Schepis, N. v Elders IXL Ltd

C A T C H W O R D S

TRADE PRACTICES - rellance on respondent's expertise - reasonable

time only allowed.

FmERAL COURT - Inrerest - applylnq State law

- Western Australia -

statute appllcable to courts generally - whether ~urlsdlctlon	to
award.

Trade Practlces Act 1974, 55.52, 71(2)

Supreme Court Act	( W . A . ) 1935-1979	55 .32 ,	3 4
Ned Scheuls Fi Ors.

v. Elders IXL Llmlted

bIA G63 of 1986

PINCUS J.

BR I

S BAJJE

24 DECEMBER 1986

IN THE FEDERAL COURT OF AUSTRALIA

)

WESTERN AUSTRALIA DISTRICT REGISTRY

1	W.A. G68 of 1986

DIVISION

GENERAL

BETWEEN:	NED SCHEPIS, CARMELO SCHEPIS, VENY SCHEPIS
and JOHN SCHEPIS

Applicants

AND: ELDERS IXL LIMITED

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDEF?:	24 DECEYBER 1986

PADE:

BRISBANE

THE COURT ORDERS THAT:

1. The respondent pay the appllcants the sum of

$51,000.

2. Costs be reserved.

3 .

The tlme for the fllinq

of a notlce of appeal be

extended until 28 January 1987.

NOTE:

Settlement and entry

of orders is dealt wlth in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

)

WESTERN AUSTRALIA DISTRICT REGISTRY )

W.A. G68 of 1986

DIVISION

GENERAL

)

BETWEEN:	NED SCHEPIS, CARMELO SCHEPIS, W Y	SCHEPIS
and JOHN SCHEPIS

Applicants

AND:	ELDERS IXL LIMITED

Respondent

PINCUS J.

24 DECEMBER 1986

REASONS FOR JUDGMENT

Tnls 1 s J. case about the cause

of the relatlve fallures

of two crops of tomatoes grown by the appllcants on thelr property near Perth In the 1984185 and 198S/86 seasons. The appllcants' case 1 s that the prlnclpal cause of the relatlve fallures was that they relied on an lrrlgatlon system supplied by the respondent for

watering and fertlllmtlon of the tomatoes, but that system worked

very poorly.

I call the fallures

"relatlve" because, although

tomatoes were produced

In each season, they were not as

good,

large or numerous as they should have been.

There is credible expert evidence that the system was

deficient as alleged, and nothing to contradict

it.

witness

has been called by the respondent

as to the efficacy

of the system

it supplied. For the reasons explained below, it seems clear that

the respondent must

be held liable under

3 . 5 2 of

the Trade

c ,

2 .

Practices Act and under the general law, but the extent to whlch

it 1 s llable is

a complicated questlon depending on the analysis

of a mass of

evidence.

It is common ground that the two tomato

crops were not very successful, and that causes having

nothmg to

do with the respondent made at

least some contribution to

their

unsuccess. It is not possible by any mathematical process to

apportion the effects

of the various causes, and I have, in the

end, adopted a broad estimate.

In arrivlng at it I have had to

reach conclusions on

a number of contested factual questlons

mentioned below.

Of these, the one whlch 1 s most important is

whether the respondent should be held liable for the results

the deflclencles In the lrrigatlon system throughout the whole of

the two seasons, or whether the

loss should be

"cut off" at

earlier date; on that point, as wlll appear, my conclusion 1s

favour of

the respondent,

prlnclpally

because

I think

the

appllcants should

have obtained advice other than that

of the

respondent at a tlme earller than they dld.

Pleadlnqs

The statement of clalm I n the form

in which It came

before me alleged that the applicant Ned Schepls approached the

respondent to deslgn and supply

automatlc

irrigatlon

and

fertiliser system, and that the applicants made

known that they

required "automatic and variable irrlgatlon and fertillsation

individual bays of tomato plants at varying rates

of watering and

application of fertiliser specified by the applicants". There was

also to

a self-cleaning

filtration

system

operating

automatically. The defence, to put it simply, denied that the

’ t

3 .

.-	respondent undertook to deslgn anythlng, but as will appear, that
issue was not seriously contested.

