Budd & Ors v Kambah Tea Tree Plantations Pty Ltd & Ors [2001] NSWCA 180 | Case summary

Budd & Ors v Kambah Tea Tree Plantations Pty Ltd & Ors [2001] NSWCA 180 | Case summary | Zoe

[26]

The factual circumstances 5 In brief, the plaintiffs alleged and the trial judge in large measure found that by reason of a "First Supply Contract" made in March 1995 and varied in May, June and August 1995, the first defendant (through the second defendant, Mrs Holding) agreed to procure from a seedling grower 1.3 million tea tree seedlings and supply them to the plaintiffs at 13 cents per seedling. Further, the plaintiffs alleged and the trial judge found that pursuant to a "Second Supply Contract" made in July 1995, the first defendant (through Mrs Holding) agreed to supply a further 2 million tea tree seedlings at 13 cents per seedling. Mrs Holding lived near Casino and the plaintiffs planned to plant the seedlings on a farm in that area. 6 It was common ground that by mid September 1995 the plaintiffs had paid for 1.3 million seedlings to be supplied under the First Supply Contract, and had paid $30,000 in relation to the 2 million seedlings to be supplied under the Second Supply Contract. 7 On 19 September 1995, according to Mr Budd, the first plaintiff, he had an acrimonious telephone conversation with Mrs Holding. In that conversation, according to him, she told him his seedlings were not in the Casino area but at Leppington and the majority had been lost by reason of frost. 8 On 25 September 1995 Mr Budd and Mrs Holding had another telephone conversation. According to him, he said that he did not accept that all the trees had been affected by frost. He wanted to know where they were. She said she had been forwarding the progress payments for the 1.3 million seedlings and a $30,000 payment for the 2 million seedlings to the relevant nursery. She refused to disclose the name of the nursery. He then said he had been to a nursery at Leppington run by a Mr Jim Vella. "He has told me the full story. You have lied to me. You have not paid Vella, and you have touched me for 2.5 cents per seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedling, otherwise all bets are off and I will seek legal advice."

[27]

The reference to 2.5 cents was a reference to the plaintiffs' contention that of the 13 cents the first defendant received per seedling, it was entitled to keep 2.5 cents, and pay the balance of 10.5 cents to the seedling grower, whereas in fact it had retained a total of 5 cents, and intended to pay only 8 cents to the seedling grower. 9 On 27 September 1995 solicitors retained by the first defendant wrote a letter to Mr Budd which was in part as follows: "We are instructed that on 25 September, 1995 you had a telephone discussion with Norma Holding of our client in which you purported to terminate two contracts with our client. We understand that the first contract, entered into on or around March 1995, was for our client to supply and plant into your property 1 million tea tree seedlings. The number of seedlings was subsequently increased to 1.3 million seedlings. The second contract related to a subsequent order placed by you for supplying and planting 2 million additional tea tree seedlings. In respect of the contract for supplying and planting 1.3 million tea tree seedlings, your purported termination constitutes a wrongful repudiation of the contract. Our client elects not to accept the repudiation and accordingly the contract remains binding on you. Please let us know when your property will be ready to have the seedlings planted. In respect of the contract for the supply and planting of 2 million tea tree seedlings, your purported termination constitutes a wrongful repudiation of the contract. Our client has committed itself to acquiring from its suppliers the 2 million seedlings and these arrangements cannot be cancelled. Accordingly, our client accepts your repudiation of the contract which is hereby terminated. Our client intends to hold you accountable for any losses incurred as a result of the wrongful repudiation. Our client will endeavour to sell the 2 million seedlings and will recover from you the difference between the agreed sale price of the seedlings to you and the price at which our client is able to sell the seedlings to other buyers. In the event that our client is unable to resell the seedlings, then our client will hold you accountable for the whole of the contract price for which you agreed to buy the seedlings. Our client will also recover from you any interest payable by our client on monies which our client must borrow in order to pay its suppliers for the seedlings ordered on your behalf, if this becomes necessary. In addition, our client is entitled to receive payment for the planting of the seedlings." 10 In the first half of 1996 the first defendant delivered 1.3 million seedlings. They were planted on the plaintiffs' farm by the plaintiffs, not the first defendant. 11 On some date in 1998, after an unexplained delay, the plaintiffs commenced proceedings. As their claims are formulated in the Further Amended Ordinary Statement of Claim in the appeal papers, they alleged the "First Supply Contract" in relation to the 1.3 million seedlings made in March 1995 and varied in May, June and August 1995. They also alleged the "Second Supply Contract" in relation to 2 million seedlings. They alleged that certain of the terms contended for were breached: because of errors in the cross-referencing, it is not entirely clear which they are. However, the essence of the allegations lay in three points:

[37]

The trial judge said that the plaintiffs, being "unwilling or unable to perform the contract" were not entitled themselves to terminate it for breach. There was no complaint from the plaintiffs about any element of this finding, either in relation to its legal character or in relation to the underlying factual finding about the unreadiness of the plaintiffs' land, in the Notice of Appeal or the Amended Notice of Appeal. Nor was there any complaint about it in the plaintiffs' written submissions or oral submissions to this Court. During the argument in this Court it was pointed out that no challenge had been made to the first reason advanced by the trial judge, and that none could be entertained or dealt with without an amendment to the Notice of Appeal. No application to amend was made. It follows from the finding under discussion that the contract remained on foot to be performed by the first defendant, and the first defendant was able to sue for damages for breach of the term set out in paragraph 10 above. These circumstances alone preclude any challenge to the $23,012.52 which the trial judge awarded to the first defendant for breach by the plaintiffs of the First Supply Contract (save as to calculation of quantum). 19 The second reason which the trial judge advanced for rejecting the plaintiffs' claim that the first defendant had breached the supply contract could have been expressed narrowly or broadly. 20 A narrow approach would have focused on the inquiries suggested by the Further Amended Ordinary Statement of Claim. In September 1995, did Mrs Holding tell Mr Budd, in the words of paragraph 15 of the Further Amended Ordinary Statement of Claim, that the tea tree seedlings under the First Supply Contract would not be available for delivery or planting in September or October 1995, and that the first defendant did not intend to supply the seedlings in accordance with the terms of that contract? And did the plaintiffs accept that repudiation on 25 September? Mr Budd gave evidence of three telephone conversations he claimed to have had with Mrs Holding on 5, 19 and 25 September 1995. In none of his evidence - whether in his statements of 10 May 1999, 18 August 1999 or 25 May 2000, or in his affidavit of 10 July 2000, or in his oral evidence - did he attribute to himself on 25 September 1995 words to the effect that the plaintiffs were terminating the First Supply Contract because of any statement by Mrs Holding that the first defendant did not intend to supply the seedlings in accordance with the terms of the contract. It follows that there was no evidence to support the crucial allegation in paragraph 17 of the Further Amended Ordinary Statement of Claim: "On or about 25 September 1995, the Plaintiff accepted the repudiation set out in paragraphs 15 and 16 above." The repudiation in question was Mrs Holding's allegedly having informed the plaintiffs that "the First Defendant did not intend to supply the tea tree seedlings under the First Supply Contract" (Further Amended Ordinary Statement of Claim, paragraph 16). Rather, on Mr Budd's evidence in his statement, the following took place. On 5 September 1995 Mrs Holding said it was dry, that it was getting late for planting, and that the seedlings ordered should be resold. He said he did not want that. On 19 September 1995 she said that the majority of seedlings, which were at Leppington, had been lost due to frost. She also said: "I am getting sick and tired of you and Leigh [Hicks] not trusting me. We can't do business with people who don't trust us to do the right thing by them, so I suggest you get Leigh to do all your work from now on. Goodbye."

