R.T. & Y.E. Falls Investments Pty Ltd v. The State of New South Wales and Ors [2001] NSWSC 1027 - NSWSC 2001 case summary — Zoe

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R.T. & Y.E. Falls Investments Pty Ltd v. The State of New South Wales and Ors [2001] NSWSC 1027

[2001] NSWSC 1027

Supreme Court of NSW|2001-11-15|Before: Palmer J, Finkelstein J, Matthews AJ, Sackville J, Emmett J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2001-11-15

Before

Palmer J, Finkelstein J, Matthews AJ, Sackville J, Emmett J

Catchwords

First Defendant liable to Plaintiff for misleading conduct under FTA and in negligence
Third Defendant not liable to Plaintiff in negligence.

Source

Original judgment source is linked above.

Catchwords

First Defendant liable to Plaintiff for misleading conduct under FTA and in negligenceThird Defendant not liable to Plaintiff in negligence.

Judgment (169 paragraphs)

[1]

Introduction 1 Mr Ron Falls has been breeding stud cattle for fifty years. His father was a stud cattle breeder before him and his son, Peter, has followed in the family tradition. The family company, which is the Plaintiff in these proceedings, has since 1978 conducted a highly successful beef shorthorn stud principally at its property, Malton , at Finley near Deniliquin. From 1983 until 1993 the Malton Stud had consistently been the most successful exhibitor of beef shorthorn cattle at the Sydney Royal Easter Show and the Royal Melbourne Show. The Malton Stud had a very high reputation in the Australian cattle industry.

[2]

2 By 1992 the Malton herd of stud cattle, numbering almost 900 head, was extremely valuable. In early 1992 the NSW Department of Agriculture ("NSWAg") adopted a policy to eradicate Bovine Johne's Disease ("BJD") in New South Wales. The means of eradication primarily recommended by NSWAg was total herd depopulation, i.e., the slaughter of all cattle in herds found to contain infected beasts. Compensation for cattle slaughtered in accordance with the BJD eradication policy was to be payable to owners of affected herds pursuant to the Cattle Compensation Act, 1951( NSW) .

[26]

A depopulation proposal is made 28 On 21 August Mr Peter Falls went to Dr Salmon's office in Deniliquin to discuss further the proposal which Dr Salmon would put to NSWAg. Mr Falls explained that he understood "the proposal" to be the Plaintiff's proposal to retain an élite herd of cows for breeding, although depopulating the remainder of the herd with compensation: T55.20, T56.30, T58.2. On the same day Dr Salmon prepared the proposal and sent it by facsimile to his immediate superior in the Department, Mr Richard Roe. The proposal is as follows: "The above own a Beef Shorthorn herd which has a longstanding history of Johnes Disease. The initial test of part of the herd gave 11 positive and 4 suspicious ELISA results from 301 head. This herd was the subject of intensive investigation by me during the late 1970s. Malton is one of the more prominent Beef Shorthorn studs in Australia. They have been the most successful exhibitor of Beef Shorthorns at both Sydney and Melbourne Royal Show on many occasions over recent years. Messrs Falls are committed to eradication of Johnes Disease, they share my reservations as to the possibility of eradication by test and slaughter using current technology. It is proposed to select some 30 mature cows which Messrs Falls consider to b genetically superior and which were negative on the initial ELISA. These cows will be allocated into three groups and removed to three different properties which have no history of Johnes Disease. Each group will be subject to ELISA at six monthly intervals. If all animals in any group are negative to three successive assays, it is proposed to return them to Malton mid 1994 with their calves. If any animal in a group reacts, she will be destroyed along with any calves and the procedure started again. "It is proposed to depopulate Malton prior to December 1992. The property will be used to graze steers older than 12 months which will be sold before they reach 24 months of age. The herd at Malton currently comprises 827 cattle. Of these some 75 are commercial cattle and the balance stud Beef Shorthorns. Approval is sought to slaughter all but 30 of these cattle under compensation . Given the quality of the herd, it is likely that there will a substantial difference between the market value and the residual value and consequently a substantial compensation payment. It would be appreciated if a decision on this matter be made as soon as possible so that an independent valuer can value the herd and allow depopulation before the summer." [Emphasis added]

