M a & J Tripodi Ltd v Swan Hill Chemicals Pty Ltd (No 2)
[2018] VCC 526
•24 April 2018
Chapter 1 duty
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-13-04200
| M A & J TRIPODI PTY LTD | Plaintiff |
| v | |
| SWAN HILL CHEMICALS PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11, 12, 13, 14, 15, 18, 19, 20, 21, 27, 28 July 2016, 27, 28, 29, 30 March 2017 | |
DATE OF JUDGMENT: | 24 April 2018 | |
CASE MAY BE CITED AS: | M A & J Tripodi Ltd v Swan Hill Chemicals Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 526 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT – NEGLIGENCE – TRADE PRACTICES – DAMAGES
Catchwords: CONTRACT – Existence – Breach – Loss of opportunity – Damages
NEGLIGENCE – Duty of care – Advice – Loss of opportunity – Evidence – Burden of proof
TRADE PRACTICES – Misleading and deceptive conduct – Deprivation of commercial opportunity – Whether plaintiff must establish on balance of probabilities that benefit would have been derived from opportunity – Whether sufficient to establish some prospect of benefit
DAMAGES – Quantification of loss and damage – Damages for loss of opportunity – Whether there was commercial opportunity of some value – Whether opportunity would have been pursued – Future or potential events – Likelihood of occurrence – Relevance to measure of damages
Legislation Cited: Competition and Consumer Act 2010 (Cth); County Court Civil Procedure Rules 2008 (Vic); Evidence Act 2008 (Vic); Goods Act 1958 (Vic); Trade Practices Act 1974 (Cth)
Cases Cited:Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; Dasreef v Hawchar (2011) 243 CLR 588; Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; Longden v Kenalda Nominees Pty Ltd [2003] VSCA 128; Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; Mallett v McMonagle [1970] AC 166; Masters Home Improvement Pty Ltd v North East Solutions Pty Ltd [2017] VSCA 88; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; Price Higgins & Fidge v Drysdale [1996] 1 VR 346; R v Ryan [2002] VSCA 176; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Tabet v Gett (2010) 240 CLR 537; Wilson v Bauer Media (Ruling No 7) [2017] VSC 357
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Twigg QC | Vadarlis & Associates |
| Mr A Schlicht | ||
For the Defendant | Mr T Margetts QC | Wotton & Kearney |
HIS HONOUR:
Summary
1 The plaintiff company (“Tripodi”) has its roots in a long-established family farming business near Swan Hill. The current director of Tripodi is Michael Tripodi (“Michael”). His grandfather came to Australia in about 1938. The grandfather began the farming operations at Lake Boga which were later taken over by his son. Michael, after living in Melbourne for about eight years, returned to the family farm in about 1992 and farmed in partnership with his father for about seven years.
2 Since about 1999, through Tripodi, Michael has conducted the business effectively in partnership with his wife, Janine (more commonly known as Jina).
3 While the primary focus of the farm remains stone fruit, in about 2010, Michael and Jina decided to diversify the business and bought an additional 300 acres intending to use approximately one-third to grow fruit for export and the balance to grow other crops. After conducting a trial of growing borlotti beans on black mulch plastic, Michael and Jina decided to expand this production. Tripodi bought machinery to pick and process the borlotti beans crop and leased approximately 200 acres from Craig Burrell (“Burrell”) to grow borlotti beans.
4 The defendant (“SHC”) conducted business as a supplier of chemicals and other materials commonly required by farmers in running their farms.
5 Tripodi alleges that Michael had relied on advice and guidance from SHC since about 1992 regarding what chemicals to use in the production of the stone fruit, whether it be fertilising the soil or protecting the fruit trees from pests, insects or fungus. As a result, Tripodi spent substantial sums of money each year with SHC on herbicides, pesticides, insecticides and other chemicals. Part of the service which SHC offered was frequent attendance at the Tripodi orchard to monitor the health and well-being of the fruit trees.
6 Tripodi says that when it decided to grow borlotti beans commercially, it sought advice from SHC about the appropriate chemicals to use to protect the crop. Tripodi claims that the chemicals recommended by SHC were not suitable for the task. Some chemicals allegedly killed the bean plantings. In other plantings, due to the deadly results upon the crop, Tripodi used no pre-emergent herbicide and the plantings were overwhelmed by weeds. Ultimately, only some of the borlotti beans plantings were successful and produced a good crop of beans. As a result of the problems experienced due to the conduct and advice of SHC, Tripodi says that it suffered substantial losses. Tripodi says that it was unable to honour an agreement to supply beans to Woolworths and lost approximately $4.2 million. This includes past and future losses.
7 SHC denies that it advised Tripodi that the pre-emergent herbicides it used were suitable. The primary SHC person who dealt with Tripodi was Brian Cumming (“Cumming”). Cumming says he informed Michael that there was no authorised herbicide in Victoria for use with borlotti beans and it would be best to do a trial before spraying a whole crop. SHC also disputes that the pre-emergent herbicides used were responsible in a legal sense for the demise of parts of the crop. SHC says that the “summer death” virus was the responsible agent for much of the losses suffered and, if the first and second plantings had survived the pre-emergent herbicides, the virus would probably have destroyed those plantings in any event. SHC says that the person who supplied the seed to Tripodi warned Michael to be wary of the summer death virus. As a result, SHC contends that regardless of the pre-emergent herbicide used, the bean crops would have been largely destroyed due to the summer death virus.
8 SHC also contests the quantum of the claim. Tripodi claimed that there was a contract on foot between itself and Woolworths to supply shelled borlotti beans in commercial quantities. SHC denied that there were any contractual arrangements in place between Tripodi and Woolworths whereby Tripodi agreed to sell, and Woolworths agreed to buy, any particular quantity of beans at any particular price –whether it be $13.20 per kilogram or some other price. SHC submitted that Woolworths required Tripodi to demonstrate their reliability by supplying green shelled peas on a consistent basis. Only if this trial product performed successfully would Woolworths contemplate ongoing commercial dealings with Tripodi for the sale of borlotti beans.
9 SHC also contended that there was no factual or legal basis for the plaintiff’s claim that the defendant should be liable for losses sustained in respect of growing seasons as far away as 2017 and 2018.
Background
10 When severe flooding affected crops in Queensland around 2010, Tripodi decided to investigate whether it could fill this resultant gap in the market by running a trial growing capsicum and borlotti beans in the 2010/2011 season.
11 Tripodi undertook a test-planting on about 5 hectares in January 2010. SHC provided the seeds for this test planting. Because SHC did not have enough borlotti bean and capsicum seeds, the plaintiff also grew green stringless and yellow butter beans during this trial planting. The capsicums were not successful. However, the borlotti beans were successful, producing about 5 tonnes of borlotti beans per hectare. These beans were harvested manually and sold in their shell to the wholesale markets.
12 Manual harvesting was time consuming and expensive. Accordingly, Michael investigated mechanical harvesting options.
13 After viewing mechanical harvesters in action in Italy in 2011, Michael and Jina purchased two FMC 979 mechanical harvesters. These harvesters were usually used for harvesting peas. However, with some modification, this harvester would both pick and shell the borlotti beans.
14 In addition to purchasing two harvesters, Tripodi also purchased packaging and sorting equipment, with a view to producing shelled borlotti beans directly to the market. Ultimately Tripodi spent about $3 million on purchasing the picking, processing and packaging equipment.
15 Between about late October 2011 and January 2012, Michael and Jina conducted a second test planting for further research and development purposes. The second test planting was larger, comprising seven separate crop plantings being on a portion of land at the Lake Boga property known as Plum Valley.
16 In October 2011, Michael and Jina also engaged Lisa Cork (“Cork”), a director of Fresh Produce Marketing Limited to commence brand development and marketing activities for Tripodi. The aim was to produce a full range of different products including freshly shelled peas, cannellini beans, kidney beans, a pea and corn mix and freshly shelled borlotti beans.
17 In August 2011 Tripodi purchased 3.5 tonnes of borlotti bean seeds from Sunland Seeds Pty Ltd (“Sunland Seeds”) for the second test planting.
18 The first crop of the second test planting was planted in late October 2011. It was irrigated using a trickle tape irrigation system. Because of this, no pre-emergent herbicide was applied to the crop to prevent weed growth.
19 A pre-emergent herbicide is applied to crops before they are sown and/or before they emerge as seedlings. A post-emergent herbicide is applied to plants after they have reached a certain stage of growth (depending on the herbicide in question).
20 On or about 28 October 2011, Michael telephoned Chris Smith (“Smith”), an employee at Sunland Seeds, requesting advice on what herbicides other borlotti bean growers in Australia were using. By email dated 28 October 2011, Smith recommended using:
· Basagran as a post-emergent;
· Dual Gold as a pre-emergent;
· dimethoate and lannate as insecticides.
21 On 4 November 2011, Michael forwarded Smith’s email to Cumming. Cumming recommended that if weeds began to grow, the borlotti bean crops should be treated with Basagran.
22 On 21 November 2011, Cumming delivered the Basagran to Tripodi for this purpose. Basagran was applied to the first, second and third crops of the second test planting. It had the requisite effect on the weeds, with little or no damage to the borlotti beans. Because there was not a lot of weed pressure on these first three crops, it was used “as required”. The Basagran was applied at approximately the fourth to sixth leaf stage of the plants.
23 In about December 2011 Smith met with Michael at the Lake Boga property to inspect the crop. Michael noticed that 1-2% of the crop had died. Smith said he thought it could be the disease known as summer death.
24 Summer death is a virus that attacks and kills crops. It is carried by infected leaf hopper insects, which inject the virus into the plant. The disease progresses quickly, and its first signs include a downward curling of the plant’s leaves. The disease is highly infectious, but can only be transmitted from plant to plant by infected insects.
25 Due to increased rain in the Swan Hill area in early February 2012, weeds known as fat hen and caltrop began to grow in the fourth crop of the trial planting. Accordingly, Cumming examined the land and recommended using Basagran at a rate of 2.5 litres per hectare. Cumming delivered the Basagran to Michael on 7 February. Michael sprayed the crops with Basagran between 7 - 10 February. This failed to kill the caltrop and fat hen, but killed other weeds that had grown throughout the crops. Accordingly, after further discussions with Cumming, Michael knifed between the rows of crops to kill the weeds. The knifing controlled around 80% of the weeds, but did not kill all of the caltrop.
26 The first five crops of the second test planting were used strictly for research and development purposes. They were harvested with the mechanical harvesters and sorted and packaged using the newly equipped production line. The last two crops were picked by hand and sold to the wholesale market.
27 Following the second test planting, Michael decided that he wanted to use a solid-set irrigation system, rather than trickle tape. He asked another local farmer, Craig Burrell for costing advice, as he knew that Burrell had a solid-set irrigation system on his land at Beverford (“the Beverford property”). The upshot of this conversation was that in mid-April 2012, Burrell agreed to lease 200 acres of land at the Beverford property to Tripodi, for $1500 per month. The lease was never documented, and was a handshake agreement.
