Tre Cavalli Pty Ltd v Berry Rural Co Operative Society Ltd - [2013] NSWCA 235

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Tre Cavalli Pty Limited v The Berry Rural Co Operative Society Limited [2013] NSWCA 235
Hearing dates: 24 June 2013
Decision date: 24 July 2013
Before: McColl JA at [1];
Gleeson JA at [2];
Leeming JA at [141]
Decision:
1. Appeal dismissed.
2. The appellant to pay the respondent's costs.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
SALE OF GOODS - conditions and warranties - implied conditions and warranties - cattle vaccine - whether contaminated at time of sale - whether constituted a supply of goods of unmerchantable quality

SALE OF GOODS - remedies for breach of contract - measure of damages - whether primary judge erred in not making further allowances
PROCEDURE - additional reasons - matters of substance - whether additional reasons can be taken into account
Legislation Cited: Sale of Goods Act 1923
Cases Cited: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441
Baldry v Marshall [1925] 1 KB 260
Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
British Oil & Cake Co Ltd v J Burstall & Co Ltd (1923) 15 Lloyd's Rep 46
Bell v Veigel [2008] NSWCA 36
Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49
Daniels v Anderson (1995) 37 NSWLR 438
Holmes v QBE Insurance Ltd [2004] NSWCA 432
Jones v Dunkel [1959] HCA 8; 101 CLR 298
Palmer v Clarke (1989) 19 NSWLR 158 Pinnock Bros v Lewis & Peat Ltd [1923] 1 KB 690
Regal Pearl Pty Ltd v Stewart [2002] NSWCA 291
Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332
Spencer v Bamber [2012] NSWCA 274 Talbot-Price v Jacobs [2008] NSWCA 189
Taupau v HVAC Constructions (Queensland) Pty Ltd [2012] NSWCA 293
Todorovic v Moussa [2001] NSWCA 419; 53 NSWLR 463
Category: Principal judgment
Parties: Tre Cavalli Pty Limited (Appellant)
The Berry Rural Co Operative Society Limited (Respondent)
Representation: Counsel:
T J Boyd / J D Cairn (Appellant)
R Cavanagh SC / S J Walsh (Respondent)
Solicitors:
Leitch Hasson Dent (Appellant)
Thompson Cooper (Respondents)

File Number(s): 2012/69980
Decision under appeal

Jurisdiction:

9101

Citation:

Tre Cavalli Pty Limited v The Berry Rural Co Operative Limited

Date of Decision:

2011-12-02 00:00:00

Before:

Puckeridge ADCJ

File Number(s):

DC 2008/319687

Judgment

McCOLL JA: I agree with Gleeson JA's reasons and the orders his Honour proposes.

GLEESON JA: This appeal concerns an unsuccessful claim that a cattle vaccine which the appellant purchased from the respondent, was contaminated at the time of sale, and thus constituted a supply of goods of unmerchantable quality. The appellant's claim for damages was dismissed by the District Court and the appellant has now appealed to this Court: Tre Cavalli Pty Limited v The Berry Rural Co Operative Limited, (District Court of New South Wales, Puckeridge ADCJ, 2 December 2011, unreported).

The vaccine was manufactured by Fort Dodge Australia Pty Ltd (Fort Dodge) and sold in a pack containing the description "Websters Clepto 7 Clostridial/Lepto HP Vaccine for Cattle" (Blue 546H). The contents of the vaccine comprised a water solution of ingredients including inactivated Clostridial and Leptospira bacteria. The purpose of the vaccine was to provide cover against five clostridial diseases and two strains of Leptospirosis in cattle.

The appellant initially joined Fort Dodge as the second defendant alleging negligence in the manufacturing process, but subsequently discontinued this claim. The manufacturer remained an active party to the proceedings below by virtue of a cross-claim brought against it by the respondent.

The appellant did not seek to establish at the trial that the vaccine was contaminated as at the time of manufacture. Rather, the case it sought to establish was that the vaccine was contaminated as at the time of sale by the respondent to the appellant. A period of one month elapsed between the date of manufacture and the date of sale to the appellant.

Before the primary judge, the appellant's claim for breach of contract relied upon an implied warranty as to fitness for purpose of the vaccine supplied and its merchantable quality: see ss 19(1) and (2) of the Sale of Goods Act 1923, as well as an implied condition that the goods shall correspond with the description: see s 18(1) of the Sale of Goods Act.

The primary judge held that there was no breach of s 18(1) because the cattle vaccine purchased from the respondent did comply with the description on the pack. His Honour also held that s 19(1) did not apply, because he accepted a submission by the respondent that the appellant did not make anything known to the respondent about the purpose for which it required the vaccine. Hence his Honour held the appellant did not rely on the respondent's skill or judgment in purchasing the vaccine.

The appellant's primary claim below was that the vaccine was of unmerchantable quality. The primary judge observed that the evidence disclosed two possibilities, either the vaccine was contaminated as at the time of sale, or became contaminated during the vaccination of the appellant's cattle. The primary judge considered these two possibilities were equally consistent and accordingly, the appellant had failed to discharge the onus of proof that the particular pack of the vaccine purchased from the respondent was unmerchantable as at the date of sale. Thus, the appellant's claim failed.

The primary judge went on to consider the claim for damages upon the hypothesis that the appellant had shown the vaccine was of unmerchantable quality as at the time of sale. The primary judge indicated that he would have assessed damages in respect of the value of the lost cattle in an amount totalling $66,250, but otherwise would have rejected the claim for damages for the loss of opportunity of carrying on other breeding and stud operations as a consequence of the loss of certain cattle.

While the appellant's written submissions and the grounds of appeal raised the claim based on breach of s 18(1) and s 19(1) of the Sale of Goods Act, argument on appeal centred upon breach of the implied warranty of merchantable quality under s 19(2) of the Sale of Goods Act. The respondent conceded below and on appeal, that if the vaccine was contaminated by it as at the time of sale, then it was not of merchantable quality and a breach of contract would have been established by the appellant. The respondent maintained its position on appeal that the appellant had not discharged the onus of proof.

For the reasons set out below, the appeal should be dismissed with costs.

The judgment below

The primary judge commenced his reasons with a description of the appellant's cattle business and the purchase of the cattle vaccine on 20 October 2007 by Bridgett Bowden, a director of the appellant, from the respondent's store in Berry. The vaccine was a single 200 millilitre container pack (batch 07538A01). The respondent's invoice described the vaccine as "7in1 Vaccine 200 ml Websters/Cattlevax". Ms Bowden also purchased an injector gun to administer the vaccine.

Ms Bowden had been involved in numerous farming enterprises and had been a veterinary assistant before commencing her own business in 2006, which she described as a "stud limousin" operation. Limousin cattle are a breed of large framed beef cattle of European origin, from the Limousin region in central France with a distinctive lighter wheat to darker red-gold colouring. That business was conducted by the appellant at two locations, a property leased at Jaspers Brush near Berry in New South Wales and part of a leased property known as "Congupna" near Shepparton in Victoria. The property at Jaspers Brush was utilised for lot feeding and breeding or fattening of commercial cows and calves and also for the stud operation. The property at Congupna was also used for breeding purposes and backgrounding of cattle. The appellant's business plan comprised both commercial cattle and stud cattle, including a proposed embryo transfer program to be funded from backgrounding cattle, that is, putting them on feed and then selling those cattle.

Vaccination of cattle

The primary judge recorded that on 20 October 2007, following the purchase of the vaccine, Ms Bowden vaccinated 15 head of cattle at Jaspers Brush which she described as weaners, commencing at around 10.30am. She was assisted by her father, Phillip Bowden, and her husband. The cattle were vaccinated in a "vet crush". Each cow was injected high on the neck and just under the skin. The vaccine was removed from the packaging and connected with a new vaccinator and a new needle. Ms Bowden stated that she noted the batch number in her diary as "B07538A01" and that she followed the directions as stated on the vaccine package. The primary judge noted, and implicitly accepted, Ms Bowden's evidence that she used a dosage of 2.5ml on each of the 15 cattle vaccinated at Jaspers Brush, although the recommended dose was 4ml. The unused vaccine was given by Ms Bowden to her father who she said immediately placed it in his portable car fridge (most likely with the draw tube still attached to the container of vaccine (Black 250G)) and left at about noon that day to drive to Shepparton in Victoria. Mr Bowden gave evidence that he placed the vaccine with some seafood, which was possibly frozen (Black 270G-J).

The primary judge recorded that on the following day, 21 October 2007, Mr Phillip Bowden vaccinated 35 of the appellant's 57 cattle at Congupna, assisted by his farm manager, a Mr Vincent and his son. Mr Bowden noted the batch number in his diary (B07538A01), which was the same batch number recorded by Ms Bowden in her diary.

