FEDERAL COURT OF AUSTRALIA

DAMAGES - Losses sustained by owners of cattle contaminated with chlorfluazuron - General principles of recovery of damages - Foreseeability - Necessity to take account of position of individual claimants - Use of hindsight - Effect of contamination on cattle prices generally - Interest - Taxation - Recoverability of losses related to non-contaminated cattle - Recoverability of costs sustained in providing alternative sources of feed or agistment for retained cattle - Losses sustained on delayed sales - Losses relating to injuries occasioned by agistment.

 

 

 

BRIAN McMULLIN and LEONE MARGARET McMULLIN v ICI AUSTRALIA OPERATIONS PTY LTD, ICI AUSTRALIA LIMITED and CROP CARE AUSTRALIA PTY LIMITED

NG305 of 1995

 

 

JUDGE:          WILCOX J

DATE:            27 NOVEMBER 1997

PLACE:          SYDNEY

PROTOTYPE SHORT MINUTES OF ORDER   IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG305  of   1995

 

 

BETWEEN:	BRIAN McMULLIN and LEONE MARGARET McMULLIN Applicants
AND:	ICI AUSTRALIA OPERATIONS PTY LTD First Respondent   ICI AUSTRALIA LIMITED Second Respondent   CROP CARE AUSTRALIA PTY LIMITED Third Respondent

SHORT MINUTES OF ORDER

 

ORDER that, on or before 12 December 1997, the first, second and third respondents pay to Peter Long & Co, solicitors for the applicants, the sum of:

 

(I)        $............................................ in satisfaction of the claim of the applicants, Brian McMullin and Leone Margaret McMullin.

(ii)        $........................................... in satisfaction of the claim of group member, Bruce Henry Gunning;

(iii)       $.......................................... in satisfaction of the claim of group members, Gerard William Gallagher, Nancy Gallagher and Michael Gallagher;

(iv)       $........................................... in satisfaction of the claim of group members, John and Jill Roughley;

(v)        $............................................ in satisfaction of the claim of group members, Ian Christopher Hill and Kay Hill;

(vi)       $............................................ in satisfaction of the claim of group members, Brian Allan Hanigan; Kerry Hanigan and Benah Pastoral Company Pty Ltd; and

(vii)      $............................................ in satisfaction of the claim of group member, Phillip William Kirkby.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG305 of 1995

 

BETWEEN:	BRIAN McMULLIN and LEONE MARGARET McMULLIN Applicants
AND:	ICI AUSTRALIA OPERATIONS PTY LTD First Respondent   ICI AUSTRALIA LIMITED Second Respondent   CROP CARE AUSTRALIA PTY LIMITED Third Respondent

 

JUDGE:	WILCOX J
DATE:	27 NOVEMBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT (NO.5)

WILCOX J:  On 24 June 1997 I handed down Reasons for Judgment on issues of liability arising between the applicants, Brian McMullin and Leone Margaret McMullin, and the five respondents then remaining in the proceeding.  This judgment is now reported at 72 FCR 1.  I will call it “the liability judgment” and continue to use abbreviations used in that judgment. 

In the liability judgment, I  dismissed the proceeding as against the States of New South Wales and Queensland but held it should continue as against the three ICI respondents, ICI Australia Operations Pty Ltd, ICI Australia Limited and Crop Care Australia Pty Limited.  I fixed a date, 4 August 1997, to commence hearing the numerous cross-claims.

Most of the cross-claims were settled before 4 August 1997.  One was not but, after a couple of days’ hearing, it too settled.  This meant the only continuing parties were the applicants, on behalf of themselves and the group members, and the ICI respondents.  These parties accepted my ruling, in the liability judgment, that the ICI respondents owed a duty of care, in relation to the negligence claim, to (and only to) four categories of claimants:

 

            “(i)      Claimants (mainly graziers) whose cattle become contaminated by CFZ during the claimants’ period of ownership;

 

             (ii)       Claimants (graziers and others such as abattoir owners) who unwittingly purchased already-contaminated cattle;

 

             (iii)      Claimants, such as meat processors and exporters, who owned meat that was found to be contaminated and was, therefore, condemned; and

 

             (iv)      Claimants, such as feed lot owners, who found that cattle in their possession (but not ownership) were contaminated and thereafter incurred expense in holding them in detention.”

I understand the ICI respondents have reached agreement with some group members concerning the amount of damages payable to them.  But many cases remain outstanding.  I was told it would facilitate negotiations if rulings could be made in a few cases, chosen because they threw up recurring problems or factual situations.  Upon receipt of this information, I made directions for the preparation of eight cases and set aside eight hearing days commencing 5 November 1997.  A problem arose about one case; in the result seven cases were heard over a period comprising all or part of six days.

One of the directions I made was for the preparation, in relation to each case, of a document in the form of a Scott Schedule, setting out the details of each element in the claimant’s claim (including the manner of computation) and the respondents’ answer to each of those details.  These documents served clearly to identify the matters in dispute and the extent of the dispute.  They made a substantial contribution to the saving of hearing time, the duration of which was further reduced by agreements between the parties on many issues.

General principles

The litigated claims were deliberately selected to throw up a variety of fact situations.  Consequently, there is not much commonality between them and little may usefully be said by way of generalisation.  However, it is useful to note some principles concerning the recoverability of damages that have general application to these cases.

First, the basic principle governing recoverability of damage in negligence cases is that the damage must be foreseeable:  see Overseas Tankships (UK) Ltd v Mort’s Dock & Engineering Co Ltd (“The Wagon Mound” No. 1) [1961] AC 388.  It is not enough that the damage be the direct consequence of the tortfeasor’s negligence.  Neither is it sufficient to ask whether  the damage would not have occurred “but for” the tortfeasor’s negligence:  see March v E & M H Stramare Pty Limited (1991) 171 CLR 506.

Second, the criterion of foreseeability does not require the claimant to demonstrate that the precise nature or extent of the damage was foreseeable.  It is enough that the damage is not different in kind from what is foreseeable:  see Hughes v Lord Advocate [1963] AC 837.  As was said by Lord Reid in Overseas Tankships (UK) Ltd v Miller Steamship Co Pty Ltd (“The Wagon Mound” No.2) [1967] 1 AC 617 at 636, in negligence cases “damages can only be recovered if the injury complained of was not only caused by the alleged negligence but was also an injury of a class or character foreseeable as a possible result of it”. [Emphasis added.]

Third, the foregoing principles must be applied on the basis of commonsense and experience.  It is worth recalling the words of Deane, Dawson, Toohey and Gaudron JJ in Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 6-7:

 

            “For the purposes of the law of negligence, the question whether the requisite causal connexion exists between a particular breach of duty and particular loss or damage is essentially one of fact to be resolved, on the probabilities, as a matter of commonsense and experience.  And that remains so in a case such as the present where the question of the existence of the requisite causal connexion is complicated by the intervention of some act or decision of the plaintiff or a third party which constitutes a more immediate cause of the loss or damage.  In such a case, the ‘but for’ test, while retaining an important role as a negative criterion which will commonly (but not always) exclude causation if not satisfied, is inadequate as a comprehensive positive test.  If, in such a case, it can be seen that the necessary causal connexion would exist if the intervening act or decision be disregarded, the question of causation may often be conveniently expressed in terms of whether the intrusion of that act or decision has had the effect of breaking the chain of causation which would otherwise have existed between the breach of duty and the particular loss or damage.  The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant’s wrongful act or omission is, as between the plaintiff and the defendant and as a matter of commonsense and experience, properly to be seen as having caused the relevant loss or damage.  Indeed, in some cases, it may be potentially misleading to pose the question of causation in terms of whether an intervening act or decision has interrupted or broken a chain of causation which would otherwise have existed.  An example of such a case is where the negligent act or omission was itself a direct or indirect contributing cause of the intervening act or decision.” [Emphasis added.]

 

Fourth, a claimant is bound to do all things reasonable to mitigate the loss suffered by him or her as a result of the tortfeasor’s negligence.  In Tuncel v Renown Plate Co Pty Ltd [1976] VR 501 at 504 the Full Court of the Victorian Supreme Court adopted three rules concerning mitigation of damages set out in the 12th edition of Mayne and McGregor on Damages viz:

 

            “(1)     The first and most important rule is that the plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the defendant’s wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid.  Put shortly, the plaintiff cannot recover for avoidable loss.

 

             (2)       The second rule is the corollary of the first and is that where the plaintiff does take reasonable steps to mitigate the loss to him consequent upon the defendant’s wrong he can recover for loss incurred in so doing; this is so even although the resulting damage is in the event greater than it would have been had the mitigating steps not been taken.  Put shortly, the plaintiff can recover for loss incurred in reasonable attempts to avoid loss.

 

             (3)       The third rule is that where the plaintiff does take steps to mitigate the loss to him consequent upon the defendant’s wrong and these steps are successful, the defendant is entitled to the benefit accruing from the plaintiff’s action and is liable only for the loss as lessened; this is so even although the plaintiff would not have been debarred under the first rule form [sic - from] recovering the whole loss, which would have accrued in the absence of his successful mitigating steps, by reason of these steps not being ones which were required of him under the first rule.  Put shortly, the plaintiff cannot recover for avoided loss.”

 

I add one further point, which is relevant to some of the items in dispute in these cases.  While hindsight may be used in measuring the loss actually suffered by a claimant, as distinct from the loss it appeared the claimant might suffer at the time of the tortious act or discovery of its consequences, it must not be used to judge the reasonableness of the claimant’s reaction to the tortious act or discovery of damage.  This point was made by a Full Court of this Court in Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1987) 74 ALR 7 at 37:

            “Whilst a claimant for damages, in circumstances such as these, must always act reasonably, his conduct should be looked at at the relevant time and not with the use of hindsight.  It cannot be stressed too strongly that a claimant, such as the respondent in this case, which is placed in a dilemma by the wrongful conduct of the party sued, very often has to make difficult decisions on inadequate information.”

 

That was certainly true in these cases.  When the CFZ problem was first discovered in November 1994, very little information was available concerning its effects.  Cattle owners did not know how long their cattle were likely to be quarantined or whether overseas countries would agree to accept beef containing a low CFZ level.  It was several months before some (but not all) of Australia’s major customers agreed to accept beef containing a CFZ level not exceeding 0.2 mg/kg.  In the meantime, cattle owners in northern New South Wales and southern Queensland had to decide what course to take.  And they had to do so at the height of a drought in their areas that some have described as the worst in living memory.  In evaluating decisions under challenge in these cases, it is necessary to remember these facts and put oneself in the position of the cattle owner at the time.  It is not to the point that, with the benefit of hindsight, some decisions might be thought to have been unnecessary, or even unwise.

Fifth, there are occasions when it is not possible precisely to calculate the extent of a claimant’s loss.  Provided it is clear some loss has occurred, in such a case the court must do the best it can:  see Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 at 182-183.  The court must make an estimate, even though it cannot arithmetically demonstrate its correctness.