28 In about July 2012 Tripodi, at a cost of about $28,000, engaged Burrell to prepare the land for the bean crop by discing, mulboring and spraying.
29 Michael also investigated other farmers who could produce crops for the plaintiff, so that it could provide a continuous supply of product all year round. Tripodi engaged Andrew Jackwitz, a farmer at Low Wood in Queensland, to grow peas for the plaintiff and, following an introduction from Smith, engaged Nelson Cox to grow peas and borlotti beans in Bairnsdale.
30 In May 2012, Michael approached Anthony Klatt (“Klatt”), head of produce at Woolworths, to enquire about the sale of produce from the anticipated 2012/13 season.
31 On about 2 July 2012, Michael, Jina and Lisa Cork met with Klatt and Mario Saad (“Saad”), a category manager of Woolworths to present their ‘Edible Gems’ range. Tripodi offered to supply peas and borlotti beans to Woolworths, but also discussed other products, such as cannellini, kidney, flageolet and broad beans, which it was proposing to produce. By using additional farmers, Tripodi planned to supply peas for nine months per year, and borlotti beans for six months per year.
32 Following the Woolworths meeting in early July 2012, in mid-July 2012 Tripodi, through Michael, informed Cumming of the proposed sale of freshly shelled borlotti beans to Woolworths. Michael said that he needed Cumming out on the Beverford property doing “his normal agronomy work”. According to Michael, Cumming said he understood and would be on the Beverford property once a week.[1]
[1]This fact was not put to Cumming.
33 Between about July and November 2012, Burrell prepared the Beverford land for planting. This included discing, ripping and mulboring the land to remove weeds and to ensure that the ground was ready for planting. It also included spraying ‘Roundup’ herbicide on the land.
34 On 17 September 2012, Tripodi engaged Kevin Chaffey to work the Beverford property as a farm hand. Chaffey was previously an employee at SHC.
35 On 2 October 2012, Tripodi and Woolworths executed the Vendor Trading Terms. These were drafted by Woolworths and set out the terms on which Tripodi would be a supplier of product to Woolworths.
36 On 25 October 2012, Chaffey also started working up the Beverford property in preparation for the first plantings.
37 The parties agree that Tripodi undertook the plantings of the borlotti bean crops on the following dates:
· 17 November 2012 (“First Planting”);
· 22 November 2012 (“Second Planting”);
· 4 December 2012 (“Third Planting”);
· 17 December 2012 (“Fourth Planting”);
· 21 December 2012 (“Fifth Planting”);
· 27 December 2012 (“Sixth planting”);
· 3 January 2013 (“Seventh Planting”);
· 15 January 2013 (“Eighth Planting”);
· 23 January 2013 (“Ninth Planting”);
· 29 January 2013 (“Tenth Planting”);
· 31 January 2013 (“Eleventh Planting”);
· 6 February 2013 (“Twelfth Planting”).
38 The day before the First Planting, Cumming informed Michael that there was no herbicide registered for use with borlotti beans. Accordingly, he recommended using a broadacre herbicide called Mentor. Cumming delivered 2.5kg of Mentor to the Beverford property.
39 Cumming calculated the application rate of Mentor and wrote this recommendation on the label of the Mentor container. This recommendation was also recorded by Chaffey in his diary. Cumming recommended that Tripodi irrigate the planting for three hours.
40 Chaffey applied the Mentor to the First Planting and irrigated the First Planting for three hours.
41 On about 18 or 19 November 2012, during a telephone conversation between Cumming and Tripodi, Cumming advised that, instead of irrigating the Second Planting for three hours as had been done with the First Planting, the Second Planting should be irrigated 1.5 hours before sowing and for a further 1.5 hours after sowing. Further, on 23 November 2012, Cumming told Chaffey to apply Mentor to half of the Second Planting, and another herbicide, Terbyne, to the other half of the Second Planting. He also instructed him to apply a greater amount of Mentor – at the increased rate of 340g /400L.[2] Chaffey followed each of these new instructions.
[2]T322.
42 On 27 November 2012 Chaffey noticed that some of the plants in the First Planting were “silvering off” - the leaves were turning from green to silver. On 28 November, Chaffey inspected the First Planting again, and noticed that it had worsened. On the same day, Cumming inspected the First Planting for insects. He also examined some of the plant roots. By about 29 or 30 November 2012, at least 50% of the First Planting had died and a further 30% was showing signs of silvering.
43 On 3 December 2012, the Second Planting was showing signs of silvering off.
44 Between about 4 - 5 December 2012, Chaffey completed the Third Planting.
45 On 6 December 2012, Michael conducted a further inspection of the First Planting, and decided it was unsalvageable and instructed Chaffey to plough it into the ground.
46 On or about 14 December 2012 Michael decided that the Second Planting was unsalvageable and directed Chaffey to plough it back into the ground.
47 On 17 December 2012, Chaffey completed the Fourth Planting.
48 On 21 December 2012 Chaffey sowed the Fifth Planting. Later in December, he sowed the Sixth Planting.
49 In mid-December 2012, Michael contacted Nelson Cox, who told him that he had used Dual Gold as a pre-emergent for years. Michael told Cumming that he wanted to use Dual Gold for the next borlotti bean plantings. Accordingly, on 22 December 2012, Tripodi purchased Dual Gold from SHC.
50 Around late December 2012, Gary Jeans (a part owner of SHC) recommended that Michael put sticky traps at certain locations in the bean crop to determine whether any and what insects were present. Jeans attended the Beverford property and laid the traps. Michael was instructed to bring the traps back to SHC the following week.
51 Neither Mentor nor Terbyne was applied to the Third, Fourth, Fifth, Sixth, Seventh or Eighth Plantings.
52 On 28 December 2012, Chaffey applied Dual Gold to the Sixth Planting. He only applied it to about half of the Sixth Planting due to wind. The Sixth Planting resulted in a healthy crop of beans.
53 On 31 December 2012, Chaffey returned the sticky traps placed on the Third Planting to the SHC. They identified thrip and other bugs on the traps. As a result, Jeans swept the Fourth Planting with a sweep net. Afterwards, Chaffey, Matthew Earle of SHC and Jeans attended SHC’s office, where Chaffey was provided with a paddock inspection form, together with a list of further recommended insecticides to use on the land.
54 In late December, according to Tripodi, the weed pressure on the Third, Fourth and Fifth Plantings increased and some plantings began to die in early January 2013.
55 On 1 January 2013 Michael applied the recommended insecticides to control various insects, including the brown leafhopper.
56 On 3 January 2013 Chaffey re-sowed the land used for the First Planting (the Seventh Planting). This planting was unsuccessful, with the crops dying as they did in the First Planting.
57 Between 10 – 15 January 2013, Cumming took samples of soil and crops from the Beverford property and sent them for treating to Denis Persely, a plant pathologist at the Queensland Department of Agriculture, Fisheries and Forestry.
58 On 15 January 2013 Chaffey sowed the Eighth Planting. On 18 January, Dual Gold was applied to this planting.
59 On 23 January 2013 Chaffey sowed the Ninth Planting. On 24 January, Dual Gold was applied to this planting.
60 On 29 January 2013, 31 January 2013 and 6 February 2013 respectively, Chaffey sowed the Tenth, Eleventh and Twelfth plantings.
61 The Sixth, Eighth, Ninth, Tenth, Eleventh and Twelfth Plantings were successful. However, the produce from these plantings could not be sold to Woolworths because it required a continuous supply of 12 weeks from its farmers and Tripodi’s supply was too limited.
62 On the recommendation of Burrell, in January 2013 Tripodi engaged Tony Kourmouzis from Red Earth Agricultural consultants to take a sample of the borlotti bean seed for testing by Crop Health Service.
63 From around early 2013 the plaintiff discontinued its dealings with SHC and engaged Stephen Lorimer of HE Muir & Sons for agronomy services. In early March 2013, Michael attended SHC’s offices to pay the weekly account, and Cumming informed Michael that he was no longer their agronomist.
64 By email dated 18 July 2013 from Klatt to Tripodi (copying in Chris Chase, a Woolworths Business Support Manager), Woolworths agreed to purchase 5,000kg of freshly shelled peas per week in cartons of 5 at a cost of $3.30 per unit. It agreed to purchase on the following terms:
· Stock be delivered to agreed distribution centres in accordance with Woolworths’ specifications;
· Shelled peas and new products as listed in the presentation be exclusive to Woolworths for one year;
· Woolworths have the first right of future exclusivity on the provision of future order commitments;
· In addition to its termination rights specified in the Vendor Trading Terms, Woolworths could immediately terminate the Memorandum of Understanding where, over a rolling 13 week period, the delivery to the distribution centre was lower than 90% or where, over a four week period, the fulfilment rate was lower than 80%.
65 On 16 August 2013, Tripodi filed the writ in this proceeding.
66 Between 2013 and 1 January 2014, Tripodi provided freshly shelled peas to Woolworths. Various issues arose with the pea deliveries, including inaccurate weight, failure to be free of foreign matter, inconsistent “best before” dates, and shelf life and appearance not meeting the required standard.
67 On 8 December 2013, Woolworths advised that that it would be removing the Edible Gems peas from stores until the product met the Woolworths specification. The plaintiff continued to supply peas until 1 January 2014, and then commenced various remedial procedures to meet Woolworth’s demands.
68 Ultimately, Tripodi was unable to supply peas in 2014, as crops were destroyed through an error in the application of chemicals.
Issues
69 At the beginning of the trial the parties were asked to submit a statement of the issues to be decided by the court. Based on that document, the issues to be decided are as follows:
(a) Was there a retainer between Tripodi and SHC for the provision of advice as to appropriate pre-emergent herbicides to apply to the 2012-13 borlotti crop, as well as the health of the crop generally? If yes, did SHC breach its retainer in providing the advice given in respect of the 2012-13 borlotti crop?
(b) Did SHC owe a duty of care to Tripodi to provide advice as to appropriate pre-emergent herbicides to apply to the 2012-13 borlotti crop, and to monitor and safeguard the health of crop generally?
(c) If yes to (b), was Cumming’s advice to Tripodi in respect of the 2012-13 borlotti crop negligent and thus made in breach of that duty?
(d) Did SHC provide Mentor and Terbyne to Tripodi in breach of terms implied under common law, the Australian Consumer Law,[3] and the Goods Act 1958 (Vic), because those products were:
[3]The Australian Consumer Law is set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth).
(i) not reasonably fit for the purpose of being used to control weeds in borlotti bean crops; and
(ii) not of merchantable quality?
(e) Did the plantings die as a result of the virus known as summer death? If no, would they have died of summer death in any event?
(f) If yes to (c), did SHC’s negligence cause the death of the First to Seventh Plantings inclusive?
(g) If yes to (f), did Tripodi suffer any loss and damage as a result of SHC’s negligence and if so, how much?
