Pearson and Pearson v Primac Association Ltd and Incitec Ltd
[1996] QCA 492
•6/12/1996
| IN THE COURT OF APPEAL | [1996] QCA 492 |
| SUPREME COURT OF QUEENSLAND |
Appeal No. 240 of 1995
Brisbane
| Before | Fitzgerald P. Davies J.A. White J. |
[Primac Association Ltd v. Pearson & ors.]
BETWEEN:
GRAHAM EDWARD PEARSON and
ERIN ELSIE PEARSON
(Plaintiffs) First Respondents
AND:
PRIMAC ASSOCIATION LIMITED
(First Defendant) Appellant
AND:
INCITEC LIMITED
(Second Defendant) Second Respondent
REASONS FOR JUDGMENT - THE COURT
Judgment delivered 6 December 1996
The appellant, Primac Association Limited, has appealed against part of a judgment given in the District
Court at Cairns on 6 October 1995. Judgment was given in favour of the plaintiffs in the action,
Graham Edward Pearson and Erin Elsie Pearson, against the appellant and Incitec Limited, which were
both defendants in the action, in the amount of $103,911.52. As between the appellant and Incitec,
60% of the liability was attributed to Incitec and 40% to the appellant. Other orders were made, including orders for costs, which do not need to be recorded. By its appeal, the appellant seeks to have
the Pearsons’ judgment against it set aside or, alternatively, that it have judgment against Incitec for the
amount of the judgment against the appellant in favour of the Pearsons. Orders for costs are also sought
in respect of both the trial and this appeal.
The Pearsons are potato farmers, who the trial judge found suffered damages of $72,096.12 “by reason
of the loss of yield” of crops of potatoes planted in 1991. The cause of the “loss of yield” was found
to be unsuitable fertilizer. A further $1,400.00 was awarded to the Pearsons in respect of “the costs
of chemicals purchased in an endeavour to solve the problems”. The balance of the judgment in their
favour related to interest. The trial judge found that the Pearsons’ damages were “caused by the
negligent advice” of the appellant and Incitec, and that it was unnecessary to consider alternative claims
by the Pearsons pursuant to the Trade Practices Act 1974 (Cth.) and the Sale of Goods Act 1896.
The appellant and Incitec operated in the small town of Tolga on the Atherton Tablelands. The
appellant, whose principal local representative in relation to most material aspects of the present matter
was Mr Royale, carried on business as a supplier of agricultural chemicals, including fertilizers, and other
merchandise to farmers. Incitec manufactured and supplied fertilizers in bulk to the appellant, which
onsold the product to farmers. The appellant and Incitec also provided advice to farmers, including
recommendations with respect to fertilizer use. Incitec’s relevant local representative was an agronomist
and nutritionist, Mr Micola.
In February 1991, by arrangement with the Pearsons, a representative of the appellant attended at their farm and collected soil samples for testing and a recommendation with respect to a suitable fertilizer for
use in connection with potatoes which they proposed to plant in March. The Pearsons paid the
appellant, which passed the samples on to Incitec for analysis and advice. Curiously, it was not alleged
that there was a contract between the appellant and Incitec, or that Incitec was paid for its work. Later,
what was described as “a soil test plant analysis recommendation file” was produced by Incitec and
delivered by it to the Pearsons. The material contained recommendations with respect to the fertilizer
to be used by the Pearsons when planting their potato seed. Incitec’s recommendations also obviously
became available to the appellant, which early in March sold the Pearsons 9.6 tonnes of fertilizer which
contained a mixture of products which was consistent with Incitec’s recommendations; soon after taking
delivery the Pearsons used the fertilizer when planting potato seed.
Seed for a further crop was planted on 24 April, using a fertilizer recommended by Mr Royale and
supplied by the appellant. There was some variation from the fertilizer used in March, primarily related
to cost, but what was supplied and used was again consistent with Incitec’s recommendations.
Primac supplied a further delivery of fertilizer in May which was used in connection with seed for a
further crop planted that month. Again, what was supplied was consistent with Incitec’s
recommendations.