The statement of clalm also alleges that the respondent,

by Trevor Guest, represented

to the appllcant Ned Schepis, In

substance,

that

the

respondent

could

design

and

supply

efficient system whlch would meet the applicants’ requlrements. Other representations were also alleged, but It is not necessary

to deal wlth them. The defence

denles

that

any

such

representatlons were made. Then the pleadlngs show, in substance,

an agreement that there was

a contract to buy

an irrigation system

for $13,270.25, and

that

the

contract

was

carried

out.

The

statement of

clalm

alsr, alleges that the representatlons

were

false In that, inter alla, the	system	falled	to	meet	the
appllcants’ requlrements.

Counsel for the respondent took the polnt that 5 . 5 2

the Trade Practices

Act cannot create liablllty for mere broken

prornlses; however,

for

reasons whlch will appear,

1 s

not

necessary to determlne how

that prlnclple applles to the present

case.

The

defence also pleads that the system supplled was one

specified by the appllcants; that allegation

was not seriously

pressed,

although

there

was

some

evldence

that

Ned

Schepls

participated in the selection of some equipment.

The statement of claim goes

on to say, in effect, that

the representations were false

m that the respondent dld not have

the capacity to deslgn and supply such a system as was required.

The applicants’ pleading further says

that each representatlon was

- \

* <

4 .

a' term of the contract, and alternatively that

it was an implied

term of the contract, that the system would be reasonably

fit for

the purpose for

whlch it was supplied. Lastly, the applicants

plead a case in negligence.

the hearlng progressed, it became clear that one of the appllcants' complaints, not covered by the pleading, was that

the equipment had been supplled too late In the first season

1.e. in the 1984/85 season, and that the delay had caused a

loss.

Counsel for the applicants sought to amend, but counsel for the respondent informed me, and I accepted, that the respondent would not be able to meet that case wlthout further investlgatlon which

would necessltate an ad~ournment.

In the special clrcumstances,

It seemed to me unfalr to

force the respondent to lltlgate the

issue of

delay, wlthout an

adlournment properly to prepare Its

case on that rather compllcated questlon. Since the

applicant ald

not wlsh the

amendment

granted

terms

adlournment, I refused the appllcatlon for amendment. That had

consequences adverse to the applicants, for they attributed part

of their loss - rlghtly as It seemed to me - to

the fact that the

system was not Installed untll rather late in the 1 9 8 4 / 8 5	tomato
season.
Ned Schepis and Trevor Guest

Under this heading

I deal with the evidence

of the

applicant Ned Schepis and that

of Trevor Guest, they being the two

principal witnesses as to the dealings between the parties. Both

. .

' :

5 .

.-	of them appeared to me falrly honest witnesses, although Guest
was, early in his evidence, somewhat unco-operative.

Schepls is an automotive mechanlc by trade, but he and

his famlly have for some

years had experlence in market gardening.

In 1982, he

received a letter from the respondent regardlng

Guest's avallablllty as an "irrigation speclalist" and recelved a business card, which was tendered, to the same effect. He met Guest and dlscussed lrrlqation problems with him. Guest explained

that hls own experlence in lrrlgation

was

prlnclpally

"overhead" systems, meanmg thereby systems In whlch water 1s sprayed Into the alr, rather than belng run or trlckled. onto the 5011. That known llmitatlon on Guest's experlence 1 s of

Importance and bears upon the reasonableness

of the

applicants'

contlnulng to rely upon the respondent after dlfflcultles arose

wlth the system supplied by the respondent,	a sublect further
dlscussed below.

Schepzs

says

that

the

1582/83 season he had an

lrrlgatlon system whlch he Installed after consulting Guest and

others, one of the latter being descrlbed

as the "local lrrigation

advlser". In that season, the appllcants put in

5-6,000 tomato

plants and in the

1983184

season Intended to Increase their

planting to about 12,000.

That proposal was dlscussed with Guest

who took measurements, heights and levels and roughly designed

irrigation system, apparently for

no fee.

That system worked

fairly well.

incorporated means of fertilising the plant but

not	"automatic" means.

6 .