[39]

She replied: "You will not be getting anything out of me. Leigh is now doing your work. You and I are finished!" 21 It is to be noted, first, that on this account it was Mrs Holding who terminated the First Supply Contract, not Mr Budd: he appeared to be willing to let her retain 8 cents per seedling and to accept delivery of the seedlings in due course, which on the plaintiffs' construction of the contract accorded with its terms. Secondly, the items of conduct complained of (lies about whether Mr Vella needed payment or had been paid, overcharging to the extent of 2.5 cents per seedling, and, if it was still pursued, the question of frosting) are not alleged in the Further Amended Ordinary Statement of Claim to be breaches characterised as repudiations which were accepted by the plaintiffs. Thirdly, if Mrs Holding's words were words of breach, Mr Budd does not attribute to himself language accepting the breach. 22 It follows that even taking Mr Budd's evidence at its highest, the pleaded case had not been established. 23 However, the trial judge went much further, and dealt with the plaintiffs' claim that the first defendant had breached the First Supply Contract on a much wider basis. She rejected Mr Budd's evidence of the September 1995 conversations. In particular, she preferred Mrs Holdings' version of the 25 September 1995 conversation which she summarised as follows: "She says that Mr Budd told her that he did not 'want you people to do any more work for me' because he did not 'like the way' the Holdings had been treating the Hicks. She says that Mr Budd wanted to take the tea tree seedlings he had paid for; but that he wanted his money back on the others. That she declined to do: she had already placed the orders." 24 The trial judge declined to find that the first defendant had refused to supply the tea tree seedlings or had in any other way repudiated the First Supply Contract. She found it was not a term of the contract that the first defendant should not be able to charge the whole 13 cents less whatever had to be paid to the seedling grower. She rejected an allegation made late in the trial by the plaintiffs that the first defendant was in breach of the First Supply Contract in that "Mrs Holding and Kambah Tea Tree were incapable of preparing Palmer Plantations' land and planting in a satisfactory manner as per the industry norm". She rejected an allegation that the first defendant had, by holding monies paid by the plaintiffs and not instantly passing them to the seedling grower, retained a "secret commission", because she said that no term that the monies be instantly dealt with in that fashion could be implied, and there was no term limiting the first defendant to 2.5 of the 13 cents as distinct from 5. Finally, she found that the plaintiffs had breached the contract, and ordered $23,012.52 as damages for that breach.

[41]

The structure of the plaintiffs' arguments on appeal 26 The plaintiffs' arguments on appeal can be divided as follows. 27 One head of argument was devoted to the proposition that the First Supply Contract was a contract only entitling the first defendant to 2.5 cents per seedling, on the basis that it had allegedly been represented that nursery propagation charges were 10.5 cents. If successful, this head of argument would lead to the conclusion that the first defendant had committed breaches of contract. But that conclusion would lack point, since they were not breaches of contract which the plaintiffs relied on to terminate the contract. Even if that were not so, there would be left standing and unchallenged the trial judge's first reason for concluding that the First Supply Contract had not been terminated by the plaintiffs. 28 A second head of argument was devoted to the trial judge's conclusions about the events of and before 25 September 1995. This too, even if sound, would be futile, at least in relation to the First Supply Contract, in the absence of a challenge to the trial judge's first reason for rejecting the plaintiffs' case that the First Supply Contract had been terminated by the plaintiffs, namely that they could not do so since they themselves were in breach. 29 A third head of argument related to a finding by the trial judge that she accepted Mrs Holding's evidence that before 25 September 1995 she had placed orders with four nurseries to fulfil the Second Supply Contract, and in particular that one of them, Bridestowe (later known as Tea Tree Distributors), had accepted an order for 0.8 million seedlings. The significance of this line of argument was that if correct it undercut the first defendant's claim to damages for breach of the Second Supply Contract. 30 A fourth head of argument (only put in writing) related to the trial judge's finding about an allegation made by the plaintiffs that when the plaintiffs entered the Second Supply Contract and paid $30,000 as a deposit, Mr Budd relied on a representation that Mrs Holding had already paid $30,000 to preclude a price rise of 1 cent per seedling which would otherwise take place on 1 September 1995, and that that representation was false. The trial judge found that Mr Budd did not rely on that representation. 31 A fifth head of argument advanced apparently to bolster the arguments in relation to the first four heads was, in the language of Ground 5 of the Notice of Appeal, that the trial judge "made findings on credit which were unreasonable, contrary to the evidence and unsupportable". 32 A sixth head of argument was that the trial judge exhibited actual bias and apparent bias, and by reason of her conduct of proceedings denied the plaintiffs a fair trial. This was largely the subject of Ground 3 of the Amended Notice of Appeal. 33 The seventh head of argument related to alleged errors in the calculation of the quantum of damages recoverable by the first defendant. 34 It appeared to be accepted by the plaintiffs that if they enjoyed success on any of the first six heads, that would only lead to a new trial because of the heavy dependence of the trial judge's reasoning on credit findings and the inability of this Court to make credit findings of its own, but that if they enjoyed success on the seventh head, this Court could re-assess the damages. 35 If one were to set out each of the particular submissions deployed as part of each of the plaintiffs' arguments, were to set out the reasons for accepting it, rejecting it, or qualifying it, and were to assess how far any successful argument should lead to the relief sought, these reasons for judgment would be of unconscionable length. 36 The fact is, as the plaintiffs said to the trial judge and as the trial judge agreed, victory or defeat for the plaintiffs on liability turned entirely on whether Mr Budd was accepted as a witness or whether Mrs Holding was. The trial judge heavily criticised Mr Budd. She said he was "a person of no credit". His evidence was the opposite of "direct and consistent". It was "evasive and contradictory". In numerous specific respects he was disbelieved. Parts of his evidence were "contrived and deliberately untrue". When he appeared in person on behalf of the plaintiffs for three days he put "propositions to witnesses that were directly contradictory of his own and other evidence and inconsistent with the (much amended) April 2000 Further Amended Ordinary Statement of Claim." The trial judge said: "Mr Budd had a distinct tendency to add or vary matters in a way that he considered would assist the claim by the plaintiff partnership. I do not believe Mr Budd's evidence on any matter where it is not supported by an independent corroboration. I gave [sic] accepted some of his evidence where it is against his interests or those of the plaintiff partnership. There were very few points on which Mr Budd's evidence enjoyed support from any witness, including those whom testified for the plaintiff. I find much of Mr Budd's evidence to be contrived and deliberate fabrication." 37 On the other hand, the trial judge said of Mrs Holding: "I find that Ms Holding is an honest witness. She made various errors and misstatements - in both her correspondence with the plaintiff/cross-defendant and her evidence. Her propensity to accept matters put to her in cross-examination when she did not know the answer was unhelpful; and she was occasionally confused and a confusing witness. But I found her to be an honest witness, whose evidence was direct and consistent."

[44]

Did the First Supply Contract entitle the first defendant to only 2.5 cents per seedling? 39 The trial judge said: "As noted, much of the dispute centred on the plaintiff/cross-defendant's claim that the purchase price was broken up and terms of the payment arrangements. The plaintiff alleged that the contract included the following terms: 1. The plaintiff would pay to the first defendant the amount charged by the seedling grower to the first defendant for the propagation of the seedlings, being 11.5 cents per seedling (the Mr Hicks version) or 10.5 cents per seedling (the Mr Budd version). … I find that there were no contract terms about the break-up of the purchase price. The contract was only a single line price: 13 cents per tea tree seedling planted. … The plaintiff claimed that later contracts or variations contained a number of express terms, including that: 1. The plaintiff would pay the first defendant for the supply of seed an amount of 1.0 cent per seedling delivered; 2. The plaintiff would pay to the first defendant the amount charged by the seedling grower to the first defendant for the propagation of the seedlings being 10.5 cents per seedling; 3. The sums that the plaintiff was required to pay were payable when the first defendant was called upon to make an instalment payment to the seedling grower. I find that there were no such contract terms. … It was a term of the contracts that payment be made in 3 instalments, but none by reference to payments to nurseries." 40 She made these findings after a detailed analysis of the evidence of Mrs Holding, Mr Budd, Mr Hicks and Mr Palmer. 41 Mr Leigh Hicks was a farmer. He and his wife had known the Holdings for 15 years. Mr Crawford was a farmer, and he and his wife had known the Holdings for 40 years. The Holdings were specialists in tea tree farming. The Hicks and the Crawford family decided to commence tea tree farming, and the Holdings agreed to help them. Mr Hicks planned to visit Casino to look at suitable farms. He discussed his plans with Mr Budd. Mr Budd was attracted to the advantages of tea tree farming when Mr Hicks sought his advice, and the plaintiffs' partnership (which in substance consisted of Mr Budd, Yvonne Mary Budd, Mr Palmer and Mrs Palmer) was formed. The activities of that partnership were to be quite distinct from the activities of the Hicks family and the Crawford family. It was agreed that Mr Hicks, though not part of the plaintiffs' partnership, would act on its behalf for certain purposes.

