Wesfarmers Dalgety Ltd v Williams
[2005] WASC 287
•23 DECEMBER 2005
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: WESFARMERS DALGETY LTD & ORS -v- WILLIAMS & ANOR [2005] WASC 287
CORAM: SIMMONDS J
HEARD: 19-23, 26, 27 & 29 JULY, 2 & 3 AUGUST, 7-10, 13 SEPTEMBER, 2 DECEMBER 2004
DELIVERED : 23 DECEMBER 2005
FILE NO/S: CIV 2156 of 2000
BETWEEN: WESFARMERS DALGETY LTD
(ACN 008 743 217)
DALGETY LTD (ACN 008 996 218)
PRIMARY INDUSTRY BANK OF AUSTRALIA LTD (ACN 001 621 129)
PlaintiffsAND
RUTH EILEEN WILLIAMS
First DefendantGALE CURTIS WILLIAMS
Second Defendant(BY ORIGINAL ACTION)
RUTH EILEEN WILLIAMS
First Plaintiff by First CounterclaimGALE CURTIS WILLIAMS
Second Plaintiff by First CounterclaimMARK CURTIS WILLIAMS
Third Plaintiff by First CounterclaimGEOFFREY ORMOND GRAINGER
JOAN HARRINGTON GRAINGER
Plaintiffs by Second CounterclaimAND
WESFARMERS DALGETY LTD (ACN 008 743 217)
DALGETY LTD (ACN 008 996 218)
PRIMARY INDUSTRY BANK OF AUSTRALIA LTD (ACN 001 621 129)
First Defendants by First CounterclaimJIM DYER
Second Defendant by First CounterclaimGEOFFREY ORMOND GRAINGER
Third Defendant by First CounterclaimJOAN HARRINGTON GRAINGER
Fourth Defendant by First CounterclaimWESFARMERS DALGETY REAL ESTATE (WA) PTY LTD (ACN 009 238 993)
Fifth Defendant by First CounterclaimRUTH EILEEN WILLIAMS
GALE CURTIS WILLIAMS
MARK CURTIS WILLIAMS
First Defendants by Second CounterclaimWESFARMERS DALGETY REAL ESTATE (WA) PTY LTD (ACN 009 238 993)
Second Defendant by Second Counterclaim(BY COUNTERCLAIM)
Catchwords:
Misleading and deceptive conduct - Contract for sale and lease of farming land - Real estate agent also the vendor and lessor - Claim for damages and indemnity for liability for amounts owed under leases and related financing arrangements - Whether representation in advertisement that farming land is "not fully cleared" and represents an "expansion opportunity" carried the implication that there was no restrictions on clearing unfelled portions of that land - Whether representation that vendor had letter or permit granting permission to clear land carried the implication that permission to clear was transferable to a purchaser or lessee of that land - Whether representation that gaining permission to clear land would be "straightforward" was misleading or deceptive - Whether disclaimer in contract of sale of land negatived a pleaded reliance on representations as to clearing that land - Whether representation as to area of arable land estimated in combine acres and including land subject to a memorial of conservation covenant was misleading or deceptive - Whether loss caused by supervening events - Whether lessee failed to mitigate loss by staying in possession of land following legal advice - Turns on own facts
Environmental law - Land clearing - Notification of intention to clear land under Soil and Land Conservation Regulations 1992 (WA) - Definition of "change in use" of land - Blade ploughing held to be notifiable - Likelihood of Commissioner objecting where adjoining and nearby lands are subject to soil conservation notices - Turns on own facts
Real estate agents - Misleading and deceptive conduct - Agent also the proprietor of the land - Whether employee entitled to indemnity from employer - Whether employer entitled to indemnity from employee - Whether employee who engaged in misleading and deceptive conduct had performed duties with reasonable care
Mortgages - Remedies of mortgagee
Legislation:
Fair Trading Act 1987 (WA), s 10, s 77, s 79
Soil and Land Conservation Act 1945 (WA), s 30, s 35
Soil and Land Conservation Regulations 1992 (WA)
Trade Practices Act 1974 (Cth), s 52, s 82, s 87
Result:
Judgment for the plaintiffs by original action
Judgment for the plaintiffs by first counterclaim
Category: B
Representation:
Original Action
Counsel:
Plaintiffs: Mr J R B Ley
First Defendant : Mr J C Curthoys
Second Defendant : Mr J C Curthoys
Solicitors:
Plaintiffs: Arthur Metaxas & Co
First Defendant : Arns & Associates
Second Defendant : Arns & Associates
Counterclaim
Counsel:
First Plaintiff by First Counterclaim : Mr J C Curthoys
Second Plaintiff by First Counterclaim : Mr J C Curthoys
Third Plaintiff by First Counterclaim : Mr J C Curthoys
Plaintiffs by Second Counterclaim : Mr M G Clay
First Defendants by First Counterclaim : Mr J R B Ley
Second Defendant by First Counterclaim : Mr J R B Ley
Third Defendant by First Counterclaim : Mr M G Clay
Fourth Defendant by First Counterclaim : Mr M G Clay
Fifth Defendant by First Counterclaim : Mr J R B Ley
First Defendants by Second Counterclaim : Mr J C Curthoys
Second Defendant by Second Counterclaim : Mr J R B Ley
Solicitors:
First Plaintiff by First Counterclaim : Arns & Associates
Second Plaintiff by First Counterclaim : Arns & Associates
Third Plaintiff by First Counterclaim : Arns & Associates
Plaintiffs by Second Counterclaim : Martin de Haas
First Defendants by First Counterclaim : Arthur Metaxas & Co
Second Defendant by First Counterclaim : Arthur Metaxas & Co
Third Defendant by First Counterclaim : Martin de Haas
Fourth Defendant by First Counterclaim : Martin de Haas
Fifth Defendant by First Counterclaim : Arthur Metaxas & Co
First Defendants by Second Counterclaim : Arns & Associates
Second Defendant by Second Counterclaim : Arthur Metaxas & Co
Case(s) referred to in judgment(s):
Associated Protective Electronics Pty Ltd v Pabflow Pty Ltd (1996)
.......... ATPR 410-524
Atra v Farmers & Graziers Co-op Co Ltd (1986) 5 NSWLR 281
Blair v Curran (1939) 62 CLR 464
Brockway v Pando (2000) 22 WAR 405
Butcher v Lachlan Elder Realty Pty Ltd (2005) 218 CLR 152
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167
Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1
Gould v Vaggelas (1985) 157 CLR 215
Grainger & Anor v Williams & Ors [2000] WADC 296
Grainger v Williams & Ors [1999] WADC 57
Henville v Walker [2001] HCA 52
I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41
Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638
John Nominees v Dixon [2003] WASCA 51
Jones v Dunkel (1959) 101 CLR 298
Kelmer v Baxter (1866) LR 2 CP 174
Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555
O'Brien v Smolonogov (1983) 53 ALR 107
Voli v Inglewood Shire Council (1963) 110 CLR 74
Warwick Entertainment Centre Pty Ltd & Anor v Alpine Holdings Pty Ltd & Ors [2005] WASCA 174
Williams & Ors v Grainger & Anor [2002] WASCA 87
Case(s) also cited:
Brown v Jam Factory Pty Ltd (1981) 35 ALR 79
Dare v Pulham (1982) 148 CLR 658
Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134
Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2003] WASC 13
Williams & Anor v Grainger & Ors [2002] WASC 46
TABLE OF CONTENTS
INTRODUCTION
CREDIBILITY AND RELIABILITY OF THE PRINCIPAL WITNESSES IN THIS CASE
THE EVENTS LEADING TO THE CONTRACTS OF PURCHASE AND LEASE
The Williams family
The Graingers
The efforts to sell Kensey Park
The Williams family's interest in Kensey Park's Kent Location 1658
The Williams family's interest in acquiring Kensey Park's Kent Location 1659 together with Kent Location 1658
Events following the second inspection: the meetings at Kensey Park
EVENTS FOLLOWING THE MEETINGS AT KENSEY PARK AND THE EXECUTION OF THE LEASES AND THE CONTRACT OF SALE
WILLIAMS CLAIMS ARISING OUT OF THE EVENTS LEADING TO THE CONTRACTS OF PURCHASE AND LEASE
The clearing representations
Reliance on the clearing representation
Persons liable for the clearing representations
Conduct in "trade and commerce"
The representation as to the "arable" portion of Kensey Park as a whole
Reliance on the representation as to "arable" acres
Persons liable for the representation as to "arable" acres
Representation as to "arable" acres as conduct in trade or commerce
Loss resulting from reliance on the misleading or deceptive conduct
Assessment of damages or compensation for misleading or deceptive conduct
Indemnity for misleading or deceptive conduct
Interest
Declaration of rescission of the contract of sale and purchase and consequential relief
THE GRAINGERS' CLAIMS ARISING OUT OF THE CONTRACT OF SALE
THE GRAINGERS' CLAIMS FOR TRESPASS
MR GRAINGER'S AND WDRE'S CLAIMS AGAINST EACH OTHER ARISING OUT OF HIS EMPLOYMENT
WESFARMERS DALGETY'S, DALGETY'S AND PRIMARY INDUSTRY BANK'S CLAIMS IN RESPECT OF THE FINANCING
THE GRAINGER'S DAMAGES UNDER CIV 2339 OF 2002
FINAL ORDERS
SIMMONDS J:
Introduction
This an action heard before me together with another, both of which arose out of the expansion plans of the Williams family, Mr Gale Williams, his wife Ruth and their son Mark, who had had farming operations for many years in the Newdegate‑Jerramungup‑Fitzgerald area in the south‑east of this State. Those plans led them to seek to expand family's operations on to lands owned by the Graingers in the same area. That led to the entry into transactions with the Graingers, Mr Geoffrey Grainger and his wife Joan, of the sort which is apparently common in such cases, to lease the Graingers' lands with options to purchase them. There was also a transaction to purchase one of the lands.
The Williams family obtained finance for these transactions from Wesfarmers Dalgety Ltd, Dalgety Ltd and Primary Industry Bank of Australia Ltd, which together were usually referred to in these proceedings as "Wesfarmers Dalgety", a convention I will follow, unless it is necessary to distinguish between them. However, I should note that since the commencement of these proceedings Wesfarmers Dalgety Ltd changed its name, twice, and is now Landmark Operations Ltd; Dalgety Ltd changed its name, also twice, and is now Landmark (Qld) Ltd; and Primary Industry Bank of Australia Ltd changed its name, and is now Rabobank Australia Ltd (see Exhibits 1(16) ‑ 1(18)).
Not long after entry into the transactions I referred to, there was a notice of rescission of the purchase, but not of the leases, based upon misrepresentations it was said were made by Mr Geoffrey Grainger concerning the ability of the Williams family to clear part the land. The financial arrangements with Wesfarmers Dalgety were renegotiated, and the Williams family continued to occupy the Graingers' lands.
The Graingers brought action in the District Court in 1999 to obtain possession of their lands and for damages. A Deputy Registrar of that Court awarded them summary judgment in that action, and ordered that the Williams family deliver up possession within 21 days of 26 August 1999, and pay the Graingers damages or compensation to be assessed: Grainger v Williams & Ors [1999] WADC 57, Deputy Registrar Hewitt. An appeal against that determination to a Judge of that Court was dismissed: Grainger & Anor v Williams & Ors [2000] WADC 296, Yeats J. The Full Court granted leave to appeal against that judgment, but subsequently that appeal was dismissed for want of prosecution: Williams & Ors v Grainger & Anor [2002] WASCA 87, Malcolm CJ, Wallwork J and Olssen AUJ. Prior to the delivery of the judgment of Yeats J the Graingers recovered possession of their lands, which have been resold. Their claim for damages was subsequently remitted to this Court, to become CIV 2339 of 2002, one of the actions before me.
The Williams family brought action in this Court claiming relief against the Graingers in respect of a number of representations including but not limited to those on which the notice of rescission had been issued. Relief was also claimed against Wesfarmers Dalgety for certain other representations, and a related real property agency company, Wesfarmers Dalgety Real Estate (WA) Pty Ltd ("WDRE"), as well as a Mr Dyer, an officer of the first two companies, for the representations said to have been made by the Graingers. This relief was sought on the basis that, in making the representations, Mr Geoffrey Grainger was an employee of one or other company, and an agent of both. This was CIV 1171 of 2000, the claims for relief in which subsequently became counterclaims in CIV 2156 of 2000, which I reach shortly. However, CIV 1171 of 2000 was not discontinued and was adjourned to wait the outcome of these proceedings. At trial, the Williams abandoned their claims against the financers, Wesfarmers Dalgety, and against Mr Dyer, but not against WDRE.
