WG Riverview Pty Ltd v Ireland

[2019] NSWDC 79

District Court

New South Wales

Medium Neutral Citation:	WG Riverview Pty Ltd v Ireland [2019] NSWDC 79
Hearing dates:	18 – 20 February 2019
Date of orders:	26 March 2019
Decision date:	26 March 2019
Jurisdiction:	Civil
Before:	Sidis ADCJ
Decision:	1. Verdict and judgment for the plaintiff in the sum of $200,191.88 2. The defendants are to pay the plaintiff’s costs of the proceedings. This order is suspended for seven days to allow the parties, within that period, to list the matter of costs for further argument 3. The exhibits will be retained for 28 days
Catchwords:	COMMERCIAL – False representations – Misleading conduct – Disclaimer clause – Assessment of damages – Mitigation – Contingencies
Legislation Cited:	Australian Consumer Law ss 18, 236 Competition and Consumer Act 2010 (Cth) s 2
Cases Cited:	Benlist Pty Ltd v Olivetti Australia Ltd 1990 ATPR 41-043 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 Re Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] 2 FCR 82
Texts Cited:	The Laws of Australia: Contract (2003) Prof Davis and Dr Seddon Cheshire & Fifoot: The Law of Contract, 8th Aust Ed, Dr Seddon & Prof. Ellinghaus
Category:	Principal judgment
Parties:	WG Riverview Pty Limited (Plaintiff) Corey Dean Ireland & Prudence Jane Ireland (Defendants)
Representation:	Counsel: G E Babe (for the Plaintiff) D-L Del Monte (for the Defendants)   Solicitors: Kent McRae Walsh & Blair Lawyers
File Number(s):	2017/00121859
Publication restriction:	N/A

Judgment

1. This matter involved the question of whether the plaintiff was misled by representations made by the defendants concerning a bull that was listed for sale at auction in a catalogue issued by them in August 2015. The plaintiff’s claim was brought under s 18 of the Australian Consumer Law.

2. The plaintiff’s pleading of reliance on the representations was challenged by the defendants on the basis that it was not reasonable for it to have done so in the circumstances of the sale. Issues of proof, mitigation and assessment of loss and damage were also raised.

3. Evidence for the plaintiff was given by one of its principals, Mr William Graham, a veterinarian specialising in large animals and a breeder of Angus cattle of substantial experience. Evidence for the defendants was given by Mr Corey Ireland, also a breeder of Angus cattle of substantial experience.

4. Both the plaintiff and the defendants ran their breeding operations on a number of large properties in southern western New South Wales. They bred Angus cattle for stud and for sale in the meat market; the latter being referred to as “commercial cattle”.

5. The dispute concerned the sale by the defendants to the plaintiff on 11 September 2015 of a bull listed as lot 3 and identified in the sale catalogue as “Irelands Kelleher K34” (K34) for the sum of $18,000.

The representation

6. K34 was listed in the auction catalogue as the progeny of the sire SJKF223 Granite Ridge Thomas F223 (Granite Ridge Thomas) and of the dam VICB107 Irelands Lowan B107 (B107). DNA testing undertaken at the request of the plaintiff after the sale established that Granite Ridge Thomas was not the sire of K34.

7. The practice in the stud breeding industry was to register breeding cattle with the Angus Society of Australia where a number of registers were maintained. The plaintiff and the defendants were members of the Angus Society.

8. The Angus Society maintained a register of cattle at various levels. K34 was listed as “HBR” in the defendants’ auction catalogue, indicating that he was a bull registered in the Herd Book Register as the progeny of the Granite Ridge Thomas and B107. This was the highest level of registration available on the Angus Society’s various registers. Another level of registration for breeding cattle was “APR”, or Angus Performance Register. Breeding cattle were required to be registered with the Angus Society annually, on either the HB or AP registers. The “ACR” or Angus Commercial Register related to steers and heifers that were sold for commercial purposes, that is, for the meat market, and not for breeding purposes. The base APR was available for cattle with Angus parentage that had no recorded sire and therefore could not be registered as stud animals.

