KCPC Pty Ltd v Ivamar Pty Ltd

MATTERS ARISING WITH RESPECT TO DIRECTIONS 1 AND 2

1. Emerging from the draft orders filed in accordance with those Directions and amended Short Minutes of Order filed by the respective interests were three issues as to the appropriate form of orders to reflect the primary judgment and any residual questions concerning damages and compensation. Those issues were as follows: 1. The amount owed by the defendants in respect of the shortfall in cattle numbers and the sale of cattle in December 2019 ("the shortfall issue"). 2. The amount owed by the cross-defendant in respect of the agreed one-off payment under the January agreement ("the one-off payment issue"). 3. An additional order providing the cross-claimants access to the cross-defendants' properties for the purpose of retrieving the defendants' "Falcon air-compressor", if that item was not already delivered by the cross-defendants'. That issue ultimately became a claim by the cross-claimants for $120 for the air compressor ("the recovery of property issue").

The shortfall issue

1. The aspects of the primary judgment, particularly concerning the shortfall issue, are extracted below ([7], [470]-[476], , [487]-[495], [552] and the related pars 163 and 569(3)):
2. Paragraph [7] of the primary judgment the Court made a finding as to the number of cattle sold in December 2019: 7. In December 2019, 309 cattle from the properties were sold by the Burkes.
3. The footnote to par [7] reads: Notwithstanding the figure of 311 cattle sold in the joint chronology, the parties adopted a common position in their written and oral submissions of the sale number being 309. The difference appears to derive from an inconsistency between the National Livestock Identification System ("NLIS") documentation showing 311 and the 'European Union Vendor Declaration (Cattle and Waybill)' showing 309. I shall adopt the common position stated by the parties in their submissions.
4. The number of cattle sold in December 2019 is also addressed in pars [473] and [474], appearing in the extract from the primary judgment in the following paragraph.
5. Paragraphs [470] - [476] of the primary judgment deal with the assessment of the shortfall of cattle (in the context of cattle sold by the defendants in December 2019) as follows: 470. Clause 2(a) was a term of the 2017 Lease Agreement which required the defendants to maintain the herd profile which was defined as 1222 cows, 556 calves, 620 weaners and 29 bulls. 471. The evidence before the Court established that it is more probable than not that a shortfall in cattle numbers, by reference to the herd profile in the 2017 Lease Agreement, existed on and from 1 December 2019 and that the defendants failed at that time to hand over the herd in the requisite numbers. As mentioned, I consider that this inference is available upon the basis of strong and persuasive evidence. 472. The shortfall in cattle was as follows: (a) 300 cows; (b) 87 calves; (c) 157 weaners; (d) 4 bulls, making a total shortfall of 548 head. 473. Before I come to the central issues raised by the defendants as to the proper assessment of the plaintiffs' claim in this respect, it is necessary to return to the cattle sold in December 2019. According to the NILS's documentation, cattle were sold on 4, 11 and 12 December 2019, the total number being 309. As properly conceded by counsel for the plaintiffs, those cattle must be treated as being available on and from 1 December 2019 and not calculated as part of the shortfall, even though they will become relevant in considering the claims under ACL. 474. The 309 cattle sent to Edwards Livestock in December 2019 were not, in fact, surplus to the herd profile and their removal caused loss to the first plaintiff. The 309 head comprised 131 heifers and 178 steers. The 131 heifers would have reduced the shortfall of cows to 169. The 178 steers would have reduced the shortfall of weaners to nil and, applying the additional 21 weaners to the shortfall of calves, would have reduced the shortfall of calves to 66. 475. Adjusted in this manner the shortfall in cattle was as follows: (a) 169 Cows; (b) 66 Calves; (c) Nil Weaners; (d) 4 Bulls. 476. This makes the total shortfall of 239 head.
6. Paragraphs [487] - [495] of the primary judgment discuss the assessment of loss for the shortfall in cattle and are extracted below: 487. The proper construction of the second paragraph of cl 10 of the 2017 Lease Agreement is that the market price will be the market price at the point of termination. The agreement does not expressly state that the market price will be calculated in that way but, when read in context, it is the only construction available given the grammatical connection between the conduct of a herd count upon termination and the requirement to pay for any shortfall at the market price. 488. Neither the variation to the 2017 Lease Agreement, to provide for a head count in February/March 2020 nor the equivalent terms of the January agreement alter that conclusion. In my view, the only term of cl 10 of the 2017 Lease Agreement that was varied in those respects was the date at which the count would occur and not the term for the calculation of the value of the shortfall. No part of the transactions between the parties with respect to the head count contemplates any variation to that term of the 2017 Lease Agreement. The January 2020 Agreement expressly provides for the continuance of cl 10 of the 2017 Lease Agreement save for the date of the count. 489. No different conclusion would follow if an assessment were to be made of damages arising from the breach. 490. The general rule is that damages for breach of contract are assessed at the date of the breach. That rule will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation: Vieira v O'Shea [2012] NSWCA 21 at [44] (per Basten and Maegher JJA with whom Handley AJA agreed). 491. The plaintiffs contended that it was envisaged that "these cattle" would be sold in 2020 and so the appropriate date is an assessment in 2020 when they were sold. Thus, the value was said to be realised in the future and the plaintiffs lost the opportunity to make those sales later. 492. However, the cattle to which the plaintiffs are referring in that context must be the cattle which represented the shortfall giving rise to the breach of contract at the point of termination of the contract. The contract itself specified that that breach is to be assessed at the point of the termination of the contract because of the breach. It is common ground, and I have found, that the termination occurred on and from 1 December 2019. Furthermore, just compensation must reflect the value of the cattle at the time of the termination of the lease when the shortfall materialised. Finally, the plaintiffs brought no evidence as to the market for beef cattle in the location or vicinity of the properties as would have been appropriate in the assessment of damages under the plaintiff's case for damages: Golden Strait at [34]. 493. Accordingly, the assessment of compensation for the shortfall of cattle as at the termination of the 2017 Lease Agreement is the market price for the cattle that is less than the herd profile at the date of termination. The actual shortfall of cattle in that respect has been assessed above in this judgment (save for the question of the loss of offspring which will be discussed below). What remains is the assessment of the market price of the shortfall of cattle. 494. The defendants submitted that the Court may have regard, in that respect, to either the September sale prices or December sale prices for the cattle on the properties. 495. Both of those sale periods correspond to the ongoing drought but, in my view, the December prices should be used to assess market value at the point of the termination of the agreement. They occurred at a time corresponding to the peak of the drought and at a time proximate to the date of termination (within two weeks of 1 December 2019).