Finally, Wesfarmers Dalgety brought action, also in this Court, to enforce the financial arrangements as renegotiated between them and two of the members of the Williams family. This is CIV 2156 of 2000, the other action before me. In this action, the Williams made counterclaims for relief against the Graingers and WDRE in respect of the Graingers' representations, counterclaims which replaced the claims in CIV 1171 of 2000. Pursuant to leave I gave at the trial, WDRE made a claim against Mr Geoffrey Grainger, based on his employment contract with the company, for indemnity against any liability of that company on this counterclaim. Also in CIV 2156 of 2000 the Graingers made counterclaims for relief against the Williams in respect of breach of the contract of sale, as well as in respect of the Williams family's trespass to the Graingers' lands as found in the District Court action to which I have referred, to the extent those damages were not recoverable in that action because they arose subsequent to the issuance of the writ in that action. Mr Grainger in CIV 2156 of 2000 also claimed relief from WDRE, apparently based both on his employment contract with that company, as well as representations it made to him as to his protection by a professional indemnity policy, for loss and damage suffered as a result of defending these actions as well as an action in 1999 brought by two of the Williams.
The trial ran over 15 days. Testimony was given by 13 witnesses, and there were 181 exhibits. Closing submissions in writing were made for Wesfarmers Dalgety, WDRE, the Williams family and the Graingers. I heard oral closing submissions on matters I identified arising out of the written submissions.
At trial the Williams did not defend the claims in CIV 2156 by Westfarmers Dalgety and the Primary Industry Bank, rather putting them to their proof. In closing, counsel for the Williams conceded the indebtedness as at 1 June 2004 was $1,111,286.70.
The complexity of the issues in this case and the parties' investment in their resolution over some years are both evident. My approach to that resolution is first to consider the events that led to their contracts of purchase and to lease, and the aftermath of those contracts. In view of the concession made by counsel for the Williams, this is to set in context my consideration of the Williams' claims arising out of those events, including their claims that WDRE is also liable in those events by reason of Mr Grainger's relationship with the company. I will then turn to consider the Graingers' claims arising out of those contracts as well as in trespass to the subject lands. I will then consider Mr Grainger's and WDRE's claims arising out of its contract of employment of him. I will then consider Wesfarmers Dalgety's claims arising out of the financing the Williams received. In a separate judgment heavily dependent on the findings in this one I deal with my assessment of the damages under the District Court action remitted to this Court (CIV 2339 of 2002).
I should begin, however, by addressing some general issues of the credibility and reliability of witnesses raised with me in the written closing submissions of counsel for the Graingers.
Credibility and reliability of the principal witnesses in this case
The principal witnesses were the Williams family, Gale, his wife Ruth and one of their sons, Mark. There is another son, Greg. However, he is not a party to and was not otherwise involved in any of these proceedings.
I was urged to conclude that the evidence of the family was unreliable because on many issues Gale, Ruth and Mark gave evidence at variance with their witness statements that formed part of their evidence, or that was internally inconsistent. Various examples were given.
I note, however, that the events in question in this case go back five to seven years, and some inconsistencies in recall are to be expected in such cases. The examples given of inconsistent evidence did not, it seems to me, show more than such inconsistencies. I did not conclude, from my observation of them, that any of the Williams family were not witnesses who could at no point be relied upon to provide accurate recollections of any events. Where it has been important to the determination of an issue to consider relying particularly on the evidence of any of the Williams family, I have considered both the consistency of their evidence, and its support in other evidence in this case, as well as its plausibility.
I should add that I arrived at the same conclusions as to the other principal witnesses in this case, the Geoffrey and Joan Grainger.
The events leading to the contracts of purchase and lease
The Williams family
Some time after Mark and Greg left school, in the mid to late 1970s, their parents assisted them in the setting up of a business, G C & R E Williams & Sons. Assets in the form of a tractor, blade plough and a rake were acquired, and the business did contract harvesting and clearing work.
In 1979 Gale and Ruth acquired a farm, "Lake Magenta", about 60 kilometres to the south east of Newdegate. This is the property in Crown Grant Volume 1498 Folio 621 (Exhibit 1(5)). The farm was partially cleared when they acquired it, and Greg and Mark assisted in doing further clearing. Lake Magenta ran sheep and produced grain. From June 1991 the farm business was conducted through a trust, as I will indicate again below. At about this time, Mark, who had left the farm, came back to it following his separation from his wife.
By June 1998, the Williams family had determined that Lake Magenta was not viable as a sole source of income for Gale, Ruth and Mark.
Until about 1990, Mark and Greg worked in the winter months doing contract clearing. Clearing in the area involves the dragging of a chain between a pair of bulldozers to clear the upright vegetation, in the winter or the spring. In the summer, after harvest, the bush is then burnt. In the winter months, when the soil is relatively moist, the ground is blade ploughed to remove the mallee roots, and the roots are burnt. A crop is then sown in the cleared land in the following year. Mark's and Greg's business could do the clearing work, except for the chaining, for which they did not have the required bulldozers. However, by about 1990 the clearing business had ceased, although the equipment was retained.
Throughout Gale Williams worked as a farm manager in the area to supplement the income from Lake Magenta. Mark moved away from the area, but in 1995 moved back to the farm after separating from his wife.
In early 1998 Gale, Ruth and Mark Williams concluded that their farming operation needed to be expanded beyond Lake Magenta if they were to remain as primary producers.
The Graingers
In 1964 Geoffrey and Joan Grainger acquired Kent Location 1659 (the certificate of title for which is exhibit 83), and in 1971 they acquired an adjoining property lying to the north east, Kent Location 1658 (the certificate of title for which is exhibit 82). On the titles Kent Location 1659 is shown as a larger property (1783.9959 hectares) than Kent Location 1658 (1594.9546 hectares).
Between 1972 and 1991 the Graingers farmed these two properties together as "Kensey Park". They did this in partnership with their son Peter Grainger and his wife. During the 1991 harvest, Geoffrey Grainger became conscious of health limitations that prevented his continuing to be actively involved in farming Kensey Park. In 1992 he began working as a real estate sales representative for Wesfarmers Dalgety Ltd, and then, in 1996, when its business was taken over by WDRE, for that company. His son Peter continued to farm Kensey Park, until 1998.
In October or November 1997, if not slightly earlier, a family decision was made by the Graingers to sell Kensey Park. This was against the background, on Mr Grainger's evidence, of his inability to farm the property himself, Peter "had had a pretty fair go at farming" it, the local school had closed making the journey to school for Peter's children "arduous", and there was a substantial debt to the Primary Industry Bank of $400,000 to $420,000 in respect of the property. The sale of the property would enable the Graingers to pay down that debt (TS 1866 ‑ 1867). However, there "wasn't any great necessity to sell the property straightaway. We had one chap that was agisting sheep on it." (TS 1867) Peter Grainger's evidence was that he left the property in March 1998, while efforts were being made to sell it (TS 2018).
The efforts to sell Kensey Park
In November 1997 Geoffrey and Joan Grainger submitted to WDRE an authority to list Kensey Park (Exhibit 121), which WDRE accepted. At that time a WDRE pamphlet dated 15 November 1997 (Exhibit 125) was prepared to advertise Kensey Park. This pamphlet showed it was a property comprising "3,379.0000" hectares or "8349.6847" acres, and was a "well developed property with scope for good sheep and grain production". The price was $1,160,000 "ONO". Inquiries were directed to "Geoff Grainger" or the WDRE listing branch in Albany.
In the 27 November 1997 issue of the periodical Farm Weekly an advertisement for Kensey Park under "Wesfarmers Dalgety" appeared (Exhibit 33). This advertisement referred to Kensey Park as a "great grain and wool producer", giving the price as $1,160,000 or "$140 Ac", the contact as "G. Grainger" and the same after hours telephone number as in the pamphlet.
Only one offer to purchase had been received by March 1998, and that offer was not continued with. Geoffrey and Joan Grainger decided to offer the two properties, comprising Kensey Park, Kent Location 1658 and Kent Location 1659, separately. A WDRE pamphlet dated 15 April 1998 (Exhibit 124) was prepared to advertise Kent Location 1659. This pamphlet showed it was a property comprising "1784" hectares or "4408" acres, carried the same "well developed" language as its predecessor for the two properties, and directed inquiries as the earlier pamphlet had done. The price was $720,000. The later pamphlet was a copy of the earlier pamphlet for Kensey Park as a whole (Exhibit 125), with changes made by deletion of some portions and the writing in of new detail. There are some indications not all of the needed changes were made: thus, the total number of dams (12) shown is the same as for Kensey Park as a whole (Exhibit 124 compared with Exhibit 125, Exhibit 108, witness statement of Geoffrey Grainger, par 78 and Exhibit 22, an advertising account of Kent Location 1658, returned to below).
In the 23 April 1998 issue of Farm Weekly an advertisement for Kent Location 1658 appeared under "Wesfarmers Dalgety" (Exhibit 34), showing the property's area as "3941 Ac" and the land as "good duplex country, suit broad acre cropping canola wheat barley" and a "great opportunity at $346,000". Geoffrey Grainger's name and after hours telephone number appeared. Kent Location 1658 was advertised first, as it was thought it might be easier to sell the cheaper lot (cross‑examination of Geoffrey Grainger, for WDRE, TS 1970).
It is evident, from the pamphlet for Kent Location 1659 and the advertising of Kent Location 1658 to which I have referred, that the former was considered to be the more valuable land, at about $163 per acre compared with about $92 per acre. It is also evident that the total price for Kensey Park had fallen somewhat, from the earlier advertised $1,160,000 (Exhibit 33) to $1,084,000 (Exhibit 124 and Exhibit 34). This was done "to try and get a sale" (cross‑examination of Geoffrey Grainger, for WDRE, TS 1965).
The language of the 23 April advertisement of Kent Location 1658 was repeated in an advertisement that appeared the following week, in the 30 April 1998 issue of Farm Weekly (Exhibit 23). However, in the same issue, three pages earlier and under the heading "Property", Kent Location 1658 was featured in what was called in the trial an "advertorial" (Exhibit 22). This was a narrative account of the property, described as a "Mixed farm business in Jerramungup area". This account is under a photograph of what appears to be a part of the property. The advertorial described the property and its farming history in similar but not identical terms to the advertisement (such as that the property featured "seven paddocks" and "four dams"), adding further detail, and concluding: "This property is not fully cleared but represents a great expansion opportunity at $364,000".
The Williams family's interest in Kensey Park's Kent Location 1658
Kensey Park is located about 40 kilometres from Lake Magenta. How and when the Williams family came to take an interest in Kensey Park was a matter of considerable controversy before me. The controversy went to the basis for the language in the advertorial describing Kent Location 1658 quoted above. The Williams family referred to that language as one of the representations in a group of representations on clearing part of Kent Location 1658. Representations as to that clearing is one of the bases upon which their counterclaim against the Graingers rests.
Geoffrey Grainger's evidence was that Gale Williams met him and inspected Kent Location 1658 (Exhibit 108, witness statement), first "on or about Wednesday 20 April 1998", and "again on 30 April 1998". I note that the 23 and 30 Farm Weekly issues were published on Thursdays, and 20 April 1998 was a Monday. Geoffrey Grainger said that, as a result of Mr Williams saying to him at the earlier meeting that the property was an "opportunity to expand" their farming acreage in the area, he used the language of "expansion" in the advertorial in the 30 April 1998 issue. He saw this language as better for advertising purposes than the language he had previously thought of, "build-up", and as preferable to "development", which he considered to be "misleading", as the land had not been fully cleared (examination‑in‑chief, TS 1809 ‑ 1810), in the sense I will shortly reach.
Gale Williams' evidence was that his first meeting with Geoffrey Grainger to inspect Kent Location 1658 was on 30 April or 1 May 1998, after Mr Williams had seen the advertising material for Kent Location 1658 in the 30 April 1998 issue of Farm Weekly (Exhibit 21, witness statement), in particular the advertorial (TS 614, cross‑examination for WDRE). His second meeting to inspect the property was about a week later. It seems to me that a date for the first meeting on or shortly after the publication of the 30 April issue is more likely, for the following reasons.