9. Mr Graham said the plaintiff purchased K34 for breeding purposes because he fitted well in to the plaintiff’s breeding program.

10. Of great significance to his decision to proceed with the purchase was the representation that K34 was listed as HBR because he was the progeny of Granite Ridge Thomas and B107, indicating that, if joined with registered breeding females, his progeny would be registrable as stud or breeding cattle and therefore of higher market value than commercial cattle. In order to trade K34’s progeny as breeding cattle, it was necessary for the plaintiff to be able to establish his parentage.

11. The Angus Society undertook DNA testing of a sample of tail hair taken from K34 on 22 October 2015. The Angus Society advised that Granite Ridge Thomas was not K34’s sire.

12. The Angus Society undertook further DNA testing of two samples. One was taken independently of the plaintiff from K34 and the other from samples of tail hair taken by Mr Ireland of a calf, said to be K34, at the time of vaccination in May 2014.

13. The Angus Society advised the plaintiff and the defendants by email dated 16 December 2015 (Exhibit A.69) that the sample provided by the plaintiff excluded Granite Ridge Thomas as the sire. The sample provided by the defendants confirmed Granite Ridge Thomas as the sire but:

Both profiles are completely different, therefore the two samples submitted are not from the same animal.

14. Both samples confirmed B107 as the dam.

15. The result was that the identity of the sire of K34 could not be confirmed and he was to be excluded from the HBR pending “verification of parentage”. This verification has never been available, although the evidence of Mr Parnell, Chief Executive Officer of the Angus Society, confirmed that K34 remained on the register. This was a mistake, he said, that would be rectified by his exclusion. There was no doubt in Mr Parnell’s mind that, without a registered sire, neither s K34 nor his progeny was eligible for registration as stud or breeding cattle.

16. There was no dispute between the parties concerning any of this material. It compelled a finding that the auction catalogue contained a representation that was wrong. The bull sold as K34 was incorrectly described in the catalogue as the progeny of Granite Ridge Thomas and the plaintiff did not receive, as a result of the sale, a bull with a pedigree that would allow its use for breeding purposes.

Reliance

17. It was clear from his evidence that Mr Graham relied on the representation concerning the sire of K34 and that he committed the plaintiff to the purchase of that bull in the honest belief that Granite Ridge Thomas was his sire.

18. The defendants’ position on this issue was that it was not reasonable for Mr Graham to have relied on the stated pedigree when practices within the cattle breeding industry at the time of this sale were such that an experienced breeder would know that there were inherent risks in the purchase of stud bulls and that Mr Graham purchased K34 knowing of and accepting these risks.

19. Mr Graham was questioned at length concerning his knowledge of these allegedly inherent risks. He agreed that the catalogue stated that K34 had not been tested for a number of potential genetic mutations that involved the risk of progeny that was deformed or did not survive.

20. He acknowledged that, at the time of this auction sale in 2015, it was not the practice amongst breeders to provide DNA evidence to confirm parentage of stud cattle offered for sale. Nor was it the practice to provide DNA evidence to the Angus Society to support applications for registration of stud cattle.

21. He acknowledged that it was known that errors at times were made in breeders’ record keeping and in information provided to the Angus Society for the purpose of registration of cattle on the Society’s various registers. Inaccuracies in the plaintiff’s own records were put to him and acknowledged. It was apparent from Mr Parnell’s evidence that the Angus Society’s registers were not error free.

22. In acknowledging the risks associated with the purchase of stud bulls, Mr Graham said that he took due care, to the extent that he was able, in the selection of K34. He received the defendants’ auction catalogue 10 to 14 days prior to the date appointed for the auction, 11 September 2015. He viewed the catalogue having regard to his particular interest and expertise in genomics and the genetics of cattle. The features that attracted him to the bull named as K34 as an addition to the plaintiff’s breeding program were:

1. The named sire and grandsire. The plaintiff had, prior to the sale, purchased straws of semen drawn from both Granite Ridge Thomas and the named grandsire, Thomas Grand Up, that were used through artificial insemination in its stud breeding program with no indication of genetic mutation and with otherwise satisfactory results.

