Rondos v Toolangi Certified Strawberry Runner Growers Co-op Ltd

[2013] SADC 59

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

RONDOS & ANOR -V- TOOLANGI CERTIFIED STRAWBERRY RUNNER GROWERS CO-OP LTD & OTHERS

[2013] SADC 59

Judgment of Her Honour Judge McIntyre

8 May 2013

TORTS - NEGLIGENCE - PROOF OF NEGLIGENCE - WEIGHT AND CREDIBILITY OF EVIDENCE

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES

DAMAGES - GENERAL PRINCIPLES

The plaintiffs were commercial strawberry growers in the Adelaide Hills. The first defendant is a cooperative of growers who grow strawberry runners under the Victorian Strawberry Runner Certification Scheme for supply to the commercial strawberry industry. The second defendant is a grower and member of the first defendant.

In the 2003/2004 season the plaintiffs' strawberry crop collapsed. The strawberry runners were purchased from the first defendant and grown by the second. The plaintiffs claim damages against the defendants. The plaintiffs contend that the runners were supplied infected by binucleate rhizoctonia, a soil borne fungus, which attacked the root system of the plants and ultimately caused the failure of the crop.

HELD: That the plaintiffs have not established that the strawberry runners were infected by binucleate rhizoctonia at the time of supply. The pathogens that caused the failure of the crop were in all probability indigenous to the plaintiffs' land.

Victorian Plant Health & Plant Products Act 1995  ; Trade Practices Act 1974 s52, 53A, 7(2), 74(B)(C)(D); Victorian Fair Trading Act 1999 s9, 10, 12; South Australian Misrepresentation Act 1972  ; Manufacturers Warranties Act 1974  ; Goods Act 1958 s18, referred to.
Mendelson -Zellor C Inc. v T & C Providores Pty Ltd [1981] 1 NSWLR 366; Moonlighting International Pty Ltd v International Lighting Pty Ltd [2000] FCA 41; Browne v Dunn (1893) 6 R 67 (HL), considered.

RONDOS & ANOR -V- TOOLANGI CERTIFIED STRAWBERRY RUNNER GROWERS CO-OP LTD & OTHERS
[2013] SADC 59

1. The plaintiffs, Mr and Mrs Rondos, were commercial strawberry growers in the Adelaide Hills trading as P & A Charleston Strawberries.  The first defendant, Toolangi Certified Strawberry Runner Growers Cooperative Limited (Toolangi), is a cooperative of growers who grow strawberry runners under the Victorian Strawberry Runners Certification Scheme for supply to the commercial strawberry industry.   The second defendant H Weda and Sons Pty Ltd (Weda) is a grower and member of Toolangi. 

2. In the 2003/2004 season Mr and Mrs Rondos’ crop of 230,000 selva plants collapsed.  The selva runners were purchased from Toolangi and grown by Weda.

3. Mr and Mrs Rondos contend that the runners were supplied infected by binucleate rhizoctonia, a soil borne fungus, which attacked the root system of the plants and ultimately caused the failure of the selva crop.  The defendants contend that binucleate rhizoctonia was not responsible for the type or level of disease in the plaintiffs’ plants and that there were other pathogens identified.  The defendants say that the pathogens did not come from Toolangi and in particular Weda’s land but were in all probability indigenous to the plaintiffs’ land. 

4. The plaintiffs claim against the defendants, on a number of grounds, for loss arising from the failed strawberry crop.  In particular Mr and Mrs Rondos say that the failure of the strawberry crop caused the closure of the business P & A Charleston Strawberries.  For the reasons that follow I find that the plaintiffs have not proven their claim against the defendants and accordingly their claim ought to be dismissed.

   Issues

5. The main issues to be determined are as follows:

   1.     Where was the contract formed and what law applies?

   2.     In what capacity do the plaintiffs pursue this action?

   3.     Did binucleate rhizoctonia (alone or in combination with other pathogens) cause the selva  crop to fail?

   4.     Was binucleate rhizoctonia indigenous to the plaintiffs’ property or was it introduced on the strawberry runners?

   5.     What is the proper assessment of the loss arising from the failure of the      strawberry crop?  In particular did the failure of the strawberry crop cause         the plaintiffs to close the business P & A Charleston Strawberries?

   6.     Are the plaintiffs entitled to recover any loss from the defendants and upon        what basis?

   The hearing

6. The hearing commenced on 6 August 2012 and the liability evidence concluded on 12 September 2012.  I heard submissions on the question of liability on 18 September 2012.  Owing to difficulties with the plaintiffs’ taxation returns that came to light during the course of the hearing, the question of quantum was adjourned. I heard evidence and submissions about quantum commencing on 20 November 2012 until 23 November 2012.

   The Witnesses

7. The plaintiffs, Peter and Angela Rondos, gave evidence.  In addition they called a number of witnesses. Arthur Lazaraki, a fellow strawberry grower and long term friend, gave evidence about his growing practices including fumigation and how he assisted Mr Rondos with advice when the plaintiffs decided to take up commercial strawberry growing.  Hans Kloss, an agronomist, gave evidence about providing advice to the plaintiffs throughout their business and of his observations of their selva  crop in 2003/2004.  Their accountant, Mr Lee Chew told the court about his firm’s preparation of the business accounts and taxation returns. 

8. Mr Paul James, a plant pathologist employed by the South Australian Department of Primary Industry (PIRSA) at Lenswood has known the plaintiffs in a professional capacity for some years and has provided them with advice from time to time.  He gave evidence about planting 550 trial plants on the Rondos’ property in 2003/2004 and of his observations of the plaintiffs’ selva  crop during that season.

9. Ms Barbara Hall works at the South Australian Research and Development Institute (SARDI) as a plant pathologist.  Ms Hall gave evidence about examining plants from the plaintiffs’ property and of conducting some pathogenicity tests. Dr Prue McMichael, a plant pathologist, gave expert evidence as to the cause of the crop failure and the significance of the pathogenicity tests that she instructed Ms Hall to undertake. 

10. Finally the plaintiffs called Mr David Crace, a chartered accountant with particular expertise in forensic accounting, to give evidence about the losses sustained in consequence of the crop failure. 

11. Mr George Weda, a director of the second defendant and the managing director of the first defendant gave evidence. In addition the defendants called a number of other witnesses. John Baker is employed by the Victorian Strawberry Industry Certification Authority (VSICA) and gave evidence about the runner certification scheme and the certification process in the Toolangi area.  Mr Rodney Mitchell, owner and co-director of R & R Fumigation Services Pty Ltd, gave evidence about fumigating the Weda property and also gave expert evidence on the topic of fumigation generally.  Dr Scott Mattner, a plant pathologist employed by the Victorian Department of Primary Industries at Crop Health Services, gave evidence of conversations with the plaintiffs and of his work in the research and development of alternative fumigants to methyl bromide. Mr Donald Parker, a strawberry grower from the Adelaide Hills, gave evidence about purchasing strawberry runners from Toolangi and of his farming practices. 

12. Dr Frank Martin, a research plant pathologist based in California, Professor Frank Louws, a plant pathologist currently employed as a professor at the North Carolina State University and Dr Peter Taylor, a plant pathologist based in Victoria, all gave expert evidence about the cause of the failure of the Rondos’ selva crop.

13. The defendants called Mr Paul Spence to give forensic accounting evidence in response to the evidence called by the plaintiffs on that topic.

14. In addition a number of affidavits were tendered by consent.  The plaintiffs tendered affidavits of Benjamin Cosentino[1] and Darren Andrew Ray.[2] The defendants tendered affidavits from Donald Parker[3], Heather Corallo[4], Luciano Corallo[5], Dianne Davies[6], Brenton Sherry[7] and Dr Peter Merriman.[8]

    [1] Exhibit P4

    [2] Exhibit P6

    [3] Exhibit D58

    [4] Exhibit D59

    [5] Exhibit D60

    [6] Exhibit D61

    [7] Exhibit D62

    [8] Exhibit D63

    Assessment of the evidence

15. The key witnesses on many issues in dispute are the plaintiffs.  Mr and Mrs Rondos impressed me as a hard working and devoted couple.  However there were some unsatisfactory aspects to their evidence and to their conduct of the litigation that caused me to doubt their evidence on a number of crucial topics. 

16. One of the difficulties was the evidence that Mr and Mrs Rondos gave at trial was in several respects inconsistent with instructions provided to their experts Dr McMichael and Mr Crace. I will highlight a few of the more significant issues.  The list is not exhaustive.

17. Prior to trial, Dr McMichael and Mr Crace were told that the selva  crop became distressed and “tired” in December 2003. Dr McMichael in particular was never told that the selva crop commenced to show symptoms in October 2003. This was a matter that was relevant to the matters that she had to consider. Dr McMichael was provided with a letter from the defendant’s solicitors to the plaintiff’s solicitors dated 16 August 2005[9] where this issue was raised as follows:

    As your client did not observe or report any symptoms of disease until seven to eight months after planting, we are instructed that attributing reports of disease to the receipt of runners from our client, is not consistent with experience.  If the diversity of pathogens identified on your client’s property were in the planting stock when they were delivered, then we are instructed, that plant pathology experience would indicate that the symptoms: wilting and plant collapse; lesions or galls on the roots; loss of feeder roots; and a lack of crop vigour, would have presented during the runner phase of production at Toolangi.  These symptoms would have been readily identified in regular inspections of runner stock conducted independently either Victorian Strawberry Runner Certification Scheme, by the runner grower himself and during the packing and processing of the runners.  No such symptoms were ever observed during the runner phase of production at Toolangi.[10]

    [9] Exhibit P27, Tab 4 dated 16 August 2005

    [10] Exhibit P27, p10 para 5

18. Dr McMichael responded to this in her report dated February 2007[11] as follows:

    The onset of black root rot (or similar disease/syndrome) several months after planting is typical of the disease complex.  Research has demonstrated symptom onset five to eight months after planting, with mortality often peaking during peak fruit production.[12] 

    [11] Exhibit P7, Tab 1

    [12] Exhibit P7, p17 para 5

19. Plainly therefore the timing of the onset of symptoms was identified at an early stage of proceedings as an issue of some significance.

20. The basis upon which the plaintiffs’ case was pleaded, and upon which counsel for the plaintiffs opened, was that there were no problems until December 2003. However, the effect of the plaintiffs’ evidence at trial was that they observed problems with the crop commencing in October 2003.  The timing of the onset of symptoms is important for a number of reasons and I will deal with this topic in more detail later in my reasons.  However, the importance of the topic is such that it is hard to understand why the discrepancy arose between the instructions given by the plaintiffs to their solicitors and their evidence at trial.  No explanation was given for this change of position. 

21. The plaintiffs have known throughout these proceedings that the defendants maintain that Mr Rondos did not adequately fumigate the strawberry beds prior to planting the selva runners.  Dr McMichael made an enquiry about the rate of application of fumigant following her engagement by the plaintiff’s solicitors.  She was told “following further instructions from our client” that:

    On 25 April 2003 fumigation with methyl bromide occurred.  The prescribed rate was 25 mls per square metre.  He used 900g of methyl bromide, 23 rolls of plastic and 13 rolls of T-tape.[13]

    [13] Exhibit P7;  p29

22. This information was the subject of extensive comment by Dr Taylor who contended, among other things, that this was an inadequate rate of application.[14]  Dr McMichael responded to Dr Taylor’s criticisms in her report.[15]  Accordingly, the rate of application was a live issue between the parties at an early stage of proceedings.  Given this, it is extraordinary that Mr Rondos gave evidence that the instructions to Dr McMichael were wrong and that his rate of application was 40g per lineal metre.  This is a significant departure from the information provided to Dr McMichael. It occurred for the first time during evidence.  There was no explanation given as to why this change of position occurred nor was there any explanation as to why this information was more likely to be correct than the information previously provided to Dr McMichael.  I will return to the topic of fumigation later in my reasons, as it is one of the key issues to be determined.

