Riverman Orchards Pty Ltd v Hayden

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT BENDIGO

COMMON LAW DIVISION
MAJOR TORTS LIST

S CI 2015 04571

RIVERMAN ORCHARDS PTY LTD (ACN 087 671 118) (As Trustee for the A&C CACCAVIELLO FAMILY TRUST)	Plaintiff
v
RODNEY JAMES HAYDEN	Defendant

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JUDGE:	JOHN DIXON J
WHERE HELD:	BENDIGO
DATES OF HEARING:	24-28, 31 OCTOBER, 1-4, 7-11 NOVEMBER, 13 DECEMBER 2016
DATE OF JUDGMENT:	28 JUNE 2017
CASE MAY BE CITED AS:	RIVERMAN ORCHARDS PTY LTD v HAYDEN
MEDIUM NEUTRAL CITATION:	[2017] VSC 379

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TORTS — Nuisance – Private – Spray drift damage to neighbouring vineyard because of herbicide spraying – Unreasonable and substantial interference with use and enjoyment of land.

TORTS — Negligence – Pure economic loss arising from herbicide spray drift – Reasonable foreseeability – Scope of duty of care – Risk of harm significant – Causation – Breach established.

DAMAGES — Quantum – Whether cost of total replacement of vineyard and consequential losses necessary and reasonable – No claim for diminution in value of plaintiff’s interest in land – Costs of remediation – Costs of rehabilitation and mitigation – Need for replacement of trellis and irrigation infrastructure – Proper replanting timeline – Hypothetical yields and prices in counterfactual scenario – Past and future income losses – Discount rate.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D A Klempfner with Mr E J Batrouney	Meerkin & Apel
For the Defendant	Mr C E Shaw with Mr J C Hooper	Meridian Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Issues.................................................................................................................................................... 4

Evidence............................................................................................................................................... 5

Submissions regarding liability...................................................................................................... 6

Plaintiff........................................................................................................................................... 6
Defendant....................................................................................................................................... 8

Background facts.............................................................................................................................. 11

Mallee Block................................................................................................................................ 11
The Andrew Peace Wines contract........................................................................................... 14

Issue 1 - Did the 2013 spray drift event occur?............................................................................ 17

Defendant’s contentions............................................................................................................. 17
The defendant’s evidence.......................................................................................................... 18
Other circumstances................................................................................................................... 31
Expert evidence........................................................................................................................... 33
Conclusion - issue 1.................................................................................................................... 35

Issue 2 - Nature and extent of the damage................................................................................... 36

Nature of the chemicals.............................................................................................................. 36
Nature of the damage................................................................................................................. 38
Dr Bell’s opinion................................................................................................................ 38
Ms MacGregor’s opinion.................................................................................................. 40
Mr Whiting’s opinions...................................................................................................... 45
Other evidence................................................................................................................... 47
Joint report and conclave.................................................................................................. 48
Metsulfuron analysis........................................................................................................ 50

Conclusion - issue 2.................................................................................................................... 55

Nuisance Claim................................................................................................................................. 59

Issue 3 - Substantial and unreasonable interference with use and enjoyment of land.... 59
Nuisance - principles.................................................................................................................. 60
Interference......................................................................................................................... 60
Substantial interference.................................................................................................... 61
Unreasonable interference................................................................................................ 61

Conclusion - issue 3.................................................................................................................... 62
Interference......................................................................................................................... 62
Was the interference substantial?.................................................................................... 64
Was the interference unreasonable?............................................................................... 65

Negligence claim.............................................................................................................................. 66

Issue 4 - Was there a duty of care?........................................................................................... 66
Issue 5 - Content of the duty...................................................................................................... 69
Issue 6 - Breach............................................................................................................................ 71
Issue 7 - Causation...................................................................................................................... 74
Contributory negligence............................................................................................................ 78

Damages............................................................................................................................................. 79

Principles...................................................................................................................................... 80
Issue 8 - Is remediation necessary and reasonable................................................................ 90

Issue 13 - Quantum........................................................................................................................ 105

Relevant findings...................................................................................................................... 105
Grape Yields..................................................................................................................... 106
Grape prices..................................................................................................................... 114
Replanting timeline......................................................................................................... 118
Discount rate.................................................................................................................... 120

Rehabilitation/Mitigation costs............................................................................................. 123
Past Income loss........................................................................................................................ 130
Cost of remediation - the cost of replacing the vineyard.................................................... 131
The plaintiff’s claimed quantum................................................................................... 131
Scope of works................................................................................................................. 136
Costing.............................................................................................................................. 145
Conclusion on cost of re-planting the Mallee Block.................................................. 150

Future Income loss.................................................................................................................... 150

Assessment...................................................................................................................................... 151

Conclusion....................................................................................................................................... 152

HIS HONOUR:

Introduction

On 4 October 2013, in a clear and crisp spring dawn Tony Caccaviello went to spray his vineyard known as Mallee Block. He immediately noticed that the vines looked different. Initially he thought there had been an overnight frost, but as the day warmed up, the shoots did not turn black and burn, but were drooping down with yellow spotting and an increasing translucent appearance.

Over the following days, the condition of the vines did not improve and Mr Caccaviello began to suspect that a chemical spray drift, not a frost, had affected his vineyard. Apart from the block immediately to the north west, on which a crop of vetch was growing, the adjacent blocks would not be considered appropriate to spray. The vetch was a different matter. That block was into the direction of the winds that had been prevailing during the previous week.

Mr Caccaviello has lived and farmed in Piangil for his entire life. He began farming in partnership with his parents and two brothers at the family property in Piangil before starting his own farming operation, Riverman. Riverman farms on three separate blocks owned by Mr and Mrs Caccaviello. The property includes 171 hectares of cereal, stone fruit, olives and vacant land. Relevantly, it farms established vineyards (area under vine) on three blocks: Main Block (33.25 ha), Lisa’s Block (29.24 ha) and Mallee Block (61.14 ha). The vineyards on Main Block and Lisa’s Block are approximately 40 years old. The spray drift incident did not affect these blocks.

The defendant in this proceeding, Mr Rodney Hayden, is the owner and occupier of a property neighbouring Mallee Block, located at the corner of Sandy Lane and Mallee Highway, Piangil. Part of the defendant’s property at the time of the alleged drift events, but since sold, a paddock known as ‘Perrononies’, lay to the northwest of Mallee Block and its closest point, the southeast corner of it was approximately 90 metres from the northwest corner of Mallee Block.

Before contacting Rodney Hayden, Mr Caccaviello wanted to be sure in his suspicion. He first contacted Rod Smith, a viticulturist and a representative of Landmark, a local agricultural supply company, who inspected the vines. Mr Smith considered that the vineyard had received a chemical overspray and recommended that Mr Caccaviello take expert advice from one Alison MacGregor. Mr Caccaviello also contacted the Department of Primary Industries to claim that he was the victim of an overspray but it would be a month or so before representatives of the Department could attend his property.

With Mr Smith’s confirmation of his own suspicions, Mr Caccaviello confronted Mr Hayden who confirmed that vetch in Perrononies was sprayed by his brother Maxwell Hayden on 30 September 2013 with a mixture containing 2,4-D, glyphosate and metsulfuron-methyl. These chemicals are toxic to grapevines and are not used within a vineyard. The mixture also included a wetting agent based on ammonium sulphate.

In August 2015, the plaintiff (who I will also refer to as Riverman) issued this proceeding seeking damages for nuisance and negligence against the defendant. It asserted that subjecting its vines to overspray with a knockout strength broadleaf herbicide mixture was an unreasonable and substantial interference with its use and enjoyment of the Mallee Block vineyard. It also asserted that the vetch spraying on Perrononies was negligently carried out, principally in the manner in which it was done in the prevailing conditions on 30 September 2013 and in the mixture of chemicals chosen, which were applied neither in accordance with the label recommendations nor the recommendations of Mr Hayden’s advisor, Mr Gavin Spinks, an agronomist with Swan Hill Stockfeeds.

At the time of the overspray, Andrew Peace Wines (APW), a local winemaker, was purchasing all of the produce from 54.25 hectares (ha) of the Mallee Block under an evergreen or rolling supply agreement at annual prices to be agreed each year prior to harvest, subject to a guaranteed base minimum price of $200 per tonne. That contract remained on foot, but was under threat. The plaintiff claimed that its vineyard does not yield the same quantity of fruit and the quality of the fruit produced is poor and that after three seasons it was clear that the vineyard would not recover.

The plaintiff claims that 8000 vines need to be removed and replanted to re-establish the vineyard to the standard that it was prior to October 2013. The site must be returned to a greenfield and properly prepared for successful replanting requiring that the entire trellis and irrigation infrastructures be removed and replaced and the young vines trained onto cordons. Once remediated, it will be some years before the vineyard would return to full productivity.

In summary, the heads of damage claimed by the plaintiff were:

(a) Rehabilitation/Mitigation costs;

(b) Losses of the grape sales for 2014, 2015 and 2016 vintages;

(c) Cost of re-establishing the vineyard over a 12 year period; and

(d) Future losses of grape sales during re-establishment.

The defendant contended that the plaintiff had failed to establish that the chemicals sprayed on to Perrononies on 30 September 2013 drifted on to the Mallee Block. Alternatively, any chemical drift established did not damage the vines on the Mallee Block or did not do so in a way that continued now or would in the future affect those vines. Accordingly, there was no unreasonable interference by the defendant with the use and enjoyment of the plaintiff’s land.

Although the defendant denied the existence of a duty of care, the conduct of its defence at trial was principally that there was no breach of any duty of care. The defendant contended that the spraying of Perrononies did not cause damage to the plaintiff’s vineyard and that either replanting the vines or retraining the vines would result in a greater loss to the plaintiff than simply doing nothing. If the defendant was held responsible in either nuisance or negligence, the quantum of its exposure to damages was the loss that arises because of taking no further action in respect of the vines. For this reason, the quantum claimed by the plaintiff was vastly in excess of any true loss or damage that it suffered.

Issues

The parties agreed that to resolve the dispute between them, the Court needed to determine the following issues:

A. Spray drift event in September/October 2013
1.Did the spraying of herbicides on the defendant’s property in or around late September/early October 2013 cause damage to the plaintiff’s vineyard on the Mallee Block?
2.If yes to question 1 above, what is the nature and extent of the damage?
3.If yes to question 1 above, having regard to all of the relevant circumstances, did the spraying of herbicides on the defendant’s property in or around late September / early October 2013 constitute a substantial and unreasonable interference with the plaintiff’s use and enjoyment of its land?
4.When spraying his property with herbicides in or around late September/early October 2013, did the defendant owe a duty of care to the plaintiff to exercise the care and skill of a farmer in the same or similar circumstances?
5.If yes to question 4, what was the content of the defendant’s duty to exercise the care and skill of a farmer in the same or similar circumstances?
6.Did the defendant fail to take precautions against the risk of damage to the plaintiff’s vineyard on the Mallee Block that, in the circumstances, a reasonable person in the same or similar position would have taken?
7.Did the spraying of the defendant’s property in or around late September/early October 2013 materially contribute to any loss and damage suffered by the plaintiff?