An incident report subsequently prepared by Mr Vincent described the administration of the vaccine on 21 October 2007 at the Congupna property. Commencing at about 9.00am, the vaccine was removed from the fridge and connected with a new vaccinator and a new needle. The report stated that two plastic vaccinators and three needles were used. The report noted that the fluid movement seemed sluggish leading to the replacement of the first vaccinator; 35 cattle were vaccinated with 4mls of vaccine, leaving 22 head of cattle not vaccinated as there was insufficient product.

First signs of affected cattle

The primary judge noted that the first observation of any problem with the vaccinated cattle was contained in a diary entry of Ms Bowden on 23 October 2007 that she found a calf at Jaspers Brush "down". The entry for the next day, 24 October 2007, recorded that she found a dead calf and three more calves described as "down". Her diary entry for 26 October 2007 recorded a conversation with her father in which he told her there were 12 dead cattle on the property at Congupna. (It should be observed that this diary entry was inconsistent with Mr Bowden's diary entry for 26 October 2007 which recorded "4 dead, 4 down and near death, 20 badly effected [sic]".)

There was a dispute at trial as to the accuracy of Ms Bowden's diary entries. The respondent highlighted that the relevant entries were all written in the same pen, which was not used elsewhere in the diary. Further, Ms Bowden was unable to state whether the diary entries were all written at the same time. Her explanation was that the information in her diary was transferred from her stock book. The stock book was not produced to the Court despite a call for its production. Ms Bowden's explanation was that she had given it to a previous solicitor.

The primary judge did not make any express finding concerning the accuracy of Ms Bowden's diary entries, but noted Ms Bowden's evidence in her statement concerning inspection of cattle at Jaspers Brush on 23, 24 and 25 October 2007. When she carried out an inspection on 24 October 2007, Ms Bowden said she found one calf dead, three down and unable to stand and the remaining 11 calves were sick and stiff. The calves had large swelling the size of a tennis ball at the point of vaccination and the injection site was inflamed. She said there was also swelling down the front legs and that each calf was stiff and reluctant to move. Ms Bowden said she inspected the cattle again on 25 October 2007 and the condition of the affected cattle had not improved.

In relation to the cattle at the Congupna property, the diary of Mr Bowden recorded on 24 October 2007 that Mr Vincent told him that cows and a bull were ill. As noted at [17] above, his diary entry on 26 October 2007 recorded that four limousin cattle were dead, four were down and near death and 20 were badly affected.

The incident report of Mr Vincent, the farm manager at Congupna, stated that he arrived at the property on 24 October 2007 at about 4.30pm. On inspection of the young bulls he noticed nothing unusual, they were all sitting in the shade. He also inspected the heifers and steers in a separate paddock and was shocked at their condition. He noted four were dead, four were down and close to death, and others struggled to get to their feet. He stated that the cattle had large swelling at the vaccination point and swelling down the front leg, others had large swelling areas around the joints and glands. The primary judge did not comment on the apparent discrepancy between the date of these observations in Mr Vincent's incident report, being 24 October 2007, and Mr Bowden's diary entry in respect of what would appear to be the same inspection by Mr Vincent on 26 October 2007. Ms Bowden's diary entry for 26 October 2007 refers to the same report by Mr Vincent in terms "Bruce called on Wed", which may be taken to be a reference to 24 October 2007.

The primary judge also referred to Mr Bowden's evidence that following the call from his farm manager at approximately 5.00pm on 24 October 2007, he attended the property and inspected the stock. He found swelling around the vaccination points and around the joints. He considered the cattle seemed very stiff and reluctant to move. He also inspected the unvaccinated 22 cattle which had been kept in a separate paddock and stated they were all in good health as were all other unvaccinated cattle on the property.

The primary judge noted the evidence of Mr Bowden that after 26 October 2007, the affected cattle on the Congupna property continued to discharge pus from the infected areas of the body and there was paralysis of various cattle and lumps in the affected areas. Mr Bowden stated that he injected 20mls of penicillin into the cattle on a daily basis until 15 November 2007 but there was no improvement in the health of the stock.

The appellant's case was that by 2009 all 15 calves at Jaspers Brush that were vaccinated had died, and all vaccinated cattle at Congupna declined following vaccination and eventually all those cattle died as well. By contrast, unvaccinated cattle, both at Jaspers Brush and Congupna, remained in good health. The cattle which died at Congupna were said to include two elite cows which had been bred for the appellant's embryo transfer program.

Notification of incident

There was a conflict in the evidence as to when Ms Bowden first notified the respondent concerning the sick and dead cattle. Ms Bowden stated that she notified a person by the name of Michael at the respondent's store in Berry on 29 October 2007 and asked him to telephone the manufacturer. Her diary contained a note to this effect, but it was written in the same pen as the entries earlier in October 2007 relating to the vaccinated cattle, which does not appear elsewhere in the diary. The primary judge observed that there was no reference in the respondent's records of such a note or such information having been received by a person by the name of Michael. Further, Mr Michael Tyrrell, a storeman at the respondent's Berry store gave affidavit evidence that he knew Ms Bowden as a customer, and he had served her on a number of occasions including the occasion of the sale of the vaccine on 20 October 2007. The primary judge noted that there was no reference in his affidavit to having been subsequently contacted by Ms Bowden in relation to the vaccine. Mr Tyrrell was not required for cross-examination.

The primary judge also noted the evidence of Mr Abbott, the general manager of the respondent's Berry store, that Ms Bowden told him on 14 November 2007 that two of the calves vaccinated at Jaspers Brush had died and four were ill. Mr Abbott also recorded that Ms Bowden told him that 40 cattle were vaccinated at Shepparton of which four steers had died and four cattle were ill.

The primary judge recorded that Ms Bowden was cross-examined as to why she had delayed in making any complaint until 14 November 2007, according to the records of the respondent. Ms Bowden maintained she had spoken to Michael on 29 October 2007 and had contacted that person again after that date and had been informed that he had forgotten to notify the supplier but he would do so as a matter of urgency. The primary judge did not make an express finding as to whether he accepted Ms Bowden's evidence on this issue.

Inspection of affected cattle

Mr O'Dwyer, a representative of the manufacturer, attended the property at Congupna on 15 November 2007 and completed an adverse event report. This report recorded that Mr Phillip Bowden told him he had brought the vaccine to Shepparton five days after using it at Jaspers Brush. The primary judge observed that there was a conflict between this evidence and that of Mr Bowden, who said he vaccinated the 35 cattle on 21 October 2007. The primary judge implicitly accepted the evidence of Mr Bowden over that of Mr O'Dwyer, noting the incident report of Mr Vincent supported Mr Bowden's evidence of the time of vaccination at Congupna.

On 16 November 2007, Mr Robert Christie, another representative of the manufacturer, attended the property at Jaspers Brush. He observed two calves in a yard and calves in a paddock. The calves showed symptoms of swollen joints, stiffness when walking, lethargy, mucous around the mouth and trouble standing. The adverse event report which he completed on that day stated that all, apart from two of the calves that had been vaccinated, had recovered by 80 per cent. Ms Bowden acknowledged the accuracy of this statement by signing the adverse event report, but stated that the calves' condition deteriorated thereafter.

Examinations by Dr Gill

Ms Bowden did not ever obtain any veterinary examination of the affected cattle at Jaspers Brush, nor any post mortem report on any of the affected cattle which she said had died at both properties.

The only veterinary examination which occurred was in respect of the cattle at Congupna. This occurred on 21 November 2007 at the request of the manufacturer when Dr Ian Gill, a veterinarian, examined the cattle at Congupna. The primary judge noted that Dr Gill stated in his report of 28 November 2007 that:

" ... because [of] the time intervals between vaccination and the appearance of clinical signs as referred to by Mr Bowden and his property visit, most of the clinical evidence described by Mr Phillip Bowden had resolved. He proceeded to state that there was still a number of clinical signs to be observed in the vaccinated cattle, including a stilted gait in a number of the animals, evidence of active resolving and resolved superficial abscesses, vaccinated yearling cattle being in visibly poorer condition than unvaccinated herd mates, a vaccinated yearling bull with dyspnoea and the carcasses of at least four yearling cattle. He also examined a particular heifer more closer, that heifer was number 630.

Pathology report obtained in relation to a biopsy showed certain bacteria, which according to Mr Gill was usually a skin contaminant. He stated in his report that the introduction of skin bacteria when performing injection is not unusual but the infection is usually confined to the injection site and to a small number of animals. He said that this is the result of an infection being physically introduced when the needle pierces the skin in individual animals. It was his conclusion that as infection resulted in such a large percentage of cattle the bacteria must have been widely distributed through the vaccine pack. He proceeded to state that at some stage the vaccine pack had become contaminated. He stated:

'To have affected such a large percentage of treated cattle the contamination must have occurred before or very soon after vaccination of the cattle at Nowra began.'

He also stated 'that the origin of the bacteria was unknown'."