Mr Grainger did not explain the discrepancy between the "Wednesday" and the "20 April" references and the 23 April advertisement of Kent Location 1658. No earlier advertisement of Kent Location 1658 as a separate property was referred to. In view of the date of the pamphlet for Kent Location 1659, 15 April 1998 (Exhibit 124), it would seem likely that the 23 April 1998 advertisement of Kent Location 1658 was the first to appear after the decision was made to dispose of the two parts of Kensey Park separately. As I have said, there had been at least one earlier advertisement of the whole of Kensey Park in Farm Weekly, and Mr Williams had subscribed to that publication throughout the relevant period (TS 613, cross‑examination for WDRE). However, Mr Williams also testified that, if he had seen it, the price of Kensey Park as a whole would have been outside his range, at least at that time (TS 614, cross‑examination for WDRE). Nor it seems to me would "on or about 20 April" easily accommodate a meeting that occurred on, or more likely after, the appearance of the 23 April 1998 advertisement, a meeting at which new advertising language was said to have emerged that was incorporated in the advertorial that appeared no more than a week thereafter.
The language of "expansion" could quite possibly have come from a different source. Geoffrey Grainger's evidence, when he was asked in examination‑in‑chief to clarify what he meant by calling Kent Location 1658 a "development opportunity", indicates to me that he would have tended to use the terms interchangeably, a point which also tends to qualify what he had said about the undesirability of using "development opportunity". He testified (TS 1809): "I would see it as to expand, that it would be suitable for a farmer to add to his existing holding".
Geoffrey Grainger's evidence was also that his recollection of the dates of the meetings was in part based on the likelihood he had consulted contemporaneous notes he kept of matters of that sort (TS 1976, cross‑examination by counsel for WDRE). However, his evidence also was that he had discarded the notes some time before signing his witness statement, and he could not indicate when (TS 1977).
On the balance of probabilities then I conclude that Mr Grainger's recollection was mistaken as to the date of the first meeting. It is more likely to have occurred later than 23 April 1998. Mr Williams testified that he had been prompted to contact Mr Grainger first by the advertorial of 30 April (TS 616, cross‑examination for WDRE), although he also conceded that he was not conscious of any details in the advertorial different from those in the "tiny" advertisement of 23 April which was repeated in the 30 April issue of Farm Weekly (TS 616). However, on his evidence there was also the reference in the advertorial to the property not being "fully cleared, but" representing a "great expansion opportunity" that distinguished the two and helped to pique his interest, if not "set me alight" (TS 622 ‑ 623).
In any event, even if the meeting had occurred earlier, as Mr Grainger testified, it seems to me this is not inconsistent with the Williams family acting upon the advertorial, nor does it make such action less likely. On Mr Grainger's account, the advertorial might have confirmed an exchange between the two men. I return below to the further bearing (if any) of the advertorial on the matter of the representations as to clearing on which the Williams family rely.
In any event there is agreement between Mr Grainger's and Mr Williams' evidence that there were two inspection visits the latter made with the former to Kent Location 1658. There is also evidence that Mr Gale Williams and his son Mark visited Kent Location 1658 on their own during this time, as I will indicate below. What occurred on the two inspection visits involving Geoffrey Grainger and Gale Williams is also a matter of controversy between the parties.
Geoffrey Grainger testified that at the first visit he showed Gale Williams the property, including what both in their evidence called the "New Land". This was about 1,700 acres of land in the north-east of Kent Location 1658 which about eight years previously had been chain cleared, and a 1,000 acre portion of which had been burnt. After these operations there had been regrowth of the native vegetation whose height would indicate to an experienced farmer the likely period since clearance or clearance and burning. Gale Williams' testimony was to the same effect. There is, however, a difference between them as to how much Geoffrey Grainger said to Gale Williams about the history of the use of the land, and about further clearing of it, both on that visit by comparison with the second, and overall.
Geoffrey Grainger testified that Gale Williams did not ask any questions about the clearance of the New Land on the first inspection, which was "fairly quick". This was apparently a recollection reinforced by his view that "usually unless we've got a buyer that's quite interested you don't put in a great deal of time with them until they show definite interest, so it would have been on the second inspection we would have gone into it a bit more thoroughly" (TS 1879).
Mr Grainger testified (although with some equivocation under cross‑examination: TS 1879) that it was only on the second visit Gale Williams asked him "what the story was" with respect to the land that had been chained, which apparently included the land chained and burnt.
Gale Williams' evidence was that he had asked about the clearance of the New Land on the first visit. I find that his recollection is to be preferred to Mr Grainger's. I note that Mr Grainger's evidence indicates that Mr Williams had shown Mr Grainger a "definite interest" in acquiring Kent Location 1658. This is indicated by his evidence of Mr Williams telling him on the first visit about the Williams family's inability to expand their existing farm, as it had itself been cleared and adjoining farms were unavailable, and about Mr Williams seeing Kent Location 1658 as an expansion opportunity in the area (Exhibit 108, witness statement of Geoffrey Grainger, par 43), evidence to which I previously referred in a different context. This in my view tends to confirm that from the outset Mr Williams was showing an interest in the property of the sort that would have made an exchange about the clearing, at least of the sort Mr Grainger said had been shown on the second visit (see Exhibit 108, witness statement, par 52), likely on the first. This conclusion derives further support from the evidence of Mr Grainger, in cross‑examination for the Williams family, that he had indicated to Mr Williams during the first inspection the Graingers had a letter of approval from the relevant government authority for clearing 400 acres of the New Land, by which he said he meant to indicate at least that the clearing had been done lawfully (TS 1880). I will return to this letter below.
Whether or not there was a conversation or conversations in some detail about the clearance of the New Land on the first as opposed to the second inspection visit, the evidence of both Mr Grainger and Mr Williams is that Mr Grainger went into the matter with Mr Williams at his request during one of them. Mr Grainger's evidence was that he said he had a "permission" for clearance which allowed for 850 acres to be cleared for sowing for pasture and crop, and for the balance of 150 acres to be set aside for shade and shelter (Exhibit 108, witness statement, par 52.1). Mr Grainger's evidence was also that a system had been developed involving shutting up the sheep in the New Land for up to three months from the end of February to the end of May, to allow feed to grow on other pastures and to stop pasture degradation. While in the New Land, the sheep derived their feed from the native vegetation and from self‑feeder units put in there. He described all of this to Mr Williams (Exhibit 108, witness statement, par 52.5 ‑ 52.8).
Geoffrey Grainger's evidence was also he had told Mr Williams that the "permit" for clearance might not be "transferable" "and the law has changed", and that Mr Williams should "check with the department and the Jerramungup Land Care office as to the possibility of a permit for further clearing" (par 52.9). In cross‑examination for WDRE, Mr Grainger put what he said at this time in a somewhat more qualified way, as follows (TS 1880):
"On the first inspection did you say words to the effect that part of the new land could be cleared and that you had a letter to that effect?---No, I said we had a permit for clearing on the new land so that - to indicate it hadn't been cleared illegally, but I said that permit ‑ we no longer knew how it stood because of the changes of legislation over the years."
I will return below to these qualifications of the approval, and to the process by which the written approval was obtained and the change of law referred to.
Mr Grainger's evidence was further that (par 54):
"Gale Williams seems to have assumed that the 850 acres could not be converted to pasture for grazing or cropping without a valid permit to clear. We are not sure that any permit is needed for that area as we had substantially completed that clearing under the authority we had."
Gale Williams' evidence was that at the first inspection he asked Mr Grainger why the clearance of the land had not been completed after the chaining and burning, and Mr Grainger replied that it had not been financially feasible to do so at the time (witness statement of Gale Williams, Exhibit 21, par 29), which in cross‑examination for the Williams family he acknowledged was one of the reasons (TS 1863). Gale Williams' evidence was further that he asked whether the land could be cleared, and Mr Grainger replied with words to the effect he had written approval to clear 400 acres of bush, after which Mr Williams asked for a copy of the letter (Exhibit 21, par 28).
Mr Grainger's evidence was that Mr Williams did not then, or at any other time prior to signing the leases and the contract of sale, signings which I reach shortly, ask to see a copy of the approval to clear (Exhibit 108, witness statement, par 60). However, in cross‑examination for WDRE, Mr Grainger testified, at variance with his witness statement (Exhibit 108, par 61), that he had in fact earlier asked his son Peter to endeavour to find the "letter" of approval to clear in case Mr Williams did ask for it (TS 1940). Gale Williams' evidence was that he had not pursued the matter of the written permission at the first inspection, as "until Mark had had a look at it and could guarantee to me he could actually blade plough it there was really no point in me going any further at that particular point on that particular point" (TS 630, cross‑examination for WDRE). The fact that Mr Grainger recognised the potential importance of the permit or letter (which it appears to me Mr Grainger and Mr Williams treated in their discussions as the same thing), given Mr Williams' interest in the Graingers' permission to clear, and Mr Williams' testimony that he had not pursued the matter of the permit or letter at the first inspection, confirms me in the view I have previously expressed, that the existence of a permit or letter of approval was probably addressed in the first inspection. I have also concluded that it is more likely than not that Mr Williams had asked to see a copy of the permit or letter, but had not in any way pressed the point, at that first inspection. Below I will set out my finding and the reasons for it that a copy of the letter was also requested at meetings at Kensey Park on and 15 and 18 May 1998.
Mr Williams' evidence was also to the effect at no stage in the discussions between them did the Graingers make any qualifications of the written approval of the sort to which Mr Grainger's evidence referred. It seems to me that it is unlikely there were any such express qualifications made, either then or at a later stage in the discussions between the parties. The evidence of both Mr Williams and Mr Grainger was that the matter of clearing the 1000 acres was a matter of some significance to Mr Williams, as the family's ability to perform at least the blade ploughing of the land with the equipment acquired for his son's then dormant clearing business would also indicate. Further, there is evidence, to which I will return, that Mr Williams did not obtain a copy of the written approval or in fact make inquiries of the relevant government department with respect to clearance before the conclusion of the lease or sale transactions. I would have expected that he would have so proceeded if such qualifications had been expressly made that directed him to make his own inquiries.
Further, on the evidence I have described of the advertising of Kensey Park and its components and that advertising's background, as well as Peter Grainger's departure from Kensey Park in March 1998, it is evident to me the Graingers had reasons to achieve their purposes as soon as possible, and were acting on them. The availability for those purposes of 1000 acres, not then sown to pasture or crop, and representing over one-quarter of the total area of Kent Location 1658, would have been important to a prospective purchaser (cross‑examination of Mr Grainger for the Williams family, TS 1890). These indicate to me that Mr Grainger might not, particularly in early discussions of the property but also afterwards, have spelt out the qualifications, as to the transferability of the permit, the change in the law, and checking on the utility of the permit with the relevant government department, which at least later it was obvious to him might be appropriate, even as a real estate licence holder concerned not to make "untoward statements" that might have threatened his licence (the reason he gave for providing the qualifications, in cross‑examination for the Williams family: TS 1881 ‑ 1882). This was given that he was dealing with some one with farming experience in the area, as Mr Grainger knew Mr Williams to be, based on a prior occasion in 1993 on which he had met Mr Williams (Exhibit 123, supplementary witness statement of Geoffrey Grainger, par 19). It also seems to me this was the way in which, on Mr Grainger's evidence about the "expansion opportunity" represented by the property, Mr Williams presented himself to Mr Grainger in their discussions in April and May 1998.
The evidence of Mr Williams and of Mr Grainger was that the price for Kent Location 1658 was not discussed at the first inspection (Mr Williams: witness statement Exhibit 21, par 31: he knew the "listed" price, but "we didn't discuss the price further"; Mr Grainger, TS 1882). During the remainder of the inspection, the evidence of Mr Williams was that he noted there was "a lot of grass and weeds" on the property (Exhibit 21, witness statement, par 33), while Mr Grainger indicated in cross‑examination for the Williams family that the property was "fairly grassy" representing "good feed" for the sheep on it, while there were "capeweed and rye grass weeds" present (TS 1882).
The Williams family's interest in acquiring Kensey Park's Kent Location 1659 together with Kent Location 1658
The evidence of Gale Williams was that at the first inspection of Kent Location 1658 Mr Grainger indicated that the neighbouring block was also for sale, but Mr Williams did not visit it at that time (Exhibit 21, witness statement, par 31).