2. The dam named in the catalogue, B107, was compatible with the line of cattle bred by the plaintiff.

3. The “DD2%” test result indicated to him that genetic deformities resulting from past breeding practices were unlikely to occur.

4. Other features detailed in the catalogue, such as IMF, or marbling, and EMA, eye muscle area were satisfactory and of particular significance.

5. On 11 September 2015 he attended the defendants’ property and, in the company of Mr Bruce, stock and station agent, he inspected the bull identified as K34. He noted that the bull was structurally sound and quiet.

6. Granite Ridge Thomas was available for inspection on the day of the auction and Mr Graham took the opportunity to do so prior to the sale.

7. His physical inspection of K34 on the day of sale, coupled with this knowledge of the satisfactory breeding results from K34’s sire and grandsire persuaded him that the risks of generic mutation and infertility were minimal.

23. The plaintiff therefore contended that Mr Graham was as thorough as it was possible to be in assessing K34 prior to the purchase.

24. Mr Graham maintained that from past experience, he regarded the defendants as accomplished and reliable breeders. He therefore was prepared to accept without question their representations concerning K34’s parentage. In fact, the evidence made it clear that he had no option but to do so. He received the catalogue only 10 – 14 days before the auction sale. It would have taken six weeks to obtain the results of a DNA test.

25. Mr Ireland’s evidence indicated that reliance on the defendants’ reputation was well placed. He described the defendants’ normal breeding practices. Granite Ridge Thomas, he said, would have been pastured with about 40 stud breeding cows in a secure paddock with a separate paddock between them and any other bull. Fences on the paddock were checked at intervals of one to two days and any damage to fencing repaired on the day it was noted.

26. Mr Ireland was confident that the records he maintained of his breeding stock were accurate and in good order.

27. Exhibit 6 was an extract from the defendants’ joining book that recorded the autumn joining in 2013. It recorded that B107 was included in those pastured with Granite Ridge Thomas and was tested as pregnant following that pasturing. Mr Ireland’s evidence was that any breach of the fencing by an intruding bull would have been noted in the joining book. He recalled no unusual circumstances during the period when Granite Ridge Thomas was pastured with these cattle during the autumn joining period in 2013.

28. The progeny that resulted from the autumn joining was vaccinated in about May 2014. At the same time samples of tail hair were taken for future DNA testing. Mr Ireland explained that, at this time practices concerning DNA testing were developing and the industry was working towards embracing this technology. He personally did not take the samples. This was done by his employees but he was confident that due care was taken to ensure each sample was properly marked and identified to the bull from which it was taken.

29. His evidence concerning the circumstances in which he sent the sample, identified as that taken from K34 to the Angus Society for testing, was somewhat confused. He initially said it was forwarded at the request of the Angus Society. He subsequently explained that it was his practice, as a service to purchasers of the defendants’ stud bulls, to confirm parentage by providing them with the results of DNA tests after the sale.

30. Questioned on the matter of why this testing was done after rather than before the sale, he explained that, in 2015, the cost of each test was $180 and it was not financially viable to test every bull put to market when it was not known which of them would be purchased as stud bulls. The samples that were sent for testing after the sale was completed were limited to those sold for breeding purposes.

31. Mr Ireland was unable to explain how the error in relation to K34 occurred. Although he initially stated that the Angus Society provided the information contained in the auction catalogue concerning the parentage of each individual animal, it became apparent that the defendants’ were the source of the Society’s information. Mr Ireland said he checked and confirmed the correctness of the information that was supplied. The mistake could not therefore be attributed to the Angus Society.

Findings of fact

32. The auction catalogue incorrectly represented that Granite Ridge Thomas was the sire of K34.

33. Mr Graham committed the plaintiff to the purchase of a bull described as the progeny of Granite Ridge Thomas when it was not.