Dr Gill visited the Congupna property a second time on 23 December 2008. He understood that he was to inspect 20 cattle on that date, but on arriving was informed by Mr Phillip Bowden that only four of the cattle which had been vaccinated remained. Mr Bowden told him that the other vaccinated cattle had been gradually destroyed and processed through the knackery system. Dr Gill's understanding that he was to inspect 20 cattle has some significance. The appellant's statement of claim filed 17 October 2008 pleaded in paragraphs 13 and 15 that on or after 22 October 2008, 15 of the Congupna cattle that were vaccinated died and the remaining 20 cattle that were vaccinated suffered injuries. The reference to "22 October 2008" appears to be an error and should be understood as referring to "22 October 2007". The statement of claim was verified by Bridgett Bowden on 1 October 2008. Mr Bowden was not cross-examined on the circumstances in which 16 of the 20 cattle remaining were destroyed between October and December 2008.

The four cattle examined by Dr Gill were young limousin females, one being the heifer 630 which he had examined in November 2007 and which he recalled being in good condition at that earlier date, with a body weight of between 400 to 450 kilograms.

At inspection on 23 December 2008, heifer 630 was described by Dr Gill as thin and poorly grown with an approximate body weight of 350 kilograms and was stiff gaited in all limbs. None of the four cattle examined by Dr Gill had grossly swollen joints nor was there any swelling over the body, particularly at the location of the superficial lymph node where infection and abscesses that may have occurred in October 2007 would be expected. However all four cattle had an impaired gait.

In his report of 9 January 2009, Dr Gill's diagnosis was that the clinical signs of lameness and stiffness were consistent with chronic arthritis that had resolved. He stated that it was probable that this was related to the events of October 2007 when there was evidence of purulent arthritis in various and multiple joints in most of the cattle examined at that time. In relation to heifer 630, Dr Gill stated that the reason for the poor condition was less clear but he assumed, having regard to the history of the animal, that her poor condition as at December 2008 was a result of her diseased state in 2007.

The primary judge noted that it was the opinion of Dr Gill that:

"... for the presence of large purulent abscesses and purulent arthritis in cattle most commonly there is a particular bacteria involved. The particular bacteria involved he said was A.Pyogenes. He stated that to have affected so many cattle there was strong evidence that the particular bacteria was present in the vaccine and widely distributed through the vaccine pack. However he said the source and mechanism of the contamination could not be determined. He proceeded to state,

'Because all vaccinated cattle were alleged to be affected in some way, the contamination would have occurred some time before its use or during its administration to the first animal'."

Having rejected the appellant's claims under s 18(1) and s 19(1) of the Sale of Goods Act, the primary judge observed that the issue between the parties concerned whether or not the goods were of merchantable quality. His Honour noted the appellant's contention that the particular container of vaccine must have been contaminated at the time of use and plainly was not of merchantable quality, whereas the respondent submitted that the unmerchantable quality must be shown to be as at the time of sale. The respondent also submitted that the appellant had not discharged the onus of showing that contamination was in the vaccine was at the time of sale.

The primary judge considered the issue of merchantable quality by reference to three aspects:

First, the expert evidence concerning the likely time of contamination of the vaccine.
Secondly, the evidence of the manufacturer concerning its quality control and quality assurance procedures in the manufacturing process, the packaging and shipment of the vaccine to the respondent, and the absence of any complaint of contamination in relation to any other pack from the same batch.
Thirdly, the evidence of the respondent concerning its usual procedures in respect of the receipt and storage of vaccines from the manufacturer, and the receipt and storage of the 10x200ml containers of the Websters Clepto 7 vaccine on 20 September 2007, prior to sale of one container to the appellant on 20 October 2007.

Expert evidence

As to the expert evidence, the primary judge noted the evidence of Professor John House, the director of the Livestock Veterinary Teaching and Research Unit, Facility of Veterinary Science at the University of Sydney in a report dated 21 September 2009 that:

"... it was impossible to be definite in relation to the cause of death of the cattle, but that there were numerous features to suggest that a vaccine or more likely a contaminant in the vaccine was likely to have caused the reported disease and subsequent death of the cattle. He was of the opinion that the clinical observations made following vaccination, namely the swelling of the site of vaccination, extending down the legs, the distribution of infected cattle which had been vaccinated versus unvaccinated cattle and the fact that the distribution of affected cattle were on different properties strongly implicated the vaccine as a cause of the animals' compromised health."

The primary judge then referred to the evidence of Dr Ian Lean, an Adjunct Professor at the University of Sydney, in reports of 14 and 16 December 2010 respectively. The latter report responded to the report of Professor House. The primary judge observed that Dr Lean concurred with Professor House that the association with the administration of the vaccine and signs of illness was strong and that the history of the subsequent group of cattle being vaccinated at Congupna with the same vaccine and also showing signs of the illness, was consistent with the introduction of a contaminant at the injection site. The primary judge then referred to paragraphs 11 and 12 of Dr Lean's report as follows:

"'While the association appears to be very strong between the Clepto-7 vaccination and subsequent illness in the cattle, it is not clear where the source of such contamination arises.'

In para 12 he states:

'While the association with the Clepto 7 vaccination and subsequent disease is strong, there are two possible options with regard to the cause:

(i) It is possible, although very improbable, that the single 200 ml bottle was contaminated prior to receipt by Tre Cavalli Pty Limited resulting in subsequent injection of a contaminant into the cattle; or

(ii) That contamination arose either in the handling or management of vaccination that allowed a contaminant to be spread throughout the cattle both at the Berry property and the Congupna property. This is an equally improbable outcome'."

The primary judge also noted Dr Lean's opinion that neither of the causes as outlined in paragraph 12 of his report were at all likely, because a single bottle/container of the vaccine is extremely unlikely to be contaminated; for that to occur other bottles/containers in the batch would almost inevitably be contaminated.

Manufacturing process

As to the process of manufacture, the primary judge accepted the evidence that the relevant batch was manufactured by First Dodge in accordance with the manufacturing procedure approved by the Australian Pesticides and Veterinary Medicines Authority; that the possible contaminant identified by Dr Gill had never been identified in environment monitoring or filling at the Penrith facilities where the vaccine was manufactured; and that the particular batch contained 839,025 doses, which were put into 11,837 packs of varying sizes and were filled and packed by the manufacturer between 14 and 19 September 2007.

The container or pack purchased by the appellant was one of 1305 such 200 ml packs, which had been filled and packed by the manufacturer on 18 September 2007.

The evidence of the manufacturer also established that there was no other contamination complaint was received by it in relation to the 11,837 packs of the vaccine from the same batch, namely B07538A01. The primary judge observed that Mr Phillip Bowden had vaccinated the remaining 22 of the appellant's cattle at the Congupna property on 22 October 2007. His diary recorded that the vaccine was from the same batch, namely B07538A01, which he had apparently purchased from another supplier in Shepparton on that day (Black 259X-260P). Those 22 cattle did not suffer any ill effects from the vaccination.

Receipt and storage of vaccine by the respondent

As to the respondent's dealing with the vaccine, the primary judge accepted the respondent's evidence that when the relevant pack arrived at the its store in Berry it was within the required temperature range of 2°C to 8°C, and it was handled appropriately in the usual manner for storage of vaccines. The primary judge also recorded that Mr Tyrrell had observed Ms Bowden on 20 October 2007 take the box of vaccine from the refrigerated section of the respondent's store.

Likelihood of contamination of the vaccine

The primary judge then returned to Dr Lean's statement that "it is extremely unlikely that a single bottle container of vaccine would be contaminated". The primary judge observed that Dr Lean noted the report of Dr Uren who had described the manufacture of the vaccine, and who was similarly aware of the extreme high levels of good manufacturing practice used to produce vaccines and to ensure their sterility. The primary judge noted Dr Lean's opinion that it was extremely likely that other cases would be detected and reported if the vaccine batch was similarly contaminated. He also noted Dr Lean's opinion that notwithstanding the improbability of either situation which he referred to in paragraph 12 of his report (see [40] above), no other cause of the outbreak was sufficiently probable to accept as possible.

The primary judge expressed his conclusion on causation in the following terms:

"The Court however is confronted with two possibilities as referred to by Mr Lean and also by Mr Gill. Mr Gill in his reports stated that the contaminate of the vaccine may have been contaminated soon after purchase, that is as at the time of purchase, or during the vaccination. When the Court is confronted with two possibilities which are equally consistent the Court is unable to come to a conclusion as to probability. The plaintiff, to succeed on the basis that the particular vaccine in the particular pack was unmerchantable as at the date of sale, bears the onus.

I cannot be satisfied on the review of all the evidence that the plaintiff has discharged the onus that the particular pack was unmerchantable as at the date of sale. Accordingly, there must be a verdict for the defendant."

