McMullin, Brian v ICI Australia Operations Pty Ltd

[1998] FCA 1172

FEDERAL COURT OF AUSTRALIA

DAMAGES – Losses sustained by owners of cattle contaminated with chlorfluazuron – Time at which assessment of damages is made

Federal Court of Australia Act 1976 (Cth) s 18AB (1A)

Johnson v Perez (1988) 166 CLR 351
McMullin v ICI (Wilcox J, 27 November 1997, unreported)

BRIAN McMULLIN and LEONE McMULLIN v ICI AUSTRALIA OPERATIONS PTY LTD, ICI AUSTRALIA LIMITED and CROP CARE AUSTRALIA PTY LIMITED
NG 305 of 1995

JUDGE:         WALKER JR

DATE:           17 September 1998
PLACE:         GUNNEDAH, NSW

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 305  of   1998

BETWEEN:

BRIAN MCMULLIN
FIRST APPLICANT

LEONE MCMULLIN
SECOND APPLICANT

AND:

ICI AUSTRALIA OPERATIONS PTY LTD
FIRST RESPONDENT

ICI AUSTRALIA LIMITED
SECOND RESPONDENT

CROP CARE AUSTRALIA PTY LIMITED
THIRD RESPONDENT

JUDGE(S):

WALKER JR

DATE OF ORDER:

17 SEPTEMBER 1998

WHERE MADE:

GUNNEDAH, NSW

THE COURT NOTES THAT:

1. In accordance with the procedure adopted by Justice Wilcox, the task of making the final calculations will be left to the parties.

2. An agreed form of order concerning the final calculations to be submitted by the parties.

3. If acceptable, such order as abovementioned will be made in Chambers.

Naomi Englebrecht

Associate to Judicial Registrar Walker

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 305 of 1998

BETWEEN:

BRIAN MCMULLIN
FIRST APPLICANT

LEONE MCMULLIN
SECOND APPLICANT

AND:

ICI AUSTRALIA OPERATIONS PTY LTD
FIRST RESPONDENT

ICI AUSTRALIA LIMITED
SECOND RESPONDENT

CROP CARE AUSTRALIA PTY LIMITED
THIRD RESPONDENT

JUDGE(S):	WALKER JR
DATE:	17 SEPTEMBER 1998
PLACE:	GUNNEDAH, NSW

REASONS FOR JUDGMENT

The claim of Mr Clive Francis Pursehouse
These reasons concern the quantum of damages suffered by Mr Clive Francis Pursehouse (hereinafter referred to as “the claimant”) as a result of CFZ contamination of his cattle. The matter was referred for assessment by Wilcox J pursuant to s 18AB(1A) of the Federal Court of Australia Act 1976 (Cth).

Clive Francis Pursehouse operates half of “Breeza Station,” a 5,000 acre property located thirty kilometres north west of Quirindi in the Gunnedah Shire of New south Wales.  He works a herd of about 250 breeding cows, selling their progeny and at times some of the breeders that he replaces with new heifers.  On 31 July 1994, his stock numbers on “Breeza Station” totalled 326 head, made up of 255 females, including 170 not yet calved; fifty-four newborn calves; four bulls; and thirteen steers.

The claimant gave evidence that during 1994 “Breeza Station” had suffered the worst drought conditions he had experienced.  As a consequence, he had drought-fed his stock, some with cotton trash, for the first time.  He remembered completing a questionnaire from the Rural Lands Protection Board concerning the possible risk of his cattle being affected by chlorfluazuron residues but could not recall the exact date he received it.  According to his witness statement, he became aware of Helix contamination in cattle around November 1994 and, as he had fed cotton trash, there was a significant risk that his cattle would have CFZ residues.  On 9 February 1994, the claimant received a letter from NSW Agriculture advising him that there was a risk to his cattle and that he was to be placed on a tail tag-monitoring list.  It would seem therefore that he would have received the questionnaire in December 1994.

The claimant alleges that it was his intention to sell twenty-nine cows and calves in November 1994 and a further 122 cows and store calves that had been on agistment at Wingham in the Christmas week of December 1994.  Although these animals were part of the claimant’s breeding herd he says it was a necessary sale because of the extreme drought conditions being experienced at the time.  It is his claim that because these cattle were suspected of contamination he was caused to delay their sale and thereby suffered a loss.  He also makes further claims for the loss of two cattle dogs and two bulls lost while on agistment at Wingham, associated expenses and the value of Sorghum he fed to the cattle, which he would have otherwise sold on the market at a profit.