[55]

The trial judge found that there was no agreement that the defendants would prepare the land for plantation, as distinct from undertaking the actual process of plantation and the steps immediately involved in that. She rejected the evidence of both Mr Budd and Mr Palmer about the 1 May conversation. 54 The reasoning of the trial judge supporting her findings may be organised into the following categories. 55 First, as a matter of objective fact, the first defendant did not propagate the seedlings which it proposed to deliver on its premises. It had tea trees, and from them it gathered seeds. It proposed to send them to a seedling grower for propagation. It did so after the March 1995 conversations. The seeds were then put in potting mix. The plants were then thinned out some weeks later. In due course it was intended that they would be delivered to the property in which they were to be planted by the first defendant. It follows that there were at least two stages at which the first defendant had an opportunity to make a "profit". First, the generation of seeds by the first defendant gave the first defendant an opportunity to charge for them. Secondly, the process of arranging for a seedling grower to propagate the seeds, and in due course the planting of the seedlings, caused the first defendant to incur costs independently of whatever the seedling grower charged and gave it an opportunity to charge. 56 Secondly, though the Holdings had been friendly for a long time with the Hicks family and the Crawford family, they had not been friendly with Mr Budd or his interests, or Mr Palmer and his interests. To them they were strangers. 57 Thirdly, it was unrealistic to suppose that the defendants would give up their high quality seed, go to the trouble of making arrangements with seedling growers, and plant the seedlings for nothing. 58 Fourthly, the proposition that Mrs Holding would commit the first defendant to a contractual obligation to charge no more than 1.5 cents (in March 1995) or 2.5 cents (in May 1995) more than the seedling growers would charge was unrealistic for a reason she explained in cross-examination thus: "you seen the way Mr Vella's price fluctuates, how can you price a job on saying to your client well I'll - I'm only charging you what the nursery charged me. You don't know what the nursery is going to finish up charging. That's why we put a 13c per seedling supply and plant to cover everything, so how could I put - say to you, look I'm only charging you 8 cents because that's all the nursery's charging me. Vella's started off at 8.5, they went down to 8, they went to 7, and if I got caught with Danny's seedlings and I had to fork out another 13,000, where was I going to get an extra one cent per seedling if I didn't cover myself by charging 13 cents per seedling, that covered everything." 59 Fifthly, in numerous respects Mr Budd's entire position was unsatisfactory.

[59]

The trial judge was doubtless influenced in her conclusions on this question by the general bad impression which Mr Budd made on her in all respects. 60 Sixthly, Mr Palmer's evidence of the 1 May conversation was suspect in that part of it was to the effect that Mrs Holding would prepare the land: this was in the face of much contrary evidence that it was not for the first defendant to prepare the land by removing stumps, clearing it, levelling it, carrying out drainage and road works, and removing unwanted fences. The first defendant's role was merely to carry out the process of planting by inserting the seedlings after ripping and hoeing. Mr Palmer's evidence was further suspect in that he said Mrs Holding said: "I will not make a profit, I will help you, I will make the profit out of the planting, out of preparing the land and sowing the plants." He estimated the profit level at 1.5 cents. The trial judge said: "On the basis of Mr Budd's July evidence about the cost of planting, Ms Holding would have made a profit of between 0.365 and 0.265 cents per seedling, if her operational costs were not more than Mr Budd's. The defendants/cross-claimant offered a slightly lower estimation of the cost of plantation for the purposes of quantifying its claim for damages on the cross-claim. That would have yielded a 'profit' of somewhere in the order of $4,000 for her services on behalf of the plaintiff partnership/s venture, inclusive of planting 1.3 million tea tree seedlings. Mr Palmer's suggestion that he believed that she would 'make' 1½ cents out of planting is not credible. He is an experienced businessman. I do not believe that he thought that planting would cost the Holdings nothing. Even if she were to donate her labour, it is difficult to see how he could fail to notice that there would be actual out of pocket costs, such as for fuel and insecticide and equipment depreciation. It is possible that Mr Palmer genuinely believes his evidence. But it is unlikely. It has the distinct tone of a fabrication. I do not believe Mr Palmer's evidence. I note that this evidence was not relied upon to particularise any alleged representation about not making a profit, although submissions were made to this effect (albeit without reference to this evidence)."

[61]

The plaintiffs' contentions 61 On what basis did the plaintiffs contend to this Court that the trial judge's reasoning and conclusions were inconsistent with other evidence pointing "inescapably" to a different conclusion? To use other language commonly used in this type of inquiry, how did she fail to use, or palpably misuse, her position of advantage? In what way did she rely on evidence which was inconsistent with the facts "incontrovertibly" established by the evidence, or evidence which was "glaringly" improbable? How was it not "reasonably open" for her to make the findings she did? 62 The plaintiffs submitted that the break up of the 13 cent charge was corroborated by four independent witnesses - Mr Hicks, Mr Palmer, Mrs Clark and Mr Crawford. However, the persons described as independent corroborative witnesses were in some respects not independent, in others not corroborative, and in one case not a witness at all. One of the witnesses was probably not a witness whose evidence was, in the end, admitted. 63 Mr Hicks could scarcely be described as independent. He had acted as agent on behalf of the partnership in March. He had had an acrimonious falling out with Mrs Holding in September. He attended the trial in the company of Mr Budd. Further, Mr Hicks' evidence about the March conversations was not directly corroborative of Mr Budd's and Mr Palmer's evidence of the 1 May conversation. Mr Budd did not narrate to the court any report by Mr Hicks of a break up in the 13 cents during the March conversations. Mr Hicks did not "corroborate" any other evidence in the March period before 1 million seedlings were ordered; rather, his evidence stood alone and itself called for corroboration. The trial judge gave reasons for doubting the reliability of Mr Hicks' evidence which were not irrational. Further, she said of another part of his evidence that his recollection was false. "He was open about his difficulty in recalling details five years after the events and that it was not easy to remember details 'if you haven't got things written down and a good memory', which was the position in which he found himself." 64 Mr Palmer, two of whose corporations were plaintiffs, could not be described as independent either. And just as Mr Hicks' evidence about the March conversations did not directly corroborate Mr Palmer's evidence about the 1 May conversation, so his evidence about the 1 May conversation did not corroborate Mr Hicks' evidence of the March conversations. The plaintiffs submitted that it was never suggested to Mr Palmer that, as the trial judge said of his evidence, it had the "distinct tone of fabrication". Mrs Holding's version was, however, squarely put to him. The trial judge was entitled to reject his denial for the reasons she gave, which were far from irrational. There was great improbability in Mrs Holding working for nothing, as Mr Palmer would have it on his version. 65 Mrs Clark's evidence was not corroborative. It was about another contract, not the contract between the plaintiffs and the first defendant. It was of questionable relevance. Mrs Clark's statement was tendered on 3 July 2000. The defendants objected to it as irrelevant. Mr Budd did not demonstrate its relevance. The trial judge ruled that it was irrelevant (Black 2/373D). On 4 July its re-tender was foreshadowed, and the trial judge was told that Mrs Clark had driven all evening from northern New South Wales to get to court in Sydney. Mr Budd again did not demonstrate the relevance of Mrs Clark's statement. The trial judge said (Black 2/453V-454K): "HER HONOUR: Mr Southwick, we could spend hours debating this, and it is going to be rerun every morning. My inclination is to admit it. It would seem to me to be completely irrelevant because I cannot see any circumstance in which a contract with someone unrelated is of any relevance. Now, it seems to me that rather than debate this every morning, we will end up taking more time, so the simplest course is to admit it. Mr Southwick, is there any prejudice in that? SOUTHWICK: The most significant difficulty of course is that my client is in the witness box and I can't take instructions from her. HER HONOUR: We will defer it until your client has finished cross-examination. SOUTHWICK: Beyond that, I agree with the proposition your Honour has put. It seems tragic to have Mrs Clark waiting around over something which is irrelevant and can't be cross-examined on. HER HONOUR: We are going to have this conversation every morning because every matter will be revisited by a subsequent application. SOUTHWICK: If it is allowed in we will deal with it on that basis. HER HONOUR: I will defer the decision until your client has finished cross-examination and you can seek instructions."

