Exceed Dairies Limited v Whyte
[2012] NZHC 1303
•12 June 2012
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2010-425-000649 [2012] NZHC 1303
BETWEEN EXCEED DAIRIES LIMITED Plaintiff
ANDROGER LAURENCE WHYTE AND DIANE GRACE WHYTE
First Defendants
ANDROGER LAURENCE WHYTE AND L W NOMINEES LIMITED AS TRUSTEES OF THE DACRE TRUST AND DIANE GRACE WHYTE AND L W NOMINEES LIMITED AS TRUSTEES OF THE WOODLANDS TRUST
Second Defendants
ANDWILLABY FARM LIMITED Third Defendant
ANDESSENTIAL NUTRITION LIMITED Third Party
Hearing: 2, 3, 4, 7, 8, 9 and 10 May 2012
Appearances: R G Smedley for Plaintiff and Third Party
A D G Hitchcock and B C O'Malley for First, Second and Third
Defendants
Judgment: 12 June 2012
JUDGMENT OF FOGARTY J
This judgment was delivered by Justice Fogarty on
12 June 2012 at 11.00 a.m., pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors:
Anthony Harper Lawyers, PO Box 2646, Christchurch
AWS Legal, PO Box 1207, Invercargill
EXCEED DAIRIES LIMITED V WHYTE HC INV CIV-2010-425-000649 [12 June 2012]
Introduction
[1] This is a dairy farm dispute. The dispute is set over four dairying properties: Dacre, Longbush, Hillbyrne and Glenham.
[2] Dacre, Longbush and Hillbyrne are owned by the Whyte family. Mr and Mrs Roger and Diane Whyte farm Dacre for the Dacre and Woodlands trusts. Longbush is a run-off property. It is owned by Willaby Farm Limited. Hillbyrne is another separate dairy farm. It is sufficient in this judgment to refer to all these properties as owned by the Whytes.
[3] Dacre is the Whytes home farm, where they have their family home. Longbush is used for wintering cows and also during the other months of the year for running dry cows and raising heifers. Glenham is a wintering block which was leased by Exceed Dairies Ltd (“Exceed”).
[4] The Whytes have other farms. They are very successful farmers. They are consistently in the top ten percentile of Southland farmers for production of kilograms of milk solids (“kgMS”).
[5] Because of their business interests, in addition to farming Dacre and Hillbyrne, Mr and Mrs Whyte decided to lease Dacre and put a sharemilker on Hillbyrne.
[6] Mr Nigel van Dorsser is a consultant within the dairy industry, with 25 years’ experience. He owns a company, Essential Nutrition Ltd (“ENL”). ENL develops and supplies nutritional supplements for dairy cows and farm management blue- prints. He also has Exceed. Exceed was recently formed with the intention it become a dairying farming company.
[7] Mr Roger Whyte and Mr van Dorsser were introduced. They decided to enter into agreements whereby Exceed would be a sharemilker of the Hillbyrne property
and, so Mr Whyte thought, ENL would be the lessee of the Dacre property. Mr van
Dorsser did not appear to commit to Exceed or ENL.
[8] Sharemilking contracts are commonplace in the dairy industry. And there are typical industry arrangements which provide a standard for any particular sharemilking agreement. It is unusual, however, to lease a dairy farm, including all farm plant and machinery and the lessor’s dairy herd.
[9] This dispute arises out of an intention of Mr Whyte and Mr van Dorsser that there be a lease of Dacre and its run-off, Longbush, of the plant and machinery and of 400 milking cows, during the season 1 June 2008 to the end of May 2009.
Preliminary issue as to the status of the Disputes Tribunal decision
[10] In its decision, dated 18 December 2009, the Tribunal was considering whether Exceed should be indemnified by Mr and Mrs Whyte in the sum of
$3,088.12.1 This was an invoice from a veterinary surgeon for hoof repairs to cows.
[11] In the course of her reasoning, the Referee determined that there was no lease between Exceed and the Whytes at the time that Exceed incurred farm expenses. In addition, Exceed had to show that there was a contract in force which provided for all farm expenses to be paid for by the Whytes.
[12] Once Exceed succeeded on this issue the onus shifted to the Whytes to prove that Exceed was negligent in providing farm services to the Whytes. However, the Whytes was unable to prove on the balance of probabilities that Exceed was negligent.
[13] It is accepted that in these proceedings some of these issues are the same.
[14] The Disputes Tribunal is a statutory body created by the Disputes Tribunal
Act 1988 (“DTA”). Section 18(6) of the DTA provides:
1 Exceed Dairies Ltd v Whyte Disputes Tribunal Gore CIV-2009-017-000108, 18 December 2009.
(6) The Tribunal shall determine the dispute according to the substantial merits and justice of the case, and in doing so shall have regard to the law but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.
[15] Section 23 provides:
23 Decisions of Tribunal to be final
Every agreed settlement approved by a Tribunal under section 18(3) of this Act, and every order made by a Tribunal under section 18(8) or section 46(2) or section 47(3)(b) of this Act, and every variation of a term of an agreed settlement under section 47(3)(a) of this Act, shall be final and binding on all parties to the proceedings in which that settlement is approved or the order or variation is made, as the case may require, and, except as provided in section 50 of this Act, no appeal shall lie in respect of any such order or variation or approved settlement.
[16] There is a right of appeal contained in s 50 of the DTA. But the appeal is limited to procedural complaint. Sections 50(1) and (2) provides:
50 Appeals
(1) Any party to proceedings before a Tribunal may appeal to a District Court against an order made by the Tribunal under section 18(8) or section 46(2) or section 47(3)(b) of this Act, or against the approval by the Tribunal of an agreed settlement under section 18(3) of this Act, or against the variation of a term of an agreed settlement under section 47(3)(a) of this Act, on the grounds that—
(a) The proceedings were conducted by the Referee; or
(b) An inquiry was carried out by an Investigator—
in a manner that was unfair to the appellant and prejudicially affected the result of the proceedings.
(2) Without limiting the generality of subsection (1) of this section, a Referee shall be deemed to have conducted the proceedings in a manner that was unfair to the appellant and prejudicially affected the result if—
(a) The Referee fails to have regard to any provision of any enactment that is brought to the attention of the Referee at the hearing; and
(b) As a result of that failure, the result of the proceedings is unfair to the appellant.