However, the parties did not address all these issues in their final submissions. Accordingly, I have confined myself in this judgment to the matters which the parties focused upon and argued.
Credit
70 In circumstances where a number of the important exchanges in this case were based on conversations, and where there is little independent evidence to corroborate the parties’ accounts, an examination of the credit of key witnesses is essential.
Cumming
71 I found Cumming to be an unimpressive witness. He presented in his demeanour in court as someone who was uncertain, guarded and defensive. At the same time, he seemed careful to avoid as far as possible giving evidence which might harm or adversely affect his position or that of SHC. The combination of his manner and the evidence he gave did not instil in me confidence in the accuracy or reliability of his evidence in general. I did not find Cumming to be a credible witness. Without corroboration, I would generally regard his evidence on the more controversial matters as suspect and not to be readily accepted.
72 My view of Cumming was the result of various factors.
73 First, Cumming acted in the manner of an uncertain witness who was often reluctant to be definite in his answers to questions. This reluctance increased during cross-examination. Many of Cumming’s responses were qualified with words of supposition and likelihood. He often used words or phrases such as “probably”, “could have” and “pretty sure”. At one level, it is perhaps understandable that a witness giving evidence in a court case might be a little guarded. No one wants to embarrass themselves by giving exaggerated or false answers. At the same time, a witness who has done nothing wrong has no reason to be other than frank and direct with the court in answering questions. In the present case, the contrast between Cumming and Chaffey was stark – it explains largely why Chaffey was the most impressive witness of fact. Given his demeanour and parts of his evidence, I felt with Cumming that his frequent equivocation was due not merely to the usual anxiety often associated with giving evidence at a trial, but resulted from a different concern: more likely an awareness that his conduct and that of SHC in relation to the growing of the borlotti beans exposed SHC to a substantial liability risk.
74 Secondly, Cumming’s evidence was not consistent. For example, Cumming gave an account of his position and responsibilities at SHC which seemed inherently inconsistent. Cumming contended that his position was more akin to a horticultural salesman, rather than a horticultural agronomist. However, he admitted both that his job at SHC was similar to that of his colleague Matthew Earle, who is described as a horticultural agronomist, and that between 2005 and 2013 he had provided horticultural agronomy services to Tripodi. Cumming defined these services as including the sale of agricultural chemicals and fertilisers which would “revolve around agronomy”, providing sap test services, dormant application spray services and supplying Tripodi with a chemicals program for peaches and nectarines for 2012 -2013. Cumming explained that the chemicals program was prepared by a trainee who was working for SHC at that time, together with Matthew Earle. Cumming said that he oversaw the program. Cumming also stated that Tripodi would rely upon his advice with respect to crop care “from time to time”. He explained that when there was a problem he would take it upon himself to make recommendations, and between 2005 and 2013 he made recommendations in an ‘ad hoc’ way, meaning that if he saw something he could help with, he would. Cumming also admitted that when Tripodi first planted capsicum crops in 2012 he went to see the crop for the express purpose of monitoring it but that the beans were a sideline and a trial. He admitted that at particular times Michael would rely on his advice for the provision of insecticides, but “not always”. When asked to clarify what was meant by “not always”, Cumming responded “I can’t really answer that question”.
75 Further, in a report dated 11 February 2005, which Cumming prepared to assist Tripodi in making an insurance claim for the loss of crop due to storm damage, Cumming stated:
“Through my role as a horticultural agronomist with Swan Hill Chemicals, I have forged a close working relationship with Michael and Gina Tripodi”
76 When Cumming was asked about this in cross-examination, he admitted that he described himself as a horticultural agronomist, and that he had signed the document. SHC did not revisit this issue during re-examination.
77 Cumming was also questioned about a screenshot of the defendant’s website, where he was described as a “Horticultural managing agronomist”. Cumming stated that was not his real title. He said that his title was “horticultural manager”. He said that this was the first time he had seen the website, which had been put together by “Clear Eyes New Media”, and that his job description was attributable to that entity and not him.
78 Cumming’s evidence in respect of the insurance report, namely, admitting to providing agronomy services, and describing oneself as an agronomist in a document used as part of an insurance claim, but then asserting later that one is not an agronomist, is troubling. On the one hand, I can accept that he is a horticultural agronomist as he asserted in the insurance report and his later evidence to the contrary is false. On the other hand, I can accept that he is not an agronomist and he gave false information to the insurer and his client in relation to the insurance claim. Obviously, this raises a significant issue about his honesty and reliability in giving truthful evidence to the court. Moreover, it draws additional attention to a concern about Cumming giving partisan evidence at the expense of the truth.
79 Thirdly, other aspects of Cumming’s evidence concerned me. For example, Cumming said that he had no recollection of the content of any of the conversations concerning borlotti beans between himself and Michael during the period of March to November 2012. However, he was able to give evidence concerning various conversations which occurred both before and after this period, with both Michael and other persons. In circumstances where the occurrence of these alleged conversations is important in the context of the case, it seems odd that Cumming could not categorically state whether the alleged conversations took place.
80 Cumming recalled the content of discussions he had with Michael in 2011 concerning the FMC harvester. He gave evidence that Michael did not discuss the FMC harvester with him in early 2011. Rather his first discussion with Michael concerning the harvester was when “Big Red” arrived in September-October 2011 or “possibly later”. When it was suggested that the harvester actually arrived in January 2012, Cumming agreed with that proposition, and concluded that it must have been January 2012 when the first discussion took place.
81 Further, Cumming admitted that, although he could not recall the discussions between March 2012 and November 2012 concerning the borlotti beans, he could remember the discussions concerning summer death and the pre-emergent prior to its application. Cumming referred to these conversations as the “key discussions”.
82 Cumming also recalled having discussions with Burrell in the middle of 2012 about providing weed killer to the Beverford property, and said that he provided Roundup to Burrell.
83 In addition, Cumming said that he had discussions with Michael concerning the preparation of the land in March 2012. Cumming gave evidence that in March 2012 he and Michael had discussions concerning the methods of irrigation for the purpose of pre-emergents. He also stated that at that time, he had given advice on the use of pre-emergents in respect of the pea crops, and had recommended the use of the herbicide Stomp. He also stated that after the first trial harvest of capsicums and borlotti beans, he had a brief discussion with Michael about the harvest of the crop.
84 An issue in the case is what advice – if any – Cumming gave Michael during the March to November 2012 period in respect of the borlotti beans. In circumstances where Cumming has shown that he can recall conversations relating to other aspects of his dealings with Michael, and with other persons, both before, during and after the relevant March to November 2012 period, I am not convinced that he cannot recall whether or not the alleged conversations about the borlotti beans took place. At best, Cumming’s evidence regarding the alleged conversations between March and November 2012 suggests an inability to recall relevant events in this case. Thus, while Cumming says that he can recall nothing of these conversations of which the plaintiff speaks, he is not so certain that he is prepared to deny the conversations took place.[4] At worst, Cumming’s lack of recollection is contrived because he realises that it would not assist SHC’s position.
[4]To that extent, he does not contradict what Michael says.
85 Fourthly, I am also reluctant to trust in the accuracy of Cumming’s accounts due to the changes he made to his evidence as the case progressed.
86 During cross-examination, Cumming insisted that, in December 2012 after it was clear that the First Planting was dying, he told Chaffey that he thought the crop had died due to the Mentor and he said to Chaffey that he needed to do a trial with the chemical. This was the first mention of such a conversation. It was not raised during his evidence-in-chief. Nor was it raised during Chaffey’s time in the witness box even though Cumming was present in court during Chaffey’s evidence.
87 By way of explanation, Cumming said that he did not mention it in examination-in-chief due to the difficulty of remembering everything and the big job involved in giving evidence-in-chief in this case. He also said that he had discussions about the conversation with SHC’s solicitor, as well as Don McDougall from the insurance assessors, but could not remember whether he told the defendant’s barrister. Cumming then said he believed that he had included the conversation in his insurance statement which was prepared by Don McDougall in around 2013. This statement was not referred to in the particulars to SHC’s pleadings in the proceeding.
88 In addition, it became apparent during the trial that SHC and Cumming had not disclosed in discovery all relevant documentary materials which they held. In particular, the documents not discovered were:
· Cumming’s diaries for the 2012 period; and
· the statement prepared by Douglas McDougall, on behalf of SHC’s insurer in respect of this proceeding.
89 During cross-examination, Cumming revealed that he had diaries from 2012 and said he wished that he had his diary to prove that he had gone out on the land the day before the First Planting to speak with Michael and Chaffey.
90 Cumming admitted that he kept diaries recording attendances with clients between 2005 and at the date of giving his evidence, in a combination of electronic and hard copy formats. He used the diaries to record orders and to write down if he had been speaking to someone. The diaries were kept for each calendar year. Cumming said he did not record every visit he had in his diaries, and that he could have kept a diary of his attendances at the Tripodis, but that he could not say specifically and could not answer whether he did.
91 Cumming could not recall whether he had a book or electronic diary in 2012. He said he would have had a book diary at some point, but may have been chopping and changing and trying to work out the electronic system. He said he did not know how to back up his electronic diaries but that when he had finished with book diaries they would sit in a drawer somewhere at work or at home. He confirmed that he had not destroyed the diaries from between 2010 and 2012. Thus they were theoretically available. However, Cumming was unsure where they were.
92 Cumming stated that he could not remember being asked by SHC’s solicitors to produce the diaries, but admitted that he had assisted with the production of documents for SHC.
93 Cumming admitted he was asked to produce documents relating to the case by SHC’s solicitor, but he could not recall the solicitor asking him for diaries. He said that SHC’s solicitor certainly asked him to look for emails, and whether at one point in time there was a staff planner or a weekly planner. Cumming said he was told that the time period of particular interest was November 2012 – January 2013.
94 During cross-examination, Cumming also stated that in 2013 he had answered questions for the insurance assessor, Don McDougall, in relation to the claim on which this proceeding is based. This resulted in the production of a statement. Upon the revelation that there was such a statement, the plaintiff called for production of the statement, but it was not produced.
95 In circumstances where Cumming was asked to provide emails and staff planners from the 2012-2013 period, and where many of the facts in issue in this proceeding relate to what happened and when it happened, it seems odd for Cumming to claim that it had not occurred to him to offer to provide contemporaneous materials that recorded his activities during the relevant period.
96 Thus, after taking into account the various matters set out in paragraphs 73 to 95 inclusive, I have concluded that Cumming was not a credible or reliable witness whose evidence I would accept without corroboration. To the extent of any conflict between his unsupported testimony and that of another witness, generally I would prefer the evidence of the other person.
Michael
97 In general terms, Michael Tripodi was a witness who tried to tell the truth to the best of his recollection. In that way, he was sincere even when his recollection was faulty – as it was in part. However, it seemed to me that Michael had convinced himself of the justice of his case and had persuaded himself that the facts as he recalled them supported his version of events. The problem for Michael was that the facts did not always comfortably fit with his version of events.