On 16 July, Mr Royale recommended a fertilizer mix which the appellant supplied which was used in
relation to another planting, together with some fertilizer which had been left over from what had been
supplied in April. Again, what was supplied and used was consistent with Incitec’s recommendations. Seed for a further crop was planted in August, again using fertilizer which the appellant had supplied
which was consistent with Incitec’s recommendations.
There was no appeal from a finding by the trial judge that the fertilizer supplied was unsuitable and
resulted in poor yields from the potato crops and loss to the Pearsons. His Honour also found that it
was not reasonable “to recommend and/or sell the ... fertilizer ... mix” which was supplied to, and used
by, the Pearsons. Further, although paid for advice by the Pearsons, the appellant “simply blindly
adopted [Incitec’s] recommendation”.
The judgment later stated:
“There is an issue as to who made the recommendation and whose recommendation it was which the Pearson’s relied upon. It is submitted on behalf of the [appellant] that so far as the [Pearsons] are concerned the recommendation (i.e. what I have found to be negligent advice) came solely from Micola and it was upon Micola that the [Pearsons] relied. I cannot agree with this. It must be remembered that from the start it was from the [appellant] that Mr. Pearson first sought advice by reason of his request that they take soil samples for the purposes of making a recommendation. Whilst it is true that the initial recommendation in exhibit 3 came from Micola in a folder produced by [Incitec] I am of the opinion that the circumstances demonstrate that the [appellant] clearly adopted that recommendation. The method of communication of the recommendation, as shown by the evidence, was merely a convenient way for the [appellant] to attend to the delivery of the recommendation which had been sought from it by the [Pearsons]. To put it in conventional legal terms I am of the view that the [appellant] sought the advice of [Incitec] (via Micola) for the purposes of making its recommendation to the [Pearsons] and that the delivery of the recommendation to the [Pearsons] by [Incitec] constituted both a delivery of its own recommendation and a delivery of the [appellant’s] recommendation as it’s agent. When Mr. Pearson ordered the fertiliser for the first planting he was relying on the recommendation of both the [appellant and Incitec]. There is no point to be taken that [Incitec] can escape liability because it's duty was solely to the [appellant]. [Incitec] admits that it owed the [Pearsons] a duty of care in the giving of advice for the making of representations with respect to the use of fertilisers. It is obvious from exhibit 3 that [Incitec] through Micola must have realised that his advice and recommendations would ultimately reach the [Pearsons] and potentially acted upon by them. I am also of the view that the evidence of Royale's intimate involvement in recommending various fertiliser mixes for the later plantings goes beyond a mere acquiescence in Mr. Pearson's adoption of Micola's recommendation. It supports the view that the [appellant] adopted Micola's recommendation from the start. The reliance by the [appellant] on the recommendation of Micola may have consequences for the claims between the [appellant and Incitec], however I am satisfied that the recommendation to use [the recommended fertilizer] at planting was made in fact by both [the appellant and Incitec] to Mr. Pearson and Mr. Pearson relied on the recommendation by both [the appellant and Incitec]. In my view the [Pearsons] should succeed against both [the appellant and Incitec].
...
... The [appellant] was itself in the business of advising farmers as to the use of fertilisers and selling fertilisers to farmers. Under those circumstances it seems to me that the [appellant] had some obligation to give independent consideration to the fertiliser recommendations it was making to its customers. I have no doubt, as I have already indicated, that the [appellant] simply adopted the recommendations made by Micola. It is one thing to adopt someone’s recommendation but in my view that is not sufficient evidence to establish that the recommendation was sought in circumstances in which the [appellant] was in fact relying upon [Incitec’s] skill and judgment and made it reasonably known to [Incitec] that it was doing so. As I have said the evidence is sufficient for me to be satisfied that the [appellant] adopted [Incitec’s] recommendation and presented it to the [Pearsons] as it’s own. However there is no evidence concerning the dealings between the [appellant] and [Incitec] to demonstrate the Micola was asked to make a recommendation in such circumstances that he knew or should have known that the [appellant] was relying upon it. I find against the [appellant] on it’s claim for an indemnity against [Incitec]. ... I am therefore able to in effect make an apportionment of liability between the [appellant and Incitec]. In my view [Incitec] must clearly accept the greater share of responsibility as between the [appellant and Incitec]. It was it’s servant Micola who actively made the recommendation. The [appellant] simply blindly adopted it. However the [appellant] should not have done so. Before adopting Micola’s recommendation as it’s own it should have instituted a separate enquiry and given independent consideration to whether or not the recommendation was a responsible one or a negligent and reckless one as I have found. I apportion liability between the [appellant and Incitec] at 60% against [Incitec] and 40% against the [appellant].”