[17] The basic principle of estoppel in this context is stated by the author of Laws of New Zealand as follows:2
Where a final judicial decision has been pronounced by a New Zealand judicial tribunal of competent jurisdiction over the parties to and the subject- matter of any litigation, any party or privy to that litigation is estopped as against any other party or privy to the decision from disputing or questioning that decision on the merits in any subsequent litigation. The same principle, with some exceptions, applies to the decisions of foreign judicial tribunals. However, in the case of a judgment in rem, such a decision is conclusive for or against everybody, not only the parties and their privies.
The doctrine of estoppel per rem judicatam is commonly justified on two grounds. The first ground is that of public interest: it is in the interest of the state that there should be an end of litigation. The second ground is that of hardship on the individual: no one should be proceeded against twice for the same cause.
[18] The particular issue in this case is whether or not a decision of the Disputes Tribunal should be approached as “a final judicial decision … by a New Zealand judicial tribunal of competent jurisdiction”.
[19] A question arises, for as we have seen this Tribunal is not required to apply the law, but rather to decide the dispute according to substantial merits and justice of the case, having had regard to the law, but not being bound to give it effect.
[20] I am of the view that s 18(6) of the DTA removes decisions of Disputes Tribunals from being capable of being categorised as a final judicial decision. I should add this is not in any disrespect to the Tribunal. The Referee’s decisions are reasoned and generally endeavour to follow the law.
[21] I am reinforced in my consideration that issue estoppel does not apply by reflection on two dicta, one a classic, and one recent.
[22] The classic statement is:3
… where in a judicial decision between the same parties some issue which was in controversy between the parties and was incidental to the main decision has been decided, then that may create an estoppel per rem judicatam.
2 The Laws of New Zealand Estoppel (online ed) at [2].
3 Carl-Zeiss-Stiftung v Rayner & Keeler Ltd (No.2) [1966] All ER 536, 565.
…
The requirements of issue estoppel still remain (i) that the same question has been decided; (ii) that the judicial decision which is said to create the estoppel was final, and (iii) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[23] There is also the recent decision of the Supreme Court in Z v Dental
Complaints Assessment Committee:4
[63] Whether a proceeding attempts in substance to relitigate a controversy already settled by final determination and amounts to an abuse turns on what Lord Bingham described in the context of court litigation as a:
“. . . broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial question whether in all the circumstances a party is misusing or abusing the process of the court.”
[24] I agree with Mr Hitchcock that the ultimate test in the law of res judicata is whether or not there is an abuse in bringing a case back to another Court. In no sense are these proceedings an abuse. When the parties submitted themselves to an adjudication on the hoof repairs before the Disputes Tribunal they were not submitting that dispute to be decided according to law. It would be quite wrong to hold them to findings which may or may not include findings of mixed fact in law and which may or may not have followed from the application of the law, so as to preclude them from litigating the issues between them in these proceedings. There is no issue estoppel accordingly.
Issue 1 — Was there a lease?
[25] The allegation on behalf of the Whytes is that there was an agreement to lease which has been part performed.
[26] In ascertaining whether or not there was a lease it is agreed that any lease is also a contract.
4 Z v Dental Complaints Assessment Committee [2008] NZSC.
[27] The Whytes rely on the Court of Appeal decision in Paper Reclaim Ltd v
Aotea International, in particular paragraph [52] which:5
… it does not particularly matter whether the parties’ understanding was reached at one meeting, two meetings, or over time. What we are clearly satisfied about is that, at least by the 1990s, the parties’ dealings, when viewed objectively from the point of view of reasonable persons on both sides, allow only for a finding that a concluded bargain had been reached … It is well accepted that the courts are entitled to look at the whole context of the parties’ relationship in reaching a view as to whether a bargain was concluded and as to its terms …
[28] Note that this decision, which is probably the high watermark of a liberal view of contract formation, still requires the need to identify a concluded bargain.
[29] To have a concluded bargain not everything has to be agreed. In Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd the Court of Appeal said that the requisites to the formation of a contract are:6
[53] The prerequisites to formation of a contract are therefore:
(a) An intention to be immediately bound (at the point when the bargain is said to have been agreed); and
(b) An agreement, express or found by implication, or the means of achieving an agreement (e.g. an arbitration clause), on every term which
(i) was legally essential to the formation of such a bargain; or
(ii) was regarded by the parties themselves as essential to their particular bargain.
A term is to be regarded by the parties as essential if one party maintains the position that there must be agreement upon it and manifests accordingly to the other party.
[54] Whether the parties intended to enter into a contract and whether they have succeeded in doing so are questions to be determined objectively. In considering whether the negotiating parties have actually formed a contract, it is permissible to look beyond the words of their “agreement” to the background circumstances from which it arose – the matrix of facts. This can include statements the parties made orally or in writing in the course of their negotiations and drafts of the intended contractual document.
[30] Where parties believe they have entered into a bargain and have part performed it, another principle comes into play. This is that without violating the
5 Paper Reclaim Ltd v Aotea International [2006] 3 NZLR 188.
6 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd [2002] 2 NZLR 433.
essential principles of the law the Court endeavours to find an enforceable bargain. The most frequently cited case is the decision of Hillas & Co Ltd v Arcos where Lord Tomlin said:7
… the problem for a court of construction must always be so to balance matters that, without violation of essential principle, the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains.
[31] It is a feature of agreements in which the parties’ obligations continue over time that it is not always possible to agree all the obligations at the commencement of the contract. Some terms can be left to be agreed from time to time, usually against industry standards. So, for example, in a dairy context, where there is an agency collecting information on the dollar rate per kilogram of milk solids (“kgMS”) paid to sharemilkers in particular regions, the parties could agree that the rate that would be paid in their contract would be adjusted from time to time depending on movement of the average rate. Even further, if a very minor matter is left to be agreed when the essential matters particularly as to financial terms are agreed it is very unlikely that the contract would be not recognised by the Court.
[32] Against these basic considerations, the Whytes argued that up until 1 June
2008 when they relinquished possession of Dacre, the Whytes were solely negotiating a lease of land, buildings, plant and stock with ENL. Mr van Dorsser wanted “alignment” (his word for agreement), the signature of heads of agreement then execution of formal documents. Mr van Dorsser took possession of Dacre and Longbush from 1 June and Exceed engaged staff and paid costs from 1 June 2008 through to 20 September of that year, at least. There is a dispute as to whether there was an oral agreement achieved in late April 2008. ENL was the only person mentioned as lessee until mid to late June. The farms to be leased (Dacre and Longbush) were agreed, as was the term of three years. There was reference to right of renewal, but I do not find that was agreed.