Coles Stores bought tomatoes from the applicants

In the

1983/84 season and asked, during

or at the end of that season, if

the applicants could increase their production. Schepls formed

the n e w that he could not do so wlthout automatmg his irrigation

and fertillsing system, and spoke to Guest In April 1984 on the

subject. Guest told Schepis that

an automatic system could

provided and that

he had experience with automatic retlculation

water.

However,

Schepis

knew that

Guest

was

not

really

experlenced in the specific sort of system the applicants deslred.

About the mlddle of

1984, Guest again took steps to deslgn

system to suit the applicants' requlrements

and, for some months,

had numerous conversations with Schepis about the matter.

Guest's evidence was that about thls time he sent a

representative from "Hardies"

to Schepls. Although Schepls did

not admlt that, I flnd it to

have occurred, and

flnd, more

generally, that at

all materlal tmes Schepls was-aware that Guest

relled, at least to some extent, upon Hardles wlth respect to

technlcal matters. The respondent acted as agent for distrlbution

of Hardies' lrrigatlon products.

Hardies submitted a design

of an automatlc system, but

Schepls relected it as too dear. According to Schepis, Guest

s a d

that he would produce a cheaper design. Guest was lnclined to say

that he took no responslbility for design, but merely transmitted

to the applicants Hardies' ideas about design. In

cross-exammation, however, he substantially

abandoned

that

position, and I

am satisfied that

he assumed responsibllity, in

large part, for supplying a design, relying upon such information

* .

supplied by Hardles

as he

thought fit. It would seem to have

been, in a commercial sense, rather reckless for the respondent,

through Guest, to have

done this. It had

no true expertise

available in the area.

Of course, no deslgn fee was paid. It

must have

been clear to Guest that

if the

system falled the

applicants might sustain considerable losses. However,

I do

not

think

Guest

is the

sort

of man

who

glves

thought

self-protection above all else; he was genulnely anxious to help

the appllcants, no doubt partly in order to make a sale, but also

because he 1 s temperamentally so incllned.

He worked on the

appllcants' Irrigation system in	his own tlme, as well as In that
of his employer.

I flnd that Guest told the applicants about the mlddle

of 1984 that he would

submlt a deslgn wlth a cost estlxate.

design was ever produced, but

Guest, worklng on the basls

Hardles' design, supplled a

quotatlon listing equlpnient whlch

thought was necessary to achleve the appllcants' purposes. The

design was Implicit In the selection

of the equlpment. Guest gave

evldence that he

knew nothing about automatic fertllisation and

Schepls gave no evldence that Guest ever claimed expertlse in that

area.

I think Schepls was determined to have the system designed

for no charge, If he	could, and to some extent explolted Guest's
over-enthusiasm.

Schepis

intended to use

the

quotation

from

the

respondent to "shop

around", no doubt endeavouring to get

he same

equipment

cheaper

elsewhere,

having

the

advantage

the

respondent's design work.

In the event, however, the quotation

. .

c arrived too

late to enable him to

that. Schepls had

understanding of

the extent

which

expertise

truth

necessary in the selection and layout of irrigation equipment of

such a sophisticated klnd as he desired.

He seems to have been

willing to accept the risk that such

a modestly experienced person

as Guest

might

prove

incapable

of supplylng

the

requisite

technical knowledge.

Equipment supplied by the respondent arrlved and was

installed, in important respects, under the supervision

of Guest.

The only

person

with

any

real

claim

relevant

technical

experlence who took part In the installatlon was

electrlclan

engaged by the applicants, one Gary Pruden. However, as Pruden

made clear In hls evidence,

he also had to rely upon

Guest's

supposed knowledge, havlng no experlence	of the	k m d whlch was
relevant to the speclflc task In hand.

The	applicants lntended to plant seedllngs from about

the beglnnlng of October

19R4.

They lntended to have the system

operating before planting, but It arrived too late, for reasons

whlch do not requlre examlnation. Towards the end of October, the

system was put lnto operation, but the plpe loins started to part

under the water pressure. Remedial steps were taken on

Guest's

advice, including the fltting of a "non-return valve", use of

degree joins instead	of	90 degree jolns, and bolting	of the
unlons.

At the end of November 1984, a critical part of the system arrived, namely a pump having the function

injecting

. .