98 Like Cumming, Michael gave evidence for an extended period. He did so not only at the initial hearing in 2016, but then again for a shorter time in the continuation of the trial in 2017 after the matter returned from the Court of Appeal. For this reason, I had ample opportunity to see him in the witness box and assess his demeanour and how he dealt with the questions asked of him.
99 There were some aspects of Michael’s evidence that gave me pause for thought. First, before he signed terms of settlement in May 2013 with SHC regarding Tripodi’s outstanding account, he did not make any written complaint about the failure by SHC and Cumming to provide proper advice and guidance in relation to the growing of the borlotti bean crop at the Beverford property.
100 Secondly, notwithstanding the failure of the bean crop and the consequential impact which Tripodi said this had on its business and dealings with Woolworths, Tripodi agreed to repay the whole of the debt alleged by SHC to be owing.
101 In relation to both these matters, one might have expected an aggrieved party to at least raise in writing with SHC the allegations of poor performance by SHC and the consequential loss for Tripodi in connection with the borlotti bean enterprise. However, I accept that he raised matters orally with David Ford of SHC.
102 Thirdly, Michael said in his evidence that the issue of the purchase price Woolworths would pay Tripodi for the beans was raised at the July 2012 meeting and was followed by a later phone call with Klatt. The evidence he gave was not detailed but referred to Michael discussing a price for the beans with Klatt and Saad. In the brochure which Michael and Jina took to the meeting with Woolworths in July 2012, Tripodi referred to 250 milligram units of shelled peas with a cost price of $3.50 to Woolworths and a retail price of $4.99 and a 300 milligram unit of shelled beans with a cost price of $3.50 to Woolworths and a retail price of $5.99. Tripodi said that Woolworths indicated that $3.50 per unit was too high and asked Michael to review the price. Tripodi did not raise this cost price issue with Klatt in his evidence. Klatt simply referred to Woolworths negotiating the proposed pea price down from $3.50. Klatt made no reference to any specific price for beans. The same situation applied with Saad.
103 Fourthly, as noted, in his evidence Michael mentioned for the first time a conversation allegedly had with Klatt after the July meeting in which Michael and Jina produced the brochure setting out Tripodi’s proposed product range and availability. This conversation about the price of beans was important. However, no explanation was given by Tripodi for its apparently sudden introduction to the case. Nor was it raised with Klatt, the other party to the alleged conversation and someone who willingly gave evidence for the plaintiff.
104 The upshot of these matters is that I have reservations about the reliability and accuracy of Michael’s evidence. I consider that he has unconsciously or subconsciously altered his recollection of events to better fit what he perceived to be the best interests of Tripodi. For that reason, his evidence needs to be treated with care. In the absence of some corroboration, either from other witnesses, contemporaneous documents or the probabilities of other established facts, I would be somewhat sceptical of his evidence. His enthusiasm for the bean project has rendered him not the most credible or reliable of witnesses.
105 One part of Michael’s evidence which I find wrong as a matter of fact related to his presence at the Beverford property on the day of the First Planting in November 2012. Michael gave evidence that he was not present on the land whilst the spraying took place on the First Planting. In his cross-examination, he contended he was not on the land until after the spraying of the First Planting, claiming that he was packing apricots. He contended that he arrived after the First Planting was sprayed with Mentor. However each of Chaffey, Cumming and Burrell gave evidence that Michael was present during the spraying of the First Planting. Especially having regard to the Chaffey evidence, and in circumstances where two other witnesses gave the same evidence, I find that Michael’s recollection was mistaken.
106 A major point of attack on Michael’s evidence concerned what SHC said was the inconsistency regarding the advice which Tripodi, through Michael, sought from SHC and Cumming.
107 The original statement of claim, which remained in the same terms for two years, stated:
“10.In or about February or March 2012 the plaintiff sought advice from the defendant about appropriate methods of weed control to be used with the proposed borlotti plantings.
PARTICULARS
The request for advice was made by Mr Tripodi to Mr Cummins at the Boga property in about February 2012. The substance of the request was that as he was intending to plant borlotti beans at the Beverford property in the 2012/2013 season and he wanted to know what he should use to control the weeds.” (sic)
108 The report from the expert Dr Peter Taylor dated December 2014 was provided to the plaintiff’s solicitors on 9 January 2015. It stated that the borlotti beans planted at the Beverford property did not die of weed infestation or weed suffocation but of the summer death virus.
109 The amended statement of claim, which was dated 10 April 2015 provided that:
“10.In or about February or March 2012 the Plaintiff sought advice from the Defendant about appropriate methods of
weed controlcrop protectionto be used with thefor its proposed borlotti plantings.PARTICULARS
The request for advice was made by Mr Tripodi of the Plaintiff to Mr Cummins at the Boga property in about February 2012. The substance of the request was that as he was intended to plant borlotti beans at the Beverford property in the 2012/2013 season and he wanted to know whether the land he intended to plant the borlotti bean crop on was suitable for that crop and what chemicals he should use prior to planting and thereafter to control the weeds and protect the crops.”
110 Michael agreed that the original statement of claim was based on his instructions to his former solicitors, and that he read the statement of claim before the writ was issued. He also acknowledged that the statement of claim remained in that form for almost two years, and that the amendment took place after his current solicitors received the Taylor report. But Michael also maintained during his evidence that he asked Cumming for advice in respect of both weed control and crop monitoring and protection.
111 In effect, SHC submitted that the court should infer from the changed pleading of the statement of claim that:
(a) the original claim concerned only a request to Cumming to advise Tripodi about weed control at the Beverford property;
(b) after SHC’s expert found that the borlotti beans died due to the summer death virus and not weeds, Tripodi amended its statement of claim to include an allegation that it sought advice from Cumming about ongoing crop protection for the borlotti bean crop.
(c) Michael’s evidence in support of the broader claim was false and contrived. It was fashioned purely to overcome the problem created by Dr Taylor’s report which significantly undermined the case which Tripodi had been running until it received that expert report.
112 Having considered the matter, on balance I am not satisfied that Michael’s evidence was, in effect, falsely manufactured to cope with the expert report of Dr Taylor. On this aspect of the case, I accept the position advanced by Tripodi. Further, I note from the transcript that the proposition about the plaintiff changing the statement of claim specifically as a result of Dr Taylor’s report was not put directly to Michael. It is not enough to say that the plaintiff’s pleading was amended a couple of months after receiving the expert report. If SHC sought to criticise Tripodi’s case and the veracity of the witness, in my view it should have been put to Michael that:
(a) the statement of claim was amended because of, and in order to, address the contents of the expert report; and
(b) Michael’s evidence on this issue was false.
113 In circumstances where one party asks the court to disbelieve a major witness for the other side, this is a point of some significance.
114 Accordingly, I do not accept the defendant’s proposition that the report itself was the impetus for change and Michael is a liar whose evidence on this issue was invented and untruthful.
Chaffey
115 Chaffey presented as a measured and careful witness who took seriously his obligation to give truthful evidence.
116 Although he was a witness for the plaintiff, this did not stop him from giving evidence which did not advance the plaintiff’s interests. For instance, contrary to Michael’s recollections, he gave evidence that Michael was present at the Burrell property during the spraying of the First Planting on 17 November 2012. Chaffey said that he had no doubt that Michael remained at the location of the First Planting while Chaffey sprayed the Mentor on 17 November 2012.
117 A witness who is willing to give evidence that contradicts the party whose case they have been called to support, is often a witness of truth. Subject to the circumstances and other evidence, a court might well be more inclined to accept the evidence of such a witness.
118 I was further encouraged to take a favourable view of Chaffey due to the consistency between his diary from the relevant 2012 – 2013 period, and his evidence in court. Chaffey kept a diary throughout the 2012-2013 period when he worked for Tripodi. Notes from his diary had been typed up by his wife on 12 March 2013. Where the typed notes and written diary conflicted, Chaffey explained that the written diary was to be relied upon, as the typed notes had mistakes in them.
119 Whilst it is acknowledged that the source of both of these pieces of evidence is the same, the fact that Chaffey’s recollection of events is consistent with a diary account made contemporaneously, and which was made for the neutral purpose of enabling Chaffey to keep track of the work he was doing, in my opinion, allows the court comfortably to conclude that Chaffey’s diary entries are most likely to be accurate accounts of what took place.
120 Another factor supporting my view of Chaffey as an honest and reliable witness was his independence from the litigating parties. Although Tripodi engaged him to work at the Beverford property, he had no obvious financial or other interest to pursue or defend in circumstances where there was no allegation that any act or omission by him had caused or contributed to the failure of the borlotti bean crop at the property.
121 In part, SHC was critical of Chaffey’s evidence and submitted that his recollection of certain events surrounding the mixing of the herbicide between plantings 1 and 2 might be confused. The point seemed to be that Chaffey gave inconsistent evidence about who mixed the Mentor before its first use on a borlotti bean planting at the Beverford property. However, from my reading of Chaffey’s evidence, he said both in his evidence-in-chief and cross-examination that Cumming worked out the dosage rate for the Mentor and then Cumming and Chaffey mixed up the product in the spray tank before Chaffey sprayed the planting. Nothing put by SHC in this regard had any adverse impact on Chaffey’s credibility.
Burrell
122 Burrell spent a short time in the witness box. Overall, I found him to be consistent in his account of what took place.
123 It appears from both his and Michael’s evidence that at the time of the borlotti plantings, he and Michael were good friends. However, since that time the relationship has deteriorated. No submissions were made by either party on what, if any, effect this may have had on the veracity of the evidence given by Burrell.
124 The plaintiff submitted that Burrell was not a reliable witness, as his memory was “hazy at best”, “confusing” and he could not remember the details of dates, times, people present or the name of the product Mentor.[5]
[5]Paragraph 206 of the plaintiff’s closing submissions dated 25 July 2016.
125 I agree that certain aspects of Burrell’s evidence were unclear. For example, during cross-examination, Burrell was asked whether Chaffey was present during the phone call in which the defendant contends Cumming told Michael to undergo a trial of Mentor. Burrell’s response was that he could not recall.
126 I also agree that Burrell’s evidence appeared somewhat uncertain. For example, he was unsure (until prompted by counsel) as to the date of planting.
127 However, none of Burrell’s evidence was crucial or significantly affected any of the major issues to be determined in the case. To that extent, it is not necessary to consider in any detail his evidence and his reliability as a witness. Suffice to say, I regarded him as an honest witness attempting to tell the truth as he recalled it. His recollection was incomplete and uncertain in some respects, but ultimately it does not matter.
Woolworths witnesses
128 Three people from Woolworths gave evidence: Klatt, who at the relevant time was a senior category manager; and Saad and Chris Chase both of whom were category managers. I found each of them to be honest, credible and reliable witnesses. I accept their evidence. They provided a consistent account of the dealings between the parties and much of their evidence was supported by contemporaneous documents. Klatt in particular was an important witness and to the extent of a conflict between him and one of the parties, I would prefer his evidence.