After the luncheon adjournment in this matter counsel for the claimant, Mr Rowe, indicated that there had been an objection by the respondent as to the methodology adopted for the calculation of economic loss as set out in the scott schedule.  He explained that the claimant had taken a cut off point when it was said that the loss crystallised, that is, 30 June 1996 and that thereafter interest would take care of the ongoing loss.  Counsel for the respondent on the other hand argued that the proper method of assessment should be that which has been adopted in personal injury cases, that is, assessment being made at the time of the hearing.  This position was not resolved between the parties and the hearing proceeded without further legal argument on the issue.

In the third edition of Halsbury’s Laws of England under the heading “Date by reference to which damages are measured,” the following appears:

“Damages are to be measured by reference to the position of the plaintiff at the date when damages or loss was suffered and this is normally the date of the breach of contract or commission of the tort.”

In the fourth edition of Halsbury, the statement from the third edition does not appear. However, in Johnson v. Perez (1988) 166 C.L.R 351, the Full Bench of the High Court gave extensive consideration as to the date at which an assessment of common law damages was to be made. The general rule it decided was that damages are assessed at the date of breach, notwithstanding that the breach was a common law duty of care, a statutory duty or any other duty, with an award of interest compensating the plaintiff for not having received the damages at the date of breach. Mason C.J. expressed the following view at page 355:

“There is a general rule that damages for torts or breach of contract are assessed as at the date of breach or when the cause of action arises. But this rule is not universal; it must give way in particular cases to solutions best adapted to giving an injured plaintiff that amount of damages which most fairly compensate him for the wrong he has suffered… One established exception to the general rule relates to the assessment of damages for personal injuries.”

Further on at page 360 the Chief Justice stated:

“As the cases to which I have referred reveal, the principles governing the assessment of damages do not permit the application of rigid rules based on categories of actions. Instead, the injured party’s intentions and the surrounding circumstances must be considered in light of the underlying principles in order to do justice between the parties. Where mitigation is possible, an early date for assessment may be appropriate. Where mitigation concerns are not relevant and the circumstances indicate that the injured party would have maintained possession of the goods had the accident not occurred, the date of judgment is the most appropriate date for assessment.
Where the circumstances indicate that the property or interest would in some way have been converted into monetary terms between the time of injury and the date of judgment, the date as at which the injury is assessed should reflect the time of the intended conversion.”

The methodology used by the claimant in this matter has to be considered with the intentions of the claimant and the circumstances at the particular time of the alleged loss.  It is true that the time selected for the crystallisation reflects the lowest point in the market for cattle and may appear somewhat arbitrary but it is a time that does reflect an appropriate period for assessment of the loss.  To take into account all of the factors as at the date of hearing would present a somewhat more difficult task on the evidence led.  For these reasons the method adopted in the scott schedule will be used for the assessment of damages for this particular matter.  The adoption of this methodology does not necessarily mean it will be applicable in other cases.

Twenty-nine Hereford cows and calves

The claimant alleges that it was his intention sometime prior to November 1994 to sell twenty-nine Hereford (drought affected) cows and calves.  His claim is based on the premise that had it not been for the Helix contamination these animals would have been sold in November and he therefore sustained a loss because of their delayed sale.  In cross-examination his evidence was as follows:

Q.       Can I just go back to the 29, when was it intended that they would be sold?

A.Well I was going to try and sell them as soon as you know, within…I did not have an exact time frame, but you know, as soon as I could.

Q.Well if it hadn’t been for Helix when could you have sold the 29 if you could have sold them?

A.Well I was hoping to get the – take the pressure off the place in letting that 29 you know the battle on for a while and then sell them, but the intention was they were the first cattle to be sold.

Q.       Yes, and I am asking you if it hadn’t been for Helix when could you have sold them?
A.       Anytime.
Q.       Anytime?
A.       Yes
Q.       Why didn’t you sell them in October then?
A.       I don’t know. It is a decision I didn’t – I made.

When brought back to this point later in the cross-examination the evidence was as follows:

Q.Prior to that letter there was nothing – there was no reason why you couldn’t sell cattle, was there.

A.       No.

Q.So why didn’t you sell the 29 cows and calves which in your statement you say were going to sell in November 1994?