. I

fertiliser into the system. That was selected by Guest, but

erroneously so.

Since it was clear to Guest that it could not be

installed on the discharge side of the main pump, he put it on the suction side with results mentioned below; for present purposes,

It is enough to

note that the pump did not work properly. Even

before that, the plants were suffering from lack	of	water and
fertiliser.

The intention from the outset

was, as I have mentloned,

that the system would be automatlc. It was Intended to supply

irrigation and fertllisatlon to different parts

of the applicants'

cultivation by electrical controls, without

the necessity of

human

intervention. None of the persons who were engaged In the task

establlshlng

the

system,

however, had

sufflclent

relevant

experlence.

As tlme went

on, and the deflclencles of the systen

contlnued, one would have expected Schepls to lose confidence In Guest; for example, Schepls says in his evldence that the plpe at

the pump end of the system

blew

out several times durlng the

season, desplte the fact that the un1ons had been bolted. The

evldence continued:

"Mr. Guest Inspected the system

number of

occasions but could not explain why these blow-outs

were occurring.

' I

Schepis' evidence was that at the end

of 1984 he

told

Guest that the system was constantly blocklng and that the means

of clearing the filters

(by reverse flush) did not appear to be

working. Schepis said, and

I accept, that when the system was

examined on that

occasion

breakages

and

missing

parts

were

discovered.

Guest advised Schepis to put in

a non-return valve,

and he took that and other measures.

Schepis also said, and I find, that the controller dld

not automatically cause each sectlon

of the cultivation to be

fertilised

its

approprlate

rate,

as was

intended.

Guest

suggested that time delay clocks be Installed. That was	done, but
they dld not cure the problem.

About

his

time

(December

1984)

Guest

left

respondent's employ, having recommended to Schepis that

he contact

Hardies Irrlgatlon In Perth to seek

a remedy for any problems he

encountered. In February

1985, during operatlon of the system,

part of it "blew to pieces"

and

Schepis

complained

the

respondent,

whose

representatlve

was

then

one

Bachos.

Having

consulted with Hardles and Bachos,

by arrangement with the former

Schepls sent the inlectlon pump, whlch was stlll not working

properly, to Hardles In Adelalde to be tested.

He installed a new

pump In the meantlme, whlch also dld not work properly. There

were other difficulties,

also, about that time, but In my

opinlon

it must have become obvlous before the end of the 1984185 season,

that the system was seriously defective. If Schepls had ever had the idea (as he apparently did) that Elders, through Guest or

otherwise, had been able

to supply such a system as would fulfll

his requlrements, he must have lost that lllusion well before the

1985/86 season

started.

According

to Schepls,

the

applicants

"could not afford outside consultants and had to rely on Elders

themselves for help".

, '

J.1.

He went on to say that between May and October 1985 he contacted Bachos on a number of occasions to ask for help in getting the system working. Bachos passed him on to a man called

Smith at Hardies who passed hlm on to a man called Chris. "Chris was concerned but unfamiliar with the complexities of the system."

Thus, the respondent having made it clear enough that it could

no more than pass the problem to its supplier Hardles,

it was in

my view past tune for the appllcants to get expert assistance.

During the 1985186 season, the system, at

first,

was

worklng as

it had in the prevlous season

- i.e.

very badly.

Ultimately Schepis contacted a person

with the relevant expertlse,

one Green, and the system was corrected and made to work properly.

However, that did not occur untll January

1986, by whlch tlme much

damage had been done. During the 19851R6 season, prlor to Green's

interventlon, other Ineffective remedlal steps were trled, the

details of whlch It 1 s unnecessary to recount. It should also

mentioned that.

it IS common ground that

an Insect, the "two

spotted-mlte" attacked the crop in the

19R5/86 season. However,

that is of no consequence because,

in my opinlon, the appllcants

behaved

unreasonably in failing to

obtaln

advlce

from

any

qualified person for such a long perlod

tlme, and

I am not

prepared to allow any losses in respect of the 1985186 season.

decline to do so, not on

the basis of any general principle that

in such circumstances the tlme during which recovery is

allowed

must be severely

llmited,

but

because

of the

particular

circumstances of this case. Of these,

an Important one is that

Schepis was from the outset unwilling to pay for competent advice.