The argument in this Court was complicated by the appellant’s appeal in relation to the judgment against
it in favour of the Pearsons. Although a submission to the contrary was made by the appellant - based on the patently untenable proposition that it did not know the purpose for which the fertilizer was
required by the Pearsons or that they were relying on its skill and judgment - the Pearsons were plainly
entitled to judgment against the appellant for breach of contract even if it was not negligent: Sale of
Goods Act, sub-ss. 17(a); 54(1). There was no suggestion that the damages recoverable by the
Pearsons for breach of contract would be different from the amount awarded for negligence. However,
if the appellant was liable to the Pearsons in contract, not tort, it was accepted that Part 2 of the Law
Reform (Tortfeasors Contribution, Contributory Negligence, and Division of Chattels) Act 1952 would
not apply as between the appellant and Incitec; on this hypothesis, the appellant claimed an indemnity
or damages against Incitec on the basis that it negligently breached its duty of care to the appellant
and/or in reliance on ss. 52, 82 and 87 of the Trade Practices Act.[1]
The appellant’s attack on the finding that it breached its acknowledged duty of care to the Pearsons
[1] As noted earlier, the trial judge decided the matter solely on the basis that both the appellant and
centred on the trial judge’s finding that it should not have simply adopted Incitec’s recommendation but
should have exercised its own judgment and skill. Essentially, it was submitted that that appellant was
entitled to delegate the task for which it had been engaged by the Pearsons to Incitec, which was
qualified and competent to give expert advice, and that the appellant was entitled to rely on Incitec and
not required to form an independent opinion. Although there was evidence that both the appellant and
Incitec had anecdotal information from farmers who had soils with the same characteristics as the
Pearsons’ soil that a fertilizer mix such as that recommend by Incitec was satisfactory, the appellant did
not seek to use that information to justify its recommendation of the unsuitable fertilizer mix supplied to
the Pearsons; its case was founded on the premise that it relied solely on Incitec’s recommendation, as
the trial judge found. Incitec challenged that finding, but it was open on the evidence.
liability of either the appellant or Incitec to the Pearsons or any apportionment of their respective liabilities to the Pearsons on any basis other than the Law Reform etc. Act; nor, if the appellant was liable to the Pearsons in contract but not negligence, that the possible liability of the appellant and Incitec to the Pearsons on the basis of the Trade Practice Act should also be considered, or any apportionment of their respective liabilities to the Pearsons should be considered on any basis other than Incitec’s possible liability to the appellant in negligence or under the Trade Practices Act.
The finding of the trial judge which, in our opinion, cannot be sustained is that Incitec did not know and
should not reasonably have known that the appellant proposed to rely and act upon its
recommendations with respect to fertilizer use by the Pearsons. No evidence which supported such a
finding was pointed to, and the purpose of the delivery of the Pearsons’ soil samples to Incitec was
advice from Incitec. If the appellant, as well as Incitec, was negligent vis-a-vis the Pearsons, the
foundation of the trial judge’s apportionment of liability between the appellant and Incitec is based upon
a finding that we consider plainly wrong; notwithstanding the reluctance of an appeal court to interfere
with an apportionment of responsibility between joint tortfeasors, since the foundation for the
apportionment was erroneous this Court must itself apportion liability between the appellant and Incitec
according to what is just and equitable having regard to the extent of their respective responsibilities for
the Pearsons’ loss: Law Reform etc. Act, s. 6. If, on the other hand, the appellant was not negligent
but is liable to the Pearsons in contract, it is entitled to recover at least part of the amount from Incitec,
which clearly owed a duty of care to the appellant as well as the Pearsons; Incitec’s erroneous fertilizer
recommendations breached both duties of care, not only that owed to the Pearsons.