Damages

The primary judge next considered the appellant's claim for damages upon the hypothesis that the appellant had succeeded in establishing a breach of contract. The primary judge noted that the evidence in relation to the loss of the cattle was very non-specific and the appellant's records did not corroborate or substantiate a number of the allegations. His Honour set out the various amounts he would have allowed for the value of lost cattle. Those amounts totalled $66,250, but did not include any amount in relation to 19 limousin heifers because his Honour considered the evidence very non-specific and did not establish which of those heifers were affected as a result of the vaccination.

As to the other losses claimed by the appellant, his Honour gave the following brief reasons as to why he would not have awarded any damages:

"I would accept what was stated by Mr Lean in his report and would not allow for the loss of commercial herd productivity.

As to the loss of stud herd productivity I could understand that any reduction in stud cows and heifers could bring about a loss of stud herd productivity but note that there has not been a loss accordingly to financial statements for the years 30 June 2007 and 30 June 2008, and any loss would involve loss of opportunity. The Court is unable on the evidence before it to state definitely and with specificity as to what stud cattle were lost to allow an assessment even as to loss of opportunity.

I would also accept the opinion of Mr Lean that in relation to the loss of embryo transfer program that there was no loss of embryo production because the plaintiff had embryos which could have been used to continue the embryo transfer program. I accept the evidence as to what the loss would be.

I can only state that the evidence before this Court is insufficient to come to firm conclusions on the losses as claimed by the plaintiff."

Additional reasons of primary judge

The reasons of the primary judge were the subject of a reserved judgment which was given orally on 2 December 2011. Those reasons record that a verdict was entered for the respondent and that the cross-claim between the respondent and the manufacturer was dismissed.

On 21 December 2011, the primary judge gave what he described as additional reasons for his decision of 2 December 2011. Those reasons comprised eight pages and primarily concerned the absence of precise evidence as to when and how many of the vaccinated cattle died.

The appellant submitted that the Court should not take the additional reasons into account on the appeal and in any event, those reasons dealt with an issue which the appellant submitted was not an issue at trial, namely that all the affected cattle had died.

The respondent submitted that the Court could take the additional reasons into account as they explained why the primary judge did not accept that all the affected cows had died as a result of being vaccinated, and that in explaining the basis of this finding the primary judge recognised that he had failed to give proper reasons in his earlier reasons for judgment.

There are limits within which a judge can correct or add to a draft of orally delivered reasons for judgment. A judge may revise reasons to correct errors and infelicities of expression, or to correct a slip, where the reasons as expressed, do not reflect what the judge meant to say. However, it is not permissible to alter the substance of reasons once given: see Bell v Veigel [2008] NSWCA 36 at [221] per Mason P (Giles and Tobias JJA agreeing).

When a judge purports to give reasons at the same time as orders are pronounced, the principles of open justice require that the Judge's reasons should be taken to be in substance those that he or she is purporting to give at that time. Once the orders are pronounced, rights of appeal or to seek leave to appeal arise and, subject to permissible alterations limited to circumstances in which a mistake or slip could justify corrections in draft reasons for judgment, that right can be given effect to only if the reasons are in substance those that the Judge has given at the time of making the orders concerning which the right of appeal or to seek to leave arises: see Spencer v Bamber [2012] NSWCA 274 at [141] per Campbell JA (Basten and Macfarlan JJA agreeing).

A power to revise a judge's reasons for decision applies equally in relation to ex tempore judgments, as in the case of reserved judgments given orally, as occurred in the present case: see Todorovic v Moussa [2001] NSWCA 419; (2001) 53 NSWLR 463 at 469 [50] per Beazley JA, where her Honour held that such power was implied within the statutory provisions which govern the delivery of judgments in the District Court.

Where additional reasons are not properly given in the exercise of judicial power the course commonly taken is for the appellate court to "disregard" the additional improper reasons: see Todorovic at [53] citing Palmer v Clarke (1989) 19 NSWLR 158 at 170 per Kirby P. See also Talbot-Price v Jacobs [2008] NSWCA 189 at [12] per Ipp JA, referred to by Basten JA in Spencer v Bamber at [13].

In my view, this Court must disregard the supplementary reasons given by the primary judge on 21 December 2011. Although the order of the Court below was not included in the Red Book it is clear from the reasons on 2 December 2011 and the opening sentence of the supplementary reasons of 21 December 2011, that a verdict was entered for the respondent on 2 December 2011. Accordingly, the primary judge could not supplement his reasons for decision except within the ambit of the permissible alterations referred to above. The additional reasons given on 21 December 2011 involve matters of substance, including purported findings of fact. They are properly disregarded on this appeal.

Additional salient facts

It is appropriate at this stage to record some additional factual matters established on the evidence before the primary judge. The first relates to handling of the vaccine by the appellant. The second relates to the identify of one of the cows inspected by Dr Gill on 21 November 2007 and in respect of which a biopsy was taken. The third relates to the initial compensation claim made by the appellant against the manufacturer on 22 November 2007.

Handling instructions

The instructions issued by Fort Dodge in relation to handling of the vaccine included that it should be refrigerated, preferably between 2°C and 8°C, but not frozen; that once opened the vaccine should be used within 24 hours; and that a partially used pack could be kept for use the next day if a number of steps were taken, including unscrewing the delivery tube from the vaccine pack, emptying the delivery tube and vaccinator by depressing the plunger several times and disinfecting the stopper. Further, before re-use, the delivery tube and cap should be sterilized by boiling for at least 10 minutes (Blue 447-448).

As noted at [14] above, in the present case, it is most likely that the delivery tube was still attached to the vaccine, contrary to the instructions of the manufacturer, when it was transported by Mr Bowden from Jaspers Brush to Shepparton on 20 October 2007.

Cow 630

As noted at [31]-[36] above, the primary judge referred to Dr Gill's reports concerning the cows inspected at Congupna on 21 November 2007, and again on 23 December 2008, which included heifer 630.

The applicant's stud ledger records by identity tag each of the 35 cattle which were vaccinated at Congupna on 21 October 2007. However, the cattle listed as vaccinated do not include heifer 630. When confronted with this proposition in cross-examination, Ms Bowden suggested that Dr Gill had made an error when recording the identity tag of the heifer he inspected on 21 November 2007, and that he really meant to refer to heifer 603, which the stud ledger did record as having been vaccinated on 21 October 2007.

The difficulty with Ms Bowden's suggestion of a recording error by Dr Gill is that the stud ledger recorded that heifer 603 had calved on more than one occasion, the latest being 2 September 2008. When inspecting the four cows in December 2008, Dr Gill noted that heifer 630 had never calved. Thus, Ms Bowden's suggestion that Dr Gill had made a recording error in his reports was contradicted both by the appellant's stud ledger records and Dr Gill's reports.

The evidence before the primary judge supports a finding that Dr Gill's evidence in relation to inspection of heifer 630 should be accepted in preference to Ms Bowden's evidence, which suggested a recording error by Dr Gill. The significance of this is twofold.

First, Dr Gill had assumed in his report of 28 November 2007, that the bacteria isolated from heifer 630 was also present in the other affected cattle. This influenced his conclusions as to the likely presence of contamination in the vaccine.

Secondly, if, as should be accepted, the bacteria found in heifer 630 at Congupna was not linked to the vaccine, there is no evidence by way of pathology explaining the illness in the affected cattle at Congupna, just as there is no such evidence in relation to the affected cattle at Jaspers Brush. Both of these matters are considered further below.

Initial claim against manufacturer

On 22 November 2007, Ms Bowden sent an email to Fort Dodge making a claim for monetary compensation in relation to sick and dead cattle said to have been affected by the vaccine. According to table 1 of the email, at the Congupna property four stud heifers and two steers had died, five junior bulls were said to be "effected [sic] by injection", 10 stud cows were "effected [sic] - damage to be assessed" and 14 commercial cows were "severely effected [sic]". In respect of the Jaspers Brush property, it was stated that two vealers were dead and three vealers were sick (Further Supp Blue 4). (The email was described as "without prejudice" but was ultimately tendered without objection and Ms Bowden was cross-examined on it.)

Table 2 of the email set out the ID numbers of the affected cattle which were said to have either died or were affected (except the commercial cattle which did not have identity tags). The respondent's submissions highlighted a number of discrepancies between the details of the affected cattle the subject of the compensation claim against the manufacturer on 22 November 2007, and the appellant's stud ledger. The primary judge did not refer to these discrepancies in his reasons. The discrepancies in the evidence highlighted by the respondent include:

(1) Heifers B24 and B28 were recorded in the 22 November 2007 email as having died at Congupna and yet were recorded in the appellant's 2008 stud ledger as being alive and undergoing drenching and vaccination in April and December 2008 respectively. Ms Bowden's explanation in cross-examination was that she had made an error in her 2008 stud ledger because she had cut and pasted the information from the previous year and had not deleted the cows that had died (Black 510H-P).