7. Paragraphs [163], [552] and [569(3)] of the primary judgment discuss the January agreement and some key provisions: 163. I consider the email from John should be found to be an accurate record of the content of the January meeting. The email corresponds to John's affidavit and is contemporaneous to the meeting it records. In my view, the January 2020 email clearly represents an agreement reached between the parties in January 2020 in accordance with the content of that email (the "January 2020 Agreement"). … 552. Given that I have found that an agreement was made in January 2020 in terms of the January 2020 email, it is appropriate to turn to the factors identified by the plaintiffs to establish reliance. It is convenient in that respect to commence the consideration of the cross-claims brought by the defendants in that same context. Three parts of the January agreement that are relevant in that respect are set out below, (acknowledging that there is repetition of an earlier extract): (1) Paragraph 4 of the January agreement provides as follows ("10% incentive"): "4. As an incentive, from the 1st January - 30 June 2020 only and inclusive, all sales of the cattle will garner the Burkes 10% of the cattle sale prices, less costs of sales (commission/fees/transport) and the cattle feeding costs (including freight & feeding equipment) incurred by the WF. General estimate of herd Cows 1,222 @ $750 = $916,500 Weaners 620 @ $850 = $569,500 Calves 556 @ $400 = $222,400 Bulls 29 @ $800 = $ 23,200 $1, 723, 600." (2) Paragraph 6 of the January 2020 Agreement provides as follows (the "management fee"): "6. Operations management from 1st Dec, WF will pay the BF $ 6,000 + GST per week to cover- (invoices to be supplied with correct info) a. All labour for both management and casuals to run all the properties across the 7 day week. b. All workers on -costs- (workers comp, superannuation, over-time etc ..) c. All equipment (whether it be Burke's or external) and running costs (fuel/R&M/Rego/insurance) d. This will arrangement be reviewed in April & June based on cattle numbers and general work load e. BF to provide a weekly activity report f. WF will be appointing a selling agent- John Hannaford to assist with the cattle sales and managing the sale of Somerset, and leasing of KCPC and Westwood. BF to work with John Hannaford to organise the cattle, review feed reqs, prepare for the stock count on the 27th Feb and review the work program and have a more defined cattle sales program. (3) Paragraph 7 of the January Agreement provides as follows (the "one-off payment"): "7. 1 off payment WF will pay BF $20,000 to cover all old issues ie/ equipment, hay sheds etc this will be paid prior to 30th June." (collectively the "January agreement provisions"). … 569(3). As I have found, the Burkes made representations as to the herd numbers in the January 2020 meeting. The reliance placed upon those herd numbers in coming to the 10% incentive is obvious on the face of the January 2020 email which was the foundation for the January agreement. In cl 4, which establishes the 10% incentive, the agreement provides estimates for the herd for the purposes of calculating the incentive which are predicated upon the herd numbers in the 2017 Lease Agreement."
8. In the original form of the proposed orders filed by the parties, both the plaintiffs and the defendants proposed a cumulative amount (not including interest) to reflect both the shortfall in cattle numbers at the point of the termination of what was described in the primary judgment as the 2017 Lease Agreement (and the related January agreement) and the sale of cattle in December 2019. The plaintiffs proposed the sum of $406,660.17 and the defendants proposed the sum of $371,832.43. Both of those amounts were predicated upon the then acceptance by the parties that the monies received by the defendants through the sale of cattle in December 2019 was $215,482.43.
9. In the result, in the orders originally proposed, the plaintiffs sought a net amount of $191,177.71 for the value of the shortfall in cattle and the defendants proposed a corresponding sum of $156,350.00.
10. Before going to the proposed amended orders which were subsequently filed by the parties, it is useful to note the basis for the respective calculations as follows: 1. The plaintiffs calculated the value of sales based upon the Edwards Livestock Recipient Created Tax Invoices for respective sales in cattle of 110, 127 and 165 on 5 and 11 December 2019. The defendants appeared to have calculated the sale of cows on the same basis. However, what is clear from this calculation is that the plaintiffs proceeded upon the basis that the number of cattle sold was 302. 2. The calculation of the value of cows and bulls by the plaintiffs for the purpose of calculating the value of the shortfall in cattle proceeded from the same basis, namely, the prices paid for 302 head in December 2019 when applied to a formula developed by the plaintiffs. The plaintiffs' assessment in that respect was set out in their written submissions as follows: 5. Prices for cows and bulls in December 2019 can be derived from the prices paid for the 302 head in December 2019. When the 302 head are treated as weaners, the average price for weaners, net of sales costs and excluding GST, from the December 2019 figures above is: $215,482.43/ 302 = $713.52 per head 6. The average prices per head, net of sales costs and excluding GST, of weaners cows and bulls sold from the Properties in April and May 2020 were calculated in the affidavit of Kirstie Anne Wallace affirmed on 4 December 2021. 7. Those average prices per head (extracted at paragraph 478 of the Judgment of 27 March 2024) were: a. Weaners: $977.95 b. Cows: $1,062.08 c. Bulls: $1,252.18 8. The December 2019 average for weaners per head, namely, $713.52, is 72.96% of the April-May 2020 average for weaners per head of $977.95: 713.52/ 977.95 = 72.96% 9. If one assumes that the same price differential existed for cows and bulls and applies that percentage to the April-May 2020 averages for cows and bulls, the following figures are produced: Cows: $1,062.08 x 72.96% = $774.89 Bulls: $1,252.18 x 72.96% = $913.59 1. These price extrapolations were applied to a shortfall of 242 cows and 4 bulls (a total of 246 cattle which does not correspond to the Court's finding of the shortfall in the primary judgement, after the deduction of sold cattle, of 235 cattle). In any event, the sum claimed by the plaintiffs under their formula became $191,177.74. 2. In the defendants' submissions accompanying their originally proposed orders, it was contended "that there were no sales of cows, calves and bulls in December 2019 from which a market price can be derived". I do not understand the defendants, by this submission, to be contending there were no sales of the plaintiffs' cattle by the defendants in December 2019 (as there plainly were sales of the plaintiffs' cattle by the defendants during that month). Rather, the defendants were submitting, in my view, that the records did not permit a delineation between the sale of cows, calves, weaners and bulls as would have permitted a clear assessment of the market price for each class of cattle. This submission has some real force because the sales records only referred to 'heifers' and 'steers'. There was no designation in the sales records for cows, calves, weaners and bulls per se, although in later submissions the parties treated heifers and steers as weaners. 