8. Does the plaintiff’s vineyard on the Mallee Block need to be replaced?
9.If yes to question 8, how long will it take for the vines to reach maturity?
10.If no to question 8, how long until the yield of the vines on the Mallee Block resumes to a satisfactory level?

11. Does the plaintiff’s vineyard on the Mallee Block need to be retrained?
12.If yes to question 11, how long until the yields of the Mallee Block resume to a satisfactory level?
13.What is the quantum of any loss and damage suffered by the plaintiff as a result of the spraying of herbicides on the defendant’s property in or around late September/early October 2013?

Evidence

Resolution of these issues involved evidence, principally from the plaintiff’s directors, Mr and Mrs Caccaviello and the defendant Mr Hayden and his brother, Maxwell Hayden. Mr Caccaviello is responsible for day to day farm management. Mrs Caccaviello is responsible for the financial and administrative side of the business. The plaintiff called a number of other witnesses. This evidence is discussed in due course.

The parties also relied to a significant degree on expert opinion evidence.

Dr Bell, a horticultural and agricultural consultant and director of David J Bell & Associates Pty Ltd, prepared a number of reports for the plaintiff based on his inspections of the Mallee Block vineyard on 13 January 2014, 16 October 2014, 18 February 2015 and 29 January 2016.

Ms Alison MacGregor, Senior Agronomist at SunRISE Mapping and Research, inspected the Mallee Block on 15 October 2013, 11 December 2013, 14 April 2014, January 2016 and May 2016 and prepared various reports for the plaintiff.

Mr John Whiting, Principal Consultant at John Whiting Viticulture, who first inspected the Mallee Block on 30 March 2015, prepared several reports for the defendant.

Dr Bell, Ms MacGregor and Mr Whiting also considered a list of common questions developed by the parties out of the issues raised by the pleadings and each prepared a report in response to the questions. They then met in a conclave and determined their points of agreement and disagreement arising on consideration of those questions. The joint report from the conclave was in evidence and the experts gave evidence concurrently after their reports and the joint report were tendered as their respective evidence in chief.

Mr Tony Natoli gave expert accounting evidence for Riverman and Messrs Ivey and Tremain prepared joint expert accounting reports, with Mr Ivey participating in a joint conclave and giving evidence concurrently with Mr Natoli.

Submissions regarding liability

It is convenient to now briefly summarise parties’ principal liability submissions before stating my evidentiary findings bearing in mind that a more detailed exposition of the contentions advanced will be provided where appropriate.

Plaintiff

First, the plaintiff submitted that there was a ‘vast body of circumstantial evidence’ that the spray drift event occurred and caused substantial and unreasonable interference with the plaintiff’s farming activities on Mallee Block. The plaintiff relied on the following matters as evidence the interference was substantial:

(a) The vineyard remains in a poor condition and the vines are still clearly affected by herbicide damage;

(b) The vascular and/or root systems of the vines have been severely damaged by exposure principally to metsulfuron and/or a mixture of metsulfuron and glyphosate;

(c) Mallee Block will most likely not return to its pre-spray drift event condition, and will deteriorate further, failing to recover commercial viability;

(d) Since the spray drift event, Mallee Block has produced poor quality fruit, which has, at various times, either been:

(a) rejected by APW; or

(b) partially accepted by APW at a reduced price.

The plaintiff contended the result of this damage was interference by the defendant that necessitated that the vineyard be replanted to return it to its pre-spray event condition. Such interference could only be characterised as substantial.

The plaintiff submitted that the interference was also unreasonable. Because there was a clear and foreseeable risk of damage to Mallee Block vines from a spray drift in the conditions prevailing on 30 September 2013, and consequently a risk that the plaintiff’s economic interests in the use of Mallee Block could be seriously compromised by the defendant’s spraying activities, it was unreasonable for the defendant to have sprayed Perrononies that day. The block could have been safely sprayed on 4 October 2013 without any compromise of the defendant’s farming activities.

The defendant was aware that the combination of herbicides used could be harmful to the vines on the Mallee Block, and that spraying Perrononies posed a risk. Both Rodney and Max Hayden said as much and in that respect I accept their evidence. Accordingly it was incumbent on the defendant to take a number of precautions to mitigate this risk when spraying, including by:

(a) applying an appropriate mix of chemicals by adhering to the applicable label rates and thus using a mixture that was less concentrated with metsulfuron;

(b) spraying in appropriate weather conditions and, equally, refraining from spraying in inappropriate weather conditions;

(c) using appropriate equipment in accordance with good farming practices; and

(d) realistically assessing the weather conditions on 30 September 2013, particularly the forecast for how the weather would develop that day.

The plaintiff contended that the defendant had failed to take appropriate precautions on 30 September 2013 by:

(a) failing to adhere to the label rate of metsulfuron of 7 g/ha, by using a mixture including metsulfuron at 10 g/ha;

(b) failing to follow the recommendation of Mr Spinks and using different concentrations of herbicides;

(c) spraying when the weather conditions were unsuitable and carried risk of spray drift occurring; and

(d) spraying with inappropriate boom height and nozzle size.

The plaintiff alleged it had taken reasonable steps to identify and mitigate the damage by contacting DPI and engaging and accepting the advice of appropriate consultants including Ms MacGregor, Mr Duffy, and Mr Stephen Lorimer, both immediately following the spray event and into the months and years following.

Thus, the plaintiff contended that the defendant breached a duty of care owed to it that caused it to suffer loss.

Defendant

The defendant’s principal submission throughout the proceeding was that there was in fact no interference by him through spraying activities on Perrononies with the plaintiff’s farming activities on Mallee Block, but if there was a spray drift event, the plaintiff’s damage was not caused by exposure to the herbicides used by the defendant.

First, the defendant asserted, relying on the evidence of Mr Whiting, that no damage was caused by any spray drift that allegedly occurred on 30 September 2013. There were no symptoms evident in the vines caused by the chemical damage alleged by the plaintiffs. Rather, the damage to Mallee Block vines was caused by:

(a) water stress arising from inadequate irrigation;

(b) excessive pruning; and

(c) general inadequate management, including inappropriate fertilisation.

Without resiling from this position, the defendant submitted that in any event the alleged interference was neither substantial nor unreasonable. This was for the following reasons:

(a) interference will not be substantial where it is no more than that which the average person in the locality can reasonably expect in the circumstances and the defendant is using his land for its common and ordinary uses;[1]
[1]Bamford v Turnley (1862) 122 ER 27, 33; Southward London Borough Council v Mills [2001] 1 AC 1, 15-16.

(b) there will be no long term effect from any herbicide damage from any spray drift in September 2013. There was no substantial interference; and

(c) the exercise of reasonable care can discharge liability for nuisance, and the defendant took such reasonable care when spraying on 30 September 2013, including by:

(c) having appropriate regard to wind conditions;

(d) stopping spraying at about 11:30 am on the day in question when the wind freshened and the weather conditions ceased to be conducive to spraying; and

(e) stopping spraying at a position in the middle of Perrononies at what the defendant estimates was 470m from the Mallee Block at its closest point.

The defendant contended that the question of ‘reasonableness’ was to be assessed by answering ‘whether a farmer in the same or similar circumstances to Max Hayden would have decided not to spray in the wind conditions on the morning of 30 September 2013 or ceased to spray if the wind conditions changed’.

In putting this contention the defendant cited N M Rural Enterprises Pty Ltd v Rimanui Farms Ltd[2] in which Harrison J observed[3] of section 5B(1)(c) of the Civil Liability Act 2002 (NSW), the equivalent of section 48(1)(c) of the Wrongs Act1958 (Vic):

In terms of s 5B(1)(c) of the Act, the only precaution that is relevant is the general precaution of deciding not to spray, either at all or to cease if conditions changed. The question can be posed as whether a reasonable person in the pilot’s position would have decided not to spray. I am not satisfied that N M Rural has established that the reasonable pilot would have. Nor am I satisfied that he or she should have. It seems to me to be instructive in this respect to observe that none of the pilots was cross-examined to the point of accepting that any of their nominated spray runs were clearly or arguably contraindicated. I do not consider that I am in a better position to decide that they were. It does not seem to me that the evidence permits me to make a finding, that is not mere supposition or speculation, about the probability that harm would occur if care were not taken for the purposes of s 5B(2)(a) of the Act.

[2][2013] NSWSC 309 (‘N M Rural’).

[3]Ibid, 357 [925].

The defendant continued that the Court could not be satisfied that the plaintiff had established:

(a) that a farmer in the same or similar circumstances to Max Hayden would have decided not to spray or would have ceased spraying the area of Perrononies that he was spraying on 30 September 2013; or

(b) that a farmer in the same or similar circumstances to Max Hayden should have decided not to spray or should have ceased spraying the area of Perrononies that he was spraying in the wind conditions at Perrononies on the morning of 30 September 2013.

The defendant further submitted, again citing the judgment of Harrison J in N M Rural,[4] that the plaintiff had not established a necessary fault element on the part of the defendant. The defendant submitted that the plaintiff must establish on the balance of probabilities that the defendant knew or ought to have known that the herbicide spray was likely to drift onto the Mallee Block and cause damage to the vines. The defendant submitted that the weather conditions on 30 September 2013 were not such that the defendant knew or ought to have known that the alleged drift would occur, nor is there evidence that the defendant was aware or ought to have been aware that such a drift was actually occurring, and causing damage.
[4][2013] NSWSC 309, 357 [945] citing Quick v Alpine Nurseries Sales Pty Ltd [2010] NSWSC 1248, [139]-[154] (Ward J).

The defendant also asserted that the following facts should be accepted by the Court:

(a) the weather conditions on 30 September 2013 were appropriate for spraying;

(b) had the conditions been inappropriate for spraying, it does not stand to reason that Max and Rodney Hayden would have decided to spray, or that Max Hayden would have continued to spray the paddock; and

(c) the defendant was alive to and had considered the sensitivities surrounding Perrononies.

Background facts

The following matters were not controversial.