[65]

The 25 September 1995 events and their prelude 69 The plaintiffs' submissions on this subject criticise the trial judge's preference for Mrs Holding's version of the 25 September 1995 telephone conversation over Mr Budd's version. They also criticised her for relying on some parts of the evidence of the Vellas to conclude that "Mr Budd had decided to make alternative [arrangements] some time before 19 September". They submitted that the pattern of events in September, and other parts of the Vellas' evidence, made Mr Budd's version more probable. 70 First, the plaintiffs pointed out that Mrs Holding was not cross-examined as to the 5 September, 19 September or 25 September conversations. Mr Budd did put to her that one sentence in the 25 September 1995 conversation was not said, but no others: she denied that. Mr Budd asked her what else she could remember: she repeated her evidence in chief. Since it was the plaintiffs who had the right and the responsibility to cross-examine Mrs Holding on the conversations, their substantial failure to do so points strongly towards, rather than against, the trial judge's conclusion. 71 Secondly, the plaintiffs pointed out that on 11 September 1995 Mr Budd forwarded $43,000 to the first defendant, being the last $13,000 owing on the First Supply Contract, and a $30,000 "deposit" on the Second Supply Contract. They said this does not "fit easily or well" with the trial judge's finding that prior to 19 September 1995 Mr Budd had decided to make alternative arrangements. It is possible that the decision to do so was after 11 September 1995 and just before 19 September 1995. In any case, the critical date is 25 September 1995. 72 Thirdly, the fact that on 26 September 1995 the Vellas supplied Mr Budd with a quote of 7.8 cents per tree for 2 million tea trees suggests there must have been some prior contract inviting that quote: quite possibly before 19 September 1995, but if not before 19 September, at least soon after. There was evidence from Mr John Vella, to which the plaintiffs did not refer, that it would take a couple of days to a week to generate such a quote, and that it would only be issued after a discussion with the purchaser and an internal decision within the company, and after credit checks on the purchaser had been made. 73 A fourth matter relates to the quality of the Vellas' evidence. The trial judge relied on Mr Jim Vella's view that his meeting with Mr Budd was "during the colder months, about the winter time, some time in the winter". The trial judge said that was difficult to reconcile with a meeting after 19 September (which Mr Budd said was on 22 September). The plaintiffs put two arguments about the Vellas' evidence. First, they pointed to features of it which were consistent with Mr Budd's account of his visit on 22 September 1995. However, these similarities do not negate the conclusions of the trial judge on the fact that Mr Budd had made alternative arrangements before 19 September. Secondly, the plaintiffs, somewhat inconsistently with the first argument, said that their evidence was "At best conjecture" and "speculation". They said that neither of the Vellas provided a statement or affidavit of their evidence; each was called at short notice; with limited access to contemporaneous, but undated, documents, they were asked to recall events occurring 4½ years earlier; each had difficulty in recalling when the relevant meeting occurred, and each were vague and inaccurate in their evidence. However, the Vellas were certainly entirely neutral witnesses; whatever the grounds on which the trial judge might not have accepted them, the fact is that she did accept them; and her conclusions are not so irrational as to justify a new trial. 74 Fifthly, the plaintiffs submitted: "Relevantly, her Honour's 'alternative arrangements' analysis was never put to Budd and he had no opportunity to answer it; at no time was Budd cross-examined to suggest that his contact with the Vellas was as perceived by her Honour in her judgment; i.e. a decision to make alternative arrangements before 19 September 1995 …, and that the arrangements themselves with the Vellas began before 28 September … ; nor (unfortunately) were the Vellas cross-examined to that effect."

[66]

The first part of the submission was put with considerable emphasis several times in oral address in chief. It was said to be important because the trial judge's findings on "alternative arrangements" were said to have been a "springboard" to her overall rejection of Mr Budd's credibility. The whole submission is hard to understand. First, no one aspect of the trial judge's conclusions about Mr Budd's credibility appears to have been a springboard to any other aspect of her conclusions on that subject. Nextly, Mr Budd was cross-examined over more than two pages to suggest that he had a motivation to obtain supply direct from the Vellas and independently of the first defendant, and before 25 September 1995. "Q. Now, when you went and visited the Vellas, you found out the price for which you could obtain propagated seedlings? A. Yes. Q. And indeed, after 25 September you placed an order for some two million seedlings? A. Yes. Q. With the Vellas? A. Yes. Q. At 7.5 cents per seedling? A. Plus 3 cents freight, 7.8. Q. 7.8. Was it the case that you supplied seed to the Vellas? A. Yes. Q. Did you obtain that seed from somewhere else? A. Yes. Q. Where was that? A. Seed was obtained from a Sally Stewart. Q. What was the price that you paid Sally Stewart for seed? A. For two kilos of seed I paid $8,000. Q. $8,000? A. Yes. Q. I think the rule of thumb that you mentioned previously was you get one million seedlings from each kilo? A. Something like that, yes. Q. Does that translate to something like 2 cents a seed from Sally Stewart? A. No. Q. Perhaps you can work it out for me? A. Yes. HER HONOUR: So the price per seed was? What is the price per seed? SOUTHWICK: He just agreed with me about two cents, your Honour. I don't know whether he is calculating it again? A. I am having difficulty with this jolly machine. 8,000 divided by two million, isn't it? I keep getting 4.03. Q. Do you think you paid 4 cents per seedling? A. No, that's not right. I think it is point 04. HER HONOUR: Q. That means 4 cents per seed, does it? A. No, .04. SOUTHWICK: Q. Just under half a cent per seed, is that right? A. Yes. Q. So you are paying to Mrs Holding at 13 cents $260,000 pursuant to the order for the two million seedlings; is that correct? You indicated that a few minutes ago? A. Yes. Q. Plus if you are not ready to receive them until after July when you planted the 1.3 million you could claim holding costs; is that right? A. No. Q. You were asked to pay holding costs from Leppington with respect to the 1.3 million seedlings? A. I am denying that there was an order. Q. You are denying that there was an order placed at all for the two million seedlings? A. Yes. HER HONOUR: Q. Let's for a moment take the unusual step, because you have alleged there is a breach of contract for failing to supply the two million seeds in your statement of claim, that there was an order for two million seeds. Let's take that as a working assumption? A. Okay. SOUTHWICK: Q. What I am putting to you, Mr Budd, if you allow for a cost of roughly half a cent per seed across two million seedlings, that translates to a cost of $10,000 for that seed? A. Yes. Q. And that if you allow for the purchase of the propagated seedlings from the Vellas at 7.8 cents per seedling, including the delivery charges, that works out at $156,000, and that if you allow planting costs at 1.235 cents per plant, that works out at $24,700. Do you want to check those numbers? A. I accept the figures. Q. If you add those amounts together, 10, the 156 and the 24, 7, you get the figure of $190,700 as the cost that you ultimately paid for the two million seedlings? HER HONOUR: The difficulty I have with that proposition is that the charges raised according to the document put in evidence last time has different costs; 8 cents, sometimes 7 cents. SOUTHWICK: I am taking a figure that the witness has provided. I appreciate the difficulty For these purposes the approximate figure is sufficient. Q. What I am suggesting to you is at approximately $190,000 to plant, to have the seedlings in the ground, that represents a substantial saving over the $260,000 Mrs Holding was going to charge you? A. Of course. Q. Indeed, it represents an even greater saving than the mere difference between those figures if there are additional holding costs charged to you for not being ready to accept the seedlings? A. Your point? Q. What I am putting to you is that you had substantial financial reasons for wanting to get out of this second contract once you knew you could have the seedlings propagated by Mr Vella for around seven-and-a-half cents per seedling? A. That was only after the first contract was terminated. Q. But you see, you were aware, in September when you first spoke to Mr Vella of the prices, that he was charging for propagating seedlings? A. In conversations. He sent a fax, yes. It wasn't at 25 September, though. HER HONOUR: Q. Do you say on oath on 25 September you did not know the prices? A. Sorry, 22 September. Q. Do you say on oath that you did not know on 25 September? A. No, I do not. I withdraw that. SOUTHWICK: Q. You say, as I understand it, that there was no second order placed for two million seedlings? A. Not by me, no, or any partner of Palmer Plantations."