3. The defendants also submitted that the plaintiffs' calculations were derived from the sale price of cattle in May 2020, by which time the drought had broken. In that light, the defendants made the following submission: 7. Fifth, the only evidence, and, it is submitted, the best evidence of the drought value of cows, calves and bulls on the various properties at the end of 2019 is the agreed value of cows, calves and bulls that was reached in the January agreement which is reproduced at [552] of the Court reasons. That and which, was to the effect that cows were worth $750, Calves were $400, and bulls were $800 each. 1. If by 'derived' the defendants meant the plaintiffs used April-May cattle prices as a basis for calculation, then the defendants' submission may be accepted. However, whether correct or not, the formula does have the effect of producing prices, albeit discounted, from the prices for cattle in April or May 2020. 2. It was from that submission by the defendants that the earlier mentioned assessment of the shortfall in cattle made by the defendants of $156,350.00 was derived.
11. The plaintiffs filed amended Short Minutes of Order on 30 April 2024 in which they sought an amount of $163,012.53 in respect of the shortfall in cattle numbers and the amount of $220,477.07 in respect of the sale in cattle in December 2019. Both amounts were exclusive of interest.
12. The amount for the sale of cattle was derived by increasing the number of cattle sold by 7 to represent a total sum of 309 cattle, being the number of missing cattle referred to in the primary judgment.
13. The defendants' response, in that respect, (reflected in amended Short Minutes of Order filed on 3 May 2024 - "the defendants' amended orders") referred to documentation relating to the sales concerning, it was contended, the number of weaners presented for sales (comprising, on the defendants' case heifers and steers) and the number of cattle sold as reflected in invoices thereafter. The former represented a number of 309 cattle; the latter 302.
14. As to the shortfall in cattle, the plaintiffs' revised position, namely, the sum of $163,012.53, was before based upon the following propositions advanced by the plaintiffs: 8. The cattle actually missing at 1 December 2019 were 239 head (548 less 309 sold). 9. The 239 head missing at 1 December 2019 were comprised of 169 cows, 66 calves and 4 bulls. 10. The defendants in their calculation of 18 April 2024 have used the estimated prices for cows, calves and bulls suggested by the defendants in the meeting with John Wallace on 20 January 2020, namely, $750, $400 and $800. Those figures were estimates made on 20 January 2020 of future sale prices. The defendants' estimate at that time for weaners was $620 a head. That figure is demonstrably too low for December 2019, because the weaners that were sold in December 2019 had an average price of $713.52. The other estimates from 20 January 2020 are also likely to be too low. Consequently, the method used by the plaintiffs in paragraphs 5-9 of their calculation of 11 April 2024 should be adopted (repeated at paragraphs 11-16 below). 11. Prices for cows and bulls in December 2019 can be derived from the prices paid for the 302 head in December 2019. When the 302 head are treated as weaners, the average price for weaners, net of sales costs and excluding GST, from the December 2019 figures above is: $215,482.43/ 302 = $713.52 per head 12. The average prices per head, net of sales costs and excluding GST, of weaners cows and bulls sold from the Properties in April and May 2020 were calculated in the affidavit of Kirstie Anne Wallace affirmed on 4 December 2021. 13. Those average prices per head (extracted at paragraph 478 of the Judgment of 27 March 2024) were: a. Weaners: $977.95 b. Cows: $1,062.08 c. Bulls: $1,252.18 14. The December 2019 average for weaners per head, namely, $713.52, is 72.96% of the April-May 2020 average for weaners per head of $977.95: 713.52/ 977.95 = 72.96% 15. If one assumes that the same price differential existed for cows and bulls and applies that percentage to the April-May 2020 averages for cows and bulls, the following figures are produced: Cows: $1,062.08 x 72.96% = $774.89 Bulls: $1,252.18 x 72.96% = $913.59 16. On the basis of the plaintiffs' calculation of 11 April 2024, the average prices of a cow and bull in December 2019 should be taken to be $774.89 and $913.59 respectively. 17. The average price of a calf in December 2019 should be taken to be $460.36, by applying the proportion between calves and weaners in the figures of 20 January 2020 (that is, $400 to $620 = 64.52%) to the average price of a weaner in the December 2019 sales: $713.52 x 64.52% = $460.36 18. When the above figures are applied to the missing cattle, the loss was as follows: a. Cows: 169 x $774.89 = $130,954.41 b. Calves: 66 x $460.36 = $28,403.76 c. Bulls: 4 x $913.59 = $3,654.36 d. Total: = $163,012.53 (emphasis added)
15. The defendants also shifted their position as to the assessment of the shortfall in cattle in their Amended Short Minutes of Order, making the following submission: 6. The defendants originally contended that the value of cows, bulls and calves for the missing portion of the herd should be based on the January 2020 agreement that is reproduced at [552] of the Court's reasons. 7. Noting however that the plaintiffs submissions are predicated on the average price for the weaners sold in December as being $713.52; see [5] of the plaintiff's submission, it is immediately apparent that this figure is substantially less that the agreed price for weaners that was suggested in January 2020, namely $850 per head as is recorded at [552] of the Court's reasons for judgment. 8. If that is correct, to the extent that the value of cows, bulls and calves in December 2019 which is based on the agreed values in January 2020, a discount ought to be applied, given that the price actually achieved for the sale of weaners in December 2019 was less that the January 2020 agreed figure. 9. On this basis, in the case of the missing cows, when compared to the estimated value of weaners in January 2020 of $850 per head, the estimated value of cows as being worth $750 per head, confirms that cows were worth 88.23% of the current market value for weaners, or $629.57 per head. 10. Similarly, in the case of calves, when compared to the estimated value of weaners in January 2020 of $850 per head, the estimated value of calves being then worth $400 per head, confirms that calves were worth 47.05% of the current market value for weaners, or $335.77 per head. 11. Finally, in the case of bulls, when compared to the estimated value of weaners in January 2020 of $850 per head, the estimated value of bulls being then worth $800 per head, confirms that bulls were worth 94.1% of the current market value for weaners, or $671.54 per head. 12. It follows that based upon the actual market value for weaners sold in December 2019 of $713.52 per head, the best evidence of the value of the missing part of the herd profile was: Class Number Value TOTAL Cows 169 $629.57 $750.00 $106,397.33 $126,750 Calves 66 $335.77 $400.00 $22,160.82 $26,400.00 Bulls 4 $671.54 $800.00 $2,686.19 $3,200.00 239 $131,244.34 $156,350.00

