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.