    [14] Exhibit D3, pp21-24

    [15] Exhibit P7, p17 para 5

23. Similarly there are issues about the manner in which the fumigant was applied.  The method used by Mr Rondos was the “hot gas method”.  Dr Taylor criticised this method of application and what he knew of Mr Rondos’ equipment.[16]  In particular he expressed a view about the length of coil required to adequately distribute the gas.  He referred to the AQIS standard and suggested that it was not clear whether Mr Rondos’ equipment complied with this standard. Mr Mitchell provided a report in which he expressed his views as to the importance of:

    …..using the correct equipment designed to adequately vaporise the required amounts of methyl bromide.  The equipment must be designed to a standard, and the water temperature must be maintained during application.[17]

    [16] Exhibit D3; pp23-24

    [17] Exhibit D45, p2

24. Accordingly the equipment used was an issue of importance that was identified at an early stage of proceedings.  It could have been clarified by the production and examination of the relevant equipment by the various experts.  No explanation has been given as to why this did not occur. The explanation may lie in Mr Rondos’ initial evidence that his fumigation equipment was thrown away.[18]  However, the plaintiffs then tendered, through Mr Rondos, some recent photographs of various pieces of farming equipment not previously discovered to the defendants. [19]  Mr Rondos identified images of a copper and piping in some of those photographs as the fumigation equipment that had belonged to him.[20]  This begs the question when or if the equipment was thrown away and why it was not made available to the experts.

    [18] Transcript p126

    [19] Exhibit P9

    [20] Transcript p83

25. The plaintiffs instructed Dr McMichael that they had never had issues with previous strawberry crops or slow growth of plants.  Dr McMichael was told that Mr Rondos had been growing strawberries during the 12 years prior to the 2003 planting and that each of his prior crops was successful.  She was also told that plants provided prior to the 2003 plantings established and grew well.[21]  Dr McMichael indicated that this was a significant issue in her reports.  Mr Rondos gave evidence in chief along similar lines.  The records subpoenaed from SARDI however indicate that the plaintiffs submitted plants for testing by SARDI on 3 February 2003 to ascertain the cause of “poor root growth”.  The SARDI report addressed to the plaintiffs indicated that pythium was recovered from the soil.[22]  This is relevant to the issue of liability and I will deal with this topic in more detail later in these reasons, but for present purposes it is also relevant to the issue of credit.  Mr Rondos was asked whether he had previously had problems with the pathogen pythium.  He denied this and also denied that he had previously sent plants off for analysis.  It was only when shown the SARDI documents, including a form submitted to SARDI dated 31 January 2003 signed by his wife, that he agreed he had problems with poor growth in January 2003 and that pythium was recovered from his soil.[23]

    [21] Exhibit P7, p6

    [22] Exhibit P3, p41

    [23] Transcript pp200-2

26. Dr McMichael was instructed that the Rondos’ land was “historically pasture or potato growing land”.[24]  In her first report Dr McMichael said that the land supported a potato crop seven years before the selva  crop was planted.  This is significant because potato crops can be a host for some AG groups of rhizoctonia.  The evidence given by Mr and Mrs Rondos was somewhat different to the instructions provided to Dr McMichael suggesting that as far as they were aware the land had only been used for pasture.  In examination in chief Mr Rondos said that the land had previously been used as pasture for dairy cattle.[25]  In cross-examination he gave evidence as follows:

    [24] Exhibit P7, p35

    [25] Transcript p103. 

    QYou now know that the block at Juers Road before it was used for grazing land was used to grow potatoes.

    ANot that I know of.

    QSo you weren’t aware of that at the time.

    AAt the time I was there, I never seen potatoes grown there.

    QHad you been told.

    ANo.

    QDid you ask.

    ANo

    QAt the time, I mean.

    ANo.

    QSo any knowledge that you have about that is knowledge that you’ve acquired after the crop had failed.

    AYes.

    QDo you appreciate the significance of land having had potatoes grown on it for a strawberry farmer.

    ANo. Not before no.

    QAnd the sort of pathogens that attack strawberries are also commonly found in potatoes.

    ANo, I didn’t know that.[26]

    [26] Transcript pp203-4

27. Mrs Rondos gave evidence in chief as follows:

    QPrior to planting the strawberries on the Juers Road land, did you know what that land had been used for.

    APasture.

    QWhen you drove past it going into Charleston and driving around in the area, did you notice what it was.

    AWhat it was?

    QYes.

    AClear land with cows on it.

    QAnd was that the position for the whole time that you were at Charleston.

    AFor the 10 years that we were there, yes.[27]

    [27] Transcript p332

28. Inconsistencies also arise in relation to the financial evidence. In the first letter of instruction to Mr Crace, the forensic accountant engaged by the plaintiffs to quantify their losses arising from the crop failure, dated 7 January 2008[28] he was instructed, amongst other things, that:

    We understand that Mr Rondos owns an olive orchard which is operated via the Trust, however this occurred mainly after 2004 and very little if any expenditure was recorded in that year.  We are seeking further information on that issue.[29]

    [28] Exhibit P26, p130

    [29] Exhibit P26, p132

29. Mr Crace set out his instructions relating to the olive farm at paragraph 7.15 of his first report.[30]  Mr Crace said quite properly that any income and costs associated with the olive grove should be excluded from a consideration of the financial performance of the strawberry business. 

    [30] Exhibit P26, p394

30. Mr Crace set out his assessment of the total olive costs for the financial years ended 30 June 2003 and 30 June 2004 in his report.[31]  It became apparent during evidence that these costs were understated.  In cross-examination of Mr & Mrs Rondos both said that the olive farm was purchased and settled on 2 August 2002, that they planted about 2,000 trees and that there was considerable expenditure incurred in relation to that property not all of which was disclosed to Mr Crace.[32]  Whilst both Mr and Mrs Rondos conceded these expenses, it was only when faced with the relevant documents during their cross-examination. They did not explain why Mr Crace was not properly instructed at the time of his first and second reports nor was there any explanation why the understatement of expenditure was not corrected when the plaintiffs read Mr Crace’s reports.  

    [31] Exhibit P26, p396

    [32] Exhibit D10, Mr Rondos Transcript pp261-72 and Mrs Rondos Transcript pp407-11

1. There was also a very substantial understatement of the strawberry sales in 2003/2004 in the financial statements for P & A Charleston Strawberries. This only became apparent during the plaintiffs’ evidence following late disclosure of some banking statements.  This led to the necessity for Mr Crace to undertake a complete reconstruction of the financial returns for that financial year.  This in turn caused a lengthy adjournment of the trial.  The declared sales income was just under $55,000 whereas the actual sales income was slightly in excess of $352,000.

2. This is a complex matter that I will deal with in more detail in due course. However, it is also important on the issue of credit. Whilst I accept Mr Chew’s evidence that this understatement of income originally arose due to clerical errors in his accountancy practice I found the plaintiffs’ evidence (specifically Mrs Rondos who was responsible for the accounts) as to why they did not notice the accounting errors unconvincing. 

3. These issues in the accounts cause me to doubt the credit of both plaintiffs because of their apparent willingness to provide, or fail to correct, inaccurate financial information that had the effect of inflating the losses of the strawberry business and thus their claim.            

4. In addition to inconsistencies such as these, there are some substantial gaps in the evidence.  Many of the issues that are in dispute are matters that are uniquely within the plaintiffs’ knowledge but which they have been unable to clarify.  This includes issues such as the year in which they did not have a second year crop; the locations at which they farmed in various years; more precise details of when and where various activities took place in 2003/2004 such as bed forming, fumigation, planting, pruning and harvesting and the precise details of fumigants and other chemicals used.  Mr and Mrs Rondos were very vague and unhelpful on these topics. Whilst the lapse of time provides some explanation for this it is unfortunate that a number of quite important documents that might have assisted their recall of events are apparently now destroyed or lost including leases for land, the spray diary for the relevant season and the picking shed records after early November 2003.

5. The defendants’ counsel made submissions that I should not accept the plaintiffs’ evidence on a number of grounds including those listed above.  Objection was taken to his submissions on the basis of fairness and specifically it was contended that there had been no compliance with the rule of practice set out in Browne v Dunn.[33]  I have carefully considered the submissions and the transcript and I do not accept that there was any unfairness.  On the contrary, the various contentious matters were put to the plaintiffs and they were each given  opportunity to comment or explain.

   [33] 1893) 6 R 67 (HL)

6. Taken individually and in combination these matters cause me to have reservations about the evidence given by Mr and Mrs Rondos. I will deal with these issues in context however due to these matters and others of a similar type I came to the conclusion that I could not rely on their evidence on contentious issues where it was not supported by other evidence.

7. The plaintiffs contend that I should reject the evidence of Mr Weda where it conflicts with theirs. There are three bases put forward for this.  First his involvement in Toolangi, second his demeanour and third it was contended that there was an element of reconstruction in his evidence.  I do not accept these submissions. 

8. The plaintiffs appeared to paint this as a “David & Goliath” struggle between the plaintiffs’ operation on the one hand and that of the defendants on the other. Whilst this is hardly a relevant consideration for the matters that I must determine, it is also factually incorrect.  Mr Weda was criticised for describing himself as a simple farmer and for saying that Toolangi was “no BHP” on the basis that Toolangi’s operations turned over $9.8 million in sales in 2004.[34]  This submission overlooks the fact that Toolangi is a farming cooperative of 12 growers and that, when divided between the growers, the turnover is not vastly dissimilar to that of P & A Charleston Strawberries in some years of its operation.  It was my view that Mr Weda was an impressive witness with considerable farming experience. His evidence was credible and consistent. I detected no reconstruction.  To the contrary he was very clear when he had no recollection of matters and the occasions on which he was able to refresh his memory from contemporaneous records.  I have no hesitation in accepting his evidence.

   [34] Plaintiffs’ written submissions dated 17/9/12 para 26

9. The other lay witnesses who were called were in the main uncontentious.  The expert witnesses were all objective and were very helpful to the Court particularly in explaining the more esoteric areas of their expertise.  Areas of difference between the experts were generally explained on the basis of differing instructions.  I will deal with the differences of opinion in the context of my finding on the evidence.

   The Plaintiffs’ business

10. Mr and Mrs Rondos commenced the business P & A Charleston Strawberries in late 1993.  Prior to that time they had worked in other occupations but had over the years assisted friends who owned similar strawberry farming businesses. 

11. Peter Rondos was the principal manager of farming operations. Angela Rondos was primarily responsible for managing the business including paperwork, accounts and workers.  They employed an external accountant, Mr Chew and his firm, to prepare all of the financial returns for the business and to set up the company structure.  

12. The business operated on various leasehold properties in the Adelaide Hills. Initially the Rondos packed the strawberries at their home but in about 1995 they leased a shed on Jungfer Road at Charleston that they used as their packing facility until the business ceased trading.  

13. In about 1998 they set up a quality system designed to satisfy the requirements of the SQF2000 Quality Code 1997.  The system is described in a manual that the plaintiffs maintained in respect of all their growing and packing operations.[35] The system was audited initially twice per year and then once a year.  Mrs Rondos normally dealt with this process.[36]  The manual included work sheets such as the picking shed records and the spray diary.  Some of these are missing for the relevant periods of time.  Mrs Rondos said that they were most likely destroyed when they closed up the business.

    [35] Exhibit P1 Tab 9

    [36] Transcript pp97-8

14. Throughout the course of the business the plaintiffs purchased their strawberry runners from Toolangi.  Indeed it appears from their evidence that they were under the misapprehension that Toolangi was the only supplier of strawberry runners to commercial growers in Australia. 

15. Runners were generally planted in March/April each year. The strawberry harvest would start in about November to about January/March although Mr Rondos said that if the crops were covered it was possible to harvest up to August. The Rondos obtained two seasons from one set of runners.  In other words they would plant runners one year, harvest the strawberries and then prune the runners at the end of the season in order to obtain a crop in the following season.  The second year crop was not as productive as the first year but was still commercially viable. After the second year the runners would be removed and the land left fallow for at least a year.   

16. In the 2003/2004 seasons the Rondos had a second year crop on their Jungfer Road property and they planted a first year crop on the Juers Road property.  This was the first year the Rondos had cropped Juers Road.  Mr Rondos says that he prepared the strawberry beds in his usual manner, fumigated most of the beds using a hot gas application of methyl bromide and then planted runners sourced from Toolangi. 

17. The Rondos purchased two types of runners that season.  The principal variety was selva runners but they decided to try a small quantity of a new variety of runners called diamante.  230,000 selva runners were planted in fumigated land.  Owing to a mistake, it is said that 1,000 diamante runners were planted in unfumigated land.  In addition to these commercial crops the plaintiffs also planted a batch of 550 test plants as part of a programme run by Paul James on behalf of PIRSA.  It is said that these plants were in fumigated land.