Mr Grainger's evidence was that at that inspection Mr Williams asked him how much of "the land" was "arable" (Exhibit 108, witness statement, par 65). Mr Grainger appears to have taken this question to relate to the sum of Kent Locations 1658 and 1659, that is, to Kensey Park as a whole, as his evidence was that he "did not respond to that question" but said that he believed "the areas of the farms that could be cropped or pastured were about 1850 acres for [Kent Location] 1658 and about 3500 acres for 1659" (Exhibit 108, par 65, opening words, and par 65.1).
On Mr Grainger's evidence Mr Williams was told by him that he would need to get "estimates" from his son Peter, "who had better knowledge of current areas available for cropping and pasture", and that Mr Grainger also told Mr Williams "estimation was difficult because of the large number of water features and remnant vegetation areas spread over the property" (Exhibit 108, par 65.2, par 65.3). As I will indicate below, there were indeed many such features and a number of such areas, and the determination of the areas available for cropping and pasture was one on which there was considerable conflicting evidence before me.
Gale Williams' evidence was that there was no specific discussion of Kent Location 1659 at the first inspection, and he did not recall this exchange as recounted by Mr Grainger (cross‑examination for WDRE, TS 642). However, Mr Williams' evidence included that he asked for any "map" the Graingers had, which would seem to have referred to the whole of Kensey Park (cross‑examination for the Graingers, TS 559). Further, he gave evidence that at the second inspection, when as I will indicate below he received a "mud map" of the whole of Kensey Park, he explored in more detail Mr Grainger's intentions with respect to Kent Location 1659 (Exhibit 21, witness statement, par 38). Mr Grainger indicated in cross‑examination for the Williams family that by the end of the second inspection Mr Williams had told him the Williams family were very interested in buying Kent Location 1658, pending finance, and in leasing Kent Location 1659, with an option to buy it (TS 1882). The evidence of Gale Williams also included that by the end of the second inspection he had indicated to Mr Grainger the Williams family were very interested in buying Kent Location 1658, "finance pending", and leasing Kent Location 1659, with an option to buy it (Exhibit 21, witness statement, par 39).
Further, Mr Grainger testified that, on the second inspection, "we had a preliminary look over the place and I said to him he was free to inspect any time he liked", when he would have been able to see the features of the two properties that made up Kensey Park. Those features included "two homesteads, 25 paddocks, 12 dams (two equipped) 6 troughs, 30,000 gallon tank, 2 lakes, 4 silos, 4‑stand raised board shearing sheds, general purpose machinery shed and ample shade and shelter" (TS 1821, cross‑examination for Williams family, reading from Exhibit 108, witness statement, par 78).
There is, however, no evidence that at the second inspection Mr Williams asked for a copy of any permit or approval the Graingers had to clear the New Land.
The evidence of both Mr Williams and Mr Grainger was that at the second inspection Mr Grainger gave him a "mud map" for Kensey Park, comprising both Kent Location 1658 and 1659. This was part of a hand drawn document. Two copies of the document were put into evidence. One copy was the document as created by the Graingers (Exhibit 25). The other, which had annotations made on it at the meeting by Mr Grainger, as well as certain other markings at least some of which were made by Mr Williams, was a copy of the one handed to Mr Williams at the second inspection (Exhibit 26).
The originally created form of the mud map is a document with three elements. The first element is the map itself, which is a rendering of Kensey Park made up for the most part of areas designated with circled numbers, the highest of which is 19, numbers which it was accepted before me correspond to paddock numbers given by the preparer of the document to the areas. Near each of the circled paddock numbers appears a number (or in the case of the paddock numbered 12, two numbers). There is also one area bounded in such a way as to appear to be a paddock without a circled number, but including a number 75. There are also three contiguous areas at the lowest point on the map with numbers but no circled paddock numbers, although there is a designation "2B" in one of them. At the right hand border of two of the areas there is an area without a circled paddock number and without a number like the other areas. At the top left of the map, there is a large cross hatched area divided by a "Track", with an area on the left side of that divider carrying the legend "600 Hec" and "chained and burnt".
The second element of the document is a column to the right of the map. The column's numbers correspond with the numbers that appear near the circled paddock numbers (or in the case of paddock 12, a number which corresponds with the sum of its two numbers), with the exception of one number, "120", which does not correspond to any number on the map, but may have been a rounding down of, or transcription error for, a "121" which does not otherwise appear in the column. In addition, the column includes the number 75 in the area for which there is no circled paddock number, and the three numbers appearing in the contiguous marked areas at the lowest point of the map, for which again there is no circled paddock number. At the foot of the column there is a number, which is the sum of the numbers above it, "2177 HA", and immediately below that "5442 ac". This latter number, it was accepted before me, was the conversion of the former number to acres using a multiplier of 2.5, although it was also accepted before me that the more accurate multiplier for hectares to acres is 2.47, which meant the acreage figure was inflated by 1.2 per cent. I note that the acreage compares with Geoffrey Grainger's estimation to Gale Williams, at the first inspection, of the total acres that could be cropped or pastured of 5,350 acres. The third element of the map is an annotation appearing immediately below the "5442 ac". The annotation reads "another 200 ac grazable approx".
The evidence of both Mr Williams and Mr Grainger was that they understood the numbers in the column shown in the second element of the map were "combine acres", which were acres based on the area returned by the clock on the machinery used to distribute seed (Gale Williams: Exhibit 21, witness statement, par 40; Geoffrey Grainger: Exhibit 108, witness statement, par 68). The figures shown on the map as returned by the clock were, on the evidence of the conversion of their total into acres, in fact hectares and would have been so understood. The distribution of seed would have been by the Graingers in this instance (Mr Williams, cross‑examination for the WDRE, TS 639; Mr Grainger, cross‑examination for the Williams family, TS 1824).
The character of the numbers in the second element as combine acres is confirmed by the form of the document as delivered to Mr Williams and marked up by Mr Grainger at the second inspection (Exhibit 26). It was agreed by the parties that Mr Grainger marked up the document with the word "Combine" alongside "5442 ac", as well as putting a further three figures below that number, of "5442", "1900" and "3542". That last figure is the difference between the first two (TS 543, examination‑in‑chief of Mr Williams). An inspection of the mud map figures in the column and the locations on the map from which they came would seem to indicate that the figure of "3542" was Mr Grainger's estimation of the minimum portion of the combine total of 5,442 acres represented by Kent Location 1659. I also note that the second two figures are close to those, to which I have previously referred, and to which I will return, which Geoffrey Grainger testified he indicated to Mr Williams, at the first inspection, were those for the areas of those two locations he believed could be cropped or pastured ("about 1850 acres for [Kent Location] 1658 and about 3500 acres for 1659": Exhibit 108, par 65, opening words, and par 65.1).
There were further markings on the document (Exhibit 26), however. Mr Williams testified he had added the word "stubble" in the paddock with the circled number 15 (TS 553, cross‑examination for the Graingers), and he also testified he had added the figure "8000" (sic 80) in the paddock with the circled number 7 (TS 555, cross‑examination for the Graingers). There were other markings on the document the maker or makers of which were not established on the evidence before me. These included some indistinct (on the copy that is Exhibit 26) numbers in the upper left, as well as some markings which on the evidence before me it was accepted reduced the totals in hectares and correspondingly in acres at the foot of the column making up the second element.
The markings first referred to, which on Mr Williams' evidence he accepted were related (TS 556, cross‑examination for the Graingers), were hatching lines drawn across, and shading on the inside of the four boundaries of, the paddock with the circled number 5. There was also a circle around the number "80" with an accompanying tick near the paddock number (for paddock 5); and in the column making up the second element there was a circle with a tick around one of the two number 80s there. Mr Williams testified that he understood the hatching lines indicated the paddock was "used only for grazing", after which he was asked what bearing it had on the total in the second element of the document. The following exchange occurred (TS 556, cross‑examination for the Graingers):
"You have used the map as a representation by Mr Grainger you assert that this map is a representation by Mr Grainger that the numbers appearing in the paddocks is a representation of the area that can be cropped in each of the paddocks? --- Except that one.
Except that one? --- Yes.
It's not in that case. So that should be taken off the total, because it's quite clear that's not cropable? --- That's right.
So your assertion that Mr Grainger was representing that 5442 acres was all cropable, he didn't represent that at all. On what you've just said, he has represented that 5542 less 80 was cropable, because you accepted that that 80 in that paddock could not be cropped? --- It couldn't be easily cropped, no. It wasn't immediately cropable. It needed cleaning up, yes.
So you accept that once it was cleaned up it could be cropped to 80 hectares? --- Yes, quite possibly."
Still later in his testimony Mr Williams added that, while the paddock had been cleared, it needed cleaning before it could be cropped, although it could reasonably be included as a combine figure as Mr Grainger had done (TS 639, cross‑examination for WDRE).
I should note there is some error in the quoted passage in the cross‑examiner's reference to the total in the second element, which in acres was 5,442, not 5,542, although there is no sign to me the witness misunderstood what was being referred to. It is also apparent from the passage I have quoted the witness understood that the 80 being referred to throughout was a measure in hectares, not acres. The 80 would have reduced the hectare total from 2,177 to 2,097. Using the same conversion rate to acres as the document, this would have produced an acreage equivalent of 5,242 acres, which was the figure accepted by Mr Williams for this purpose in later evidence (TS 637, cross‑examination for WDRE).
The evidence of Mr Grainger was that Mr Williams at the time of delivery of the document was aware Peter Grainger had prepared the mud map (Exhibit 123, supplementary witness statement, par 18). Mr Williams' evidence was that he had never been told Peter had prepared it, but that "it didn't bother him where the figures came from", "whether or not" from Peter, although he wanted to know it was from someone who had worked the land, which he presumed was true of Mr Geoffrey Grainger (TS 640, cross‑examination for WDRE).
The evidence of Mr Grainger was that he was aware that Mr Williams "wanted to get a crop in quickly as it was late in the season and would require the map for that purpose" (Exhibit 123, supplementary witness statement, par 18; and TS 1820, cross‑examination for Williams family). The evidence of Mr Grainger was also that the use of combine acres was in making decisions as to seed and fertiliser and planning cropping (TS 1824, cross‑examination for Williams family). Mr Williams' evidence went into the matter in somewhat more detail when he testified that the decisions went to the estimation of "fertiliser requirements, seed requirements, fuel requirements, the whole gamut of establishing a crop" (TS 558, cross‑examination for the Graingers). Mr Williams' evidence was also that it was still too early take any decision to crop, as a deal to acquire Kensey Park was not yet close to being struck (TS 559, cross‑examination for Graingers). However, his evidence also was that at the end of the second inspection he had indicated to Mr Grainger "if we went further we had to crop it and that the sheep that were on the property should be grazing the arable land immediately until it could be sprayed" (Exhibit 21, witness statement, par 39).
Mr Grainger's evidence was that at the time he gave the mud map to Mr Williams he told him the "map was only an estimate" (Exhibit 108, witness statement, par 67) and that "areas on the map were approximate only" (Exhibit 123, supplementary witness statement, par 18). Mr Grainger's evidence was also that the "clock style acreage gauge" on the combine used during seeding would record "the approximate area that has been seeded" (Exhibit 108, witness statement, par 67).
Mr Williams' evidence was that Mr Grainger had not said any such things: "he quoted they were combine acres and I accepted that as combine acres" (TS 639, cross‑examination for the Graingers). However, Mr Williams also said this about combine acres (TS 639, cross‑examination for the Graingers):
"He didn't tell you that those figures were surveyor's figures? --- No, no, no.
He told you they were the figures off the combine? --- Yes.
And you were familiar with estimating figures that way? --- Yes.
Which obviously wasn't nearly as accurate as having a survey done? --- Not as accurate, no.
A lot less expensive? --- You know at the end of the day what's on the clock.
So it's not precisely accurate but it gives you an idea? --- They're pretty accurate."
Counsel for the Williams family invited me to conclude that, because the document also included the third element, being the reference to "another" 200 acres shown as "grazable approx", that the figures in the second element, and on the first element, the map, could not be approximations. However, it seems to me, on Mr Williams' evidence I have quoted, that the level of accuracy of the combine acres shown is that for such acres as generally understood by farmers in the area, as both Mr Grainger and Mr Williams were known to one another to be or to have been. I return to this below, when I consider whether there were actionable misrepresentations in these matters. However, the fact that the word "approx" appears on the map for one of its figures is some support for the view I have arrived at that I am not satisfied that Mr Grainger did separately indicate at the time he handed over the document that the figures were estimates or approximations. It seems to me it would, on his view, be unnecessary to add this. This derives further support from his evidence, to which I referred above, as to the conversation he had with Mr Williams at the first inspection as to Kent Location 1659, when I am satisfied Mr Williams was told Mr Grainger had not farmed Kensey Park in recent times, and that he would need to get the information to respond to Mr Williams' inquiries from Peter Grainger, who had been farming the property recently. I am not satisfied, however, that Mr Grainger indicated at that time that whatever he got from Peter would be an "estimation", as his evidence was that he had said. It seems to me unlikely, for the reasons I have given, that he would have qualified what he expected to receive from Peter in that way.