Mallee Block

Mr and Mrs Caccaviello purchased the Mallee Block in about 1999 and the plaintiff soon established an irrigated 62 ha vineyard. When Riverman first planned and established the vineyard a significant portion of it was planted with chardonnay grapes, which then commanded up to $1,000 per tonne from wineries. The first crop was harvested in 2006 and from 2007 until 2011 Riverman supplied grapes to Orlando Wines under a capped supply contract that was below the yields that it was obtaining from its vineyards, with some small volume sales to Trentham Estate Wines. From 2011, Riverman sold its produce to Andrew Peace Wines (APW) apart from some table grapes and the box trade. The expression ‘box trade’ refers to sales by the box at the Sydney Wholesale Market to individual home winemakers.

The plaintiff set out to create Mallee Block as a high yielding premium quality block and it differed from his other blocks in several respects:

·It is twice the size;
·It is laid out north to south so as to capture the morning and afternoon sun;
·It contains only one type of soil as opposed to Main Block and Lisa’s Block which contain a number of different types of soil. The variation in soil type affects the way that different varieties of grapes are laid out in those vineyards;
·The vines produce on two wires, cordons, and are trained to full lateral cordons for each vine;
·The cordons are wider spaced, 650mm, permitting a canopy that enhances even fruit quality and ripening;
·The chardonnay was more closely planted at 3 metres between rows rather than the standard 3.7 metres; and
·Finally, each row is 1 kilometre long enhancing efficiencies in the use of equipment.

There was some inconsistency in the precise areas of cultivation of different grape varieties on the plaintiff’s blocks as follows:

Main Block

Block name

Variety

Area contracted to APW

Area under vine

Discrepancy

CHA1(MB) Chardonnay 10.74ha 12.15ha 1.41ha

MER1(MB) Merlot 2.85ha 3.24ha 0.39ha

SAN1(MB) Sangiovese 2.92ha 2.83ha - 0.09ha

SHZ1(MB) Shiraz 6.95ha 6.87ha - 0.08ha

PET1(MB) Petit Verdot 7.41ha 8.15ha 0.74ha

VER1(MB) Verdelho 5.82ha 5.67ha - 0.15ha
Lisa’s Block

Block name

Variety

Area contracted to APW

Area under vine

Discrepancy

CHA2(LB) Chardonnay 3.55ha 4.04ha 0.49ha

MER2(MB) Merlot 2.85ha 3.24ha 0.39ha

CAB(LB) Cabernet/S 10.74ha 14.12ha 3.38ha

SHZ1(MB) Shiraz 6.02ha 8.08ha - 0.08ha

PET1(MB) Petit Verdot 7.41ha 8.15ha 0.74ha

VER1(MB) Verdelho 5.82ha 5.67ha - 0.15ha
Mallee Block

Block name

Variety

Area contracted to APW

Area under vine

Discrepancy

CHA101-14
CHA SCHW
CHA RAM Chardonnay 11.78ha
11.77ha
11.77ha 35.85ha 0.53ha

GOR Gordo 2.25ha 2.25ha

MAT1
MAT2
MAT3
MAT4
Mataro Nil prior to 2014
6.874ha
3.287ha
4.034ha
Nil
6.874ha
3.287ha
4.034ha
4.146ha

4.146ha

SHZ3 Shiraz 2.50ha 2.50ha

Black Muscat 2.20ha 2.20ha

Total area contracted to APW
in 2013
from 2014
40.07ha
58.41ha

As separate records were not kept of the box trade, it was excluded from the claim in the proceeding for past and future losses although the area of vine under cultivation is included in the claim for the rehabilitation, and reconstruction/replacement of Mallee Block. As a result, the claim was based on sales to a single buyer, APW under the rolling supply agreement. Accordingly it is the area of vine under contract to APW that is relevant and I am satisfied that the appropriate area of each variety under cultivation for the purposes of calculating past and future losses is that set out in the ‘Area contracted to APW’ column in the above table. It is not necessary to reconcile any discrepancy, which is likely to be an error or areas allocated to the box trade or table grapes.

The Department of Primary Industries, now the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) investigated the spray event. Samples were analysed (to which I will later return) and Mr Hayden was interviewed. Ultimately, he received a warning letter. This investigation was conducted pursuant to the Agricultural and Veterinary Chemicals (Control of Use) Act 1992 (Vic).

What now follows are my findings on matters that were controversial. Unless the context suggests otherwise, I will refer to each season, which commences in spring and ends with senescence in the vines the following autumn by the harvest year. So, for example, the spray drift in October 2013 affected the 2014 season.

The Andrew Peace Wines contract

The first matter of some controversy was the precise nature and terms of contractual arrangements between APW and the plaintiff.

In August 2011, APW and the plaintiff agreed to a one year (annual) agreement for the purchase of the grower estimated harvest of various grape varieties in the 2012 season, delivered to the winery. The estimated tonnage of harvested fruit for each variety was nominated on the face of the agreement as the maximum purchase commitment made by APW under that agreement. APW agreed to a base minimum price per tonne of $200 and agreed to clarify in January 2012 the actual price per tonne that it would pay. The agreement referred to, and incorporated, a document entitled ‘Wine Grape Quality Control Standards’ and set out various conditions in respect of the quality of the fruit, APW’s right to reject fruit that did not meet certain standards and the terms of payment. This agreement did not distinguish between fruit from different blocks on the plaintiff’s vineyard.

On 23 August 2012, APW agreed with the plaintiff on a 12 month rolling supply agreement. This was an ongoing supply agreement that was not limited to a particular season, which had not, by the trial, been terminated. APW agreed to purchase the plaintiff’s grapes grown in each season on the contracted area of the nominated vineyard blocks as set out above at a price to be agreed prior to delivery to the winery. That agreed price was subject to a guaranteed base minimum price per tonne of $200. Mataro grapes from the 2013 harvest were not sold to APW by this agreement.

The rolling supply agreement was similar to the annual agreement in many respects. The Wine Grape Quality Control Standards were incorporated in appendix 1 of the agreement and APW’s right to reject fruit that did not meet quality control conditions remained governed by the terms and conditions of the rolling agreement.

The rolling supply agreement differed from the annual agreement by operating as an ongoing obligation on APW to take the fruit harvested from the nominated blocks and as an ongoing obligation on the plaintiff to supply it to APW. Each party achieved a degree of commercial certainty. There were provisions for renegotiation and termination, usually to occur in the off-season that were not engaged and are not relevant in this dispute. The agreement provided in respect of fruit prices that:

(i)Seasonal pricing will follow yearly market conditions to ensure that Andrew Peace Wines is in step with the rest of the industry. The seasonal price will not go below a guaranteed minimum base price as outlined in appendix 2. Actual prices will be sent to Growers in writing prior to vintage and crop estimates can be updated throughout the season.
(ii)Prices are ‘per tonne delivered to winery’, i.e. transport costs are to be met by the Grower.
(iii)If the grower can show with a statutory declaration (or evidentiary proof i.e. written offer), that another reputable winery has offered a higher price for his fruit across the whole agreement or for any particular variety then Andrew Peace Wines may either,
a) match that price, or
b)release all the fruit covered by this agreement for that season, or,
c)reach an alternative agreement with the grower by mutual agreement.
d)If any variety is not delivered for two separate vintages Andrew Peace Wines may terminate this grape supply purchase agreement.

In practice, the actual prices to be paid were determined by APW shortly prior to harvest, on the assumption of acceptable fruit quality on delivery. APW liaised closely with growers to schedule fruit for delivery to it as close as possible to its nominated Baume targets.

Each year, immediately prior to harvest, Mr Andrew Peace set prices that were communicated to growers in different ways. The evidence revealed that in some cases APW sent out an appendix 2 that stated the price and the expected tonnage. In other cases, the appendix 2 merely stated a price per tonne for the different grape varieties. There was also evidence of other communications, either by letter or through personal contact between APW’s grower liaison officer Mr Rod Duffy and Riverman about the prices to be paid for a particular harvest. Variations in this procedure from one season to the next were of no consequence.

In these circumstances, I conclude that the rolling supply agreement was not embodied in a single document and its terms were partly implied from the conduct of the parties. The record keeping of each party was not ideal and the need to answer requests for the agreement for a particular year for instructions to experts and for the purposes of this litigation resulted in some compilation documents that purported to represent the agreement for a particular season, which piqued the interest of cross-examiners. I will refer more specifically to some of these issues in context.

From the 2012 season to the time of trial, and continuing, the grape supply agreement between APW and the plaintiff was, and remains, the rolling supply agreement.

Issue 1 - Did the 2013 spray drift event occur?

This issue became a matter of inference. There was no direct evidence of a spray drift. Careful examination of a number of circumstances persuades me on the balance of probabilities that the 2013 spray drift event did occur. The principal circumstances that I will now analyse are:

(a) The evidence called by the defendant about the spraying event;

(b) Observations of the symptoms that appeared in the vineyard;

(c) Expert evidence about spraying.

Defendant’s contentions

The defendant contended:

(a) There was no direct evidence of any observation of a spray drift emanating from Perrononies and spreading to the Mallee Block on 30 September 2013.

(b) The analysis of the vines failed to detect the presence of metsulfuron, a chemical also used in the spraying of Perrononies on 30 September 2013. In its absence, a finding that there was a spray drift from Perrononies to the Mallee Block could not be substantiated or proved simply on the basis that traces of glyphosate and 2,4-D were detected on vine samples taken from the Mallee Block.

(c) The prevailing weather conditions were appropriate to conduct spraying on Perrononies on that day. Mr Max Hayden gave evidence that if he considered it unreasonable to spray he would cease spraying, which he did on this occasion once weather conditions deteriorated. There is no evidence to suggest that the weather conditions were unsuitable for spraying between 9.30am and 11.30am, when he decided to stop spraying.

(d) The chemical mix used in the spraying was an industry standard recommendation to control vetch. Mr Spinks gave evidence confirming this and that it is a commonly used formulation in the Mallee area.

(e) There is no evidence of vascular damage to the vines.

(f) Any damage caused to the Mallee Block was sustained by reason of the plaintiff’s management practices, including under-watering.

(g) In the alternative, if any spray drift was to have spread from Perrononies to the Mallee Block, it would not have drifted in sufficient quantities to cause damage. Ms MacGregor gave evidence that 2,4-D is toxic to vines at 1% of the label rate, glyphosate causes symptoms at 4% of the field rate and metsulfuron would cause damage at 1% of the applied rate. At a distance of 470 metres, Ms MacGregor agreed that the amounts drifting would approach zero, or at least be significantly lower than 1%.

The defendant argued that the spraying of 30 September 2013 did not cause damage to the Mallee Block, but that in the alternative, even if the Court finds a spray drift event occurred, the proportion of chemicals that would have drifted would have been insufficient to cause the damage sustained.

