His Lordship's words have been adopted, or treated as correctly stating the law, in authoritative decisions in Australia: Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 at 161; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 357, 377.
12 In the cases, contracts have been held to be frustrated where the subject matter is destroyed, or radically changed in nature by supervening events. In the end a value judgment must be made by the Court. Questions of the degree of change of the situation must be taken into account. It is not only the absolute impossibility of performance that will effect a frustration: see Codelfa Construction Pty Limited v State Rail Authority of New South Wales supra where, on a railway construction project, disturbed residents obtained an injunction restraining 24 hour working, which had been contemplated by the parties under the contract.
13 The provisions of the Frustrated Contracts Act 1978 have no relevance to the decision of the question before me.
14 Mr Loewenstein puts the defendants' arguments in two ways. He says that the business by definition, contains three elements, one of which is the milk quota. If the quota is abolished and that element destroyed, it can no longer be said that the tripartite entity, which was the subject of the contract, exists. He says, alternatively, that, even if it cannot be said that the business, as defined, no longer exists, nonetheless, there is such a radical change in the circumstances, that the obligation thereafter continuing cannot be taken to be the obligation which the first defendant undertook. It is important to note in this regard that, upon what I have held to be the correct construction of the contract, an obligation is placed upon the first defendant to retain all three elements of the business, or only to seek to dispose of them at the one time. He says that the obligation to retain those elements, including the continuation of the dairy farming activity, is a quite different obligation, in circumstances where the subsidy scheme has been abolished.
15 Mr Stevens, on the other hand, whilst conceding that the change is a considerable one, points to cases where radical changes in profitability caused by changing circumstances have not been taken to change the essential nature of the obligation, so that the contract cannot be taken to have been frustrated. He says that what we have got here, before and after the legislative change, is a working dairy farm which produces milk and buys and sells cows. The fact that the milk is sold into a radically different market and that, indeed, the price of dairy cattle may be substantially changed by the difference in the milk market, does not affect the nature of the obligation in a way which will attract the doctrine of frustration. He points out that, after the legislative change, as before, the first defendant, for the purposes of the business owns land, owns cows, grazes cows on the land, produces milk, sells milk and buys and sells cows. He points out that, if this produces a change or fluctuation in the profitability of the business, that is not of itself a new situation, if one looks at the history of profits as set out in the evidence.
16 The question is a nice one and the Court, as I have said, must make a value judgment. I have said that no conclusion can actually be drawn as to the change in profitability since the legislation, but the price differential, which is apparent from the evidence and which is not contested, is a radical one and it seems to me that in a real way the whole market, into which milk is sold in this State, is radically changed. The obligations imposed by the deed, as I have already said, include an obligation to dispose of the dairying activity, the land and equipment and the quota (now abolished) together. It seems to me that the obligation imposed by that clause, in the context of the change, are radically altered.
17 There is one other matter to which I need to advert. Mr Stevens has also made submissions, by reference to the authorities, which deal with the question of whether or not the parties should be taken as having contemplated the change which has occurred, or its possibility, at the time of the entry into the contract. In some cases, the parties have made provision for the consequences where some changes occur, but not others. In those cases, one can sometimes draw the inference that the parties' intention was, if disadvantage arose from some contemplated change, that the disadvantage should lie where it falls, in accordance with other provisions of the contract. Sometimes, as here, there is no provision as to what will occur in the light of the future circumstance which has arisen.
18 Commodity subsidy schemes have not been unusual in the 20th century. I suppose it is correct to say that, where they are implemented by legislation, there must always be the possibility that the legislation may be amended or repealed. However, in my view, there is nothing in the evidence that would suggest that the abolition of the quota scheme was, or ought to have been, in the contemplation of the parties at the time the deed was entered into more than six years ago, or to infer that it was their intention that in the light of such a change the contractual provisions should remain in force, any loss or disadvantage remaining where the contractual provisions cause it to fall.
19 The result of my consideration is that I have come to the conclusion that the agreement embodied in the deed, so far as it is unperformed, has been frustrated by the supervening event of the abolition of the quota subsidy scheme.
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20 The question of costs has been debated before me. Clearly the defendants have been substantially successful in the proceedings. In the end that was on the issue of frustration. Mr Stevens has made some submissions about the costs of the first day, on the basis that the frustration issue had not really arisen at that time. However, I do not think this is a case in which the costs can conveniently be divided up, even to the extent of dividing out a separate element in respect of an interlocutory application, although at the end of the first day an interlocutory injunction was, in fact, granted. There was a misunderstanding generally, as to whether the matter was on that day proceeding on an interlocutory, or final, basis. In the end I granted short term interlocutory relief, on the basis that I should myself give the matter an early final hearing, which I have now done. A great deal of what occurred on that first day was the reading into evidence of the affidavits and presentation of the material generally, which has formed the body of evidence upon which I have determined the case on its final hearing. I do not think, in the circumstances, there is any element which can usefully be separated out for separate consideration as to costs and the correct result is that the defendants should have their costs generally. Short minutes should be brought in before me incorporating any orders that are deemed appropriate arising out of this judgment, and they should embody a costs order in the above terms.