[33] The letter of 26 May 2008, drafted by Mr van Dorsser, set out what he
considered the parties were “aligned on” in late April, but it included two provisions which were challenged by the Whytes. The first was the 1.25 per cent of the milk
7 Hillas & Co Ltd v Arcos [1932] All ER 494 at 499.
solids payouts for rates and insurance. The second was as to how losses of cows or empties would be replaced and what responsibility the Whytes might have in that respect.
[34] On the other hand, in May, the core rent was agreed to be computed by a formula of payout per kgMS x 245.5 (Dacre) x 165 (Longbush). The term was to be three years. The number of milkers was to be 500, of which 400 would be supplied by the Whytes.
[35] There was an ambiguity in the e-mail of 26 May. The Whytes proffered the e-mail from Mr van Dorsser of 26 May as recording terms of a lease, some of which I have just summarised. I note that the e-mail ends with the heading in bold:
The next step
To discuss, align and sign-off this proposal as the basis for drafting an agreement.
The letterhead included Exceed and ENL. It is signed by Mr van Dorsser. It came with a one page Heads of Agreement lease to be signed by Mr van Dorsser on behalf of ENL.
[36] The Whytes acknowledged that through June, as the documents record, there were a number of negotiations or renegotiations on the 1.25 per cent issue and the treatment of cull cows, empties and replacement heifers. The Whytes accept there were a number of other issues that were not necessarily finally resolved, but in their view there were mechanisms for resolutions, that is; the amount of stock, the value of plant and machine, the amount of fertiliser required and that stock to be leased would be on industry standard terms.
[37] The treatment of culls, empties and replacement heifers was unresolved. On
2 June Mr van Dorsser called it “the stock issue” – “where you pay us for their value (for rearing heifers) such that we can then purchase any of them at that value from you”.
[38] On 23 June, three weeks after Mr van Dorsser entered into possession, he and Mr Whyte were discussing a draft “Heads of Agreement” between Exceed, not ENL, and Roger and Diane Whyte. This had been drafted by Mr van Dorsser. It is common ground that this Heads of Agreement was not agreed. There was continuing disagreement on the stock issue. This is a significant financial issue and one upon which Mr Roger Whyte was taking a keen interest, and upon which he was consistently disagreeing with Mr van Dorsser.
[39] On 2 July Mr Whyte wrote to Mr van Dorsser a two page handwritten note on the subject of renting the cows. He referred to taking advice. He put forward the proposition that they were renting the cows for the purpose of milk production and not a lease of the cows as such.
Takes a bit to get your head around thus different thinking needs to apply. This is how I have put a proposition together. 400 cows to be supplied made up this year of MA (mixed age) cows and heifers of which 28 owned and 30 leased at $200 per annum. Next season these will be replaced with my own stock. Cow values have to start at the correct level. Cows valued at $2,300, sale of other herd used for value and heifers at $2,000 again the sale at 200 from other herd codes as base and heifers based value set at 2000.
On it went. It provided, contrary to the earlier proposals of Mr van Dorsser, that:
Income from culls, deaths and sales are to go to owners and the owner pays for grazing of young stock.
[40] The financial terms to compensate the lessor for providing most of the 400 of the 500 milking cows, together with the question of ownership of their heifers, is a very significant financial matter, way beyond the issue of the calculation of a payment to cover rates and insurance. There was also an issue as to whether or not Exceed would be a lessee rather than ENL. Exceed was to be the sharemilker on the Hillbyrne Farm. Mr Whyte did not want Exceed to be the lessee of Dacre.
[41] There are standard practices for lease of cows, which require the lessee to replace cows with in-calf young cows. But the stock issue between Mr Whyte and Mr van Dorsser was not appealing to standard terms.
[42] The Whytes have not proved that the parties ever reached an agreement to lease capable of being enforced by a Court, even viewing the facts benevolently according to the authorities referred to above.
Issue 2 — Was there an agreement in September?
[43] Mr van Dorsser argues that in the immediate aftermath of the shooting of the calves on or about 19 September, he realised that the lease agreements as envisaged by the parties were no longer a possibility, and he says that, as a consequence of his discussions with Mr Whyte, it was agreed that:
(a) Mr Whyte would resume control and farm Dacre.
(b) ENL and Exceed’s costs to date would be reimbursed by the Whytes. (c) Exceed would continue to provide labour and supply vehicles and fuel
for those vehicles on the farm for the remainder of the season.
(d) All farm working expenses (including any expenses incurred by
Exceed on behalf of the farm) would be met by the Whytes.
[44] The position of the Whytes is that they deny that it was no longer a lease from that date. They say that Mr Whyte was asked to assist with some aspects of the on-farm management. It was agreed that Mr Whyte would apply the milk cheques as they came into winter operating expenses much of which have been put on the Whytes’ various accounts over the winter. Mr Whyte went further in his evidence. He says that he agreed that he would pay costs to date and he would pay future farm operating costs subject to there being sufficient income to meet those expenses.
[45] There is no doubt that the financial relationship between the parties changed from September. The Whytes met all the farm working expenses (“FWE”) incurred to September, but for the winter grazing of the Dacre cows at Glenham of
$89,991.21. They also met virtually all the new expenses arising from September, at least initially. As at 24 December, virtually all the expenses claimed by Exceed had
been paid in full. Mr Whyte was paying for the labour at a rate of 65 cents per kgMS. This was not a rate he had agreed with Mr van Dorsser.
[46] I am satisfied that a complete agreement was not reached in September. Inasmuch as there was some agreement, the expenses have been paid and are not the subject of this dispute. Inasmuch as there are outstanding issues as to recovery of labour costs, recovery of the winter grazing, and recovery of fuel and vehicle costs, there comes a question as to whether there was a sufficient basis in the dealings between the parties for those issues to be addressed under the remedy of quantum meruit.
Issue 3 — Which party or parties are entitled to quantum meruit?