(2) The 35 cows marked in the appellant's 2007 stud ledger as having been vaccinated at Congupna on 21 October 2007 do not correspond with the cattle recorded in the 22 November 2007 email as having been vaccinated on that date. In particular cows B20, B22 and five junior bulls B1, B2, B3, B4 and B5 are recorded in the 2007 stud ledger as having "died", but are not recorded in the stud ledger as having been vaccinated on 21 October 2007.

(3) Cow 606 is recorded in the 22 November 2007 email as having been "written off", and in the 2007 stud ledger as having been vaccinated and noted as "affected vac", yet Dr Gill's report of 9 January 2009 recorded that on inspection on 23 December 2008, cow 606 had calved two to three months previously and was rearing a calf, and Ms Bowden agreed in cross-examination that this was correct (Black 197M-S).

(4) Cow 604 is also recorded in the 22 November 2007 email as having been "written off", and in the 2007 stud ledger as having been vaccinated and noted as "dogged" (a colloquial expression referring to cattle sent to the knackery to produce dog food), yet Dr Gill similarly recorded in his report of 9 January 2009 that this cow had calved two to three months previously and was rearing a calf, and Ms Bowden also agreed in cross-examination that this was correct (Black 197G-K).

(5) Cow B32 is recorded in the 2007 stud ledger twice, once as having died, but Ms Bowden acknowledged in cross-examination that this was incorrect because B32 was not vaccinated (Black 197X-198G).

(6) The 2007 stud ledger recorded that cow Y603 was vaccinated at Congupna on 21 October 2007. Ms Bowden's evidence initially was that all vaccinated cattle eventually died. However she subsequently changed her evidence on this point, stating in cross-examination, that heifer 603 was not one of the cattle which had died as a result of being vaccinated (Black 521Q-T).

Although Ms Bowden attempted to explain some of the discrepancies referred to above as errors and deficiencies in her recordkeeping system, the primary judge implicitly rejected this explanation. This was in the context of considering the damages claim for loss of cattle where his Honour found that he was unable to ascertain which of the 19 limousin heifers were affected as a result of the vaccination (Red 51D).

Issues on appeal

The notice of appeal raised six grounds of appeal. Ground 1 related to the claim under s 18(1) of the Sale of Goods Act of breach of the implied condition that the goods shall correspond with the description. The appellant complained that the primary judge "limited his consideration to the description on the vaccine pack and failed to have regard to what was the description and whether the vaccine corresponded with the description". Insofar as this complaint relates to the description of the goods, no error has been shown in the primary judge only taking into account the description on the pack. The appellant did not suggest that there was any other relevant description of the goods. Further, no written submissions were made in support of this ground of appeal and it was not raised by the appellant during the hearing of the appeal.

In particular, no submissions were made that the description of the vaccine was a misdescription because it was contaminated by the addition of some substance (and if so, what substance) which was not an authorised ingredient of the formula so as to make the goods lose their identity, or whether any defect in the vaccine was a matter of quality rather than description. This matter was considered in Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 466-467, 472 and 504, where the contaminated substance was produced by a chemical reaction following the use of a preservative, not something added to the herring meat product so as to make the description erroneous; cf Pinnock Bros v Lewis & Peat Ltd [1923] 1 KB 690 and British Oil & Cake Co Ltd v J Burstall & Co Ltd (1923) 15 Lloyd's Rep 46, the so-called "copra cake" cases, where the subject matter of the sale, copra cake, was so adulterated with castor seed as to be poisonous to cattle and it was held that the goods were not properly described as copra cake at all. It is unnecessary and inappropriate to consider matters not raised or pressed on appeal and this ground may be put aside.

Ground 2 related to the claim under s 19(1) of the Sale of Goods Act, and was advanced on the basis that the supply of a contaminated vaccine must mean that the vaccine was not reasonably fit for the purpose of being sold for vaccination in cattle. To this extent, ground 2 depends upon the outcome of grounds 3 and 4 relating to the claim under s 19(2) of unmerchantable quality. However, ground 2 raises two additional factual issues:

(1) whether the appellant made anything known to the respondent about the purpose for which it acquired the vaccine on 20 October 2007 so as to show that it relied on the respondent's skill or judgment in purchasing the vaccine;

(2) whether the proviso to s 19(2) applies in relation to goods sold under their trade name.

These issues may be conveniently dealt with after considering the claim under s 19(2).

The primary issues raised by the other grounds of appeal are as follows:

(1) Whether the evidence was sufficient to support a finding that the vaccine was of unmerchantable quality as at the time of sale by the respondent to the appellant on 20 October 2007 (Grounds 3 and 4).

(2) If so, whether in considering damages the primary judge erred by failing to consider the evidence, failing to give reasons for his findings and failing to have regard to the principles relating to assessment of damages for loss of opportunity (Grounds 5 and 6).

Unmerchantable quality

The appellant acknowledged that its claim of unmerchantable quality depended upon circumstantial evidence only, there being no direct proof that the vaccine was contaminated at the time of sale by the respondent and no post mortem examination of the dead cattle.

The appellant accepted that it must demonstrate that the circumstances appearing in the evidence give rise to a reasonable and definitive inference in favour of what is alleged, namely the vaccine was contaminated at the time of sale. That is, the circumstances must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is a mere matter of conjecture: see Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5. A court is not authorised to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others: see Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 304-5 per Dixon CJ.

Circumstances relied upon by the appellant

The appellant submitted that there was acceptable evidence of a correlation between the illness and death of the cattle and the vaccination, and no evidence to suggest that the contamination arose after sale of the vaccine to the appellant. The circumstances relied upon by the appellant as providing what it contended was an irresistible inference that the vaccine was contaminated at the time of the sale were:

(1) That only vaccinated cattle were affected and that this occurred on consecutive days at two different locations. The appellant relied upon the coincidences of time and place as pointing strongly in favour of its case (see Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 at 58).

(2) The absence of any suggestion that the vaccine was administered incorrectly by the appellant.

(3) The association between vaccination and signs of illness were strong and consistent with the introduction of a contaminant at the injection site.

(4) The presence of the bacteria related to a skin contaminant found in heifer 630 when examined on 21 November 2007.

(5) The likelihood that the infection occurred as a result of a contaminated needle had been dismissed by Dr Gill.

The first matter referred to above may be generally accepted, subject to the qualification arising in relation to the inconsistencies in the appellant's 2007 stud ledger recording which cattle were vaccinated at Congupna.

The second matter concerning the administration of the vaccine was the subject of attack in cross-examination of Mr Bowden. This was in relation to the cattle vaccinated at the Congupna property, where the respondent suggested a five day delay had occurred after opening of the vaccine pack, contrary to instructions on the pack that the vaccine must be used within 24 hours. As noted at [28] above, the primary judge implicitly accepted the evidence of Mr Bowden, which was supported by the incident report of Mr Vincent, that the cattle were vaccinated at Congupna on 21 October 2007, not five days after 20 October 2007. However, as noted also at [61] above, the handling of the vaccine by the appellant after it had been used on 20 October 2007 was not in accordance with the manufacturer's instructions. The drawtube had not been disconnected and the delivery tube and cap were not boiled before reuse the following day.

The third and fourth matters each require further consideration in the light of the contrary circumstances relied upon by the respondent and the expert evidence. The respondent did not suggest that the fifth matter (contaminated needle) was incorrectly dismissed by Dr Gill.

Circumstances relied upon by the respondent

The respondent submitted that the following circumstances, revealed by the evidence, were inconsistent with the vaccine being contaminated as at the time of sale:

(1) The extreme improbability that a single pack of vaccine was contaminated in a batch where 11,837 packs from the same batch were released to the market at around the same time with no adverse effects reported, including at least three other packs from the same batch purchased by Mr Bowden from a supplier in Shepparton and used to vaccinate other cattle at the Congupna property on 22 October 2007 (291 cattle in total, including 22 of the appellant's cattle) and 5 November 2007 (72 cattle).

(2) The unchallenged evidence that the vaccine was subject to rigorous quality control and quality assurance procedures at each phase of the manufacturing process, including the blending, filling and quality control testing phases of the manufacturing process and the filling and labelling of the vaccine packs, including the filling and packing on 18 September 2007 of the pack later purchased by the appellant.

(3) The unchallenged evidence of the manufacturer that the vaccine was stored in a cool room at the manufacturer's Penrith facilities and delivered directly from there to the respondent's Berry store on 20 September 2007 in a temperature controlled foam box as part of a batch of 10 bottles.

(4) The unchallenged evidence that Mr Bricklebank of the respondent checked and recorded that the temperature of the 10 x 200mls packs upon delivery on 20 September 2007, which was within the manufacturer's recommended range, and then placed those packs in the fridge in the respondent's store from which Ms Bowden later took the container pack of vaccine on 20 October 2007.