34. There was no dishonest conduct on the part of the defendants in making the false representation. Both the plaintiff and the defendants entered into the transaction in good faith in the understanding that K34 was sired by Granite Ridge Thomas.

35. It was not possible in the time between receipt of the auction catalogue and the date of sale for the plaintiff to obtain the results of DNA testing.

36. Mr Graham’s past experience of breeding through artificial insemination caused him to place particular reliance on the identities of Granite Ridge Thomas and of Thomas Grand Up and influenced his assessment of the risks of genetic mutation and infertility.

37. The most important factor in his decision to commit the plaintiff to the purchase of K34 was that Granite Ridge Thomas and B107 were registered as stud cattle. It was the basis upon which K34 had been accepted for registration in the Herd Book. The result was that K34’s progeny should have been similarly registrable and of greater value than commercial cattle.

38. The defendants adopted commendable practices in taking care to ensure that fences and appropriate protection against intruding bulls were maintained. DNA testing established that a bull was the result of the autumn 2013 joining between Granite Ridge Thomas and B107, making it improbable that a breach of fencing in autumn 2013 was the cause of the error.

39. The plaintiff did not receive the bull that was the result of the autumn 2013 joining. K34, being the bull received by the plaintiff as the result of the sale, was not the bull that the defendants thought they were selling and not that which the plaintiff thought it was buying.

40. The auction catalogue misrepresented that Granite Ridge Thomas sired the bull sold as K34. The representation was false and misleading and it misled the plaintiff.

The Law

41. S 2 of the Competition and Consumer Act 2010 (Cth) provides:

Object of this Act

The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. 

42. Schedule 2 to the Competition and Consumer Act contains the provisions of the Australian Consumer Law. S 18(1) of the Australian Consumer Law provides:

Misleading or deceptive conduct 

(1)  A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 

43. Thus, the issues in this case must be decided in the context of legislation designed to impose a standard of business practice in the conduct of commercial transactions and to afford protection to consumers who suffer damage as a result of conduct that fails to meet that standard.

44. I concluded that the appropriate way in which to approach a claim made under s 18(1) of the ACL was not whether it was reasonable, having regard to the practices within the cattle breeding industry in 2015, for the plaintiff to rely on an established and reputable breeding business to adopt management practices that avoided the risk that something would go wrong in a manner that was so serious that it sold a different bull to that for which it bargained. I preferred to address the question of whether it was reasonable to allow the plaintiff the protection afforded to consumers by s 18(1) in the circumstances in which the transaction at issue occurred.

45. The answer to this question required consideration of authority from which I noted that the outcomes in decided cases concerning the operation of s 18(1) and its predecessor s 52 of the Trade Practices Act 1974 depended essentially upon the facts in each case and were of little assistance. The principles established by these earlier decisions did, however, provide some guidance.

46. Those principles of particular assistance were:

1. Misleading and deceptive conduct has been described as that which is a “real or not remote chance or possibility regardless of whether it is less or more than 50 per cent”. … The test is objective. Bowen CJ, Lockhart, Fitzgerald JJ, Re Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] 2 FCR 82 at 87.

2. The intent of the maker of the statement is irrelevant to the issue of whether the statement was misleading or deceptive. The question is whether the statement conveyed or contained a misrepresentation. Re Global Sportsman at 87.

3. The question of whether the receiver of the statement was actuated by the misrepresentation is a question of fact: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25, French CJ at [31].

4. The issue of causation is to be determined by reference to the conduct the maker of the statement in relation to the receiver. The sophistication and experience of the receiver of the statement may therefore be relevant. In Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 the plaintiffs were described by the majority as “intelligent, shrewd and self-reliant”: Gleeson CJ, Hayne, Heydon at [41].

5. Justice McHugh, dissenting, at [150] in Butcher listed the following principles:

1. The complainant must rely on the representation or conduct.

2. If a material representation is made (or if certain conduct occurs) which is calculated to induce the complainant to enter into a contract and that person in fact enters into the contract, an inference arises that the person was induced to do so by the representation or the conduct.