[47] Both parties claim relief by way of quantum meruit. Quantum meruit is an ancient remedy. Chitty on Contracts puts the remedy in its chapter on restitution.8 It is the term which is used in various contexts, which needs to be kept in mind. It was common ground that if I found there was no lease, justice would have to be done between the parties on a quantum meruit basis. Both parties are seeking the quantum meruit basis. As Mr Hitchcock put it, this is a case of duelling quantum meruits. He was unable to cite a precedent for such a duel.
The Whytes’ claim for remuneration on a quantum meruit claim
[48] The Whytes seek a quantum meruit of $224,271.92 by taking what they say they should have received as lessors of $373,063 including GST and deducting their actual net income of $148,791.08. This net income starts with the gross milk income of $879,298.31, $55,906.98 for cows and bobby calves, less expenses paid.
[49] Further they claim $345,442.91, made up of their labour, $202,400 for replacing 88 cows, and a variety of other expenses not previously included in FWE.
8 Chitty on Contract s – Volume 1: General Principles (27th ed, Sweet & Maxwell, London, 1994) at
Part 29.
[50] Quantum meruit provides a reward for services rendered. Given that I have found that there was no binding agreement to lease, and given the events in September, there is no basis for contending that it was the Whytes who provided services to Exceed/ENL. It was the other way around.
[51] At all times the Whytes were the owners of the land and owned most of the cows. They owned all the plant and machinery. They kept the milk solids revenue.
[52] A common context for the remedy is for work done where the contract is terminated by breach. This has been some relationship on the facts to the events in September beginning to an end pursuit of a lease agreement between the two parties. There is no doubt that Mr van Dorsser went into possession with Mr Whyte’s consent on 1 July, on a mutual expectation that either Exceed or ENL and the Whytes would agree a lease.
[53] Similarly, since September there were assurances given by Mr Roger Whyte which, on what he says are his terms, he has kept. But on any view of it everybody was working on the basis that the staff of Exceed were not volunteers but were there to be paid. The Whytes are not entitled to the remedy of quantum meruit. Exceed is.
[54] The only just way of dealing with this mess is to recognise those facts and address to what extent Exceed should be entitled to more benefits, in addition to the benefits that they did obtain by way of reimbursement from the Whytes.
Issue 4 — Is bad management by Exceed a defence to Exceed’s quantum meruit claim?
[55] The normal basis for quantum meruit assessments is to examine the work done and decide a reasonable price. What is reasonable is usually guided by market conditions prevailing at the time. Naturally, however, it can also be judged against the quality of the work. A tradesman working on a contractual basis can no more be expected to be paid on a quantum meruit basis than he would not expect to be paid if he was not doing the work in a tradesman like fashion.
[56] In response to Exceed’s claim for quantum meruit the Whytes plead that they obtain no benefit from the alleged work. That the farming operation carried on on Dacre and on the Dacre run-off, Longbush, was grossly mismanaged. They have 20 particulars as to the mismanagement.
[57] The Whytes then plead that as a consequence of this mismanagement the farming operation restricted production in the 2008/2009 season and led to significant cost over-runs which in turn led to a significant trading loss. They complain in their pleadings that the plaintiffs effectively require the defendants (the owners of the land and most of the herd) to fund the entirety of the trading loss incurred in the 2008/2009 season.
[58] Exceed dispute mismanagement, item by item, and second argue that their production figures, cow mortality rates etc are in line with industry averages, albeit below that of the Whytes. They point out, however, that the Whytes are in the top ten percentile of dairy producers. Their argument is that there cannot have been bad management when they produced results which are in line with regional average production over the season.
[59] I now go through the individual items of alleged mismanagement and make my findings. Then I will return to the ultimate question as to whether or not these findings require an adjustment or discount off what would otherwise be appropriate remuneration for work done by the Exceed team.
[60] The headings are taken from the second amended statement of defence, counterclaim and claim against the third party dated 13 April 2012.
7.7.1 – 7.7.6 — Gross mismanagement
[61] These are a set of pleadings essentially criticising the management of Dacre by Mr van Dorsser and/or Mr Pol and/or Mr Bethune.
[62] The Whytes’ argument is that Messrs van Dorsser and Pol did not visit Dacre and the run-off sufficiently to provide adequate input. And that Mr Bethune spent
insufficient time at Dacre, mainly due to his other responsibilities on other properties.
[63] There is no direct challenge to the expertise of these men. The evidence persuaded me that there was insufficient supervision by them of Jimmy and Angela Deans, the principal employees on Dacre (until they resigned in November). I was also persuaded that this couple were run off their feet. That the other Brazilian employees did not appear to have sufficient skills to complete an adequate team on the site. Part of the problem was that in the spring of 2008 there were 700 cows on Dacre calving. That indeed was a major part of the problem of adequacy of the staff.
7.7.7 — Failure to use the herd homes at Dacre and Longbush
[64] This is a complaint by the Whytes about the fact that the majority of the
Dacre cows were wintered off Dacre at Glenham.
[65] About 200 of the Dacre cows were wintered at Glenham along with the Hillbyrne herd. There was no utilisation of the two herd homes; one erected on Dacre and the other at Longbush. This contention is also best considered with contention 7.7.9 and 7.7.11 which are complaints about the quality of care of the herd while being wintered at Glenham and as to the condition they were in when they returned back to Dacre to calve.
[66] Glenham was not an ideal wintering off property. It was a property being recovered from the bush. Its lessors promised an adequate supply of water, but that was not in place at the time the cows arrived. The cows had to walk considerable distances to get water. One drowned in a creek.
[67] That said, the mortality rate against the total cows wintered on Glenham was not outside the statistical expectations.
[68] There is conflicting evidence as to the condition of the cows upon their return to Dacre. There was no thorough examination of the condition of these cows by either side upon their return. The evidence was, therefore, somewhat anecdotal. I
accept, however, Mr Roger Whyte’s evidence that a significant number of the cows were not in the condition they ought to have been in had they been adequately supervised and cared for over the winter.
[69] Undoubtedly the average to poor condition of the Dacre cows returning from Glenham partially accounts for the inability of the herd to produce the results that hitherto, and in subsequent years, have always been achieved by the Whytes.
[70] I do accept Mr van Dorsser’s calculations that place the milk solids
production of the herd in line with the average of farms in Southland in the season.
[71] If the test of bad management were a comparison of Exceed’s performance against that which had been previously achieved by the Whytes then there would be no doubt that there was bad management of the farms, the plant and machinery and the care for the cows throughout the entire season, including the wintering period. For there is clear evidence that the production rates achieved and the problems with calving and with care and use of machinery simply did not match the historic performance of Mr and Mrs Whyte.