Events following the second inspection: the meetings at Kensey Park
There was evidence indicating that Gale Williams and his son Mark, in the absence of Mr Grainger, made one or more visits to Kensey Park, whether between the first and second inspection (witness statement of Mark Williams, Exhibit 57, par 20) or after it (witness statement of Gale Williams, Exhibit 21, par 37). These visits and the inspections led to conclusions as to which paddocks of those shown on the mud map would be usable immediately were the property to be acquired (TS 559, 560, cross‑examination of Gale Williams for the Graingers). In the event, ultimately only some of the paddocks shown on the mud map with combine numbers nearby were initially cropped by the Williams family in 1998 (TS 562 ‑ 565, cross‑examination of Gale Williams for the Graingers), a matter I will return to.
Subsequently, there were one or two meetings involving Gale and Ruth Williams and Geoffrey and Joan Grainger, at one of the homes at Kensey Park. The evidence of Gale and Ruth Williams is that there were two such meetings, one on or before 15 May 1998, and the other on 18 May 1998. The evidence of Geoffrey and Joan Grainger refers to only one such meeting, on 18 May. It appears on the evidence to be more likely than not there were indeed two such meetings. At the first such meeting most of the terms were agreed, for both a lease of Kent Location 1659 and sale of Kent Location 1658, particularly the lease rental and lease term, and the option to purchase price, for the former, and the sale price, for the latter. At the second such meeting a lease of Kent Location 1659 (as well as a lease of Kent Location 1658) was signed, with some modifications and additions, but not to the rental and option price terms for Kent Location 1659.
The evidence of both Mr Williams and Mr Grainger was that at the end of the second inspection, as I have indicated, the former had indicated to the latter the Williams family were very interested, both in leasing Kent Location 1659 with an option to buy it, and in buying Kent Location 1658. However, the uncontested evidence of Mr Gale Williams (Exhibit 21, witness statement, par 41) is that no rental, option price or purchase price had been settled upon at this point.
The evidence of both Mr Williams and Mr Grainger was that at a meeting at a homestead at Kent Location 1659, attended by their wives and themselves, at least the bulk of the terms of the lease and of the sale were agreed. Mr Grainger told Mr Williams that the Graingers' aim was to sell Kent Location 1659, and they were not prepared to lease it beyond February 2000 (Mr Williams: Exhibit 21, witness statement, par 45 and par 47; Mr Grainger: TS 1884, cross‑examination for the Williams family). Those agreements and that indication are of course consistent with the evidence of the Graingers that at the same meeting a lease of Kent Location 1659, as well as a lease of Kent Location 1658, were signed by all four (Geoffrey Grainger: Exhibit 108, witness statement, par 8; Joan Grainger, Exhibit 104, witness statement, par 4).
However, it was also the evidence of the Graingers that the lease of Kent Location 1659 was brought to the meeting in "prepared" and "typed" form (Exhibit 108, Mr Grainger's witness statement, par 7) or "partly prepared" form (Exhibit 107, Mrs Grainger's witness statement, par 3), together with a contract of sale for Kent Location 1658 in "partly prepared" and "typed" form (Exhibit 108, Mr Grainger's witness statement, par 7). By contrast, the lease of Kent Location 1658 was drafted by Mr Grainger "on the spot" (Exhibit 108, Mr Grainger's witness statement, par 17; Exhibit 107, Mrs Grainger's witness statement, par 13). I return below to the contract of sale of Kent Location 1658. The "Agreement to Lease" respecting Kent Location 1659 (Exhibit 28, tendered through Gale Williams; a differently stamped copy of this lease, tendered through Geoffrey Grainger, is Exhibit 113) was on the same form as the "Agreement to Lease" respecting Kent Location 1658 (Exhibit 27, tendered through Gale Williams; a different stamped copy of this lease, tendered through Geoffrey Grainger, is Exhibit 115). Most of the details on the form for Kent Location 1659, including the parties, the property details, the rental, the lease term, the option price, and most of the special conditions, were typed (Exhibit 28), but the corresponding details were all handwritten on the form for Kent Location 1658 (Exhibit 27). There were, however, handwritten and initialled modifications of the lease of Kent Location 1659, including the deletion of the option to renew the lease beyond the end of the lease term on 28 February 2000 (notwithstanding some handwritten insertions as to the term of the option and the renewal rental). There were also some handwritten additions to the special conditions for that lease, to one of which I will return.
The form of the documentation in respect of the leases indicates to me that the terms of the lease of Kent Location 1659 had largely been agreed previously, whilst the agreement as to Kent Location 1658 was concluded on the spot. It is possible that the terms of the former so agreed had not involved any meeting between any of the parties, but simply prior exchanges of some (unspecified) sort, such as was the evidence of Mr Grainger, as to the name of the lessee of Kent Location 1659 (a trust), with the possibility to be left open for a different acquiring party in respect of the purchase of Kent Location 1658 (Exhibit 108, witness statement, par 11 and par 12). However, unlike those matters, those of the rental, the lease term, the option price and the special terms and conditions would seem to me to be ones that would have called for a meeting of some nature. This is confirmed for me by the evidence of Mr Grainger in respect of what he said was the one meeting of the couples at Kensey Park to conclude the transaction, as follows (TS 1891, cross‑examination for Williams):
"After the first meeting between you and your wife and Gale and Ruth Williams did you tell Gale Williams to come back and you would have all the documents ready?---There was one meeting with my wife, to the best of our recollection ‑ one meeting, my wife, myself, Gale and Ruth, which was out on the farm ‑ and we could not finalise the situation as it was and we said we'd have to have another meeting to give us time to finish some of the documentation and for Gale to work out exactly how he wanted the structuring of the lease and of the purchase."
This evidence does not sit well with the other evidence that there was only one such meeting, at which the leases were concluded.
It was agreed that on 18 May 1998 there was a meeting of both couples at Kensey Park at which modifications were made to the typed lease of Kent Location 1659, the hand written form of lease for Kent Location 1658 was prepared, and a typed contract of purchase and sale of Kent Location 1658 was considered. At the same meeting, the Graingers provided to the Williams a completed Disclosure of Interest and Consent in Real Estate or Business Transactions form dated 18 May 1998 in respect of Kent Locations 1658 and 1659, showing notice by the Graingers, consent to this by them, and agreement by them to pay its agreed selling or leasing fee to WDRE (Exhibit 31).
It was also agreed that the two leases, both dated 18 May 1998, were signed at the meeting. Each lease on its face bears the signatures, as lessor, of Geoffrey and Joan Grainger, and, "for and on behalf of the Brown Trust", as lessee, of both Gale Williams and Ruth Williams. The Brown Trust was the trading trust through which the Williams family farmed their Lake Magenta property, and since 1995 Ruth Williams had been its trustee (Exhibit 38, witness statement of Ruth Williams, par 9). I note that the signatures on the documents were all witnessed by a Ms Wray, who was a daughter of Geoffrey and Joan Grainger, and who was a proprietor of the agency of WDRE in Jerramungup out of which Geoffrey Grainger conducted some of his work as a representative of WDRE (TS 1949, cross‑examination for WDRE). That agency was also where the contract of sale was executed by Gale Williams and Geoffrey Grainger some two days later, as I find below. As there is no evidence Ms Wray was present at the meeting on 18 May 1998, it seems to me to be more likely than not she appended her signature as a witness some time afterwards, possibly the same day, as the leases both indicate that true copies were received by Mr Grainger on 18 May 1998 and by Mrs Williams on 26 May 1998.
The lease of Kent Location 1659 was for a term of 21 months, commencing on 1 June 1998 and expiring on 28 February 2000 (Exhibit 28, cl 2), at a monthly rental of $3,652 (cl 1). As I have indicated, the clause on the form conferring an option to renew (cl 3(A)), which had included some handwritten details for the length of the further term and the rental, had been struck through. Further, one of the special conditions to the lease, typed on to the form, was as follows:
"b)Should the purchase of Kent location 1658 not be settled by the 18th December 1998 lease of Kent location 1659 will terminate on that date. The Lessee to have the right of access to harvest any crop sown by them for the 1998/1999 Season. Any Crop grown by the Lessee to remain their property."
The lease of Kent Location 1659 also contained an option to purchase at a price of $680,000 (cl 4).
The lease of Kent Location 1658 was for a term of six months, commencing on 18 June 1998 and expiring on 18 December 1998 (Exhibit 27, cl 2), at a monthly rental of $2,000 (cl 1). However, a handwritten special condition provided for the property to be "destocked" by 1 June 1998 and for the lessee to have "vacant possession by this date". The clause on the form conferring an option to renew (cl 3(A)), with blank spaces for the rental and the length of the further term, had been struck through. The only other special condition in the lease, also handwritten, provided for what was referred to in the evidence as a "discount" for early settlement, and read as follows:
"Should the Lessee obtain written approval of purchase from Kent Location 1658 by 18th of July 1998 the rental shall be reduced by $2000.00 which shall be deducted from the purchase price."
The only provisions for livestock, plant and chattels to be included in either lease were in the lease for Kent Location 1659, for "silos, shearing shed and shearing machines. Household water pumps and solar pump". Relatedly, one of the special conditions in the same lease was e), a handwritten provision, for "Peter Grainger to have access to locations 1658 and 1659 to remove his equipment in negotiations with the Lessee". There appears to be no provision in either lease for the use by the Williams family of the combine or combines Peter Grainger had used from which the mud map's combine acres had been taken.
There was some controversy before me as to why there was a handwritten lease for Kent Location 1658, prepared on the spot at the 18 May meeting, and in particular whether it was for the protection of the Graingers, the Williams family, or both. It seems to me to be reasonably clear it was for the protection of both.
It is common ground between the Williams and the Graingers that the former were seeking early possession of the properties for the purposes of putting in a crop, as the season was coming to an end (Exhibit 21, witness statement of Gale Williams, par 56; Exhibit 108, witness statement of Geoffrey Grainger, par 16). I note that Mr Grainger's evidence was he understood Mr Williams to be seeking immediate access to the farm, and possession from 1 June 1998 (Exhibit 108, witness statement, par 17). Mr Grainger's evidence was also that he understood the Williams family were proposing to put in a crop on Kent Location 1658 before 10 July 1998 (TS 1896, cross‑examination for Williams family).
10 July 1998 was the date typed in the contract of sale for finance approval, for settlement and for vacant possession (Exhibit 29, cl 2, 4 and 1, respectively). As I will indicate shortly, this date was modified to 18 July in the first two cases. For now, I note two of the typed special conditions in the contract of sale were as follows (Exhibit 29, cl 29):
"b)A Condition of Purchase of Kent Location 1658 is that the Purchasers are able to Lease Kent Location 1659 until 28th February 2000 and then first option to purchase Kent Location 1659 for the sum of $680,000-00. The annual Lease to be $43,825-00 payable monthly on the first working day of each month. Lease for Kent Location 1658 to be $2,000-00 per month until settlement and Kent Location 1659 to be $3,652-00 per month until settlement.
c)Lessee/Purchasers to have immediate access to both Locations for spraying and cropping practices on the signing of this Contract."
Geoffrey Grainger further testified that Gale Williams indicated they needed to have some security to permit them to take the crop off if finance was not approved and the sale went off (TS 1896, cross‑examination for Williams family). In those circumstances, it seems to me it would also have been of value to the Graingers to have a record of the price for and limits to any such right of removal, as a form of lease would have provided. It is therefore not surprising that Mr Grainger testified that he saw the lease of Kent Location 1658 as a "safeguard both ways" (TS 1897, cross‑examination for Williams family).
When modifications were made to the contract of sale document considered at the meeting of 18 May 1998 was a matter of some controversy before me, as was the date at which it was finally executed. I have concluded that it is more likely than not almost all of the modifications were made but not fully initialled at the 18 May meeting. However, the name and address of the purchaser, as well as the date in May for the document itself, were left blank, pending the receipt of instructions on the purchaser from the Williams family. The document was executed on 20 May 1998, by the Graingers, and by Gale and Mark Williams, signing above lines that said "for and on behalf of the Mallee Trust The Trustee Mark Curtis Williams", with most of the signatures being added at the office of the agency for WDRE in Jerramungup to which I previously referred. It was then that the name of the purchaser was typed in to the document, and final modifications made, to write in the day in May for the document, and to correct the typed road address of that purchaser.