Cattle values and the  “Without Helix” premium

The claims the subject of these reasons have been computed by comparing two scenarios:  “Without Helix” and “With Helix”.  The first scenario purports to show what would have been the claimant’s position in relation to a particular item if the claimant’s cattle had not suffered CFZ contamination.  The second scenario purports to show the position as it was, with CFZ contamination, and taking into account the claimant’s actions in response to that contamination.

A number of claims take a “Without Helix” cattle weight, expressed in cents per kilogram, that is higher than the rate adopted on the “With Helix” scenario.  This is contentious.  The respondents say there is no justification for the difference.  As this issue involves several cases, it is convenient to discuss it immediately.

Several witnesses gave evidence about the state of the cattle market in the period immediately after discovery of the CFZ problem in November 1994.  Their evidence was not challenged and may be briefly summarised.  The first witness on the point was Richard Cameron, principal of Davidson Cameron Pty Limited.  That company carries on business as a stock and station agent at Gunnedah and Quirindi.  Mr Cameron has been a licensed stock and station agent for approximately 20 years.  His company sells some 30,000 cattle each year on behalf of approximately 400 cattle producer clients.  It also buys about 5,000 cattle each year on behalf of clients.  Mr Cameron attends cattle sales throughout eastern Australia; plainly he has an extensive knowledge of the market.

In a witness statement tendered in evidence, Mr Cameron said he first became aware of CFZ contamination in about November 1994 and an immediate effect was a reduction in the throughput of cattle at sales in Gunnedah, Narrabri and Moree.  He said the “major effect of the CFZ contamination event was to render the cattle of many of my clients unsaleable”.  He went on:

 

            “17.     I attempted on several occasions to market cattle for my clients having recorded CFZ contamination levels below the maximum residue limit of 1 part per million for domestic consumption.

 

             18.      Where these cattle complied with export specifications for weight and age there was interest in them at some works which would offer 30% off export rates or pet food rates.

 

             19.      The market for live cattle in Australia is a market that operates on a sale by description and specification basis.  Both domestic and export markets have specific requirements for age, weight and type.  Cattle fitting into export class specifications are not always transferable into domestic market applications because of the difference between specifications in those two respective markets.

 

             20.      As a result of the restraint on many of my clients being able to sell their cattle resulted in a number of my clients being overstocked with cattle on their home properties.

 

            21.       On many occasions between 1995 and to date I have attempted to secure agistment for the cattle unable to be sold by my clients.

 

            22.       Due to exceptional drought circumstances affecting the North and the majority of the West of New South Wales and a considerable part of Queensland, agistment was extremely difficulty [sic] to find and if it was available was very expensive.”

 

Under cross-examination, Mr Cameron said the reduction in supply of cattle going through the Gunnedah market did not lead to an increase in price of “clean cattle”; that is, cattle not affected by CFZ contamination.  He said he had not consulted any records but his recollection was that:

 

            “the result of the contamination was that buyers didn’t participate in the market, didn’t compete in the market so the price for the clean cattle was negatively affected rather than increased.”

 

The second witness on market conditions was Robert Alastair Walker.  Mr Walker lives in Gunnedah.  In various capacities, over a period of about 20 years, he has been responsible for purchasing cattle for Woolworths Limited.  Woolworths is a substantial buyer on the domestic market; it purchases about 500,000 cattle each year.  In about November 1994 Mr Walker became aware of CFZ contamination and the domestic MRL of 1 mg/kg.  Notwithstanding this tolerance, from early 1995 on instructions from Woolworths, he did not purchase any contaminated cattle.

In oral evidence Mr Walker said there was an impact on the value of cattle that were suspected of being CFZ-affected.  His evidence proceeded:

 

            “What was the nature of that effect?---Well, buyers like myself wouldn’t buy them so there was a large discount because there was a very narrow market they were being sold into.

 

From your observation what was the amount of the discount?---I would think up to 50 per cent.

 

Can you tell us whether there was an effect on the export market?---Definitely.

 

Was the effect on the export market from your observation greater or less than the effect on the domestic market?---Greater.

 

How much greater?---Well, I wasn’t buying the cattle but my observations would be - well, cattle that would be locked in at $3 I’d say would be about $1.20 on the - being pushed onto the market.

 

From your observations were there any buyers in the export market for CFZ affected cattle?---Not as fat cattle, no.”

 

In normal times, Mr Walker explained, there are different markets for export and domestic cattle; “the local trade would go to about 260 kilos dead weight and the export market is about 280 kilos and above”.  Generally, export cattle carry more fat than domestic cattle.

The existence of separate markets was also asserted by Daniel Andrew Wilkie, an accredited livestock assessor carrying on business at Yelarbon, Queensland.  In that business, Mr Wilkie attempts to find buyers for clients’ livestock.  After November 1994 he sought purchasers of CFZ-affected stock but found this difficult.  In particular, he tried to sell export stock on the domestic market but found this “not impossible, but very difficult”.  If he succeeded, a discount had to be allowed, generally 33.3 %.  Because they were forced to retain cattle they would otherwise have sold, many of his clients had overstocking problems.

Mr Wilkie was asked about the situation where a grazier had two mobs of cattle, one CFZ-affected and one not.  He said, in that situation, it was possible to sell the CFZ-free cattle without a discount, but only where it was possible to identify them by statutory declaration.  Often the problem was that cattle were mixed, in which case “the whole mob became one”.

Evidence was given by Stephen Mathers, manager of the Caroona feedlot of Australia Meat Holdings Pty Ltd, of the unwillingness of that company to purchase CFZ-affected cattle and the precautions it took to avoid doing so. Australia Meat Holdings is one of the largest cattle processors in Australia.  Its interest is primarily in the export market and that was the focus of Mr Mather’s work.

Counsel for the applicants, Mr J Rowe, tendered a witness statement signed by Associate Professor Donald MacLaren of the Department of Economics in the Faculty of Economics and Commerce at the University of Melbourne.  Attached to that statement was a report prepared this year by Professor MacLaren, in conjunction with a post-graduate student named Steven Margelis, entitled “Expert Report on Economic Effects of Chemical Contamination on Australia’s Exports of Beef”.  The report contains much interesting information, including that exports account for about two-thirds of Australian beef production.  I need do no more than quote its Conclusion:

 

            “From the data available, it has not been possible to prove that contaminated exported beef has had a significant, deleterious, long-term effect on export earnings and domestic prices because the tonnages affected were small relative to annual volumes and because the response by consumers in the importing countries is diffused through time.  Nevertheless, the image of Australian beef has been lowered successively over time by a series of contamination scares which have been compounded in recent years by the depressed state of the international beef market.  Such events provide additional justification to the Japanese to restrict imports of beef from Australia and to substitute beef from other countries.

 

             Japan is the most important export market for Australian beef and in that market, the beef is identified by country of origin.  Hence, once consumer confidence has been shaken or lost as a consequence of the importation of contaminated Australian beef, there is a feedback effect on import volumes and prices (hence revenues and profits) from Japanese consumers through to cattle producers in Australia.  The second most important market is the U.S. Australian beef exported to that market is used as manufacturing beef and is, therefore, not subject to consumer sentiment in the way in which it is in Japan.  However, U.S. sanitary regulations are strict and import bans have been used to stop imports.

 

             Competition on the basis of guaranteed quality with other suppliers to the Japanese beef market is crucially important to the long-term success of the Australian beef industry, i.e., to its cattle producers, beef processors and exporters.  The ability to compete on quality is impeded when contaminated meat slips through domestic inspection in Australia only to be discovered in the importing countries.  The evidence from the price statistics for Gunnedah and related markets is that the contamination occurring in late 1994 had a short-term, depressing effect on cattle prices at saleyards of around 10 %.  The depressing effect on incomes then follows.  Such a transitory effect of contamination should not be interpreted as inconsequential because the long-term, negative consequences already noted above are serious for the Australian beef industry.” [Emphasis added.]

 

Professor MacLaren was not asked to attend for cross examination.  There has been no identification of the “price statistics for Gunnedah” mentioned in the final paragraph.

Against this background information, evidence was given by Ian Charles Aberdeen, an agricultural loss assessor assisting the claimants, of his reason for allowing a premium in calculating “Without Helix” live cattle prices.  Mr Rowe referred him to the claim of Bruce Henry Gunning, a group member, where he adopted a “Without Helix” price of 135 cents per kilogram, but the ICI assessor conceded only 125 cents.  It was agreed the latter figure reflected the actual price at the time.  Mr Rowe asked Mr Aberdeen why he allowed a premium, to take the figure to 135 cents.  Mr Aberdeen replied:

 

            “The explanation goes back over the history of assessing these Helix claims which I began to do in January 1996.  At that time, I was assessing these claims in association with an assessor from the other side and a process was being used for estimating a price without-Helix of simply looking up a price series that was available from the Meat Industry Authority for various sale yards; weekly prices; average monthly prices.  If you knew the weight and the sex of the animal, you looked up the price and there it was.  In this case, 125 cents and there’s other examples.  During the course of 1996, I came across more and more evidence that the Helix event had affected cattle prices, generally, across Australia and in particular sale yards, it was having a devastating effect on certain pens in that sale yard where buyers were walking away once they knew these cattle were Helix affected yet all of these prices were being recorded and reported in the price series so, clearly, these price series were the prices of cattle in a with-Helix situation.  They patently were not reporting the prices that would have been ruling in those sale yards in a without-Helix scenario and I came to the conclusion that it was just inappropriate to use these price series.  It was then necessary to come to a view on what adjustment should be made.  It still seemed reasonable to use these price series that we have available and are still obtainable from the - now the National Livestock Reporting Service.  There was evidence that the overall price for meat and cattle in a Australia had been depressed by ten per cent.  The potholing in particular markets where a pen was ignored by many buyers seemed to be giving a depression of 30 per cent, up to 50 per cent and, so, if all of that was being picked up and reported and averaged in these price series, I came to the conclusion that adjusting the price series up by ten per cent would be a conservative adjustment that would better reflect the prices that would have been reigning through this period if there had been no Helix  problem.”

 

Mr D Habersberger QC, who appeared with Mr G McArthur for the respondents at this hearing, cross-examined Mr Aberdeen about 1994 and 1995 prices for various types of cattle.  Mr Habersberger showed Mr Aberdeen the “Weekly Average Indicator Prices” sheet issued by the Meat Industry Authority in respect of the first sales week of each month from February 1994 to December 1995.  These sheets break up cattle into five categories:  vealers, young cattle (280-370 kg), young steers (370-440 kg), steers (440-550 kg) and cows (420-520 kg).  “Young cattle” are subdivided into steers and heifers.  In respect of each of those categories, the sheet quotes a price in cents per kilogram liveweight, for each of sixteen New South Wales cattle markets.  Mr Aberdeen accepted the authenticity of this information.  Mr Habersberger then showed Mr Aberdeen some graphs compiled from the sheets.  They depicted prices for young cattle (steers) and young steers at Gunnedah/Tamworth and Wagga/Bathurst.  There was a separate graph for each of the two categories of cattle but the prices at Gunnedah and Tamworth had been averaged to create one line on the graph, as had those of Wagga and Bathurst.  Mr Aberdeen agreed neither graph showed a significant difference between the two price levels, but he questioned whether this would be true of other cattle categories.  Mr Aberdeen specifically agreed the compiler of the graphs had made a fair choice of centres; Gunnedah and Tamworth being the two centres most affected by CFZ and Bathurst and Wagga being well away from cotton areas.  Also Mr Aberdeen agreed it was a fair sampling technique to take the first sales week each month.