. >

2 . . *

12.

Expert Evidence as to Defects

of System

There was evidence from two people

with

sufficient

knowledge to analyse the deflciencles of the system. One was

Mr.

J.D.S.

Hill, an engineer, and the other

an irrigation consultant,

Mr. P.E. Buck.

The

latter had no formal qualificatlons, but had

sufficient relevant experience to make

his oplnion of value.

H111 said that there were four thlngs wrong

wlth

the

deslgn: the meterlng pump

was wrongly chosen, the filters were of

the wrong capaclty, measures should have been taken to protect the

system agalnst excessive pressure, and thlcker pipes should	have
been used In the hlgher pressure parts.

Of these deflclencles, In

my view, the most serlous was

the flrst.

H111 explained that the suctlon effect of the maln

pump (whlch, as

I have explained, was mounted

"downstream" from

the meterlng pump) was such that the meterlng pump had llttle

effect upon the course of events.

The maln pump had such strong

suctlon that It slmply

drew fertlllser stralght throuuh, whether

or not the metering pump was working.

The result was that a basic

element of the system did

not function. Instead

of the flow of

fertlliser being elaborately controlled, the amount drawn Into the

system depended upon random factors having nothing to do with

the

crop's fertiliser requirements.

A s a

result, sometlmes too much

fertiliser was in~ected,

and sometimes not enough. Only by chance

would the deslred amount

be introduced.

I infer that Guest did

not have such understanding of the mechanism

as to enable him to

make a proper choice of injector pump.

The injector pump was in

. I

13.

iruth designed to be mounted

on the other (positive pressure) side

of the main pump; Guest knew this.

A s to

the other three deficiencies, little need be

added. It should

be pointed out, however, that the error made

with

respect to filter selection appears to have been of

elementary kmd. The filters were designed to work

wlth specified

mlnlmum flow rates; the system produced	a rate of flow well below
them.

I gained the impression from

Hlll’s evldence that

extenslve theoretical training

is necessary to enable one properly

to deslgn an irrigation system. In hls opinion people who market lrrlgation equipment qenerally have enough knowledge to calculate

pressures and flow-rates.

That supports the applicants’ case,

because

makes it seem reasonable for the appllcants, in the

first Instance, to have assumed that Guest mlght have, or at least have ready access to, such informatlon as was needed to permlt a proper selectlon of equlpment. It does not follow, however, that the applicants were entitled, when they knew that serlous mistakes

in equipment selectlon must have been made, simply to bill thelr

losses

the

respondent.

Partlcularly

1 s that so when

the

respondent‘s amateur deslgn work had been

free and the appllcants

were aware that proper quallfied advice was available.

I do

not

accept that the applicants

were, at relevant times, unable to

expend the relatively modest sums necessary to engage people to

inform them what was wrong

with the system.

Schepis expended

monies in taking certain relatively ineffectual remedial steps,

the advice

of Hardies and in consultation

with Pruden.

L .

. -

14.

Buck gave evidence that

he has been a private irrigation

consultant for some years, and that

his firm charged "some $400

odd per day inclusive".

The

most obvlous deficiency, in

his

opinion, was the insecure plpework.

He agreed that the filters

were wrongly selected.

In his view, apart from the correction of

the fertllising metering system

(which had already occurred

at the

date of his inspection), other upgrading steps were necessary to

achieve

satisfactory

operation

and reliable

performance.

estimated their cost to be

$6,000.

It should be added that Mr. Green, who was

responsible

for correctlng the fertlliser metering system, was not called, but

his report

13 February

1986

was

tendered.

Accordlng

Schepls, some months elapsed between	hls flrst request for Green's
help and Mr. Green's supplying It.	I infer that Schepls dld not

press him to come as a matter of urgency.

Concluslons as to Llabilltv

To some extent, the deflciencies In

the system were such

cannot

attrlbuted

any

fault

the part of

the

respondent. That particularly applies to electrical work done by Mr. Pruden, who made no secret of his lack of understanding of the operation of the components with whlch he had to deal. That, however, is a matter to be taken into account in assesslng the

damages. It is

my opinion that the respondent is liable

the

applicants in respect

of each of the three causes

of action

pleaded - i.e. under 5.52

of the Trade Practices

Act, for breach

of contract and for negligence.