3. The inference may be rebutted by showing, for example, that the complainant, before entering into the contract, had actual knowledge of the true facts and knew them to be true or that the complainant did not rely on the representation or the conduct.

4. The representation or conduct need not be the sole inducement. It is sufficient that it played some part, even if only a minor part, in contributing to the formation of the contract.

Findings on Liability

47. These principles established that there was no defence to the claim that the catalogue misrepresented that Granite Ridge Thomas sired K34. Nor could the fact that the error was inadvertent be relied upon by way of defence.

48. The defendants’ contention that the representation should be tested against whether Mr Ireland had reasonable grounds for making it was inconsistent with established authority to the effect that the issue of whether the representation was false was a question of fact and that the belief or intent of the maker was irrelevant.

47. Mr Graham was experienced in the breeding of stud bulls to the point where he might fall into the category of those who are “intelligent, shrewd and self-reliant”. There were a number of distinctions between his situation in relation to the defendants and those of the purchasers in Butcher. The misrepresentation came from the defendants directly and not from an agent. The defendants were at all times in control of the cattle that were offered for sale.

48. Further, the plaintiffs in Butcher had the opportunity, if they chose to do so, to check the information concerning title boundaries set out in the agent’s brochure. It was accepted that the plaintiff in this case did not have the opportunity to check and confirm K34’s parentage prior to the sale. His only source of comfort concerning the accuracy of the information going to parentage was the reputation of the makers of the representation. Mr Graham had dealt with the defendants on prior occasions and had been given no reason to doubt the integrity of the information they provided. The defendants promoted themselves as practitioners with “31 years of proven breeding” (Exhibit A.18).

49. Mr Graham freely acknowledged the risks inherent in the purchase of stud cattle. The risks addressed in the course of the hearing were: low fertility, genetic mutation and parentage. His reliance upon the representation that Granite Ridge Thomas was the sire was clearly established by his evidence of the manner in which he addressed the risks of fertility and mutation by reference to past experience of breeding with Granite Ridge Thomas and Thomas Grand Up. He undertook physical inspections of K34 and Granite Ridge Thomas prior to purchase.

50. I did not accept the contention that the plaintiff was obliged to inform the defendants of its purpose in purchasing K34. The information contained in the catalogue concerning registration in the Herd Book and parentage was clearly designed to attract practitioners in the Angus breeding industry. Further it was apparent that Mr Ireland was fully aware of the purpose of the plaintiff’s purchase when, unsolicited, he arranged DNA testing because K34 was sold as a stud animal.

51. Nor did I accept that it was necessary that the plaintiff provide evidence of what it would have done had it not purchased K34. The plaintiff’s breeding business was substantial. There was evidence of options available to it by using existing or leased bulls or reserves of frozen straws for artificial insemination. I considered it improbable therefore, that the absence of one bull would have the cost the plaintiff the productive capacity of this particular mob of cows in the 2015/2016 breeding season.

52. The unavoidable finding therefore, was that the plaintiff relied on the representation concerning parentage both in assessing breeding risks and in accepting that the parentage described would permit K34’s progeny to be registered with the Angus Society and thereby command higher sales values than those of commercial cattle.

53. In this respect I considered that Mr Graham acted reasonably.

The Disclaimer

56. The defendants relied on a disclaimer in the auction catalogue, contending that Mr Graham’s acknowledgment that he was aware of its content, when coupled with the claimed inherent risks involved in the purchase of a bull at auction, should be accepted as evidence that he did not rely on the representations contained in the catalogue in deciding to purchase K34.

57. The auction catalogue included the following paragraph:

DISCLAIMER

Whilst all due care and attention has been paid to accuracy in the compilation of this catalogue and the information neither the vendors, selling agents or representatives thereof assume any responsibility what so ever for the correctness, use or interpretation of the information of animals included herein.

58. Again, the question of the extent to which a disclaimer will afford protection to the maker of a misleading statement depends very much on the facts and the circumstances of the parties involved.