The defendant’s evidence

The defendant (Rodney) made executive decisions in the management of the Hayden farm and Maxwell Hayden’s (Max)[5] duties included doing all the spraying that was required using a tractor and boom spray unit that they owned. Rodney explained that up to the 2011 season, Perrononies had been used for a succession of cereal crops (wheat and barley). In Autumn 2012, a crop of vetch, an animal feed, was planted as a ‘disease break’, with the intention to follow it with a wheat crop in 2013. Because a volunteer crop had sprouted from self-sewn seed out of the 2012 vetch crop in the eastern half of the paddock, the wheat crop sewn in Autumn 2013 was confined to the western half of the paddock. In about August or September 2013, Rodney decided that the vetch needed to be removed by spraying in the eastern half of Perrononies before the vetch again set seed in order to return to a wheat crop in 2014.
[5]For convenience, and without intending any disrespect, I will distinguish the Hayden brothers by referring to then by their first names. When I refer to Mr Hayden, I am referring to the defendant.

Rodney was uncertain as to the best mix of herbicides to use to eliminate the vetch and contacted Mr Gavin Spinks, an agronomist with Swan Hill Stockfeeds, for advice. Mr Spinks drove past and inspected the paddock and then sent his recommendation by a text message to Rodney that read:

Vetch control –gly 450 1.8L +surpass 450 1L+ally 7-10 grams+lontrel 100mls +wetter 0.25%. 60L/ha. Gav.

The recommended mix was glyphosate 450 (being the concentration in grams per litre), Surpass 450 (a brand name for 2,4–D), Ally (a brand-name for metsulfuron, which is present at 600g per kg), Lontrel (a clopyralid), and a wetting agent to aid the application process, the mixture to be applied at the rate of 60 litres per ha. Mr Spinks noted that other farmers were spraying out their vetch at that time intending to control it before it set seed. He agreed that the recommended mix was ‘a very, very strong mix that will do a very good job on controlling vetch’. His expectation was that one application of this mixture would terminate the vetch and other weeds in the paddock, provided that the vetch was not sprayed too late in its growth cycle. As will shortly become apparent, Rodney did not strictly follow this recommendation when purchasing necessary chemicals which he left in the paddock by a water tower for Max’s use.

I do not accept the version of events proffered by the Hayden brothers as a probable explanation of what occurred on the morning of 30 September 2013. Rodney and Max stated that at approximately 7.45 am, Rodney discussed with Max whether he should spray Perrononies on that day. The fact of the conversation was all that was positively asserted and neither had any recall of the content of the conversation. The brothers both stated that they would have discussed the prevailing and forecasted weather conditions for the day, but had no recall of the forecast or their discussion of it. Each assumed that because Max did spray at Perrononies that morning, the information available to them had confirmed that conditions were favourable for spraying at that time, in particular with respect to wind speed, wind direction, humidity and temperature and that they agreed that Max should go to Perrononies and spray it.

These early morning conversations between the brothers about spraying were said to be regular but not invariable. Max would usually be observing the weather at his home, but Rodney, who had internet access, would check the forecast on the Bureau of Meteorology website. Use of that access to obtain the Bureau of Meteorology forecast was probably the point of the conversations. There was no evidence of the forecast, as at 7:45 am, for 30 September 2013.

The habitual, but not invariable, nature of the activity and the absence of any recall at all brings into question whether there was in fact such a conversation on the day in question.

Assuming that there was a conversation as the brothers asserted, although it is unsurprising that a witness cannot recall a weather forecast for a day three years earlier, the suitability of the day for spraying became an issue at a very early stage when Rodney and Max may well have had some recollection of both their conversation and information gathered in the course of it such as the internet forecast. Tony Caccaviello complained directly to Rodney within about a week of the spraying event. That was followed by an investigation by the Department of Primary Industries and this litigation. Ordinarily, memories would be refreshed or reconstructed by such events, but that did not occur.

I am satisfied on the probabilities that the weather forecast for spraying Perrononies on 30 September 2013 was not favourable. It would be convenient to have forgotten it. I could not detect a reason that compelled spraying on that day, unless the expensive spray mix had been earlier prepared and needed to be used or disposed of. That possibility was not explored and I say no more about it. What is more probable is that there was no conversation as deposed to by the brothers. It is likely they did not discuss the weather forecast as there was no need to do so because Rodney regarded Max as experienced and capable of making his own assessment. Max intended, in giving his evidence, that I concur with this assessment of his abilities. He said he had sprayed 27,000 acres annually for the preceding eight years and had sprayed Perrononies many times.

Max used a Goldacres boom spray drawn behind a tractor. The alignment of the tractor on the spray runs is GPS controlled to permit accurate coverage without overspray. The boom spray had a 6000 lt. tank and its operation was computer controlled. For example, the application rate of 60lt/ha is set by the computer control. The boom had a span of 36 m and was fitted with 76 medium-coarse nozzles. The same boom settings were used for all spray jobs on the Hayden’s farm. Max had neither a record nor a recollection of the settings for the boom spray. He said his usual practice was to set the boom one metre above the top of the weeds. He ‘hazarded a guess’ that the vetch in Perrononies was 12 – 18 inches high at the time. He did not suggest that this height setting was ever varied for different weeds, spray mixes, or ambient conditions.

Max said he arrived at Perrononies between 9 and 9:30am on 30 September 2013, took at least 45 minutes to set up the sprayer and then sprayed until 11:30 am. He gave two reasons for stopping then. First, he had finished the area he decided to spray. Secondly, he was concerned that the freshening wind might place a neighbour’s garden at risk.

There were no contemporaneous records of the weather at Perrononies and Mallee Block on that day and my findings must be a matter of inference from all of the available evidence, to which the BoM data from the nearest weather station at the Swan Hill airport is clearly relevant.

The defendant pointed to spray diary records that were required by law to be kept and I will pause for a moment to consider the diary that was produced. Max claimed responsibility for completing the entries that appear in it and he said that the entries accurately recorded what had occurred. Later, he described the entries as approximate, for example, the wind speed would have been ‘around’ 20kph. Just how approximate was not clear. He said that the diary, comprising loose A4 sheets in a folder, was completed by him on the day when he finished spraying and the folder was kept in the tractor. Max could not confirm under oath that the entries were accurate as he had no memory of the day. He retreated to describing what would have been ‘ordinary practice’. This want of memory was both surprising and convenient. It was also inconsistent because, under cross-examination, Max either recalled or reconstructed part of the events of the day to assist the defendant’s case.

For example, he recovered a recollection that he had not sprayed the whole paddock on 30 September. If that was so he did not record that fact at all in his spray diary on the day when presumably it was fresh in his memory. Other entries in the diary mostly, but not always, identify the area sprayed, which is a fact that is required to be recorded. Max was specific that he stopped spraying 470 m north of Mallee Block, which implied that on the day he would know that he had sprayed a lesser area. Later, Max described a function on the on-board computer that maps the paddock as it is sprayed. I do not accept his assurance that the spray diaries accurately recorded what occurred. Obviously, it was now beneficial to the defendant’s case to suggest that spraying stopped 470 m north of Mallee Block.

Turning to the relevant entries, first, there was an entry in respect of the subject spraying that showed the herbicide mixture, which I will precisely identify shortly, was applied to Perrononies on 30 September 2013 at the rate of 60lt/ha when the wind was blowing from the north at 20kph. Neither the plant matter being sprayed nor the area of application was completed although it is clear that only the eastern part of the paddock could have been sprayed. The diary suggests that the spray was finished on 4 October 2013. Next, there is an entry that immediately precedes the subject entry, which shows the same mixture was applied over 100 ha at the same application rate at Langleys (another of the Hayden’s paddocks) on 24 September 2013 and also finished on 4 October 2013 when the wind was blowing from the north west at 25kph. There is a third entry that stated that on 1 January 2014, 80 ha of ‘stubble’ on the west side of Perrononies was sprayed with a different mixture. Finally, on 10 January 2014, 80 ha of ‘vetch’ in east Perrononies was sprayed with a different mixture.

Max stated that although he was unable to independently recollect the weather conditions on 30 September 2013, the diary record would be his best estimate of the wind speed at the commencement and completion of spraying. He was suggesting that the wind was a constant speed and not gusting. He also stated that it was his practice to monitor conditions whilst spraying, through observing the spray mist, the dust cloud, tree lines and the plants being sprayed. He did not suggest that such monitoring informed the entry that he made in the spray diary. He said consulting his phone could provide him with the weather readings in Swan Hill. He suggested, based on his previous experience, that there could be significant variation between the weather conditions, the wind speed and direction, in Swan Hill and Piangil although this assertion was not developed. Plainly given their proximity, there could also be significant similarities between the weather conditions in Swan Hill and Piangil. Max did not state that he consulted the readings in Swan Hill on his phone or that there was any significant variation that day between the weather conditions in Swan Hill and Piangil. Max did say that the BoM forecast can be surprisingly accurate as to whether the wind will increase or decrease during the course of the day.

Having carefully considered Max’s evidence and examined the spray diaries, I consider that the diary entries are neither reliable nor complete. Further, I do not accept that they were made contemporaneously, that is, on the day. It is probable that the entries were made at some time after Mr Caccaviello complained of the spray drift and before the first visit from the DPI inspector. I cannot assess the reliability of Max’s recall when the entries were actually made.

The closest Bureau of Meteorology weather station is Swan Hill aerodrome. The weather records from the Swan Hill aerodrome on the day in question that were available to the court did not include what had been forecast, but now only provide the data actually recorded about the weather that day. The weather station, which is situated approximately 40kms south-east of Piangil, recorded that on 30 September 2013 between 7am and 9:30am the wind speed was in excess of 20kph, blowing from the north, and gusting above 30kph. At 9am the wind speed was 26kph, with wind gusts reaching 37kph. The wind eased a little between 9:30am and 10:30am and was blowing from the north west or north, north west. It was gusting slightly during this hour at speeds around 20kph. By 11am, the wind had picked up to 28kph, with wind gusts reaching 39kph blowing from the north. By 12 noon, the wind was blowing from the north, north west and continued to blow from that direction or to swing more to the west during the afternoon. The wind strengthened from noon initially to speeds in the mid-30s, and was gusting to speeds at or above 50kph. In the late afternoon, from 4:30pm to about 6:00pm, the wind speed was above 60kph, gusting to over 100kph. The temperature was 20ºC at 9:00am climbing to 28ºC in the early afternoon and 29ºC in the strong winds of the late afternoon. The relative humidity fluctuated from 28% at 7am to 1% at 1pm and 15% at 5pm.

A forecast reasonably reconstructed from this data would have indicated that the weather was not suitable for crop spraying, at least at Swan Hill. It would also have indicated that the wind speed would increase over the day and that gusty north winds should be expected by at least mid-morning.