I have noted the finding of Yeats DCJ in Grainger v Williams [2002] WADC 296 at [10], that the contract of sale was indeed executed on the date it bears. It was put to me for the Graingers that this raised an issue estoppel so far as they and the Williams family are concerned. I am not convinced that it does, as it is not clear to me that the exact date is "legally indispensable to the conclusion" in that judgment: Heydon, J D Cross on Evidence, 7th Australian ed, Lexis Nexis Butterworths, Sydney, 2004 at [5080], quoting from Blair v Curran (1939) 62 CLR 464 at 532, per Dixon J. However, I consider that the date is sufficiently established otherwise, as I will now indicate.
Apart from the modification of the address of the purchaser, the only handwritten modifications made and initialled on the contract of sale are changes, to which I have already referred, for finance approval and for settlement, from 10 July to 18 July 1998, to the typed dates for settlement (Exhibit 29, cl 1) and for approval of finance (Exhibit 29, cl 2). There was also a modification of the reference to the General Conditions for the Sale of Land incorporated into the contract (Exhibit 29, cl 18), from the 1994 conditions to the 1998 ones, which was not initialled. It seems to me to be more likely than not that these modifications, apart from the modification of the address of the purchaser, were made at the 18 May meeting, as the date changes align with the terms of the "discount" for early settlement in the handwritten lease for Kent Location 1658 that was prepared and executed on that day.
However, it seems to me more likely than not that the execution of the document, with the insertion of the typed name of the purchaser, followed by the modification of its road address, with the initialling of the modifications including the changes of date, occurred on 20 May 1998. That was the date of the document, as well the date shown on it for when a true copy of the document was received by the vendor and by the purchaser. Also, Geoffrey Grainger sent a fax to WDRE that day indicating, among other things, that the contract of sale had not been completed, "as Gale's accountant is working on structuring a new trust" (Exhibit 116); Mr Grainger testified that later that day the name of the new trust was in fact supplied, making completion of the contract of sale possible (TS 1905, cross‑examination for the Williams family).
The purchaser whose name and address were inserted was the Mallee Trust, whose trustee was Mark Williams. However, it appears that the trust was not created until 21 May 1998 (Exhibit 51, Deed of Settlement of the Mallee Trust). Although there was some suggestion at the trial, for the Graingers, that this might have made Mark Williams and Gale Williams, as signatories, rather than Mark Williams as trustee, liable on the contract of sale (see Kelmer v Baxter (1866) LR 2 CP 174, on pre‑incorporation contracts where the non‑incorporation is disclosed), I do not see it as significant in this matter. The liability of Mark Williams, whether personally or as trustee, is clear: Meagher, R P and Gummow, W M C Jacobs Law of Trusts in Australia 6th ed, Butterworths, Sydney, 1997, at [2102] (on a trustee's liability). There is no parallel with the common law position for an unincorporated company and its pre‑incorporation contracts.
It will be noted then that by the end of 20 May 1998 there was a contract of sale of Kent Location 1658 to the as yet uncreated Mallee Trust, subject to finance, to settle by 18 July 1998, and a lease of that land with an option to purchase by the Brown Trust, at the same price, exercisable until the end of the lease term, which was on 18 December 1998. However, the initial lease payment of $2,000 would be credited towards the purchase price in the event of purchase, at least by the lessee, by 18 July 1998.
There was a further document in these transactions, relating to "offer and acceptance / contract dated 20/5/1998", between the Graingers, as "vendor/s", and "Gale Williams Ruth Williams (trust to be nominated)", as "purchaser/s", in the form of a formal request by the purchasers for an extension of time for the last date of finance approval to 17 August 1998 "&/or sale of the Purchaser/s property" to the same date (Exhibit 30). The names of the parties, the dates of the document itself, and the extension dates, were handwritten. This document was signed by Gale Williams and Geoffrey Grainger and both signatures witnessed by Mr Grainger's daughter, Ms Wray. There was considerable controversy as to when this document was executed, with the position for the Williams family that it was some time after the execution of the contract of sale, and the position for the Graingers that it was on 18 May 1998, at the meeting I have referred to. I note that Yeats DCJ in Grainger v Williams [2000] WADC 296 did not make a finding as to the date of execution of this document.
It seems to me more likely than not that the document was executed after that meeting but before the contract of sale. I note the evidence of Geoffrey Grainger that the extension document was signed by Gale Williams in Jerramungup at the office where the contract of sale was executed (TS 1908, cross‑examination for Williams family). I also note that the handwritten entry for the "purchaser/s" points to the identity of the trust as still being unclear.
It was pressed on Geoffrey Grainger during his cross‑examination for the Williams family that it made little sense to execute an extension of time document for a contract of sale that had not yet been concluded, and that, if the extension had been granted, it was reasonable to expect the contract would have been modified to show the new dates. However, there were executed lease documents for Kensey Park that were expected to be replaced by a sale of the property, and the Graingers were hoping to have settlement at the earlier date, which is indicated by the "discount" for settlement of the sale of Kent Location 1658 by 18 July, and which is consistent with Mr Grainger saying that settlement would be on 18 July 1998, in his letter dated 27 May 1998 to an officer of the Primary Industry Bank in respect of the farming finance it had extended to the Graingers (TS 1903, cross‑examination for Williams family). In that context the explanation Mr Grainger gave for the earlier extension of time document, as a "back up" arrangement in case finance could not be arranged within the originally anticipated time frame from the 18 May meeting (TS 1903), appears to me to answer the question as to the sense it made to have the document executed in the form it was in before the execution of the contract of sale.
There is one final matter I need to refer to in respect of the meetings I have determined took place on or about 15 May and on 18 May 1998 between Mr and Mrs Williams and Mr and Mrs Grainger at Kensey Park. It is an exchange or exchanges with respect to the clearance of the 1,000 acre portion of the New Land in Kent Location 1658.
The evidence of Gale Williams, confirmed by his wife Ruth, was that at the earlier meeting he asked for a copy of the clearance letter previously mentioned, and that Geoffrey Grainger said it was "buried in his records somewhere" (Exhibit 21, witness statement of Gale Williams, par 49; Exhibit 38, witness statement of Ruth Williams, par 33; and as to the earlier meeting, the cross‑examination of Gale Williams for WDRE, TS 630, while at the second meeting he had asked if the letter had been found, and Mr Grainger had said words to the effect it had not, but that Mr Williams should just go ahead and clear the land (Exhibit 21, par 54; Exhibit 38, par 40). I have some difficulty accepting that Mrs Williams in fact heard any such exchanges. She admits that at both meetings she was sitting and talking with Mrs Grainger, apart from Mr Williams and Mr Grainger if not far from them, and not involved in the business they were discussing (Exhibit 38, par 30 ‑ 32; TS 930, cross‑examination for WDRE)
However, that there was an exchange, at one of the meetings at least, that was something like the second of these at least, and that occurred between the two men, seems to me to be clear from the evidence of Mr Grainger. That evidence was that he had said words, at what he said was the one meeting between the couples at Kensey Park, to a similar effect to those he used during one of the inspections, namely that, so far as he was concerned, Mr Williams could go ahead and clear, but he had to make his own inquiries (TS 1980 ‑ 1981, cross‑examination for WDRE). The initial evidence of Mr Grainger is also that he was not asked for a copy of the letter until after the leases and the contract of sale had been executed (Exhibit 108, witness statement, par 60). However, his later evidence was that he had been asked for the document at the signing of the contract of sale, on 20 May 1998 (TS 1940 ‑ 1941, cross‑examination for WDRE). His initial evidence was also that it was only after the request he had asked his son Peter to look for the document (Exhibit 108, par 61); however, his later evidence was that he had asked Peter to look for it before the request, as he acknowledged Mr Williams' interest in the Graingers' permission to clear (TS 1940, cross‑examination for WDRE), on the basis "if he was to purchase the place he would need full documentation as to what we had done with the place" (TS 1941).
I note that the two Schedules A include as an expenditure the deposit paid for the purchase of Kent Location 1658. However, the financial statements do not appear to include any such figure. I return below to the appropriateness of including the deposit as a loss from farming Kensey Park and Lake Magenta.
However, the correspondence I have described would be of no moment if it became apparent that it had not been shown the system I have described for the determination of the financial position of the Brown Trust operated to distinguish farming from non-farming expenditures.
It emerged from the cross‑examination of Ruth Williams for the Graingers that a number of items in the schedules to her witness statement referring to entries in BankWest statements for amounts paid and deposited for the Brown Trust did not relate or wholly relate to farming activities but rather to mining activities, as she had indicated on the BankWest bank statement (Exhibit 44) with the letter "m" (such as for advertising: TS 859 ‑ 862). The total amounts relating to mining expenses conceded by counsel for the Williams family as involved in the annotated bank statements was $42,473, with which income of $52,220 also so shown was associated. However, it was apparent that no such mining amounts were included in the end of trial Schedule A; and, consistently with Ruth Williams' system for passing on the bank statements to the accountants as I have described it, it does not appear that any such mining amounts were included as expenditures of the Brown Trust in its financial statements.
It was put to me that a number of other expenditures than those identified in the bank statements by the letter "m" as mining ones might have been mining items included in the bank statements and financial statements for the Brown Trust. This was notwithstanding Ruth Williams' evidence that its only business activity was farming. Some of these items were shown on the cheque butts as "m", and those so identified as a result of the inspection of the cheque butts by counsel for the Graingers were excluded from the end of trial Schedule A. The amounts involved (principally for the use of a Textron loader, used for both "m" and other purposes, as the bank statements, in Exhibit 44, indicate) do not appear to be large, and are consistent with the system not operating perfectly, rather than not operating at all.
Of rather greater potential significance, the balance sheets for the Brown Trust forming part of its financial statements show entries as a "Current Asset" in fluctuating amounts for a "Loan Paxton Enterprises Pty Ltd". This company Ruth Williams identified as a mining concern associated with the Williams family (cross‑examination for the Graingers, TS 758 - 759) which over the relevant period (presumably May 1998 to February 2000) was a "small business at the time" (examination‑in‑chief, TS 691). There was also some evidence, from the cheque butts, that there was another mining company involved, identified as "Matrix" (see for example Exhibit 48, BankWest cheque 000739, annotated as "Rego m" in the relevant bank statement, Exhibit 44). It was conceded before me this company was Matrix Minerals Ltd in which the Williams family were also involved, and I admitted into evidence business identification and company searches for both that company and Paxton as well as an information memorandum for Matrix, and a business identification search for Matrix Minerals Fertilisers (Exhibits 152 - 156), all dating from after 2000. Although counsel for the Williams family put to me that this material was merely collateral as to the credit of Ruth Williams, and so not admissible (Cross on Evidence (supra), at [17580]), I do not agree. The evidence goes to the issue of whether or not there were substantial mining expenses unrelated to the farming operations of the Brown Trust that had been included as part of the claimed losses, notwithstanding the answers given by Ruth Williams, particularly her answer with respect to Paxton that as far as she was concerned it did "nothing" (cross‑examination for the Graingers, TS 858).
I was asked to consider this material in conjunction with the financial statements of the Brown Trust and the partnership GC and RE Williams. Those it was submitted by counsel for the Graingers show, as a document prepared by counsel for the assistance of the Court and tendered at the trial as Document "A" highlights, a correspondence between increases in Current Asset entries for the Brown Trust in respect of the partnership GC and RE Williams over the period from the end of financial year 1997 to the end of financial year 2000 with the payment of the National Australia Bank debt and increases in drawings by Gale and Ruth Williams from the partnership. The accuracy of Document "A'"s transcription of amounts from the financial statements was accepted by counsel for the Williams family, and I admitted this document into evidence on the basis of what it showed as to the entries in the financial statements (Exhibit 157).