Subsequently, graphs were prepared for three other categories:  heifers, cows and vealers.  They followed the same format, averaging Gunnedah and Tamworth on the one hand and Bathurst and Wagga on the other.  These graphs were tendered in evidence.  In no case is there a significant difference between the two graph lines.

In his closing submissions, Mr Rowe acknowledged there is no evidence that liveweight prices of clean cattle were lower at sales in cotton areas than non-cotton areas.  But he suggested the effect of CFZ contamination was to depress cattle prices generally.  If that were so, it would have caused loss to cattle producers without CFZ-affected cattle, as well as those who owned  CFZ-affected cattle but also sold clean cattle.  The loss of the former group would not be recoverable as they were outside the respondents’ duty of care; but that would not be a reason for denying recovery to members of the latter group.

However, there is a question whether it is correct to claim a CFZ-caused general depression of prices.  There is no evidence of a general drop in live cattle prices after CFZ contamination became known.  Professor MacLaren did not claim this; he referred to “price statistics for Gunnedah and related markets”, whatever they were.  It is, of course, possible that publicity about CFZ contamination caused some consumers to eschew beef, thereby reducing demand for domestic cattle. Such a reduction would tend to depress domestic cattle price levels.  Against this, there was certainly some CFZ-related reduction in supply, caused by CFZ contaminated cattle being held off market.  This reduction would tend to increase prices.

Although relevant statistics are presumably kept, nobody put before the Court any evidence as to the volume of cattle sold in Australia, or slaughtered, for the domestic market.  So it is not possible to say whether there was any significant volume variation in the period immediately following discovery of the CFZ problem.  Nor is it possible to say whether the net effect of CFZ contamination was to increase or depress market prices for clean cattle.  The five graphs all show relatively high prices in the first half of 1994, compared with what followed.  However, if one examines the graph lines from July 1994 (five months before the CFZ problem became known) to December 1995, in no case is there evidence of a general price decline.  In each case the graph bumps up and down around 120 cents, except for cows where it is 100 cents.

The case for allowance of a premium is not established.  When the parties rework the calculations in the light of this judgment, they should eliminate the claimed premium.

 

 

Interest

At one stage there was a difference between the parties concerning interest.  That was resolved, the agreement being that pre-judgment interest should be allowed at the rate of 12% per annum on any sum found to be due, as from the date when the loss was sustained or the expenditure incurred.  The parties kindly indicated they would calculate the amount payable to each of the present seven claimants in the light of agreements already reached in respect of many items and my rulings on those remaining contentious.  They will calculate interest on the basis payment will be made on or before 12 December 1997.  When that is done, it will be appropriate for me to make orders in accordance with the prototype short minutes of order attached to these reasons.  When the parties have agreed on the sums to be inserted in respect of each claimant, they should submit short minutes to my associate.  I will make the order in chambers.

Taxation

The effect of the losses sustained by the claimants, and/or the expenditure incurred by them, would have been to reduce their taxable income in the years of loss or expenditure.  The damages awarded to the claimants will be taxable in their hands in the current financial year.  The situation will vary from one claimant to another, but it may be surmised that, in most cases, there will be a difference in income, and perhaps in marginal tax rates, between the relevant years.  As the claimants are all primary producers, the averaging provisions in the Income Tax Assessment Act 1936 will smooth the differences; but some may remain.  To the extent they do, the displacement of income from one year to another will advantage or disadvantage the claimant.  I do not propose to take that into account.  To do so would be immensely to complicate the task of assessing damages.  It would be necessary to consider each claimant’s taxation position and rework his or her averaging calculations.  The cost of doing this would be disproportionate to the benefit.  It would probably make little difference to the respondents’ total damages burden, but would greatly increase their costs burden.  Any findings will totally ignore income tax considerations.

 

 

The McMullin claim

The first of the seven cases falling for consideration, fittingly enough, is that of the applicants in the proceeding, Brian and Leone Margaret McMullin.  The parties have reached agreement on all but one aspect of this case.  That aspect is item 4 to the claim, described as “Lost trading opportunity due to contamination of ‘Doreen’”. 

“Doreen” is a property immediately adjoining “Auburn”, a property near Wee Waa, New South Wales that was owned by Mr and Mrs McMullin.  “Doreen” was owned by David Blows, a cotton farmer.  It contained a floodway area of about 1,000 acres.  The floodway was unsuitable for cotton growing but included approximately 500 acres of improved pasture.  The remainder contained natural seasonal herbages suitable for cattle.  In about 1990 Mr Blows entered into an arrangement with Mr and Mrs McMullin allowing them to agist cattle on the floodway.  They did this, from time to time as feed was available.

Early in 1993 the parties agreed to vary their arrangement as from 1 October, the commencement of the 1993 water allocation season.  Instead of Mr and Mrs McMullin paying agistment fees, they would temporarily transfer to Mr Blows 500 megalitres of their annual water allocation.  The varied arrangement was to continue until 30 September 1996.

In March 1994 Mr and Mrs McMullin put 170 steers on the “Doreen” floodway.  In July 1994 they removed 70 steers to a feedlot.  They removed other steers during August and September.  When Mr McMullin became aware of the CFZ problem, he tested some of the steers he had sent to the feedlot, and also some of those still on the “Doreen” floodway.  All tested positive.  Mr McMullin concluded the floodway was affected by spray drift from Mr Blows’ adjoining crops; the McMullins had never fed cotton trash.  So he removed the 42 head remaining on “Doreen” and did not use the floodway again.  In June 1995 Mr and Mrs McMullin sold “Auburn” to Mr Blows.  Mr Blows said in a witness statement that the sale did not affect the McMullins’ entitlement to use the floodway until September 1996, but in fact they did not.

The claim in respect of this item is limited to loss of the opportunity to use “Doreen” to depasture 120 steers.  Mr McMullin says he had intended to purchase 120 steers in about March 1995, and fatten them on the floodway for sale in late October.  The floodway contained sufficient pasture in March but Mr McMullin was unwilling to use it because of its CFZ contamination.  As he could not carry the steers on “Auburn”, he lost the opportunity of fattening those steers.  The net loss was originally calculated at $9,035, before interest.  However, Mr and Mrs McMullin subsequently agreed to adopt a lower average liveweight figure, so the loss will be reduced by about $2,000.

The issue is whether I accept Mr McMullin’s evidence that “Without Helix” he would have purchased steers to graze the floodway.  I have no hesitation in doing so.  Mr and Mrs McMullin had done this in 1994.  They had useful rain early in 1995; there is no reason to disbelieve Mr McMullin’s evidence about the availability of feed.  Although Mr and Mrs McMullin were not then paying money for the use of the floodway, they had given up part of their water allocation in return for the right to graze it.  Commercial sense dictated they do so.

The McMullin figures should be calculated on the basis that item 4 is allowed.

The Gunning claim

The second claim for consideration is that of Bruce Henry Gunning of “Emu Holes”, Quirindi.  At one stage there were numerous disputes in relation to this claim; but most have now been resolved.  Items 1.1, 1.2, 3, 4 and 5 are now agreed.  In relation to items 1.3, 1.4 and 1.5, the only question is whether to allow a price premium, as suggested by Mr Aberdeen.  For reasons already expressed, I decline to do so.  These items should be calculated without a premium. 

The other matters of contention are item 1.6, which relates to a claimed loss on the sale of 50 stud cow and calf units, and item 2, loss on bull sales. 

To put these items into context, I should say Mr Gunning carries on a Hereford and Poll Hereford stud.  He also runs commercial cattle.  It has been his practice since 1987 to hold an annual bull sale at his property, in July or August.  Buyers come from a wide area.  Between 1991 and 1994 Mr Gunning sold 50 to 60 bulls each year at the sale.  In addition, he made private sales.  In 1993-94 he sold a total of 97 bulls; in 1994-95, 94 bulls.

In July 1994, as a result of the drought, Mr Gunning commenced to feed his cattle fodder supplements, including cotton trash.  But he did not feed cotton trash to the bulls.  After he learned about the CFZ problem, Mr Gunning had some heifers tested.  The tests proved positive.  In early February 1995 Mr Gunning was instructed not to sell any cattle until further tests were made.  Samples were then taken from a variety of cattle, but not bulls.  Of 16 samples, ten revealed a CFZ level not less than 0.2 mg/kg.

The Tamworth officer of DepAg advised Mr Gunning that his property would remain on the CFZ monitoring list.  The result, according to Mr Gunning, was a reduction in attendance at his bull sale of 28 July 1995.  Mr Gunning sold only 36 of 54 bulls offered, a marked downturn on figures for previous years.

On 19 August 1995 samples were taken from nine cattle.  Eight returned CFZ results of less than 0.1 mg/kg (the lowest detectable quantity); the other sample showed 0.23 mg/kg.  DepAg revoked the detention order on “Emu Holes” but its tail-tag remained on the monitoring list.

On 1 September 1995 Mr Gunning entered into a management agreement with DepAg whereby he agreed, among other things, to provide a vendor declaration concerning CFZ contamination when selling any cattle from his property.  In return,  DepAg released him from tail-tag monitoring.

Samples from two cattle were taken on 9 January 1996.  One showed a CFZ level of 0.24 mg/kg, the other 0.07 mg/kg.

Although comparatively few of his cattle were CFZ-affected, Mr Gunning thought it would be damaging to his stud’s reputation to sell CFZ-affected stud cattle.  He explained the matter in this way in his witness statement:

 

            “... from conversations I had had with stock agents and observations at sale yards with regard to cattle affected by Helix I knew that any cattle which were possibly affected with CFZ contamination were not selling at any reasonable rate.  Also, by having cattle at the sale yards and having to declare that they had been exposed to CFZ through feeding on cotton trash, I would be advertising my status as being Helix affected and I did not want everyone to know of this as in operating a cattle stud it is important to maintain my reputation.  I considered that not exposing my cattle for sale at this time mitigated my loss from exposing the reputation of our herd to the stigma arising from the contamination issue.”

 

“Without Helix”, Mr Gunning claimed he would have sold 50 stud cow and calf units (a pregnant cow with calf at foot) in February 1996, whereas he eventually sold these cattle in dribs and drabs over a lengthy period having a median date of August 1997.  There are a number of problems about the computation of loss.  More fundamentally, counsel for the respondents challenge the claim there would have been a sale in February 1996.  They note the explanation of the proposed sale given by Mr Gunning in the course of his cross examination:

 

            “I thought we sort of had enough cows, maybe if we offered 50 it might recoup some of the loss that we had both through the drought and through Helix and get us back to a situation that might make my bank manager smile a little bit more, and that’s basically why we sort of thought about holding that sale then and those other sales had been pretty hot sort of thing and I thought it would have been a good opportunity to actually sort of get cashed up again.”