13. It follows that the figure of $131,244.34 should replace the figure of $163,012.53 in paragraph 4 of the plaintiffs' proposed amended short minutes. This figure is likely to be more reliable, since is based on the actual sale price in December 2019, at the heart the drought, which of course was a central reason why the lease was terminated at that time. 14. Alternatively, the defendants contend for the figure of $156,350 as outlined in their previous submissions.

Consideration: shortfall issue

1. As was observed in the primary judgment (at [7]), there was an inconsistency between the number of cattle sold in December 2019 by the defendants, between that stated by the parties in their joint chronology, namely, 311 cattle were sold by the defendants in December 2019 and the National Livestock Identification System ("NLIS") and the 'European Union Vendor Declaration (Cattle and Waybill)' documentation, showing 309 cattle were sold. In the primary judgment, the Court proceeded upon the basis of the then joint position of the parties that 309 cattle were presented for sale in December 2019.
2. However, what was not discussed in the primary judgment, as it was not the subject of submissions prior to the delivery of the primary judgment, was the number of cattle reflected in the invoices for sale of cattle by the defendants in December 2019. In additional submissions regarding missing and sold cattle accompanying the plaintiffs' amended orders, it was contended that the "known sales record", namely, the invoices, "were for 302 head: 110 sold for $82,427.23 net on 5 December 2019; 192 sold for $133,055.20 net on 11 December 2019. The subtotal for the sold cattle for which there are invoices is $215,482.43". The plaintiffs further submitted: "If the other 7 head were sold for the average price of the other 302 ($713.52 net; that is, $215,482.43/ 302) at the same time, they fetched $4,994.64 and increased the total net figure for 11 December 2019 to $138,049.84...". That increase, in the plaintiffs' submission, brought the total monies claimed by the plaintiffs for the cattle sold in December 2019 to $220,477.07.
3. In the defendants' amended orders, they contended that the invoices received from Edwards Livestock Co for sales of the plaintiffs' cattle in December 2019 showed the sale of cattle as 302. The defendants' submitted that the Court should make orders for 302 cattle sold on the following basis: "In relation to the first sale, a Recipient Created Tax Invoice for the sale issued on 5 December 2019 referred to only 110 steers. In relation to the sale of heifers on 11 December 2019 the tax invoice referred to 127 heifers. This is significant since the plaintiff's calculation assume that the defendants received payment for the 3 steers and 4 heifers (which by the time of sale were not the subject of the lease) when that was not the case. The defendant's liability should be limited to the $215,482.43 received, not the $220,477 propounded by the plaintiffs…".
4. A significant difficulty with ignoring the 7 cattle that were presented for sale in December 2019 which are not reflected in invoices provided to the defendants ("the defendants' amended sales position") and the Court's finding in the primary judgement is that the Court calculated the shortfall of cattle as 239 on the basis of deducting 309 (being the agreed position as to cattle sold in December 2019) from the total deficit of 548. If the Court did not give relief for the 7 cattle under the December 2019 sales, then they must as a matter of logic, consistency and fairness be accounted for by way of addition to the shortfall in cattle of 239 (see paragraph 473 of the primary judgment).
5. A further difficulty with the defendants' amended sales position is that there is no evidence before the Court as to the fate of the 7 unaccounted for cattle other than they were in the possession of the defendants for sale. The evidence does not disclose whether the defendants did or did not recover payment for them, although I acknowledge that in later submissions by the defendants as to receipt of payment for sales recorded in bank records, it appears that the payments received until then were for the sale of 302 cattle. There is no evidence the cattle were returned to the plaintiffs; the records brought to the Court's attention only indicating they were presented for sale.
6. In my view, the appropriate course, in this respect, is to adhere to the findings of the primary judgment (noting that no submissions were expressly made seeking the vacation of that finding), notwithstanding further submissions made after judgment presented on the topic (when both parties altered their original positions). Acknowledging that the records show 309 cattle were presented for sale in December 2019, the missing cattle should be accounted for in the way submitted by the plaintiffs in the submissions accompanying their amended proposed draft orders. That is, the missing cows shall each be given the average value of $713.52 ($215,482.43/ 302), which gives the overall sum value of the cattle sold in December 2019 to be $220,477.07.
7. I turn to the shortfall in cattle.
8. The approach, adopted by the plaintiff in the original and amended orders, in relation to the remaining shortfall, sits contrary, in my view, to the terms of the primary judgment because first, it used $713.52 for weaners as the basis of the calculation for cows, calves and bulls and secondly, the plaintiffs employed an averaging process to calculate values that involved using April-May 2020, post drought, figures which the primary judgment eschewed.
9. It may be accepted that the plaintiffs endeavoured to adjust for the effect of post drought prices by calculating the difference price between the (assumed), weaners in December 2019 and the prices for such cattle in April-May 2020. However, in my view that approach still has the effect of importing into the calculation of sale prices the prices of April-May 2020 (post-drought) even though in a formula designed to discount from the April-May 2020 prices. I will put aside for present purposes the mathematical difficulties of calculating an average of an average.