The drawings over the period of financial years to the end of June 1999 and to the end of June 2000 were substantial, in the order of $45,000 each per year. The cross‑examination of Ruth Williams for the Graingers paid significant attention to this matter, which Ruth Williams testified she could not elucidate upon (TS 726 ‑ 744), except to say that she had no knowledge of actual cash flows to her or to her husband (TS 839). The possibility existed, it was being suggested to me, that substantial amounts shown as expenditures in the Schedules A and the financial statements of the Brown Trust were not in fact farm expenditures but at least in substantial part mining expenditures, presumably as part of a system of apportioning certain expenditures as ones which would be treated by the Brown Trust as increases in the current asset in respect of the partnership, and would be treated by the partnership as drawings by Gale and Ruth Williams.
It was also submitted that there were other items that might need to be similarly treated, as it was said emerged from other aspects of the cross‑examination of Ruth Williams on the financial statements for the Brown Trust. To the extent of the evidence in the respects I will note emerging from that cross‑examination, as well as the cross‑examination on the increase in the partnership current asset and drawings I have just referred to, counsel for the Graingers indicated he was withdrawing his objection to the financial statements.
It emerged from that cross‑examination that the Brown Trust had made advances to entities associated with Gale and Ruth Williams (TS 756 - 765), and that the financial statements also indicated that the Brown Trust had incurred a liability to the trustee, Ruth Williams, although she could not recall why the financial statements indicated this, nor could she recall any associated movement of funds (TS 805). There was also evidence so emerging that there were transfers out of the Brown Trust to beneficiaries of the trust without compliance with the terms of the mortgage under which Ruth Williams was a mortgagor (TS 801 ‑ 802). There was also evidence so emerging that in the year ending 30 June 2000 assets were purchased and sold by the Brown Trust of which Ruth Williams had no recollection (TS 790 - 794), nor, for that matter, did Mark Williams (cross‑examination for the Graingers, TS 1185). Ruth also testified that, although she annotated personal expenses on the bank statements with the letter "P" (cross‑examination for the Graingers, TS 842), she conceded that expenditures on fuel and telephone calls might have been for private purposes (cross‑examination for the Graingers, TS 856 - 857).
It was put to me that when account was taken of all of these items, the possibility could not be excluded that the Williams family had in fact suffered no loss on farming operations, notwithstanding what the bank statements and the financial statements might appear to show. It was further put to me that to properly test that possibility, it would have been necessary to have access to the financial records for the mining operations for the Williams family, as well as the source documents for the transactions shown in the bank statements, the financial statements and the invoices and cheque butts (putting aside the lateness in the provision of access to the last three sets of documents). However, none of those documents had been discovered, as is indicated by the affidavits of discovery of Gale, Ruth and Mark Williams, which I admitted as exhibits (Exhibits 158 ‑ 161). However, although Ruth Williams had acknowledged there were documents with the accountants for the Brown Trust, it appears to me from her evidence that she is referring primarily to the annotated bank statements, and the invoices and cheque butts, that are before me as parts of exhibits (examination in chief, TS 686 ‑ 688, 691, and 689 ‑ 695 and cross‑examination for the Graingers, TS 841). Although she did concede there might be other documents with the accountants (cross‑examination for the Graingers, TS 721), and that she had not pressed her accountants to find all of the documents "buried" in their storage facilities (TS 724 - 725), I do not conclude from that there were significant further documents in relation to the annotated bank statements and the financial statements of which discovery could be given. To the extent there were further documents, it is not apparent to me that they might have added information to what appeared in the annotated bank statements, which were to enable the accountants to make the allocations (TS 842). On this basis, and given the opportunity counsel had over the cross‑examination of Ruth Williams to test her system of record keeping, I do not conclude that prejudice has been shown.
Nor do I conclude that large expenditures for non-farming purposes were not disclosed in the annotated bank statements and financial statements.
I do note that there was also evidence that some of the payments Ruth Williams made forming part of the claim for loss were in respect of obligations incurred before any reliance on representations by the Graingers, such as hire purchase payments on vehicles acquired in previous years. However, because of my view as to the reliance by the Williams on the representations by the Graingers for the purpose of farming Kensey Park and Lake Magenta as a single enterprise, I do not consider that this makes those amounts unclaimable. For similar reasons, I do not consider the failure to disaggregate expenditures and receipts by reference to those two farms makes the evidence of those expenditures and receipts of no assistance to the calculation of loss.
It was also put to me that items in the originally pleaded Schedule A and the end of trial Schedule A for chemical analysis of the soil of Kensey Park ($132 and $148, respectively), in respect of misrepresentations not proceeded with, and solicitors fees ($64,422), could not properly be claimed as expenses of the enterprise of farming Kensey Park and Lake Magenta. I disagree. I consider that these are part of the cost of the project undertaken in reliance on the representations I have found. While the amount for solicitors' fees was large, I have previously discussed the advice the Williams family sought from their solicitors in relation to their staying at Kensey Park. A number of members of the firm were involved over a significant period. In that light the amount seems to me to be reasonably claimable here.
I note that included in the end of trial Schedule A is a set of expenditures for wages, apparently paid to Mark Williams, in the amount of $13,688. I do not consider that a payment of wages cannot be allowed as loss or damage caused by impugned conduct because the payment is made to a person related to the claimant. The claimant here is of course Ruth Williams, as trustee for the Brown Trust. Nor is there any evidence that wages would not have been payable to someone for the work in question, or that the amount of wages was unreasonable.
I have concluded from the preceding paragraphs, and especially the table of comparisons between the Schedules A and the financial statements for the Brown Trust, that the Williams family have shown loss from the project of farming Kensey Park and Lake Magenta as a single enterprise. Where there is some measure of uncertainty in the calculation of that loss, as emerges from the preceding paragraphs, a court "must do its best to quantify the loss even if a degree of speculation and guess work is involved": Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 at 182, Federal Court, per Sheppard, Morling and Wilcox JJ.
I conclude that the appropriate measure of the loss is the lowest figure in the table of comparisons, or $544,985. This is drawn from the financial settlements for the Brown Trust. There is no indication this amount includes the $5,000 deposit paid on Kent Location 1658's purchase price. In my view, as I explain below, this is appropriate.
Indemnity for misleading or deceptive conduct
Three forms of indemnity were sought.
One was for the Wesfarmers Dalgety obligations, less the amounts paid forming part of those obligations that would have been outstanding if there had been no reliance. Those amounts were the obligations to the National Australia Bank and to Sainwell, for the payment out which the term loan from Wesfarmers Dalgety was used. However, it was put to me for the Williams family that they were entitled to an indemnity against the interest accruing on the amounts so paid out, as before the reliance on the impugned conduct they had been able to meet those obligations.
In closing oral submissions to me, counsel for the Williams family conceded that they could not claim both the damages for the loss referred to and an indemnity against the Wesfarmers Dalgety obligations. This concession was, it seems to me, properly made. Those damages if properly claimed are for the amounts drawn down in relation to farming Kensey Park and Lake Magenta as a single enterprise, less income earned from that operation. To recover for any part of the amount so drawn down by way of an indemnity would be to recover that part of the amount twice. The drawings are the loss brought about by the impugned conduct.
Nor should a distinction be drawn between Ruth Williams, on the one hand, and Gale and Mark Williams, on the other. The latter two are only liable in respect of the Wesfarmers Dalgety obligations secondarily.
However, there was a second indemnity sought, for Ruth Williams' obligations under the chattel mortgage with RAC Finance in respect of the equipment acquired for the farming of Kensey Park and Lake Magenta. The chattel mortgage was, like the drawings that produced the Wesfarmers Dalgety obligations, brought about by the impugned conduct. The amount of the loan secured by the mortgage would not, however, have been reflected as an expenditure used in the determination of the loss suffered by the Williams family as I indicated above. Also, the chattel mortgage would have left the Williams family with equipment of some value to them, as at the date at which the single farming enterprise was terminated, which as I have indicated was 29 February 2000. Declines in the value of that equipment after that date are not, in my view, properly for the Graingers to bear. I find there is a right to an indemnity in respect of the RAC Finance chattel mortgage, against which must be set off the value of the equipment acquired as at 29 February 2000. I have no evidence of that value, however.
The third form of indemnity claimed was for the costs and any award of damages arising from the judgment for the Graingers for possession in CIV 2339 of 2002. I deal with those damages in a separate judgment being issued and meant to be read with this one.
Interest
The claim here is for interest on amounts claimed as damages. I would see that claim as one for the amount fixed as at 29 February 2000, the date at which I conclude the single farming enterprise was terminated. Interest was claimed under Supreme Court Act 1935 (WA), s 32. There was no submission put against this claim, and no reason not to grant it appears to present itself to me.
Interest is, I find, properly to be awarded, from the time the causes of action arose to the date when the judgment takes effect.
The rate of interest, in the absence of any other basis apparent to me in the evidence, in my view should be that which would apply to the sums as if they were judgment debts, at the rates applicable to judgment debts. Those rates are the ones which were those gazetted for the purposes of former s 142 of the Supreme Court Act, and are now, effective 1 May 2005, the ones prescribed by regulation under s 8(1)(a) of the Civil Judgments Enforcement Act 2004 (WA).
Declaration of rescission of the contract of sale and purchase and consequential relief
This is claimed by Mark Williams. The consequential relief claimed is the $5,000 deposit paid for the purchase of Kent Location 1658. I have already noted that this is included as an originally pleaded Schedule A and an end of trial Schedule A expenditure above. I consider this amount should be recoverable only once, and by Mark. Any obligation he owes to the Brown Trust in respect of that recovery is a matter between him and the Trust.
As to the declaration of rescission of the contract of sale and purchase, it seems to me that Mark proceeded promptly to give notice of rescission (Exhibit 35). I have already indicated why I am of the view he could rescind the contract of sale and purchase without there being a termination, at that point or ab initio, of the leases. At common law, the contract of sale and purchase was void ab initio. As the contract was void in that way, it is unnecessary, and inappropriate, to grant the analogous relief under the broad remedial power conferred by Fair Trading Act, s 77(3): Lockhart (supra), at [11.56].
The declaration sought should be made.
The Graingers' claims arising out of the contract of sale
It follows from the rescission ab initio of the contract of sale and purchase that the Graingers have no claims against Mark Williams on that contract. This makes it unnecessary to determine whether or not Gale or Gale and Ruth Williams were parties to the contract of sale. However, while I should indicate, as I did above when considering the matter of mitigation of the loss of the Williams family, that the leases and the contract of sale were undoubtedly related transactions, I do not consider that this made the parties to either parties to the other. I have noted the reference in the judgment of Deputy Registrar Hewitt in Grainger v Williams & Ors [1999] WADC 57 at [8] to it appearing to him "sensible to accept the proposition, as a working hypothesis, that both the agreements for lease and the contract for sale were entered into by the same entity". However, this was an hypothesis only, to permit him to evaluate in the light most favourable to the defendants before him (the Williams) their submissions as to the continuance of the leases. I do not consider it was a determination that there were the same parties to all of the transactions, which would be inconsistent with their express terms as to their parties.
It was put to me for the Graingers, however, as I understand it, that any right to rescission was not effectually exercised, as it required the rescission of all three contracts. There had been a purported rescission of the contract of sale without any rescission of the leases in this case, as I have indicated. However, I have concluded that, notwithstanding their relatedness, the leases and the contract of sale were separate transactions, and could be separately dealt with by way of rescission of at least the contract of sale without rescission of the others. This it seems to me is the result of the contracts being separate contracts with different parties. There is nothing in the express terms of the contracts to indicate that the termination of the one could only be accompanied by the termination of the others. There is nothing in the judgments of the District Court in CIV 237 of 1999 (Grainger v Williams [2000] WADC 296) which holds or even indicates otherwise. This, it seems to me, means there was no such barrier to rescission of the contract of sale.
This also disposes of any claim for wrongful repudiation of the leases arising out of the purported rescission of the contract of sale without rescission of the leases. There are, of course, damages claims for breaches of the lease agreements in CIV 2339 of 2002, judgment in which is being delivered with judgment in this action.
The Graingers' claims for trespass
As I previously indicated, this is a claim in respect of the Williams family's trespass to the Graingers' lands as found in the District Court action to which I have referred, to the extent loss in respect of that trespass was not recoverable in that action because it arose subsequent to the issue of the writ in that action. The assessment of damages in that action is also before me, in CIV 2339 of 2002, and in a separate judgment being issued with this one I provide that assessment. As I indicate in that judgment, the claims in respect of matters arising subsequent to the commencement of the District Court action fall under two heads, damages for double yearly value and mesne profits. As I indicate there, the law with respect to both is that matter arising after the commencement of the action is recoverable, and so there is no need to make an order under the current head in this action.