I am not persuaded on the probabilities that on 30 September 2013 weather conditions varied significantly, or at all, between Piangil and Swan Hill. There was no evidence of actual variation. Max suggested that at times there could be variation in wind direction, but did not identify the circumstances in which variation might be expected. At its highest, I am invited to infer from the fact that Max said he sprayed Perrononies in acceptable conditions and that the conditions at Swan Hill were definitely not suitable for spraying that the weather was significantly different at Piangil. That inference cannot be drawn unless I accept, which I do not, that Max was a credible and reliable witness with a full and accurate recollection of the circumstances of the day.

Dr Bell checked the weather data from the only other BoM weather stations in the region, at Mildura and Hopetoun, on 30 September 2013. The weather was windy and gusting, consistent with the data from Swan Hill. I am satisfied that it is probable that on 30 September 2013 the weather data collected at the BoM weather station at Swan Hill sufficiently closely represented the conditions at Piangil for that data to be used to understand the probable actual conditions at Perrononies and Mallee Block on that day.

Max stated that he considered it appropriate to spray with a wind speed of between 15 to 20km/hr, but conceded that this is the upper range. However, his spray diary recorded spraying in a wind of 25kph on 24 September 2013 and numerous occasions when the wind speed is noted at the upper limit of 20kph. That said, not all paddocks on the Hayden farm were adjacent to more sensitive land uses.

Max believed he got to Perrononies at around 9 – 9:30am and observed that the weather conditions were appropriate for spraying. The BoM data shows that the wind eased between 9:30 and 10:30am and it is feasible that Max then may have reasonably believed that the weather conditions were conducive to spraying. Plainly he decided to spray, and did so. The first thing he did was fill the tank with water to which he then added the chemicals. I am satisfied that he mixed a full tank and did so because he intended to spray the whole paddock. He said filling the tank took around 30 minutes. Accordingly, he may have started spraying around 9:40 – 10:10am.

Rodney advised him about the mixture of herbicides that should be used on this occasion and Max added the following quantities of the herbicides to a full 6,000 litre spray tank. This provided a spray mix for approximately 100 ha. I am satisfied that he did not mix a lesser amount.

Active Ingredient

Product name

Quantity

Application rate

Glyphosate

Sipcam Raze510

150 litres

1.5 litres/ha

Metsulfuron-methyl

Dupont Ally (or Genfarm metsulfuron 600WG 500G)

1 kg

10 grams/ha

2, 4 - D

Amine (NUFA Amicide Advance 700) or Dow Statesman 720

80 litres

0.8 litres/ha

Ammonium Sulphate

AMS

60 litres

0.6 litres/ha

Rodney’s purpose was to eliminate the vetch on Perrononies once and for all in one application. Rodney stated that he had two reasons to add 1kg of metsulfuron, at the upper limit of Mr Spinks’ recommendation. First, he did not wish to use Lontrel, as Mr Spinks suggested, because it persists in the soil. Secondly, Rodney was concerned that vetch was often difficult to eliminate and the worst result would be that the paddock might need to be re-sprayed if the mixture was not strong enough. I am satisfied that metsulfuron was applied at this concentration. I am also satisfied that as at 30 September 2013 neither Rodney nor Max had recently read the labels of the products that were applied.

Although an effective result first time was one reason to use a full strength mixture, another is that spraying is a costly exercise. The chemicals cost tens of thousands of dollars. The Haydens were motivated to avoid wastage of expensive chemicals. Max suggested that spraying was not chanced when the prevailing weather conditions were inappropriate because the application of the chemicals was less efficient creating a greater risk of the need to respray. Once the mixture was made up it must be used within 24 hours. If the weather conditions deteriorate it may become necessary to dump expensive chemicals unless the mixture can be refreshed. In this case, there is no suggestion that a mixture was refreshed.

I am satisfied that Max was conscious of the cost of the chemicals and actively sought not to waste them. Max did not suggest that any chemicals were dumped but if he only sprayed the smaller area that he described and finished by 11:30am, he would not have used the tank that he had filled. It is likely that at least a third of a tank would have remained unused. A full tank will spray approximately 100 ha and travelling at 14 kph that would take 2½ to 3 hours. The west side of Perrononies was approximately 80 ha. If the full area was sprayed, the spraying could have occurred between 10 am and 1pm.

Max claimed that he would have driven the tractor at 14km/hr whilst spraying, slowing to 8km/hr when turning. The sprayer switched off automatically when the tractor was turning. His technique was to spray a ‘headland’ at the north and south, by driving in an east-west direction, and then spray between the headlands, driving in a north-south direction. This technique used the benefit of the GPS spray control system.

Max also stated, demonstrating selective recall of the events of a day about which he had no memory, that he located the southern headland approximately 470 metres from the Mallee Block, going as far as a clump of trees situated on Perrononies. He did not consider the weather conditions to be favourable for completing the south and eastern corners of the paddock. The only aspect of the weather conditions that could have been of concern to Max would have been the strength and/or variability of the wind. By this evidence he purported to recall the events of a day of which he had no memory. Given the technique that he adopted for spraying, Max must have made that assessment soon after he started spraying when the time came to set out the southern headland. That would have been at around 10 or 10:30am. The BoM data suggested a mid-morning easing of the wind. It was unlikely that Max made that assessment at the paddock by observation of the conditions, which would have favoured a conclusion that the conditions were good to complete the whole spray job with the tank he had prepared.

However, there was no independent evidence supporting Max’s claim that he set out the southern headland 470 m north of Mallee Block. It is equally open that Max arrived at Perrononies when the wind had eased from its early morning speed and he concluded that the trend in the wind favoured spraying. He admitted that a decreasing wind provided good spraying conditions. The BoM data recorded a wind speed of 13kph at 10am. Intending to spray the whole of the west side, he mixed a full tank and for about the first hour of spraying the conditions were suitable. Then, Max either failed to appreciate that he had misjudged the changing conditions or he pressed on regardless in order not to waste the cost of the chemicals.

Alternatively, if Max did set out the southern headland 470 m north of Mallee Block, the assessment he made was consistent with knowledge of the probable forecast of wind gusting and freshening over the day rather than the conditions observable at Perrononies at the time. If that be the case, Max must have deliberately calculated that a buffer zone of 470 m to the south would be sufficient to protect the vulnerable properties. The damage sustained by Mallee Block implies that a buffer zone, if actually adopted was, in reality, a miscalculation and an error of judgment.

Max suggested that he sprayed until approximately 11.30am and he stated that he stopped because he was concerned that spray would drift over to a neighbouring property, situated directly to the south of Perrononies and to the west of Mallee Block, on which was a newly established garden with trees. Again, this selective recall is curious. First, Max completed the area he said he decided could be safely sprayed, i.e. the area north of the 470 m buffer. Secondly, the BoM data shows that the wind had freshened to 28kph by 11am. Max was slow to appreciate the changing conditions. Thirdly, he never satisfactorily answered the question of why at 11:30am he perceived a threat that he had specifically allowed for by setting the southern headland back 470m, and then stopped spraying. That was precisely the concern that a sprayer would have if he realised that he had misjudged the wind forecast when he had not allowed a buffer zone. Fourthly, Max stated that a spray drift would not have threatened the vineyard as the wind was blowing from the north and not towards Mallee Block, but by 9:30am, according to the BoM data the wind direction had moved a little to the west, towards Mallee Block. Finally, if Max had only been spraying for that time he would have about one third of the tank remaining unused. He did not suggest that any chemicals were wasted that day, initially believing, not recalling, that he emptied the tank by spraying. Had chemicals in fact been wasted this would have been an expensive mistake that was likely to have been remembered. When challenged, he suggested, for the first time, that he may have mixed less than a full tank, without any specific recollection that he did, or any explanation for the quantities of chemicals entered in the spray diary that were for a full tank.

I do not accept this explanation. It is likely that, once the chemicals were mixed, even if conditions were not ideal as the day developed, Max decided to proceed to finish spraying Perrononies to minimise the loss of expensive chemicals. I expect that he hoped not to create a spray drift and I accept that he intended to avoid doing so. In other words, Max made an error of judgment and ran the risk, that he did not fully appreciate at the time, of spray drift occurring. That risk eventuated.

Max said he returned to spray the south-east corner of Perrononies on 4 October 2013 when the weather conditions were favourable. Again, there was no independent corroboration of this assertion. I am not persuaded that he did so. That was the day when Mr Caccaviello first observed that his vineyard had been affected and it is curious that, despite the activity at Mallee Block and the suspicion of the spray drift, nobody observed that Perrononies was sprayed on that day. The spray diary records that another paddock was also sprayed on that day, although Max believed that entry, rather than the entry for Perrononies, was mistakenly made. He said he had done a good job and that the vetch ‘all died’.

As I have noted, Perrononies was resprayed for vetch on 10 January 2014. That may have been necessary because, as Max suggested, seed from the 2012 self-sewn crop was dormant in the soil and sprouted with rain. Max’s suggestion seems inconsistent with his earlier evidence about both the intention and the success of the spraying as well as with the evidence of both Rodney and Gavin Spinks. Rodney’s intention was to spray the area once, with a highly concentrated mix of herbicides that both Mr Spinks and Dr Bell stated ought to have killed the vetch, which had not set seed, with one application. There was no suggestion that eliminating the vetch would require spraying on two occasions until the record of the second spray was drawn to Max’s attention in evidence.

Max had no recollection of the re-spray and speculated about what might have occurred on 10 January 2014 from the ingredients in the mix used. Alternatively, it may indicate that the spraying was not completely successful in September/October, because of the windy conditions resulting in a loss of a portion of the chemicals in a spray drift, reducing the application of chemicals to the vetch and failing to prevent some of it from setting seed. Bearing in mind that vetch is a very hardy plant that is difficult to eliminate, it is likely that an insufficient quantity of chemicals was applied to the vetch. Although Mr Spinks opined that spray timing can affect whether vetch grows the following season – if the vetch is sprayed late, when it has already self-sowed before being sprayed, then the vetch may not be eliminated in its entirety, Rodney was aware of this risk and intended to spray Perrononies before the vetch set seed. He did not suggest that he mistimed the spray application.

Unless independently corroborated or inherently probable, I have not accepted the evidence of Max Hayden. As I have said, the weather conditions recorded at Swan Hill by the BoM probably represented the weather conditions at Piangil. The topography of the region is not likely, over a 40km span, to cause any significant variation in wind direction, speed or turbulence.