(5) No complaints were received by the respondent in relation to the other nine packs comprised in that delivery.

(6) The unchallenged evidence of Mr Tyrrell that he observed Ms Bowden take the pack of vaccine from the fridge in the respondent's store on 20 October 2007.

In addition, the respondent highlighted the following matters as casting doubt on the appellant's claim that the vaccine was contaminated at the time of sale:

(1) The only testing of cattle occurred in relation to heifer 630 at Congupna on 21 October 2007, but the bacteria found in that cow originated from a source other than the vaccine, as that cow was not vaccinated according to the appellant's stud ledger records.

(2) No testing was ever undertaken of the other cattle at Congupna, or any of the calves vaccinated at Jaspers Brush.

(3) In relation to the calves at Jaspers Brush, the appellant did not call in a veterinary surgeon, either immediately when the calves were affected in late October 2007 or after 16 November 2007, once the deterioration in the calves became apparent to Ms Bowden following inspection by the manufacturer's representative on 16 November 2007. Further, there was no expert evidence as to why the calves died after the 80% improvement in their condition observed on 16 November 2007.

(4) In relation to the cattle at Congupna, there were inconsistencies between the cattle identified in the appellant's 2007 stud ledger as having been vaccinated and the cattle inspected by Dr Gill on 27 November 2007, as noted above at [69].

(5) The unlikelihood of contamination occurring in the vaccine during the manufacturing process was supported by the expert evidence of Dr Lean.

The respondent also relied upon the expert evidence of Dr Lean, and submitted that the evidence of Dr Gill and Professor House proceeded upon assumptions which were not established or were incorrect. It is appropriate to first turn to the expert evidence.

Expert evidence

The examinations by Dr Gill and his reports are referred to at [30]-[35] above. It will be observed that Dr Gill assumed in his reports that the bacteria isolated from heifer 630 was also present in the other affected cattle, and that he considered the case to be unusual as it appeared that the infection was introduced in the injected material, because to cause infection in such a large percentage of the cattle, the bacteria must have been widely distributed through the vaccine pack.

However, the premise underlying Dr Gill's reasoning was that heifer 630 had been vaccinated like the other cattle, but this has been shown by the respondent to be incorrect. This undermines the opinion of Dr Gill that the bacteria must have been widely distributed through the vaccine pack. It also affects the weight which could be given to Dr Gill's conclusion (based on this incorrect premise) that "the contamination must have occurred before or very soon after vaccination of the cattle at Nowra began. However the origin of the bacteria remains unknown".

The conclusions expressed by Dr Gill in his second report of 9 January 2009 are similarly affected by his assumption that the most likely contaminant was A.pyogenes, being the bacteria found in heifer 630, which unknown to Dr Gill was not vaccinated. Even on the basis of the incorrect assumption, Dr Gill remained unable to resolve when, what he assumed was contamination in the vaccine, would have occurred. His conclusion remained no higher than "the contamination would have occurred sometime before its use or during its administration to the first animal".

The opinions of Professor House and Dr Lean are referred to at [39]-[41] above. Professor House was not cross-examined. His opinion was based on a number of matters including the report of Dr Gill of 28 November 2007 and the pathology report from Gribbles Veterinary Pathology, which was attached to Dr Gill's report. His report suffers from the same difficulty as does Dr Gill's report, insofar as he assumed that the bacteria isolated from heifer 630 was also present in the other affected cattle.

Dr Lean was cross-examined, but not on paragraph 12 of his report of 16 December 2010, which the primary judge referred to in his reasons as decisive; namely, the two equally improbable hypotheses that the contamination either was present prior to receipt by the appellant or after receipt. The failure to cross-examine Dr Lean on the critical aspect of his report is significant, because the criticism of the primary judge's acceptance of Dr Lean's unchallenged evidence is unwarranted unless it can be shown that Dr Lean's conclusion was on the face of his report, illogical or inherently inconsistent, or based on an incorrect or incomplete history, or the assumptions on which it is founded are not established (see Taupau v HVAC Constructions (Queensland) Pty Ltd [2012] NSWCA 293 at [130]). No such submission was made by the appellant.

The primary judge was confronted with conflicting expert opinion as to the likely timing of any contamination and with only one of the experts being cross-examined, but not on the issue identified by the primary judge as decisive. In these circumstances I do not consider that error has been shown in the primary judge's acceptance of the expert opinion of Dr Lean, that it was equally improbable that the vaccine was contaminated prior to receipt or after receipt by the appellant.

Circumstances inconsistent with contamination

The unchallenged or established circumstances identified in [82] and [83] above, were all inconsistent with the inference of contamination of the vaccine as at the time of sale. Taken together they strongly point against the suggested inference relied on by the appellant arising from the association between the vaccination and the observed illness in the cattle. Further, the existence of the bacteria later found in heifer 630 which was not vaccinated at Congupna, also points against the vaccine being contaminated with that identified substance as at the time of sale. The appellant did not suggest that some other unidentified substance was the contaminate present in the vaccine at the time of sale.

The appellant's case did not challenge the integrity of the manufacturing process or suggest that the contamination occurred during the manufacturing process. Rather its case was based on an inference that something occurred after the manufacturing process to render one pack out of 11,837 packs of the same batch of the vaccine contaminated as at the time of sale. However, the unchallenged evidence concerning the delivery of the vaccine packs by the manufacturer to the respondent and the storage of the vaccine in its fridge at its Berry store until the time of sale to the appellant, all pointed against this suggested inference.

Notwithstanding the circumstances relied upon by the appellant as referred to in [77] above, in particular the coincidence of time and place and the association between the vaccination and the signs of illness in the cattle, in my view, the other circumstances referred to in [81] above taken together with the primary judge's acceptance of Dr Lean's opinion, amply support the primary judge's acceptance that the conflicting inference (not contaminated at the time of sale) was of an equal degree of probability. Accordingly, I do not consider that error has been shown in the primary judge's conclusion that the appellant did not discharge the onus of proof of unmerchantable quality as at the time of sale.

In my view, grounds 3 and 4 of the notice of appeal are not made out.

Fitness for purpose (Ground 2)

Having failed on the claim of unmerchantable quality, the appellant cannot succeed on the claim under s 19(1) that the vaccine was not fit for the purpose for which it was required, as this claim was advanced solely on the basis that the vaccine was contaminated at the time of sale (see Regal Pearl Pty Ltd v Stewart [2002] NSWCA 291 at [101]). As to the two additional issues raised by this claim, I can express my conclusions briefly.

Makes known the purpose

Reliance by the buyer on the seller will seldom be express, it will usually arise by implication from the circumstances. In the case of a purchase from a retailer the reliance will be generally inferred from the fact that a buyer goes to the shop in the confidence that the retailer has selected his stock with skill and judgment. It is immaterial whether the retailer be the manufacturer or not, and there is no need for the buyer to specify in terms the particular purpose for which the buyer requires the goods. The particular purpose will generally be clear because it is the only purpose for which anyone would ordinarily want the goods (see Grant v Australian Knitting Mills Ltd at 60).

Ms Bowden selected the vaccine from the fridge in the respondent's store and stated in her evidence that she knew what she wanted because she used it all the time. This does not mean that she did not, at least, by implication make known to the respondent (which was a specialist supplier of rural products) the particular purpose for which the goods were required, so as to show that the appellant relied on the respondent's skill or judgment. The respondent's invoice identified that the goods were acquired for the vaccination of cattle, and Ms Bowden purchased an injector gun to administer the vaccine at the same time (see [12] above). In my view, the particular purpose for which the appellant required the vaccine was at least made by known implication to the respondent.

Proviso

It is necessary however to consider whether the proviso to s 19(1) applied in the present case, because the vaccine was sold under the trade name "Websters Clepto 7 Clostridial/Lepto HP Vaccine for Cattle". The operation of the proviso in the corresponding provision of the UK Sale of Goods Act 1893, s 14(1), was considered in Baldry v Marshall [1925] 1 KB 260.

In Baldry v Marshall, the proviso was not given a wide operation. The English Court of Appeal emphasised that the mere fact that an article is sold under its trade name, in the sense that the trade name forms part of the description of the thing sold, does not necessarily make the sale a sale under a trade name. Whether it is a sale under a trade name depends upon the circumstances. For example, if the buyer mentions the article by its trade name and also asks whether it will suit its particular purpose, the proviso has no application (Baldry v Marshall at 266).

When the proviso speaks of "the sale of a specified article under its patent or other trade name", it means an article specified by the buyer as being the article which he or she wishes to buy. If the purchaser so specifies the article and it is sold to him or her under its trade name, then the condition of fitness is excluded (see Baldry v Marshall at 266 per Bankes LJ, 268 per Atkin LJ and 270 per Sargant LJ).