However, in our opinion, it was open to the trial judge to find that the appellant was negligent. Its
business involved giving advice on fertilizer use, and it was paid by the Pearsons to do so. It must have
known that scientific field trials had not been carried out by Incitec as there was insufficient time for that
to have been done, and that, like it, Incitec was aware of the anecdotal information. It did not seek to
ascertain what, if any, other scientific tests had been carried out by Incitec, or, so far as the evidence
shows, whether, in the period between the Pearsons’ soil samples being taken and the delivery of the Incitec recommendations to the Pearsons, adequate scientific testing by methods other than field trials
was even possible. There was no detailed investigation of the past relationship between the appellant
and Incitec, or evidence of Incitec’s reputation, on which a conclusion might have been based that it was
reasonable for the appellant not only to delegate the task for which it had been engaged by the Pearsons
to Incitec but also to rely on Incitec’s recommendations without any exercise of independent judgment
or even inquiry concerning what steps Incitec had taken or methods it had used.
Nonetheless, it was Incitec which was primarily responsible for the recommendation of unsuitable
fertilizer. In our opinion, it is just and equitable between it and the appellant that Incitec bear 80% of
the Pearsons’ loss.
Accordingly, we would dismiss the appellant’s appeal against the Pearsons with costs to be taxed but
allow its appeal against Incitec with costs to be taxed. The orders made by the trial judge with respect
to contribution between the appellant and Incitec should be set aside and in lieu it should be ordered
that their liability to the Pearsons, including costs, be apportioned as to 80% to Incitec and as to 20%
to the appellant.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 240 of 1995
Brisbane
[Primac Association Ltd v. Pearson & ors.]
BETWEEN:
GRAHAM EDWARD PEARSON and
ERIN ELSIE PEARSON
(Plaintiffs) First Respondents
AND:
PRIMAC ASSOCIATION LIMITED
(First Defendant) Appellant
AND:
INCITEC LIMITED
(Second Defendant) Second Respondent Fitzgerald P.
Davies J.A.
White J.
Judgment delivered 6 December 1996
Judgment of the Court
THE APPELLANT’S APPEAL AGAINST THE PEARSONS DISMISSED WITH COSTS
TO BE TAXED.
THE APPELLANT’S APPEAL AGAINST INCITEC ALLOWED WITH COSTS TO BE
TAXED.
THE ORDERS MADE BY THE TRIAL JUDGE WITH RESPECT TO CONTRIBUTION
BETWEEN THE APPELLANT AND INCITEC ARE SET ASIDE AND IN LIEU IT IS
ORDERED THAT THEIR LIABILITY TO THE PEARSONS, INCLUDING COSTS, BE
APPORTIONED AS TO 80% TO INCITEC AND AS TO 20% TO THE APPELLANT.
CATCHWORDS: | NEGLIGENCE - contributory negligence - appropriate apportionment of liability between joint tortfeasors - was the appellant negligent and, if so, to what extent in its supply of fertilizer |
| Law Reform (Tortfeasors Contribution, Contributory Negligence and Division of Chattels) Act 1952, s. 6 and Part 2 Sale of Goods Act 1896, ss. 17(a), 54(1) Trade Practices Act 1974 (Cth.), ss. 52, 82, 87 | |
| Counsel: | Mr P.D. McMurdo Q.C., with him Mr D.R.M. Murphy for the appellant. Mr D.C. Andrews for the first respondents. Mr P.D.T. Applegarth for the second respondent |
| Solicitors: | McCullough Robertson for the appellant. Williams Graham & Carman for the first respondents. Phillips Fox for the second respondent. |
| Hearing Date: | 25 November 1996 |
Incitec were liable to the Pearsons for negligence, and did not decide the Pearsons’ claims in contract and under the Trade Practices Act. No objection was taken to that course in this Court. Further, it was not suggested by any party that, if the appellant is liable to the Pearsons in negligence, this Court should consider any other possible bases of
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