Scolyer v North-West Wholesale Fruit and Vegetable Co Pty Ltd

[1988] TASSC 90

Serial No B22/1988

List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION: Scolyer v North-West Wholesale Fruit and Vegetable Co Pty Ltd [1988] TASSC 90; B22/1988

PARTIES:  SCOLYER, William Roy
  SCOLYER, Isabel Alys

SCOLYER, Geoffrey Roy
SCOLYER, Phillip William

v

NORTH-WEST WHOLESALE FRUIT AND VEGETABLE CO PTY LTD
PAPANICOLAOU, Nick

FILE NO/S:  416/1983
DELIVERED ON:  10 June 1988
JUDGMENT OF:  Underwood J

Judgment Number:  B22/1988
Number of paragraphs:  29

Serial No B22/1988

List "B"

File No 416/1983

WILLIAM ROY SCOLYER, ISABEL ALYS SCOLYER,
GEOFFREY ROY SCOLYER AND PHILLIP WILLIAM SCOLYER
trading as SCOLYER HOLDINGS v NORTH–WEST
WHOLESALE FRUIT AND VEGETABLE CO PTY LTD
and NICK PAPANICOLAOU

REASONS FOR JUDGMENT  UNDERWOOD J

10 June 1988

1. The plaintiffs are a farming family carrying on business in partnership at Forth. They grow vegetables. The business is conducted principally by Mr Bill Scolyer and his elder son, Geoffrey.

1. The defendant company is a vegetable processor at Devonport. The second defendant (who was and is known as Nick Pappas) is its principal director and manager. Although these proceedings were brought against both defendants, it was conceded on behalf of the plaintiffs that, at all material times, Mr Pappas was acting as the known agent for his company and that he acquired no personal obligations. Accordingly, the action against him should be dismissed. However, as the acts and words of the second defendant were the acts and words of the defendant company I shall, for convenience, hereafter refer to Mr Pappas as the defendant.

1. Vegetable processors along the North–West Coast clean, pack and sell vegetables on the overseas, interstate and local market. The custom is and was for each farmer to enter into a contract with a processor at the beginning of each season. In substance, the contract requires the farmer to grow an agreed acreage of a specified vegetable and sell the crop to the processor at a predetermined price. Each year, detailed terms of agreement are negotiated.

1. The plaintiffs' claim is for damages for breach of contract. Their case is that, in about May 1982, they entered into a contract with the defendant to grow about 35 acres of onions due to be harvested in about March 1983 and that the defendant wrongfully refused to accept and pay for approximately 25 acres of onions. The defendant admits that he did enter into an agreement with the plaintiffs but claims that his refusal to accept and pay for all the onions grown was not, in the circumstances, a breach of that contract. The agreement was oral and its terms were the central issue in dispute between the parties. The resolution of this issue depends almost entirely upon the credit of the witnesses.

1. I find that in about May 1982 it was agreed between the parties that the plaintiffs would grow approximately 35 acres of onions for the defendant. The crop was to be grown in three paddocks which were referred to in the evidence as "Sprent", "Thompson's Road" and "Kindred".

1. At that time, apart from an agreement that the price would be not less than that paid for the last crop, no terms were agreed. During the preceding season relations between the defendant and the farmers who had grown onions for him had not been harmonious. The growers expressed some dissatisfaction over the terms of the contract for that season and the defendant's performance of his obligations under the contract. Accordingly, it was resolved that before the next crop, due for harvesting in about March 1983, all those growers, including the plaintiffs, would meet with the defendant to settle and reduce to writing, express terms of a contract which would be common to all growers.

1. During the latter half of 1982 there were two or more meetings between the defendant and the onion growers. It was common ground that the final terms of agreement were settled at the last meeting which probably was held towards the end of 1982. That meeting, at the defendant's factory, was attended by a number of onion growers, including Mr Bill Scolyer, and the defendant. Evidence of what was agreed at that meeting was given by Mr Bill Scolyer, the defendant and two onion growers, Messrs. Slater and Little. There was a sharp conflict between the defendant's evidence and that given by the other three witnesses.

