
From time to time, counsel for the plaintiff contended that Margaret Tiver, in particular, was misleading the Court. On occasions, he alleged that she had deliberately lied. Although, at times, Margaret Tiver’s conduct at the bar table may have been justifiably criticised, in assessing her credit I have relied solely on her evidence.
The plaintiff contends the Tivers deliberately failed to make full and proper discovery. The plaintiff submits many relevant documents have not been disclosed. For example, John Tiver admitted that a number of invoice books for the sale of grain are missing.[44] Many primary records of the business are incomplete. I conclude that discovery by the Tivers has been far from satisfactory. As a consequence, the plaintiff has been required to subpoena documents from third parties, copies of which, in many instances, were, or should have been, in the possession of the defendants. In other instances, documents produced by the Tivers in response to calls for production at trial had not been discovered. The source of some documents is unclear, and the circumstances under which they came into existence is unclear. Many of the documents came to the plaintiff’s attention at a very late stage of, and often during, the proceedings. The failure to make adequate discovery resulted in some delays. The plaintiff submits that the Tivers have failed to comply with their obligations because they were aware that the documents did not support their case.
[44] T 1946, T 1948 and T 2149.
I have had regard to the complexity of the case and to the Tivers’ difficulties in presenting their case. I draw no adverse inferences against them from their failure to comply with the Supreme Court Rules 1987 (“the Rules”) or their failure to comply with orders of the Court prior to the hearing.
I am not satisfied that the failure to provide lists of documents and the failure to abide by the Rules has been a deliberate attempt by the Tivers to avoid their obligations and to hide the truth. I am not satisfied that their failure to comply with their discovery obligations has been a deliberate attempt by them to mislead the Court, or to obstruct the proper presentation of the case. It is more likely that the Tivers, being unrepresented, have been unable to prioritise the tasks that they have had to undertake. In some instances, it appears that they did not understand their discovery obligations.
The events prior to 1 November 2001
The farming enterprise and Flagstaff Proprietors’ major creditors
In order to understand how the relationship between Landmark and Flagstaff Proprietors commenced, it is necessary to narrate the events leading up to 1 November 2001, when John and Margaret Tiver met Mr Peter Robinson, Landmark’s Financial Services Manager for South Australia, for the first time. The allegations that Landmark acted unconscionably and in breach of duty in their dealings with the Tivers, must be considered against the background of events leading to Landmark’s offer of finance.
John Tiver said Flagstaff Proprietors’ dairying operation had experienced financial difficulties as a result of the toxic tallow event, but, by 1998, the dairy was recovering and prospering.[45] At that time, Flagstaff Proprietors was indebted to NAB, Elders and the Bank of South Australia (“BankSA”).
[45] T 1072.
Flagstaff Proprietors had faced significant financial pressures from 1993 through to 2000. In cross-examination, John Tiver acknowledged that, during this period, a number of Flagstaff Proprietors’ creditors, NAB foremost amongst them, issued demands, which the Tivers were unable to meet. Initially, he refused to concede that this was because the dairy business was not generating sufficient cashflow to meet Flagstaff Proprietors’ loan commitments. He said:[46]
[46] T 1962-3.
Q. Do you say that the business of the dairy was such that you could meet payments required by your creditors as and when they fell due.
A. The business of the dairy -
Q. Yes.
A. - was under great stress after 1993.
Q. I'm talking about 1999 through to 2001.
A. 1999 we were still under pressure then, yes.
Q. National Australia Bank were making -
A. Demands.
Q. Demands, yes.
A. That's correct.
Q. There were numerous creditors that you couldn't pay.
A. We had difficulty.
Q. You received numerous letters from solicitors making demand on behalf of suppliers to the business, didn't you.
A. Yes, we were still suffering from the effects of the toxic event which lasted for years.
Q. You recovered in 1998, you got your maximum yield in 1998. You just told us that.
A. With a high debt loading at that stage because of the toxic event, yes.
Q. But the fact of the matter was your business was not such as to generate cash sufficient to meet your obligations to your numerous creditors, was it.
A. We were under pressure, yes.
Q. It's not my question though. My question is: your business was not generating cash sufficient to meet the claims of your various creditors, was it - your dairy business.
A. Our dairy business was doing well.
Q. You just chose not to pay your creditors; is that right.
A. No, no, we'd fought back from a toxic event where we lost nearly everything and we got back to a position of that. That was at its - a lot of borrowings to buy House to get back there.
It was put to John Tiver that, from 1999, Flagstaff Proprietors was being served with numerous demands from multiple creditors, which the Tivers were unable to meet from their dairying income. He denied the dairy was unsuccessful. He said Flagstaff Proprietors could not meet its financial obligations because its business was being “strangled” by Elders. His evidence continued:[47]
[47] T 1963-4.
Q. But you see in 1999 through 2001 you had numerous claims from creditors, including National Australia Bank, threatening proceedings against you because you weren't paying your debts.
A. That's correct.
Q. That was the dairy business, you say, so was cash flow positive and successful.
A. I still say it was more successful than what the grain business we went into, yes.
Q. But you knew, come 2001, that your dairy business was simply not successful enough to generate funds to meet creditors' claims.
A. Our dairy business was being strangled by Elders at that time, yes.
HIS HONOUR
Q. How was it being strangled by Elders.
A. When they - they - the irrevocable authority.
Q. They took the milk money.
A. That's correct.
…
XXN
Q. Before Elders exercised their rights under the irrevocable direction to which you've just referred his Honour, you had numerous creditors demanding payment from you that you couldn't meet because your dairy business was not generating sufficient cash to meet your obligations, and that's the fact, isn't it.
A. No, our dairy business was still potentially - we had all these young cattle we'd just developed come forward.
HIS HONOUR
Q. That's not an answer to the question.
A. Repeat your question please.
XXN
Q. The position was that prior to Elders exercising their rights under the irrevocable direction to which you just referred his Honour, your dairy business was not generating sufficient cash to meet the claims of your various creditors, of which there were many by way of demands, be it from the creditor direct or from solicitors representing them, weren't there.