Did Tripodi retain SHC both to advise on pre-emergent herbicides for the 2012-13 borlotti bean crop and the health of the crop generally, and to provide monitoring services regarding the bean crop?
129 Tripodi claims that in March 2012 it sought advice about herbicides and crop care generally from SHC during a conversation between Michael and Cumming. The conversation allegedly occurred in Michael’s office. Michael said that during the conversation, he requested that SHC, through Cumming:
(a) advise Tripodi as to whether the land was suitable land for planting the borlotti bean crop;
(b) advise Tripodi as to which chemicals it should use prior to planting
(c) take responsibility for controlling the weeds and protecting the crops;
(d) attend the property once a week to monitor pests and diseases.
130 Tripodi claimed that, in response, Cumming stated words to the effect of “Yes, I’ll help you in any way I can”.
131 SHC contends that Michael’s request was limited to asking Cumming to find a suitable pre-emergent herbicide and, thus, SHC’s duty was so limited. SHC submitted that this was supported by the fact that:
(a) Cumming’s involvement in the 2011/12 planting was expressly limited to providing a herbicide;
(b) Cumming was not paid for the agronomy services he had allegedly agreed to provide;
(c) Michael had told Cumming that he was not concerned with the summer death virus in January 2012 (thus, it was said, Michael was not looking for guidance on insecticide use in March 2012);
(d) Cumming amended its pleadings with the effect that a broader request was made only after Tripodi had received the defendant’s expert report which claims that summer death – not the herbicides – was responsible for the death of the 2012/13 plantings;
(e) Michael did not make contemporaneous complaints to Cumming about his role or engagement in the application of insecticides once it became clear that plantings 3, 4 and 5 had died due to summer death.
132 Cumming said that he did not have any recollection of the details of conversations he had with Michael between March 2012 and November 2012. He did not have any recollection of the conversation Michael alleges.[6] However, he said that the conversations he did have around that period mostly related to trying to find herbicide options for the bean crop.
[6]T651.
133 There is no independent evidence – written or otherwise – specifying what was said during the conversation between Michael and Cumming.
134 In this conflict of evidence between Michael and Cumming, I prefer Michael’s evidence. Accordingly, I accept the gist of Michael’s evidence and find that he raised with Cumming the issues of an appropriate pre-emergent herbicide for the borlotti beans, the need for SHC to monitor the bean crop for pests and disease, and to provide appropriate advice. Such an approach was consistent with Tripodi’s prior dealings with SHC. Also, it was consistent with Cumming’s prior conduct in relation to Tripodi, and its stone fruit and other farming that Cumming should have agreed to Michael’s request. In circumstances where a farming operation engaged in a substantial business involving valuable assets, as Tripodi did, I accept that Tripodi placed significant reliance on SHC for advice in relation to the care and nutrition of its crops, be it stone fruit, capsicum or beans. Tripodi looked to, and received from, SHC advice, guidance and monitoring designed to protect and enhance the wellbeing and productivity of its crops.
135 There was an established relationship between the parties. Michael and Cumming had worked together since about 2005. Over the years, SHC through Cumming, had provided extensive advice, product and services to Tripodi. Tripodi had paid for the pesticides, insecticides and other products it bought for its farming operations but had not been charged for SHC’s advice and general agronomy services. Presumably SHC expected that if it provided a good service to clients like Tripodi, the clients would accept its recommendations and purchase chemicals and other product from SHC.
136 Cumming had been involved in the growing of the smaller plots of beans which Tripodi had undertaken for its own research and development purposes. Cumming was aware that Tripodi’s main focus was on stone fruit but Cumming nevertheless had assisted earlier both in relation to the borlotti beans and the capsicums which Tripodi grew. Cumming did not limit himself to providing advice and services to Tripodi only about stone fruit.
137 Accordingly, I find that by the agreement reached between Tripodi and SHC through Michael and Cumming, there was a retainer for SHC to advise on pre-emergent herbicides for the bean crop in the 2012-13 growing season and the health of the wellbeing of the crop generally. Also, Tripodi retained SHC to monitor the borlotti bean crop as it did with the stone fruit.
Did SHC owe a duty of care to Tripodi regarding:
(a) advice about pre-emergent herbicides to apply to the bean crop in 2012-13;
(b) the provision of monitoring services regarding the bean crop; and
(c) advice about the health and protection of the bean crop?
138 Tripodi claims that SHC owed it a duty of care about the advice regarding herbicides.
139 Tripodi claims that the duty arose when Cumming:
(a) in or about mid November 2012, advised Tripodi that it should use the pre-emergent chemical herbicide Mentor at a rate of 170gm grams per hectare to control the weeds. Cumming did not advise Tripodi as to the inherent risks of using such a product on the borlotti bean crop. (“Mentor Advice”).
(b) on or about 22 November 2012, recommended that Tripodi apply Mentor to approximately half of the next planting, and the herbicide Terbyne to the balance. The Terbyne was to be applied at a rate of 700g per hectare to control the weeds. Cumming did not advise Tripodi as to the inherent risks of using such a product on the borlotti bean crop. (“Mentor/Terbyne Advice”).
140 Tripodi also claimed that, not only was SHC negligent to advise the use of chemicals which harmed the bean crop, SHC was also negligent in failing to make proper investigations and recommend chemicals which had been successfully used with borlotti beans before November 2012. Thus, the claims reflected allegations of advice given which was negligent, and advice which was not given but should have been – a negligent failure to advise regarding a suitable pre-emergent herbicide.
141 In addition, Tripodi claimed that SHC owed a duty of care regarding the monitoring and safeguarding of the bean crop. This included dealing with and advising about risks created by weeds, insects and disease.
142 Tripodi’s submissions regarding the negligent advice given relied on the well-established principles regarding such a duty in Hedley Byrne & Co Ltd v Heller & Partners Ltd.[7]
[7][1964] AC 465.
143 The House of Lords in Hedley Byrne established that if, in the ordinary course of business or professional affairs, a person seeks information or advice from another in circumstances in which a reasonable person would know that he was being trusted, or that his skill or judgment was being relied on, and the person asked chooses to give the information or advice without indicating that he does not accept responsibility for it, then the person replying accepts or assumes a legal duty to exercise such care as the circumstances require in making his reply. A failure to exercise that care can give rise to an action for negligence if damage results.[8]
[8]Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, 486-7, 493-4, 495-7, 502-3, 508-9, 514, 522-3, 528-9, 538-40.
144 Since Hedley Byrne, later decisions have established that:
(a) in cases of negligent misstatement causing pure economic loss, a duty may arise even if no request for advice or information is made. When considering the law of negligent misstatement, the idea of implied acceptance by a defendant of liability is, in effect ,a liability imposed by law and is not voluntary.
(b) because such a claim requires that there be reliance by the representee on the negligent advice or misstatement, unlike with other torts, reasonable foreseeability of harm, whilst relevant to determining if a duty is owed, will not be of itself, sufficient to establish a duty of care.
(c) courts have held that the duty of care is less likely to arise where advice is given in an informal context, as people speaking on social or informal occasions may express opinions with less care than if they were giving the advice in a professional context.
(d) the less formal or serious the occasion in which information or advice is sought, the less likely it is for a duty of care to be found.
Standard
145 Because the retainer included SHC performing monitoring services for Tripodi in relation to the borlotti bean crop, SHC had a duty to provide such services at a standard which a reasonably competent agronomist advisor would provide. Based on the work which SHC and Cumming did for other produce grown by Tripodi, the service would include regular inspections, examinations, testing for disease and giving advice designed to protect the crop and enhance its productivity.
146 Having regard to the evidence as a whole, I find that a person in Cumming’s position ought to have known that he was being relied on to provide serious advice to a client in a commercial context when making the alleged misstatements about the Mentor and the Terbyne.
147 The existence of the duty is based upon several things. First, due to the retainer, there was an obligation to exercise due skill and care in advising about a suitable pre-emergent herbicide for the bean crop.
148 Secondly, as noted, the duty was consistent with the prior conduct of SHC and Cumming regarding their dealings with Tripodi. The parties agreed that in respect of Tripodi’s stone fruit crops, Cumming would:
· provide chemicals for nutrition of Tripodi’s fruit trees, as well as fungicides, herbicides and insecticides;
· test to determine nutrition and thus the chemical needs of plants and the soil in which they grew;
· develop chemical application programs, based on the information gained from the previous season’s successes and failures.
149 Cumming also provided crop care for species outside his usual expertise. Cumming’s primary experience was with stone fruit, cucurbits and wine grapes. However, he helped Michael with Tripodi’s 2010/11 trials of legumes and capsicums. He gave advice to Michael about scleoritinia – a disease that was attacking some of the plants. He also took it upon himself to find the cause of problems with the capsicum plants. This involved inspecting the plants at the property and monitoring their progression without a request from Michael.
150 Cumming also stated that he knew Tripodi would rely on his advice in an ‘ad hoc’ way, meaning that if “I saw something, if I could help in any way, yeah, I would”.[9]
[9]T623.
151 Thirdly, much of SHC’s and Cumming’s conduct seemed to accept that there was a duty imposed upon them. It was as if the defendant assumed the obligation to Tripodi to provide the advice and services which a reasonably competent agronomist advisor would provide in the circumstances. Cumming did provide advice about pre-emergent herbicide, and once the early plantings began to fail, he was involved in trying to identify and rectify the problem.
152 When he took leave at the end of 2012, Cumming received regular text messages from his junior colleague Abby Gadsden, who was providing photographs of the progression of the second and third plantings. These text exchanges also contained recommendations from Cumming to Gadsden to take sap tests from the failing plants. Additionally, Gadsden provided updates to Cumming on the progression of testing results.
153 Similarly, when issues arose with the Third and Fourth Plantings, Cumming arranged for soil testing to be taken on the plantings, and had the samples sent to the South Australian Research and Development Institute (SARDI) for analysis. Cumming explained that SARDI offered a diagnostic service and if you wanted to test for plant pathogens or diseases, it was a good facility to use.[10]
[10]T572-3.
154 Cumming also admitted that he looked for pests as a potential cause of the deaths of the First and Second Plantings and that if he had seen a reason for putting down sticky traps at those early stages, he would have. Also, through other personnel, SHC laid sticky traps at the Beverford property and analysed the results to make recommendations about how to deal with the insects identified.
155 Although Cumming asserted that he was under no duty to Tripodi and denied knowing the intricacies of Tripodi’s investment in the borlotti bean project, he was aware of extensive steps which had been taken by Tripodi in developing and commercialising its borlotti bean crops: he knew about Tripodi’s purchase of the harvesting machinery; he knew that Michael and Jina had travelled to Italy twice for the purpose of investigating harvesters for harvesting borlotti beans; he was aware that the 20 hectare trial in 2012 was completed, inter alia, to test out the harvesting machine; he knew that Tripodi planned to produce borlotti beans in a punnet; he knew that Tripodi was building an assembly line; he was also aware that Michael had leased out additional land for this commercial venture, being Burrell’s property, as he helped Tripodi prepare the land for this purpose.[11]
[11] Cumming instructed people including Gadsden to test the leased land’s soil to determine which fertilisers should be used.