[67]

This illustrates incidentally Mr Budd's impossible position in, on the one hand, suing as a personal plaintiff for breach of a contract to supply 2 million seedlings (the Second Supply Contract, entered on or about 24 July 1995, according to paragraph 9D of the Further Amended Ordinary Statement of Claim), while, on the other hand, repeatedly denying that any such contract existed. But the cross-examination also shows a consciousness on the part of Mr Budd of the costs to be saved by arrangements alternative to the Second Supply Contract. The non-responsive answer to the fourth last question shows that Mr Budd was prepared to admit knowledge of the costs to be saved soon after 25 September. The fact that it was non-responsive was some indication of Mr Budd's sensitivity on the point. The second last answer is a concession that he knew the financial facts before 25 or 22 September. After the defendants had taken the court to the above passage in their address to this Court, the plaintiffs complained in reply that the cross-examiner had not put specifically to Mr Budd the proposition found by the trial judge that he "had decided to make alternative [arrangements] some time before 19 September." That quibble is so insignificant that it has a damaging impact on the entire argument. In reply the plaintiffs also went further and claimed that the defendants put no submission to the trial judge about Mr Budd's motivation to begin dealing separately with the Vellas before 25 September. In fact the defendants put the point in quite distinct fashion in their written submissions in chief and in their written submissions in reply (Black 3/642M and 649J). 75 As for the argument that the Vellas were not cross-examined about Mr Budd's alternative arrangements with them, Mr John Vella was cross-examined to establish the procedures which would have had to have been carried out before the 26 September 1995 quote was issued. His evidence is strongly suggestive of dealings between the Vellas and Mr Budd on cost either before or just after 19 September 1995. It was therefore unnecessary to question Mr James Vella in the same way. Obviously neither of the Vellas could be questioned about Mr Budd's personal mental processes. They were both questioned on matters of timing.

[69]

77 The first two arguments of the plaintiffs were: "(i) $30,000 worth of seed would amount to 6 kilograms (per Mrs Holding's evidence, Black Book 431U); a kilogram planted 1 million seedlings (Black Book 189K also Red Book 66F-J); hence the $30,000 worth of seed Mrs Holding said she delivered for the 2 million order would have in fact propagated 6 million seedlings. (ii) However, Mrs Holding's sworn evidence was that she gave a Mr Richard Long at Bridestowe 2 kgs of seed, the equivalent of 2 million seedlings (Black Book 431R-U); but she only ordered 800,000 seedlings from Bridestowe." 78 These arguments attack her evidence that in July she sent seed to propagators in relation to the 2 million order. The fallacy in these arguments is that she made it clear that the $30,000 worth of seed (equivalent to 6 million seedlings) was not all for the 2 million order. 79 The next argument of the plaintiffs was: "(iii) Mrs Holding's evidence of placing the order with Bridestowe for 800,000 seedlings was contradicted by Mr Lewis and Mr Evans: (a) Mr Lewis was a Property Manager for the company Tea Tree Distributors Pty Ltd) which purchased Bridestowe on 30 June 1996. Although he was not with Bridestowe in 1995, he said he was not aware of any orders placed by Mrs Holding for 800,000 seedlings in 1995 - which, given the payments made by Mrs Holding to Bridestowe/Tea Tree Distributors (Blue Book 374J-M), he ought reasonably have had knowledge of. Significantly, Mrs Holding's case as to the placement of the order not being put to him in cross examination. Counsel for Mrs Holding knew that documents had been produced by Tea Tree Distributors to the solicitors for Mr Budd, and were available in Court to be cross examined upon (Black Book 451M-U); they had been exhibited to the affidavit of Budd, sworn 10 July 2000 (Blue Book 323-339). (b) Mrs Evans, a Horticulturist, was the Farm Manager for Bridestowe from 1993 to about June 1996 and in that capacity was responsible for all of Bridestowe's seedling propagation (Blue Book 433H-K). Although he did not take orders for seedlings, he was in daily contact with the owner, Mr Aldwell (Blue Book 433N). Mr Evans said that in 1995 no propagation of seedlings was done for anyone other than Bridestowe itself (Blue Book 433Q-R); all propagation was for Bridestowe's own purposes (Blue Book 433V-W and 434I-J). He said it was not only not unusual for seed to be sent for propagation, but 'it never occurred' (Blue Book 434F and 435E-G). Mr Evans said that as the 'person in charge of all seed planting and propagation activities' for Bridestowe, he would have had to know about any seed allegedly sent for propagation, and by inference, any order (Blue Book 435I-J). He was not cross-examined to suggest there could be orders he would not know of. Relevant to Mrs Holding's payments to Bridestowe/Tea Tree Distributors, Mr Evans said that in February 1996 Mrs Holding purchased old Tea Tree seedling stock (Blue Book 435N-O); he affirmed this in cross-examination (Black Book 585I-P). Significantly, he was not cross-examined as to Mrs Holding's version of her having 'delivered 2 kilograms of seeds to Mr Richard Long' at Bridestowe, nor that the payments she had made in February 1996 totalling $10,000 was not for 'old stock', nor that the payments she made in September and November 19 96 totalling $20,082 was otherwise than in part payment for the purported order of 800,000 seedlings made in 19 95 . Nor was he cross-examined on the evidence Budd gave on the preceding day of the hearing of a conversation he'd had with Mr Evans about the 'old stock' (Black Book 570V-571M)." 80 Orally it was submitted that Mrs Holding was never recalled to deal with certain statements which she was said (in evidence which was rejected) to have made about Bridestowe. 81 This group of submissions advanced by the plaintiffs was directed to the following findings about Messrs Evans and Lewis. Neither had the benefit of any records. Taking orders was not Mr Evans' role, he being farm manager. A separate office handled orders. His knowledge of orders depended entirely on what he was or was not told by Mr Aldwell, who was not called. "He admitted openly that the sole basis of his affidavit was a combination of limited knowledge, unidentified and undated, and unspecified discussions with Mr Mike Aldwell, who was not called. Ms Holding may or may not have collected old stock seedlings in February 1996. How many? For how much? Why? Mr Evans did not know. I do not know."

[70]

As for Mr Lewis, he was property manager, and had only started work on 1 August 1996, nearly a year after the relevant time. 82 The first difficulty with this part of the plaintiffs' submission is that it does not controvert any of the matters on which the trial judge relied. Counsel for the plaintiffs themselves had submitted at the trial that there were no documents in the possession of Messrs Evans and Lewis. 83 Secondly, on the question of recalling Mrs Holding, the trial judge told the defendants' counsel when on 12 July he said that Mrs Holding was not available on 12 July and raised the possibility of calling her later: "You might assume if you seek the opportunity to call evidence that you will get a very hostile reception, Mr Southwick. Enough is enough." 84 Thirdly, on the question of how Messrs Lewis and Evans were cross-examined, it was scarcely necessary to cross-examine Mr Lewis in view of his absence from the business at the relevant time. Mr Evans had no documents which could be used for the purpose of cross-examining him, and the trial judge said that it "may be the case that that is simply pointless" for that reason. So far as the plaintiffs rely on the documents at Blue 2/323-339, they are Exhibits DMB2 and DMB3 to Mr Budd's affidavit of 10 July 2000. They were referred to in paragraph 34 of that affidavit, which was rejected. They are marked "Not Tendered". They should not have been included in the Appeal Books and should not have been relied on in support of the plaintiffs' submission. In any event, all the parts which might be material are illegible, and it is not possible to evaluate what useful cross-examination could be conducted on the strength of them. Further, the two witnesses were called at the very last moment of the trial. Failure to cross-examine Mr Evans about orders that he had no responsibility for or first hand knowledge about at that stage is scarcely culpable or significant. 85 The next submission of the plaintiffs was: "(iv) It is submitted that it was patently clear that the cheques drawn by Mrs Holding in respect of the supply by Bridestowe/Tea Tree Distributors have been demonstrated to be for seedlings unrelated to, and without nexus with, Budd/Palmer and the purported order for 800,000 seedlings: (a) The $10,000 paid in February of 1996 was for 'old stock' (Black Book 435L-O). (b) The $20,000 paid in September and November 19 96 was a fresh order, unrelated to the purported order for 800,000 seedlings in July/September 19 95 ; Mrs Holding agreed that those payments related to an order placed in September 1996 (Black Book 426I-U)." 86 In relation to the first proposition, the evidence reference is erroneous; and it is not clear that seed planted in September 1995 is not by February 1996 "old stock". As to the second proposition, it rests on evidence at Black 2/426I-U which was corrected at 430K. 87 Nextly, the plaintiffs submitted: "(v) Mrs Holding instructed her solicitor, Mr Pascoe, on 27 September 1995, to reject Budd's purported termination (Blue Book 32); on 9 November 1995 Mr Pascoe wrote to Leppington Speedy Seedlings, but to none of the other unidentified 'suppliers' for the 2 million seedlings second contract. The submission is put that the absence of any enquiry, or replies, from those other suppliers, coupled with the absence of any corroborative evidence from the suppliers themselves (other than Evans and Lewis from Bridestowe/Tea Tree Distributors, being called by the Plaintiffs) invites a strong Jones v Dunkel inference. Budd was precluded from cross-examining as to the circumstances surrounding this correspondence (Black Book 439-441T)." 88 The other suppliers did not have a relationship with the defendants which made their absence from the witness box a factor suggesting that their evidence would not have helped the defendants and that inferences favourable to the plaintiffs could be more strongly drawn. Further, the lateness with which the evidence of Messrs Evans and Lewis was put on made it impossible to apply that process of reasoning. The reason why Mr Pascoe wrote to Leppington Speciality Seedlings was to resolve the dispute over the 1.3 million seedlings, not the 2 million seedlings. The terms of the letter of 27 September 1995 from Mr Pascoe, which refer to "suppliers" of the 2 million seedlings, supports Mrs Holding's evidence. The reason why Mr Budd was not allowed to cross-examine was because client legal privilege was claimed, and it is not legitimate to draw any inference from the fact of the claim. 89 The next submission of the plaintiffs was: "(vi) The second contract for 2 million seedlings was for delivery in May 1996. Propagation of seedlings took between three and five months (Black Book 181R-S; 182P-Q). For delivery in May 1996 propagation had to be initiated in December 1995. This time frame was consistent with Mrs Holding's request, on 24 July 1995 (Blue Book 25), for the payment for that order, in the 30%/30%/40% regime, to commence 'before seeding down time, 17 November 1995.' This commencement date for propagation, viz 17 November 1995, left ample time after the phone conversation of 25 September 1995, for whatever orders that had been placed to be cancelled; the facsimile of 24 July 1995 confirmed delivery to occur in May 1996." 90 This argument rests on an assumption as to timing which the evidence does not support. The contract was for delivery in March, not May 1996 (Red 60W). Further, the argument appears to be an argument that the defendants failed to mitigate loss. That is a matter which should have been pleaded in the Defence to Amended Cross Claim. It was not. Nor was it advanced to the trial judge. It is an argument which might possibly have been defeated by evidence, for example, evidence that the orders could not, without breach of contract, have been cancelled. In those circumstances the argument cannot be entertained by this Court: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418. 91 The arguments of the plaintiffs in relation to the Bridestowe order do not justify either an order for a new trial or a reduction in the damages payable on the cross-claim.