A. Yes.
Q. And that's a fact.
A. We were having difficulty then, yes.
John Tiver spoke about what were commonly referred to during the proceedings as the “irrevocable authorities” held by Elders over Flagstaff Proprietors’ income from milk production and sales to National Foods Limited (“National Foods”), the entity to which the Tivers sold their milk. From March 2001, Elders relied upon its irrevocable authorities to direct Flagstaff Proprietors’ income from milk sales towards the repayment of Elders’ facilities. The Tivers engaged solicitors. This resulted in a protracted dispute between the Tivers and Elders. I will say something more about the irrevocable authorities later in these reasons.
Margaret and John Tiver testified that Flagstaff Proprietors’ primary enterprise of dairying was expanding and regaining strength throughout the 1990s, following the toxic tallow event.[48] Margaret Tiver emphasised the success Flagstaff Proprietors’ dairying enterprise had enjoyed and achieved prior to the toxic tallow event, in the late 1980s and early 1990s. Margaret Tiver’s unwavering position was that the dairy complex was prospering in the late 1990s, and leading into 2001, and particularly at the time Flagstaff Proprietors entered into arrangements with the plaintiff. John Tiver conceded during cross-examination that Flagstaff Proprietors’ dairy enterprise was generating insufficient cashflow to satisfy its financial commitments to its creditors, particularly its three major creditors, in the late 1990s and moving into the new millennium. Margaret Tiver made no such concession. Her evidence is to be considered having regard to the financial statements for that period which demonstrate that the dairy business was not profitable.[49] I shall refer to those accounts in more detail later in my reasons.
[48] T 446-7.
[49] Exhibit P123.
The Tivers submit that their dairying activities were very profitable in 2001. They submit that evidence was not challenged. I reject that submission. As is clear from John Tiver’s evidence and from the history of Flagstaff Proprietors’ relationship with its financiers, which culminated in NAB requiring Flagstaff Proprietors to find alternative financiers, the dairy business was far from successful or financially sound.
On the subject of Flagstaff Proprietors’ cashflow, its income following the toxic tallow event was from milk sales and from crops which were excess to the requirements of feed for cattle. As I have mentioned, Flagstaff Proprietors operated a feedlot dairy in conjunction with the dairying enterprise. John and Margaret Tiver commenced operating the dairy feedlot in about 1989. At the time, both Ben and James Tiver were at school. Amongst the crops grown for the feedlot were barley, peas and wheat. Flagstaff Proprietors sold any excess crops reaped for cash. John Tiver was referred to a business plan for Flagstaff Proprietors for January 1992, which indicates that a farming consultant had been retained by the Tivers for the purpose of maximising their crop yields.[50] It was put to John Tiver that from at least 1992, before the toxic tallow event, the Tivers were engaged in cash cropping. He gave the following evidence:[51]
[50] Exhibit P276.
[51] T 1961-2.
XXN
Q. Would you look at this business plan for January 1992, and this is a business plan of Flagstaff Proprietors, January 1992.
A. That would be, yeah, just after we started the dairy.
Q. Have a look under the heading 'Present situation', 'A farm consultant, Dr Allan Mayfield, is being used for cropping programs to maximise yield for both cash crops and dairy requirements'.
A. That's correct; Mr Mayfield only ever came for one day. He was over extended, his working then. He said he couldn't fit us in over and above so he only ever came for one day.
Q.The fact of the matter was in 1992 you were cash cropping.
A. We were growing crops for the dairy, excess -
Q. You were cash cropping as set out in this business plan, weren't you.
A. Excess was for cash to be sold, excess.
HIS HONOUR
Q. When you said in the present situation 'a farm consultant is being used for cropping programs to maximise yields for both cash crops and dairy requirements', put aside the fact that Dr Mayfield didn't make himself available, but you were, were you not, concerned about maximising yields.
A. If we could, yes.
Q. In 1992.
A. Well, naturally you want to do that but at the same token our feed cropping is for the dairy, is a different enterprise.
Q. Yes, I understand, you said that.
A. If we get maximum yields for the feed crop that would be great and excess, that would give us more excess if we had it to sell.
Evidence adduced during the trial in respect of the Tivers’ experience and expertise in cash cropping is primarily relevant to their agronomic claim. I pause to observe that John Tiver’s evidence about obtaining maximum yields, even though the crops were grown for feed, was confirmed by Glen Hillebrand whom, as I earlier indicated, was an agronomist employed by Landmark who assisted the Tivers when they changed from dairying to cropping. Both John and Margaret Tiver said that there was a difference in growing crops for feed when compared to growing crops for cash or sale, a distinction which Mr Hillebrand refuted. John Tiver’s evidence on the point was inconsistent, having earlier given the evidence referred to above. I will deal with the issues about the type of crops grown by the Tivers for the feedlot, the agronomy involved in growing those crops and the extent to which it is contended that cropping for the feedlot differed from cash cropping, later in these reasons.

Throughout the 1990s, the sale of excess crops grown for the feedlot was a source of income for the Tivers, additional to that from milk sales. In respect of the income derived from sales of excess feedlot crops, Margaret Tiver insisted that it was a subsidiary source of income for Flagstaff Proprietors.
Flagstaff Proprietors’ financial position became critical in late 2000. This was primarily the result of their continuing failure to comply with the terms of their facilities with NAB and Elders.