A.I think the main thing, reason, I know those ones were left at home and I was that busy organising myself with those cattle on agistment and that was the reason at that stage.

Q.       And the cattle at that time were on agistment because of the drought?
A.       Yes.

Q.And therefore you were too busy to sell in November 1994, the 29 that were still at home?

A.       Well, yes they weren’t sold, no.
Q.       That had nothing to do with Helix, did it?
A.       At that stage it didn’t, no.
Q.       Helix did not stop you selling those cattle in November 1994?
A.       True.

On the basis of this evidence I must disallow the claim for the delayed sale of the twenty-nine cows and calves.  I will deal with the issue as to the further costs and expenses caused by the effects of the Helix contamination on these animals further on.

122 cows and store calves
These animals were sent on agistment to Wingham in October 1994 and the claimant alleges that he intended to sell them during late December 1994.  Despite the claimant’s apparent confusion with times and cattle numbers, I was satisfied that he had an intention to dispose of these animals at the coastal market during the Christmas week December 1994.  The respondent argued that the claimant intended to have these cattle remain on agistment for a period of three months in order to qualify for the 50 per cent travel rebate.  This inferred that he did not have an intention of disposing of the 122 animals in December.  Although this may in hindsight be plausible, it fails to take into account the uncertainty of the time and the fact he also transported other cattle to Wingham that he did not intend to sell.

There can be no doubt that the claimant was, as at December 1994 subject to the detrimental influence of the Helix contamination.  His evidence was that he had become aware of contamination by word of mouth in November 1994 and it appears that he would have completed out the questionnaire from the Rural Lands Protection Board sometime in December of 1994.  It is therefore probable that this sale was delayed by the affect of Helix contamination and is compensable.

Although his cattle had not been officially tested for the contaminant until June 1995, the claimant gave evidence under cross-examination that prior to receipt of the questionnaire there was no reason why he could not sell his cattle.  His evidence relating to the time after he had completed the document was:

“Well I live next door to a cotton farmer, and I had fed trash and – so you know all three I was – like I had to tick all three boxes, so I knew I was in –had a fair – was in a fair risk that I was going to be – I say that there was a fair risk that I was going to be contaminated.”

The respondent says that the claimant had no intention to sell in December 1994 because he did not carry out testing until June 1995.  In answer to this the claimant said that there was insufficient fat around the tail of the animals for the vet to carry out tests although this did not mean the beast was in poor condition.  I have no reason to disbelieve the claimant with regard to this evidence and no evidence was led to contradict it.

The argument that the cattle would not have been in saleable condition does not take into account the animals having had the benefit of better feed on the coastal agistment and would have been in a much better condition than they were on the station.  I am satisfied that it was probable that the claimant intended to sell the 122 cattle in December 1994 and this sale was delayed by the affect of helix contamination.  Even though the claimant may have later changed his mind about what he was to do with his herd, the fact remains that the effect of Helix contamination caused him to suffer a loss.  Such effect did not end abruptly after the tail tag was removed in August 1995.  It seems reasonable that, as suggested by the claimant, there was a stigma attached to cattle herds that had been subjected to the CFZ contamination.  For these reasons I will allow the loss in relation to the delayed sale of the 122 cows and calves.

Sheet 2A, line 20 of the scott schedule should now reflect total proceeds of $77,433.  In accordance with the methodology accepted, that is, the crystallisation as at 30 June 1996, lines 20 to 21 are to be deleted from sheet 2B.  The overall loss will now be calculated as set out below on the usual basis:

Total WITH Helix proceeds     $84, 999
Total WITHOUT Helix
Proceeds  $77, 433
Direct profit  $7, 566
Less Interest on $77,433          $ to be agreed
Overall loss  $ to be agreed

Two bulls and two dogs

The respondent argued that there should be no allowance made for the loss of the bulls and dogs, as they were on agistment because of the drought and not because of Helix contamination; that their loss was not reasonably foreseeable.  This contention is supported by there being no established intention of the claimant to actually sell the bulls prior to the CFZ contamination.  However, the claimant did give evidence under cross-examination that bulls were regularly replaced for various reasons.  It is not unreasonable that the claimant would need to service the Helix-affected cows he had on agistment.  Removing these animals to another environment could have possibly put the claimant at a foreseeable risk of loss.  In assessing this loss I have selected an amount of $2, 000 with interest to be agreed in the usual manner.