I cannot draw from the evidence an affirmative conclusion that on the balance of probabilities the defendant did not create spray drifts that affected Mallee Block, an observation that I make only to identify what the evidence cannot support. I cannot be satisfied on the evidence of events from the defendant’s perspective alone that there were no spray drifts. The case is a circumstantial one and the plaintiff bears the onus of proof that there were spray drifts. The plaintiff discharged its burden of proof in this regard.

The plaintiff submitted, and I agree, that in the totality of the circumstances that played out on Perrononies on 30 September 2013, the defendant’s evidence carried considerable weight in determining whether spray drifts were created. When the defendant’s description of the spray event is analysed and considered with other circumstances that I will now consider, it was clearly probable that the defendant created spray drifts that affected Mallee Block.

Other circumstances

Mr Caccaviello stated that an overspray from Perrononies was the obvious source for a spray drift on Mallee Block, having regard to the prevailing weather and the use of neighbouring paddocks. There was no challenge to this proposition and no suggestion that a spray drift could have emanated from a different property or activity.

There was no alternative explanation for the presence of symptoms of herbicidal spray drift in the Mallee Block vineyard five days after Max sprayed Perrononies. There would be no suggestion of an alternative explanation for the observed symptoms until Mr Whiting was engaged by the defendant as his expert some 20 months later. However, Mr Whiting could only explain what he saw and failed to properly grapple with the observations and data documented by professional colleagues.

Neither APW nor other local vineyards reported being affected by spray drift in October 2013. The absence of damage to other properties supports a conclusion that Mallee Block was damaged by a wind driven direct drift from an immediately neighbouring property rather than by an inversion. Further, the weather data and observations about frosts support that conclusion.

When Mr Caccaviello first approached the defendant in the week following 30 September 2013, Rodney admitted that the paddock had been sprayed with a combination of Roundup (glyphosate), Ally (metsulfuron) and 2,4-D. The plaintiff did not use those chemicals in the vineyard. Rodney made the same admission to officers of the DPI. Samples later taken from the vineyard for analysis would reveal the presence of glyphosate and 2,4-D.

The absence of any trace of metsulfuron in the analysed samples from Mallee Block vines and Perrononies weeds does not prevent the finding that the spraying of Perrononies affected the Mallee Block as there is a ready explanation of its absence from the test results. The experts concurred that metsulfuron is difficult to detect in plants given it degrades within a few days. Mr Fern, a senior scientist with AsureQuality, confirmed that metsulfuron metabolises rapidly in plants. Testing to a much greater degree of sensitivity than was provided commercially by AsureQuality or testing within hours or days of the application would have been needed.

There is no doubt that metsulfuron was included in the spray mix. What is particularly significant is that it was used at a rate that exceeded the label recommendation. This was admitted by the defendant. As I noted at the outset, Mr Caccaviello reported the damage to the DPI. Investigators inspected Mallee Block on 23 October 2013 and took samples as did Ms MacGregor, including from Perrononies. Subsequent analysis of vine samples collected by the DPI from the Mallee Block and weed samples collected by Ms MacGregor from Perrononies in a laboratory in New Zealand were reported on 23 December 2013 and 19 February 2014 to show the presence of glyphosate and 2,4-D. The DPI issued a formal warning letter to Mr Maxwell Hayden. The letter detailed that the DPI concluded that a spray drift event had occurred from Perrononies to Mallee Block on 30 September 2013 and that the spray drift damaged the Mallee Block vineyard. The DPI concluded that Mr Hayden had contravened ss 5, 19(1)(a) and 40(1)(a) of the Agricultural and Veterinary Chemicals (Control of Use) Act 1992. His activities in spraying Perrononies had injuriously affected plants outside the target spray area. He had failed to keep adequate records of chemical use.

Max had, on Rodney’s instruction, applied metsulfuron above the maximum label rate which is 7 g/ha, potentially in breach of s 19(1)(a) of the Act. Mr Spinks, who had not checked the label specifications, had recommended up to 10 g/ha. At 10 g/ha, metsulfuron was applied at 143% of the maximum recommended rate. Although there was obviously no analysis of the strength of the spray drift that affected Mallee Block, it is probable that metsulfuron was present in it in a high and significant concentration.

The DPI’s warning letter also records, without subsequent objection, that Max Hayden, in an interview during the investigation, thought that a spray drift may have been created when he turned the sprayer boom around on the top of a slight rise at the southern end of the paddock. Given the pattern that he adopted for the spray job, he would have executed that manoeuvre numerous times.

Because of extensive damage to the fruit, APW rejected the plaintiff’s Mallee Block fruit in total in January 2014.

Expert evidence

Dr Bell, Ms MacGregor and Mr Whiting in their joint report dated 10 August 2016 agreed that the spray records suggested that there was a risk of damage caused by a spray drift but did not agree on the degree of risk. Mr Whiting described it as no more than a risk, while both Dr Bell and Ms MacGregor considered the risk to be extreme. I prefer the opinions of Dr Bell and Ms MacGregor, each of whom made a careful and documented study of the state of the vineyard following engagement by Riverman. They concluded that it was highly probable that the vineyard received multiple applications of spray drift, if not a continuous application, when the defendant was spraying on 30 September 2013.

Dr Bell and Ms MacGregor noted three factors as significant. In early October, the canopy was small, with young, short shoots, that would not have intercepted the majority of the spray drifts. The balance of the drift would have landed on the soil that was moist following good rains in mid-September. Further, approximately 6 – 9 mm of rain fell the following day that would have moved the metsulfuron into the soil. Secondly, the above label use of metsulfuron would have contributed to the probability that the vines would take it up through the soil. Thirdly, the weather data demonstrated that the day was very unsuitable for spraying.

The experts all agreed that the initial pattern of damage intensity was consistent with herbicide drift emanating from the north west and from the use of glyphosate, 2,4-D and metsulfuron. Just 12 months after the spray drift event Dr Bell suggested that the vines may not recover at all. He concluded from the severe and extensive damage that he observed that the vines had received a high dose of chemicals from the spray drift. Dr Bell described the damage as the worst he had seen in 35 years of working with agricultural chemicals. Mr Whiting relied on the observations of Dr Bell and Ms MacGregor as he did not directly observe the damage in 2013, 2014 or prior to the harvest in 2015. The experts agreed that the chemicals used, in isolation or in combination and even in low concentrations, were harmful to vines.

Dr Bell described the spray mix that was used as extremely potent, containing a greater concentration of the chemicals than would be required to kill woody weeds including blackberries. It would provide total control over the weeds over time.

The prospect of damage from chemical overspray is well recognised by both the Parliament, by the provisions of the Agricultural and Veterinary Chemicals (Control of Use) Act 1992, and by vendors of chemical products through product label information. Much of the information provided on labels for the relevant chemicals is provided to mitigate the risks associated with spray drift. All products containing 2,4-D should be applied by a coarse to very coarse droplet size. The Hayden’s spray boom was fitted with medium-coarse nozzles. While operating pressures can be used to control droplet size, there was no evidence that Max was controlling droplet size in this way. The probability that the droplets were finer than coarse to very coarse would be conducive to a spray drift. Labels also cautioned against spraying in winds less than 3kmh or greater than 15kmh in some cases and 20kmh in other cases. I am satisfied that these warnings were not heeded.

The defendant was critical of the plaintiff’s experts failure to conduct or commission sophisticated computer based modelling of the spray drifts they alleged. I accept Ms MacGregor’s evidence that there were too many variables that were unknown to the experts at the relevant time to permit useful modelling to be undertaken. In the absence of a specific informed study, a minimum of 0.5% of the concentration sprayed could be expected in the drift, but that concentration could be much higher in conditions conducive to spray drift. Dr Bell agreed, noting that there were no details of nozzle size and type, spraying pressure, boom height, speed of spraying and time of the spray operation. He would have expected the boom to have been set relatively high to spray off a vetch crop in order to achieve double overlap in application, but at the risk of increasing the level of drift. Dr Bell considered that the defendant set the spray boom too high at one metre in the conditions. On his analysis of the weather data from Swan Hill, wind direction between NNW and NW, which applied on the day, would have a spray drift depositing directly onto the Mallee Block vineyard. Max Hayden provided some of this information when giving evidence as I have already noted, but there was no objective or contemporaneous data (from the on-board computer or the spray diary).

Two other relevant factors identified by Ms MacGregor were the unpredictability of wind and the ground conditions. Wind unpredictability, especially turbulence and gusting, can exacerbate the conditions that favour a spray drift. I am satisfied that the wind was gusting on the day. Uneven ground conditions could cause boom height off the ground at one end of a 36 m boom to vary significantly, resulting in discharge of herbicide droplets at a much higher point than planned or expected. These two effects can combine. Max Hayden identified this very problem when interviewed by the DPI.

Conclusion - issue 1

On the basis of the foregoing analysis, I am satisfied to the requisite standard in all of the circumstances that when the defendant sprayed Perrononies on 30 September 2013, multiple spray drifts were created during the time that the defendant sprayed that caused a sufficient and damaging quantity of herbicide to settle on the plaintiff’s vineyard affecting both the foliage and the soil. The spray drifts contained, relevantly, the herbicides, 2,4-D, glyphosate and metsulfuron in sufficient concentrations to cause very serious damage to the vines. However, the concentrations of herbicides to which the vineyard was exposed cannot be more precisely determined.

Issue 2 - Nature and extent of the damage

Mr Caccaviello initially noticed that the vines were different on the morning of 4 October 2013, observing translucent shoots, drooping canes, and yellow speckling on foliage. Since then, he has observed that the vines have become anaemic, some show no signs of growth, there was a distinct unevenness in berry ripening, and the fruit produced was of poor quality. He has tried various methods to mitigate the effects of the spray drift, including pruning the vines (cutting them back to single cordons to encourage regeneration), pulse watering and using different varieties of nutrients. He gave evidence that these efforts to present have been to no avail. I will return to his farming practices in due course.

(g) Step 7: Mark new vineyard layout. Surveyors are contracted to set out the grids along which the new vineyard is to be planted.

(h) Step 8: New posts. Both Mr Caccaviello and Mr Lorimer considered that the existing trellis (including the posts) would be broken or damaged during the vineyard removal process and that it would be impractical for the posts to be re-used. Internally fractured posts, which might appear unbroken to the naked eye, if re-used, would be unable to support the weight of the new vines.

Mr Muller challenged this conclusion, contending that if removed correctly substantially all posts could be salvaged. Neither party could quantify what percentage of posts might be salvageable post excavation. It could be supposed that a contractor engaged to complete the works for a fixed price that included supply of posts and other hardware might be motivated to work, and inspect the recycled materials for suitability, in a cost-effective way. There was no evidence that a contractor, prepared to assume and price those risks into the contract was available. I am not satisfied that, on balance, a system of post removal and analysis for suitability for recycling, while possible, would be economical or has been costed. I will allow the cost of new posts.