NAB was Flagstaff Proprietors’ major financier, holding a registered first mortgage over properties owned by the first to fifth defendants.[52] Mr Craig Eichler, an asset structuring analyst with NAB, wrote to John and Margaret Tiver on 29 November 2000 to advise that NAB required the Tivers to provide updated cashflows and financial information to 30 September 2000.[53] Flagstaff Proprietors’ account was overdrawn in the amount of $15,052.31 and this, coupled with Flagstaff Proprietors’ inability to meet previous agreed principal repayments meant its facilities were in default. Mr Eichler concluded:
This position remains unacceptable and whilst we understand that you are awaiting the dairy deregulation payment to clear, we now feel that it is a matter of urgency that the Bank understands how and when you intend to clear this position, and your intentions for the future. The Bank is now required to re-assess your proposal given the changes you are proposing to be requested.
The Bank is committed to attempt to work through your current financial situation, however this matter has been ongoing for a considerable period of time. As discussed with Margy on Friday 24 November 2000, we require the above information to enable us to make an informed assessment.
[52] Exhibit D15.
[53] Exhibit P110.
On 11 December 2000, John and Margaret Tiver met with Mr Larry Davenport, a senior finance manager of Elders, to discuss their financial position. Elders wrote to Flagstaff Proprietors on 12 December 2000.[54] Elders held security over 60 per cent of the dairy herd and various plant and equipment, in addition to holding second registered mortgages in respect of the land over which NAB held first registered mortgages.[55] At that time, the Tivers’ facilities with Elders were in default. The letter details a revised plan, subject to Elders’ approval for repayment of the facilities. It provides details as to the amounts and dates upon which monies were to be paid.
[54] Exhibit D34.
[55] Exhibit D15.
Critically, NAB’s letter of 29 November and Elders’ letter of 12 December both refer to the expected receipt of Dairy Structural Adjustment Program (“DSAP”) monies, to which I will refer in more detail later. Mr Davenport wrote:[56]
… I confirm the following arrangements on an, in principle basis, with respect to DSAP entitlement monies that you have advised will be directed to this company for disbursement to your nominated accounts.
[56] Exhibit D34.
Margaret Tiver advised both organisations that Flagstaff Proprietors was soon to receive DSAP monies. Both organisations maintained their relationship with the Tivers on the understanding that at least part of those monies, if not a substantial part, would be directed towards repayment of their facilities.
Dairy deregulation - the DSAP monies
In 2000, the Australian dairy industry was deregulated. The Federal Government established the Dairy Industry Deregulation Authority (“DIDA”), which was responsible for overseeing a scheme to compensate dairy farmers, nationwide, to lessen the impact of deregulation. A grant was provided to the dairy industry for the purpose of giving each dairy farmer a Dairy Structural Adjustment Program (DSAP) payment. The amount of that payment was to be calculated according to the particular dairy’s milk production.[57]
[57] T 1079-80.
John and Margaret Tiver testified that the adverse effects of deregulation had a greater impact upon dairy farmers in the Eastern States than upon those in South Australia.[58] This accorded with their evidence that their dairy enterprise was flourishing and they had no reason to move out of dairying into another farming practice, such as cash cropping. This issue is relevant to the terms on which the Tivers entered into the Facility Agreement with the plaintiff in November 2001, which I will discuss in due course.
[58] T 1441-2, T 448-9.
During July and August 2000, Flagstaff Proprietors applied to DIDA for DSAP standard payment rights.[59] On 15 November 2000, prior to the meetings with NAB and Elders, Flagstaff Proprietors was advised that its application for DSAP payments had been successful. The business, as a whole, was entitled to a total DSAP payment of $858,748,[60] with each of the second to sixth defendants, as partners of Flagstaff Proprietors, having an entitlement to one fifth that sum, being $171,750.[61] The monies were to be paid by quarterly instalments, over approximately eight years to 30 June 2008. The Tivers, however, opted to receive a discounted DSAP payment, in order to receive the monies up-front rather than by way of instalments.[62] They were informed that the Commonwealth Bank of Australia (“CBA”) could finance the stream of payments by way of an up-front lump sum payment. Margaret Tiver had been discussing with the CBA the total amount of the up-front payment Flagstaff Proprietors could expect to receive as early as July 2000.[63] The CBA agreed to advance a total sum of $707,594.76 to Flagstaff Proprietors, secured by the income payable to each partner in respect of their future DSAP payments.[64] The monies were received by way of an up-front payment in about February 2001.[65]
[59] T 1431.
[60] T 450.
[61] Exhibit P111 and Exhibit P112. Exhibit P111 is the Notice of Decision from the DAA sent to the sixth defendant. Exhibit P112 comprises corresponding notices sent to the second, third, fourth and fifth defendants.
[62] T 1079-80.
[63] Exhibit P284.
[64] T 513-5.
[65] Exhibit P203A and Exhibit P285. See also T 2036.
The DSAP monies were the dairy deregulation payments discussed at the meetings with NAB, on 24 November 2000, and Elders, on 11 December 2000. As I earlier indicated, the Tivers’ position with NAB and Elders in and around that time was critical. They were in default with both lenders. It is apparent from the correspondence that Margaret Tiver informed personnel from each organisation of, if not promised those persons, the DSAP monies that Flagstaff Proprietors expected to receive, with a view to alleviating each financier’s concerns over the outstanding amounts under their respective facilities.
Margaret Tiver’s casual attitude, during her evidence, towards Flagstaff Proprietors’ position with NAB at this time was in marked contrast to the documentary evidence. It was put to Margaret Tiver, in cross-examination, that at the 24 November meeting, she sought to alleviate NAB’s concerns by indicating the DSAP monies would be put towards payment of the account. She was asked the following questions:[66]
[66] T 517-9.
Q. What I suggest to you happened is that you met with the officers of the National Australia Bank apparently on 24 November 2000 and they told you of the banks's [sic] position as to the status of your account and you told them 'Well, we were awaiting this dairy deregulation payment' as part of the way in which you rectify the situation. You agree with that, don't you.
A. I don't know when the dairy deregulation came in exactly. I would need the tax returns to look at.
Q.I will come to that. It came in on 23 February 2001.
A.Right, so we haven't got it yet.