[72] However, I do not think that can be the correct test. The reason is that the Whytes were the lessors. When a lessor leases property and chattels to another person, unless there are specific rules or terms to the contrary, the law presumes that the lessee enjoys quiet possession of the land, chattels and stock leased. Another way of putting it is that the ownership of the property, chattels and livestock is transferred temporarily to the lessee. The lessee has all the benefits of the owner subject to paying the rent and taking care of the property being leased, subject to the terms of the lease. Depending on the context, lease terms typically provide for the lessee to make good at the end of the lease any damage or deterioration of the property or to replace lost or exhausted property. The general effect of such terms is to put the lessor back in the position the lessor was in, but for the lease, or would have been in if there had been no lease, thus in some occasions allowing for fair wear and tear. But, unless there are specific provisions to the contrary, the common law will not presume that the lessee is required to demonstrate the same standards of
excellence that have been achieved by the lessor previously when exercising and enjoying the rights of ownership of the property being leased.
7.7.8 — Budget cows
[73] The complaint is that part of the herd, about 200 and up to 270 cows owned by Exceed, were budget cows with significant percentages being early and late calvers and/or in light condition as at June 2008 and many of which showed repeat cases of mastitis in the previous season. The Whytes say that they had a value of around $700 as opposed to the average dairy cow in Southland at that time which had a value of $2,200 and $2,400.
[74] These allegations were proved. Such evidence as there was of the cows completely fits this pleading. Most of the cows were quite old, although there were some young cows. But the pleading is a general pleading as to the quality of the herd brought on to the property by Exceed. That said, again the results achieved by the total herd were in line with average industry performance in that region.
7.7.12 — Messrs van Dorsser, Pol and Bethowen did not control spending and expenditures
[75] This is a vague pleading. Ultimately the inferential argument was that the farm did not run at a profit because spending was not under control. However, the farm ran at a loss only if rental for the Whytes is included in the expenditure. There was some anecdotal evidence of uncontrolled spending, but the only specific evidence was of the purchase of a set of walkie-talkies for $300. I do not think that this pleading was made out on the evidence.
7.7.13 and 7.7.14 — Recording of cows and calves
[76] This is a complaint that the staff did not tag the cows in June when they came onto the site and indeed the tagging of the herd was not done until October 2008. Furthermore, there were no records of calves and cows. The cows were dropping their calves and the staff, being run off their feet, were not recording calf to mother.
[77] These pleadings were proved. But no financial cost was proved subject to the unresolved issue as to the allocation of cows between the Whytes and Exceed. That is an issue addressed later in this judgment.
7.7.15, 7.7.16 and 7.7.17— Inadequate care of calves
[78] This was an allegation that the calves were not adequately cared for. There was some dispute as to whether there was an instruction that all calves were to be reared. There is no doubt that more calves were being reared than is normal. There were, however, some bobby calves (calves sent to slaughter). Bobby calves had to be taken off the farm by a farm trailer because there was not a compliant loading platform. I am satisfied that these allegations are made out. Angela Coleman, through no fault of her own, was simply not up to looking after the number of calves that were retained. The fact that a vat with penicillin milk was found amongst the calves is a clear indicator that the staff were stressed and care was inadequate.
7.7.17 — Generally insufficient attendance to dairy routines
[79] This is a pleading I have already partly dealt with in respect of calves, but extends generally to a complaint of insufficiently experienced on-farm personnel who were not properly supervised, and were not attending to dairy farm routines and requirements. It was proved.
7.7.18 and 7.7.19 — Baleage and groundwork being contracted out
[80] It would appear that baleage and other groundwork was contracted out. I am not satisfied that this was bad management. Insufficient detail of this complaint was advanced.
7.7.20 — Damage to farm equipment
[81] There were a number of complaints: that a silage trailer was damaged; that fence posts were damaged; that a tractor mudguard was dented; that a ute was driven in damaged condition some distance to a mechanic such that the motor was
seized on arrival; and that metal containers for baleage were picked up incorrectly and significantly damaged.
[82] The defence was that such damage as there was, was ordinary wear and tear.
[83] I am satisfied that there is some merit in the defence, but on the other hand it would appear that the baleage containers were being wrongly picked up and so damaged and the fact that the ute seized up is self-evidently the result of negligent use. There was no evidence that the damage rendered the containers unuseable. Because there was no agreement to lease these, costs were not at the risk of Exceed/ENL. The damage to equipment and for example to posts and fences, is a risk assumed at any one time by the owner of a farm on which labour is employed. That includes the Mitsubishi ute overheating. It overheated when being driven to a garage to be repaired. None of these claims rely on any allegation of dishonesty. They all fail with the finding that there was no agreement for lease.
7.9 — Consequence of mismanagement – Restricted production
[84] This brings us to the pleading that it was as a consequence of mismanagement that the farming operation of Dacre and the Dacre run-off had restricted production in the 2008/2009 season and leading to the farm suffering significant cost over-runs, and a trading loss.
[85] Restricted production depends, as I have indicated, on what measure one uses. I do not think that there is any requirement for would be lessees to achieve the same results as outstanding lessor farmers who have decided to lease the property.
[86] On the weight of the evidence I am satisfied that production was restricted by two factors. The first was that there were a very large number of cows, over 700, brought to Dacre at the start of the season for calving. This put pressure on the spring pasture. There was a sophisticated disputation between Mr van Dorsser and Mr Roger Whyte over the ability of pasture in the spring to recover from heavy grazing. Mr van Dorsser was saying that the cows could not graze the grass down to levels which would restrict the rebound in growth. Mr Roger Whyte was saying that
it was important to retain sufficiently length of leaf to get good photosynthesis which was the engine of growth for the grasses.
[87] I accept the expert evidence of Mr Platfoot that seasonal production depends significantly on the peak production achieved per individual cow. Accordingly, it is of prime importance that cows calve in good condition and in a good quality environment with very good feed in order to achieve peak production, so that, as that cow’s production tails off during the season, it will tail off from a peak in a declining curve. The higher the peak ultimately the greater the seasonal production of that cow, other factors being equal. In this regard I find it proved that the farm was over stocked at the start of the season which led to a reduction in the quantity of production.