The appellant's submissions did not advance any reason why the proviso to s 19(1) would not apply in the present case. This was in circumstances where first, Ms Bowden selected the pack from the fridge at the respondent's Berry store and presented it, together with an injector gun, to the salesperson, Mr Tyrrell, for purchase. Secondly, there was no evidence of any discussion between Ms Bowden and Mr Tyrrell prior to purchase which might negate the application of the proviso, such as Ms Bowden asking whether the vaccine would suit the appellant's particular purpose. In my view, the proviso to s 19(1) applied, and no claim was available as to fitness for purpose.

It follows that ground 2 of the notice of appeal is not made out.

Damages

There are two aspects of the appellant's complaint. First, in relation to loss of cattle, it is contended that the primary judge erred by not making a further allowance for loss of 19 heifers in the sum of $47,500.

Secondly, it is contended that the primary judge erred in various respects in not making an allowance for three other categories of loss: (a) commercial herd productivity; (b) loss of stud herd productivity; and (c) loss of embryo transfer program.

The appellant submitted that the primary judge failed to make any significant findings on the issues relevant to damages, or to give reasons as to why he preferred the evidence of Dr Lean over that of Mr Tremain. Accordingly, the appellant submits that, should its appeal on liability be allowed, the matter should be remitted for a new trial on the issue of damages. The respondent acknowledged in its oral submissions that it was very difficult for this Court to consider the issue of damages, because it involved a detailed analysis of whether the appellant had established how many cows had died and when. However, it was submitted that there was no error in the primary judge's assessment of the value of the cows which the primary judge was prepared to accept had died, being 31 out of the total 50 claimed by the appellant. In relation to the three categories of loss of opportunity, the respondent submitted that there was no error in the primary judge accepting the opinion of Dr Lean over that of Mr Tremain.

Loss of cattle

The appellant claimed damages of $47,500 for the loss of 19 heifers, valued at $2,500 per head, based on the evidence of Mr Clark. According to Ms Bowden's evidence, the 19 heifers comprised 11 commercial cattle and 8 stud cattle, all situated at the Congupna property.

The value of commercial cattle was agreed in the joint experts report at approximately $502 per head, and the agreed value of stud heifers was $2000 per head. Thus, the amount of this claim according to the joint experts report totalled approximately $21,500 not $47,500 as submitted by the appellant.

As noted at [48] above, the primary judge did not include any amount of damages in relation to the 19 limousin heifers, because he considered the evidence very non-specific and did not establish which of those heifers were affected as a result of the vaccination. In considering the appellant's complaint a number of observations are appropriate.

First, there was no specific evidence as to when the 11 heifers, being commercial cattle, were said to have died other than the general statement of Ms Bowden that they had all died or being sent to the knackery by 2009. There is no record of their loss in either the diary of Ms Bowden or her father.

Secondly, as to the eight stud heifers, the appellant's email to the manufacturer dated 22 November 2007 stated that four had died, and four had been affected by the vaccine. However, of the four said to have died by 22 November 2007, heifers B24 and B28, were recorded in the appellant's 2008 stud ledger as being alive as at December 2008 (see [70](1) above).

Thirdly, one of the four stud heifers said to have been written off was heifer B32, but Ms Bowden acknowledged in cross-examination that this was incorrect as this heifer was not vaccinated (see [69](5) above).

In view of the lack of detail in the appellant's evidence of when and in what circumstances the heifers were said to have been lost and the inconsistencies in the appellant's evidence referred to above, I do not consider that error has been shown in the primary judge's non-allowance of this part of the claim for loss of cattle.

Loss of commercial herd productivity

The appellant claimed loss of approximately $360,000 on the basis that it was forced by its stock financier to sell a large proportion of its cattle herd and relinquish its lease on the Congupna property because of the effects of the vaccine problems on the financial state of its business. It was claimed that these forced sales had a large, adverse effect on the productivity of the appellant's commercial herd, reducing numbers to well below that target of 1000 head of commercial cattle. Loss was claimed by the appellant on the assumption that commercial cattle numbers were reduced by 700 head below what would otherwise have been achieved because of the forced sales. Loss was claimed for a period of two years on the assumption of an average gross margin of $214 per head per annum, and an estimated extra weight gain from lot feeding, equivalent to 100kg per annum, which would have resulted in extra income over two years.

Mr Tremain assessed the appellant's loss at $357,162, assuming a reduction in the commercial herd of 700 head over two years, with an enterprise gross margin of $255.12 per head, taking into account costs and returns from lot feeding (being assumed income from extra weight gain).

Dr Lean expressed the opinion that even if the ongoing size of the appellant's commercial cattle herd was reduced because of the incident, there was no certainty that this had led to any loss of income due to the low profit margins on the appellant's business. Dr Lean examined the appellant's business plan and after making adjustments for actual sale prices received in 2008 at $535 per head rather than the appellant's budgeted price of $860 per head, concluded that the average estimated returns based on 776 head of cattle would have resulted in a loss of $122,887 per year. This was before taking into account the cost of labour which Dr Lean estimated would have been in the order of $25,000 to $40,000 per person per annum.

The main area of difference between the experts was the value of cattle at sale. That is, whether it was appropriate to assume a value consistent with actual sale prices achieved by the appellant during 2008 (Dr Lean's approach) or a significantly higher value which assumed both an average gross margin of $214 per head per annum and income from extra weight gain (Mr Tremain's approach). The experts maintained their respective positions when giving evidence and although cross-examined on other issues, neither expert was cross-examined on this issue (Black 395-397).

The primary judge preferred the evidence of Dr Lean to that of Mr Tremain but did not give any reasons for his conclusion. A trial judge has an obligation to give adequate reasons for their decision. The content of the duty varies from case to case. It may be sufficient when faced with two irreconcilable versions of an incident unsupported by any other evidence, to simply say that the Court preferred one witness rather than the other. This however is not such a case. The primary judge was faced with a disagreement between experts as to the likely value of progeny from the stud herd, which included differences of opinion as to costs of feed, value of estimated extra weight gain from lot feeding, and likely sale prices covering the period 2008 to 2010. These matters should have been analysed and evaluated. They were not. The primary judge simply indicated a preference for the evidence of one expert over the other without any analysis whatsoever: see Holmes v QBE Insurance Ltd [2004] NSWCA 432 at [36]-[39] per Beazley JA (Hodgson JA and Campbell J agreeing).

The contents of an adequate statement of reasons were outlined by Meagher JA in Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 443. They include that a judge is required to refer to relevant evidence; to set out any material findings of fact and any conclusions or ultimate findings of fact reached; the reasons for making those relevant findings of fact and conclusions; and the reasons for applying the law to the facts found.

In this case, as in Holmes v QBE Insurance Ltd, the primary judge did not comply with those obligations. He failed to make findings on the critical revenue and expense assumptions underlying the appellant's claim for loss of commercial herd productivity. This was necessary to form a view on whether the loss of a commercial opportunity had some value (not being a negligible value), in which event the value was to be ascertained by reference to the degree of probabilities or possibilities: see Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355. It follows, in my view, that the reasons are inadequate.

Although error has been established in the primary judge's approach in relation to this aspect of the damages claim, it is unnecessary to consider what ought to flow in this case from that error. This is because the appellant has failed to establish that the primary judge erred in rejecting its claim of breach of contract on the ground that the vaccine was of unmerchantable quality.

If the appellant had succeeded in establishing a breach of contract, then the question would have arisen whether this Court could deal with this issue or ought remit the proceedings to the District Court for determination of this issue. Both parties, in effect, agreed that the latter would be the appropriate course. Although no issue of credit arose in relation to the experts, I agree that the appropriate course would have been to remit the proceedings. It is inappropriate for this Court to attempt to undertake the relevant fact finding exercise that would be required, particularly in the absence of submissions from the parties as to what those findings should be, as well as to the contingencies which ought to be taken into account in the assessment of the value of the lost opportunity and the discounting exercise associated with that assessment.

Loss of stud herd productivity

The appellant claimed loss of approximately $90,000 in relation to stud herd productivity. This was on the assumption that the operation of the stud herd was disrupted for three years following 2007, and would continue to be disrupted for a further two years due to difficulties in obtaining appropriate replacement cattle and necessary delays between obtaining replacement cattle and producing saleable offspring. Mr Tremain assessed the loss at $90,090. This loss assumed a total reduction of 16 head of cattle comprising 8 stud cows and 8 heifers.

Dr Lean stated in the joint experts report that he relied on the finding of the Court in relation to the reduction in the number of stud cows and heifers; he acknowledged there was likely to have been some ongoing disruption to the stud herd until numbers could be reinstated; and if the incident caused the loss of some stud cattle, then he assessed the average progeny value at $1984 per head compared to Mr Tremain's assessment of $2508 per head. He concluded that he had not assessed a specific loss due to uncertainties about the extent and duration of any ongoing effect on the stud herd. However, his assessment for any progeny that may have been lost was approximately 75 per cent of Mr Tremain's assessment, assuming all other factors remained the same.