15.

To be more specific,

I hold that the respondent is

liable:

(i) Under 5.52 of

the Trade Practices Act, in

that

represented that it had the expertise and capacity to

deslgn and supply

an efficlent system, but dld not

have

either,

and

that

represented

that

the

system

(consisting In the selected components) it supplled

was

such as would

meet the applicants' requirements, whereas It

was not of that descrlption.

(ii)

In contract, by virtue of the term implied under

s . 7 1 ( 2 )

the

Trade

Practices

Act

that

the

system

was

not

reasonably fit for

the

purpose

[made known

the

applicants to the respondent) for whlch

It was supplled.

(ill)

In negllgence, In that,

having assumed a relevant duty of

care, it negligently falled properly	to design the relevant
system.

I did not understand counsel for the respondent, In the end, to submit that there was no liabllity; he confined hlmself to

a submlsslon that there was

no liability under the

Trade Practices

but made no such submission with respect to the allegation

negligence.

It was contended on behalf of the applicants that in the particular circumstances of the case,

did not matter whether

. .

. (

16.

damages were assessed in tort or in contract. Prima

facie,

suits brought under

5 . 5 2 of the Trade Practices

Act, the former

method

appropriate:

Gates

v. City

Mutual

Life

Assurance

Society Ltd. 63 A.L.R. 600 at p.609.

That involves an assessment

on the basis

a comparison between the applicant's financlal

position had he never entered into the transaction, and

his

posltion in fact. Here, it appears that I should start from the assumption that if the applicants had not obtained the equipment

selected

the

r spondent,

hey

would

have

obtained

properly-selected equipment

fertilised the plants wlth reasonable efficiency. In contract, in

situations of this sort, the appllcants are entitled to be put in

which

would

have

worked,

and

that positlon whlch they would

have occupied had the breach never

occurred:

Gates'

case

at p.607.

therefore

appears

correct, as was submltted,

that

the measure of

damages, in the

partlcular clrcumstances of this case,	1 s the same m tort as	in
contract.
Quantum

It	is necessary to introduce this subject by referrlnq

further to expert evidence. A number of persons claiming relevant

biological knowledge were called, principally Messrs.

Parnell,

Gratte and Hawson. There was also

Mr. Burt from the Department

Agriculture.

His evidence concerned

a theory advanced by the

respondent about a substance called Alar, which turned out not to

requlre examination.

17.

Mr. Parnell is a botanist, but has not a great deal of experience relevant to tomato-growing on a commercial scale.

derived assistance from

hls evidence, however, in the general

support he gave to the

account

given

Schepis

hls

difficulties with the irrigation system. Gratte and Hawson are both government advisers of conslderable experience, partlcularly with reference to vegetable-growing. Gratte saw the property only

in 1986, and for the reasons explained above,

I am not prepared to

allow any damages in respect

of that period. However,

I have

taken Gratte's evidence into account as throwing light upon the

standard of management of the property; Gratte's opinion

was that

Schepis was a grower

of only average abillty. Hawson's evldence

suggested that the area in which the applicants' farm 1s

located

IS not quite as suitable for tomato growlng as land further north.

He emphaslsed the importance of climatlc condltlons in successful tomato growmg.

There was other evidence called, from

Mr. H.G. Leitch

and Mr. L.J. Dickson, deallng wlth the "early blight" problem

the 1986 year. It seems to	me unnecessary to say anything	on that
topic.

There was a conslderable volume of evldence directed to

the question whether, and

if so

to what extent, the applicants'

losses might be attributed to causes other than the breaches on behalf of the respondent. It is necessary to mention some of the more important of them.

18.

Schepis admltted that

his spraying of his plants to

discourage diseases would

have been more effective if he had

had

what are called "droppers" fltted to

his spray boom. However, in

my opinion,

that

deflclency

not

shown

have had

any

significant effect upon his output in the 1984/85 season.

important

addltional

cause

the

applicants'

difflculties,

admltted to by Schepis, was the delay in supply of the irrigation

system, referred to above. It

1 s my

view

that

part

of the

appllcants' loss is attributable to that cause. Mr. Ainslie, for

the respondent, argued that as to the delay and in other respects,

the appllcants' case was left too vague to enable a

sufficiently

accurate assessment of damages to be made.