156 SHC’s submissions were as follows:
(a) Cumming had raised the issue of summer death with Michael in January 2012, and Michael told him he had been advised it was not an issue for 2012 season. Therefore, when Cumming was engaged in March 2012, Michael would not have been concerned with, or seeking, advice regarding insecticides.
(b) Michael was relying on others, not SHC, for advice about herbicides and pesticides for use on borlotti beans. He sought advice from Smith (“Smith”) in relation to the type of seed to use for plantings, and advice about herbicides and pesticides for use in the 2011/12 borlotti season.
(c) Despite paying others for crop monitoring services, Tripodi never paid an additional fee to SHC for the provision of crop monitoring services.
(d) Tripodi did not make a claim that SHC had agreed to provide a broader service until after SHC’s expert report demonstrated that plantings 3,4 and 5 were killed as a result of summer death, not the herbicides. Similarly, when negotiating and entering into a deed of settlement with SHC on 15 May 2013, in respect of a separate proceeding for the recovery of monies owed to SHC, Tripodi made no written complaint that SHC had owed it a broader duty of care.
157 I deal with each of these matters in turn.
158 First, in my opinion, whether Cumming raised the issue of summer death with Michael in late December 2011 or early January 2012, is not decisive in determining the issue of the scope of the duty owed by SHC to Tripodi. The plaintiff’s claim is that the duty arose because of the agreement reached in March 2012 between Michael and Cumming. Assuming the December 2011 or January 2012 conversation did take place, then it occurred before the March 2012 conversation created obligations between Tripodi and SHC in respect of the borlotti beans. I have found that the agreement extended beyond a request for advice about pre-emergent herbicides.
159 Secondly, the evidence in support of SHC’s assertion that Tripodi was relying on others, such as Smith, to provide the relevant services is weak. SHC relies on Cumming’s assumption that Smith was providing the relevant services, on the basis of Smith’s involvement with Tripodi. However, on the evidence, the only bases for Cumming’s knowledge of Smith’s involvement are: the 28 October 2011 email, which Cumming also alleges he did not fully read, and the December 2011/January 2012 conversation Cumming alleges he had with Michael. Because Cumming was a far from impressive witness, I would attach minimal weight to his evidence about the conversation with Michael. Moreover, Smith was not readily available like Cumming to inspect the crop and advise on a frequent basis.
160 Thirdly, the submission that the absence of a fee for monitoring is indicative of Tripodi’s lack of reliance on SHC is unconvincing in circumstances where SHC historically had not charged Tripodi any fee for Cumming to provide such crop monitoring services.
161 Finally, the fact that Tripodi amended its claim following the production of SHC’s expert report does not in this case support an inference that it was amended because of the report’s findings. Additionally, the fact that no written complaint was made during the negotiations between SHC and Tripodi in respect of recovery of monies owed, is undermined by the undisputed evidence that Michael made an oral complaint to David Ford, the former chief executive officer or general manager of SHC.[12]
[12]T249; T648.
162 Overall, I accept that Tripodi retained SHC for the purposes of both providing advice and monitoring services. Thus, SHC owed Tripodi a duty of care regarding the provision of advice and monitoring services. The retainer and duty were not restricted only to advising about controlling weeds in the borlotti bean crop.
Was there a breach of retainer and/or a breach of duty?
163 Having found that a duty was owed, I now turn to determining whether the alleged misstatements or failure to advise constituted a breach of SHC’s retainer and/or SHC’s duty to Tripodi.
164 To determine whether SHC breached its duty of care, a court must first consider:
(a) whether a reasonably competent agronomist in Cumming’s position would have foreseen that their advice and conduct regarding the pre-emergent herbicides and the health of the crop generally might pose a risk of injury to the plaintiff or to a class of persons including Tripodi;
(b) what the reasonably competent agronomist would have done by way of response to the reasonably foreseeable risk of injury.
165 Cumming had assisted Tripodi with its crops since about 2005. Prior to that, he had helped other farmers in the Swan Hill area, who also produced crops for large commercial chains. His areas of specialty included table grapes, stone fruit and cucurbits. His work for Tripodi included:
(a) providing recommendations for chemicals to use on crops, including treatments that would boost the crop’s nutrition and protect the crops from damage due to insects, fungi and weeds; watering and chemical application programs and seed treatments. In providing application programs, Cumming was aware of the importance of ‘withholding periods’ for commercially produced crops;
(b) arranging for samples to be taken from plants in order to develop the appropriate treatments;
(c) visiting Tripodi’s land to monitor the progress (and health) of its stone fruit crops;
166 Cumming held himself out as a horticultural agronomist. As early as February 2005 he wrote a letter on behalf of Tripodi on SHC letterhead in which he referred to his “role as a horticultural agronomist with Swan Hill Chemicals”.
Mentor advice
167 The parties have submitted conflicting recollections of how and when the Mentor advice was given in respect of the First Planting.
168 It is agreed that Cumming instructed Chaffey to mix the Mentor at a rate of 170g per hectare at 400 litres per hectare in the Hardi spray tank to apply to the First Planting. Cumming had written the instructions on the bottle. The spray tank had 2,200 litre capacity and was filled to capacity. That would have covered 5.4 hectares at a rate of 400 Litres per hectare. Cumming provided a 2 litre bottle of Mentor to Chaffey.
169 Cumming says he provided the bottle of Mentor to Chaffey on 16 November 2012, as their cars crossed paths on Burrell’s property. Chaffey says he did not see Cumming on 16 November. Rather, on 17 November 2012, [13] Cumming arrived mid-morning with Mentor and advised, by reading the label, what amount should be applied to the first planting. Chaffey’s handwritten diary contained the entry:
“Sprayed Bays 1 – 13
Mentor 170g/H at 400L/H
As per Brian SHC
Then watered 3 Hrs”
[13]T348. In his typed diary, it said that the chemicals were applied on 16 November 2012. However, the parties agreed that the spraying took place on 17 November 2012. Chaffey confirmed that where notes in his written diary different from those in his typed diary (which was created months after entries were put into the written diary), the notes in his written diary should be preferred.
170 I prefer Chaffey’s evidence, and accept that he received the Mentor on 17 November 2012. Overall, Cumming’s evidence on this point was significantly weakened by the circumstances in which it was given. First, he did not mention his meeting with Chaffey during examination-in-chief. He first mentioned this meeting during his cross-examination, despite having been present in court when Chaffey was giving contrary evidence.[14] Additionally, when he was asked to explain the delay in revealing this alleged meeting, he said that it was because of a combination of factors, namely: he had difficulty remembering everything when giving evidence-in-chief; he thought he had relayed his version of events to SHC’s solicitor and insurance assessors. He also revealed that evidence of the meeting would be found in his diary entry from 16 November 2012. He had not revealed the existence of this diary, which was not before the court, despite Cumming having participated in the proceeding’s discovery process.
[14]He was present in court for the duration of the first part of the trial.
171 In my opinion, the Mentor recommendation was made negligently. The evidence before the court shows that Cumming made scant efforts to find an appropriate pre-emergent herbicide, learn about the plant (despite his admitted lack of experience with borlotti beans), and seek to meet Tripodi’s deadlines. Taking into account his experience and understanding of the importance of chemical applications to the commercial production of crops, this fell below the requisite standard. Especially is this the case where Tripodi would be in a vulnerable position if the advice or services were not what they were meant to be. Further, there is no evidence before the court showing why Cumming’s use of Mentor, as opposed to other pre-emergents, was thought to be appropriate in the circumstances, and at the rates that he suggested.
172 At trial, Cumming provided a vague account of the steps he took to find a pre-emergent herbicide. He gave evidence that his investigations included the following:
(a) discussions in March 2012 with colleagues at SHC;
(b) discussions with local farmers, who largely did not use pre-emergent herbicides;
(c) raising the issue with various people after March 2012. The only person Cumming could specifically recall asking was Tally Matthews, who had no experience with borlotti beans or green beans.
173 He said that, together with his colleague David Ford, he did identify other products as potential options to use on the beans during the March – November 2012 period. But the only product he could specifically recall identifying before the First Planting was Treflan. He could not recall what Ford identified. Curiously, he did not contact Smith (of Sunland Seeds) whom, on SHC’s case, he considered to be the borlotti bean expert that Michael was relying on for seeds and advice with respect to summer death.
174 Although he acknowledged he had no previous experience with borlotti beans, Cumming did not make much effort to learn more about the borlotti bean plant. He could not recall if, during his investigations in early 2012, he was even aware that borlotti beans were biologically similar to green beans.
175 Despite being asked to find a suitable pre-emergent in March 2012 (which was then 6 months before the intended September planting date, and 8 months before the eventual November planting date) Cumming did not identify a suitable pre-emergent herbicide to apply to the borlotti beans by the required date. On the day of the first spraying, Cumming (and SHC) said he had only identified a pre-emergent herbicide that was suitable for trialling, not applying to the whole crop. One week prior to the planting, Cumming was still searching for a suitable product, and no indication was given to Tripodi at that point that:
(a) he had not been able to find a suitable product;
(b) he might only be able to find a product for testing, and that the borlotti bean production would be delayed.
176 These limited efforts were also coupled with an absence of evidence from SHC to explain why Mentor was suggested as a suitable product. Accordingly, it is difficult to see how the recommendation was reasonable. It is accepted by both sides that borlotti beans were not mentioned on the Mentor label; nor French beans or green beans, which are, according to SHC’s expert, within the same species as borlotti beans. Cumming knew, at the time when he recommended Mentor, that there were risks in applying the chemical to an “off-label” product – that is, one not specifically listed on the label as being suitable for use with the chemical. In evidence, he explained that the product Treflan was not appropriate because of its weed coverage, and that the product Stomp was also inappropriate. But he did not explain why Mentor appeared to be a reasonable and appropriate choice for Tripodi’s purposes. Similarly, Cumming could not explain why he chose the 170g rate of application. Cumming said that he read the label and worked out the rate. According to the label, that rate of application was suitable when applying Mentor to chickpeas, fava beans and lentils – all different species to borlotti beans and green beans.
177 In its defence, SHC alleged that on the morning of the first spraying, during a phone call between Cumming, Michael and Burrell, Cumming advised Michael of the risks associated with using an off-label product and said that he should perform a trial of the Mentor on a patch of the First Planting. SHC contended that despite the recommendation, Michael decided to apply the herbicide to the whole crop. I have already discussed why I accept that this phone call took place on the morning of the first spraying.
377 Thirdly, Ivey said that the figures on plantings 9-12 were referrable to specific blocks in a small time period at a set time in the season and were not necessarily typical or indicative for the purposes of working out what an ongoing average yield would be.