[73]

The bias of the trial judge 96 The plaintiffs made it plain that they were not submitting that the trial judge had contravened any principle pursuant to which the court should assist litigants in person (which the plaintiffs were during the days on which Mr Budd represented them). The plaintiffs also made it plain that they were not alleging only apparent bias, but to some degree actual bias. In this they were more candid than most parties in their position. They said that because of the apparent bias and the actual bias they had not had a fair trial. They submitted: "… the ordinary observer of the trial would have had a reasonable apprehension that the trial judge was not bringing, and ultimately could not bring, an impartial and unprejudiced mind, to the resolution of the issues. There was continuing, excessive, judicial intervention: much of her Honour's comments were not only impolite, and uncomplimentary, but were pejorative, denigratory, belittling, depreciating, cynical, sarcastic, and derisive. Annexed to these submissions is an extract of 'Observations, Interventions and Comments by her Honour during the trial (annexure 'A'). Whilst any one, or a number of the instances, standing alone, may not lead to the view that the judge was not impartial, it is submitted that cumulatively, they lead, inexorably, to that conclusion." 97 To the complaints in Annexure "A" should be added the complaints in Ground 4 of the Notice of Appeal ("her Honour visited upon the Plaintiff procedural requirements and constraints which were in the circumstances unfair"). 98 It is not proposed to go to the particular passages complained of in view of their very great number. To some extent the plaintiffs complained of excessive intervention in the oral evidence of Mr Budd during his second period in the witness box while he was unrepresented; and in the oral evidence of Mrs Holding while the unrepresented Mr Budd was cross-examining her. To some extent the plaintiffs complained of questions or observations addressed to the unrepresented Mr Budd revealing scepticism about the plaintiffs' case, or the consistency of some particular step he wished to take with that case. To some extent the plaintiff complained of remarks revealing a lack of faith in Mr Budd's credibility. To a large extent they complained about attempts to ensure that Mr Budd complied with procedural and evidentiary rules relating to cross-examination while he was questioning witnesses called by the defendants. And the plaintiffs said of a great many of the trial judge's observations that they could be characterised by the adjectives set out in the second paragraph of the submissions quoted in paragraph [96] above. 99 The submission should be rejected for the following reasons. 100 First, in Vakauta v Kelly (1989) 167 CLR 568 at 572, Brennan, Deane and Gaudron JJ said: "Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object. The reason why that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her." 101 The plaintiffs submitted that that did not apply here. For some reason which is not entirely clear, the plaintiffs were not represented by counsel or solicitors for some days when the trial resumed in July. New counsel (who was junior counsel on the appeal) was then briefed. The plaintiffs submitted that they lacked legal representation throughout the period during which the statements complained of were made. That is true of most of them, though a few were made to the new counsel who appeared for the plaintiffs on 12 July. However, that does not answer the difficulty. If Mr Budd had considered that the trial judge was actually biased, or that he was being treated in a denigratory, cynical, sarcastic and derisive way, he would no doubt have passed that perception on to counsel who appeared on 12 July. Counsel had access to the transcript, and made good use of it in preparing substantial submissions very speedily between some time after 4 July and 10 July. Counsel did not protest at the statements made in his presence of which complaint is now made. Nor did he make any protest about the statements recorded in the transcript of which complaint is now made. In the circumstances waiver has taken place. 102 Secondly, the circumstances of the trial must be remembered. As the trial judge said, it was "a very strange case". It was contemplated that it would be finished in the week allocated in March 2000. In fact the vagueness of the evidence called, the lack of creditworthiness of Mr Budd, the unreliability of Mrs Holding, the lack of relevant documents, the complexity of the pleadings and the complication of the issues that grew up out of seemingly simple facts ensured that it did not. It is significant that no complaint of judicial misconduct is made in relation to anything that happened in March. But by July, when the plaintiffs were not legally represented, it became imperative for the trial judge to seek to ensure that the case finished with reasonable expedition. Proceedings for some time took the unsatisfactory form of Mr Budd cross-examining Mrs Holding on conversations they had had years earlier. It was understandable that the trial judge might have become increasingly concerned about keeping the case on the rails. At the best of times trial litigation is a tense and tiring process. It is apparent from the very short time that judgment was reserved that the trial judge must have been working very hard on the case during the days in early July in relation to which complaint is principally made. The trial judge had to keep Mr Budd, unskilled as he was in court procedures and the formulation of questions, under control. To the extent that the trial judge's statements did merit the characterisation which the plaintiffs gave them, they were not made without considerable provocation, and the trial judge may well have felt it was necessary to be extremely blunt towards Mr Budd in order to ensure that the messages she rightly wished to convey were received. 103 Thirdly, the plaintiffs have considerably exaggerated the phenomena of which they complain. Many of the trial judge's criticisms were entirely justified. While she asked many questions of Mr Budd in his last appearance in the witness box, quite a number were necessitated by the fact that it fell to the trial judge to elicit his evidence in chief. And while she made many interventions while Mr Budd was cross-examining Mrs Holding, the trial judge was entitled to seek to shorten longueurs, reduce repetition, ensure fairness and precision in the formulation of questions and curtail rambling arguments about admissibility. Many of her observations actually assisted the plaintiffs by enabling the evidence to be more sharply focussed. A reading of the whole transcript reveals that the trial judge was not at any stage going to conduct the trial merely by sitting back and letting the parties conduct the case without any intervention or restraint at all. Her technique is a common modern technique, and a not unacceptable one, particularly in a busy trial court under pressure from crowded lists. Many of the observations complained of were not directed to the plaintiffs' side alone. There were numerous other observations not referred to directed to perceived deficiencies in the behaviour of Mrs Holding or that of counsel for the defendants. If all the trial judge's statements had been uttered while counsel for the plaintiffs were present (as a fraction were), there would be no ground for complaint: trial litigation often calls for plain speaking, directness and, sometimes, asperity. The absence of counsel for the plaintiffs cannot alter the outcome. 104 Fourthly, so far as the trial judge raised problems with Mr Budd in argument on 4 July, she was acting in the plaintiffs' interests rather than the reverse. Mr Budd asked for a 24 hour adjournment on the ground that he had engaged a barrister to help him with submissions. She granted a significantly longer adjournment and devised a procedure by which the counsel to be briefed would be able to have access to all the transcript. For the rest of that day (Black 3/525-563) she proceeded to highlight possible problems in a clear and vigorous way so that the new counsel would be able to grasp them more easily and deal with them: in that period she made many of the statements now complained of. The course she adopted was far juster and far more likely to achieve a result favourable to the plaintiffs than to sit in silence without alerting Mr Budd, and the counsel later to appear, of what might be troubling her. In Vakauta v Kelly (1989) 167 CLR 568 at 571, Brennan, Deane and Gaudron JJ said: "Nor will that requirement of the reality and appearance of impartial justice be infringed if a judge with preconceived views about the general reliability of the evidence of a particular medical witness discloses the existence of such views in the course of the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case …. It seems to us that a trial judge who made necessary rulings but otherwise sat completely silent throughout a non-jury trial with the result that his or her views about the issues, problems and technical difficulties involved in the case remained unknown until they emerged as final conclusions in his or her judgment would not represent a model to be emulated." 105 Finally, there are other matters indicating that the trial judge was not biased, and matters indicating to a reasonable observer that she was not apparently biased. Not only did she grant the plaintiffs a longer adjournment than they requested, and put in place a regime enabling the plaintiffs' new counsel to represent their interests effectively, she also granted them leave to reopen their case on 12 July despite the difficulties this might have caused the defendants. She permitted a late amendment to the Further Amended Ordinary Statement of Claim despite its gross improbability and the want of evidence in support of it. She explained many procedural matters to Mr Budd. She stated frankly the numerous deficiencies in Mrs Holding's evidence, and the less numerous deficiencies in her commercial behaviour. 106 The submissions directed to criticism of the behaviour of the trial judge fail.