18. The plaintiffs’ 2003/2004 selva crop failed.  The precise timing is controversial as is the cause. 

19. P & A Charleston Strawberries ceased trading following the failure of the selva crop.  The question of whether the failure of the crop was causative of that is contentious.  The timing of the decision to stop growing strawberries is not clear.  Mr and Mrs Rondos were unable to be precise about the time.  It appears to be between 24 February 2004, when the Rondos reduced but confirmed their order for the next seasons strawberry runners and about May/June 2004 when those runners were invoiced, paid for and delivered.[37]

    [37] Transcript p277 - Mr Rondos; Affidavit of Diane Davies Exhibit D61 para 31.

    The defendants’ business

20. Toolangi Certified Strawberry Runner Growers Association commenced in 1960 and incorporated as Toolangi Certified Strawberry Runner Growers Cooperative Limited in 1979.  Weda was a foundation member of the association in 1960 and has remained a member since that date. Since 1964 the Toolangi district has been a location protected by proclamation and since 1995 has been declared to be the Toolangi Plant Protection District under the Victorian Plant Health and Plant Products Act 1995.

21. Toolangi and its predecessor association has been part of the Victorian Strawberry Runners Certification Scheme (“the Scheme”) developed by the Victorian Department of Agriculture since 1960. In 1995 VSICA was established by the Government of Victoria to assume responsibility for the Scheme.  It is an incorporated not-for-profit association.  The board of Directors of VSICA comprises two runner growers, two fruit growers and an independent chair; currently Peter Merriman.

22. In particular, VSICA manages the process of production of commercial crops of certified strawberry runners from pathogen tested stock under protocols specified in the Scheme.  This process takes place over 4 stages or generations.

23. The first generation or nucleus stock of strawberry runners is grown at Knoxfield Victoria by VSICA by pinning daughter plants, produced on stolons by the mother plant, into the substrate or soil to promote root formation.  The nucleus stock is then cleaned, labelled, packed and placed in cool storage.  The following season the nucleus stock is planted in fumigated soil within insect proof cages.  The nucleus stock produces daughter runners that are pinned into fumigated soil and comprise the second generation known as the foundation stock.  The foundation stock is also grown by VSICA.  Once this has been harvested, cleaned, labelled and packed in cool stores it is then sold to commercial runner growers who grow crops according to the protocols specified in the Scheme.  

24. Toolangi purchases foundation stock from VSICA and two members of Toolangi grow the third generation mother stock as field crops.  One of those two members is Weda. The mother stock is harvested and then distributed to the members of Toolangi who grow the fourth generation certified runners as field crops.  The third and fourth generations of selva  in this case were grown by Weda.  The runners harvested from the fourth generation were supplied to the plaintiffs by Toolangi.  Both the third and fourth generations are inspected by VSICA as part of the Scheme. 

25. Toolangi sells only runners certified by VSICA. VSICA inspects commercial runner crops submitted for certification.  The process is set out in the conditions of the Scheme. Upon certification, VSICA issues a certification label that is attached to the exterior of the boxes of runners.  It is uncontentious that certification was granted in this case, that certification labels were issued and attached to the boxes of runners supplied to the plaintiffs by Toolangi.  The label read, in part, as follows:

    These strawberry runners are certified by the Victorian Strawberry Industry Certification Authority (VSICA).  The Department of Natural Resources & Environment provides the Scheme with specific technical services which includes the maintenance of a number of nucleus mother plants, which are tested for diseases as specified in the conditions of the Scheme.

    Certification of strawberry runners by VSICA is strictly limited to the act of endorsing as meeting the conditions of the Scheme.  The method of determining compliance is visual inspection of the growing crop.  VSICA does not test for varietal purity and trueness to type. VSICA takes no responsibility for any conditions or circumstances affecting the plants after the final field inspection by the Authority, other than as required by law or as expressly set out in the conditions of the Scheme.  No conditions or warranty, expressed or implied, of quality or fitness for any particular purpose or of merchantability is given by VSICA in respect of certified runners, other than as required by law or expressly set out in the conditions of the scheme.[38]

    [38] Exhibit P1, tab 19

26. The significance of the certification by VSICA is the subject of contention however in view of my findings on liability I do not need to deal with that issue.

    Where was the contract formed and what law applies?

27. The process by which the plaintiffs purchased runners from Toolangi was the same each year.  Shortly put, Toolangi would invite growers to place indicative orders to enable Toolangi to gauge likely demand prior to planting mother stock.  The growers would later confirm or vary those orders and pay a deposit before final despatch of the runners. 

28. Toolangi sent order forms listing the strawberry varieties it would have available in commercial quantities for winter planting of fresh plants in 2003 to South Australian growers including the plaintiffs by letter dated 22 July 2002.  On 14 August 2002 Toolangi received a strawberry plant order form for 2003/2004 season signed by Mrs Rondos for 300,000 selva  runners and 1000 Diamante runners.  On 4 February 2003 Toolangi provided the plaintiffs with an order acknowledgement form.  Toolangi also provided the plaintiffs with a non-propagation agreement in relation to their order.  The date on which this was sent is not clear but it was signed by Mrs Rondos on 20 February 2003 and received by Toolangi on 24 February 2003.  This amended the Rondos’ original order by reducing the number of selva runners required from 300,000 to 230,000.  The Rondos paid a deposit of $11,500 in February 2003.  On 24 April 2003 Toolangi sent an amended order confirmation to Mr and Mrs Rondos.  The Rondos paid Toolangi the balance of the purchase price in May 2003 prior to collection of the plants.  The selva and diamante runners were collected from Toolangi on 12 May 2003 by Harris Transport.  This transport was arranged by Mr and Mrs Rondos.  The runners were shipped with a Plant Health Assurance Certificate dated 12 May 2003.[39]

    [39] Affidavit of Diane Davies sworn 9 September 2012; Exhibit D61

29. A live issue is where the contract was formed as this affects the legislation that may apply. The initial order forms are, in my view, no more than an invitation to treat as they do not impose any obligations to either sell or purchase strawberry runners. The order acknowledgement is sent by Toolangi to prospective purchasers with the clear understanding that the initial order may be amended by the purchasers as the Rondos did on this occasion.  The conditions of sale indicate amongst other things that:

    Receipt of an order by the Co-operative does not constitute acceptance of it.  The Co-operative reserves the right to accept it in whole or in part at any time prior to the delivery date specified on the order.  The Co-operative reserves the right to accept it in whole or in part at any time prior to the delivery date specified on the order.

30. Binding obligations only crystallise at the time of acceptance of the final order by Toolangi and the delivery of plants. Acceptance of the order by Toolangi occurred in Victoria and arguably property passed in Victoria when the transport company organised by the Rondos collected the plants from Toolangi.  Accordingly, it is my view that the contract was formed in Victoria when Toolangi accepted the amended order and provided strawberry runners to Harris Transport.[40] 

    [40] Mendelson-Zeller Co. Inc. v T & C Providores Pty Ltd [1981] 1 NSWLR 366; Moonlighting International Pty Ltd v International Lighting Pty Ltd [2000] FCA 41

    The plaintiffs’ claims

31. The plaintiffs claim for damages to be assessed against the first defendant for:

    ·Negligence

    ·Breach of Contract

    ·Breach of s.52 and 53(A) of the Trade Practices Act 1974 (TPA)

    ·Breach of s.9, 10 and 12 of the Victorian Fair Trading Act 1999 (FTA)

32. In view of my ruling in relation to the location of the contract the claims under the South Australian Misrepresentation Act 1972 (MA) & Manufacturers Warranties Act 1974 (MWA) can be dismissed.

33. The plaintiffs also seek damages to be assessed against the second defendant for negligence, breaches of s.52, 53, 74(B), 74(D) and 74(C) of the TPA and breach of s.9, 10 and 12 of the FTA.

34. In summary the plaintiffs claim that the first defendant has breached its contract with the plaintiffs by providing selva runners carrying binucleate rhizoctonia causing the plaintiffs to suffer loss and damage. The plaintiffs also rely on a number of implied statutory terms specifically that the selva runners were sold in accordance with their description pursuant to s.74C of the TPA and s.18 of the Goods Act 1958 (Vic) (GA), that they were fit for the purpose for which they were provided and which was made known to the defendants pursuant to s.71(2) and 74(B) of the TPA and of merchantable quality under s.71(1) and 74(D) of the TPA and 19(B) of the GA.

35. It is also alleged that Toolangi was negligent because it “manufactured” and supplied to the plaintiffs a product it ought to have known was diseased, not fit for its purpose and not of merchantable quality and that it failed to have in place systems of production so as to prevent selva  runners from contracting the disease or to detect the existence of the disease. 

36. Weda is said to have been negligent by “manufacturing” selva  runners that it ought to have known were diseased and defective, that were not fit for purpose and that were not of merchantable quality.  Further it is contended that Weda failed to have in place systems of production so as to prevent the selva  runners from contracting the disease or to detect the existence of the disease.

37. The plaintiffs further claim statutory damages alleging that Toolangi and Weda have engaged in misleading or deceptive conduct contrary to s.52 and 53(A) of the TPA and s.9, 10 and 12 of the FTA and that Weda has engaged in conduct in contravention of s.74(C) of the TPA.

38. All of the plaintiffs’ claims whether pleaded in negligence, contract or statute are based on the contention that the defendants supplied runners that were infected by binucleate rhizoctonia.  I do not consider that the plaintiffs have established that this was the case and accordingly each claim fails.

    In what capacity do the plaintiffs bring these claims?

39. The statement of claim pleads as follows:

    1.   At all material times and since 1993 or early 1994, the First Plaintiff and the Second Plaintiff operated a business in partnership as trustees for the Rondos Family Trust, growing strawberries and trading under the business name of Charleston Strawberries to 1997 and then as P & A Charleston Strawberries …

40. The defendants contend that there is no evidence of any partnership and that it was the Trust which operated the strawberry farming business at all relevant times.  The defendants further contend that the plaintiffs do not have any claim as individuals. 

1. The Deed of Trust[41] is stamped 2 February 1996. The Trust is a discretionary Trust and its beneficiaries are Peter, Angela, Marika and Sarandos Rondos.  The Trust is not a legal entity.  It must sue by its trustees.  Peter and Angela Rondos are the trustees of the Trust. 

   [41] Exhibit P1, tab 11

2. The plaintiffs written submissions on the topic of quantum[42] maintain the position set out in the statement of claim that the plaintiffs claim is:

   …for a loss to the partnership and as the trustees of the Trust

   [42] Plaintiffs Summary of Argument – Quantum

3. In evidence the plaintiffs described their business as a partnership. The description used by the plaintiffs in their evidence is not, without more, determinative. No partnership agreement has been produced.  The financial returns do not include partnership returns.  The Trust taxation returns do not include a distribution to a partnership or any other reference to a partnership.  These returns refer to the business name of the main business conducted by the Trust as P & A Charleston Strawberries.  Mr and Mrs Rondos’ personal taxation returns do not disclose partnership income.  On the contrary, they indicate that their income at relevant times is a salary from the Rondos Family Trust and a distribution from the Rondos Family Trust.  The ABN on all of the business documents that have been tendered for P & A Charleston Strawberries is 19 864 385 163 which is the ABN for the Rondos Family Trust. 

4. Accordingly it is my view that the defendants are correct in their contention that the plaintiffs are conducting this action on behalf of the Trust and that they have not identified any individual or personal claim. 

   Timetable of relevant events

5. There are some controversial timing issues that I must resolve.  These include the time at which symptoms became apparent in the crop, the dates of various tests and the timing of complaints to the defendants. 

   Onset of symptoms

6. It is common ground that the strawberry runners appeared healthy on delivery.  They were planted shortly after delivery between 19 May 2003 and 25 May 2003.[43]

   [43]   Statement of Claim para 18

7. The plaintiffs’ Statement of Claim sets out the sequence of events as follows:

   22.     On or about 29 October 2003, Mr Hans Kloss tested all of the selva  runners and     the diamante runners and made recommendations about fertiliser, but no disease   was detected nor any problems identified with any of the runners at that time.

   23.     In the period between 14 November 2003 to 17 December 2003, hot weather   conditions in excess of 30 degrees celsius were experienced.

   24.     In or about early to mid December 2003, during and after the hot weather       conditions referred to in paragraph 23 above, some of the selva  runners appeared      stressed and tired.

   25.     In or about early to mid December 2003, a disease began to appear randomly   throughout the selva runners.

   26.     The diamante runners were not affected by the disease and went on to yield a crop.

   27.     All of the selva runners failed and died from the disease during December 2003      and January 2004.  (“the Crop Loss”).