Mr Caccaviello claimed that, in addition to the specific allowances for labour made for each step, a further substantial allowance for miscellaneous labour costs would be necessary in relation to steps 8-12 for tasks including unloading trucks, getting material to the site, loading and unloading trailers, moving wires and filling the water cart. The defendant suggested that these costs had been invented, but I accept that there will be some additional miscellaneous labour required in each of these steps and although the plaintiff no longer sought a contingency sum, a contingency allowance is appropriate for expenses of this sort.

(i) Step 9: Distribute posts. The new posts must be distributed and laid out in the correct format, with two workers following a tractor and trailer dropping the posts and, given the number of posts involved, I allow 576 hours (72 days) for this task.

(j) Step 10: Post placement. A tractor operator, using a large knocker and assisted by two workers who pick up and hold each post, knocks it straight into the ground. For 34,601 posts, at 30 posts per hour, this is expected to take 1,153 hours (144 days) to complete. In addition, the end assemblies involve larger posts that require an auger attachment to the tractor to first drill a hole before the posts are knocked into the ground. This is expected to take 2 workers 344 hours to complete. This task requires 187 days.

(k) Step 12: End assemblies. Firstly the wire, steel rods, nuts and washers must be purchased that make up the end assembly. Two people are required to lay the wire along the rows, one holding a wire spinner and the other walking down the row running the wire out to the other end along the ground. Once the wire is tied at each end it is clipped into place along the vine structure. This is expected to take two workers a total of 480 hours to complete. The 688 end assemblies then have steel rods drilled in to ensure the right tension to support the weight of the vines, each of which is estimated to take one hour to complete by one experienced employee assisted by a farm hand.

(l) Step 11: Purchase and planting of new vines. New vines are planted and trimmed in the new vineyard structure. It is estimated to require approximately 158 days to trim or de-bud vines that are purchased as rootlings (78,741 vines, at 500 vines per day). Planting is estimated to require three workers and a tractor operator, planting 225 vines per hour for a total of 350 hours (44 days). Of the three workers, one is to throw the vines out, the second to put the vine into the ground and the third following to check that each vine is in line and properly sealed without air pockets. Mr Caccaviello’s evidence was that this process was followed when establishing the original vineyard.

(m)Step 13: Vine training for first, second, third years. Using twine, vines are strung up with vine guards, necessary to protect the young vines from chemical and animal damage. Vine training is undertaken three times per season for the first three years, being the process used when the Mallee Block vineyard was first established. Training involves removing the vine guard and ensuring the vine is wrapping around the twine properly, removing unwanted shoots, so that the vine stem grows straight vertically to fill the space between the two wires of each cordon. Any supervision required in the first year to ensure a consistent standard across the vineyard can be provided by Mr Caccaviello.

Mr Muller did not include the costs of vine training or any allowance for maintenance costs during and after the re-establishment process. No reason was given as to why these steps should be excluded and, save for the issue of supervision, I am satisfied that they are reasonable steps which ought be factored into the costs of re-establishing the vineyard.

Before turning to costing of the scope of works, I will address the claim for overhead expenses associated with the works that were claimed on the basis and in the sums set out in the second table, at [397]. The defendant objected that many of these additional expenses were tasks that the plaintiff would have been required to undertake in any case if the spray drift had not occurred, or were exorbitant estimates or were simply unnecessary. There was force in some of these submissions and, in particular, Riverman, while seeking recompense for lost income when Mallee Block was no longer being farmed and was in the process of remediation and development back to productive yields, failed to make proper allowance for the reduction in the work involved in running the farm and the savings in management time that would be achieved.

I am satisfied that it is reasonable to allow Riverman’s claims as follows:

(a) I do not allow the costs of a farm manager, technical/irrigation manager and assistant manager, at $150,000, $85,000 and $60,000 per annum respectively, for each of the first four years of the re-establishment of the Mallee Block. I am not satisfied that this claim is reasonable. Riverman presently has no full time employees and did not have such employees in the years immediately after Mallee Block was initially established. Mr Caccaviello himself has in the past, and continues to, farm the three blocks. Mallee Block is slightly over a third of the total farm by area. I do not accept Mr Caccaviello’s suggestion that he would be fully employed on the remainder of the farm once remediation of Mallee Bock began and could only have limited involvement in overseeing the re-establishment of the Mallee Block. Once Riverman brings to account the savings in the time and expense of management when Mallee Block is not producing, either at all or to its full potential, it is not reasonable to allow for additional management expenses. The proper allowance for the savings in the time and expense incurred by Mr and Mrs Caccaviello is to allocate that cost against the claim for supervision overheads.

(b) An allowance for chemicals and fertiliser for the first four years post re-establishment is reasonable, and I will allow it on the basis of the figures provided in Ms MacGregor’s report.

(c) I will not allow for the hire of a tractor and sprayer to distribute herbicide and fungicide through the vines for any of the first four years. This work would have been required in any case, and Mr Caccaviello stated that the younger vines would require roughly half the applications of older established vines.

(d) I allow for the costs of purchasing seed and fertiliser for a cover crop for the first four years post re-establishment to protect the new vines. I accept that this is a necessary step until the vines reach sufficient strength and maturity and one that was undertaken when the Mallee Block was first established. The labour for tine cultivation in the first year was allowed in step 4. In subsequent years, the labour cost becomes simply an incident of usual farming, in lieu of spraying with sprayseed to control weed, which is a reasonable off set.

(e) I would allow an amount for slashing of the organic matter underneath the vines by a tractor with a specialised attachment, twice a year for the first four years to assist the young vines to grow and I accept that this task would not be performed on a mature vineyard in an ordinary year.

(f) I will not allow any amount for flushing out the dripper lines as that is an expense that would ordinarily be incurred and is unrelated to the establishment of a new vineyard.

(g) I allow an amount for replanting dead vines, which Mr Caccaviello estimated at 2% of the newly planted vineyard. This process will involve 6 workers over 16 days locating and re-planting unsuccessful sections of the new vines. This is not done on mature vines, such as those at Lisa’s or Main Blocks, because vines of different ages cannot be effectively farmed in a single vineyard. The opportunity to replace dead vines is unique to the young vines when they are first being established.

(h) With regard to sundry equipment hire, I will allow a contingency to cover such expenses, for each of the first four years. I accept that the labouring involved will necessarily require hired equipment including forklifts, generators, drills, water tanks, trailers and portable toilets, the scope of which cannot be precisely determined in advance.

(i) I allow a sum for hand pruning the buds in the second, third and fourth years after the new vineyard is established. This process is required to ensure the long term health of the future vineyard by filling the cordons with healthy vines and cutting back other parts as needed. The allowance will be for labour for workers under Mr Caccaviello’s supervision.

(j) I allow an amount for restraining the end posts at the end of the first year once the new vines are in place and any movement can be detected. This involves re-aligning and tightening the strainer posts and wire, checking the steel stabiliser rod in each end assembly and tightening the bolts. Mr Caccaviello estimated that this would take 3 workers a total of 80 hours to complete.

(k) I allow an amount for the labour involved in mulching and sweeping the canes with a tractor in the second, third and fourth years after establishment. This is required to clean the debris from around the new vines, giving them the best chance of growing. It is a task exclusive the establishing a new vineyard.

In addition to the labour costs of many of the steps outlined above, Mr Caccaviello included amounts for tractor hire and fuel costs. This was on the basis that he would not be using his own tractors, of which he owns six, because they would be exclusively required in managing the other two vineyard blocks. I do not accept that contention. It is reasonable that where costs are saved in the management of Mallee Block, because the plaintiff is not employing or is under employing its existing farm equipment, that excess capacity should be employed in the re-establishment process whenever possible. Additional equipment hire will only be allowed when the plaintiff’s resources are exhausted. I will allow a contingency amount to deal with overruns such as equipment hire as and when required. I also propose to allow an amount for fuel for each particular task, but taking into account the defendant’s objection that Mr Caccaviello gave no account of the fuel tax credit of 39 cents per litre.

Costing

Mr Muller did not reveal how his estimates factored in labour costs, particularly the number of man hours to be worked, making a comparison with Mr Caccaviello’s figures difficult. Mr Caccaviello produced a quote from Kandel Contracting Pty Ltd for labour at $36 per hour, per worker. The lower $27 per hour award rate suggested by the defendant was for casual labour, and I accept that for a project of this size contract labour is appropriate, which is more expensive including additional costs such as superannuation. Labour costs are allowed at $36 per hour, per worker.

Mr Caccaviello relied on a quote obtained from Belmonto Pty Ltd for $265 per hour for tractor hire, as follows:
DESCRIPTION
Hire JD 8310R Tractor
To bedform for orchards $256 per hr plus fuel
Contract Discing $50 per HT plus fuel
Contract sowing with disk seeder $52 per HT plus fuel
Mr Caccaviello stated that the hourly fee of $265 was for machine (tractor) hire and driver and included the use of specialised attachments. This figure is useful in assessing an appropriate contingency sum, but for reasons given, I will not allow for tractor hire as claimed by Riverman because it can employ much of its own equipment. I will allow for a driver by an additional labour cost of one worker charged at the rate of $36 per hour.

Based on the quote from Tasco, I will allow fuel expenses at Mr Caccaviello’s estimates, but discounting the cost of fuel from $1.17 to $0.78 to take into account the Fuel Tax Credit scheme from which Riverman is entitled to a 39 cent rebate. I have accepted Mr Caccaviello’s estimates of fuel requirements for different farming tasks.

On the basis of the foregoing discussion, the cost of re-establishment of the vineyard will be allowed as follows:

(a) Steps 1, 2, and 3 are costed at $161,200: Notwithstanding that this quote was for a scope of works that left the block as a green field ready for replanting, Riverman stipulated additional expenses, being cutting wire from the posts and removing dripper line, cleaning the field by hand, separating wood and metal pieces, and removal of debris. I accept the defendant’s submission that there is overlap in the costing of these initial steps to remove the current vineyard and restore the site to a green field. Mr Caccaviello obtained a quote from Boundary Bend Excavations Pty Ltd as follows:

QUOTATION
Removal of 62 hectares of grapevines – 80,000 vines and 36,000 steel posts/pine posts
Excavation of vines and posts, removal of wire and dripper hose.
Vines to be pushed into piles and burnt.
Pine posts to be separated from piles before burning.
Disposal of wire, dripper hose and steel posts to rubbish tip.
Area to be cleared and brought back to bare ground suitable for replanting.
Cost $2,500 per Hectare
Total Cost - $155,000

The quote was close to Mr Muller’s estimate of $2,600 per hectare for the cost of removal of the vineyard. Those expenses are included in Boundary Bend Excavations quote that was tendered as a business record without further explanation and I accept the parameters of that quote on its face. I find that the proper allowance in respect of steps 1, 2 and 3 in the scope of works is $161,200.