[88] That said, there are complications as to the over stocking. The additional cows brought on to the property were part of the Dacre herd from Hillbyrne.
[89] There was no evidence that calving Hillbyrne cows at Dacre was opposed at the time by Mr Roger Whyte. It was never the intention for the Hillbyrne cows to stay long on Dacre. They were to have been moved to Hillbyrne shortly after calving. There was no clear evidence presented to the Court as to the feed situation at Hillbyrne.
[90] I reject the suggestion that the cows were brought to Dacre in order to get milk for Exceed as lessee and thus revenue which would not be earned at the same rate were they to be milked at Hillbyrne. I am satisfied rather, that there would have been some goal of efficiency being pursued by Mr van Dorsser in this plan rather than any attempt to take down the income relatively between Exceed on the one hand and the Whyte’s operations whether at Dacre or Hillbyrne on the other.
[91] The productive qualities of Dacre were also affected by the fact that some of the Exceed cows were calving in late July, much earlier than the Whyte cows would normally be due to calve. This was putting early pressure on the pasture.
[92] All that said, again the data on actual production achieved over the whole of the season falls, I find, within the normal expectations that a lessor has to accept of an average lessee during that season.
[93] A simple comparison between the production achieved by Mr van Dorsser and the production achieved by Mr Roger Whyte, on Dacre, is not easy. This is because in the season Mr van Dorsser’s company was on the land, Dacre had been extended by an additional 47 hectares to the original 93 hectares. The 47 hectares came from the recently converted sheep farm. There is a dispute as to how productive this sheep farm land turned out to be. There is also a variety of other disputes, including whether the usual quantities of grain and molasses were fed, after Mr Roger Whyte took control, what to do with the milk from Exceed’s 15 high somatic cell count (“SCC”) cows, whose milk was used for the calves and did not go to Fonterra. Mr van Dorsser argued that the farm was producing within the Southland averages. Indeed, using these other adjusting figures he endeavoured to argue that what was produced was not much different from what the Whytes had achieved in previous seasons. I was not convinced by that latter argument.
[94] Mr Platfoot was an expert dairy consultant called to give opinion evidence by the Whytes. Apart from having been directly involved in another capacity, as agent for the owners, of the lease of Glenham, he was working off data provided at the end of the season. He gave evidence that the Whytes were top performing dairy farmers, performing better than regional averages. As already noted, I have accepted that. He was of the opinion that the performance by Exceed was significantly below what the Whytes were achieving.
[95] Mr Platfoot produced a table showing production history for Dacre for the
2005/2006 seasons through to 2008/2009. It showed in the first three of those four seasons the kgMS/per cow consistently exceeding the MAF Southland average. Likewise the kgMS/hectare. For the 2008/2009 season the actual kgMS/cow shows at 358 as compared to the MAF average at 384 and the kgMS/hectare at 1,235 as against the MAF average of 1,070.
[96] The Whytes have not proved restricted production significantly below the Southland average. Therefore I reject the argument that quantum meruit should be refused or discounted because of poor or restricted production.
Issue 5 – Exceed’s quantum meruit claims
Recovery of Exceed costs pre September 2008
[97] As already noted, the Whytes did pay a considerable portion of Exceed/ENL’s expenses over the season. I turn now to examine the claims for the expenditure not recovered.
[98] The issue here is the winter grazing on Glenham. It was a decision of Mr van Dorsser to winter the Whyte’s Dacre herd on Glenham as well as wintering the Whyte’s Hillbyrne herd on the same property. It was necessary to winter the Hillbyrne herd because there was not enough feed on the Hillbyrne property. Mr Roger Whyte contended that it was not necessary to winter the Dacre herd on Glenham as there was ample feed on Dacre and on the Dacre run-off, Longbush, for the herd. There were two stacks of silage, one on Dacre, one on Longbush and even more importantly, both properties had herd homes, so that the cattle could stand under shelter and feed. The ability to be sheltered and to have the feed brought to them minimised the energy loss and assisted maintaining the cows’ condition.
[99] There is a dispute of fact as to whether or not Mr Roger Whyte tried to stop the Dacre herd going to Glenham. The dispute is not critical. The Whytes bad management pleadings relating to the stock being wintered on Glenham is more connected to what they contend is a loss of income from the property by reason of poor quality winter grazing. At the time that the stock were moved off Dacre to Glenham, both Mr Roger Whyte and Mr van Dorsser were working on the basis that they would agree a lease of the land and of the cows and plant. On that basis it was open for the lessee to decide where to winter graze the cattle. Off-site winter grazing would be a lessee’s expense.
[100] The problem of paying for the off-site winter grazing emerged after
September when Mr Roger Whyte paid for the costs to date excluding those.
[101] Having found that there is no lease, the cows that were wintered at Glenham remained the Whyte’s cows. There is no contractual liability on the part of Exceed to feed those cows over the winter, let alone at Exceed’s expense. The cows were fed at Glenham. That did cost money. Unless the cows had been fed and survived the winter they would not be available to convert the Dacre pasture to milk in the new season. This sequence of facts is a reminder as to how unfortunate it was that the parties did not sign a lease at the start of the season on 1 June. The consequence now is that the Whytes are liable for the winter grazing of their cows on Glenham even though had they been in control of the cows at the time they would have wintered them on Dacre and Longbush, and probably in better conditions with better outcomes than the wintering at Glenham. This is the sum of $89,991.21.
Exceed’s labour costs
[102] From the time Mr Roger Whyte stepped in in September he has contributed to the Exceed labour costs at the rate of 0.65 cents per kgMS. Ms Gail Wylie’s report explains why and discusses that rate. Ms Wylie is a farm consultant. She has practiced in Southland since 1985 and since 1994 in private practice. In early 2009 she worked with Mr van Dorsser and Mr Whyte in the hope to assist them to try to negotiate and agree a settlement. She compiled a report dated 11 April 2009.
[103] I note that there are procedural problems with this report. Mr van Dorsser sent a lot of material to Ms Wylie before she met with both parties. This material was not copied by Mr van Dorsser to Mr Whyte. Ms Wylie did not provide it to Mr Whyte. Mr Whyte dealt with Ms Wylie not appreciating the content of the materials that had been sent to her by Mr van Dorsser. This deficiency in the procedure does not in my opinion affect her report inasmuch as it addresses standard practices within the dairy industry and standard rates. And I rely on her report for that only.