Mr Grainger's and WDRE's claims against each other arising out of his employment
Mr Grainger's claim against WDRE, as I have indicated, apparently based both on his employment contract with that company, and representations it made to him as to his protection by a professional indemnity policy, was for loss and damage suffered as a result of acting on behalf of WDRE, including defending CIV 1171 of 2000, as well as CIV 2156 of 2000, and an action in 1999 brought by Mark and Ruth Williams.
Mr Grainger's employment by WDRE was under a "Specialist Real Estate Sales Representative Agreement" (Exhibit 111) with a predecessor of WDRE, Wesfarmers Ltd, to whose position under the contract WDRE succeeded (Exhibit 112, and cross‑examination for WDRE of Geoffrey Grainger, TS 1987). There was no express provision in that contract for the indemnification of Mr Grainger by the company. In my view finding an implied provision for his indemnification would be very difficult in the face of Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555, where it was held that as a general proposition there was not to be implied in an employment contract a term that the employer would indemnify the employee against the consequences of the employee's acting in the course of his employment, or that the employee would have the benefit of any contract of insurance effected by the employer in respect of such action, or that employee would be indemnified by the employer against any liability for which the employer was in fact insured or was required by law or ought in the exercise of reasonable care to have been insured. Nor was a particular implied term put forward by counsel for Mr Grainger.
It seems that the basis for Mr Grainger's claim lay rather in representations he testified were made to him at various times until 17 August 1998 by persons who supervised him in WDRE (supplementary witness statement of Geoffrey Grainger, Exhibit 123, par 27). These appear to have been put forward to found liability under s 52 of the Trade Practices Act. The representation was he had "professional indemnity cover from the Wesfarmers Dalgety group of companies for work [he] performed for members of the group". He testified under cross‑examination for WDRE that in 1993 or 1994 he had first inquired about "what cover I had and what professional indemnity cover I had". These inquiries were of the Western Australian manager for real estate for the Wesfarmers group (TS 1988). This inquiry had been made because (TS 1988):
"We had done a course on litigation and how we had to be careful as to exactly what we put to our clients and as a spin off from that I asked him what professional indemnity was available, we were covered with."
The manager had told him he was "covered" or "amply covered" (cross‑examination for WDRE, TS 1990). Mr Grainger acknowledged there was nothing in his contract on the subject, and that he in fact had checked the contract before his inquiry of the manager (TS 1991). He also acknowledged he had not asked for the contract to be amended to cover the matter, testifying that "it was a concern, but I took his word for it" (TS 1991). I find Mr Grainger's evidence on this matter to be credible, and no evidence to contest it was put up.
It was put to me that there was no evidence Mr Grainger had relied on any such representation, apparently because he testified that, following this exchange with the manager, he had done nothing differently (TS 1991). However, the evidence of Mr Grainger is that the matter was of concern to him, and a continuation of his work as before would appear to me to found a fair inference that in doing so he was relying on what addressed that concern, from a senior officer in the company (Gould (supra)). Further, there was evidence that in late 1998 Mr Grainger had several times asked WDRE and Wesfarmers Dalgety for information about the professional indemnity cover (Exhibit 123, par 28), which is some evidence of reliance (see Lockhart, (supra) at [10.19]). I consider that reliance in continuing to work for the Wesfarmers group or continuing so to work without taking steps to secure professional indemnity cover himself has been proved.
There was no evidence to which my attention was drawn that the representation I have found to have been made was misleading or deceptive, as required by s 52 of the Trade Practices Act, that is, that WDRE had no professional indemnity policy covering Mr Grainger. However, there is uncontradicted evidence from him that he had not received any reply to the requests for information about professional indemnity cover I have referred to, and no other evidence as to such cover. In those circumstances, I consider I should draw an inference of the sort in Jones v Dunkel (1959) 101 CLR 298 that no evidence he was covered by a policy taken out by WDRE was available.
The loss or damage "by" the conduct complained of is, however, the basis for any claim for relief for such conduct (Trade Practices Act s 82, s 87). This requires the showing of a sufficient linkage between the loss claimed and the reliance, as I explained in connection with the claim for the Williams family on the clearing and "arable" area representations. The loss claimed here is in the following forms:
1.The reasonable costs paid or payable by Mr Grainger in defending the Supreme Court action brought by Mark and Ruth Williams in 1999 that was set aside, to the extent those costs were not recoverable in the taxation.
2.The reasonable costs paid or payable by Mr Grainger in defending Supreme Court action CIV 1171 of 2000 to the extent that they have not been recovered or are not recoverable from the Williams family.
3.The reasonable costs paid or payable by Mr Grainger in bringing and responding to appeals in CIV 1171 of 2000 to the extent that they have not been recovered or are not recoverable from the Williams family.
4.The reasonable costs paid or payable by Mr Grainger in defending the counterclaim in CIV 2156 of 2000 to the extent they are not recoverable from the Williams family.
5.Interest paid, interest foregone and other borrowing costs on money paid by Mr Grainger in connection with the above actions and appeals.
6.Travel, accommodation and other disbursements reasonably incurred by Mr Grainger in connection with the above actions and appeals.
The linkage to Mr Grainger's reliance presumably cannot lie in the fact he would have discontinued his work for WDRE, as that does not go to show he would not have engaged in the impugned conduct that gave rise to the relevant liability. It is not suggested that he would not have attempted to sell Kensey Park if he had not been a representative of WDRE. Indeed the evidence is, as I have indicated, that the impulse to sell arose out of the circumstances of the Graingers as owners.
However, if the linkage lies in the coverage he would have obtained if he had not been induced to continue to work without his own policy, the availability of coverage to him would need to be shown: Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1, at 13 - 14, per Mason, Wilson and Dawson JJ; Lockhart, (supra), at [11.14] and [11.15]. There was no such showing in this case.
It follows that I do not consider that the loss claimed may be recovered as "loss or damage by" the representation referred to (Trade Practices Act s 82 and s 87).
However, in my view that is not the end of the matter. This goes to the claim for an indemnity by WDRE that I permitted it to make at the trial, which I turn to consider.
On day seven of the trial, during the presentation of the case for the Williams family, I gave leave to WDRE to claim an indemnity from Mr Grainger on the basis of the contract with him. The claim was rested in the term it was submitted should be implied in the "Specialist Real Estate Sales Representative Agreement" (Exhibit 111) to which I have already referred. No reliance was placed on its express terms, and in particular none was placed on cl 2.2 to which I have already referred, stating that Mr Grainger had "no right or authority" to make "on behalf of" the company "any representations". The implied term contended for was that Mr Grainger would perform the duties of his position with reasonable care.
I note that a term to the effect contended for is one that will readily be implied in a contract of employment, at least unless it is inconsistent with the express provisions of the contract: Lister (supra); and Voli v Inglewood Shire Council (1963) 110 CLR 74, at 100, per Windeyer J, Dixon CJ and Owen J agreeing. The agreement in this case styles Mr Grainger "the Employee", and there is nothing in the agreement which would counter this indication of his relationship to what is now WDRE. Nor is there any provision in the Agreement inconsistent with the implication of the term in question.
However, it is necessary to show that Mr Grainger did not perform his duties with reasonable care. The impugned conduct in this case, contravention of s 52 of the Trade Practices Act, is of course conduct that need not involve any lack of due care, and such lack is no part of the impugned conduct in this case: see Lockhart (supra) [3.13] ‑ [3.14]. It was put to me for WDRE that Mr Grainger could have had a survey done in respect of the arable acres representation, and could have made inquiries of the relevant government department in respect of the clearing representations. These possibilities established, it was said, a lack of reasonable care.
However, the fact precautions might have been taken to avoid the risk is not enough on its own to establish a lack of reasonable care: the burden of the relevant precaution must be weighed against most importantly the magnitude of the risk in question: See Fleming, J G The Law of Torts 9th ed LBC, Sydney, 1998, at 127, 130 ‑ 131. Mr Grainger had the letter of approval to clear, and the mud map, to which I have referred. Without more evidence as to the reasonableness of these bases for Mr Grainger's belief in the accuracy of his representations, I would not be prepared to conclude that a lack of reasonable care has been shown.
In any event, it seems to me that the claim to an indemnity fails on another ground. I have already referred to the representation as to professional indemnity insurance cover that Mr Grainger acted upon. Exposure to the risk of liability to his employer for breach of the implied term contended for, where his employer would not seek to have the loss from such liability met by the insurer without any question of subrogation arising, rather than to have it met by the employee, would seem to me to be a form of loss brought about by that impugned conduct.
Wesfarmers Dalgety's, Dalgety's and Primary Industry Bank's claims in respect of the financing
These are in respect of the indebtedness of Ruth and Gale Williams arising under the 28 July 1998 financing arrangements previously described, as amended. Supporting evidence for those parts of the pleaded basis for these claims that were not admitted by Ruth and Gale Williams was in documentary form that was not contested.
The evidence establishes the indebtedness as to Ruth is in her own right as well as trustee of the Brown Trust, and while Gale's liability is as guarantor subject to a limit (Exhibit 1(2)). The indebtedness and on some occasions that limit fluctuated in accordance with amendments of the original financial arrangements, the last of which was by letter dated 4 January 2000 (Exhibits 1(3), 1(7), 1(9), 1(10), 1(12), 1(13), and 1(14)), as I have earlier indicated.
The evidence also establishes that Ruth and Gale Williams mortgaged their Lake Magenta property in favour of Wesfarmers Dalgety to secure their obligations under the financing arrangements as amended (Exhibit 1(4)).
Ruth and Gale Williams by their pleadings admit that they have not repaid the seasonal facility under the financing arrangements as amended. By virtue of the mortgage, this was an event of default for its purposes, which permitted Wesfarmers Dalgety by notice to the mortgagor to declare any security for the repayment of moneys secured to be immediately enforceable and all secured moneys to be immediately due and payable (Exhibit 1(4), cl 5.2(a) and cl 5.2(b), read with cl 5.1 on events of default and cl 1.1 on secured moneys). As I have previously indicated, on 17 August 2000 a notice in writing from the plaintiffs was issued to the Williams (Exhibit 1(15); and witness statement of Ruth Williams, Exhibit 38, par 65). This notice among other things declared the mortgage to be immediately enforceable and the moneys advanced under the seasonal facility and the term loan to be immediately due and payable, and, under the mortgage, the terms of the seasonal facility and the term loan and the $750,000 guarantee, demanded that Gale Williams pay the plaintiffs the moneys due by Ruth Williams pursuant to the seasonal facility and the term loan.
By virtue of a term of the mortgage (Exhibit 1(4), cl 7.4) a certificate signed by an officer of Wesfarmers Dalgety stating the amount of the secured moneys under the mortgage due and payable is, in the absence of manifest error, conclusive evidence of that amount as at the date stated on the certificate or failing that as at the date of the certificate unless the contrary is proved. Mr Ellwood, national manager, credit, for Landmark Finance Operations Ltd to whom I have previously referred was called as a witness by Wesfarmers Dalgety to produce a certificate dated 30 June 2004 (Exhibit 2) signed by him. There was no cross‑examination on this certificate, and counsel for the Williams family in his written closing submissions appears to concede that it correctly shows the total indebtedness of Gale and Ruth Williams as at 1 June 2004.
The certificate is that both Ruth and Gale Williams were indebted to Wesfarmers Dalgety (in their current names, as I indicated them at the beginning of these reasons) in the following amounts:
"$903,286.73 and interest thereon at 11.25% per annum from 1 June 2004;
$208,000 and interest thereon at 9.75% per annum from 1 June 2004 to 30 June 2004".
The different interest rates appear to reflect the difference between the interest rate applicable for the month of June 2004 to moneys due under the seasonal facility (the higher rate) and under the term loan (the lower rate): see the 28 July 1998 financing arrangements as (Exhibit 1(2)), as amended, read with General Terms and Conditions (Exhibit 1(11)) forming part of the 28 July 1998 financing arrangements as amended, cl D). By the 28 July financing arrangements as amended, these rates are tied to the 30 day bank bill swap bid rate as published in the Australian Financial Review.
It follows that the plaintiffs are entitled to judgment in the amount shown in the certificate plus interest from 30 June 2004 calculated as the 28 July 1998 financing arrangements read, with the General Terms and Conditions, provided.
The Grainger's damages under CIV 2339 of 2002
As I have previously indicated, this matter is dealt with in a separate judgment, meant to be read with this one.
Final orders
I will hear from the parties as to the detailed terms of the final orders to be made to give effect to these reasons.
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