1. I find that Mr Bill Scolyer was an honest witness but his evidence flawed by an imperfect memory and imprecision. I find that Messrs. Slater and Little were completely honest witnesses and their evidence accurate, reliable and convincing. The defendant is not Australian born but has lived in this country for many years. He has been in the business of buying and selling vegetables for twenty years and managing the defendant company since 1975. Immediate comprehension of his evidence was impaired by his volubility, foreign accent and poor sentence structure. From time to time the defendant claimed an inability to make himself understood but I find such claim ill founded. In assessing the credit of his evidence care must be taken to make full allowance for his lack of fluency in the English language. After making such allowance I am well satisfied that the defendant's evidence was totally unreliable. He was not slow to make positive assertions of fact favourable to his case even after admitting to a poor or incomplete recollection of events. He resorted to recent invention when he thought the occasion suited. When faced with matters unfavourable to his case he became evasive. When confronted with business records which countered statements he had made earlier, he was not slow to suggest such records were erroneous including those kept in his own business. Demonstrating an understanding of the English language in excess of his modest claims, the defendant frequently argued with his cross–examiner instead of answering a question in cases where it could reasonably be anticipated that the question would lead to others which might put the defendant in a difficult position. Initially, when confronted with his bills of lading relating to the export of onions in the 198283 season, the defendant claimed he was dependent upon his wife and others for detailed knowledge of the business records but subsequently made it clear that he personally had a very sound grasp of every facet of his business and the commercial practices of the export trade.

1. Mr Little said that he took notes of the discussion at the meeting between the growers and the defendant. He said that at the conclusion of the meeting he transcribed from those notes, on some printed note paper of Ansett Airlines, the names of those present and the points of agreement reached between the growers and the defendant. He said that he read out the names and the terms of agreement to those present and everybody, including the defendant and Mr Bill Scolyer, signified their agreement to those terms. The document was admitted into evidence. Mr Slater said that he gave Mr Little printed note paper identical to the exhibit on which to make notes. He saw Mr Little take notes and he heard Mr Little read the points of agreement from those notes and further, to the best of his recollection, the exhibit accurately reflects that which was read out and agreed to at the meeting. The defendant admitted that Mr Little took notes and that he read the points of agreement between himself and the growers from those notes. However, he claimed that the exhibit was not the notes made at the time. He said that there were a number of other terms, one of which he relied upon to reject the majority of the plaintiffs' onion crop, which were read out by Mr Little and agreed to at the meeting. He was not hesitant in suggesting that Mr Bill Scolyer, Mr Slater and Mr Little all told lies and, by inference, that they had conspired together to commit perjury and manufacture a false note of what was agreed at the meeting. I completely reject the defendant's version of what was agreed at that meeting. I am satisfied that where it is in conflict with the account given by Messrs. Slater and Little, the defendant's account of what was said at the meeting was untrue.

1. Before making findings of fact with respect to the terms of agreement between the plaintiffs and the defendant it is necessary to refer to some preliminary matters. In late January or February, when the onion crop is ready for harvesting, it is dug or lifted to the surface and then left to lie in windrows for a period to dry. Later, the mechanical harvester picks the onions up with a chain scoop which permits the majority of the dirt, small stones and small onions to drop out. The harvester then removes some of the tops and carries the onions up a conveyor which delivers them into a nearby truck. The crop is then delivered to the factory.

1. Onions can be placed in four separate categories namely, export quality, picklers, seconds and rubbish. Export quality onions are good quality onions, round or globe shaped, with good skin and not smaller than 40mm. in diameter. Picklers are good quality onions but smaller than 40mm. in diameter. Only onions of export quality are sold overseas except in the case of a consignment comprising exclusively of picklers. Seconds are onions of inferior quality but sometimes marketable, no doubt at a reduced price, on the interstate and domestic markets. "Rubbish" is badly damaged, bruised or misshapen onions which are completely unsaleable.

1. I accept the evidence of Mr Faulkner, Field Manager (Onions) of Clements and Marshall Pty Ltd, that an average crop comprises not more than 5% picklers. Frequently there is no market for picklers and seconds and the processor has no use for them.

1. In the year preceding the 1982/83 season the growers delivered their crop to the factory as harvested from the paddocks. There, the foreign material and rubbish was culled, the onions cleaned, "topped and tailed", graded according to size, and packed in bags. Payment was made in accordance with the "packed out weight". The growers were dissatisfied with this system because it gave them no opportunity to verify that they were paid in full for all saleable onions. At the meeting, the growers proposed that the defendant instal a weighbridge at the factory and each load be weighed in the same state as it was when picked up off the paddock. Thereafter the stones, grass, debris and rubbish would be removed and placed in a container, the weight of which could be ascertained later and deducted from the gross weight over the weighbridge. By this method, the growers would be able to ascertain the exact weight of onions delivered onto the factory floor for processing. At the meeting the defendant pointed out that if this system was adopted he would be obliged to accept and pay for picklers and seconds for which there might not be a market. After considerable discussion between the defendant and the growers, it was agreed at the meeting that the defendant would accept the whole of the onion crop produced from the agreed acreages and, after removal of foreign material and rubbish, pay the growers $100 per tonne, less 10% to cover the picklers and seconds that the defendant might not be able to sell. Mr Little's note records:–

"Weighing – Nick to install weighbridge and no charge to grower.