378 Fourthly, Ivey had a general scepticism about the production figures. He was not convinced that, in the absence of problems, Tripodi would have sold 203,736kg from plantings 6, 8, 9-12 as relied upon by Wilkinson.[69] Ivey said there was no satisfactory evidence for this total. He regarded it as illogical and not consistent with other evidence such as the yield in the previous season.
[69]T484.
379 Ivey adopted a figure of 3,502kg per hectare for the future ongoing production yield. Plainly, this was significantly less than the 6,200 kilogram per hectare in the figures relied upon by Tripodi. Ivey agreed in cross-examination that if he adopted a yield of 4,908kg per hectare (which Tripodi alleged was the actual expected yield) then there would have been a different profit figure – it would have increased by about $290,000.
380 Finally, the areas planted were not consistent. Some were 5 hectares and others were 8 hectares. No one satisfactorily explained the area covered by each planting.
381 The other point of controversy was the area harvested. Ivey’s figures for the period after 2012/13 restricted the harvest to 42 hectares. This was done on the basis that earlier, Tripodi could not sell all it had produced and was therefore forced to dump 36,000kg of beans. The defendant’s argument was to the effect that it was not sensible to increase the area under cultivation if the produce could not be sold. Ivey accepted that this rationale might not be so strong in future years because in 2012/13, Tripodi sold no beans to Woolworths. Ivey agreed that if Woolworths were keen to obtain the product and would take up to 5,000kg per week, then the area harvested might well be greater than 42 hectares.
382 In making his comments about the Wilkinson report Ivey was critical of Wilkinson’s analysis of the growing costs per hectare. Wilkinson suggested the costs, based on the figures given to him, were $18,600 per hectare. This was equivalent to $3.79 per kilogram of beans in pods and assumed that shelled borlotti beans weighed 50% of the total mass of unshelled beans. Ivey considered that the growing costs should have been about $8,000 per hectare. This figure did not include the cost of leasing the land or the value of irrigation water used. This estimate was based upon the expert’s experience and knowledge of the cost of growing similar crops and applied from the 2012-13 season until the 2018 financial year. The defendant’s experts used this estimate because they could not accurately and reliably quantify the total growing costs because they were not provided with complete documentation of the costs and full details of the crop husbandry practices.[70]
[70]CB595.
383 With respect to price, the defendant’s experts followed instructions and assumed that Woolworths would have paid $13.20 per kilogram for the shelled beans. This was the same figure as Wilkinson used. But as the defendant’s report noted:[71]
“This parameter remains unverified in terms of the price and volumes of sales to Woolworths.”
[71]CB618.
384 So the position common to both parties is that they assumed Woolworths would pay a price of $13.20 per kilogram for the shelled beans. In its written submissions the plaintiff made a couple of references to the sale price of the beans. In its initial final submissions dated 25 July 2016 the plaintiff said: [72]
[72]Paragraph 258 of the plaintiff’s closing submissions dated 25 July 2016.
“The assumptions used by Mr Wilkinson are actual cost figures verified by actual source documents and the intention of the plaintiff to harvest all the Burrell land for borlotti beans. Further it is assumed that sales would be made to Woolworths at $13.20 per kg for the beans which is supported by the evidence of the Woolworths’ representatives, Messrs Klatt, Saad and Chase.”
Then in the more recent loss and damage submissions dated 29 March 2017 the plaintiff said:[73]
“If the product were not damaged and were available, Woolworths would have purchased the whole of the harvest at the same price that it had paid for the peas, being 13.20 per kg.” (sic)
[73]Paragraph 9 of the plaintiff’s further closing submissions dated 29 March 2017.
385 It is necessary to consider the extent to which the evidence supports a sale price of $13.20 per kilogram. This is an important point especially when even the plaintiff’s own expert agreed that selling the beans into the wholesale market would have been unprofitable. Thus, the sale price is an important factor in determining what, if any, profit Tripodi could have made had the borlotti bean venture with Woolworths proceeded. This in turn affects the question of damages.[74]
[74]Whether or not a contract is profitable is important because the corollary of the principle that a plaintiff is to be put in the position which would have resulted from performance of the contract (assuming there was a contract in existence) is that the plaintiff is not to be put in a better position. Thus, if the plaintiff would have suffered a loss if the contract had been performed, then the plaintiff can recover no damages for the breach. See N Seddon, R Bigwood and M Ellinghaus, Cheshire and Fifoot Law of Contract (Lexis Nexis Butterworths, 10th ed, 2012) at [23.6] and [23.12].
386 The first supporting reference in paragraph 258 of the plaintiff’s submissions is a general one to the evidence of Klatt, Saad and Chase. The footnote refers to an earlier section of the submissions. Upon examination, that section provides no evidence about price.
387 As noted previously, Klatt gave no evidence to the effect that there was any agreement between Woolworths and the plaintiff for Woolworths to purchase quantities of borlotti beans at any particular price. Klatt specifically said that there was no agreement between the parties about the volumes or pricing of beans. Klatt gave evidence for the plaintiff and could have been asked about the likely price or price range which Woolworths would have paid for the borlotti beans. Tripodi did not ask him any such questions. This is significant. According to Cross on Evidence:[75]
“…the principles of Jones v Dunkel apply to the failure by a party to ask a witness called by that party questions in chief, at least where the most natural inference is that the party feared to do so. Indeed it has been said that the omissions to ask questions of a friendly witness is more significant that the failure to call a witness and that the presumption that the testimony would not have been favourable to the party’s case is stronger than the presumption arising from the failure to call him. A fortiori, inferences are not to be drawn in favour of a party calling a witness who could have given direct evidence to that effect but did not.”
[75](2017 LexisNexis Butterworths, 11th Ed), 44.
388 As to Saad, he too was called by SHC. In his evidence-in-chief, he said that Woolworths never went ahead with the whole range of products which Tripodi offered and spoke about the meeting of July 2012. He said Woolworths did not agree to buy any product other than the shelled peas. While there was some discussion about beans, he said the peas were the focus and presented enough challenges so that Woolworths never really examined the beans closely.
389 In his cross-examination, Saad denied saying that Woolworths would definitely have bought the other items in the Tripodi range in addition to peas. While it was possible, the company was focused on peas at the time.
390 Chase gave little evidence relevant to this issue. It was not in the defendant’s interest to pursue the matter with him in circumstances where a major submission was that there existed no agreement between Tripodi and Woolworths for the supply and sale of beans. Tripodi did not put to Saad that Woolworths agreed to pay $13.20 per kilogram for the beans. In cross-examination by Tripodi, Chase agreed that Woolworths was keen on the range of products offered by Tripodi and he thought Woolworths was prepared to buy other products in addition to the peas if they became available. Like Saad, he agreed that Klatt was the decision maker on this issue of what other Tripodi products, if any, Woolworths would purchase. Chase agreed further that Woolworths intention was to continue buying the peas and the rest of the Tripodi range if the right quality was available. From the whole of the evidence, I infer that any future purchase of product in the Tripodi range was conditional upon the product meeting Woolworths’ specifications and quality control criteria. However, as with the other Woolworths witnesses, Tripodi did not put to Chase that Woolworths had agreed, or was committed to buying borlotti beans from Tripodi at a price of $13.20 per kilogram.
391 The next reference in the plaintiff’s 2017 submissions referred to the document in the court book by which Klatt committed Woolworths to buying from Tripodi 5000 kg of freshly shelled peas per week at a cost of $3.30 per punnet. To the extent that this email said nothing about the price payable for beans, it is irrelevant.
392 The other evidence in the plaintiff’s footnote referring to Klatt and Saad did not support the statement in paragraph 9 of the submissions as to price. To that extent, the reference was misleading and unhelpful.
393 In the circumstances, to the extent that Michael’s evidence about an agreed price of $13.20 per kilogram is accurately summarised in paragraph 361, I do not accept his evidence about the conversation. His evidence on the point is self-serving, uncorroborated and, in particular, not supported by the other person to the conversation.
Consideration
394 The assessment of loss in this case is a speculative exercise. In the present circumstances:
· there is no proper basis for the cost of the preparation and cultivation of the borlotti beans established by the plaintiff;
· there was no agreed price or volumes for the sale of the beans to Woolworths. I accept Woolworths’ evidence on this point. That organisation has no reason to lie. Moreover, Woolworths is a large company with well-developed processes which would usually be followed. I can readily accept that arrangements between Woolworths and its suppliers would have to be documented in writing and that Woolworths would require compliance with its requirements before it contracted with suppliers. No such document was in existence.
· the details of the harvest are more asserted than proved. Reliance in submissions was placed on the handwritten notes and details appearing in a document within the court book[76] but no one actually gave evidence explaining such matters.
· the yield is problematic. If I assume the figures relied upon by Wilkinson are accurate, then plantings 9-12 inclusive produced about 6,200kg per hectare. Why there was such an increase from the earlier plantings and whether such an increase was sustainable for the future was not the subject of any detailed evidence. Ivey had reservations about the figures he was given. He said, I consider with some justification, that he was surprised Tripodi had not produced better information about the figures upon which it was relying. At the same time, Ivey’s rationale for operating on an average yield of 3,500-3,600, as opposed to 6,200kg or even 4,908kg per hectare, was not compelling. His path of reasoning to that figure was not clear. Rather, it appeared somewhat random and simply plucked from the air.
[76]CB1614.
395 Of the two figures the subject of expert evidence, the figure of 4,908kg per hectare used by Wilkinson might be conservative and underestimate the likely future yield, but the plaintiff who has the onus of proving its case did not adduce sufficient evidence to persuade me that the higher yield of 6,200kg per hectare was reasonable and repeatable.
396 Another issue which affects Wilkinson’s calculation of future loss is the 25% discount rate employed. Normally, I would have expected the expert to explain the valuation methodology adopted and the reasons for using it. Wilkinson did not do so. Hence, I do not know:
· why he employed the discounted cash flow model he did as opposed to another model;
· what the other valuation methodologies were;
· how the discounted cash flow method works;
· how and why the figure of 25% was arrived at.
The discount figure, as appears from Wilkinson’s report, can have a significant impact upon the damages assessed. Thus, it is a matter of regret that Tripodi’s expert did not undertake his task in a more thorough manner.
397 In light of my findings above, in my opinion, the plaintiff has not discharged its onus to prove the loss it has suffered. As such, and subject to a limited qualification, I am unable to calculate and determine what damages should be awarded to the plaintiff.
398 This is not an instance where the plaintiff has been prevented by the subject matter, or nature of its claim, from being able to provide evidence to prove its loss. If that were the case, the court could not refuse to calculate damages. Rather, this is an instance where the plaintiff has simply failed to provide the court with sufficient evidence to prove its loss, leaving the court to merely speculate or guess as to the amount of damages that should be awarded.[77]
[77]Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [38].
399 This case bears similarities to the Victorian Court of Appeal’s decision in Longden v Kenalda Nominees Pty Ltd.[78]
[78][2003] VSCA 128.