10. In the defendants' submissions accompanying their originally proposed orders, it was contended that "it is to be recalled that there were no sales of cows, calves and bulls in December 2019 from which a market price can be derived…". It was further contended in that light, that "the best evidence of the drought value of cows, calves and bulls on the various properties at the end of 2019 is the agreed value of cows, calves and bulls that was reached in the January agreement which is reproduced at [552] of the Court reasons…".
11. The plaintiffs' submissions accompanying their amended orders contended that the defendants' entreaties to use the January figures provided by the January agreement should be rejected; the plaintiffs contending that "those figures were estimates made on 20 January 2020 of future sale prices...". However, for the reasons appearing below I reject that contention.
12. The email of 23 January 2020 which set out the terms of the January agreement, provided the agreed values for the cattle at that time under the heading "General estimate of the herd". That heading is not consistent with the parties to the January agreement expressing the 'future sale prices'. Further, the plaintiffs do not point to any evidence in support of the submission that the January figures provide 'future sale prices' for cattle. The plaintiffs' assertion that the January figure of $620 per weaner is "demonstrably low" is erroneous. The price per weaner per the January Agreement is $850 (see [552] of the primary judgment) and the figure of 620 represents the number of weaners in the cattle heard, not the value attributed to them in January 2020. Finally, the values assigned to cattle in the January agreement are demonstrably lower than those given for April-May sales in the affidavit of Kirstie affirmed on 4 December 2021
13. As a result of these difficulties, there is an appropriate basis to use the January agreement prices for cattle to estimate the value of the shortfall. There are three other factors pointing to the appropriateness of utilising the prices in the January agreement.
14. First, the January figures were agreed between the parties as appropriate values for cows, weaners, calves and bulls at that time. These values were selected in the context of the parties agreeing on a general estimate of the value of the herd in January 2020.
15. Secondly, the figures represented drought prices, which is the context in which the breach of contract occurred.
16. Thirdly, the January figures were approximate in time to the December 2019 sales and, in my view, represented a reasonable proxy for December sale figures (the Court having indicated in the primary judgment that the prices for the missing cattle should be based upon December 2019 figures).
17. I accept, therefore, that the assessment of damages or loss for the shortfall of cattle should be based on the cattle prices in the January agreement.
18. In submissions accompanying the defendants' amended proposed orders, contrary to the submissions accompanying their originally proposed draft orders, it was proposed that the prices for the sale of cattle in the January agreement should be discounted. This was predicated upon the plaintiffs' contentions accompanying their originally proposed orders which were based, in part, upon the average sale price for weaners in December, namely $713.20 per head being less than the sale price for weaners in the January agreement, namely $850 per head. It was contended there should be a general reduction in the January agreement prices. It was submitted that these discounted prices were more reliable because the figure represented the actual sale prices for weaners in December 2019.
19. I do not accept this submission accompanying the amended proposed orders by the defendants, essentially for the reasons advanced by the defendants in support of their originally proposed orders to utilise the prices agreed in the January Agreement, namely, there was no sales of cows, calves and bulls in December 2019 from which a market price can be derived and the plaintiffs did not lead any evidence as to the market value of cattle in the relevant region in November/December 2019. The most applicable counterpart is not, in my view, to be derived from an extrapolation from the sale price of weaners in December 2019 but from the actual prices in January. That the Court may have used heifer and steer numbers in order to calculate the shortfall in numbers of cows, calves and weaners in the primary judgment does not, in my view, warrant an alteration in this approach as the Court was there dealing with a different subject.
20. In the result, the defendants' alternative approach contained in their submissions accompanying the defendants' originally proposed orders shall be adopted as to the calculation of the value of the shortfall in cattle, that is, by using the prices that appeared in the January agreement. The total amount for the remaining shortfall of 169 cows, 66 calves and 4 bulls is $156,350.00
21. The sum total which should be awarded to the plaintiffs in relation to the shortfall issue (the shortfall of cattle and sale of cattle) is $376,827.07 ($156,350.00 + $220,477.07).

The one-off payment issue

1. In their amended Short Minutes of Order, the defendants persisted with a claim in this respect for $22,000, contrary to the terms of the primary judgment. The amount payable for CC1 shall be $20,000.

The recovery of property issue

1. Under the plaintiffs originally filed Short Minutes of Order, no provision was made with respect to this CC1. The defendants claimed in their originally proposed orders access the cross-defendants' properties for the purpose of retrieving (if not delivered by the cross-defendants) the Falcon air-compressor. The defendants did not pursue the remaining items granted by the Court out of their CC1, namely, 2 small box trailers, 2 horses and a molasses tank and shed ([586]). By the amended draft orders by the defendants, the orders sought was that the cross-defendants pay the cross-claimants $120 for the air compressor. No dispute was raised by the cross-defendants in that respect and accordingly, the order proposed in paragraph [10] of the defendants' amended Short Minutes of Order shall be the order made by the Court.