8. The initial instructions that were provided to Dr Prue McMichael by the plaintiffs’ solicitors were consistent with the Statement of Claim.[44]  Dr McMichael was later provided with some additional information following a statement taken from Mr James concerning his observations of the plant collapse confirming that the symptoms commenced in about December 2003.[45]

   [44]   Letters of instruction dated 24 May 2005; 2 June 2005; 9 September 2006; Exhibit P7 tab 1

   [45]   Exhibit P7, p35

9. The plaintiffs’ counsel opened the plaintiffs’ case consistent with the Statement of Claim indicating that the plants commenced to collapse in December 2003.

10. Mr Rondos gave evidence that, following planting, he did not notice anything different about the plants.  The leaf growth and the plants generally were the same as in previous years.  Mr Kloss came to the property in October 2003 and did leaf testing.  The plants were all flowering at the time of Mr Kloss’ visit. This was normal according to the weather conditions.  Mr Rondos was then shown a photograph which he identified as his tractor.[46] He said that the photograph was taken in the 2003/2004 season in early October/November/December 2003.  He then said that the plants in the photograph did not look the same as other years.  There should have been more fruit and more leaves and you would not normally be able to see the plastic covering the mounds.[47] 

    [46]  Exhibit P12

    [47]   Transcript pp112-13

11. Mr Rondos then described a “hot spell” following which the plants started to look tired.  The fruit was dull and getting dry.  He thought that the plants required further water. He administered this.[48]  The plants did not improve and so he called Paul James and Hans Kloss to look at the plants.  He said that they attended together shortly after his call.  Paul James took samples and was going to send these to the laboratory for testing.  Mr Rondos thought Mr James sent some samples to Knoxfield in Victoria and some to PIRSA.  Mr Rondos said that he spoke to Dr James Wong and Dr Scott Mattner from Knoxfield before Christmas 2003 about the outcome of those tests.[49] 

    [48]   Transcript pp114-15

    [49]   Transcript p116

12. At the end of examination in chief, Mr Rondos’ evidence as to the timing of the onset of symptoms was not entirely clear but it did not appear to be inconsistent with the position set out in the Statement of Claim.  However the situation altered in cross-examination.  Mr Rondos was taken through an affidavit from Mr Ray of the Bureau of Meteorology,[50] in an attempt to identify the “hot spell” that preceded the onset of symptoms.  This was not entirely successful as can be seen from the following transcript excerpt:[51]

    QLook at those spikes in the temperature estimated by Mr Ray.  Can you tell her Honour which of those periods of hot weather led you to do the initial watering. Are you able to say now.

    AIncreases in water in between the 3^rd of the 4^th, or even earlier I increased water, maybe on the 27^th of the 11^th.

    QSo it was in fact that peak of temperature that you can see from 26 November to 29 November that you think is a period that you then increased the watering.

    AYes, maybe.

    QDo you know or are you guessing.

    ANo, I’m not sure.

    [50]  Exhibit P6

    [51]   Transcript pp146-47

13. Mr Rondos was then taken to the photograph of the tractor[52] and was asked questions in an attempt to identify when it was taken.  Mr Rondos said he could not ascertain whether the photograph was taken before, during or after the additional watering occurred.[53]  Later, he said that the photograph was taken early in the season of 2003, perhaps September or October.  It was not at a time where they could necessarily pick fruit as opposed to clearing winter damaged fruit.[54]

    [52]  Exhibit P12

    [53]   Transcript p147

    [54]   Transcript pp148-9

14. Mr Rondos was then gave evidence as follows:[55]

    [55]   Transcript p223

    QNow your evidence is that you started to notice the crop wasn’t as robust as it should have been –

    AYes.

    Q– fairly early in the harvesting process.

    AYes.

    QI think you said as early as October perhaps.

    ANo.

    QThinking about it now, say relative to Christmas in 2003, when do you think you first started to become concerned about the crop.

    AAround about that time, October/November.

    QAnd your concern at that time was that the plants didn’t appear to be as healthy as they should be.

    ANot as in other years, no.

15. Mr Rondos later agreed that he did not see anything about the plants until October 2003 that gave him cause for concern.[56] 

    [56]   Transcript p241

16. In re-examination, the topic of the date was not clarified as Mr Rondos was asked questions concerning “your reaction in December after the heat or after the heat which caused you to notice the plants were wilting”.[57]

    [57]   Transcript p285

17. Mrs Rondos gave evidence on the same topic.  She said that she did not notice anything about the plants when they arrived in the middle of May.  She said they were planted maybe three or four days after.  She was asked what the plants looked like after planting but before harvest.  She said:[58]

    AFrom the time they were planted until around September, well, they were dormant, so nothing much was happening.  Then I realised that they were growing a little bit slower than normal. 

    [58]   Transcript p333

18. Mrs Rondos described the plants as looking smaller. She said that there were not the same amount of leaves as in previous years.[59]  She then gave evidence as follows:[60]

    [59]   Transcript p333

    [60]   Transcript p335

    QWhat did you see.

    AAgain, there was – by that time out back plastic should have been full of leaves and berries really hanging ripe and green ones.  Well, it wasn’t happening.  It started.  Dry leaves started to come through and again we sort of thought ‘Oh well, maybe it depends on the weather, they’re a bit slower growing’.  Until the hot weather started to get a little bit warmer, started to come on and that’s when we realised that the plants started to wilt.

    QI will come to that in a minute.  Before I do, looking at Exhibit P12, can you identify about when that photograph was taken.

    AIt would be early October.

    Q2003.

    AYes.  No, not October, sorry.  November, sorry.  I apologise for that.  November.

    QNow, do you see there’s –

    ANo, sorry.  Can I correct that?  Early October, my first decision.

    QWhy are you trying to decide which time it is.

    ABecause early November we never had fruit.

19. She was then asked to comment about what could be seen in the photograph of the tractor[61] relative to what you would expect to see in early October.  She said that the black plastic should not be showing; there should be green leaves with plants hanging over.  She added that she would have expected to see a lot more berries with a lot more green fruit.

    [61]  Exhibit P12

20. Mrs Rondos said there was a period of hot weather, maybe around the middle of December, of over 30° for three to four days following which the plants started to wilt and there was no life in them at all.  She said maybe one week after they noticed this Mr James came to inspect the crop.  She was not present when he did that.  She said that by January 2004 the crop at Juers Road had completely collapsed and there was nothing left.[62] 

    [62]   Transcript p343

21. Mrs Rondos’ evidence about whether or not strawberries were picked from the Juers Road site was most confusing.  It was put to her that they picked strawberries from Juers Road from October through to December.  She rejected that proposition saying that they ”picked a couple of picks” from Juers Road.  She said this was only about 10% or 15%.  Mrs Rondos said that this evidence was based upon the quality control records for the packing shed that she completed.[63]  These records only cover the period from 24 October 2003 to 12 November 2003 for the 2003/2004 season.  The packing shed records after those dates have not been located.  Mrs Rondos gave evidence that they were likely burned when they closed down the business.

    [63]  Exhibit P1, tab 9

22. The available records show that fruit was picked on 24 October, 31 October, 5 – 6 November and 9 - 12 November 2003.  The source for that fruit is said to be “Silver J”. Mrs Rondos said that the reference to “Silver” ought to have read “selva”.  “J” was said to be the block from which the fruit was sourced.  The difficulty is that the plaintiffs operated two blocks for the 2003/2004 season both of which started with the letter J.  The first year crop planted at Juers Road and the second year crop at Jungfer Road.  The second year crop at Jungfer Road was also selva. Mrs Rondos did not agree that the reference to “J” was to Juers Road.  She suggested it denoted Jungfer Road.  She was asked about the records for the previous season where the abbreviations “W” and “C” were used.  She was asked if the abbreviations stood for the two blocks apparently farmed that year – “C” for Jungfer Road, which was at Charleston, and “W” for Woodside. Her evidence on this topic was, to say the least, confusing and unhelpful.[64] 

    [64]   Transcript pp398-400

23. The packing shed records indicate that on 24 and 31 October 2003 and 5 November 2003 some fruit was deformed.  The notation is 10% for the two October dates and 5% for 5 November.  There is a handwritten comment by Mrs Rondos on the record as follows:

    Deformed fruit is always there when you first start picking.  The first two peaks (sic) is mainly cleaning and dropped on the ground.[65]

    [65]    Exhibit P1, tab 9,  p163

24. Whilst Mrs Rondos’ evidence is not entirely clear she appeared to be suggesting that there were two sources for the fruit in the packing shed despite the fact that the records show one source denoted by the letter “J”; a small percentage of fruit from Juers Road with the majority of fruit from the second year crop at Jungfer Road.  For example she gave evidence as follows:[66]

    QWhat I want to put to you, the fruit that was being picked from 6 November onwards was from Juers Road.

    AIt could be Jungfer Road.

    QDo you accept that some fruit was picked from Juers Road and sold.

    ANo, only 10 or 15%.

    QWhat is the basis for you to say 10 or 15%.

    AWhen we were cleaning because after that it wasn’t worth doing anything with them, they just started to get worse and worse.

    [66]   Transcript pp422-23

25. Later, in reference to the records from the picking shed, she said [67]

    [67]   Transcript p424

    QThis record clearly indicates that you were picking off of Juers Road by 24 October 2003; is that right.

    AWe started to, yes.

    QDo I understand your evidence to be that after 5 November 2003 you didn’t pick any produce from Juers Road at all.

    ANo, not worth picking.

    QSo no stock was taken from that block.

    ANo.

    QYou’re quite certain about that.

    AVery sure.

    QPretty sure or certain.

    APretty sure.

26. Whatever the abbreviation “J” denotes it surely cannot denote both Juers Road and Jungfer Road.  It was an important part of the plaintiffs’ quality system to track the fruit that they produced.  The records that are available for the 2003/2004 season in my view most likely indicate fruit from a single source.  Unlike the 2003/2004 season, the records for the previous season 2002/2003 appear complete. The abbreviation “J” was not used in the 2002/2003 season during which the plaintiffs undoubtedly harvested a first year crop from Jungfer Road.  Taking this into account together with written evidence about fruit sales and the usual harvest from a second year crop, I consider it more likely than not that the abbreviation for Jungfer Road was “C” for Charleston in 2002/2003 and that “J” was used in the 2003/2004 season to denote Juers Road.

27. Mrs Rondos was also asked about the time the crop started to fail.  Her evidence was as follows:[68]

    [68]   Transcript p434

    QBefore lunch I was asking you questions about trying to pin down when you started to look at the crop on a regular basis.  Do you remember you told her Honour yesterday you went and looked at the crop every second day.

    AYes.

    QI understand in your evidence before lunch that that’s when the plants started to drop.

    AYes.

    QI want to suggest to you that happened at around the time there was a hot spell of weather in early to middle December of 2003.  Do you understand that’s the proposition that I’m putting to you.

    AYep.

    QThat it wasn’t until about the middle of December 2003 that you started to go out and look at these plants because that’s when they started to suffer.

    ANo.  They started to suffer before that.

28. It was then put to Mrs Rondos that she commenced looking at the crop every second day after she sent samples off to SARDI on 17 December 2003.  She denied this and said that she started doing it before that.

29. Mr Kloss gave evidence that Mr and Mrs Rondos called him in December 2003 season saying that they had a problem with their strawberries. He went to their property. There was an obvious problem with quite a number of plants. Some were healthy but quite a large number were stunted and declining.  Some had damage to lower leaves and were brown.  He said there was some fruit on the plants.  The fruit on the unhealthy plants looked hard and undeveloped but the fruit on the healthy plants looked reasonable.  He had four or so visits to their property following this.  Over that time the plants died off.  He took a sample on one visit and took it to SARDI.  The records show that this occurred on 17 December 2003.  It was not entirely clear, but it seems likely from his evidence, that he did this on his first visit.[69]  In cross examination Mr Kloss agreed that he inspected the property in October. He identified his recommendation status report dated 29 October 2003[70]. He was then shown the photograph of the tractor,[71] and his evidence was as follows:

    QYou can assume for the purposes of my questions that this photograph was taken in the 2003/2004 picking year, at Juers Road; so make those assumptions for me.

    AI can’t make assumptions, it looks too healthy to me.

    QThat was my question.  What you saw in December, when you went to look at the crop, is not the way the crop is presenting in that photograph was it.

    ANo, that I saw, the crop I saw was more affected.  This crop looks actually not too bad at all actually.  But, you know, with the crop I saw was stunted and the samples I took were stunted.