Q. No. That's exactly what's said in this piece of correspondence.
A. They were late. The government was six to seven months late.
HIS HONOUR
Q. The question is did you discuss it with the National Bank.
A. Yes. They would have known. The one thing all the banks said about us was that we kept them very well informed, and they would have known that when we were expecting the deregulation, it didn't come to fruition because the government was behind with their program, and I think it was, I am not sure, but I think it was at least six months later than it should have been. It was supposed to have been July 2000 and I don't think we got it until - we were expecting it in early 2001.
…
Q. In fact, you were notified by the Dairy Adjustment Authority of its decision as to the allocation of units and thereby DSAP entitlement by a notice of decision dated 15 November 2000. You recall it was around November 2000 that the decision was made.
A. Can I have a look at that document? As I said, we haven't seen - we've been in court with you for three and a half years. We haven't seen these documents for that long.
…
Q. You see there's a Dairy Adjustment Authority notice of decision.
A. Yes.
Q. If you turn to the last page, you see the authorised delegate executed that on 15 November 2000.
A. Yes, I see that now. I don't recall seeing this document.
Q. You don't deny having seen it at the time -
A. No, it's addressed to me.
Q. I ask my question again: you don't deny having seen it at the time, you just can't recall now, correct.
A. I have not read or seen this document. It may have come with all the other four and John would have handled it.
HIS HONOUR
Q. Are you saying this is the first time you've seen it.
A. Everything came in an envelope with the - it wasn't individual, it was the business.
Q. I'm asking you is this the first time you've seen this document.
A. Yes, it is.
Q. You've never seen it before.
A. Not that I recall, no. I'm sorry.
XXN
Q. This document was discovered in your list of documents on 15 May 2008. That's a list you were involved in the preparation of, isn't it.
A. Benny did it.
Q. At all events, you say you have never seen this before, do you.
A. I don't remember seeing these. I remember seeing Dairy Adjustment Authority notices but, to me, this is just part of a big package. There was a huge amount of documentation with this.
Q. Your recollection is that each of the partners of Flagstaff Proprietors received a notice, isn't it.
A. Everyone got the same notices, yes, whatever they were.
Q. Including you.
A. Yes, there was about two inches of documents.
…
XXN
Q. Just so it's clear, I'll show you the notices of decision for each of the other partners as a bundle.
A. It says in here 'There are terms you have to comply with like opening a bank account', so we did that.
Margaret Tiver’s evidence was evasive and indirect. She refused to accept her receipt of the DSAP documents and the subsequent approvals, despite the evidence clearly indicating that she was heavily involved in negotiating and dealing with the Dairy Adjustment Authority on behalf of Flagstaff Proprietors.
Margaret Tiver was questioned about the meeting with Elders on 11 December. She was referred to Mr Davenport’s letter of 12 December.[67] She denied that the Tivers had ever indicated that they would put the DSAP monies towards payment of Elders’ facilities. She said that the Tivers were unwilling to do that because, if they did so, NAB and BankSA (and presumably other creditors) would also require the DSAP monies to be directed towards repayment of their facilities.[68]
[67] Exhibit D34.
[68] T 520-1.
John Tiver said that Elders informed him and Margaret Tiver that the whole of the DSAP monies should be put towards repayments of Elders’ facilities. He said he and Margaret Tiver did not believe that Elders was entitled to the DSAP monies.[69]
[69] T 1081-3.
Margaret Tiver’s evidence as to why the Tivers were unwilling to direct DSAP monies towards their major creditors was contrary to the contemporaneous documents which demonstrated that, at the time, Margaret and John Tiver were holding out to their major creditors that the DSAP entitlements would be used to reduce debt in order to quell the concerns of their financiers. Despite those representations, none of the DSAP monies were paid to either NAB or Elders to reduce the indebtedness of Flagstaff Proprietors. John and Margaret Tiver’s deceit of their major creditors was symptomatic of the way in which they treated and continued to treat their lenders.
The DSAP monies were used to satisfy the smaller trading creditors of Flagstaff Proprietors. They were also put towards the purchase of a property known as “Koonoona”. Margaret Tiver gave the following evidence:[70]
[70] T 521-4.
Q. In fact, when you received the DSAP moneys, you didn't pay any of Elders, National Australia Bank or State Bank, did you.
A. The money went into the cash flow so it would have paid interest and it would have paid whatever in the business was needed.
Q. What I suggest to you you did was to pay out lease contracts and other creditors.
A. NAB and Elders, everyone knew what we were doing.
Q. Will you listen to my question. We'll be here for a long time if you refuse to do so.
A. Sorry.
Q. When the DSAP moneys were received on or about 23 February 2001 they were not paid to any of National Australia Bank, Elders or State Bank, were they: yes or no.
A. It's a hard one to answer because if you look at the tax returns, you will see that no-one defaulted.
Q. Mrs Tiver, yes or no.
A. Okay, all right, it went into revenue.
Q. I will ask my question again and I will do so with each and every question until you answer it. Do you understand.
A. I know, you've done this to me before.
Q. Yes, I know.
A. I know, but specific questions, it is like being in a criminal trial, you know. It is 'Did you murder it or didn't you'.
HIS HONOUR
Q. Well, that's pretty easy to answer, 'Did you kill someone or didn't you?'. Murdered may be a different question because there is a legal definition to it. The question is simple: the moneys that you received through the DSAP, were they used to pay off any part of the debt owing to NAB, Bank SA -
A. No. If you had asked it that way, no, but you are asking me did I use it to pay other bills and I have to say yes, because it went into revenue.
Q. We will get to that in a minute.
A. The judge is much better at asking questions.
Q. That's why I'm a judge, Mrs Tiver, but I think we will all get along much better if you just answer Mr Hoffmann's questions.
A. Yes, but his questions are tricky.
XXN
Q. There is no trick in this. Just so we get it clear actually what happened, just to follow on from his Honour's question, in addition, moneys were paid in reduction of the Elders' debt.