 

Mr Gunning did not actually pick out 50 cows, but he said:  “Well I knew which 50 I would sell, yes”.  Later Mr Gunning gave this evidence:

 

            “Did I understand you before lunch to say in answer to a question about the proposed sale of the stud cows that you said it was due to Helix, drought and the need to raise some cash?---Yes.

 

            Is that correct?---Well, the need to fill in a hole, yes.

 

            Moneywise?---Yes, well.

 

            Because  1994/95 that financial year had been a bad year for you?---Well, yes when you’re told you can’t sell any cattle it sort of tends to get a bit that way.”

 

Mr Gunning’s evidence was supported by a witness statement from Paul Dooley, stud stock manager of Elders Limited at Tamworth.  Mr Dooley said his company has been involved with the promotion and sale of Hereford and Poll Hereford cattle on behalf of Mr Gunning over a long period; he personally has been involved for about four years.  The statement went on:

 

            “6.       On or about January 1996 I had discussions with Mr Bruce Gunning in relation to the sale of some Hereford and Poll Hereford stud cow.

 

             7.        On the 12th February 1996 I prepared a market appraisal of Hereford and Poll Hereford stud cows and heifers on ‘Emu Holes’ Quirindi, New South Wales.

 

             8.        Discussions continued between Mr Bruce Gunning and myself in relation to the viability of conducting a sale for stud cows to be held during February.

 

             9.        Those discussions took place with the knowledge that Mr Gunning’s producer tail tag was included on the AQIS monitoring list and that the status of his tail tag indicated that his cattle had been contaminated with CFZ.

 

            10.       I was personally aware of the circumstances of Chlorfluazuron contamination of livestock and confirm that many of the cattle vendors and prospective purchases that I was dealing with at that time perceived cattle that had been contaminated were regarded as risky and either did not purchase such cattle or if they did purchase them required a substantial discount to compensate them for the perceived risk which they carried.

 

            11.       It was my impression that an acute lack of information and knowledge about the effect and rate of depletion of Chlorfluazuron residue had a significant adverse effect in the market place during 1995 and 1996.

 

            12.       In light of the adverse perception arising from the contamination status of Mr Gunning’s tail tag the proposed sale of stud cows and calves would not have been viable at the planned sale date of February 1996.

 

            13.       The proposed sale was abandoned in the light of Mr Gunning’s tail tag status.”

 

Mr Dooley was not cross examined. 

 

Mr Habersberger put a number of submissions concerning items 1.6 and 2.  First, as a “point of principle”, ICI was not liable for damage sustained by a claimant in respect of cattle that were not themselves contaminated by CFZ.   Mr Habersberger said Mr Gunning’s bulls were not intended to be sold for slaughter, but for stud.  They were not themselves affected by CFZ; anyway, CFZ contamination cannot be passed in semen.

 

Mr Habersberger’s argument fails to take account of the evidence that bulls often fail at stud or suffer a mishap; in which case they are sold for slaughter.  More fundamentally, I reject Mr Habersberger’s point of principle.  It cannot be said, as a general proposition, that losses in relation to non-affected cattle are irrecoverable.  In relation to any particular case, it is necessary to look at the claimant’s situation.  If contamination of some cattle causes a grazier, acting reasonably, to sustain reasonably foreseeable losses in respect of other cattle, those losses are recoverable.  A chemical manufacturer and distributor, that thought about the matter, would realise cattle contaminated with a persistent organochlorine would be difficult or impossible to sell; as they were valuable animals, owners would be reluctant to destroy them and might hold them on their properties until the contamination level declined; this might lead to overstocking and consequential losses in respect of other stock or other farm activities; it might also cause the owner to lose opportunities for other transactions. 

 

To relate the point to Mr Gunning’s case, it was foreseeable that, if any of his cattle became contaminated by CFZ, this would inhibit sales of other cattle.  The inhibition might stem from formal restrictions, such as those imposed by DepAg, from market wariness, or both.  Reputation is critical to a stud.  Even where sales could be made, it might be reasonable for a stud keeper to hold cattle off the market rather than be forced to disclose a problem such as CFZ contamination; particularly where potential purchasers do not fully understand the limits of the problem.

 

Mr Habersberger made the point that, on two occasions in his evidence, Mr Gunning mentioned Helix as an ingredient in his decision to sell the 50 cow and calf units.  He argues that, if Helix was one of the operating causes for the proposed special sale, it cannot find a place in the “Without Helix” scenario and the claim must fail.

 

As a matter of logic, the argument is appealing.  But it does not preclude the possibility that Mr Gunning sustained a loss because of his inability, or unwillingness in the circumstances, to put cow and calf units on the market in February 1996.  The real questions are, first, whether Mr Gunning would have sold these units but for his CFZ problem and, if so, what loss he sustained because he did not.

 

In addressing the first question, Mr Habersberger pointed to evidence that Mr Gunning had not held a special stud cow sale since 1987.  Mr Gunning said he was advised by Mr Dooley not to try to sell the cow and calf units until two years after the CFZ crisis - that is, until November 1996 - but Mr Gunning did not then sell cow and calf units.  His explanation was the cattle were then too poor; there were too many cows on the property.  He conceded there was no special sale in February 1997.

 

These are reasons for doubting whether, “Without Helix” , Mr Gunning would have held a special cow and calf sale in February 1996.  On the other hand, I have the unchallenged evidence of Mr Dooley that, in February 1996, he discussed this possibility with Mr Gunning and advised against it.  It is understandable Mr Gunning may have considered a sale.  He had been through a severe drought, involving the expense of fodder supplementation.  His 1995 bull sales were well below normal.  There would have been every reason for him to “gladden the heart” of his bank manager by selling any surplus cows in reasonable condition.  I have no reason to doubt these cows were surplus - they were eventually sold - or were then in saleable condition.  Accordingly, I see no reason absolutely to reject this claim.  Probably, as Mr Gunning said, the CFZ problem was a contributing factor in his disposition to sell; but that merely means he was contemplating the sale as an element in coping with the situation caused by ICI’s negligence.

 

On the other hand, there are numerous difficulties about the applicants’ item 1.6 computation in the Scott Schedule.  Mr Habersberger spelled them out in written notes proffered during argument.  He suggests the item, if allowed, cannot exceed $24,745.  I think his criticisms are justified; this is a maximum figure.  However, it is not the appropriate figure.  Although I accept Mr Dooley’s unchallenged evidence and Mr Gunning’s protestation of intention, I must take into account the possibility that Mr Gunning may not have followed through that intention.  He may not have sold 50 cow and calf units in February 1996, for reasons having nothing to do with his CFZ status.  I think the fair thing is to allow the item but discount Mr Habersberger’s figure by about 20 %.  I will allow it at the rounded sum of $20,000.  Interest should be calculated on that sum from February 1996.

 

Similar issues arise in respect of the claim for lost bull sales.  Once again Mr Habersberger puts the “point of principle” that the claim cannot extend to non-affected animals.  Once again, I reject it; it is clear that potential bull buyers were deterred by knowledge that Mr Gunning had some CFZ-affected cattle.  His July 1995 bull sales were well down on the previous year, despite a substantial easing of drought conditions early in 1995.  But, once again, there are serious problems about Mr Gunning’s computation of loss.  The computation assumes a continuing adverse effect until 1999-2000, despite the fact that bull sales have recovered well since 1995 when Mr Gunning only sold 67% of bulls offered.  At his 1996 sale, Mr Gunning sold 41 out of 56 bulls offered (73%); in 1997, 40 out of 45 (89%).  Mr Gunning said the more distant buyers returned this year; the continuing weakness in demand is now confined to buyers within the two local shires, Gunnedah and Boggabri.  Mr Gunning said, in the past, he would sell ten or eleven bulls to local buyers; in 1997 he sold six.  The sales figures show an average of about $2,000 per bull.  However, in assessing the loss, it must be remembered that bulls not sold to stud can be sold for slaughter, at a price of about $500.  So it appears there was a loss, in relation to local sales, of about $7,500 this year.  

 

Mr Habersberger pointed to evidence of declining registrations of Hereford and Poll Herefords.  This might have some effect on demand for Mr Gunning’s bulls but it is difficult to see why this would be localised.  Apparently he is one of Australia’s leaders in these breeds; I doubt this is a factor in his reduced sales.

 

I do not think it is possible precisely to determine the CFZ loss sustained by Mr Gunning in relation to bull sales.  But I am satisfied he sustained a loss from this cause, so I must do the best I can.  Taking a broad brush approach and assuming each lost stud bull sale costs him an average of $1,500, I think it reasonable to allow $55,500 for this item.  This figure is calculated on the basis that Mr Gunning lost, or will lose, 20 bull sales (worth a net $30,000) in 1995-96, ten sales ($15,000) in 1996-97, five sales ($7,500) in 1997-98 and two sales ($3,000) in 1998-99.  The loss is spread over four years, but heavily weighted towards earlier years.  It seems reasonable to allow interest on the whole sum for 18  months.

 

 

The Gallagher claim

 

Gerard William Gallagher resides at “Brooklyn”, Attunga near Manilla.  He runs that property, and two others, “Tarana” and “Tarrabal”, in co-operation with his parents and brother Michael.  The three properties are managed separately but all are mixed farming ventures, including cattle breeding and fattening, sheep and some cereal crops.  Mr Gallagher’s claim was made on behalf of himself, his mother and his brother in relation to losses suffered at “Tarrabal”.

 

Mr Gallagher gave evidence that the food reserves of the properties became severely depleted during the drought.  In the autumn of 1994 he planted an oat crop with a view to using it to fatten steers.  The crop failed due to lack of rain.  In May 1994 Mr Gallagher commenced to feed the steers oaten hay and barley.  In July he commenced to feed them cotton trash.  He did so for about two months until supplies ran out.  From then until November, he kept the steers alive with purchased hay, which was difficult to procure, and loppings of kurrajong trees.  In November 1994 Mr Gallagher learned about the CFZ problem.  From the remnants in his shed, he collected a small sample of cotton trash and had it tested.  It showed a level of 0.47 mg/kg.  In January 1995 fat samples were taken from five steers.  They revealed CFZ levels between 0.54 and 0.92 mg/kg and Mr Gallagher’s tail-tag was placed on the CFZ monitoring list.