I do not agree; there

1 s no posslbllity of apportlonlng the

loss among the varlous

causes in an arlthmetlcal way:

cf. the remarks of Gibbs J.,

hls Honour then

was, in Ted Brown Ouarrles Pty. Ltd. v. General

Quarrles (Gllston) Pty. Ltd. (1977) 16 A.L.R. 23 at p.37.

Next, in my n e w , Schepls falled to take Guest's advlce

that the maln pipe should

be burled. That contributed to some of

the fallures whlch occurred.

The expert evldence shows that the

whole system is Insecure. Mr. Alnslie argued that the prlnclpal

problem could have been overcome If Schepis had taken Guest's

advlce to fit a non-return valve, a solution which was ultimately

adopted.

I am satisfied that there

was some fault on the part of

Schepis whlch contributed to parting of joins

and bursting of

components. However, it seems

me clear that the principal

fault was in design, or to be more specific, in specification of

. .

19.

items of equipment and that may properly be laid at the door	of
the respondent. Although parting of joins and other breakages

caused interruptions in watering and fertilisation, In	my opinion
the main problem was that the fertilisation system installed

simply did not

work, for the reasons mentioned above.

Next, Schepis admlts that there were blockages in the

system fairly early, and In my opinion (although the evidence

1 s

not all one way

on this polnt) it is llkely that they were largely

due to accumulatlon of lron oxide In the area

of the flne outlets.

Guest, rlghtly, suggested that

a water sample be

taken. The

problem was correctable and ultlmately corrected;

fault is

attributable to the respondent in respect

of these blockages.

Schepis admlts, In effect,

that

he was at fault In

faillng to supply a 200

lltre tank from whlch the

fertiliser was

to be pumped. However, there is not reason to think that that

fallure caused any slgnificant

loss.

Next, there is evldence that suggests that a problem

contributlng to the losses

was that Schepls overtaxed the water

supply. It is my

n e w that he did not

do so, and I accept

that

there was plenty

of water.

I now turn to the details

of the damages claimed.

The

principal item is the

loss in respect of the 1985/86 season which

I have totally excluded.

In respect of the

1984f85 season, the

applicants claim a loss of $59,737.52.

20.

The calculation is criticised on

a number of

grounds.

It is said that there

were probably some cash sales of

tomatoes

which were unrecorded.

I am satisfied that that is

s o , but

thmk

them likely to have been small in amount.

More importantly, Mr. Ainslie argues that a conslderable

reduction must

be made to allow for causes in respect of which the

respondent has

no legal responsibility, and in particular, the

delay in supply of the system. It appears to me that those causes

can only

be taken Into account in

broad way. I am quite

satlsfled that the prlncipal cause of the loss was the most

obvious one, namely that the fertiliser supply system dld not

work.

The next level of dlspute about the claim for

loss

1 s

that according to the

respondent's case the "gross antlclpated

Income" clamed 1s much too high. That submlsslon relled largely

upon the evldence

of Mr. F.R. Schoonens, an agronomist employed by

the respondent. In

my oplnlon, although there

1s nothlng wrong

wlth Mr. Schoonens' arithmetlc, there

1s no ~ustlflcation in the

evidence for the assumptlons on which the calculatlons are based.

I am satisfled that the mode of calculatlon presented on behalf

the applicants in exhlbit 6 1 s basically correct, sub~ect

to one

qualificatlon, namely that

it is necessary to take into account

additional packaging and labour costs,

for the reasons set out in

the report of Horwath and Horwath dated

17 October 1986. The sum

in question in respect

of the 1984/85 season is $3,631.28 and the

necessity for that

ad~ustment

is conceded by the applicants.

In my view, a reasonable estimate

of the quantum of the

applicants' losses as a result of the breaches on the part of

the

respondent which I have found in respect

of the 1984/85 season is

$40,000. To that

must

added

the

costs

repairs

and

modification whlch do not appear to be challenged, namely $2,589.