59. Justice McHugh and Justice Kirby in separate dissenting judgments in Butcher dealt at some length with the competing arguments concerning disclaimers.

60. At [152] Justice McHugh said a disclaimer could not be ignored when determining whether conduct was misleading in nature and he provided the following extract from Benlist Pty Ltd v Olivetti Australia Pty Ltd 1990 ATPR 41-043 at 51,590:

It has been held on many occasions that the perpetrator of misleading conduct cannot, by resorting to [a disclaimer] clause, evade the operation of the [Act].  Of course, if the clause actually has the effect [of] erasing whatever is misleading in the conduct, the clause will be effective, not by any independent force of its own, but by actually modifying the conduct. However, I should think it would only be in rare cases that a formal disclaimer would have that effect. (emphasis added)

61. Justice Kirby, at [219 – 220] provided the following text book guidance:

[219] Thus, Professor Davis and Dr Seddon in their new compilation The Laws of Australia: Contract (2003), drawing on a painstaking analysis of all the cases, say: 

“The courts have been very consistent in ruling that attempts to exclude liability for breach of s 52 of the Trade Practices Act 1974 (Cth), or its Fair Trading Act equivalents, will be unsuccessful. It is, of course, possible to qualify a statement so that it will not be misleading, but this must be done as part of the statement and not in some separate contractual clause." 

In short, the qualification must make any exemption very obvious to those unfamiliar with it. The more harsh the exemption, the stricter has been the approach of the courts to the duty of the party that seeks to rely upon it to draw it to specific notice. The finer the "fine print", the more readily will a court draw a conclusion that insufficient notice has been given, so as to take the provision outside the operation of an effective exemption.”

[220]   In the Australian edition of Cheshire and Fifoot's Law of Contract, 8th Aust Ed, (2002) Dr Seddon and Professor Ellinghaus reinforce these conclusions: 

"[T]he courts have consistently argued that an exemption or exclusion clause in no way diminishes the stark reality of a breach of s 52 or its equivalents, namely, that the representee was misled ...

It may be possible for an exclusion clause to remove the misleading effect of earlier conduct but the chances of a court being persuaded of this are very small indeed ..

. 

The presence of such a clause may in fact exacerbate the misleading nature of the impugned conduct ... 

In the face of this failure of exemption clauses, ingenious arguments have been employed to try to persuade courts to give effect to such clauses ... But to no avail."

62. Mr Ireland said the Angus Society provided the words used in this disclaimer and they were commonly included in sales catalogues issued by those in the breeding industry. Indeed the plaintiff used similar, but not identical, wording in its own catalogue, issued prior to its auction sale on 30 September 2015 (Exhibit 3A).

63. The defendants again relied on the majority decision in Butcher in support of this argument. I have already noted the distinctions to be drawn between the facts in that case and those encountered by the parties in the current matter. I also noted the concession made in the defendants’ written submissions at [13] that in general a disclaimer cannot be relied upon to exclude liability for misleading conduct.

64. The wording used in the defendants’ catalogue was somewhat ungrammatical but, in appropriate circumstances, it might provide them with some limited protection against claims. I could not accept that they should be permitted to rely upon the disclaimer in the circumstances of this matter. The misleading conduct complained of by the plaintiff went beyond aspects of misdescription that it could have checked pre-purchase. They extended to the description of a bull that was not the bull sold to the purchaser.

65. The disclaimers that were accepted as providing protection against misrepresentation were:

1. Prominent and not in small print; or

2. Not expressed in general terms but specific as to the matters to be excluded from liability.

66. The disclaimer that appeared in the defendants’ catalogue was in a satisfactorily prominent position but it did meet the second requirement. It did not expressly disclaim any assurance concerning the parentage of the bulls offered for sale.