 

In December 1994 Mr Gallagher decided to plant some forage sorghum in a paddock he had lying fallow.  He had prepared the paddock for sowing to wheat in 1994, but he did not sow because of lack of rain.  He left it fallow, with the intention of using it for a 1995 wheat crop.  In evidence Mr Gallagher explained it was not the family’s usual practice to grow forage sorghum, but additional feed was urgently needed and the fallow paddock was the only available place.  In January 1995 38 steers were put on the sorghum crop.  They remained there until March.  When they were removed, Mr Gallagher prepared the paddock for a wheat crop, which he sowed in May.  However, as he expected would be the case so soon after the sorghum crop, the yield from the wheat crop was poor.  The paddock yielded only 12 bags to the acre, as against 16 bags on an adjoining area that had been allowed to lie fallow  through the summer.  The same variety of wheat was sown in each area and Mr Gallagher uncontentiously attributes the difference in yield to the use of the land for sorghum.

 

There is a claim for loss on the delayed sale of the 38 steers (item 1) but there is no longer any dispute about that claim; or about item 2, concerning a delayed sale of 14 cull cows.  Items 3 and 4 raise the “premium” issue, discussed above.  I rule against Mr Gallagher on that issue.  There is also a question whether Mr Gallagher would have sold the 20 calves referred to in item 3 in July/August 1995, as is suggested on the “Without Helix” scenario, rather than in April 1996, as he did.  Mr Gallagher said in evidence he would not have sold the calves before September.  He tested four of them at that time.  One sample provided insufficient fat for a reading; the other three were below the domestic MRL of 0.2 mg/kg.  Tests were also made of samples from four cows and four steers.  All were below 0.2 mg/kg but Mr Gallagher did not immediately sell any of these cattle.  He said he spoke to someone in the Rural Lands Protection Board and was advised “to continue to try and put more fat on them”.  His stock agent gave him the same advice.  In the circumstances, I am not satisfied any delay in selling the 20 calves was CFZ related.  I disallow item 3.

 

The only live issue in relation to item 4 concerns premium.  I have dealt with that.  Items 5A and 5B are agreed but there is a dispute about item 5C.  This involves the cost of sowing the 1995 sorghum crop, mentioned above, and a 1996 sorghum crop over 8 ha.

 

The respondents dispute the claim for the 1995 sorghum on the ground the 38 steers fed on this crop were intended for the Korean market and were not up to the weight required for that market (400 kilos); so they had to be held in any event.  Mr Gallagher agreed they were not up to 400 kilos when put on the sorghum.  But that does not end the issue.  Mr Gallagher said he planted the sorghum crop on advice from Evan Sergeant, the district veterinary officer of the Tamworth Rural Lands Protection Board, “when he told me that they (the steers) would have a level of CFZ in their fat and the way to reduce the level was to dilute the CFZ by increasing the fat on the animal”.  He said, if the steers were unaffected by CFZ but less than 400 kilos, he could have sold them to a stock buyer “to put the last finish on them” and then put them through the abattoir.

 

Mr  McArthur conceded Mr Gallagher presented as a witness of truth.  I thought so too.  I see no reason to doubt his explanation for the 1995 sorghum crop.  I allow its cost, claimed in item 5C, and also the value of the reduction in wheat yield, claimed in item 7.  However, I disallow the cost of the 1996 sorghum crop.  I accept it was planted and fed to the 38 steers, but Mr Gallagher’s cattle were then all below 0.2 mg/kg.  There was no CFZ-related impediment to sale, even on the export market.

 

I note items 5D and 6 are agreed.

 

 

The Roughley claim

 

Since 1980 Jill Roughley and her husband have owned a property known as “Wellwood” near Walgett that contains 5,554 ha.  They have used the property for the breeding of Merino sheep and cattle.  In 1991 they decided to increase their focus on cattle production and to change the sheep enterprise from breeding to wool production.  Shortly afterwards they ran into severe drought and were forced to send some cows and calves away to agistment.  Over the summer of 1993-94 they received some rain but, by March 1994, the district was again drought-declared.  “Wellwood” received 364 points of rain in February 1994 and 166 in March.  Thereafter there was no rain until 28 October, when 76 points fell.

 

In July 1994 Mr and Mrs Roughley found it necessary to provide supplementary feed to their cattle.  They obtained an extension of their bank overdraft in order to purchase cotton trash.  In July and August they fed trash to their cattle herd, numbering 289.  In evidence, Mrs Roughley said the arrangement with the bank was that, if rain had not arrived when the supplementary feed ran out, they would destock completely.  In September 1994 Mr and Mrs Roughley discussed with the bank manager the possibility of a further extension of their overdraft so as to allow them to fatten some cattle in a feedlot before sale.  The manager agreed, on condition the proceeds of sale were used to reduce the overdraft.  Mr and Mrs Roughley sent 103 steers to a feedlot on 20 September 1994.

 

Mrs Roughley gave evidence that, as the drought was continuing, she and her husband decided to send all their remaining cattle to a store sale at Coonamble on 4 December.  However, just before that date, they learned about the CFZ contamination problem.  An officer of the Walgett Rural Lands Protection Board advised them to withhold their cattle from sale until further information was available.  The feedlot cattle were tested and proved positive.  They could not be sold for export, as had been intended, but were saleable on the domestic market.  Of the 103 cattle sent to the feedlot, 98 were sold, two died and three returned to “Wellwood”.

 

As a result of the positive test results, “Wellwood” was placed on the tail-tag monitoring list.  This meant cattle could not be sold without notifying the prospective purchaser; as Mrs Roughley put the matter in evidence, “our cattle operation was shut down”.  Mr and Mrs Roughley did not proceed with the proposed store sale. 

 

“Wellwood” is divided into two sections.  So Mr Roughley obtained a second tail-tag.  The idea was that fresh cattle could be purchased and grazed separately from the contaminated cattle.  They could be traded, using the new tail-tag.  On 15 February 1995, after heavy January rain, Mr and Mrs Roughley purchased 50 cows and calves and three heifers.

 

It was not until May 1995 that any of the cattle on “Wellwood” were tested for CFZ residues.  Five cattle were then tested.  All returned readings of less than 0.1 mg/kg.  As a result, “Wellwood” was taken off the tail-tag monitoring list.  Mr McArthur asked Mrs Roughley “did you then immediately sell all your cattle and complete your destocking program?”  She replied “It wasn’t necessary, it had rained”.  She agreed she sold only a small number of cattle during the following period and added “it was no longer necessary”.

 

There is no dispute about the cattle sent to the feedlot (items 1 and 3A).  After allowing some offsets, those items total an agreed figure of $5,786.  The respondent says this is the whole amount to be allowed for the Roughley claim; all other items should be disallowed.

 

Item 2 of the claim is for damage allegedly suffered by Mr and Mrs Roughley’s inability to destock their property.  It is calculated on the basis they would have sold all their cattle on 4 December and all their sheep by 30 June 1995.  The claim comes to $115,115 before interest, the bulk of it relating to sheep.

 

Mr McArthur points out there is no evidence any of the cattle remaining on “Wellwood” were CFZ-affected.  I do not find that a persuasive objection to the claim.  I see no reason to doubt Mrs Roughley’s evidence that she and her husband were advised not to attempt to sell stock until the position clarified.  So any failure to sell the remaining cattle on 4 December 1994 was occasioned by the CFZ problem.  By the time the position was clarified, rain had come.  Not only was there no longer a  need to destock, Mr and Mrs Roughley were interested in buying fresh cattle.

 

A more significant question is whether Mr and Mrs Roughley would have destocked on 4 December.  There is no evidence of preparation for this event.  Mrs Roughley says no preparation was necessary; it was simply a matter of loading the cattle onto a truck immediately before the sale. 

 

Mrs Roughley gave evidence that the destocking program had been agreed with the bank manager.  She obtained a memorandum from him and annexed it to her affidavit.  The memorandum was admitted into evidence without objection. it read:

 

            “As manager of Westpac Banking Corporation, Walgett Branch in September 1994, I was aware that John and Jill Roughley were placing young cattle into a feed lot for conditioning and that these cattle were to be sold and proceeds used to reduce the overdraft at the Bank.”

Mr McArthur  points out no reference is made to a general destocking program and argues this is a further reason for rejecting Mrs Roughley’s evidence of an intention totally to destock.

There are problems about the computation of item 2.  It seems to attribute to the respondents responsibility for all the financial vicissitudes of the “Wellwood” grazing business since November 1994.  On any view of the matter, the result is excessive.  But I need not go into the detail of the computation; I am not satisfied Mr and Mrs Roughley would have sold all their cattle on 4 December.

Mrs Roughley said the bank agreed in July:

 

            “to give us $10,000 feed to carry on, hoping that it would rain, until the cows calve out and if it didn’t we then had to de-stock and we planned to de-stock before the end of the year.”

 

A little later she said “everything was to be sold by December”.  Later she said they had planned to destock “during November” and to complete the program “by the end of November”.  Twelve head were sold from the property on 28 November, apparently before Mr and Mrs Roughley learned about the CFZ problem.  They probably became aware of it shortly after that date and have persuaded themselves they would have totally destocked on 4 December.  I see no reason to believe they would have done so.

Before the rain came in January, I think Mr and Mrs Roughley were conscious of the need to sell cattle whenever they could, both because of the problem of feeding them and pressure from the bank to reduce their overdraft. But I doubt they had committed themselves to a mass sale on 4 December.  To send all their cattle to a single store sale in the summer of a long drought would be to put all their eggs in a flimsy basket.  Mrs Roughley struck me as a resilient and pragmatic person.  I think she would have been prepared to “tough it out” with the bank a little longer while waiting for rain.

This conclusion does not mean Mr and Mrs Roughley suffered no loss from their inability to sell the cattle left on “Wellwood”.  On the contrary, the CFZ crisis arose at a particularly unfortunate time.  It impeded their ability to sell off cattle in an orderly way, as opportunities arose. They are entitled to compensation for that effect. However, it would be wrong to assess compensation in the manner set out in item 2.  In particular, I see no warrant for attributing to the respondents responsibility for the failure of Mr and Mrs Roughley to destock their sheep by 30 June 1995.  There is no evidence that CFZ contamination prevented them doing this.  Mrs Roughley gave no evidence of inability to sell sheep, or even of an intention to do so.  If they did intend to get rid of all the sheep by 30 June, that intention was presumably dependent on an absence of rain in the meantime.  No doubt it changed in January, when worthwhile rain arrived and fresh cattle were purchased.

I think it is impossible precisely to estimate the appropriate compensation for the restriction on sale of cattle imposed on Mr and Mrs Roughley by CFZ contamination.  Having regard to the scale of their enterprise and all the circumstances, I think it would be fair to allow a lump sum of $25,000.  This is intended to cover both item 2 and item 3B “feed and agistment”.

Item 4 claims $7,115 for lost wool production due to overstocking.  No evidence was given in support of this claim.  No doubt the forced retention of cattle put extra pressure on the available pasture, at least until rain arrived.  But there is no evidence this affected wool production.

Mrs Roughley gave evidence of heavy lamb losses in the spring of 1994, but it is not shown these were occasioned, or contributed to, by contamination of the cattle.  Mrs Roughley said it was bad practice to visit lambing ewes, so she did not know when the lambs died.  However, lambing started in September.  So it is likely many (probably most) died before the CFZ problem became known at the end of November.  Competition by retained cattle for the available feed is not shown to have caused the lamb losses.  More likely, the losses were related to the drought.