Pre–cleaner to be installed at factory and dirt, stones, rubbish to be removed and weighed off and deducted from growers' weights.

All [my emphasis] remaining onions to be paid for at $100 per tonne less deduction of flat rate of 10% for picklers and seconds".

1. The defendant did not dispute that the agreed price was $100 per tonne less 10% for picklers and seconds but claimed that it was not agreed that he was obliged to accept the whole crop. His claim was that at the meeting it was agreed that if a grower's crop comprised more than 10% picklers and seconds, he was entitled to reject the whole crop. I find that there was no such term. Nothing like it appears in the note. It is also inconsistent with the note which obliges the defendant to pay for all onions (after pre–cleaning) at $100 per tonne less 10%. It is inconsistent with the agreement that the price be discounted by 10% to cover picklers and seconds. The existence of such a term or anything like it, is denied by Mr Bill Scolyer and Messrs. Slater and Little. Similarly, I reject the defendant's evidence that there was agreement that, if a dispute arose as to whether more than 10% of the crop was picklers and seconds, the dispute would be referred to arbitration.

1. I find it was also agreed that the defendant would provide a harvester and a driver, who subsequently turned out to be Mr G Scolyer, and charge the growers a sum 50 cents per tonne less than that charged by other producers. It was also agreed that Mr Scolyer would cart or arrange for carting from paddock to factory on a "cost plus" basis. These charges were initially to be paid by the defendant and later deducted from the growers' accounts. Payment to the growers was to be made within thirty days of delivery to the factory. Finally, it was resolved that a written document be drawn up embodying the agreed terms.

1. It is common ground that Mr Slater had such a document drawn up and that he took it to the defendant. He said the defendant refused to sign it saying that, "his word was his bond". The defendant's account, which is fanciful, is that Mr Slater gave him the document and said that he did not want him (the defendant) to sign it. The document was not put in evidence, presumably because it has been lost.

1. In February 1983 the defendant directed Mr Geoff Scolyer to start harvesting. Work began in one of Mr Slater's paddocks. In March 1983 I find that the defendant wanted onions of a smaller (35mm. to 60mm.) size to satisfy a market he then had in Germany. The defendant inspected the plaintiffs' Sprent paddock and, as the crop fulfilled the defendant's requirements, he told Mr Geoff Scolyer to bring that crop into the factory. This was done in mid March 1983. The whole crop was accepted, processed and paid for in accordance with the terms of the agreement. The defendant claimed that, notwithstanding the acceptance of this crop, he was dissatisfied with it because it contained a high percentage of picklers and misshapen onions. He said he complained about this to Mr Geoff Scolyer but I reject his evidence of complaint and accept Mr Scolyer's evidence that the defendant said the onions were just the type he needed at that time. The defendant's factory foreman gave evidence that a lot of the onions from the Sprent paddock were picklers but his evidence was vague and imprecise and I attach no weight to it.

1. After Sprent some of Mr Little's onions were harvested. On the 24 March 1983 Mr Geoff Scolyer, again at the direction of the defendant, brought in a load from the Thompson's Road paddock. Before any more of these onions were taken to the factory, the defendant diverted Mr Geoff Scolyer to another grower's property. The defendant said that he stopped harvesting at Thompson's Road because he could see that a very high percentage of the crop was picklers and seconds but I do not accept that this was either the fact of the matter or the defendant's reason. He said that at that stage he had decided not to take any more onions from Thompson's Road but admitted that he did not tell the plaintiffs of this decision, advising them only that the paddock would be harvested later. I find that the onions from Thompson's Road, were of the smaller variety and at that time the defendant's market for smaller onions had come to an end and that he then needed larger onions for a different market. This finding is corroborated by onion sizes shown on the defendant's bills of lading.

1. By May 1983 almost all the crops had been harvested but, apart from one load, Thompson's Road and Kindred paddocks remained untouched. The defendant had filled all his overseas orders and the interstate market was depressed that year so it is likely that the defendant would have had difficulty selling many more onions after May 1983.