[104] In her report she did an estimate of a typical Southland three person 525 cow dairy farm and estimated the labour costs for the season at $170 and thought that
would be approximately $1/kgMS including calf rearing. For calf rearing she was assuming 25 per cent of the cows wintered.
[105] In her evidence before this Court she advised:
In the 2008/2009 season, the standard rate for the supply of labour (with no allowance for management input, vehicle or motorbike supply or fuel) was calculated by reference to a figure between $0.95 and $1.05 per KgMS.
[106] Mr Roger Whyte is of the view that the dollar rate per kgMS should also include the cost of the electric power for milking and detergents. That evidence appears to me to be inconsistent with the definition just quoted from Ms Wylie. However, it is a difference which has no consequence in this case as there are no separate disputes vis-à-vis detergent and power. Both of these costs have been paid by the Whytes. There is no evidence that these costs are signficant as dictating, for example, the range of 0.10 being the range between 0.95 and 1.05.
[107] At the trial there appeared to be no significant challenge by counsel to a proffered rate that, I was thinking about, of $1 per kgMS. It does coincide with Ms Wylie’s rates, but it is the mean between the range. The question becomes whether or not this rate should be imposed.
[108] I note that the rate does not include an allowance for management. The management claim for the season, separate from the labour, is $23,000. In my view if there is to be any disallowance or discount for an issue of bad management it should come against that figure, not against the basic labour costs of milking the cows and raising the calves.
[109] More than 25 per cent of the calves were raised and this is a problem. But given that the $1 rate includes an allowance for 25 per cent of the calves then if the
$1 rate is adopted, it actually works in favour of the Whytes vis-à-vis the number of calves that were raised.
[110] As a consequence of finding that there was no lease, then it is inevitable in my view that the owner has to pay the cost of milking. Issues as to proper allocation of staff etc are taken away by adopting an industry standard. Accordingly, upon a
quantum meruit basis the labour costs should be met at the rate of $1 per kgMS. The total kgMS was 172,989.5. At $1 kgMS it becomes the sum of $172,989.50. Mr Whyte paid $114,448.44, which leaves a balance of $58,541.06.
Management costs
[111] As appears from Ms Wylie’s evidence, management is included in the labour costs. In this case Exceed are seeking management costs of $23,000 excluding GST. I am not going to treat that as a separate item. The advantage of the $1/kgMS is that it is being a standard rate in the industry it has built into it an average level of efficiency. To add a mangement fee on top of the dollar per kg risks imposing on the Whytes an unreasonable cost for milking. The management team of three was inefficient, and not agreed by Mr Whyte. The claim for $23,000 is dismissed.
Exceed’s cows
[112] Originally the lease was going to provide for lease of 400 Whyte cows on Dacre. The proposal of 26 May 2008 contemplated a maximum number of milkers of 500 with the lessee having the right to supply cows beyond 400.
[113] In fact, the lessee provided cows in excess of 200. There is an issue as to the number of cows, but there is a working assumption that Mr van Dorsser is right in saying that he provided originally 275 cows. I have already set out Mr Roger Whyte’s criticism of these cows. A number of cows in the early part of the season had mastitis. About 15 of these were Exceed cows and their milk was used for raising calves.
[114] Mr van Dorsser brought more cows onto the property than contemplated in the lease. He did that exercising a putative right as a lessee. When the lease agreement was not reached he still kept those cows on the property. I have already recorded the general complaint as to the quality of those cows. But on the production figures produced by Mr Platfoot, there was a good production of milk solids per hectare. There is considerable doubt as to how many cows, over what periods, produced these milk solids.
[115] Neither the Whytes nor Exceed can reconcile cow numbers during the season. Before going into this dispute it is useful to distinguish different classes of cow.
[116] Cows going into a season who are not pregnant are called empty cows (“MT”). If MT’s are young and of good future potential they may be kept over the season and fed for another year until they can milk the following season. A herd always has rising cows (heifers) one year and not ready for milking.
[117] Then the herd will have the milkers, who are mixed age (MA) in calf cows. The Whytes say that they started the season with 514 cows in total on Dacre and they ended with 468 cows.
[118] In the course of the season cows went to Hillbyrne and came back from Hillbyrne. Twenty-seven MT cows were sent to the works, and known deaths on farm are recorded as 14.
[119] There was a herd test on 23 December which indicated 19 missing cows. At the end of the season Mr Whyte totals Whyte cows at 468 arguing they were entitled to 461 in calf cows back so that they ended up with seven extra cows.
[120] Exceed claims that they are short of 51 in calf cows, including 38 three to eight year old cows and 13 nine plus year old cows. They argue that the average value of these cows was $1,250 to $1,300 per cow for three to eight year old cows and $400 to $450 per cow for the nine plus year cows, and $500 per cow for the empty (not in calf) cows. Exceed also complains that the Whytes have neglected or refused to replace a further 32 three to eight year old cows, and 14 nine plus year old cows that were culled or killed during the season on account of Exceed. In addition there are a further 8 three to eight year old and 2 nine plus year old cows killed during the season which should be replaced, and they have refused to replace a further 5 three to eight year old cows belonging to Exceed that were empty. They have a conversion claim all up for $111,714.
[121] There have been various attempts to reconcile the cow herd numbers. The parties have been unable to do so. Mr Whyte, in the course of the trial presented a final attempt, now called Exhibit B, where he accepted he had seven cows too many.
[122] I am satisfied that the numbers cannot be reliably reconciled. The reasons are probably due to poor record keeping. There is ample evidence that record keeping on Dacre during the milking season was poor. Cows were sent to Hillbyrne and brought back from Hillbyrne. There is likely an understatement of the number of cows that during the winter and during the milking season died or were culled. Though neither party suggested so, there may be some confusion with the Hillbyrne tallies. I was not given herd reconcilations for Hillbyrne.
[123] There is no evidence to justify a conclusion that either the Whytes or Exceed
(Mr van Dorsser) deliberately converted any cows.
[124] At the end of the season Exceed took what they considered to be their cows
off the property by way of a neighbour’s farm against the wishes of Mr Whyte.
[125] Neither party have been able to offer any credible argument as to how to reconcile the numbers.