In the circumstances, the poisoned dogs are an unforeseeable loss.  This item must be disallowed.

Sorghum used as feed

The claimant gave evidence that sorghum was fed to all of his cattle by way of self-feeders in the paddocks in the winter of 1995.  Included in this feeding regime were the seventy-seven cattle he intended to retain which were not subject to Helix contamination.  I have amended the calculation of loss to reflect the amount of sorghum used in relation to the Helix-affected cattle only.  That is, the amount has been discounted by the percentage of cattle not affected.  Included in the group of affected cattle are the twenty-nine cows and calves previously not allowed in the delayed loss as at November 1994 on the basis that they were later subject to the discrimination of CFZ contamination and were then retained.  The animals affected are calculated as 66.6 per cent of the herd.

In calculating the loss in relation to the feed I have settled on a figure of 67 tonnes at $200 per tonne which equals $13,400.

Other costs and incidentals

As a means of assessing these matters I have taken the same approach and have allowed the items as set out in Sheet 4 of the scott schedule on the basis of discounting them by 33.3 per cent.

The Claim of Mr Glen Ivan Grosser

Mr Glen Ivan Grosser (hereinafter referred to as “Mr Grosser”) ran Wilga Park Pastoral Company at Boggabri in New South Wales in partnership with his wife up until he disposed of the property on 15 November 1997.  The property consists of 1628 acres and is used for farming and grazing.  Mr Grosser gave evidence that historically he ran about 140 Hereford line breeders and their progeny, plus five bulls.  He also sowed 580 to 650 acres of barley and some wheat each year.

As a result of feeding cotton trash to his animals Mr Grosser was notified by the Rural Lands Protection Board on 14 December 1994 that his stock had been tail tag listed.  In cross-examination he said he became aware of the problem in late 1994 when the problem first arose and that it was quite well documented in the newspapers and on news reports.  He makes a claim for the loss suffered as a result of having to retain these animals he would otherwise have sold and for the price differential because of the contamination.  He makes further claims for the need to buy hay and for the cost of his 1995-barley crop, grazed off.

The respondent disputes the contamination claim on four grounds.  Firstly that Mr Grosser only fed his cattle a small amount of cotton trash.  Secondly, that he did not test his cattle for contamination until May 1995, even though he was notified of the tail tag in December 1994.  Thirdly, that he did not sell his cattle when he finally came off the tail tag in September 1995, thereby failing to mitigate his loss.  Finally, it was argued that Mr Grosser has not assessed the weight of his cattle and their weight gains in an objective manner.

The fact that Mr Grosser only fed his cattle a small amount of cotton trash simply does not make his claim any less convincing than one where a farmer had fed large amounts of trash.  Mr Grosser found himself in a very difficult and unique situation.  To suggest he was only affected by small amounts of contamination in December 1994 simply does not take account of the circumstances at the time.  As Wilcox J said in the damages decision of 27 November 1997:

“When the CFZ problem was first discovered in November 1994, very little information was available concerning its effects.  Cattle owners did not know how long their cattle were likely to be quarantined or whether overseas countries would agree to accept beef containing a low CFZ level.”

For all Mr Grosser knew his cattle might have been totally destroyed by the affects of the contamination even though it may have been minimal.  There was no information at the time to indicate what amounts would render the cattle tainted or what action was required to address the problem.  Given Mr Grosser’s cattle were affected, it was inconsequential that the amounts of contaminant were not heavy.

The argument that he failed to test his cattle for five months after he was placed on a tail tag must also be considered in the light of what Wilcox J further stated in that decision:

“…In the meantime, cattle owners in northern New South Wales and southern Queensland had to decide what course to take.  And they had to do so at the height of the drought in the areas that some have described as the worst in living memory.  In evaluating decisions under challenge in these cases, it is necessary to remember these facts and put oneself in the position of the cattle owner at the time.  It is not to the point that, with the benefit of hindsight, some decisions might be thought to have been unnecessary, or even unwise.”

Under cross-examination, Mr Grosser was unsure why he had not tested earlier but said farmers were told when to test and that veterinarians were very busy during this time.  His evidence was:

“As I said I can’t just recall but it would be – it would have been in conjunction with the vet and when I was asked to do it, I dare say…it was a very confusing time for all cattle producers at the time.”