    [69]   Transcript p273

    [70]   Exhibit P1, tab 15

    [71]  Exhibit P12

30. Mr James said that Mr Rondos telephoned him in December 2003. Mr Rondos said he had a serious issue.  His plants were collapsing and he didn’t understand why. He asked Mr James to come and have a look.  Mr James thinks he went out the same day and saw Mr Rondos.[72]  He recalled that there had been a heat wave preceding these events.  He noted that the plants were collapsing; the leaves were wilting down over the plastic in an atypical fashion.[73]  He then gave evidence about his observations at Juers Road as follows:

    [72]   Transcript p530

    [73]Transcript p532

    QWhen you got to block 2 and you had a closer inspection of the plants, what did you do.

    ALooked at the plants.  These were – looked to all intents and purposes were healthy plants that had collapsed.  The leaves were quite healthy, were not tattered etc.  So, with a collapse like that that indicates a root problem.  So I dug up some plants to have a look at the root systems.

    QHow did you dig up the plant.

    ABy hand.

    QHow did you physically do that.

    ATwo hands either side of the plant and pull up.

    QDo you have to remove the plastic to do that or do you do it through the hole.

    AYou do it through the hole or you spread the hole a bit.

    QWhen you pulled up the plant, what did you see, firstly, of the roots.

    AOf the roots, the original roots from when they were planted were there.  There was an absence of feeder roots.  White new adventitious roots, feeder roots.  There was no physical chewing evidence and I broke open, the plants have two or three rounds, I broke it open to see if there was any weevils or anything in presence in the middle of it, there wasn’t any.

31. He noted that there was a pattern to the way the plants had collapsed or wilted as follows:

    QIn terms selva in blocks 1 and 2 that you were looking at, did you notice if there was any pattern to the way that they had collapsed or wilted.

    AYes.  That was what worried me in the first instance.

    QWhat was that.

    AThat the problem was running in a distinct line down a row towards – from Juers Road towards the creek.

    QWas it every plant.

    ANo, not every plant.

    QWhat was it.  Was it a number of plants and then some less damaged plants and then further on –

    AIt was a – how do I put this – it was an erratic pattern but a distinctive pattern.

    QIn terms of the amount of the paddocks that you looked at which were suffering from this wilting or collapsing, could you put a percentage on it.

    AI specifically focussed on blocks 1 and 2 at the time.

    QOf those, could you put a percentage on it.

    A40% onwards.  It was a significant number of plants.  It wasn’t individual plants, it was a large number.  I didn’t actually do a count at the time.

1. In cross-examination Mr James said that he was clear that he was called some time in December and it was likely around the 15^th or 16^th of December.[74]  He was then asked again about the pattern of the plants as follows:[75]

   QIs this an accurate description of what you saw when you attended on 16 December 2003; the diseased plants were not limited to a certain patch of soil in one part of the field, but rather they were dying in various locations and in irregular patterns.

   AYes.

   QThere were strips of dying plants in individual rows or in patches.

   AYes.

   QAnd had you observed that kind of failure in a field of strawberries before.

   ANo.

   [74]   Transcript p545

   [75]   Transcript p547

2. It is my view that the evidence establishes that the first onset of symptoms was in December 2003.  I reject the evidence of Mr and Mrs Rondos that the plants were showing signs of disease in October.  Mr Kloss did not note any problems with the selva when he inspected it in October and said that Mr Rondos first informed him of a problem in December.  Whilst Mr Kloss described the plants as appearing stunted when he inspected them in December, I prefer the evidence of Mr James that when he inspected the plants, they looked healthy thriving plants that had wilted or collapsed. Mr James has relevant qualifications and, as Dr McMichael indicated in her report dated February 2007, he is an expert in strawberries.  His observations are also consistent with those of Barbara Hall who examined the samples sent to SARDI.

3. Even if I am wrong about the abbreviation “J” standing for the Juers Road block in the packing shed records, I reject Mrs Rondos’ evidence that no, or no substantial, crops were taken from the Juers Road plants and that all orders were fulfilled from Jungfer Road. Both Mr and Mrs Rondos said that a second year crop will only last about 6 weeks. It is my view that the plaintiffs must have harvested strawberries from Juers Road to fulfil their orders. The contention that no strawberries were harvested from Juers Road is inconsistent with the quantity of strawberries sold and the period over which they were harvested.  Further, I reject Mrs Rondos’ evidence that there were no strawberries worth picking at the Juers Road block from early November 2003.  This is inconsistent with the evidence of both Mr Kloss and Mr James that they observed fruit on at least the healthy plants in early to mid-December 2003.

   Testing

4. Plant samples were delivered to SARDI on 17 December 2003.[76]  There was some confusion as to who took these samples.  Mr Rondos gave evidence that Mr James took the plant samples in December 2003.[77]  Mr James said that he did not take those samples.  He did however suggest that samples be taken for analysis by SARDI.  He says that he advised Mr and Mrs Rondos of the process to follow in taking samples.  Specifically he told them that they needed to dig down underneath the plant and take the whole plant including the roots and the soil around it [78] 

   [76] Exhibit P3/21

   [77] Transcript pp116-225

   [78] Transcript pp536-537

5. It seems likely that despite Mr Rondos’ evidence, Mr Kloss took the samples.  Mr Kloss says that he took six to eight plants from blocks 3 and 4 on Juers Road to Ms Hall at SARDI on 17 December 2003.[79]  Mr Kloss followed the methodology described by Mr James. 

   [79] Transcript p471, p473 & pp490-491

6. Testing was undertaken at SARDI by Ms Barbara Hall between 17 December and 29 December 2003.  In her report of 29 December 2003 Ms Hall noted that no crown rot was present but that the roots were poor with browned and rotting areas.  This is consistent with the field observations of Mr James.  Ms Hall gave evidence that she specifically tested for and did not find the pathogens pythium and phytophthora[80].  She did not find fusarium on the plants.  She did not specifically test for nematodes.  She said that if she had seen damage on the roots suggesting nematodes might be causing the problem she would have referred the plants to a nematologist for testing and would have noted the damage in her report.[81]  Her finding was that the pathogen on the plant was a type of fungi from the rhizoctonia genus.  She considered that this was the major cause of the disease in the plants.[82]  This report dated 29 December 2003 was the first mention of rhizoctonia in connection with the Rondos’ selva crop.

   [80] Transcript p591 & p598

   [81] Transcript p600

   [82] Transcript p699

7. Ms Hall sent a culture of the fungi taken from the plants to Agwest Plant Laboratories in Western Australia (“AgWA”) for further testing. Specifically she requested they test the samples to establish whether the rhizoctonia was binucleate or multinucleate.  AgWA received the samples on 8 January 2004 and by 14 January 2004 the tests were completed.  The results indicated that the culture was a binucleate rhizoctonia.[83]   Ms Hall reported this to Mr and Mrs Rondos by letter dated 29 January 2004.  She provided advice as follows:

   Rhizoctonia can be controlled by preplant fumigation, however in some areas this can also increase the effect of the disease, particularly if introduced after fumigation, as there are no antagonists to help control it.

   There are no post planting fungicides registered to control Rhizoctonia on strawberries.[84]

   [83] Exhibit P3 p45

   [84] Exhibit P3 p46

8. This advice accords with the expert evidence at trial.   This was the first mention of binucleate rhizoctonia in connection with the Rondos’ selva crop.

9. Ms Hall then went on to recommend that soil tests be performed to ascertain if there was binucleate rhizoctonia in the soil.  She suggested two composite samples of about 500g each; one to be taken from around the plants and one from between the rows.  Soil samples were taken but it is unclear who took them.  Mr Rondos said that he could not recall who did it but that Mr James and Mr Kloss were present.  He thinks it might have been one of them but it could have been him.[85]  Mr Kloss denied being involved in the taking of soil samples.[86]  Mr James recalled advising about taking soil samples but could not recall if he took the samples or not.  He did not recall being present with Mr Kloss.[87] The gist of his evidence was that someone else likely took the soil samples.[88]  It is clear from the evidence of Mr James and Ms Hall that there is a proper process to be followed to collect such soil samples. Because of this uncertainty about who took the samples there is also uncertainty about the manner in which they were collected.  Specifically it is not clear to me whether the instructions provided by Ms Hall and Mr James were complied with. 

   [85] Transcript pp225-6

   [86] Transcript p474; 500

   [87] Transcript p536

   [88] Transcript pp 537-8, p547, p555-6

10. Whoever took the samples and whatever method was used to collect them, it is plain that soil samples were taken and delivered to SARDI on about 17 February 2004.[89] They were subsequently tested by AgWA.[90] Ms Hall reported the results to Mr and Mrs Rondos by letter dated 3 May 2004 as follows:

    No rhizoctonia was detected in the soil sample collected from between the rows.

    Rhizoctonia was detected in the soil sample supplied from “in beds”.  This was stained and examined microscopically. The rhizoctonia detected was predominantly multinucleate, which was not the same as that recovered from the roots of the strawberry plants.  However there was a small amount of binucleate rhizoctonia detected, so it is possible that both types were present in the beds.[91]

    [89] Exhibit P3, p47

    [90] Exhibit P3, pp49-50

    [91] Exhibit P3 p51

11. When the plaintiffs discussed Ms Hall’s first report of 29 December 2003 with Mr James he suggested to them that further plant and soil samples be taken and sent for testing to Crop Health Services at Knoxfield in Victoria (“Knoxfield).[92]   Mrs Rondos attended to this on 5 January 2004. She sent what she described as two “healthy” plants and four “bad” plants to Knoxfield.[93]

    [92] Transcript p537

    [93] Exhibit D19

12. Dr Wong reported the Knoxfield interim test results to the plaintiffs on 20 January 2004.[94]  A more detailed report was provided dated 25 February 2004.[95]  Under direct microscopic examination he reported that the roots of the four plants identified as “bad” were necrotic or rotting.  Fungal culturing of the roots consistently isolated the fungi cylindrocarpon, pythium and fusarium.  Another fungus with rhizoctonia-like features was isolated but less consistently.  A number of other findings were detailed in the report concerning soil pH levels and nematodes.  Dr Wong commented that:

    Cylindrocarpon and fusarium fungi are common in soil; these fungi can invade/infect roots and other plant tissues that have been stressed/damaged through some other causes.  Pythium fungi are also common in agricultural soils and they can cause root rots of strawberries, especially when soils have poor drainage……

    [94] Exhibit P1, p273

    [95] Exhibit P1, pp290-2

13. He concluded by saying that:

    We are still uncertain what the rhizoctonia-like fungus is.  The fungus has now been forwarded to Dr Nigel Crump and Dr Dolf de Boer for further examinations.

14. Dr de Boer reported to the plaintiffs on 22 July 2004[96] indicating that Knoxfield had conducted a number of tests on the rhizoctonia-like fungus. The report states in part:

    Since we were unsure of the identity of the rhizoctonia-like fungus we conducted a number of tests.  We now know that it belongs to a rather complex species called ceratobasidium cornigerum which has a number of different host specialised strains, some of which are known to be involved in the black root rot complex, but are also associated with diseases of other crops.  Research over recent years has shown that strains of this rhizoctonia-like fungus occur throughout southern Australia, so it is not new, and may already be present in soils as a weak pathogen on grasses or other crops.  Unfortunately research on the classification and biology of these fungi is still unresolved and it is difficult to draw useful conclusions from our identification.

    Consequently we can only speculate on the source of your disease problem and on the specific cause.  Whilst it is possible that these pathogens were introduced onto your farm, it seems equally likely that they were already present in the soil and that seasonal factors have caused the problem to flare up at a critical time in the production of your crop.

    
    
    

    [96] Exhibit D19

15. Following a subpoena for production of materials from Knoxfield it became apparent that DNA sequencing of the rhizoctonia like fungus was undertaken.  It appears that this revealed that the DNA sequence was for anastomosis group I, (AG-I) one of the identified groups for binucleate rhizoctonia.

16. Dr Martin, in his report dated August 2012[97] sets out what I understand to be some uncontroversial propositions relating to binucleate rhizoctonia.  These are as follows:

    ·There is no question that there are isolates of binucleate rhizoctonia capable of causing disease.

    ·The term binucleate (two nuclei per cell) is used to differentiate this pathogen from a related plant pathogenic rhizoctonia species often recovered from soil which is multinucleate.

    ·The labelling that is used to designate anastomosis grouping of an isolated binucleate rhizoctonia is “AG” which stands for anastomosis groups  followed by a letter, for example AG-A.

    ·There are currently about 21 anastomosis groups of binucleate rhizoctonia identified in the literature. 