In summary, I allow $5,786 (with interest from December 1994) in relation to items 1 and 3A and $25,000 (also with interest from December 1994) in satisfaction of items 2 and 3B.  I disallow the remaining Roughley claims.

 

 

The Hill claim

Since 1970 Ian Christopher Hill has carried on a partnership with his wife, under the name “I C and K Hill”, on a property called “Boombah” near St George, Queensland.  The partnership has engaged in sheep and cattle trading, irrigated cropping and some dry land farming.  “Boombah” initially contained 2,850 ha but Mr and Mrs Hill sold 1,214 ha in 1980.  In about 1973 they established the Hill Family Trust which they control through a family company, I C Hill Pty Ltd.  Subsequently they established other trusts; their financial affairs are complicated. 

In 1987 I C Hill Pty Ltd purchased a nearby property called “Illawarra”, containing 259 ha.  Both “Boombah” and “Illawarra” had irrigation water rights. Thereafter the Hill group grew cotton on “Illawarra”, and also on “Boombah”.  In addition they used “Boombah” for dry land crops such as sorghum, which was used for silage, wheat and barley.  They also ran some beef cattle on the property.

The only entity in the group that owned cattle was the partnership, IC & K Hill.  The cotton grower is I C Hill Pty Ltd.  But Mr Hill explained he viewed the operation “as one business, with the entities being in place to maximise taxation advantages”.  Mr Hill said in 1994 the St George district was experiencing a drought.  The partnership had a large number of cattle on hand, there was little feed left on “Boombah” and it was necessary to purchase additional stock fodder.  They purchased cotton trash.   It was fed to the entire herd.

On 22 November 1994 a QDPI veterinary surgeon tested three “Boombah” cows for CFZ contamination.  The tests proved positive.  As a result, QDPI told Mr Hill he would have to test all cattle he offered for sale before any sale could proceed.  Thereafter tests were conducted regularly.  All samples were positive until 5 February 1996 when samples taken from 12 steers were clear.  Encouraged by this, Mr Hill sent 47 steers to the abattoir but 22 carcasses were condemned.  No payment was made for them.  The remaining 25 were clear.

Mr Hill contacted Don McDougall, an assessor advising ICI.  As a result, on 26 February 1996 ICI tested 131 bullocks, 122 yearling steers, 155 yearling heifers and 28 cows, a total of 436 six cattle.  They all tested positive, at levels up to 2.4 mg/kg.  Three hundred and twenty-five cattle had a level below 1 mg/kg, making them saleable on the domestic market, but they had been bred for export.

In April 1996 the Hill Property Trust purchased “Koopartoo”, a nearby property containing 14,000 ha.  The purpose of the purchase was to provide a place to depasture the detained cattle.  On 11 May 1996 316 contaminated stock were moved to “Koopartoo” and, on 12 July 1996, 113 cows and calves were taken there.  Hill Property Trust charged agistment to IC and K Hill.

In November 1994 Mr Hill had extensive silage reserves on “Boombah”.  Over the ensuing 18 months, much of it was used to feed the detained cattle.  In addition, Mr Hill planted Racecourse East Paddock (57 ha) with sorghum.  He said in evidence this was an area he would otherwise have planted to cotton.  Mr Hill also ratooned Pump Paddock (100 ha) back into sorghum instead of planting it to wheat.

The Hill claim totals $1,193,250.  Counsel for ICI submit it is grossly excessive and involves double (even triple or quadruple) counting.  They also say the only entity that may make a claim is the owner of the cattle, the IC & K Hill partnership.  Losses made by the other Hill entities are not recoverable; no duty of care was owed to them.  This second contention is correct:  see the liability judgment at 72 FCR at 79 and 102.

Item 1 is a claim for losses on the sale of cattle.  The respondents accept the claim in principle subject to an adjustment of the value of weaners on hand at November 1997.  This adjustment would reduce the item to $119,211 as at November 1997, or $120,403 with interest to 12 December 1997.  Mr Rowe does not dispute the need for this adjustment.  It should be made.

Items 2, 3, 4A and 4B should be considered together.  They all relate to the cost of feeding the cattle contaminated by CFZ that Mr and Mrs Hill were forced to retain until they could be sold at a reasonable price.  It should be acknowledged immediately that the Hill cattle were particularly badly affected by CFZ, and the problem enured for a long time.  Nonetheless, the claims embodied in these items involve considerable duplication.

Item 2 is a claim for handfeeding costs.  It is calculated by reference to “ration cost per day” but the evidence does not disclose the source of the daily rate.  There is no evidence the partnership (or anyone else) paid out these sums.  The item seems to be a computation of the value of the feed used for the cattle, but there is no evidence of the reasonableness of the rates.  Moreover, the assumption behind the computation is that, “Without Helix”, the herd would have been significantly reduced.  I see no warrant for this assumption. In 1992 Mr and Mrs Hill had made a decision to increase the herd.  Prior to November 1994, nothing had happened to change the appropriateness of that decision, to which they had given effect.

At 30 June 1992 IC & K Hill had 185 cattle.  The number increased to 728 head by 30 June 1993.  At 30 June 1994 it was 770.  At that time Mr Hill had 140 acres under sorghum.  He sowed a further 160 acres in November, taking the total to 300 acres as at the date he learned about the CFZ problem.  The sorghum was used as cattle silage.  The additional acreage is not consistent with an intention to reduce the herd.  By November 1994 the herd numbered 917 head.

Mr Hill responded to the CFZ problem by sowing even more sorghum.  Mr Hill’s evidence was that he sowed a further 250 acres before the end of the 1994-95 summer, taking the total to 550 acres.  There is no dispute about the additional acreage.  The question is whether it was at the expense of cash crops such as cotton and wheat.  Mr Hill claimed in evidence that, in October 1995, “Without Helix” he would have increased the family’s total cotton area from 550 acres to 940 acres.  In fact Mr Hill planted the same area in 1995 as in 1994.  In item 4A he claims for the loss of profits from the additional 390 acres, on the basis that he had to grow sorghum instead.

I do not accept that Mr Hill forewent an expansion of his cotton area in order to grow sorghum.  I am not persuaded he would have grown more cotton in 1995-96 than 1994-95.  Water allocation was tight, any expansion of the cotton area was extremely problematic.  In fact Mr Hill was advised in September 1995 that his 1995-96 water  allocation was nil.  I accept his evidence that a supplementary allocation was often made, so it was a “reasonable punt”, as he put it, to plant cotton in anticipation of one.  However, under the circumstances it would have been risky to increase the planted area.

In addition to item 2 (handfeeding) and item 4A (loss of cotton crop), Mr Hill claims the value of agistment on “Koopartoo” (item 3) and for the loss of a wheat crop due to the sowing of sorghum (item 4B).  The total amount claimed for these items is $842,315.  In cross examination Mr Hill acknowledged the total value of his herd at November 1994 was about $272,000.  It would have been absurd to spend $842,315 to feed a herd worth $272,000.  Moreover, Mr Hill conceded agistment could have been obtained at a rate of $2.00 to $2.50 per head per week. 

The herd reached its maximum size (1,219 head) in March 1996.  It fell back to 952 head by 30 June 1996.  That means it never exceeded its November 1994 size by more than 302 head.  However, Mr Hill said he had intended to sell 313 head in early 1995 (126 cows and 187 steers).  So it may be reasonable to take that figure to calculate, on a notional agistment basis, the cost of feeding the detained cattle.  If one multiplies the mean of the conceded weekly agistment rates ($2.25) by 313 head over 2.75 years, the result is $100,707.  I agree with Mr McArthur this is the maximum figure that can fairly be allowed for feeding costs.  Erring on the side of generosity, because the 313 head figure was not maintained over the whole period of 2.75 years, I propose to allow the rounded figure of $100,000 in satisfaction of items 2, 3, 4A and 4B.  As the loss spanned a period of three years, it is fair to calculate interest on the whole sum for a period of 18 months.  I note item 5 is agreed.

The Hanigan claim

Brian Allan Hanigan owns a property near Coonamble, New South Wales, called ‘Benah”.  It contains 1,882.6 ha.  Recently, with his wife, he purchased an adjoining property, “Glen Dhu”, of 1,151 ha.  With his wife, Mr Hanigan operates the Benah Cattle Partnership, the partners being himself, his wife and a family company called Benah Pastoral Company Pty Ltd.  The partnership engages in the raising of cattle and merino sheep and cereal cropping.  In the period immediately before November 1994 the cattle herd comprised 240 breeders and 100 to 300 trading steers.  There were also about 500 breeding ewes and an average of 485 ha of cereal crops (barley and wheat).

Mr and Mrs Hanigan first fed cotton trash to their cattle in April/May 1993.  In February 1994 they sent some cattle away on agistment.  When the agistment ran out, they sold these cattle.  There was no available feed on “Benah” and, in May, they resumed feeding cotton trash to those that remained there.  This practice extended over some months.

In early November 1994 Mr and Mrs Hanigan sent 120 steers to a feedlot, the idea being to fatten them up for sale.  Mr Hanigan said in his witness statement “it was a matter of minimising my losses”.

When he heard about CFZ contamination, Mr Hanigan arranged for his cattle to be tested.  Eight samples were taken, some from cattle on “Benah” and some from cattle in the feedlot.  All were positive, one result being as high as 2.4 mg/kg.  As the feedlot cattle were unsaleable, Mr Hanigan decided to return all 120 head to “Benah”.  On 14 December 1994 he put them in a paddock of lucerne, together with 33 cattle that had been in a feedlot on “Benah” itself.  The lucerne paddock contained some 137 ha.

Mr Hanigan said it was a rare event in his area for a lucerne crop to be good enough to cut and bale.  But he had thought this a possibility for his 1994-95 crop.  In November 1994 Mr Hanigan had had a tentative conversation with a bailing contractor.  However, when the cattle returned from the feedlot, he felt obliged to put them on the lucerne; there was no other available feed.  At about this time he sent away 38 (clean) steers, for agistment on his father’s property, and another 60 (contaminated) steers to his brother’s property.  The arrangement with his brother was short term only - one month.

In November 1994 Mr Hanigan had sown 170 ha of silk sorghum.  In light of the CFZ crisis, on 18 December, he sowed an additional 97 ha in Middle Paddock.  In his witness statement, Mr Hanigan explained:

 

            “The reason for this was that as the cattle had come back from the feedlot on 14 December 1994, I now had more cattle on ‘Benah’ than the property could carry and as a result, it was necessary to provide extra forage for these extra cattle and at this time I had not managed to find any agistment.  These cattle would not have been returned to ‘Benah’ but for their contamination status.  The paddock Middle Park had been prepared for wheat on 1 March 1994 and was lying fallow in preparation for sowing to wheat in mid 1994.  Unfortunately, as there was no rain at this time, this paddock had not been sown and was still lying fallow.  It was our intention to put wheat into this paddock in the 1995 season ...