[126] As is apparent from the above summary of the claim by Exceed, a good part of their complaint is that 56 were culled or killed during the season. Cows are culled and/or killed for good reason. Exceed staff were on the farm at all times. I see no basis as to why Exceed is entitled to have these Exceed culled and killed cows replaced by the Whytes. The cows in its herd tended to be old. The evidence is that it was a budget herd. That is cows sold reaching nearly the end of their life with some milking left in them, but not much.
[127] The argument for replacement appeals to the standard clause in a lease of cows with an obligation to replace the cow like for like, not the original cow. But there never was such a lease. I am satisfied from the evidence that Mr Roger Whyte would have never leased these budget cows. Given their profile it would have been
difficult to devise a sensible lease with obligations to replace. At best it would be replacing budget with budget.
[128] Mr Roger Whyte was also of the view that Exceed were over stocking the farm. As I have already noted the lease contemplated 500 cows being milked. Of which only 100 would be provided by Exceed.
[129] Given the history of this case it would be artificial to impose an onus on either side to account to the other for cows. This was a muddle that they both created. There was a very rough sort out at the end of the season. I am satisfied that on the evidence before me I cannot do any better.
[130] There is one qualification. In Mr Whyte’s latest reconcilation he acknowledges that the Whytes ended up with seven extra cows. Effectively he is acknowleding that he owes Exceed seven cows.
[131] Exceed’s claim depends on conversion by the Whytes. The onus in that regard is on Exceed to prove it. It is a serious claim to be decided on the probabilities, but taking into account the serious nature of it. Given that Exceed’s staff were on the property at all times and the record making was poor, and the quality of the cows was budget, I am of the view that the losses are either understated and/or some of the Exceed cows may well have gone into the Hillbyrne herd. The claim in conversion is not made out. It is dismissed. Mr Whyte’s acknowledgement that he has seven extra cows is recognised, at a value of $700 each, for the reasons appearing in paragraph [138].
Allowance for milk solids from Exceed cows
[132] That leaves the question of how to account for the benefit that the Whytes got from those Exceed cows that were milked on the property in the course of the season. The most reliable number in that regard is those present at the herd test on
23 December. We know that on that date there were a total of 483 cows. 287 of these belonged to the Whytes and 196 to Exceed. There is evidence indicating that about 200 cows had gone to Hillbyrne from approximately 129 from the Whyte herd
and about 67 from the Exceed herd during September and October. Mr van Dorsser said about 275 cows came onto the property. There is a broad reconcilation then between 275 coming on and 196 being present in December. I am assuming on the probabilities that that number reflects the milked cows because at least eight empty cows from Exceed went to the works in November.
[133] For the purpose of a quantum meruit claim, I am satisfied that Exceed should get credit for 196 budget cows being milked to the benefit of the Whytes. The standard industry practice is not to reward the owner of the cows by rate of production. This is sensible as production is a combination of the ability of the cow to convert grass and the quality of the feed. Rather, the industry standard is to lease the cow at 10 per cent of its value for the season.
[134] There was debate as to the value of the Exceed cows. The Whyte’s position was that cows were worth, on average, about $700 as that is what they were bought for. Whereas Exceed’s argument was that they had been bought as a bargain but should be valued according to production and therefore they were worth varying sums depending on age.
[135] There is a competitive market for the sale and purchase of cows. If they were truly undersold at $700 I would need expert evidence in that regard. I am satisfied that the purchase price of around $700 per head reflects their true value. The appropriate rent is 10 per cent or $70 per cow, so $70 x 196, $13,720 for the season.
Unpaid Exceed Expenditure
[136] Exceed in its statement of claim details expenses exclusive of GST in two schedules, one from 1 June 2008 to 20 September 2008. This shows a total expenditure of $285,787.36 of which $150,227.57 has been paid by the Whytes leaving a balance of $135,559.80. Then in the period from 21 September 2008 to
31 May 2009, the expenditure is $43,581.81, none of which was paid.
[137] These tables were not challenged in detail. Mr Hitchcock, for the Whytes, acknowledged:
If the Whytes are found to have been solely responsible for the farming operation they should provide reasonable compensation to ENL/Exceed which determination should need to take into account the allegations of ENL/Exceed’s mismanagement restricting production as significantly increasing the costs of the season.
[138] In the schedule to 20 September, there are a number of expenses to which the Whytes made no contribution. They were ACC, accommodation and meals, breeding and tagging, insurance, contract labour, office expenses, phone expenses, protective clothing, tools and equipment, vehicle expenses, vet and animal health, weed and pests.
[139] Based on the findings as to management, in the period to 20 September I exclude the office and phone expenses and the accommodation and meals. These add up to $2,393.33 (excluding GST). I have deducted that from the sum claimed of
$135,559.80 to reach a resultant sum to 20 September of $133,166.47. Similarly in the period from 21 September 2008 to 31 May 2009 removing office and phone expenses, involves a deduction of $1,922 from the claim of $45,581.81, reducing that sum to $43,659.81.
[140] These two sums add up to $176,826.28 less the cost of winter grazing
$89,991.21, which I have dealt with separately, a resultant sum of $86,835.07.
[141] For these reasons Exceed recovers:
Winter grazing – Glenham $89,991.21
Unrecovered expenditure 86,835.07
Balance of Labour 0.35 x 172,989.5 58,541.06
Leased 196 cows @ $70 13,720.00
7 lost cows at $700 4,900.00TOTAL $253,987.34
[142] That sum is to be adjusted for GST where that is appropriate, leave being reserved to resolve any question in that regard. Otherwise the GST adjustment can be agreed by a joint memorandum to be filed with the judgment to be sealed.
[143] There is no award of interest before the date of judgment. This has been a difficult dispute which the parties have endeavoured to settle.
Liable parties
[144] It was only very late in the litigation that Mr and Mrs Whyte disclosed that they were acting as trustees for the Dacre estate and the Woodlands Trust, and the role of Willaby Farm Limited. I do not understand there to be any issue as to the ability of these entities to meet judgment.
[145] Accordingly, Exceed has judgment in the sum of $253,987.34, to be adjusted for GST, together with costs, against the second and third defendants jointly. Leave is reserved for the second and third defendants to apply for an allocation of the judgment debt.
[146] Leave is reserved for the plaintiff, Exceed, to apply for judgment to be entered against Mr and Mrs Whyte should the judgment debtors not satisfy the judgment.
[147] Costs are awarded on a 2B scale against the judgment debtors. Leave is reserved to make submissions if costs cannot be agreed.
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