    ·Only certain AG’s are found infecting specific plants.  In the United States only AG-A, AG-I and AG-G have been recovered from strawberries.

    ·Three additional AG’s have been recovered from strawberries in other countries, AG-C, AG-F and AG-K.

    [97] Exhibit D20

17. Dr Martin checked the Knoxfield sequencing and said that in his view it was a 100% match to the AG-I isolated by Dr Fang in Western Australia in an article that he referred to.[98]  It seems likely that the AG-I isolated by Dr Fang was in fact the culture from the plaintiffs’ plants that Ms Hall had sent to Western Australia. Accordingly I find that the plaintiffs’ selva crop was infected by binucleate rhizoctonia of anastomosis group I.  I further find that AG-I is a pathogen of strawberries.

    [98] Transcript p819-820

18. There is controversy about whether the binucleate rhizoctonia AG-I recovered from the plaintiffs’ crop was the cause of the plant collapse.  There are a  number of issues related to this which I will discuss later in these reasons.

    Complaints

19. Mr and Mrs Rondos say that they complained to Mr Weda in December 2003 before Christmas.  Mr Rondos said that he spoke to Dr Wong and Dr Scott Mattner from Knoxfield before Christmas 2003, at about the same time as he contacted Mr Weda.  Mr Rondos said that he rang Toolangi’s offices and told Mr Weda that the plants were not looking as good as other years and invited him to come and look at them.  Mr Weda declined.[99]  Subsequently he said he was told by Scott Mattner verbally that the plants had a disease called rhizoctonia.  Dr Mattner said that he would contact Mr Weda to replace the plants.  He said he had three, four or five calls with Dr Mattner. Mr Rondos appears to suggest he contacted Toolangi to make a complaint about the plants by telephone and later on by writing.  He identified a letter dated 8 August 2004 as the writing.[100]  This letter refers to a telephone discussion on Friday 6 August 2004.  It is not clear to me if he asserted that there were other calls and if so, when these were other than the call he says he made to Mr Weda before Christmas 2003.

    [99] Transcript p116-7

    [100]  Exhibit P1, tab 21

20. In cross-examination Mr Rondos was asked if it was the first report from Barbara Hall that led him to ring Toolangi about the plants.  He said he rang earlier than the report, in fact he said it was before the samples were sent to SARDI for testing.  This would place the time of the call in mid to late December 2003.  He said he spoke to Mr Weda and told him he had problems with the plants.[101]  He said that he told Mr Weda he had a problem with the plants, he described the problem and Mr Weda responded by saying “no-one else had complained”.

    [101] Transcript p227-232

21. Later in cross-examination he was taken to the phone records of Toolangi[102] and he agreed these recorded a telephone conversation between him and a member of the office staff at Toolangi on 3 March 2003.  He agreed that he made this call and said words to the effect that there was rhizoctonia, that at the beginning of the season the strawberries were OK, that after a heat wave they collapsed and that he mentioned Mr James and Knoxfield. 

    [102] Exhibit P2 tab 80 – p651

22. It was put to Mr Rondos that Mr Weda rang him shortly after he left that message in early March 2004 and that he told Mr Weda he had plant samples taken and tested positive for rhizoctonia by SARDI.  He agreed that this was the case. [103]  He did not agree that this was his first call to Toolangi or that this was his first discussion with Mr Weda concerning the failure of the selva  crop.  He maintained his position that he rang before Christmas 2003.

    [103] Transcript p238

23. Mr Rondos was then taken to the final report from Knoxfield dated 22 July 2004 written by Mr de Boer.  Mr Rondos agreed that he contacted Mr Weda by telephone  on Friday 6 August 2004 telling him that he had received all the test results from SARDI and from Knoxfield.  Mr Rondos said he told Mr Weda that although there were differences he felt that the runners were the problem.  Mr Weda said to him that he had contacted other growers that had received the same selva plants and none had experienced any problems. Mr Weda said that he could not agree with his view that the runners were the cause of the crop failure.  Mr Rondos said this made him quite angry.  Mr Weda invited him to write a letter to Toolangi which led to the writing of the letter dated 8 August 2004.[104]

    [104] Transcript pp256-7

24. Mr Rondos reiterated his evidence that Dr Mattner had said that he would obtain some form of compensation for him.  Mr Rondos  said this was before the letter from Knoxfield dated 22 July 2004.[105]  He did not recall receiving a letter from the defendants dated 26 August 2004.[106]  Nor did he recall a phone call from Mr Weda advising that the Directors of Toolangi had discussed the problems and resolved they were not due to diseased plants from Toolangi.  He does not recall a conversation of that sort at all.[107]

    [105] Transcript pp258-9

    [106] Exhibit D9

    [107] Transcript pp259-61

25. Mrs Rondos gave similar evidence to that of her husband concerning the complaints to the defendants.  She was also somewhat vague about the dates upon which calls were made.  She said that she rang Dr Mattner and spoke to him before 24 July 2004 when they received the letter from Knoxfield.  She said Dr Mattner told them that they had diagnosed that the roots of the plants had rhizoctonia and he told her to ring Mr Weda and ask if he could replace the plants.  She said that she rang Mr Weda virtually straight away after that call and told him of her discussion with Dr Mattner.  Mr Weda told her that he couldn’t do anything about it until after he had a meeting with Dr Mattner.  She did not have any further discussion with Mr Weda but rang Dr Mattner about three or four days later.  He told her that he could not give any more reports or help any more because:

    We had a meeting with Mr George Weda.  He funds the research centre so we can’t do it anymore because we will lose our funding.[108]

    [108] Transcript pp339-41

26. She said she just had one call with Mr Weda personally.  Later however she referred to the letter she and her husband sent to Toolangi[109] and she said that she and her husband both had a conversation with Mr Weda before that letter was sent.  She said she started speaking to Mr Weda and then she handed the phone to her husband.  That is the call referred to in their letter.  She said that they told Mr Weda that the plants were sick from the root system and what was he intending to do about it.  He said that no other growers had any problems.  She said they got no response to their letter and had never seen the letter from Toolangi prior to it being tendered in court.[110]

    [109] Exhibit P1, tab 21

    [110] Exhibit D9

27. In cross-examination it was put to Mrs Rondos that Mr Weda suggested to her husband in early March 2004 that he speak to Dr Mattner at Knoxfield because he was an expert in fumigation.  She said that she did not recall her husband saying this to her.[111]

    [111] Transcript pp442-3

28. Dr Mattner described his role at Knoxfield.  He is a senior scientist.  He is involved in research and development of alternative fumigants to methyl bromide for the strawberry and other industries.  He was doing the same work in 2004.  He was not involved in the analysis work that led to the service report signed by Dr Wong dated 25 February 2004.  He read that report following the first phone call from the Rondos.  His evidence suggested that this call took place after the date of that report. Mr and Mrs Rondos took turns in speaking to him.  They said Mr Weda had suggested they call him. They asked him about the ability of methyl-bromide to control binucleate rhizoctonia.  They described the problem they had with the selva plants.  He said he would need to see the diagnostic reports to be able to provide them with advice.  They provided permission for him to access the documents and he got them from the relevant area at Knoxfield.

29. He had a number of calls with Mr and Mrs Rondos.  He did not take notes. He recalled speaking to Mr and Mrs Rondos after he read the report of Dr de Boer dated 22 July 2004. He had a conversation with them about their fumigation methods. They put to him a hypothesis that rhizoctonia was introduced into their property.  He told them that it was more likely to be due to poor fumigation practice.  He did not think either Mr or Mrs Rondos were happy with his opinion.  He agreed that he suggested that Mrs Rondos speak to Mr Weda to obtain replacement plants. He denied saying to Mrs Rondos that he was not in a position to help her because it may affect the funding he received.  He rejected a suggestion that he was concerned that helping Mr and Mrs Rondos would jeopardise his funding. 

1. I also note that the instructions to Dr McMichael omitted the information in the SARDI documents that the plaintiffs were concerned about slow growth in the strawberry plants at Jungfer Road in January 2003 and that tests showed these were affected by the pathogen pythium. 

2. Plainly Mr and Mrs Rondos had not previously sustained a catastrophic crop collapse as they did on this occasion but it is not clear that all their previous crops were successful.  Even if this was accepted to be the case, this is but one factor to consider as part of the overall issue of causation.

   Fumigation

3. The plaintiffs contend that Mr Rondos adequately fumigated his land and that the binucleate rhizoctonia was introduced onto their land by the runners.  The product that Mr Rondos used was methyl bromide 980.  There was some criticism about the use of this product however I am satisfied that properly applied it would have been effective. 

4. I have already referred to the evidence about the rate of application.  The product label[138] states that in the case of soil fumigation to plant beds a dosage of 100 grams per metre squared is required to control fungi such as species of pythium, rhizoctonia and fusarium.  Dr Taylor’s evidence was that the dosage rates on product labels are supported by scientific efficacy reports as part of the approval process with which he has had considerable experience.[139]  Dr McMichael conceded that this was likely the case although she did not have the direct experience of this process that Dr Taylor had.[140] 

   [138] Exhibit D2, p195

   [139] Transcript p1291 & p1246

   [140] Transcript p996

5. The evidence led by the plaintiffs on the rate of application is very unsatisfactory.  The spray diary for 2003\2004 was apparently destroyed prior to the commencement of these proceedings. As I have indicated above Dr McMichael was told that Mr Rondos fumigated on 25 April 2003 using 900 kilograms of methyl bromide and that the prescribed rate was 25 mls per square metre. 

6. This information must have been obtained from Mr Rondos.  It does not appear that there was any material then available to Mr Rondos to enable him to provide this information other than his memory of events. Mr Rondos gave evidence at trial that these instructions to Dr McMichael were incorrect.[141] This was the first occasion this was indicated to be the case.  No reason was advanced to explain this change in evidence. It must have been apparent to the plaintiffs at an early stage of proceedings that the 25 ml dosage rate was subject to criticism from Dr Taylor.[142]  If Mr Rondos thought that he had applied a different rate one would have thought that this would have been corrected shortly after Dr Taylor’s report.

   [141] Transcript p120

   [142] Exhibit D3, p21-24

7. Mr Rondos’ evidence in court was that his rate of application was 40 grams per linear metre.  It is not clear upon what basis he says this.  Further, it is not clear why this version of events is more likely to be the case than the instructions given to Dr McMichael.  No further documents have been produced.  The spray diary remains missing.

8. Mr Lazaraki gave evidence that he taught Mr Rondos how to fumigate.  His evidence was that he used 50 ml per metre squared.[143]  He suggests therefore that the rate of application of methyl bromide 980 was by volume and not by weight.  This is consistent with the assumption Mr Rondos provided to Dr McMichael in 2005.   In other words the assumption was based on a rate by volume not by weight.  Further it appears that Mr Lazaraki was using double the amount of methyl bromide that Dr McMichael was asked to assume Mr Rondos used.

   [143] Transcript p508

9. It is contended that the quantity of fumigant purchased and used by Mr Rondos is consistent with the rate he gave in evidence namely 40g per linear metre or 57 grams per metre squared.[144]  The difficulty with this is that I have no confidence that Mr Rondos used the quantity of fumigant that he says he did.  The invoices produced were for additional quantities of fumigant.  Mr Rondos said that he had some fumigant left from the previous year.

   [144] Plaintiffs written submissions dated 17/9/12

10. The evidence is such that I am uncertain what dosage rate Mr Rondos used.  If it was 25 mls per metre squared then that is substantially under the minimum rate on the label for any soil bed application of methyl bromide 980.[145]  If Mr Rondos applied it at the rate of 40 grams per linear metre this is only 57 grams per metre squared.[146]  This is also under the 100 gram rate.  Accordingly on either basis it appears that Mr Rondos’ rate of application was well below the dosage that the label indicated was required to adequately fumigate his land prior to planting.

    [145] Exhibit D2, Report Dr Taylor p22

    [146] Exhibit D5

11. I note Dr McMichael’s evidence that the fumigation achieved weed control. Indeed it seems from Mr Rondos’ evidence that this was his primary objective and that at the relevant time he had a limited understanding of the role of fumigation to control pathogens. The evidence of weed control is of itself somewhat unsatisfactory.  There is limited contemporaneous evidence on this topic.  Dr McMichael did not have the opportunity to view the land until June 2005.