[75]

First Supply Contract 108 The trial judge allowed $23,012.52 for damages for breach of the First Supply Contract as follows: "$16,665 for loss of revenue on or about 1 September 1996 (on the assumption that the tea tree seedlings should have been planted in September 1995 and had been ready for harvesting 12 months later); and interest on that sum of $6,347.52." 109 The plaintiffs advanced two criticisms of this reasoning. 110 First, they submitted that: "The cost planting had been represented by Mrs Holding to the Plaintiffs at 1½ cents per seedling (albeit her Honour rejected this evidence); that cost of 1½ cents per seedling was the figure accepted by Mrs Holding when she agreed with the Hicks not to carry out the planting of the Hicks' seedlings as had been previously contracted, and repaid the Hicks $10,500 (Blue Book 45T-U, 59H, 63R; Mrs Holding's evidence at Black Book 275D). Here, where the Defendants did not carry out the planting of the Plaintiffs' seedlings, a credit should be allowed for that component in the contract for 1.3 million, i.e. $19,500." 111 The submission has the following difficulties. Though the first defendant did not carry out the planting, it did not terminate the contract; the plaintiffs therefore remained liable to permit them to perform it; the first defendant was entitled to perform it at a cost of less than 1.5 cents per seedling if it could; and Mrs Holding estimated the cost of planting for the 1.3 million seedlings and the 2 million seedlings together at $22,894; accordingly, an appropriate cost would be, not 1.5 cents per seedling, but 1.3/3.3x$22,894. The submission that 1.5 cents per seedling was the correct figure must be rejected because it assumes the validity of the plaintiffs' submissions on the break-up of 13 cents, and relies on evidence in relation to Mrs Holding's dealings with Mr Hicks which has not been shown to have significance for the first defendant's dealings with the plaintiffs. Strictly speaking the trial judge should have deducted, as indicated above, 1.3/3.3x$22,894 from the figure for the First Supply Contract damages and the balance from the Second Supply Contract damages. She made no deduction for the First Supply Contract damages in this respect, but it does not matter, because she deducted the whole $22,894 from the gross income under the Second Supply Contract. 112 Secondly, the plaintiffs submitted: "It is further submitted that the 'loss of profits on harvest' allowed by her Honour at $16,605 (Red Book 97M) was speculative, being dependent upon successful propagation, and the weather, resulting in a full crop available in September 1996; it is submitted that that loss should have been markedly discounted on account of those contingencies." 113 Apart from a reference to "the last line" of Mr Murtagh's evidence in oral argument, the plaintiffs did not point to any evidence which would justify a marked discount. Nothing has been located in Mr Murtagh's evidence which justifies it. 114 Accordingly, since these two criticisms advanced by the plaintiffs fail, no adjustment should be made to the trial judge's figure for damages in relation to the First Supply Contract.

[76]

Second Supply Contract 115 The trial judge awarded $312,251.40 on the following basis: "$207,106 for the loss of the benefit of the contract of sale and plantation as at 1 March 1996; $25,694 for loss of revenue on or about 1 March 1997 (on the assumption that the tea tree seedlings should have been planted on about 1 March 1996 and had been ready for harvesting 12 months later); and interest on the loss in the sum of $79,451.40." 116 The reasoning underlying this was set out thus: "… the defendants/cross-claimant are entitled to be restored to the position in which they would have been had the [contract] for the purchase of the 2 million tea tree seedlings been performed. Taking into account the likely expenditure that would have been involved in performance of the contract as calculated and identified by Ms Holding, the position would have been this: · supply and plantation of 2 million tea tree seedlings at 13 cents each ($260,000); · deduct cost of fuel and wages involved in plantation ($22,894, yielding a sub-total of $237,106); · deduct sums received from plaintiff/cross-defendant ($30,000, yielding a sub-total of $207,106). That would yield a loss of $207,106 as at the date on which the contract should have been completed, in March 1996. Adding the loss of revenue on harvesting 2 million seedlings approximately one year later (which Ms Holding calculated as being a sum of approximately $25,694), would yield a loss of $232,800 as at 1 March 1997. The defendants/cross-claimant mitigated its losses in various ways. Some seedlings were re-sold at a return of $47,500 plus plantation yielding a total of $70,000). If the contract had been performed, the defendants/cross-claimant would still have received this sum since the re-sale took effect by cancellation of another order and substitution of the seedlings ordered for the plaintiff partnership. Effectively, therefore the defendants/cross-claimant lost the profit it would have made on the unrelated contract that was cancelled. Some of the seedlings did not take, and the nurseries therefore levied no charge (reducing the defendants/cross-claimant's loss). In the result only 1.14 million tea tree seedlings were delivered by the nurseries. 500,000 seedlings were re-sold; but 640,000 seedlings went to waste. The defendants/cross-claimant calculated their loss on the second contract by reference to the sums paid for seedling propagation less the sums recovered by re-sale of 500,000 tea tree seedlings by virtue of substitution of that order for the order required for unrelated contract. On that basis, the defendants/cross-claimant's damages schedule was calculated as nett loss $18,625 plus cost of seedlings (incorrectly estimated as $87,024 - should be $119,632 on my findings). That had the effect of treating as mitigation the defendants/cross-claimant's decision to (in effect) [forgo] the earnings from another, unrelated [contract]. The defendants/cross-claimant was also denied the benefit of the profit that would have been made by the completion of the contract. Had the plaintiff/cross-defendant not breached the contracts, the defendants/cross-claimant would have had the benefit of both contracts." 117 The plaintiffs submitted: "(i) Of the contract for 2 million seedlings the Defendants paid for and took delivery of 1.14 million (Black Book 410H); for those 1.14 million seedlings the Defendants paid $87,024 (Blue Book 374N). (ii) Of the 1.14 million seedlings delivered to the Defendants they used 500,000, for which they were resold/paid $70,000 (Red Book 96S); hence the Defendants suffered no loss of profit on that 500,000 seedling component. The balance of 640,000 seedlings (of the 1.14 million) 'died' (Black Book 433I). (iii) The Defendants having paid $87,024 for the 1.14 million seedlings, thereby paid approximately 7.63 cents per seedling. (iv) In looking to the 'loss of profit' suffered by the Defendants, the 'used' 500,000 seedlings ought to be ignored; the basis for any damage ought be limited to the 1.5 million on which the Defendants would have enjoyed 'profit'. (v) The 1.5 million seedlings, at 13 cents per seedling, would have grossed the Defendants $195,000. However, from that gross figure, the following costs and outgoings need to be deducted: (a) cost of seed at 1 cent per seed $ 15,000.00 (b) cost of propagating at 7.63 cents $114,450.00 (per above)