A. No, because we planned to refinance.
Q. What, in fact, happened was DSAP moneys were used to pay out lease contracts and other creditors of Flagstaff Proprietors.
A. Other creditors, yes, as a business running.
Q. Yes, as the partners of Flagstaff Proprietors, you made a decision that there were other creditors that needed to be paid and they were paid, weren't they.
A. Wages, yes.
Q. Lease contracts.
A. Yes.
Q. Presumably for equipment.
A. That was one.
Q. What lease contracts were they.
A. Well, I think there was the old RMH cart, which is a mixing cart. They are very expensive. The old one had worn out because they are used all day every day 365 days a year, and I think we purchased a new one, and then our cars have always been on lease. We have never purchased a car. They are always on lease for taxation purposes. What else was there? I can't recall. If you remind me - but I can't recall what the leases were for but I do know the RMH car was possibly one.
The Tivers chose to make payments to their day-to-day business creditors. Margaret Tiver characterised this as putting the money into “revenue”. The Tivers ignored Flagstaff Proprietors’ obligations to their major creditors. They ignored their previous advice to officers of NAB and Elders that DSAP monies would be directed towards repayment of their facilities. I am satisfied that they misled NAB and Elders in order to delay them from calling in their facilities and enforcing their securities.
I digress to note that the partners of Flagstaff Proprietors received a further payment in 2002, subsequent to entering into the Facility Agreement with the plaintiff. That payment was a Supplementary Dairy Assistance (“SDA”) scheme payment, in the amount of approximately $400,000. By facsimile, dated 31 July 2002, to Peter Robinson,[71] John Tiver advised that each partner of Flagstaff Proprietors would be receiving a payment in the amount of $79,812. John Tiver also referred to monies expected from cattle sales. The unmistakeable impression given to Peter Robinson was that the Tivers intended to use the SDA moneys to make repayments to the plaintiff. Again the Tivers, specifically John Tiver, represented to their primary creditor that deregulation monies would be put towards debt reduction. The evidence, which I will discuss more fully in due course, demonstrates that, again, the Tivers did not adhere to those representations.
[71] Exhibit P228.
Returning to the Tivers’ decision not to use the DSAP monies to reduce their indebtedness to NAB or Elders. By January 2001 the Tivers’ financial position had further deteriorated. On 10 January 2001, NAB wrote to the Tivers:[72]
Please also note that the Bank has in effect forgone principal repayments of $10,000.00 through not rolling the bills on 17 November 2000 and on or about 17 December 2000 and further note that to date the Bank has not charged you any further costs in terms of our letter dated 5 July 1999. The Bank continues to reserve it’s [sic] rights pursuant to this letter to charge future costs if the Bank desires.
The Bank has spent considerable amounts of time managing your file in an attempt to come to a satisfactory resolution. We are aware that there is a possibility that you may be discussing your financial affairs with Westpac Banking Corporation. In view of the foregoing, please find detailed below the proposed plan the Bank is prepared to take with you:
1.amount as detailed above is paid to the Bank by the week ending 19 January 2001;
2.re-finance proposals are to be fully investigated by you and if successful, a copy of an unconditional letter of offer is provided to the Bank by 31 January 2001. Note that in terms of our previous letter dated 6 October 2000, refinancing was to be pursued and an unconditional letter of offer provided to the Bank by 31 October 2000. The Bank is unaware of what investigations you have made into this channel of repayment of your indebtedness to the Bank and given your current financial situation, feels that this time represents your opportune time for a successful refinance; and
3.the Bank will reassess it’s [sic] current position following the cut off date of 31 January 2001 if a refinance is not proceeded with as detailed in point 2 above. The cut off date is to represent the final deadline the Bank is prepared to provide you with to pursue refinance possibilities. Failure to achieve refinance may involve the Bank instigating proceedings against you to recover your indebtedness to the Bank if we cannot gain suitable comfort as to your ongoing viability.
[72] Exhibit P113.
Margaret Tiver gave the following evidence about the letter:[73]
[73] T 526-8.
Q. You will see by this letter the bank informed you on or about 10 January 2001 that there was some $58,000 then due and payable.
A. Yes.
Q. And if you turn to the second page, that the bank continued to reserve its rights pursuant to this letter to charge future costs, looking at the first paragraph on the second page.
A. Is that where 'the bank has spent considerable amounts of time'?
Q. Yes.
A. Yes.
Q. And they then set out a proposal which involved paying the bank an outstanding amount by 19 January 2001.
A. Yes, this is what we had discussed, yes.
Q. And they asked you to fully investigate refinance proposals.
A. Yes.
Q. That is, that the bank communicated to you they wanted to end their relationship with Flagstaff Proprietors and requested you to seek out alternate sources of funds; correct.
A. Yes, we had been there seven and a half years and they were shifting. The credit bureau was closing in Adelaide.
Q. And the bank, in para.3, said it reassessed its current position following a cut-off date of 31 January 2001 if a refinance had not proceeded.
A. Yes.
Q. And they go on to say 'Failure to achieve the finance may involve the bank instigating proceedings against you to recover your indebtedness to the bank if we can't gain suitable comfort as to your ongoing viability'.
A. Yes.
Q. And you, of course, when you read this letter, understood, didn't you, that there was a threat that the bank would take action against you to recover its moneys.
A. Yes, we had a meeting.
Q. You viewed that threat seriously and, of course, set about looking for refinance, didn't you.
A. Yes, we had been anticipating refinance. We knew that we had to refinance out of there, yes.
Q. And notwithstanding that threat from the bank, rather than repay any of the DSAP moneys to the National Australia Bank, you used it elsewhere, didn't you.
A. Yes, can you imagine what Elders would have done if we put the 700 in the NAB?
Q. Just listen to my question, if you wouldn't.
A. I know, but you have to understand I am dealing with three financiers who think they all deserve it.
Q. And you took the view that none of them deserved it and you didn't pay any of them but paid other creditors in the business, didn't you.