12. Dr McMichael agreed that the efficacy of methyl bromide 980 is determined in part by the rate of application and further that if the rate of application is incorrect you will not get the depth of exposure of the pathogens in the soil.[147] Dr McMichael also agreed that under fumigation will result in re-colonisation of indigenous pathogens.[148]  This was the contention of Dr Martin who indicated that partial fumigation can enhance a pathogen problem because there is less competition for the pathogens.[149]

    [147] Transcript p958-9

    [148] Transcript p986-87

    [149] Transcript p800

13. In addition to the concern about the rate of application the method of application is also open to doubt.  Whilst the defendants criticise the use of the hot gas method I accept that it is a method in use by some growers in the Adelaide Hills and that it can be an effective method of fumigation. However I also accept the evidence of Mr Mitchell that hot gas fumigation should only be carried out by well trained and competent personnel using the correct equipment designed to adequately vaporise the required amounts of methyl bromide.  Specifically the water temperature must be maintained throughout the application.[150]

    [150] Exhibit D45, tab 1  p2

14. Dr Taylor provided a report dated December 2009 indicating similar views and stating that that the configuration of copper piping was a critical consideration in ensuring that the methyl bromide gas was discharged at the required temperature of greater than 80◦C.[151] 

    [151] Exhibit D2, tab 1 p22

15. The plaintiffs contend that I should not accept Mr Mitchell as an expert on the topic of hot gas fumigation because he lacks sufficient practical experience in that area.  I reject that contention.  On the contrary his evidence about the use of hot gas in glass houses and, on one occasion, in a field was compelling and relevant.

16. I note Dr McMichael’s evidence that she has experience with methyl bromide as a consultant but that she has not got practical or field experience in its application.  I further note that she did not discuss the specifics of Mr Rondos’ fumigation technique; rather she had a general understanding of the hot gas method.[152]  I prefer the views of Dr Taylor and Mr Mitchell on this topic.

    [152] Transcript pp953, 956, 993

17. The crucial evidence on this topic however is that of Mr Rondos.  His evidence about his method of application was most unsatisfactory.  He gave evidence that the spray equipment including the copper pipe was thrown away.[153]  However, as I have indicated, a series of photographs taken relatively recently was then tendered as part of his evidence.[154] The exhibit includes images of the copper and the pipe which Mr Rondos identified as his equipment.[155]  No evidence was led as to the size or length of the pipe other than Mr Rondos’ assertion in evidence that it was 20 metres long.  This is surprising in view of the fact that it was apparently available for inspection and measurement.  An observation I make about the equipment is that it looks somewhat rudimentary and is to be contrasted with the design of a hot gas system shown by Mr Mitchell in his report. 

    [153] Exhibit P1 - 6

    [154] Exhibit P9

    [155] Transcript p83

18. I have no evidence that the methyl bromide was discharged at the required temperature other than that given by Mr Rondos.  He described the process that he used a copper pot with a coil sitting in it with some water.  The pot in the photographs was an open tub.  The water was brought to the boil by placing the tub on a burner with an LP gas bottle attached.  He was asked how he kept the temperature of the gas burner under the copper pot so that “the temperature in the copper pot stays at boiling”.  He said that there was a measuring device “in there” to tell the temperature.[156] It is not entirely clear where “in there” was but wherever it was it falls short of establishing that the gas was discharged at the temperature of over 80◦C Dr Taylor and Mr Mitchell indicate is required.  Mr Rondos did not agree that this temperature was correct.  I prefer the evidence of Dr Taylor and Mr Mitchell. 

    [156] Transcript p82-88

19. Mr Rondos further appeared to consider that the main concern with the temperature was the water in the boiler rather than the temperature of the gas as the following exchange in the course of his cross-examination demonstrates:

    QAnd the temperature that you sought to achieve with your methyl bromide was what temperature

    AI can’t remember.  At the water level?

    QWell –

    AWhich temperature are you –

    QYou tell me.  You need to have methyl bromide come out as a hot gas at a particular temperature.

    AThat’s right, yes.

    QDo you know what that temperature is.

    AI can’t remember at this time.

    QBut you knew at that time.

    AYes, The water would be boiling.

    QThat was my next question.  As I understand it, methyl bromide needs to come out at 80 degrees celsuis; that is, 20 degrees below the boiling temperature of water.

    ANo.

    QThat is not right.

    AThat is not correct.

    QSo from your point of view, it’s the heat of the water in which this metal coil sat was about 100 degrees Celsius because the water was boiling.

    AYes.

    QThat was the case all the way along with the methyl bromide you applied.

    AYes.[157]

    [157] Transcript p 193-4

20. I note the evidence of Mr Mitchell about a commercial vaporiser manufactured by his company and how it is used to maintain the temperature of the gas.[158] It is stating the obvious to say that this is far more sophisticated than the equipment used by Mr Rondos. I was impressed by Mr Mitchell’s obvious knowledge and experience in this area.  I accept what he says about the critical issue of temperature in relation to the hot gas method.  I have no confidence that Mr Rondos had either the appreciation of this issue or the capacity to monitor it in the way that was required to adequately fumigate the strawberry beds. 

    [158] Transcript pp1426-1430

21. The fumigant used by Mr Rondos comprised 98% methyl bromide and 2% chloropicrin. Mr Mitchell gave unchallenged evidence that because chloropicrin has a higher boiling point than water it will remain as a liquid if the heat applied was as indicated by Mr Rondos.  Mr Mitchell said that this was why they always used 100% methyl bromide when using the hot gas method.  This topic was not explored in any great detail with any of the experts but it appears likely that this may also have impacted upon the efficacy of Mr Rondos’ fumigation.

22. Mr Rondos gave evidence that he used compensating drip tube.[159]  Mr Mitchell gave evidence, which I accept, that it is necessary to use non-compensating drip tube because compensating drip tube will seriously impact the gas distribution.[160] 

    [159] Transcript p209

    [160] Exhibit D45, tab 1 & Transcript p1425

23. Dr McMichael conceded that the erratic but distinctive pattern running in a distinct line from Juers Road towards the creek described by Mr James[161] had the potential to be consistent with a problem with the fumigation. 

    [161] Transcript p535

24. Dr Martin gave some evidence which I received de bene esse concerning his opinion of aerial photographs of the Juers Road block.[162]  I have considerable reservations about the origin and quality of the photographs and what, if any conclusions can be drawn from them.  I am not prepared to act upon the basis of the photographs and accordingly I have not done so.  However I accept Dr Martin’s general evidence was that if plants were observed to die in a pattern rather than randomly this suggested a problem with fumigation.  Mr James observations of the field were that there was a distinctive pattern. 

    [162] Exhibit D7

25. In addition, the finding that a number of other pathogens were present in the soil supports the proposition that the land was not properly fumigated pre planting.

26. Finally I note, as outlined above, it is possible that Mr and Mrs Rondos had prior problems with inadequate fumigation given the SARDI findings about detecting pythium in the Jungfer Road block in January 2003. 

27. Taking all of these matters into account it is therefore my view that the plaintiffs have failed to establish that the fumigant chosen, methyl bromide 980, was applied at the correct dosage and have further failed to establish that the method of application achieved the required temperature in the gas distributed through the correct type of T-tape.  I am not therefore satisfied that the land was fumigated properly prior to the planting of the selva  crops. 

    Soil samples

28. Dr McMichael indicated in her first report that it was significant that there was consistent isolation of binucleate rhizoctonia from the roots of the affected selva plants and the soil attached to and close to the affected selva plants but not in the soil removed from between the rows.[163] 

    [163] Report dated February 2007 paras 65, 108

29. I have already expressed some reservations about the methodology of the sampling.  I note Dr Martin’s evidence that the fact that binucleate rhizoctonia was found in the bed and not the furrow cannot be used to draw a conclusion that it was introduced on the plants because it very much depends on the technique that was used to do the assay.[164]  With respect to Dr Martin this is an entirely logical observation.  I note Dr Taylor made similar comments.[165]  I do not have any degree of confidence in the sampling method given the lack of evidence about it. 

    [164] Transcript p874

    [165] Transcript p1356

30. In any event I note that Ms Hall said that the rhizoctonia detected from the samples said to be taken in the beds was predominantly multi-nucleate.[166]  This of course is a different type of rhizoctonia to that which the plaintiffs contend was introduced on the plants.   No other pathogens were tested for.  The fact that multi-nucleate rhizoctonia was located tends to support the views that I have already formed about the likelihood of inadequate fumigation.  I put it no higher because of my reservations about the soil samplings.

    [166] Transcript p605

    Survival of the other cultivars

31. The plaintiffs also place reliance upon the survival of the 1000 diamante plants said to be planted in unfumigated land and the 500 trial lines said to be in fumigated soil.  In Dr McMichael’s report of February 2007 she stated:

    I am of the opinion that the continued, sound growth of the diamante and trial lines through the periods of high temperatures and fruit load stress, is evidence that the soil and environmental conditions did not cause the decline of the selva [167]

    Later in the same report Dr McMichael stated:

    It is my opinion that the root loss resulted from biotic, not abiotic factors.  This could not have been concluded had diamante and/or trial lines suffered similarly in the same growing environment.[168]

    [167] Paragraph 98

    [168] Paragraph 101

32. Dr Martin conceded that the lack of collapse of the diamantes and trial lines may suggest a problem with the selva plants.  He did not however agree that it was possible to assess the health of a plant just by looking at it because there can be pathogens on the roots causing disease that may not have killed the plant.[169]  There was no evidence as to any specific examination of the diamantes or trial lines following the collapse of the selva.  The fact that the plants did not show obvious symptoms does not necessarily mean that they did not have any problems.  All of the experts accepted that different cultivars have different levels of resistance.  Further it seems that the trial lines had been selected from a cross-breeding program in unfumigated soil. 

    [169] Transcript p887

33. It is my view that whilst the survival of these plants may suggest a problem with the selva it is very far from establishing that this was the case.  I have no specific evidence that these plants were healthy other than the assertion of Mr and Mrs Rondos as no tests were done.  The plants were not uprooted to ascertain whether they had any level of root rot and crops were not harvested from them. It is in my view one indicator but by no means conclusive.  Given root problems do not necessarily display symptoms above ground it is possible that pathogens were present but undetected.

34. Mr Rondos had not grown diamante before nor had he grown any of the trial lines before.  He had no basis for comparison.  Neither Mr James nor Mr Kloss inspected the diamante.  Mr James gave evidence that when he attended around 16 December 2003 there were no obvious problems with the trial plants and the plants were not showing any symptoms.  This does not establish that there were no problems with these plants as I have indicated above.

35. Finally, the evidence about the location of the diamante and the trial lines was not entirely clear. The plaintiffs produced no records as to the location of the plants.  Dr McMichael was told:

    The selva plants were all planted in the fumigated rows.  Next to that planting, was several rows of partially planted but fumigated ground.  In those rows, Mr Rondos planted strawberry plants from Western Australia which were part of the test run by Paul James of SARDI.  In the last few rows, on the other side of the field from the selva  plants (that is the WA plants were planted between the selva  plants in these rows) Mr Rondos planted the thousand diamante plants.  Those rows were unfumigated.[170]

    [170] Letter of instruction to Dr McMichael 2 June 2005

36. Mr James gave evidence that his 500 test plants were situated at the north of block one on Juers Road.[171]  Mr Rondos drew a diagram[172] in which he indicated that the trial plants were in block five some distance from the location identified by Mr James.  His diagram indicates three rows of planting.  Mr James’ evidence did not suggest multiple rows. 

    [171] Exhibit P16; Transcript p534 and p542

    [172] Exhibit P3

37. Dr McMichael took notes of her meeting with the plaintiffs on 1 June 2005 at her office.  She was told that the trial lines were in “half rows” and positioned between the selva plants and the diamante plants.  This is not consistent with Mr James’ evidence. I am not being critical of Dr McMichael in making this observation.  Rather it is another indication of the fact that the plaintiffs’ evidence is not entirely satisfactory on matters uniquely within the plaintiffs’ knowledge.  Accordingly I am not satisfied that the plants were planted in the locations indicated by Mr Rondos but in any event I do not consider that the evidence of the lack of collapse of the trial lines and the diamante crop of itself establishes the plaintiffs’ case.