[80]

Giving a total of $139,120.00 __________ (On this analysis the profit which the Defendants would have enjoyed on the 1.5 million seedlings is $55,880 ($195,000 - $139,100). (vii) Against this, credit needs to be given for the Plaintiff having paid $30,000 'deposit' against the order for the 2 million seeds - resulting in a net loss to the Defendants of either $13,050 or $25,880." 118 The first defendant conceded that in one respect the trial judge erred. Its submissions were: "Had the contract proceeded the Respondent would have received the benefit of a sale of 2 million seedlings. They would also have received the benefit of the sale of the 500,000. Accordingly there is no reason to deduct this amount. See judgment 97.E. The evidence is that the Respondent supplied the seed so no deduction should be made for that amount in calculating her loss. The Respondent actually paid for the cost of propagating 1.4 million seedlings $87,024 (Blue Book 374N) but it is conceded would have had to pay for the additional 0.6 million at 7.63 ie $45,780. Accordingly the calculation (with the variation from her Honour's calculation underlined) is: a. Supply and planting of 2 million seed @ 13 cents each ($260,000). b. Deduct cost of fuel and wages ($22,894 yielding $237,106). c. Deduct sums from respondent ($30,000 yielding $207,106). d. Deduct cost of propagating 600,000 seedlings $45,780 yielding $161,326. Yield loss is therefore $161,326 Add loss of revenue $25,694 Gives a loss on the second contract of $187,020 as at 1 March 1997 to which should be added interest." 119 It is true that the first defendant has the benefit of a finding that had the Second Supply Contract proceeded, the first defendant would have performed both it and the contract to sell another 500,000 seedlings. Accordingly the first defendant is correct in resisting the deduction of the $70,000 received for those 500,000 seedlings. 120 For the plaintiffs to contend that the cost of seed at 1 cent per seed should be deducted, apart from cutting across one of their earlier arguments, involves a repetition of the view that the 13 cent figure in the First Supply Contract was broken up into components, one of which was 1 cent for the seed. That view was rejected by the trial judge and the appeal has failed so far as the challenge to that reasoning is concerned. The trial judge thought that the Second Supply Contract in this respect had the same terms as the First Supply Contract. Mr Budd denied in evidence that Mrs Holding had to bear any cost for the seeds: "she has found the seed from the mother tree, she has gathered it, there's no cost to her." But no reliance can be placed on that unsatisfactory piece of evidence. Since the first defendant supplied its own seed, the fact that its price for retailing seed was $5,000 per kilo is not determinative. However, it must be recognised that the first defendant saw the seed it supplied as an asset by offering it for sale at $5,000 per kilo. Further, growing the seed must have involved it in some cost, albeit not a cost which the evidence permits ready calculation of. The fact that the first defendant charged $5,000 does not mean that that was what it cost the first defendant. It seems just to make some allowance for the seed, and a fair allowance would be $2,500 per kilo, totalling $5,000. 121 There are probably other costs to be borne in mind if the parties had ever devoted close attention to the question. One is the cost of transporting the seedlings to the plaintiffs' farm. The evidence is unclear about whether that cost would be included in the 7.63 cents paid to the seedling growers. Another may relate to insecticides. The evidence is silent on what they cost. A third question is depreciation. But the plaintiffs made no complaints along these lines and the evidence reveals virtually nothing about these topics. In the circumstances no allowance should be made. 122 The concession by the first defendant that the cost of propagating seedlings, being the difference between the quantity actual propagated and 2 million should be deducted (at 7.63 cents per seedling) is sound. (The mathematics appearing in the first defendant's written submissions are wrong: the first defendant paid for the cost of propagating, not 1.4, but 1.14 million seedlings, leaving an extra 0.86 million, not an extra 0.6 million, to be propagated at 7.63 cents each, i.e. $65,618.) But if that concession is sound, why should the cost of propagating the whole 2 million seedlings not be deducted at 7.63 cents per seedling? To earn the right to receive $260,000 (2 million seeds at 13 cents each), the first defendant would have had to have procured the propagation of the whole 2 million seeds. A concession of that broader kind, affecting the whole 2 million seedlings, not just 1.14 million seedlings, was in fact made by the first defendant at the trial (Black 3/646H-J). To deduct $65,618 for propagating 0.86 million is an insufficient deduction: there needs to be a deduction of an additional $87,024, being the sum actually expended on the 1.14 million seeds. That totals $152,642. 123 Accordingly in lieu of the sum of $207,106 for the loss on the Second Supply Contract in March 1996 on the day on which it should have been completed there should be substituted $54,464, made up as follows.

[86]

Costs 127 The second and third defendants were joined to the appeal, but apart from an order for a new trial, no relief was sought against them, because the damages awards against the plaintiffs were in favour of the first defendant, not them. Since the plaintiffs have failed in their contention that there should be a new trial, they have failed wholly against the second and third defendants. 128 The first defendant has been unsuccessful in the appeal to the extent that the damages have been reduced. If one leaves out of account the lateness of the damages challenged, the frankness of the first defendant in accepting that a substantial reduction was appropriate (though less substantial than that actually made, and less substantial than that made at the trial), and the fact that the arguments on damages which were advanced on appeal by the plaintiffs were not put at the trial, the plaintiffs might well be entitled to an order that the first defendant should pay their costs of the appeal at least in relation to damages, but perhaps generally. 129 However, the arguments advanced by the plaintiffs in support of the damages challenge were not put to the trial judge. No complaint about damages was made in the Notice of Appeal. The first complaint came in three pages to be found at the end of the substantive parts of the plaintiffs' written submissions (which in all occupied fifty-six pages). In the plaintiffs' oral argument in chief very little time was devoted to the question. Then, after the defendants' oral submissions had started, the plaintiffs asked for leave to put some further brief argument. But even taking into account that further time spent on damages and taking into account the time spent on damages in the first defendant's argument, a very small fraction of the written and oral submissions on either side was devoted to the issue on which the plaintiffs enjoyed partial success. In the balance of the appeal the plaintiffs were essaying a very difficult task of challenging conclusions which flowed from credit-based findings. In that they failed. They also failed in quite serious allegations of misconduct on the part of the trial judge. In all the circumstances it is just that the plaintiffs be ordered to pay the defendants' costs of the appeal (but not on an indemnity basis). The trial judge's indemnity costs order will stand, as will all her orders except the damages award in Order 3 made on 14 July 2000.

[96]

(b) the First Defendant failed to hold the amounts paid in accordance with paragraph 5(j) or on trust for the Plaintiff." 138 The allegations made in para 13(a) and (d) and in para 14 failed because the appellants were not charged any amount in excess of the agreed price of 13 cents per seedling. No amount had to be paid over by the respondents or held on trust. The allegations made in para 13(b), (c) and (e) failed because, in September and October 1995, the appellants' land was not ready for planting. When, subsequently, it was ready for planting in 1996, the respondents supplied the necessary seedlings. The respondents did not plant the seedlings, but that was because the appellants did not wish them to do so. 139 There was a further allegation in para 15 that Mrs Holding had informed Mr Budd that the tea-tree seedlings would not be available for delivery or planting in September or October 1995 and that Kambah Tea Tree Plantations Pty Ltd ("Kambah") did not intend to supply the seedlings in accordance with the terms of the contract. In paras 16 and 17, it was said that, by so informing Mr Budd, Kambah repudiated the contract and treated the contract as at an end and that Mr Budd, on behalf of the appellants, accepted the repudiation. This claim failed because the appellants were not ready to accept the plants in September or October 1995. When they were ready to do so, the seedlings were delivered. Mr Budd conceded in cross-examination that, in September 1995, the seedlings had in fact been propagated and were at the nursery. 140 The crux of Mr Budd's witness statement, in so far as it dealt with the issue of termination, was this conversation of 25 September 1995:- "BUDD: 'Well Norma, I must tell you that I have been to Leppington and spoken to Jim Vella. He has told me the full story. You have lied to me. You have not paid Vella, and you have touched me for 2.5 cents per seedling. I will give you the opportunity to refund to me the $30,000 deposit that you have not paid on the second order plus the 2.5 cents per seedlings, otherwise all bets are off and I will seek legal advice.'

Budd & Ors v Kambah Tea Tree Plantations Pty Ltd & Ors

At a glance

Court

Decision date

Before

Source

Judgment (99 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (3)

Cited By (2)