400 In that case, the plaintiff had entered into a contract with the defendant for the lease of premises for the purposes of setting up and running a retail furniture business. The defendant broke the contract, and the premises were never made available to the plaintiff. The Court of Appeal had to determine whether the plaintiff had established that it suffered loss, in circumstances where its loss required a determination of the value of conducting a business which never commenced.
401 At the trial, the plaintiff had sought to prove its loss by leading evidence of the profitability of another store, located in Nunawading which was part of the Carol’s Country Collections chain of stores (“the Nunawading store”). The trial judge had rejected that evidence for various reasons. Because of this, there was nothing before the court to substantiate or determine the amount of the loss caused by the defendant’s breach.
402 The court agreed with the trial judge’s assessment that there was insufficient evidence before the court to determine the value of the lost opportunity. Thus, although there was a breach, damages could not be awarded. Although on the balance of probabilities the opportunity had some value, Chernov JA explained:[79]
“…it is for the plaintiff to prove both the fact of loss arising from the defendant’s breach and the amount of the loss. Moreover, the plaintiff is required to establish both matters with as much certainty and particularity as is reasonable in the circumstances. Consequently, where a plaintiff could have produced evidence of loss but has simply failed to do so, it ordinarily means that it has failed to prove its case on damages (so that, where the claim is based on breach of contract, the plaintiff would only recover nominal damages). There are, of course, situations where a plaintiff cannot adduce precise evidence of the amount of loss, in which case the court will do its best in that regard and will estimate the damages and, where appropriate, will engage in a certain amount of guesswork” (references omitted)
[79]Ibid at [33].
403 Buchanan JA also noted that:[80]
“It was also necessary for the appellant to establish a means of estimating the amount of the profit. The appellant was required to prove the loss of profit with as much precision as the subject matter reasonably allowed. It was necessary for her to lay a foundation for an estimate of the lost profit which was not mere guesswork, for this was not a case where precise evidence of what had been lost could not be adduced.”
[80]Ibid at [11].
404 Even if I had been able to arrive at a prima facie figure for damages for loss of opportunity, that would not be the end of the matter. Under the approach adopted in Sellars’ case, I need to take account of the possibilities and probabilities in arriving at a final figure for damages. There was no certainty regarding the outcome contended for by Tripodi. Indeed, there were a number of significant contingencies which I would have expected to affect the outcome.
405 French J, as he then was when acting as trial judge at first instance in Sellars’ case, examined the contingencies in that case to assess their possible impact on the damages. His Honour concluded that the probability of any agreement being reached with Pagini was high and there was an even chance that the underwriting necessary for the agreement to proceed would have been secured. The other contingencies there concerned the conditions precedent in the draft agreement. His Honour discounted the damages award to 40% of the amount he arrived at in order to reflect the risk that no agreement would have proceeded. He further discounted parts of the damages claimed to reflect additional risks faced. As a result, there were extra reductions so that part of the damages award was reduced by 70% and part by 80%.
406 The general contingencies to be taken into account in the present case are varied.
407 The first contingency is that farming is an inherently unpredictable activity. Notwithstanding the farmer takes great care and attention with his crop, there is no guarantee of success. Events such as heat, fire, frost, rain, pests and disease can destroy crops or adversely affect them. As Tripodi itself said, its product was unique and reliability is always an issue with produce. An added complication in the present case is that, as shown by the experience with the borlotti beans, where the crop is compromised to the extent that the minimum supply period cannot be satisfied, Woolworths will not buy any of the produce, even where there are later plantings of good quality.
408 Secondly, part of the unpredictability of farming is the scope for human error. This could involve planting seed in a defective manner, watering the crop insufficiently or excessively, using the wrong fertiliser or chemicals or failing to use some necessary chemicals or using the correct chemicals in the wrong way. Evidence adduced in this case showed how such things occur and the significant consequences which can result. Tripodi divided its pea crop between Queensland and Bairnsdale. A worker at Bairnsdale applied double the recommended amount of chemical to the crop and destroyed the whole pea crop. This was a reason for the lack of continuity in the supply of peas to Woolworths.
409 The third contingency is whether Tripodi would have reached an agreement with Woolworths about the terms and conditions upon which it would supply borlotti beans. Given Woolworths’ enthusiasm and interest in legumes as a product range which it wanted to have available for its customers, I consider it likely that Tripodi and Woolworths would have reached agreement on a supply contract. This conclusion flows reasonably from the evidence of Klatt, Saad and Chase and reflects also the keenness of Tripodi to supply that range. But an agreement was not guaranteed.[81]
[81]Hence the 40% discount for this contingency in Sellars’ case.
410 Fourthly, the contingencies discussed earlier exemplify the problems which can occur to prevent a party from being as successful as it might have hoped in entering into a commercial agreement with another party. In the context, it is significant that notwithstanding the thought and planning which underpinned Tripodi’s decision to grow legumes and sell them to a company like Woolworths, in mid to late 2014, about 18 months after the beans were planted, Tripodi still had issues with the packaging of its peas – and these issues affected the colour, appearance and shelf life of the peas. That such a period of time passed without a solution to the problems suggests that the packaging of fresh shelled legumes in a way that preserves them in good condition for a commercially acceptable shelf life is a challenge. The consequences can be substantial if the buyer, Woolworths, is forced to throw out produce due to the level of deterioration.
411 Finally, apart from the technical issues about the packaging issues and their constituent elements, there remained mechanical or processing issues about the reliability of the packaging plant in dealing with the beans. During 2012 the plant was changed over from processing beans to peas. In order to reverse this, some items of machinery must be removed and replaced with different or additional items. In other words, the plant has to be reconfigured. Given the various longstanding problems which Tripodi had with the supply and packaging of peas, I would have expected Tripodi to experience similar problems with the beans.
412 In all the circumstances, including the various contingencies and issues discussed above, I would discount any damages figure by 85%. My expectation is that Tripodi was unlikely to have been able to reliably grow, package and deliver the borlotti bean product in the quantities and to the specification required by Woolworths.
413 Because the problem with Tripodi’s basic figures concerning the likely cost of production and the likely income received is fundamental to both the claim for the 2012-13 year and the further claim for the later years ending in 2018, I have not dealt in any detail with the further claim. Suffice to say, if the plaintiff’s figures alleged for the 2012/13 season are not proved, then the position is the same for the period of the further claim. Indeed, I remain sceptical of the plaintiff’s figures.
414 In any case, even if Tripodi had suffered a loss of the kind it claimed for the 2012/13 year, I am by no means satisfied that this would necessarily lead to an award of damages for the later years ending in 2018. There is an issue not only with the quantum of any loss but the causative link between any loss in the 2012/13 season and the later losses claimed up to and including the 2017/18 season. Not only did Tripodi fail to establish to my satisfaction that there was a causal link between any breach of contract or duty by SHC and the losses claimed for 2013/14 and thereafter, the evidence disclosed another more likely basis for the plaintiff’s economic difficulties after 2012/13. The evidence showed that the income from Tripodi’s primary business, its stone fruit, declined from $2,008,579 in 2011/12 to $781,624 in 2012/13 and $566,335 in 2013/14. Such a decline in income is likely to have had a major impact on the profitability of the plaintiff company and its ability to fund other farming operations.
415 The qualification I referred to in paragraph 397 above concerns a concession by the defendant’s experts that, if contrary to the defendant’s primary submissions, it has some liability to Tripodi, then such liability is limited to the sum of $44,495 for the 2012/13 season. SHC acknowledges that Tripodi replanted two of the original bean crop plantings.[82] This was because the initial planting failed and so it became possible to replant soon after that failure. SHC in essence accepted that, in the absence of the incident of the failed crops, only one original planting would have grown and there would have been no time to replant. SHC says that planting two areas at the Beverford property a second time resulted in higher expenses than if the original plantings had been successful in the absence of the alleged negligence.
[82]CB623.
416 The defendant’s expert report estimates the costs of replanting at $4,000 per hectare.[83] This compares to a figure of $8,000 per hectare for the total growing costs associated with the initial plantings.[84] The figure of $8,000 does not include the costs of leasing the Beverford property or the irrigation water used.
[83]CB623.
[84]CB599.
417 While I am satisfied that SHC breached its retainer and its duty to Tripodi, Tripodi has not proved any significant loss and would be limited to nominal damages on its contract claim. Here, it was not disputed that Tripodi did replant two of the areas at the Beverford property. Tripodi’s evidence about growing costs was defective and it led no direct evidence of the replanting costs.
418 However, the defendant did. The rules of court provide for the possibility of one party tendering and relying upon an expert report prepared by the other party. SHC estimated the replanting cost at $44,495 but that figure represented its best guess subject to reservations about growing costs, crop husbandry practices and the areas replanted.[85]
[85]CB599; CB595.
419 Doing the best I can on limited and qualified material, I award Tripodi damages of $40,000.
420 While it is not strictly necessary to deal with the point, in view of Tripodi’s failure to properly prove its loss, I note that in general terms I preferred the evidence of the defendant’s experts to that of the plaintiff. While I do not doubt the honesty of Mr Wilkinson, I consider that he did no more than perform an arithmetic exercise based on instructions and assumptions not all of which were made good by the evidence.
Conclusion
421 In summary, my conclusions in this case are as follows:
(a) Tripodi retained SHC in 2012 to advise it about pre-emergent herbicides for the proposed borlotti bean crop. The retainer included the provision of advice about how to best care for the crop and the provision of monitoring services to maintain and safeguard the health of the crop.
(b) SHC had contractual obligations to Tripodi and owed it a duty of care to provide advice and monitoring services which a reasonably competent agronomist would provide in the circumstances.
(c) SHC breached the retainer and its duty to Tripodi by:
(i) failing to provide appropriate advice about a pre-emergent herbicide to use on the beans;
(ii) failing to monitor properly the health of the beans; and
(iii) failing to recommend appropriate measures to safeguard and protect the health of the beans.
(d) There was no contract between Tripodi and Woolworths by which Woolworths agreed to purchase any quantity of borlotti beans from Tripodi, whether at any specific price or at all.
(e) Tripodi did not prove its loss arising from the breach of contract and breach of duty. The evidence did not make good all the assumptions made by Tripodi’s experts.
(f) Tripodi’s claim was for loss of opportunity. Even if the plaintiff’s evidence had been satisfactory, after making due allowance for the possibilities and probabilities which might flow in accordance with Sellars’ case, any damages awarded under this head would have been discounted by 85%. If it had been argued, I would have further reduced the plaintiff’s damages for Tripodi’s contributory negligence in planting the bean crop after being warned, albeit shortly before planting, that it was sensible to conduct a test planting using Mentor.
(g) SHC acknowledged that, contrary to its principal submissions, if it were liable at all to Tripodi, it was for the moneys wasted by Tripodi in duplicating work by replanting two of the failed borlotti bean plantings. Given the reservations attaching to the defendant’s calculation of $44,495 I award Tripodi $40,000 damages.
422 I will hear from the parties on the question of costs and the form of final orders.
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