1. About the 6 May Mr Bill Scolyer asked the defendant when he was going to take the rest of his onions. The defendant told him that he was not accepting any more of the plaintiffs' onions as they were too small and the quality was poor. Mr Scolyer told him that he was obliged to take the whole crop in accordance with the terms of the agreement but the defendant maintained his refusal to do so. In the end, the defendant offered to take two loads from Thompson's Road provided the plaintiffs took back the picklers and poor quality onions. The plaintiffs were compelled to accept this offer. After pre–cleaning, 12.36 tonnes were delivered to the factory floor. The defendant rejected 6.87 tonnes of this delivery, claiming that these onions were picklers or substandard. I do not accept this claim. Thereafter the defendant refused to accept any more of the plaintiffs' crop.

1. Upon the evidence of Mr Faulkner, referred to later, I find that the crop from Thompson's Road contained a high percentage of picklers possibly as high as 7% to 10% but that otherwise, the crop was of good quality, small to medium sized onions. Having regard to the terms of the agreement that the defendant was obliged to take the crop from all three of the plaintiffs' paddocks and pay for it at the rate of $100 per tonne less 10%, I find that his refusal to take the balance of the crop from Thompson's Road and his failure to take the whole of the crop from Kindred amounted to a breach of contract entitling the plaintiffs to recover damages.

1. After the defendant's failure to accept the onions the plaintiffs made several unsuccessful attempts, (except for a small sale from Clements and Marshall) to dispose of the crop. It is unnecessary to detail those attempts. It is sufficient to say that I find the plaintiffs took all reasonable steps to mitigate their loss.

1. Mr Faulkner said that in May he inspected both Thompson's Road and Kindred. I accept his evidence that at Thompson's Road the crop was of small to medium size, between 40mm. to 75mm. in diameter. He said that the percentage of picklers appeared to be higher than average, comprising between 7% to 10% of the crop. He said that when he inspected them, the crop was showing signs of deterioration but would have been satisfactory if harvested earlier. He estimated the yield at 14 or 15 tonnes to the acre.

1. On inspection of the crop at Kindred, Mr Faulkner said that he found that the onions were generally of a larger size, between 40mm. to 110mm. with a far lower percentage of picklers than Thompson's Road. He said the quality was better than Thompson's Road and he estimated the yield to be in the order of 20 tonnes per acre.

1. In his defence the defendant pleaded the provisions of ss19(a), 19(b) and 35(3) of the Sale of Goods Act 1896. However, in view of the findings I have made with respect to the express terms of the agreement and the quality of the crop at Thompson's Road and Kindred, the defendant is unable to rely upon these statutory provisions to avoid liability.

1. I accept the evidence of Mr Geoffrey Scolyer, who sowed the seed at Thompson's Road and Kindred with a drill which measured the acreage sown, that Thompson's Road was 16.8 acres and Kindred, 9.9 acres. I therefore conclude that the crop at Thompson's Road comprised approximately 235 tonnes and Kindred, 198 tonnes making a total of 433 tonnes. Although Mr Faulkner was very experienced in estimating the yield of onions before harvest, he admitted that there was room for error up to 20%, so this estimate must be discounted to 340 tonnes (rounded off).

1. From this figure must be deducted the load taken in March and the two loads taken in May from Thompson's Road. According to the weighbridge tickets the total weight of these loads, after pre–cleaning, was 17.72 tonnes. I find on the evidence that the total weight of onions that the defendant wrongly refused to take was in the vicinity of 320 tonnes. By their statement of claim the plaintiffs claim damages in respect of 300 tonnes and I find this claim is established.

1. Although Mr Geoff Scolyer would have harvested and carted the plaintiffs' crop using the defendant's harvester and their own truck, some costs would have been involved. There is almost no evidence on this point but doing the best I can I estimate those costs at $3.00 per tonne. 300 tonnes at $90 per tonne (less $3.00 per tonne cost of harvest and transport) is $26,100.

1. Following the defendant's rejection of the crop, the plaintiffs succeeded in selling a small quantity to Clements and Marshall Pty Ltd for $227.80. Costs were incurred in the unsuccessful attempts to dispose of the rejected onions but no evidence was led of the amount of these costs. However, it is a matter which should be taken into account to offset the income from Clements and Marshall Pty. Ltd. Taking all these factors into account I assess the plaintiffs' damages at $26,000. There will be judgment for that sum against the defendant company. As mentioned at the beginning of these reasons, the claim against the second defendant is dismissed.