Interest

1. The orders proposed by the parties as to interest naturally reflected their respective submissions as to the resolution of issues arising with respect to directions 1 and 2. In that respect, the calculation will need to be further addressed in the light of the above conclusions.
2. However, aside from that consideration, there was a significant commonality in the parties positions. Interest was calculated pursuant to s 100 of the Civil Procedure Act 2005 (NSW) on 10 judgment amounts in respect of the SOC, each having a different starting date for the calculation of interest. There was a common ground as to the starting date adopted for the calculation of interest in those respects, save as discussed below. The plaintiffs made no submissions regarding the CC1 but a consistent approach was adopted by the defendant in the calculation of interests for those Cross-claims.
3. The dispute between the parties position concerned two aspects of their calculations of interest as reflected in their respective Tables as to interest.
4. The first concerned the shortfall in cattle. The same starting date for the calculation of interest was adopted by the parties in that respect, namely, 1 December 2019. However, a difference arose from the principal from which interest was calculated. That matter is resolved by giving effect to this judgment as to matters arising under Directions 1 and 2.
5. The second dispute concerned the calculation of interest with respect to losses occasioned by the sale of cattle in December 2019.
6. There was a common position as to sale of cattle on 5 December 2019 and the amount of interest payable (although I note the starting dates on the plaintiffs' and defendants' Tables differed). However, the parties disagreed as to interest payable on cattle sold of 11 December 2019.
7. The plaintiffs calculated interest for all cattle sold on 11 December 2019 from 12 December 2019, whereas the defendants broke these sales down into two amounts. The defendants' calculated interest on 65 cattle sold on 11 December 2019 from 5 February 2020 and 113 cattle sold on 11 December 2019 from 2 March 2020. The basis for the difference of these starting dates argued by the defendants was that there had been an examination of the "actual bank statements" showing the date in which payments for the cattle sold were "received".
8. It may be noted, at the outset of the resolution of that issue, there is an error in the Table accompanying the defendants' submission on interest and costs for the sale of 113 cattle with respect to which the defendants' claimed a starting date of 2 March 2020. The principal amount shown in the defendants' Table was $54,174.06 in that respect, whereas the amount shown in the defendants' submission on interest and costs corresponding to the same sale is $78,881.14. The amount shown in the defendants' Table is plainly incorrect. The use of the latter figure (in the defendants' submission on interest and costs) corresponds mathematically (when added to sales of cattle on 5 December and another sale of cattle on 11 December 2019) to the defendants' submission on interest and costs as to the correct sum for the sale of cattle in total pursuant to Directions 1 and 2 of $215,482.43.
9. Once that issue is put aside, in this fashion, the only issue existing with respect to the calculation of interest for cattle sold was the starting date for the calculation of interest for cattle sold on 5 and 11 December 2019. The plaintiffs proposed a starting date of 6 December 2019 and the defendants proposed 5 February 2020 for cattle sold on 5 December 2019. For cattle sold on 11 December 2019, the plaintiffs contended that interest should be calculated from 12 December 2019. In the Table accompanying the defendants' submissions on interest and costs, the defendants' proposed two dates for calculation of interest, namely, 5 February 2020 (for 65 cattle) and 2 March 2020 (for 113 cattle).
10. The basis for the latter commencement dates argued by the defendants was that there had been an examination of the "actual bank statements" showing the date in which payments for the cattle sold were "received".
11. In my view, the calculation of interest should be from the date that the cattle were sold as this at point at which the defendants gave effect to their misrepresentation by the sale of the cattle. The fact there was a delay, for whatever reason, in the receipt of monies by the defendants from the misrepresentation is immaterial.
12. Accordingly, interest should be calculated based upon the "starting dates" proposed by the plaintiffs in the Table for the calculation of interest accompanying their submissions on interest and costs. I understand the plaintiffs have taken into account in their Table on interest the 7 cattle giving rise to the total compensation for the sale of cattle in December 2019 of $220,477.07.
13. It follows that interest will be awarded as to the calculation of damages with respect to the SOC in accordance with the Table for the calculation of interest prepared by the plaintiffs adjusted with respect to the Court's finding above as to damages for the shortfall of cattle (that is, to give effect to the Court's decision given in the resolution of submissions made with respect to Directions 1 and 2). There was no dispute as interest with respect to CC1.

Costs

1. The plaintiffs' primary position on costs was expressed in the following terms: Subject to any previous costs orders in the proceedings: (1) The defendants pay the plaintiffs' costs incurred by the plaintiffs in the proceedings brought on the Statement of Claim or the Statement of Cross-claim in the Second Cross-claim. (2) The plaintiffs pay 10% of the defendants' costs incurred by the defendants in the proceedings brought on the defendants' cross-claim.
2. The plaintiffs, in their submissions on interest and costs also proposed an alternative way of assessing costs which was expressed: Or, to simplify the costs assessment process: Subject to any previous costs orders in the proceedings: (1) The defendants pay the plaintiffs 95% of the costs incurred by the plaintiffs in the proceedings brought on the Statement of Claim or the Statement of Cross-claim in the second cross-claim. (2) There be no order as to the costs of the defendants' cross-claim to the intent that the parties pay their own costs in relation to that cross-claim.
3. The plaintiffs' submissions in support of those orders were as follows: 1. The plaintiffs were successful in seven of the categories of claim brough by them in the SOC and CC2. 2. The plaintiffs did not pursue four claims. Those claims occupied a negligible portion of the evidence, submissions and court time. The plaintiffs' were unsuccessful in two respects, namely, management fee and the one-off payment. 3. The overwhelming portion of the parties evidence and submissions and time during the trial was devoted to the shortfall in cattle numbers and the defendants' misleading conduct. The plaintiffs were successful in these claims. The areas that they were unsuccessful in required "almost no additional resources beyond what was required to support the successful claim for relief from reliability to pay an incentive payment". 4. The plaintiffs were successful in resisting the claim for incentive payment. 5. The defendants further amended defence concerned five categories of claim. The defendants were successful in three of those categories. None of the defendants' successful claims occupy a substantial portion of the defendants' evidence, submissions or court time. 6. The matters on which the defendants' Cross-claim were successful "account for less than 10% of the defendants' costs". 7. Further the defendants amended their defence and their Cross-claim "twice". Costs orders were made against the defendants in favour of the plaintiffs in relation to amendments on 28 August 2020 and 15 October 2020. 8. The plaintiffs incurred costs in defending the claims unsuccessfully advanced by the defendants in their CC1. 9. Overall, the principal issues raised by the plaintiffs' pleadings account for the great majority of the evidence and court time. The costs in relation to the disputes raised on those pleadings will be much greater than the costs in relation to the defendants' CC1.
4. The defendants submitted in their submission on interest and costs that costs should follow the event. The plaintiffs should have their costs of the SOC and the cross-claimant should have their costs of CC1 both on a party/party basis.
5. The defendants also submitted that the overall apportionment of the costs was a matter for the costs assessor.
6. The defendants also alluded to the fact that the amount of the judgment on the missing cattle was substantially less than the amount sought by the plaintiffs in opening.
7. Alternatively, the defendants submitted that the Court should have regard to a comparison between the amount the subject of each judgment. The comparison between the parties relative success might indicate that the costs of the proceedings should be shared proportionally to the money value of their success.