The primary judge accepted that any reduction in stud cows and heifers could bring about a loss of stud herd productivity. However, his Honour noted that there had not been a loss suffered by the appellant according to financial statements for the years 30 June 2007 and 30 June 2008, and any loss would involve loss of opportunity. The primary judge concluded that he was unable, on the evidence, to state definitely and with specificity as to what stud cattle were lost to allow an assessment even as to loss of opportunity.

In my view, error has been shown in this finding of the primary judge. First, the losses recorded in the appellant's financial statements for the years 30 June 2007 and 30 June 2008 relate to its entire enterprise, whereas both experts agreed there was a potential loss in relation to stud herd productivity. Mr Tremain assessed the loss at $90,090. Dr Lean assessed the loss at about 75 per cent of Mr Tremain's assessment.

Secondly, whilst the primary judge correctly characterised the loss as a loss of opportunity, as noted above, this did not preclude an award of damages if the loss of the commercial opportunity had some value (not being a negligible value). If the loss of the opportunity to obtain a financial gain or benefit had some value, then it was necessary for the Court to assess its value by reference to the degree of probabilities or possibilities: see Sellars v Adelaide Petroleum NL at 355; Daniels v Anderson (1995) 37 NSWLR 438 at 529-531).

Thirdly, the reason given by the primary judge as to why he was unable on the evidence to state definitely and with specificity what stud cattle were lost, was only partly correct. The primary judge's hypothetical findings on damages (see [48] above) accepted that the appellant lost 31 cows, but not 19 heifers. Of the 31 cows, eight were stud cows. Of the 19 heifers, eight were stud heifers. It follows that the assumption on which this claim of loss of opportunity was based, being a reduction of 16 head of stud cattle, was correct as to eight stud cows as found by the primary judge, but not as to eight stud heifers.

Consistently with his hypothetical findings as to the number of cattle lost, the primary judge should have considered this claim of a loss of opportunity on the assumption of a reduction in the stud herd productivity of eight stud cows. He failed to do so, and instead proceeded upon a view of the evidence, which was inconsistent with his earlier hypothetical findings as to the number of cattle lost by the appellant.

In my view, error has been shown in the primary judge's rejection of the appellant's claim for loss of stud herd productivity. Again however, no consequence flows from this error in this case, for the reason referred to in [120] above. If the appellant had succeeded in establishing a breach of contract, then the appropriate course would have been to remit the proceedings for a trial on damages of this issue for the same reasons as referred to in [120] above.

Embryo transfer operation

The appellant claimed loss of approximately $241,000 on the basis that two elite stud cows (Y575 and X755) would have been used in an embryo transfer program, but the appellant was unable to do so as these cows died as a result of the vaccination.

Mr Tremain assumed that the embryo transfer program, which had not yet commenced would be disrupted for a period of 10 years, due to difficulties in obtaining appropriate replacement cattle and necessary delays between obtaining such cattle and producing saleable offspring. He further assumed that the embryo transfer program would be partially reinstated after a further five years. On the assumption that the program would have produced 20 embryo transplant calves each year, he calculated a loss at $241,373.

Dr Lean noted that the assumptions in the appellant's business plan involved a proposal to purchase 80 embryos and implant these in cows and collect another 20 embryos from the two elite cows and also implant these and produce 100 elite calves. He stated that embryo transfer is an advanced reproductive technology with a significant failure rate, the average was 46 calves per 100 embryos transferred. He expressed the opinion that an embryo transfer program was an inherently risky process in terms of likely outcome. The factors influencing the outcome included the number of embryos successfully transferred per flush (from the elite cows), conception rates to these transfers, abortion losses, and deaths of calves before resulting in saleable calf (at weaning). He noted that the financial risks included the value of cattle for sale, longevity of production of embryo and longevity of cows. Dr Lean considered that the likely profits would not approach those estimated by Ms Bowden in her business plan, being $120,000 in respect of 100 successful embryo transplants. This estimated profit in the appellant's business plan may be contrasted with the way in which this claim was put at trial, namely, loss of 20 embryos per annum for 10 years.

Dr Lean expressed the opinion in the joint experts report that no loss of embryo production had occurred because the appellant had embryos in storage which could have been used to pursue the embryo transfer program. Dr Lean's evidence was that harvesting embryos from existing elite cows was in any event probably more expensive that purchasing commercially available embryos.

The primary judge accepted the opinion of Dr Lean in preference to that of Mr Tremain and did not allow any loss in relation to this claim. The evidence was that Ms Bowden had 14 embryos in storage prior to October 2007, which could have been implanted in commercial or diary cows at relatively little cost. However, she chose not to do so. Her explanation in cross-examination was that the appellant was not going to start the embryo transfer program until it had built up 1000 head of backgrounding cattle and that in 2008 the appellant did not have the money to commence the embryo transfer program (Black 161E and 162H).

The appellant submitted that the primary judge ignored that the appellant's business plan contemplated sourcing embryos from the two elite cows which had been specifically developed over a period of 10 years and which were assumed would produce up to 20 cows each year.

The appellant's complaint fails to grapple with the nature of this claim, which was a loss of opportunity to obtain a financial gain. The appellant needed to show that the lost opportunity had some value which was more than negligible, in which event damages could be assessed by reference to the possibilities and probabilities of the case. The appellant failed to do so.

Dr Lean's opinion, which the primary judge accepted, was that the appellant's proposed embryo transfer program was not viable. He gave as his key reasons the high costs of running recipient cows, the average of 46 cattle weaned per 100 embryos implanted, the lack of a track record of production of elite cattle and the potential to saturate the market with cattle leading to lower returns.

In my view, error has not been shown in the primary judge's acceptance of Dr Lean's evidence and the conclusion not to make any allowance for loss of the embryo transfer program.

In summary on the issue of damages, grounds 5 and 6 of the notice of appeal are not made out, other than in relation to the claims for damages for loss of commercial herd productivity and loss of stud herd productivity.

If the appellant had succeeded in establishing a breach of contract on the ground that the vaccine was unmerchantable quality as at the date of sale then, in my view, it would have been appropriate to remit the proceedings for a trial on damages, limited to these two issues. This however is unnecessary, having regard to my conclusions in relation to the other grounds of appeal.

Conclusion

I propose the following orders:

(1) Appeal dismissed.

(2) The appellant to pay the respondent's costs.

LEEMING JA: I agree with the orders proposed by Gleeson JA, for the reasons given by his Honour.

Decision last updated: 24 July 2013

Medium Neutral Citation:	Tre Cavalli Pty Limited v The Berry Rural Co Operative Society Limited [2013] NSWCA 235
Hearing dates:	24 June 2013
Decision date:	24 July 2013
Before:	McColl JA at [1]; Gleeson JA at [2]; Leeming JA at [141]
Decision:	1. Appeal dismissed. 2. The appellant to pay the respondent's costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	SALE OF GOODS - conditions and warranties - implied conditions and warranties - cattle vaccine - whether contaminated at time of sale - whether constituted a supply of goods of unmerchantable quality SALE OF GOODS - remedies for breach of contract - measure of damages - whether primary judge erred in not making further allowances PROCEDURE - additional reasons - matters of substance - whether additional reasons can be taken into account
Legislation Cited:	Sale of Goods Act 1923
Cases Cited:	Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 Baldry v Marshall [1925] 1 KB 260 Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 British Oil & Cake Co Ltd v J Burstall & Co Ltd (1923) 15 Lloyd's Rep 46 Bell v Veigel [2008] NSWCA 36 Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 Daniels v Anderson (1995) 37 NSWLR 438 Holmes v QBE Insurance Ltd [2004] NSWCA 432 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Palmer v Clarke (1989) 19 NSWLR 158 Pinnock Bros v Lewis & Peat Ltd [1923] 1 KB 690 Regal Pearl Pty Ltd v Stewart [2002] NSWCA 291 Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 Spencer v Bamber [2012] NSWCA 274 Talbot-Price v Jacobs [2008] NSWCA 189 Taupau v HVAC Constructions (Queensland) Pty Ltd [2012] NSWCA 293 Todorovic v Moussa [2001] NSWCA 419; 53 NSWLR 463
Category:	Principal judgment
Parties:	Tre Cavalli Pty Limited (Appellant) The Berry Rural Co Operative Society Limited (Respondent)
Representation:	Counsel: T J Boyd / J D Cairn (Appellant) R Cavanagh SC / S J Walsh (Respondent) Solicitors: Leitch Hasson Dent (Appellant) Thompson Cooper (Respondents)
File Number(s):	2012/69980
Decision under appeal	Jurisdiction: 9101 Citation: Tre Cavalli Pty Limited v The Berry Rural Co Operative Limited Date of Decision: 2011-12-02 00:00:00 Before: Puckeridge ADCJ File Number(s): DC 2008/319687