A. The business needs to survive.

I have concluded that the advice provided by the Landmark agronomists was not prescriptive. The Tivers were not required to, and in fact did not, follow it unswervingly. Contrary to the Tivers’ claims, Landmark did not force them to buy chemicals and fertiliser through it. In fact, the Tivers obtained fertiliser and chemicals from sources outside Landmark. Further, I repeat that the defendants have failed to establish that the agronomic advice provided by Mr Calaby and Mr Hillebrand was not competent.
The defendants have failed to establish that Landmark’s conduct in providing agronomic advice and support was in any way unconscionable. Many of the matters upon which the defendants’ agronomic claim rests have not been made out. Even if all matters pleaded by the defendants in their counterclaim had been proved, I am not satisfied that they would have demonstrated that Landmark behaved unconscionably. The Tivers exercised a choice and formed their own judgment about what course to follow in planting their crops. There is no evidence that Landmark took advantage of the defendants in the provision of agronomic advice.
Section 57 of the FTA provides:[861]
[861] Section 57 of the Fair Trading Act was last amended by the Statutes Amendment (Consumer Affairs—Portfolio) Act 2000, which commenced on 1 October 2000.
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to another person, engage in conduct that is, in all the circumstances, unconscionable.
(2)Without in any way limiting the matters to which a court may have regard for the purposes of determining whether a person has contravened subsection (1) in connection with the supply or possible supply of goods or services to another person (in this subsection referred to as the consumer), a court may have regard to—
(a)     the relative strengths of the bargaining positions of the person and the consumer; and
(b)     whether, as a result of the conduct engaged in by the person, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the person; and
(c)     whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services; and
(d)     whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the person or a person acting on behalf of the person in relation to the supply or possible supply of the goods and services; and
(e)     the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the person.
…
(4)For the purposes of determining whether a person has contravened subsection (1) in connection with the supply or possible supply of goods or services to another person—
(a)     a court is not to have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b)     a court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
(5)A reference in this section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption.
(6)A reference in this section to the supply or possible supply of goods does not include a reference to the supply or possible supply of goods for the purpose of re-supply or for the purpose of using them up or transforming them in trade or commerce. (emphasis added)
The Tivers acquired credit facilities and agronomic advice from the plaintiff for the purpose of carrying on their business. The plaintiff provided them with goods or services of a kind not ordinarily acquired for personal, domestic or household use or consumption. The defendants are not entitled to any relief pursuant to s 57 of the FTA. They were not provided with ‘goods or services’ of the type contemplated by that section.[862]
[862] See, Venning v Suburban Taxi Services Pty Ltd [1994] FCA 898, in which Foster J held that radio bookings supplied to taxi operators could not be considered ‘goods or services’ of the kind referred to by s 57(5) of the Fair Trading Act.
Mrs Mary Oldfield – ownership of stock
As I have indicated, the Facility Agreement includes Stock Mortgages in favour of Landmark. Landmark also seeks orders that the defendants execute a stock mortgage over all stock on their properties. The ownership of the stock currently on Flagstaff Proprietors’ property, however, is not clear.
In early 2002, Flagstaff Proprietors began agisting cattle for Mrs Mary Oldfield. John Tiver gave evidence that the arrangements with Mrs Oldfield are informal. The defendants did not call Mrs Oldfield to give evidence.
The uncertainty as to ownership arises as, in 2004/2005, cattle owned by Flagstaff Proprietors was bred with Mrs Oldfield’s cattle agisted on Flagstaff. There is no agreement between Flagstaff Proprietors and Mrs Oldfield about ownership of the progeny (“the Angus cattle”).[863]
[863] T 1739, T 1776.
Angus cattle were sold by Flagstaff Proprietors at various times between 2005 and 2007. The proceeds of each sale were retained by Flagstaff Proprietors.
According to John Tiver, Mrs Oldfield was eventually charged agistment fees by Flagstaff Proprietors.[864] Between September 2006 and February 2007, Flagstaff Proprietors borrowed approximately $500,000 from Mrs Oldfield.[865] Most of the monies were paid into the Adelaide Bank savings account.[866] The loan was recorded in an agreement dated 21 May 2007. It has not been repaid.
[864] T 1734.
[865] Exhibit P255.
[866] Exhibit P206 and Exhibit P209A.
John Tiver’s evidence of his dealings with Mrs Oldfield is that proceeds from the sale of Angus cattle on the open market were paid into Flagstaff Proprietors’ accounts, and that Flagstaff Proprietors charged Mrs Oldfield agistment fees. He said that Mrs Oldfield loaned Flagstaff Proprietors money. Further, Flagstaff Proprietors sold Angus cattle to Mrs Oldfield.
The plaintiff submits that the evidence of John Tiver about the ownership of stock was vague and internally inconsistent and should be rejected. The plaintiff submits that Flagstaff Proprietors’ alleged dealings with Mrs Oldfield are, for the most part, a sham, employed by Flagstaff Proprietors in this litigation to hide the true ownership of cattle on Flagstaff and, thereby, avoid the full effect of the Stock Mortgages.[867]
[867] Exhibit P254, T 1754 and T 1778.
The evidence reveals that there were, effectively, two types of payments or transfers between Flagstaff Proprietors and Mrs Oldfield. One, the sale of the Angus cattle and payment of the associated proceeds into Flagstaff Proprietors’ account with the Adelaide Bank. The other, payment of large sums of money from Mrs Oldfield to Flagstaff Proprietors.