Consideration: costs

1. In the primary judgment, the Court made the following observations regarding costs (at [604]): 604. Upon the basis of this judgment, it would seem to be appropriate to have an apportionment as to costs. However, the Court has not received submissions from the parties in that respect. The plaintiffs should include in the separate Short Minutes of Order the orders sought by the plaintiffs with respect to costs, either as an agreed matter or alternatively as stating the plaintiffs claim in that respect. The defendants will be given an opportunity to propose alternative costs orders. Both parties will be provided the opportunity to make submissions in writing with respect to costs, and call evidence with respect to the same.
2. In consideration of the apportionment of costs, relevant legal principles were discussed in Kvelde v State of New South Wales (No 2) [2024] NSWSC 196 at [18] - [19] as follows: 18. In Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 ("Ryde") at [6], the New South Wales Court of Appeal described the general position on apportioning costs in cases of mixed success as follows: "[6] Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the general rule is that the Court is to order that costs follow the event. The "event" may be characterised in more than one way. Generally the "event" refers to the result of the claim or counterclaim, as the ca"e may"be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per Ward, Emmett and Gleeson JJA. Where there has been a mixed outcome in the proceedings, and it Is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22." 19. The principles applicable to determining when and how costs should be apportioned between issues in proceedings were stated by the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]: "[38] … • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.
3. In respect of claims by the plaintiffs for breach of contract, the primary judgment records the following causes of action (at [24]) as follows: "24. Under the first of those causes of action, the plaintiffs prosecuted a claim on these alternative bases: (1) breaches of the 2017 Lease Agreement; (2) breaches of an agreement said to be reached in consequence of the termination of that lease in November 2019 (which included a contest as to whether such an agreement was reached); (3) breaches of the agreement on or about 23 January 2020 (the "January Agreement")."
4. The particularisation of these claims are set out at [25] and [26] of the primary judgment as follows: 25. The particularisation of those claims only fully materialised during the course of the plaintiffs' submissions. The claims for damages in these respects were as follows: (1) Payment of $34,000 plus interest, equalling $37,400, for outstanding rent from the defendants due under the 2017 Lease Agreement; (2) Payment of $49,500, for the unpaid portion of the purchase price for the sale of "Plant & Equipment" under cl 3 and appendix I of the 2017 Lease Agreement; (3) Payment for the unpaid portion of sale proceeds, being 15% of the total sales over $700,000 (as per cl 11 of the 2017 Lease Agreement), for the financial year from 1 July 2017 to 30 June 2018; (4) Payment for the unpaid portion of sale proceeds, being 15% of the total sales over $700,000 (as per cl 11 of the 2017 Lease Agreement), for the financial year from 1 July 2018 to 30 June 2019; (5) Damages for the market value of the shortfall in the number of cattle counted, between February and March 2020, in comparison to the 'heard profile' set out in cl 1(d) of the 2017 Lease Agreement or in the Agreement that followed the termination of the 2017 Lease Agreement; (6) Damages for breach of the 2017 Lease Agreement that required regular maintenance of the fences on the properties. 26. The claims in 1 and 2 of the proceeding paragraph were admitted by the defendants (collectively "the admitted matters").
5. Certain claims were abandoned by the plaintiffs as set out in [27] of the judgment as follows: 27. I also note at this juncture that the plaintiffs confirmed (in their written submissions) that they abandoned their pleaded claims for damages in four respects: for the return of missing property of the first plaintiffs; arising from a breach of the defendants' obligations under the 2017 Lease Agreement to manage the herd profile via ensuring each animal received a NLIS tag arising from diverted feed from the first plaintiffs' cattle to cattle not owed by the plaintiffs; arising from the agistment of cattle not owed by the plaintiffs on the plaintiffs property.
6. The Court found for the plaintiffs with respect to the first cause of action, namely, a breach of the 2017 Lease Agreement and, in that respect, broadly found for the plaintiffs for each of the claims listed in [25] of the primary judgment. The Court accepted the plaintiffs' construction of the 2017 Lease Agreement (at [94] of the primary judgment)
7. The plaintiffs were unsuccessful in the pursuit of the second cause of action, namely, the November agreement.
8. The plaintiffs were successful as to the third cause of action, namely, the January agreement and CC2 although with respect to CC2 the Court expressed (at [595]) as follows: There is a counterpart breach to the January agreement with respect to the shortfall in the herd profile as at 1 December 2019. In that respect, the plaintiffs may have judgment under the CC2 corresponding to the findings as to the shortfall of cattle in this judgment but it must be noted that the claim under CC2 in this respect is a true alternative to the claim for the shortfall in cattle under the SOC. The loss will be assessed by reference to the sales of cattle by the Burkes in December 2019.
9. The claim for the shortfall of cattle by the plaintiffs appears at [478] of the primary judgment and is for a sum of $796,960.52.
10. That amount claimed is, of course, considerably higher than the amount which will be awarded to the plaintiffs in this judgment for damages arising from the shortfall of cattle. A significant portion of that difference is because the plaintiffs' calculation was predicated upon the shortfall of 548 cattle which was found to be correct (at [400], primary judgment) but reduced, to take into account the sale of cattle in December 2019 (at [475], primary judgment), to a total shortfall of 239 head. However, there are other elements which ultimately were not established by the plaintiffs. First, the calculations were predicated on sales in April and May 2020 rather than the date of termination of the 2017 Lease Agreement. The plaintiffs' position in that respect persisted, albeit in an amended form, in their additional submissions regarding missing and sold cattle responding to the Directions 1 and 2 of the primary judgment despite the Court finding against assessing cattle prices in that way in the primary judgment (see [480]). The additional submission similarly failed.