As to the claim that he did not sell his cattle as soon as he came off the tail tag in September 1995, Mr Grosser gave evidence that:

“Because as I said earlier on there was a denigration against anybody that had a, was on a tail tag targeted list, they were either on it or had been freed from it and as far as that goes the meat, there were certain meat buyers that wanted an absolutely nil tolerance in any way, shape, or form, had even been on, the cattle fed with trash of any sort or had been declared.”

Mr Grosser was faced with a combination of difficulties during this time and his decisions were necessarily influenced by them. He gave evidence that the market situation, the condition of his cattle and the availability of feed would have influenced his decisions from time to time.  In the particular circumstances of that period it appears the decision to sell or not to sell was not a simple one.

With regard to Mr Grosser’s assessment of the cattle weight and the amount of weight gained during various periods, there is no evidence to suggest that he was not generally accurate.  His evidence was given in a genuine manner.  He appeared to be suffering from a health problem and was willing at one stage to continue his evidence despite his obvious discomfort and the offer of a break.  He impressed me as a believable person who was not prone to exaggeration. 

Mr Grosser gave evidence that he had been assessing cattle weight for twenty years.  He stressed that it was not an exact art and was even less certain regarding the weight gain of animals during periods of improved feed, emphasising the importance played in the assessment of other variables.  When asked what sort of weight steers would put on when they had new green feed as they did in January, Mr Grosser replied:

“Well, you should get a couple of kilos a week perhaps – well, it all depends on the quality of the feed and the quantity of the feed as to what that will be but if you’ve got really good feed you’ll find a couple of kilos a week but it may be less than that…Might not put anything on at all.  And if there stressed animals they won’t improve in weight either, like it will take a longer period to regain their weight.”

The respondent argued in closing that Mr Grosser arrived at the figure of a two-kilo increase per week, although with some qualification.  That of course is correct but there certainly were many factors that make an objective measurement quite unreliable, as Mr Grosser pointed out.  It is unfortunate that the records, which Mr Grosser referred to, have not been produced even though there has been ample time for the respondent to arrange for their production.  In the circumstances I have accepted Mr Grosser’s evaluations.  For these reasons I will allow item number 1 as claimed.

500 bales of hay
Mr Grosser claims it was necessary to retain cattle beyond their sale date, and, as a result, he needed to purchase extra 500 bales of hay feed.  His evidence was that he did work for his uncle, Mr A.E. Grosser and was given a receipt for 1000 bales.  He testified that this type of barter situation was a common practice on the land.  The receipt was marked as exhibit JR. A6.

I have no reason to disallow this claim on the basis that Mr Grosser did work in lieu for its payment and I allow item two as claimed. 

1995 barley crop
This item is the most significant claim amounting to $18,313 including interest.  Mr Grosser gave evidence that he usually earned between $25,000 and $30,000 income each year from the sale of barley.  When he was asked why the figures from his taxation returns for the years 1992 to 1995 revealed an average amount of $5,000 income, he replied that he had not been able to understand why this was so but it might have something to do with tax sharing from one year to the next.  The more relevant period for the year ending June 1996 however shows a profit of $47,446 for the barley crop.

Mr Grosser’s evidence was that he sowed 520 acres of barley in April to May 1995 and grazed off the 100 acres in August or September 1995.  This means that the profit received for the harvest of the barley should be reflected in his 1996 taxation returns.  That profit was reflected as $47,446.  These figures suggest his evidence is accurate as to the 1995 barley crop.  His evidence that there have been court proceedings may explain the reduced income in his taxation returns for previous years.  The cost of 100 acres at $147.50 per tonne should be allowed for item 3, with interest from October 1995.

Orders

In accordance with the procedure adopted by Justice Wilcox the task of making final calculations will be left to the parties.  Short minutes of order should then be submitted, and I will make formal orders accordingly.

I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Walker

Associate:

Dated:            17 August 1998

Counsel for the Applicant:	Mr J.E. Rowe
Solicitor for the Applicant:	Mr Peter Thomas of Peter Long & Co, Gunnedah
Counsel for the Respondent:	Mr D. Habersberger QC, Dr. C. Campbell
Solicitor for the Respondent:	Mr David Roche of Phillips Fox, Melbourne
Date of Hearing:	25 August 1998
Date of Judgment:	17 August 1998