John Tiver said repayment of the loan from Mrs Oldfield to Flagstaff Proprietors was effected, in part, by the transfer of approximately $228,000 worth of cattle to Mrs Oldfield.[868] He referred to an invoice, dated 20 September 2006.[869] The plaintiff submits that almost that exact amount was deposited into Flagstaff Proprietors’ accounts, or otherwise disbursed for its purposes, prior to that date.[870] The plaintiff submits that these amounts, totalling approximately $228,000, were actually part of the monies loaned by Mrs Oldfield to Flagstaff Proprietors. John Tiver’s evidence has the effect of the loan being repaid before it was granted. The plaintiff submits John Tiver has given his evidence with a view to justifying Flagstaff Proprietors’ receipt of monies as agistment fees when, in reality, those monies were received as proceeds from the sale of stock subject to the First and / or Second Stock Mortgages.[871]
[868] T 1741-2.
[869] Exhibit P254.
[870] Exhibit P211, Exhibit P212 and T 1760-2. See also Exhibit P206 and Exhibit P209A.
[871] Exhibit P246 and Exhibit P257.
I reject John Tiver’s evidence. It is internally inconsistent and does not accord with the documentary evidence. No documents were produced to corroborate John Tiver’s assertions that monies loaned by Mrs Oldfield to Flagstaff Proprietors were repaid by corresponding cattle transfers. Invoices raised by Flagstaff Proprietors for agistment were created some time, to the point of years, subsequent to the period invoiced, without any reference to contemporaneous records of cattle numbers.[872] I accept the plaintiff’s submission that Flagstaff Proprietors has been dealing with cattle, now said to be Mrs Oldfield’s, and retaining the proceeds from sales of those cattle, because those cattle belonged to Flagstaff Proprietors.
[872] T 1769-70.
Flagstaff Proprietors did not keep proper records of the purchase, ownership, breeding or progeny or sale of cattle held on its properties, or which of the entities associated with Flagstaff Proprietors owned the cattle.[873] John Tiver testified that different entities owned different breeds. Ownership of the cattle is further complicated by the fact that different breeds, said to be owned by different entities, were mated in order to commence the beef cattle enterprise of Flagstaff Proprietors.
[873] T 1735 and T 1737.
Conclusions
I am satisfied that the plaintiff and the second to sixth defendants entered into the Facility Agreement, which was comprised entirely in writing in its letter of offer dated 26 November 2001,[874] and subsequently varied by letters of offer dated 8 August 2002,[875] and 24 July 2003.[876] The terms of the letters set out the entirety of the agreement between the parties. I reject the defendants' claim that there were oral or implied terms of the contract.
[874] Exhibit P2.
[875] Exhibit P23.
[876] Exhibit P26.
I find that officers of Landmark indicated to John and Margaret Tiver at the meeting on 1 November 2001, and subsequently, that Landmark could provide expert agronomic assistance to Flagstaff Proprietors. I am satisfied that such assistance was provided by Glen Hillebrand and Robbie Calaby. I reject the defendants' submission that it was a term of the contract that Landmark was to provide expert agronomic advice, and that Landmark would assess Flagstaff Proprietors’ needs and supply seeds, fertiliser, sprays, chemicals and other items. I reject the defendants' claim that Landmark owed a fiduciary duty to Flagstaff Proprietors or that Landmark breached any duty to the defendants in the provision of agronomic advice. Further, I conclude that the defendants have failed to prove any loss or damage due to the conduct of Landmark.
I am satisfied that, pursuant to Clause H4 of the Facility Agreement,[877] Clause 11 of the Property Mortgages,[878] and Sub-Clause 2.2(k) of the Guarantee,[879] a certificate issued by or on behalf of the plaintiff is conclusive and binding upon the defendants as to the amount payable by Flagstaff Proprietors and guaranteed by the first defendant.
[877] Clause H4 of the Facility Agreement (Exhibit P2) relevantly provides:
a certificate signed by or on behalf of [the plaintiff]…as to a matter or as to an amount payable to [the plaintiff] in connection with the Facility Agreement is conclusive and binding on [the second to sixth defendants] as to the amount stated in it or any other matter of a factual nature except in the case of manifest error.
[878] Clause 11 of the Property Mortgages (Exhibit P15) relevantly provides:
a written statement signed by any of [the plaintiff’s] representatives of the amount of the Monies Secured or any part thereof owing or due and owing by [the first to fifth defendants] to the [plaintiff] at any time shall, in the absence of manifest error, be prima facie evidence as against all persons other than the [plaintiff] that such amount is owing or due and owing and falls within the description of the Monies Secured and of any other matter contained in that statement as at the date it is made out without the [plaintiff] being required to produce any books of account or other records or any copies of any of them to the [first to fifth defendants] or any other person.
[879] Sub-Clause 2.2(k) of the Guarantee (Exhibit P8) relevantly provides:
a certificate signed by or on behalf of any Officer of the [plaintiff] or any other person duly authorised by the [plaintiff] for that purpose stating the amount of money payable by [first defendant] is conclusive and binding.
I direct the plaintiff to provide a certificate, certifying the amount owing, at a date to be fixed, when I shall hear the parties as to the orders to be made.
I am satisfied that Flagstaff Proprietors provided securities by way of real property mortgages, which I have referred to as the Property Mortgages, which are listed in Schedule B to this judgment. I am satisfied that James and Ben Tiver, the fourth and fifth defendants, entered into a stock mortgage on 4 December 2001,[880] which I have referred to as the First Stock Mortgage and that John and Margaret Tiver for J Tiver Nominees Pty Ltd, the first defendant, executed a stock mortgage on 7 December 2001, which I have referred to as the Second Stock Mortgage.[881] I am satisfied that the first defendant, entered into a deed of guarantee on 3 December 2001,[882] which I have called the Guarantee, guaranteeing the liability of Flagstaff Proprietors to the plaintiff.
[880] Exhibit P16.
[881] Exhibit P17.
[882] Exhibit P8.