    Defendants farming practices

38. Both Mr Weda and Mr Mitchell gave evidence, which I accept, about the manner in which the Weda property was fumigated.  Mr Weda said that the land on which the runners were propagated had been used for that purpose for 12 years and that the relevant block had been fumigated 6 times.  The fumigation was commercially applied broad acre direct injection with a fumigant formulation of methyl bromide CH 50/50.  Mr Mitchell gave evidence about the manner in which this was undertaken.  There was some criticism of the evidence called by the defendants on this topic specifically it is said that the documentary evidence showed a serious shortcoming in the fumigation of the Smith Road Block B where the selva runners were grown.  I have carefully considered the plaintiffs’ submissions on this point.[173]  At the outset I note that the submission appears to reverse the burden of proof.  It was for the plaintiffs to prove that the pathogen was introduced to their land on the runners not for the defendants to prove that it did not.  Even if it was necessary for Weda to prove that their land was properly fumigated I consider that it has done so.  The essential criticism of the documents is based upon an asserted deficiency between the area shown in  the plans of the plantings and the area indicated on the invoices.  It is said that there is insufficient evidence of the location of the area fumigated on Block B for me to be satisfied that it was properly prepared prior to planting.  I reject that proposition. 

    [173] Written submissions dated 17/9/12 paras 2-6 – 211.

1. The crop was inspected by John Baker and rated as very good.  If there had been under fumigation then the resultant weeds would have led to the crop not being certified.  Neither Mr Weda nor Mr Baker thought that there was anything unusual about this particular crop.  The Co-op did not record any complaints about the selva crop other than those from the plaintiffs.  The Co-op made enquiries of every other grower who received Weda selva; no-one reported any problems.  I have the affidavits of various growers to that effect.  Mr Parker grew his selva  5 to 6 kilometres away from the Juers Road property.  Mr Corallo received some of the selva boxed by Weda on 12 May 2003, the same batch that the Rondos’ selva  came from, he did not have any problems.

2. The random nature of the cropping involving different tractors working on opposite sides of the field at the same time, the processing, the storage and distribution of runners means that it is highly improbable that all the runners received by the plaintiffs were farmed from a particular patch of block B. Further it seems improbable that given this random cropping only runners received by the plaintiffs would have been infected.  The absence of any other evidence of complaints suggests to me that it is more likely than not that the selva were not infected with the pathogen at the time of delivery to the Rondos.

   Conclusion

3. My conclusion taking into account all of the matters I have referred to is that the pathogens which may have contributed to the failure of the selva crop including binucleate rhizoctonia were more likely than not indigenous to the land and not properly controlled by Mr Rondos’ fumigation. 

   What is the proper assessment of loss arising from the failure of the strawberry crop?

4. In view of my finding on liability I will not address this topic in great detail however I consider it appropriate to make some comment and findings on quantum.

5. The plaintiffs claim three heads of damage as follows:

   ·Operating losses that would not otherwise have been incurred in the 2004 financial year which they quantify in the sum of $57,256; and

   ·Consequential loss measured as the lost income stream from operating the strawberry business which the plaintiffs quantify as $245,891.

   ·In the alternative if the first two claims are not accepted the plaintiffs’ claim for the cost of the cultivation of the land and the crop including the cost of the selva runners which the plaintiffs have quantified in the sum of $150,629 or $140,253 exclusive of GST. 

   Background

6. In the plaintiffs’ summary of opening it was stated that:

   The plaintiffs’ selva crop failed in December 2003 – January 2004 following upon a series of hot days that triggered a chain of events exposing the disease in the plants.  Despite attempts, the plants were beyond saving.  Second year crops on a nearby piece of land survived.  Their fruit was sold.  However these sales were not enough to save the business.  It collapsed.  The plaintiffs claim the consequential economic loss from the collapse.  They rely on the expert evidence of Mr Crace an accountant to quantify that loss in the sum of approximately $600,000 (excluding GST).[174]

   [174] Plaintiffs Summary of Opening – para 5

7. Both Mr and Mrs Rondos gave evidence that they did not pick any commercial crops from the selva crops at Juers Road.  They gave evidence that all of their sales in the 2003/2004 financial year came from the second year crop at Jungfer Road.  I have rejected that proposition.

8. Mrs Rondos generally took care of the financial matters within the business.  Their accountant was Mr Lee Chew.  He recommended setting up the Rondos Family Trust.  Mr Chew prepared the accounts for the Trust.  Mrs Rondos would collect the records for him to prepare those accounts.  Mrs Rondos said that she and her husband drew wages in cash out of the Trust.  The Rondos Family Trust accounts financial statements were tendered through Mrs Rondos.[175]  In doing so Mrs Rondos indicated that she had satisfied herself that they were a true and correct record of the operations of the Trust for each financial year.[176] Mrs Rondos’ personal tax returns were also tendered through her.[177]  Mr Rondos’ personal tax returns were identified and tendered through him.

   [175] Exhibit P18 and P19

   [176] Transcript p317-18

   [177] Exhibit P20

9. Mr and Mrs Rondos said that at some time after August 2004 they decided to stop the strawberry business.  Mrs Rondos said that financially they were not in a position to go ahead because they had made no money for that year, no money at all.[178]  Mrs Rondos said that the income from the sale of strawberries for 2003/2004 was just under $55,000.  She said that was the sort of income she would expect to receive from a second year crop.[179]

   [178] Transcript p347

   [179] Transcript p359

10. Mrs Rondos was then shown the delivery notes and invoices from the business[180]. She confirmed that she was responsible for these.[181] Mrs Rondos was taken through and agreed with a summary of those documents prepared by the defendants’ solicitors.[182]  Mrs Rondos agreed that these showed that the business had sold 190,000 punnets of strawberries.  Mrs Rondos was then asked about the declared income from the strawberries in the financial year ended 30 June 2004.[183]

    [180] Exhibit P2, tabs 47 & 48

    [181] Transcript p426-431

    [182] Exhibit D12

    [183] Transcript p431-32

    QYou know that your business financials for the year ending 30 June 2004, that is the period that these deliveries relate to, records income of just under $55,000.

    AI became aware of that yesterday, yes.

    QYou became aware of it when your accountant prepared the financials and showed them to you, didn’t you.

    ANo.

    QNo.

    ANo at that time I didn’t really have a look properly.  I was under too much stress and I just didn’t pay too much attention.

    QThe evidence you gave on oath was that you checked that you saw the financial records and you satisfied yourself they were accurate.

    AI was satisfied at that time, yes.

    QAnd the financial records that you prepared and your company’s tax return asserted you earned income of just under $55,000.

    AYes.

    QIf you sold 190,000 punnets of strawberries, you would expect to earn more than $55,000.

    AYes.

    QSignificantly more.

    AYes.

    QWhen you come to sit down with your accountant to talk about the 2004 year, 30 June 2004, you must have known that you had sole thousands and thousands of trays of strawberries.

    AI don’t know what happened.

11. Mrs Rondos was then taken through the bank statements for the Trust[184] and the payments deposited for strawberries.  She was then asked as follows:[185]

    [184] Exhibit D16

    [185] Transcript p454–55

    QThat was a reflection of the amount of strawberries you were sending out wasn’t it, that this money was coming in; that’s right.

    AYes.

    QHow is it, then, that when you came to sit down with your accountant to do your financial or to go through your financial figures for 30 June 2004 you saw income of $54,000 you didn’t say to him, ‘Look, that’s just wrong’.

    AI really don’t know what went wrong there because all the statements were there in black and white, so I really don’t know.

    QJust looking –

    AJust like they are here.

    QLooking at the document produced to you, rather than take you through every page, I’ve made a list of all the credits in your account taken from this bank statement.  Now, I appreciate some of them are tax refunds, and the column in the right hand side just gives a running balance, so the first three entries add up to $50,000.

    AMm.

    QThe next block adds up to $296,000.

    AMm.

    Q14 thousand and 35 thousand. Now, apart from the entries in that list that relates to three that might amount to about $40,000, over $396,000 went into your account in that financial year.  Now, if you ignore the tax refunds, say it was $300,000 that went into your account that year, you would have still made a profit, wouldn’t you.

    AI don’t know.

    QWell, with the $54,000 income your profit and loss account says you’ve lost $210,000, 212, something like that.  If, in fact, your income was $300,000, then you would have made a profit, wouldn’t you, on the face of the books.

    AI can’t say ‘yes’ or ‘no’.

12. It was clear from Mrs Rondos’ evidence and the documents that there was a very significant discrepancy between the actual income from the sale of strawberries and the income disclosed in the financial statements for the Trust.

13. Mr Chew was called to give evidence and he indicated that there had been a clerical error in his accountancy practice when entering the data from the Rondos’ bank statements.  Some pages had not been entered fully and others had not been entered at all.  This had understated both the income and the expenses of the business.  As I have indicated above, I accept his evidence.  The errors in the returns did not occur as a result of any action by the plaintiffs.  They had properly disclosed all of the relevant documents to their accountant.  What I have difficulty in understanding is why it took so long for these errors to be discovered.

14. Following this evidence it was necessary for the trial to be adjourned.  Both parties had instructed forensic accounting experts who had prepared reports on the basis of the original financial returns.  Both were incorrect to the extent that the financial statements were incorrect.  It became necessary therefore for Mr Crace, the plaintiffs’ forensic accountant, to reconstruct the financial statements for the 2003/2004 financial year from the source documents that were available.  The defendants’ expert then needed to consider the reconstruction and Mr Crace’s amended opinion.  The experts had a number of discussions resulting in some jointly prepared documents[186] and additional reports.

    [186] Exhibit P51

    Operating Losses

15. My finding is that the plaintiffs’ selva crop started to fail towards the middle of December and was followed by complete failure of the crop in early January 2004.  Accordingly sales were clearly affected by the crop failure.  The issue is however whether profit has been affected.  The manner in which the plaintiffs have presented their case and the lack of certainty as to what profit might have been made if strawberries were harvested in the period from January to May 2004 makes it difficult to be satisfied that any loss was suffered.  There is no analysis of the projected harvest, actual sale prices and associated production costs.  The previous financial returns of the business do not disclose substantial profits.  Indeed the profits in 2003/2004 of $30,489 compares favourably with the average of profits for the three previous years.[187]

    [187] Exhibit P51 – Appendix A; p25

    Loss of Business

16. The key issue to be determined in relation to this is whether the plaintiffs were obliged to cease trading as P & A Charleston Strawberries in consequence of the crop failure.  This is a contentious issue.

17. The defendants say that the reported results available for the previous financial years were marginal at best.  Even after making adjustments such as removing the olive expenses it is said that the strawberry business was not viable. 

18. Looking at the third Spence report[188] the financial statements of the Trust can be summarised as follows:

    Financial Year 2000-2001     Loss $44,257

    Financial Year 2001-2002     Loss  $40,427

    Financial Year 2002-2003     Loss  $23,598

    [188] Table 12, Exhibit D65 p22

19. There appears to be no correlation between the trading performance of the Trust in any given year and the location of where the crops were grown, the number of runners planted in any given year or whether in fact only a first year crop was planted noting the uncertainty surrounding the year in which this occurred.  I find that the only conclusion to be drawn from the historical trading figures is that the business was never profitable.

20. The defendants say that the claim for loss of the strawberry business has no foundation as the business had no commercial value.  Further the defendant say that the Trust had the resources available to it to continue its strawberry business but chose not to do so. 

21. The Trust made a decision not to plant a crop in the 2004/2005 year.  It appears however that the Trust had sufficient working capital or at least as much working capital as it had previously had access to in order to plant strawberries in the 2004/2005 year.  If the Trust wished to purchase selva runners it could have purchased some 200,000 runners for $49,830.[189]

    [189] Exhibit P2 p646

22. The Rondos’ had an overdraft facility of $150,000 with Westpac.  They had available to them an amount of about $75,000 at the time the business closed.[190]  This is more than the sum of $43,000 available in the previous financial year.    Mr and Mrs Rondos both gave evidence that it was necessary for them to close the business because of the debts and difficulties they were having following the failure of their crop.  However it is not apparent to me that this was different to their financial position in to previous years.  Their explanation that they did not have enough funds does not sit well with the historical accounts.  Accordingly I am not satisfied that the failure of the selva  crop caused the failure of the business.

    [190] Exhibit D11 p89; Transcript p403-6

23. I do not therefore accept the claim for operating loss or consequential loss.  I do however consider that the plaintiffs’ alternative claim, subject of course to my finding on liability, would be a reasonable claim.  The difficulty with the claim as formulated is that it is predicated upon their receiving no income from the selva runners.  Plainly as I have found this cannot be the case, some of the income derived by the business must have been obtained from the selva runners planted on the Juers Road property.  On the basis of the material before me I am simply unable to quantify the loss attributable to the loss of the crop in December/January and, given my finding on liability I will not proceed to further consider that issue.

    Conclusion

24. I will therefore dismiss the plaintiffs’ claim and hear the parties as to the question of costs.