11. Secondly, the plaintiffs failed to establish their claims for damages with respect to offspring (see [502]).
12. It might also be noted that the plaintiffs acknowledged that, with respect to the defendants' further amended defence, the defendants were successful in three of five categories. I will further discuss the contribution to court time arising from the respective cases of the parties below.
13. As to claims under the ACL, the Court found for the plaintiffs, the Court found that the defendants misrepresented to the plaintiffs that there were enough animals in the plaintiffs heard that the defendants could sell 400 cattle without reducing the herd profile, which was intact (see at [596]). The Court found (at [596]): … The plaintiffs relied upon that representation which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL and, in that respect, suffered loss and damage upon the sale of 309 cattle from the herd in December 2019. The plaintiffs should have relief under s 18 of the ACL in that respect and judgment under the SOC.
14. However, again in the primary judgment, damages for the sale of cattle were to be calculated on December 2019 prices.
15. The plaintiffs' relied upon s 18 of the ACL to defeat the Cross-claims brought by the defendants as to the 10% incentive, the management fee and the one-off payment.
16. The plaintiffs were partially successful in that respect as follows: 598. By virtue of the January agreement, the plaintiffs had obligations to the defendants with respect to the 10% incentive, the management fee, and the one-off payment. The plaintiffs sought relief from those obligations under the ACL upon the basis that they were induced to take them by the defendants' misleading and deceptive representations. 599. The Court grants that relief under s 18 of the ACL with respect to the 10% incentive but not the management fee and one-off payment. The defendants shall have judgment under CC1 in those latter respects.
17. Correspondingly, the defendants were successful in the CC1with respect to the management fee and one-off payment but not the 10% incentive.
18. As to the balance of the CC1, the Court found at [600] as follows: 600. The Court has granted, in part, the defendants claim with respect to certain personal plant and equipment. However, the final disposition of that claim, and in particular, the granting of the primary or alternative claims in that respect will require resolution in accordance with the terms of this judgment. The Court has otherwise dismissed various claims raised by the defendants under the CC1 on the basis that they were not pursued or there was insufficient evidence. Those claims were as follows: (1) Alleged breaches of obligations by the plaintiffs under the 2017 Lease Agreement referred to in [38] of CC1. (2) The claim in relation to silage.
19. Overall, the defendants' CC1 was resolved as follows (at [592]): 592. In my view, the defendants cross-claim should be resolved as follows: (1) The claim based upon the 10% incentive is dismissed. (2) The claim based upon the management fee is granted. (3) The claim based upon the one-off payment is granted. (4) The claim for the return of plant and equipment is granted in part and subject to resolution of the primary or alternative claims advanced by the defendants. (5) The claim in relation to silage is dismissed. (6) The claim for the breach of obligations by the plaintiffs under the 2017 Lease Agreement specified in [38] of CC1 is dismissed.
20. Contrary to the additional submissions accompanying the amended proposed orders of the plaintiffs with respect to the determination at [4] in the extract in the immediately preceding paragraph of the judgment, the Court did not confine the relief granted to an air compressor, but rather ordered access to the following: an air compressor, 2 small box trailers, 2 horses and molasses tank and shed. In the final draft amended orders proposed by the defendants, relief was only sought with respect to the air compressor.
21. When seen in light of the above analysis, this is a case where the parties have had a mixed outcome in the proceedings and it is appropriate to apportion costs in the respective claims. I have approached this task with a broad-brush basis having regard to the particular outcomes of the proceedings giving rise to the primary judgment as discussed above and my general evaluation of the parties' respective claims.
22. Overall, I consider that the most substantial component of evidence and submissions in the trial was devoted to the shortfall of cattle numbers and the defendants; misleading conduct and that the award of costs should reflect the success of the plaintiffs in this respect, albeit tempered by failures in the plaintiffs' case which are also as recorded in my judgment above including as to the assessment of damages or interest.
23. The outcome of the CC1 substantially favoured the defendants, but overall, the issues raised by in the CC1 amounted to a relatively small of portion of the evidence and submissions in the proceedings.
24. I have also made provision in the award of costs for the costs order against the defendants in favour of the plaintiffs on 28 August and 15 October 2020.
25. Lastly, I have factored into the award of costs the mixed success of the parties on the assessment of damages, interest and costs reflected in this judgment.
26. The Court rejects the defendants' contention that the Court would award costs of the SOC to the plaintiffs and costs of the CC1 to the defendants with the apportioning of costs left fully to a costs assessor.
27. The Court will make an award of costs in which the defendants pay 80% of the plaintiffs' costs of the proceeding, with such orders expressed in a form akin to that proposed in the alternative orders as to costs sought by the plaintiffs in their submissions on interest and costs.

ORDERS AND DIRECTIONS

1. The plaintiffs shall file and serve Short Minutes of Order reflecting this judgment and the previously agreed elements of the originally filed Short Minutes of Order within 7 days of the publishing of this judgment.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 May 2024