 

As we had planted the paddock Middle Park with silk sorghum, we had to forego the opportunity of sowing wheat in this paddock as we had originally intended to do.”

 

In January Mr Hanigan sent 150 steers for agistment at a property known as “The Gunya”.  These steers consisted of the 60 that had been with his brother and 90 from “Benah”.  All but five were contaminated.

On 27 February 1995 the 38 clean steers agisted with Mr Hanigan’s father were returned to “Benah”.  Further tests about that time revealed the contaminated cattle were now under 1 mg/kg but Mr Hanigan’s stock agent was unable to find a buyer.

On 1 April 1995 six contaminated steers pushed open a gate and became mixed with 49 clean steers.

Mr Hanigan deposed to numerous attempts to find buyers for his contaminated cattle, but he was not successful until late July.  During August and September, he sent four consignments, totalling 197 steers, to an abattoir in Victoria.  The 197 steers comprised the 120 steers sent to feedlot in November 1994, plus 87 retained on “Benah”, less some deaths and local sales.

The claim made by Mr Hanigan is made on behalf of the members of the Benah Partnership.  Items 1A, 1B and 1C are for losses occasioned by delay in selling the steers, item 2 is for feeding costs and item 3 for testing.  These items are accepted by the respondents subject to two matters.  First, they contest the “premium” claim in items 1B and 1C.  For the reasons already given, I rule in their favour on that issue.  Second, they say no allowance should be made for delay in selling the 49 clean steers that became inadvertently mixed with six contaminated steers.  I appreciate the respondent’s point, but I think it would be unreasonable to reject this part of Mr Hanigan’s claim.  I am satisfied from Mr Hanigan’s evidence that the mixing was a genuine misadventure.  That it should have occurred, despite proper management, is not surprising.  There is always a risk of cattle becoming inadvertently intermingled.  It was foreseeable that, if some cattle became contaminated, they might intermingle with clean cattle and thereby cause delay in selling the latter.  I propose to allow the claim in respect of the 49 clean cattle.  Items 1A, 1B and 1C should be recalculated to eliminate the premium, with interest from the agreed dates.  Items 2 and 3 are now agreed, as is item 6.

Item 4 claims for the loss of an opportunity to trade an extra 100 cattle during 1995.  In evidence Mr Hanigan explained:

 

            “We did actually buy 150 steers, I think it was 152 extra cattle in early February when the season did get very good.  Had we have not had those Helix cattle still on hand, the 120, we would have bought another 100 odd.  We felt for sure, we felt in our hearts that although there would have been 120 [which] would have gone out of Walgett feedlot to Woolworths, we did not say that we were replacing the full 120, we felt that it would be more likely to be 100.”

 

During cross examination, Mr McArthur  pointed out to Mr Hanigan that he had not mentioned these 100 head in his affidavit.  He responded:

 

            “Well I’m not sure why it didn’t end up in the affidavit.  I sort of felt - I suppose I felt when we were writing this affidavit we were supposed to be talking about things that actually did happen not things that we might have done, so I guess that’s why it didn’t end up in there, but, yes, it would have been - yes, we definitely would have bought another 100 cattle on top of the 150 had we not have had those steers to come back from the feedlot.”

 

He said later he could have put the extra cattle on agistment but he and his wife thought:

 

            “Well, we had enough money tied up in cattle, we were exposed enough to the cattle market and with a couple of hundred of them we were not sure when we would be able to sell them.  It was a bit of a catch 22, we were sort of stuck a bit there we thought, so we didn’t want to lash out any further.”

 

Mr McArthur invites me to hold it was not certain Mr Hanigan would have purchased the additional 100 steers; I should assess this item as loss of a chance and discount it by one-third.  I am not persuaded to that course.  As Mr McArthur conceded, Mr Hanigan presented as an open witness telling the truth.  His explanations as to why he did not purchase the extra 100 steers and the omission of the item from his affidavit are both credible.  If he had been able to sell the 120 feedlot cattle, there would have been every reason for buying the extra 100 steers.  The drought had broken in the Coonamble area and agistment was easy to obtain.  I allow item 4.

Item 5A relates to loss of income from baling the lucerne grazed by the steers returned from the feedlot.  The amount claimed is $21,420.  Mr McArthur emphasises it was unusual to bale hay in this area and the crop had been grazed at an earlier stage of its life.  He also points out the claim exceeds the cost of purchasing feed.  He contends that, in the light of these matters, it would be appropriate to discount the claim by one-half.  Although Mr Rowe argues to the contrary, I think this is a reasonable approach.  I allow item 5A at $10,710 with interest from December 1994.

Item 5B is for the loss of a wheat crop in Middle Paddock.  The revised estimate of the loss is $39,552.  The respondents do not quarrel with the estimate but Mr McArthur says nothing should be allowed because Mr Hanigan “admits he panicked in planting this crop” and ultimately did not need it to feed the CFZ affected cattle.

Mr Hanigan gave the following explanation of his decision to use Middle Paddock for silk sorghum:

 

            “Well, the date that we got those cattle back from the feedlot was only a day or two before we actually sowed it.  If I had have had hindsight on my side I would have probably not sown it but with the panic and the disruption having these extra cattle back I felt that we would need the extra silk in.  The normal program is to sow some silk each year, we had a month before sown the paddocks that we normally, or in our normal rotation.  I hadn’t sown this paddock because when I had sown the paddocks that I had planned to put into sorghum we didn’t have these cattle back from feedlot, there was no Helix talk then, it was after we were landed with the extra 120 from the feedlot that I panicked and sowed this extra country that I had intended to fallow through to 1995.

 

            So, you sowed it with the intention of using it as forage?--- Yes.”

 

Mr Hanigan said he would have grown wheat in that paddock in 1995 if he had not sown it to sorghum.  He sowed the adjoining paddock to wheat and his loss was calculated on the basis that, absent the sorghum, he would have achieved the same yield in Middle Paddock.

Mr McArthur brought Mr Hanigan back to the subject during cross examination:

 

            “So, as things turned out, did you not need that sorghum to feed your Helix cattle for the time you had to hold them?---Yes, I think you could say that, yes, I probably reacted wrongly sowing that paddock to silk, I could have probably eventually found - it couldn’t be found the day, you know, the day that I sowed it, but when I sowed the silk sorghum I couldn’t find the agistment but as it turned out I probably could have found agistment or - you know, there was enough feed on the place.  I perhaps, yes, shouldn’t have sown it to silk.  And I was, yes, forced into it or I felt that with cattle coming home from the feedlot that I’d better try and provide for myself rather than try and find agistment if it became available later on.”

 

To deny this claim, in my opinion, would be to fall into the error of using hindsight to evaluate a claimant’s mitigation action.  It is necessary to put oneself in the position faced by Mr Hanigan on 18 December 1994.  He had recently learned his cattle were CFZ contaminated and not readily saleable, if at all.  He had brought 120 cattle back from the feedlot because there was no point in paying feedlot fees for them.  The drought had not yet broken.  He had little feed on the property and had been forced to put these cattle on a lucerne paddock that might otherwise have been worth cutting and baling.  Agistment was extremely difficult to obtain.  In my opinion it was reasonable for Mr Hanigan to err on the side of caution.  It is not to the point that this crop turned out to be unnecessary, largely apparently because of the good January rain.  In deciding to sow the crop, Mr Hanigan made a decision that was reasonable under the prevailing circumstances.

I think it is also not to the point that non-contaminated stock eventually grazed the silk sorghum crop.  If I accept Mr Hanigan as a witness of truth, as I do, I must accept that, “Without Helix”, the silk sorghum crop would not have been sown and the wheat crop not lost.  I allow item 5B, with interest from November 1995.

The Kirkby claim

Philip William Kirkby runs a Santa Gertrudis stud at “Wave Hill” Moree.  The stud is one of the original Australian studs of this breed.  It has enjoyed considerable success at shows and sales.  Mr Kirkby also breeds Australian Stock Horses at “Wave Hill”, and engages in the production of goats and Wiltshire sheep.  He grows oats for stock feed.

The drought affected “Wave Hill” severely.  In March 1994 Mr Kirkby walked 269 mixed Santa Gertrudis cattle, with 34 calves, on Travelling Stock Routes between Narrabri and Bellata.  Over the ensuring two months, he used other stock routes.  While on the road Mr Kirkby noticed his cattle eating cotton trash dumped on the stock route.  He did not directly feed trash to any of them.

In December 1994 Mr Kirkby received a letter from DepAg asking whether his cattle had been fed cotton trash.  He responded by informing the Department about them eating trash on the stock route.  His cattle were placed on the tail-tag list.  Samples were taken from four cows and one heifer on 17 March 1985.  Two tests were positive (0.85 and 0.38 mg/kg); the other three were below the detectable limit.

Because his tail-tag was on the monitoring list, Mr Kirkby felt himself unable to sell commercial cattle.  This affected his cash flow and he was unable to service his debt.  Moreover, the retention of the cattle resulted in a depletion of the available forage on the property, so he had to put cattle on agistment.  He sent them to a property about 50 kilometres from “Wave Hill” owned by a Mr Collier. Mr Kirkby said this was a rough property and further away than he wished, but he could not get anything closer.  The cattle sent for agistment included some of his stud cows.  Owing to the drought conditions, many of the cows had failed to conceive before the end of 1994, so Mr Kirkby sent a stud bull with them to the agistment property.  The calving rate of the agisted cows was lower than usual, allegedly because of a disease they contracted on the agistment property.  While on that property, the bull broke his stifle joint and eventually had to be destroyed.

In July 1995 samples were taken from 22 head of cattle and tested for CFZ contamination.  All returned readings below the minimum detectable level.  However, Mr Kirkby’s tail-tag remained on the monitoring list.  In December 1995 a further five samples were taken.  One showed a level of 0.11 mg/kg, the others were below the detectable level.  On 22 January 1996 Mr Kirkby was advised his tail-tag had been removed from the list. 

Most of the items claimed by Mr Kirkby are contentious.  The first is for loss sustained in respect of 95 cattle (20 cull cows, 34 steers, 15 herd cows and 26 stud cows) that Mr Kirkby said would have been sold for $72,820, “Without Helix”, in March 1995.  He said the same cattle were sold one year later for $47,504 causing a loss before interest of $25,316.  Mr Kirkby said he had intended “to go through my cows and pick out the worst of them and put them in the fat cattle sale ... and to sell some stud females at a big stud female sale that they have in Tamworth every autumn about March”.  He also would have sold some culled bulls and steers. 

Item 3 in Mr Kirkby’s claim is for $22,572 (before interest), being the cost of agisting the retained cattle; first on Mr Collier’s property and later on properties owned respectively by a Mr Bogandoff and a Mr Pyne. 