67. I concluded that the disclaimer did not assist them in this case.

68. I decided that the plaintiff was entitled to a verdict.

Damage and Loss

69. The Australian Consumer Law deals with damages by providing:

236   Actions for damages

(1)  If: 

(a)  a person (the claimant) suffers loss or damage because of the conduct of another person, and 

(b)  the conduct contravened a provision of Chapter 2 or 3; 

the claimant may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

70. Between October 2015 and January 2016, K34 was joined with breeding females at various properties operated by the plaintiff. The joining was productive and the plaintiff claimed that it produced 78 calves, 74 delivered live, many of which, in ordinary circumstances, would have been registered as stud cattle. The deregistration of K34 meant that it was not possible to register the progeny as stud cattle. Only the registers relating to commercial cattle were available and the progeny was sold as such.

71. The plaintiff retained K34 and continued to join him productively with females bred commercially, although, Mr Graham said, he had recently broken down.

72. I was initially concerned to ensure that the appropriate measure of damages was applied to the assessment of the plaintiff’s losses but I decided that there was little, if any, difference in those losses whether the contractual or tortious standard was applied. I accepted the claim of loss of one season’s income from the sale of stud or breeding cattle was reasonable because the purpose of the acquisition was to acquire an animal that generated a certain level of income.

73. The defendants did, however, challenge the claim of loss on a number of grounds.

Mitigation

74. The defendants claimed that the plaintiff failed to mitigate its loss when K34 was joined with 78 heifers shortly after he arrived at the plaintiff’s property. This, the defendants claimed, represented a failure to mitigate in two respects. The first was the speed with which K34 was introduced to the breeding cows. The second was the number of cows with which he was joined.

75. The claim of failure to mitigate fell away when Mr Ireland conceded that, while it was appropriate to allow a period of time to allow a bull to settle in, provided he was appropriately conditioned, a bull purchased in mid-September could be put to cows during the joining season in October and the period of time between the delivery of K34 and joining could not be criticised.

76. As to the numbers of cows with which a new bull might be joined, Mr Ireland said it was his practice to use only 15 – 20 cows to minimise the financial loss if it transpired that the bull did not perform. He agreed in cross-examination that practices differ between individual breeders and each had his or her own opinion on what was the right thing for their own enterprise.

77. The suggestion that the defendants made an offer of reparation that was ignored by the plaintiff was of no consequence when it transpired that the offer was made in December 2016, long after the breeding between the bull and the plaintiff’s cows was undertaken between October 2015 and January 2016. Mr Graham’s evidence was that, until the end of January 2016, Mr Ireland had been assuring him the issue of the sire of K34 would be resolved satisfactorily.

78. The defence of failure to mitigate therefore failed.

Speculation/Contingencies

79. More significantly, the defendants contended that the propensity for error in the plaintiff’s record keeping, of the Angus Society, and of the stud breeding industry generally was such that the number of beasts claimed to have been sired by K34 was not at all reliable and that any assessment of damages would be speculative.

80. This contention was based on evidence of Mr Graham in cross-examination that established discrepancies in the lists he prepared purporting to represent the progeny of K34 (Ex A.90 - 91.4). The Angus Society’s records indicated that 2 females and one male were on the HBR as the progeny of K34 but not included in Mr Graham’s list. Four females on the plaintiff’s list were on the APR as the progeny of K34.

81. Mr Graham explained that the plaintiff’s business involved the registration of over 60,000 animals annually and that, with a large staff turnover, errors did occur.

82. As to the Angus Society’s register, the defendants contended that the records indicated that K34’s progeny was in fact registrable and that therefore no loss could be established. I did not accept this contention. Mr Parnell confirmed that the heifers did not qualify for registration as APR females because their sire was not registrable. His explanation was that the four heifers involved were either incorrectly registered as APR females or should more properly have been registered as base APR females. The four females that were registered as APR were withdrawn from the claim

83. Thus, these specific examples of inaccuracy were explained. I harboured some concerns regarding the propensity for error within the industry to the point where I expressed some frustration and asked, hypothetically, why breeders bothered to consult the Angus Society’s registers since they appeared to be particularly error prone. I considered whether, in these circumstances, it would be appropriate to apply a contingency factor to the figures provided by the plaintiff to allow for errors and omissions.