Crop mortgages
Pursuant to Sub-Clause 33 of the Property Mortgages, Flagstaff Proprietors was obligated to execute crop mortgages in the plaintiff’s favour.[883] By letters dated 26 June 2007 and 15 August 2007, together with an email dated 22 May 2008,[884] the plaintiff’s solicitors requested Flagstaff Proprietors execute crop mortgages over the 2007 and 2008 crops.[885] Flagstaff Proprietors has failed, or otherwise refused, to do so. The Tivers have not proffered a satisfactory justification or excuse for such failure.[886]
[883] Sub-Clause 33.1.5 (Exhibit P15) relevantly provides:
the first to fifth defendants must execute in favour of the [plaintiff], at the [plaintiff’s] request and at the [first to fifth defendants'] own cost, a lien mortgage or charge as security for the payment of the Monies Secured in a form which the Mortgagee requires over every wool clip or crop of agricultural or horticultural produce on [Flagstaff] or over stock.
Sub-Clause 32.2.1 relevantly provides:
The [first to fifth defendants] may not give any lien, mortgage, or charge over any clip, crop or stock referred to in Sub-Clause 33.1.5 except with the [plaintiff’s] consent.
Sub-Clause 33.2.2 relevantly provides:
The [first to fifth defendants] may not dispose of, deal with or part with possession of a quota for the production or sale of any crop or other produce capable of being produced on [Flagstaff] without the [plaintiff’s] consent.
[884] Exhibit P82.
[885] Exhibit P80 and Exhibit P81.
[886] T 2031-2, T 2724-5 and T 1009-11.
Flagstaff Proprietors is required to execute crop mortgages on and at the request of the plaintiff. The plaintiff is entitled to orders requiring the second to sixth defendants to execute crop mortgages in respect of the 2008 crop, and whatever proceeds remain from the 2007 crop.
Stock mortgages
Pursuant to Clause 1 of the terms and conditions of the First and Second Stock Mortgages, security in respect of them comprised certain of the first, third and fourth defendants’ stock. Pursuant to Sub-Clause 33 of the Property Mortgages, those defendants must execute, in favour of the plaintiff, at the plaintiff’s request and at the defendants' own cost, a lien, mortgage or charge as security for the payment of the monies secured. Each of the First and Second Stock Mortgages identified the stock the subject of the mortgage, and their location on the Tivers’ properties. On 13 February 2005, John Tiver provided a schedule to Landmark certifying the number of stock and the breeds held on the Tivers’ properties. There were 624 cattle and 150 ewes with lambs afoot, having a certified value of approximately $468,750, plus wool in store valued at $11,200.[887]
[887] Exhibit P78.
On 11 March 2008, a stock take of cattle and sheep[888] held on the properties was conducted by Ben Tiver and Mr William Nolan, a representative of Landmark. As I have indicated, there is uncertainty about the ownership of some of the stock.
[888] The stock take also included horses.
Some of the stock on the properties may be the subject of the First and / or Second Stock Mortgage. I order that J Tiver Nominees Pty Ltd, James Tiver and Ben Tiver account to the plaintiff for any stock which is the subject of the First or Second Stock Mortgage.
As to the remainder of the stock currently held on the properties, I order that Flagstaff Proprietors execute a stock mortgage in favour of the plaintiff over any stock owned by it which is not the subject of the First or Second Stock Mortgage.
The plaintiff submits that, since entering into the Facility Agreement with Landmark, Flagstaff Proprietors has sold stock in breach of the Stock Mortgages, and that it has diverted the proceeds of those sales from its account with Landmark to accounts with the CBA, Adelaide Bank, [889] and Citibank.[890] The various statements of account confirm that monies from the proceeds of cattle sales were paid into those accounts since the Tivers entered into the Facility Agreement. Landmark submits at least $1,121,936.65 was so diverted.
[889] Exhibit P206
[890] Exhibit P211 and Exhibit P212.
Landmark submits total amounts of $12,507.37, $774,725.41 and $334,703,87 were deposited into the CBA, Adelaide Bank and Citibank accounts, respectively, between December 2001 and December 2007. The amount of $12,507.37 is the total of two deposits into the CBA account from T&R Pastoral on 7 December 2001 and 6 August 2002.[891] The amount of $334,703.87 is the total of various deposits made into the Tivers’ Citibank Mortgage Power account from T&R Pastoral, Elders, JH Johnson and Lindners between 23 September 2005 and 23 June 2006.[892]
[891] Exhibit P178 and Exhibit P203.
[892] Exhibit P211 and Exhibit P212.
The origin of the figure of $774,725.41 cannot be easily determined from examining the Tivers’ Adelaide Bank account documents.[893] These accounts cover the period 29 August 2002 to 11 April 2008. Unlike the CBA and Citibank figures, the Adelaide Bank figure is not the total of all payments into the account.
[893] Exhibit P206, Exhibit P209 and Exhibit P323.
The overall figure of $1,121,936.65 was identified by Landmark as the minimum sum of money the plaintiff says was received by the Tivers in respect of cattle sales diverted into non-Landmark accounts. I am satisfied that, over the relevant period, significant sums of money were received by Flagstaff Proprietors from the sale of stock and not accounted to Landmark. I am unable to determine exactly what funds were diverted.
Possession of secured land holdings
The defendants admit that the Term Loan expired on 31 March 2004, and that the Seasonal Facility and Cattle Account facility expired on 21 May 2004. Flagstaff Proprietors has failed to satisfy notices of demand, dated 18 April 2005, demanding payment of all outstanding amounts due under the Facility Agreement. On 9 May 2005, the plaintiff served a notice of demand pursuant to the Guarantee on the first defendant which has failed to satisfy the notice. Landmark has served notices of default and intention to sell, dated 7 June 2006, on the first to fifth defendants, which have not been satisfied. Accordingly, I find the plaintiff is entitled to possession of the properties securing the Facility Agreement.
For the reasons I have given, judgment will be entered for the plaintiff and the counterclaim dismissed. I will hear the parties as to the final orders to be made, and costs.
Annexure A
Annexure B