(b) Step 4 - $43,996.80: I have accepted that the steps of deep ripping, discing, landplane, rotary hoe and tine cultivation are required to prepare the site once the vines have been removed. Not including the cost of tractor hire, but allowing for the hours required for additional workers at $36 per hour, I would allow the following amounts in respect of:

(f) Deep ripping : one worker, 112 hours = $4,032.

(g) Discing: one worker, 56 hours = $2,016.

(h) Landplaning – two workers, 128 hours = $9,216.

(i) Rotary hoe – one worker, 128 hours = $4,608.

(j) Tine cultivation – two workers, 56 hours = $4,032.

I allow fuel at $20,092.80, comprising 644 hours of work, at 40 litres per hour, at the rate of 0.78 per litre.

(c) Step 5 - $72,540: On the basis of the quote provided by Lipps for purchase and application of gypsum and manure, I allow $72,540.

(d) Step 6 - $380,000: On the basis of the quote provided by Swan Hill Irrigation for replacement (and installation) of the irrigation infrastructure, I allow $380,000.

(e) Step 7 - $60,821.50: On the basis of the quote provided by MK1 Developments for marking out the new vineyard, I allow $60,821.50.

(f) Step 8 - $713,001: EE Muir and Sons quoted for the supply of new posts in quantities determined by Mr Caccaviello whose estimate I accept, as follows - (Pine, 3m; 250-300) at $85 - 668 posts, (Pine, 3m; 150-200) at $40 - 1,366 posts and (Steel ECO trellis 2.7m, with clips and caps) at $14 - 33,933 posts, a total of $713,001.

(g) Step 9 - $75,686.40: For post distribution I accept the estimated cost of labour hire of $41,472 and allow for one additional worker (tractor driver) for 576 hours, at an additional $20,736. I include an amount for fuel of $13,478.40, comprising 576 hours of work, at 30 litres per hour, at the rate of 0.78 per litre.

(h) Step 10 - $524,472.20: For post placement I allow for equipment and labour hire as estimated by Mr Caccaviello and further based on quotations obtained from Belmonto Pty Ltd at $501,119 and allow for fuel at $17,986.80 (1153 hours at 30 litres per hour at the rate of 0.78 per litre) for post placement and $5,366.40 (344 hours at 20 litres per hour at the rate of 0.78 per litre) for end posts respectively.

(i) Step 11 - $505,950: Based on the quote provided by Cardoss Nurseries, $402,000 is allowed for the purchase of new vines. I accept Mr Caccaviello’s estimated costs of trimming the vines at $45,360 and the labour cost to plant the vines at $37,800. I allow for one additional worker (tractor driver) for 350 hours, an additional $12,600. I allow fuel expenses at $8,190 (350 hours, at 30 litres per hour at the rate of 0.78 per litre).

(j) Step 12 - $175,635: This allowance is based on the quotes provided by EE Muir & Sons and Vernon Steelyards for purchasing wire at $75,500 and for purchasing steel rods, nuts and washers at $8,127 respectively. I accept Mr Caccaviello’s estimated labour costs to lay the wire and lift ($34,560) and to fix the end assemblies ($57,448).

(k) Step 13 - $463,794: Based on the quote provided by EE Muir & Sons for the purchase of twine ($1,104), and vine guards ($22,050), and Mr Caccaviello’s estimates of the labour involved in vine training (with no allowance for an additional supervisor) for first, second, third years at $176,256, $132,192 and $132,192 respectively.

As to the additional expenses:

(a) I allow a total of $220,550 for chemical and fertiliser based on the estimates provided by Ms MacGregor - for year 1 ($30,550), year 2 ($50,000), year 3 ($70,000), year 4 ($70,000). Savings of the regular use of chemical and fertiliser were incorporated into Mr Natoli’s analysis of the present value of future lost income.

(b) I allow $110,308.80 for a cover crop. This allowance includes seed & fertiliser, for each of the first four years, on the basis of the quote provided by Landmark in the amount of $24,120 per year, a total of $96,480. I allow for one additional worker (driving Riverman tractors), to plant the cover crop (67 hours each year), at an additional total of $9,648, and fuel at $4,180.80 over four years, (67 hours, at 20 litres per hour at the rate of $0.78 per year).

(c) For slashing I allow $14,035.20, based on Mr Caccaviello’s estimate of 68 hours work per year, a total of $9,792. I include fuel at $4,243.20 over four years, (68 hours, at 20 litres per hour at the rate of $0.78 per year).

(d) For replanting dead vines, I allow 6 workers for 128 hours for the second, third and fourth years, at a total cost of $27,648.

(e) I allow $236,223 for hand pruning. I accept Mr Caccaviello’s estimates of $78,741 for the second, third and fourth years after planting, based on the cost of $1 per bud for 78,741 buds.

(f) I accept Mr Caccaviello’s estimated labour cost of three workers for 80 hours for restraining the posts at the start of the second year, and I allow $8,640.

(g) I allow $25,804.80 for mulching and sweeping the young canes in years 2, 3, and 4. I allow for one worker (Riverman tractor) for 128 hours each year, at a total of $13,824. I allow for fuel of $11,980.80 over three years, (128 hours per year, at 40 litres per hour at the rate of $0.78).

(h) I allow a contingency for miscellaneous labour and sundry equipment hire at $95,000.

Although Riverman did not specifically seek a global contingency sum in its costings, I consider it appropriate to ensure that the plaintiff is properly compensated that an allowance be made for unforeseen contingencies. Delay could be occasioned for many reasons and costs estimates could readily change. A general contingency of about 5% is appropriate[99] and I will allow $185,000.
[99]Notwithstanding that Mr Natoli recommended a contingency of 15%, some aspects of the project that warranted a contingency on his calculations have been dealt with in other ways.

Conclusion on cost of re-planting the Mallee Block

I assess the total cost to re-establish the vineyard by replanting Mallee Block at $4,100,306.70. This assessment does not admit a need for discounting. I also award damages in the nature of interest on that sum of $395,171.16[100] from 1 July 2016, the assumed date of loss that approximated the time when costings were current, to be calculated at the rate applicable under the Penalty Interest Rates Act 1983.
[100]From 01 July 2016 to 31 January 2017, 215 days at 9.5% = $1064.7077 per day, totalling $228,912.15; From 01 February 2017 to 28 June 2017, 148 days at 10% = $1123.3717 per day, totalling $166,259.01.

Future Income loss

The basis for the defendant’s contention that there was no future loss of income has been rejected. The principal areas of disagreement between the parties with the assumptions made about yields and prices ‘but for’ the spray drift event, the appropriate discount rate, and the assumptions made about the need, and the timetable, for replanting the vineyard. Having regard to the findings that I have made about such matters, I am most assisted by Mr Natoli’s calculations in assessing Riverman’s future income losses.

With one significant exception, I have largely accepted Mr Natoli’s assumptions on the matters on which the parties disagreed. Riverman did not establish on the evidence a proper basis for Mr Natoli’s primary assumption that the ‘but for’ grape yield of Mallee Block from 1 July 2016 would average 2860 tonnes. I have found that the appropriate figure is 2000 tonnes. I have concluded that Mr Natoli’s calculations overstate Riverman’s loss and I will allow 70% of the sum that he has calculated. As I have also accepted Ms MacGregor’s timetable for replanting, the applicable calculations are those prepared on a 10 year re-establishment basis.

As I have explained, due to timing differences, I must make an allowance for the 2017 season. I assess the lost earnings for the 2017 season discounted to present value at $278,850. Applying Mr Natoli’s calculations to assess the net present value of the gross loss of earnings before tax on grape sales from Mallee Block net of expenses saved during a re-establishment period of 10 years beginning with the 2018 season, I find that sum to be $1,289,532. I assess Riverman’s loss at 70% of those sums that total $1,625,532, which is $1,130,872.40.

I find the net present value of Riverman’s lost future earnings, before tax, from the assumed date of loss, 1 July 2016, to the completion of the replanting of the vineyard with healthy vines to restore it to a productive yield comparable with its yield prior to the spray drift event to be $1,130,872.40. I also award damages in the nature of interest of $108,988.96 on that sum from 1 July 2016, to be calculated at the rate applicable under the Penalty Interest Rates Act 1983.[101]
[101]From 01 July 2016 to 31 January 2017, 215 days at 9.5% = $293.6484 per day, totalling $63,134.41; From 01 February 2017 to 28 June 2017, 148 days at 10% $309.8281 per day, totalling $45854.55. The total for 363 days is $108,988.96.

Assessment

In summary, I assess the plaintiffs loss in the following sums:

(a) Rehabilitation/mitigation costs - $212,447 together with damages in the nature of interest of $32,787.02.

(b) Loss of grape sales from Mallee Block in the 2014, 2015 and 2016 seasons - $1,100,000, together with damages in the nature of interest of $167,640.52.

(c) Costs of re-establishing the vineyard - $4,100,306.70, together with damages in the nature of interest of $395,171.16.

(d) Future loss of grape sales during re-establishment - $1,130,872.40, together with damages in the nature of interest of $108,988.96.

Conclusion

There will be judgment for the plaintiff that it recover from the defendant the sum of $6,543,626.10 for damages, and the sum of $704,587.66 for damages in the nature of interest to the day of judgment. I will hear further from counsel on the question of costs.

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(1988) 166 CLR 351, 355-356 (Mason J).

Block name	Variety	Area contracted to APW	Area under vine	Discrepancy
CHA1(MB)	Chardonnay	10.74ha	12.15ha	1.41ha
MER1(MB)	Merlot	2.85ha	3.24ha	0.39ha
SAN1(MB)	Sangiovese	2.92ha	2.83ha	- 0.09ha
SHZ1(MB)	Shiraz	6.95ha	6.87ha	- 0.08ha
PET1(MB)	Petit Verdot	7.41ha	8.15ha	0.74ha
VER1(MB)	Verdelho	5.82ha	5.67ha	- 0.15ha

Active Ingredient	Product name	Quantity	Application rate
Glyphosate	Sipcam Raze510	150 litres	1.5 litres/ha
Metsulfuron-methyl	Dupont Ally (or Genfarm metsulfuron 600WG 500G)	1 kg	10 grams/ha
2, 4 - D	Amine (NUFA Amicide Advance 700) or Dow Statesman 720	80 litres	0.8 litres/ha
Ammonium Sulphate	AMS	60 litres	0.6 litres/ha

[2017] VSC 379

28 JUNE 2017