84. I concluded that this was not necessary for several reasons. While there were acknowledged errors in the materials produced for the purpose of the hearing, the business documents concerning the subsequent sale of the cattle that supported the plaintiff’s claim were not challenged. The four heifers, listed as M604, M878, M884 and M895, were withdrawn from the plaintiff’s claim, notwithstanding the evidence that they were not registrable. It was not suggested that Mr Graham deliberately inflated or overstated his figures or his claims of loss, and the numbers involved in the apparent errors, in the context of the numbers of cattle dealt with by the plaintiff and the industry generally, were insignificant.

85. Further, the claim did not encompass all of the 78 animals delivered as a result of K34’s efforts. It was reduced to 28 bulls and 25 females, after four stillborn males were excluded and a number of bulls and females were culled because they were not suitable for sale as stud or breeding cattle. As noted, a further four females were withdrawn from the claim during the hearing.

86. The defendants also pointed to the absence of evidence of what might have been the return to the plaintiff if another bull had been joined in lieu of K34. There was some merit in this argument when Mr Graham acknowledged that K34 proved to be very productive but there was evidence that, if the initial joining did not result in pregnancies, back up methods were available either through artificial insemination or the introduction of a second bull. In K34’s case, neither was necessary.

87. The defendants raised the issue of whether, if registered as base APR or commercial cattle, a higher price might be secured on their sale. They offered no evidence to support this proposition and I therefore took no account of it.

88. K34 continued to demonstrate high productivity in servicing commercial cows for three years and in providing the plaintiff with a return, although at a lower level than anticipated. The defendants suggested that this should influence the assessment of damages but did not make clear how. The plaintiff did not claim for loss of income in any subsequent year. Its claim for the 2015/2016 season was reduced by the income it earned from the sales of K34’s progeny as commercial cattle. I would only entertain any claim for discount in respect of income received in subsequent years if losses for those years were claimed.

89. I was satisfied that no discount for contingencies was necessary.

Assessment

90. I was grateful to the parties for reaching agreement on the difference in value between stud and commercial cattle. Their agreement resulted in figures of $5,513 for 28 males and $2,076 for 25 females. They also agreed that the difference between the sum paid for K34 and his value as a commercial stud bull was $13,154. This resulted in figures of $154,364 for males, $51,900 for females which, together with $13,154, totalled $219,418.

91. The parties also agreed that, from this total, it would be necessary to deduct costs, referred to as marginal costs, attendant upon the breeding and sales of stud cattle that did not apply in the case of commercial cattle. There remained a disagreement concerning the precise figure to be applied to females concerning which details were set out in Exhibit 8. I was invited to check the transcript, when it became available, to determine precisely which of the costs described by Mr Graham applied to females.

92. Mr Graham’s evidence appeared at pages 25 and 26 of the transcript. The marginal costs that he described were:

Registration and breed plan fees paid to Angus Australia – $25 per head

Agent’s commission - 6% of the sale price

Sales catalogues and advertising – 2% of the sale price

Veterinarian’s fee for bull checking - $50 per bull

93. The result was that the veterinarian’s fee should be excluded from the marginal costs for females because it applied to bulls only, so that the costs per head for females amounted $191.08 and for males $516.04. The total of these costs was $19,226.12.

94. In summary, my assessment of the plaintiff’s loss as result of the defendants’ misleading conduct is:

Overpayment for K34	$13,154.00
Economic loss in relation to Calves sired by K34	$206,264.00
219,418.00
Marginal costs to be deducted	19,226.12
Assessed loss	$200,191.88

ORDERS

95. Verdict and judgment for the plaintiff in the sum of $200,191.88.

96. The defendants are to pay the plaintiff’s costs of the proceedings. This order is suspended for seven days to allow the parties, within that period, to list the matter of costs for further argument.

97. The exhibits will be retained for 28 days.

98. My reasons are published.

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Decision last updated: 27 March 2019