There was discussion at the

hearmq as to the impact

taxation upon these losses. It

was conceded that as to lost

income no

adlustment should be made on account

taxatlon.

Counsel

for the respondent

contended,

however,

that

some

adlustment is necessary in respect of the tax advantage

(by way of

allowable deductions) accruing on account of expendlture

repairs and modlflcations. In the circumstances

of this case, it

seems to me that no such adjustment should be made.

Interest

That leaves Although the amount Involved In the

f o r

consideration a clalm for Interest.

mterest clalm

is not very

large, the legal polnt

1s one of some difflculty.

The primary

foundatlon on

which the clalm was put was

5 . 3 2

the Western

Australlan Supreme Court Act 1935-1979, which need not he set out

in full; it is so framed as to permlt an award of lnterest up

judgment in actions

of thls sort brought in the Western Australlan

Supreme Court. The section, however, applies to "the Court" which is defined as meaning the Supreme Court of Western Australia, so

that

prima

facie

the

sectlon

is not

available

these

proceedings.

22.

Under s.32(3) of

the same

Act, the right to recover

Interest applies to proceedings in

a Local Court except where the

sum for which judgment is given does not exceed

$750. Under 5.34

of the same

Act:

"The several rules

of law enacted and declared by

this Act, shall be in force and take effect in all

courts whatsoever in Western Australla

so far

the matters to

whlch such rules were laid shall be

respectively cognisable by such courts."

It therefore appears that

(sub~ect

to a limitation where

there are proceedings in the Local Court and the

~udgment

does not

exceed $750) the power to award such interest as

I have mentioned

is a general one applying to Western Australian courts.

It appears to me that in

the end the problem 1 s the same

as that dealt wlth In Neilsen v. Hempston Holdinqs Pty. Ltd.

6 5

A.L.R.

302 at pp.311, 312. I there dlscussed a slmllar Queensland

provlsion applicable to Courts generally in Queensland. Counsel

referred me to the reasons of the Full Court

in Centrepoint

Freeholds Ptv. Ltd. v. T.N. Lucas Pty. Ltd. (1985)

60 A.L.R.

187

at	p.198-9 suqqestlnq that the questlon depends on whether the

State statute uses expressions wide enough to apply to the Federal

Court.

Although

I accept

the

authority

the Centrepoint

Freeholds case as to its result,

I do

not, wlth respect, agree

that the question depends on whether the State statute givlng

power to award Interest uses language

wlde enough to apply to this

Court. When such statutes speak

of "all

courts" they mean all

State courts. In State Bank of New South Wales v. Commonwealth Savinqs Bank of Australia (1986) 67 A.L.R. 123, a similar problem

* .

2 3 .

was approached on the basls that the questlon is whether the State

law is one "relating to procedure" within the meaning	of 5 .79	of
the Judiciary Act.

I adhere generally to the

view I expressed in Neilsen

Hempston Holdinss Pty. Ltd.

(above) at pp.311 and 312:

"State statutes plcked

up by 5.79,

especially those

relating to 'procedure, evidence and the competency

of wltnesses', must be

so drawn as to apply to

State courts only and when

5 . 7 9 makes such statutes

bindlng

'all courts exercismg Federal

jurlsdlctlon in that State

... ' it must nean

make them binding

as if they referred to the latter

category of courts.

The mlnor reservation I have is that the expression

"must be

so drawn" overstates the matter; typlcally such State

statutes wlll be

so drawn as to apply expressly to State courts

only, but some such statutes

do not mentlon courts at all.

But

even where they do not, they set out to regulate procedure

I n

State courts only.

It 1 s s . 7 9 of

the Judlclarv Act whlch

makes

them applicable here, and where the State law (whether procedural

or otherwzse) applles to

State courts generally,

s .79

appears to

require that it be treated	as binding m proceedlngs in thls
Court.

I am, therefore, of the view that interest 1 s

allowable

and wlll allow an additional sum of $8,400 (being at the rate of

12%) under this heading.

There will be judgment

for the applicants, rounded off

2 4 .

[1986] FCA 634

24 Dec 1986