Counsel for the respondents suggest items 1 and 3 be considered together.  They say allowance should be made in item 1 for the calves at foot in March 1995, when the stud cow units would have been sold.  Some have been sold separately, some are still retained.  Mr Kirkby said the calves were worth $300-315 each.  Mr Habersberger argues that, if it be assumed nine calves were sold for an average of $315 each and the remaining 16 were now worth $600 each, credit should be given for $12,435 in respect of the 1994 calves.  I think that is correct.  But I disagree with Mr Habersberger’s further submission that a similar credit should be given for the 1975 drop calves of the stud cows.  These are taken into account in the “With Helix” scenario which predicates the sale of 26 stud cow units in March 1996.  If item 1 stands, the appropriate pre-interest amount is $25,316 -12,435 = $12,881.

However, two further submissions must be considered.  Mr Habersberger argues the cattle could have been sold on the domestic market at a discount, yielding a loss of about $10,650 but without the need for their agistment.  Alternatively, all could have been sold in July 1995 when the 22 samples all showed a CFZ level below 0.1 mg/kg.  He says this would reduce item 1 to four months’ interest on the delayed receipt of the sale proceeds and cut the agistment claim.

Mr Kirkby gave some evidence about his failure to sell off stock in July:

 

            “And you were aware, were you not, that whilst you were being monitored you could get permission to sell individual beasts?---Getting permission to sell individual beasts and selling beasts is an entirely different thing.  We had a big cloud hanging over us and the stock agents did not want to have a bar of us.

 

            Would you agree that - I will put it this way to you.  Theoretically it was possible that all of those cattle - so the 18 that had been tested in July and come up less than 0.1 could have been sold, there was nothing stopping you selling them apart from the fact that no one may have wanted to handle them?---You could have given them away.

 

            The law did not stop you or the monitoring, the target tail tag listing did not stop you selling those cattle?---I was never told that I could sell them.  When I was told that we were on the monitors list, we were never then told that we were free to sell cattle until they told us we were off the targeted tail list.  So whether that’s a slip up from the government department or who I don’t know but nobody ever told me I could sell any cattle.

 

            What were you told when you were put on the target tail?---That we weren’t to sell cattle.

 

            That what?---That we were not to sell cattle.

 

            Whatever the reading?---Well, the whole place - once you have a dirty animal in your place your whole herd, it’s like anthrax or something, once you have had it your whole herd is tainted with the stigma and the meat buyers don’t want them and the government treats you as if your entire herd had it.

 

            When do you say you came off the list?---I think it was in February 1996, wasn’t it?”

 

Mr Kirkby was asked how it was, then, that he had been able to sell stud bulls in September 1995 at sales in Tamworth and Innisplain, Queensland.  He replied:

 

            “I went to the government Rural Lands Board veterinarian and told him my bind, that I had to have some money to live on and I had these bulls ready to sell and he went into the history of the bulls and he said, look, I know these particular [bulls] weren’t on the route, they are clearly identifiable, they were big bulls, they were not taken on the stock route but because our cows were on the stock route and we had not kept accurate record of which cows were and which ones weren’t, all our cows were considered doubtful.  But the veterinarian was prepared to accept that these particular bulls had not been off the property and he knew that because he knows my operations and he was prepared to vouch for those bulls.”

 

This answer was not challenged or contradicted.  Its significance is that not even the Rural Lands Protection Board officer seems to have thought it would be possible for Mr Kirkby to sell cattle generally; he accepted a special argument about the bulls not having been exposed to the cotton trash.  Under those circumstances, it seems to me unreasonable to argue Mr Kirkby should have appreciated he could sell other cattle.  He said elsewhere in his evidence:

 

            “As far as I’m aware but, when your property becomes targeted and goes on to the targets everything is considered to be contaminated, that’s how it reads, that’s how the Act was that even though some of mu cattle hadn’t been on the stock route in the eyes of the law the whole herd is quarantined.  They are not prepared to split them and say:  these were and these were not.  Of course, we did not have accurate numbers of which cow went on the route and which cow didn’t.  We simply put the ones on the route that we felt that could best endure that situation and kept the ones at home that we felt should stay at home.”

 

With the benefit of hindsight, it can be argued Mr Kirkby might have more actively pressed his position, but I am not prepared to say his reaction was unreasonable under the circumstances that then prevailed.  I allow item 1 at $12,881 (pre-interest).  Interest should be calculated from March 1995.

I also allow item 3, but I think it ought to be reduced by 15%, as Mr Habersberger suggests, in order to take account of the adjustments set out in his written submissions.  I allow this item at $19,186, with interest from January 1996.

Item 2A is a claim for $13,570, being the difference between the actual proceeds of the sale of 10 bulls at the Tamworth sale in September 1995 and the proceeds of those sales if they had shown the same rate of increase over 1994 as Mr Kirkby received at Innisplain.  In my opinion this claim is misconceived.  The evidence establishes no nexus between prices at Tamworth and those at Innisplain.  The 1993 Tamworth prices were 67% above those of 1992; for Innisplain the increase was only 2.9%.  The 1994 Tamworth prices were 8.9% below 1993, Innisplain dropped 19.9%.  No doubt, as Mr Kirkby said, seasonal factors were important but 1995 Tamworth prices were coming off a higher base.  As Mr Habersberger pointed out, even though Tamworth prices rose less than Innisplain prices in 1995, the Tamworth 1995 prices were well above those of 1992, whereas the 1995 Innisplain prices were lower than in 1992.  I reject this item.

Item 2B is a claim for $10,485 (before interest) in respect of delay in selling seven yearling paddock bulls.  The “Without Helix” scenario shows these bulls being sold at $2,000 per head, as paddock bulls, in September 1995; yet “With Helix” being sold as fat cattle on 1 February 1996, at an average price of $502.12 per head.

As Mr Habersberger suggests, there is little evidence about this claim.  However, Mr Kirkby did deal in general terms with the disposal of paddock bulls.  He said, if he has not sold them by about November/December, “I usually cut their head off”.  He explained “it means carrying them for another year and there’s really not much demand after that”.  In light of this evidence, I understand item 2B as a claim that his tail-tag status prevented Mr Kirkby selling the ten bulls as paddock bulls in the spring of 1995; so he had to “cut their head off” after Christmas.

This item also raises the question whether Mr Kirkby could have obtained permission to sell.  Probably he could.  Moreover, there is a paucity of information about the demand for the bulls as paddock bulls.  Having regard to those matters, the item must be subject to a substantial discount.  I allow $5,000 with interest for two years.

Item 4 claims loss of value of 300 acres purchased by Mr Kirkby in 1993 with the intention of clearing it to expand his goat production.  The contention is he would have cleared the land in 1995 but was precluded from doing so because of financial difficulties occasioned by the CFZ problem; subsequently the land became affected by a State Environmental Planning Policy (SEPP 46) making clearing subject to consent of a planning authority.

There are several difficulties about this claim.  It is unnecessary to address them all.  It seems to me the claim falls at the first hurdle; it is not shown the CFZ problem rendered Mr Kirkby incapable of financing clearing in 1995.  No evidence was put before the Court as to his financial resources or borrowing ability or the effect of CFZ on either factor.  I disallow this item.

Item 5 is for poor calving in 1995.  The claim is for a shortfall of 60 calves, being the difference between the calving rate at “Wave Hill” and that at Collier’s property.  In fact, the difference was 30 calves, so the claim should be halved, to $9,900.

The poor calving rate was apparently caused by a combination of factors.  First, there was a poor conception rate in the spring of 1994.  Mr Kirkby said this was caused by the drought; it had nothing to do with CFZ.  Second, some of the cows suffered a problem that caused pus in their vagina or uterus, apparently inhibiting conception.  This may have been caused by bacteria picked up at Collier’s property, as Mr Kirkby believes.  But the two veterinary reports in evidence leave the cause of the problem uncertain.  It would be mere speculation to conclude there was a connection between the problem inhibiting conception and the fact of agistment at Colliers.  Leaving aside any other difficulty about the item, this must result in the claim being disallowed.

Item 6 is agreed.

Item 7 relates to the cost of carrying out weed control.  It is said this is higher now than it would have been if normal weed control had been carried out in 1995, and this was not done because of lack of financial resources.  But this is not established.  Even before the CFZ crisis, Mr Kirkby was spending only a few hundred dollars each year on weed control.

Item 8 is a claim for poor mare conception in 1995.  Mr Kirkby explained in evidence these were Australian Stock Horse breeding mares mated at “Wave Hill”.  He was asked the manner of mating the mares, pre-Helix, and replied:

 

            “We hand-served all the mares when they come in season and it was quite a complex task not only - well, there was a lot of time because you have to run the mares with the little baby foals separate from the mare to the big foals and the dry mares have to be run in other mobs because they will kick and knock the foals about and you cannot bring too many into the yards at once.  So, you have basically got three mobs of mares that have come into the yards, tease them with the stallion to find out if any of them are in season and then attend to them with the stallion, put them out, go and get another mob and so forth.  But because I was always checking on cattle and doing things like that it just became physically impossible for me to do it so we put the stallion out with the mares.”

 

Mr Kirkby said the conception rate in the paddock was “about half normal”.

There was evidence about the conception rate in other years.  It was not very satisfactory, mainly because of deficiencies in Mr Kirkby’s records.  It is sufficient for me to say I am not satisfied Mr Kirkby’s involvement with agisting out cattle caused a drop in his 1995 yearling crop.

Item 9 is a claim for replacement of the bull that broke its stifle joint on Collier’s property.  The claim is for $10,000, being the value of a bull of similar age and breeding.  Mr Habersberger argues the proper amount is $7,500; this was the amount paid by Mr Kirkby to replace another bull, injured while on agistment at Pyne’s property.  More fundamentally, he says, nothing should be allowed; the claim is for pure economic loss not consequential upon injury to contaminated cattle owned by Mr Kirkby, it was not foreseeable this particular injury would occur.

I do not accept Mr Habersberger’s more fundamental argument.  I think it was foreseeable that, if cattle became CFZ contaminated, they would have to be retained and some might have to be agisted on an inferior property.  Agistment on an inferior property exposes cattle to greater risk than if kept at home; both because the property may be rougher, with an increased possibility of injury, and because there is likely to be greater delay and difficulty in treating any injury.

On the other hand, it would be wrong to allow this item in full.  There is at least a chance the said injury could have occurred at “Wave Hill” with the same consequences.  I propose to adopt $7,500 as the replacement cost of the bull but discount the claim by one-third.  I allow it at $5,000, with interest from June 1996.

Orders

As previously indicated, I will leave to the parties the task of making the necessary arithmetical calculations.  I make no formal orders today; I will do that in chambers when draft Short Minutes are submitted.

I certify that this and the preceding thirty (30) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox

Associate:

Dated:              27 November 1997

Counsel for the Applicant:	J E Rowe
Solicitor for the Applicant:	Peter Long & Co
Counsel for the Respondent:	D Habersberger QC and G McArthur
Solicitor for the Respondent:	Philips Fox
Date of Hearing:	5-7, 10-12 November 1997