[67]

Fair Trading Act claim - Issues 73 In the alternative to its claims in contract and estoppel, the Plaintiff claims against NSWAg for misleading and deceptive conduct, in breach of s.42 of the Fair Trading Act ("FTA"). In the Plaintiff's Further Amended Statement of Claim, the conduct alleged consisted of five representations made by Dr Salmon on behalf of NSWAg, namely: a) that NSWAg had decided to depopulate the Plaintiff's herd; b) that NSWAg would arrange for the removal and slaughter of the Plaintiff's herd, save for an élite herd of thirty cattle; c) that NSWAg would pay to the Plaintiff for each head of cattle slaughtered the value of the beast as determined by a valuation or $2,000, whichever was the less; d) that the cattle on Malton which had tested positive to BJD did not need to be separated from the other cattle on Malton because all cattle would be removed from Malton by 1 December 1992 for slaughter; e) that depopulation of the Plaintiff's herd would commence in October 1992. No separate cause of action is pleaded against Dr Salmon as a person involved in the contravention of s.42, within the meaning of s.61 FTA. Despite a suggestion by the Plaintiff in its final submissions that an independent claim against Dr Salmon under FTA was pressed, I will not entertain such a claim in the absence of an amendment to the Amended Statement of Claim. 74 The first representation pleaded is a representation as to a present or past state of affairs. The second to fifth representations are representations with respect to future matters. In his final submissions for the Plaintiff, Mr Taylor addressed his arguments only to representations with respect to future matters, treating the second to fifth representations compendiously as being a representation by NSWAg that the depopulation of the Plaintiff's herd on the terms proposed by the Plaintiff and encapsulated in Dr Salmon's facsimile of 21 August would proceed. Mr Taylor submitted that because that representation was with respect to a future matter, it was to be taken as misleading for the purpose of s.42(1) FTA unless NSWAg discharged its onus of establishing that it had reasonable grounds for making that representation: s.41(1), (2) FTA.

[70]

78 A number of cases have examined the principles upon which a government department or agency will be held to be carrying on a business for the purposes of the Fair Trading Act and the corresponding provisions of the Commonwealth Trade Practices Act . From those cases, the following propositions can be derived: - a government department or agency will be carrying on a business for the purpose of the Fair Trading Act and the Trade Practices Act when it is doing what any private trader might do, such as supplying goods or services for remuneration or buying and reselling goods; - that the proceeds derived from the activity are not commercially adequate or are calculated to produce a loss does not, in itself, detract from the character of the activity as a business. The definition of "business" in the Fair Trading Act and the Trade Practices Act includes a business not carried on for profit. Government departments or agencies may be expected in many cases to be carrying on a business not for the purpose of profit but to achieve a policy objective of government, ultimately at the expense of the public purse; - the concept of carrying on a business requires that the subject activity be conducted with a degree of system, continuity and repetition. A single instance of the activity or engaging in the activity only in an ad hoc response to infrequent occurrences or circumstances will not normally indicate that a business is carried on; - system, continuity and repetition in carrying out an activity are not sufficient on their own to characterise the carrying on of a business. There must always be present some element of commerce or trade such as a private citizen or trader might undertake. What is a sufficient degree of commerciality is a question of fact in each case; - a person claiming under the Fair Trading Act or the Trade Practices Act in respect of a dealing with a government department or agency which carries on a business must show that the dealing occurred in the course of, and as part of, the carrying on of that business: see Re Ku-ring-gai Co-operative Building Society (No.12) Ltd (1978) 36 FLR 134, esp. at 167 per Deane J; J.S. McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 (Emmett J.); Fasold v Roberts (1997) ATPR 41-561 (Sackville J.); Plimer v Roberts (1997) 80 FCR 303; Paramedical Services Pty Ltd v The Ambulance Service of New South Wales [1999] FCA 548 (Hely J.); Easts Van Villages v Minister Administering the National Parks & Wildlife Act [2001] NSWSC 559 (Matthews AJ); Corrections Corporation of Australia Pty Ltd v Commonwealth (2000) ATPR 41-787 (Finkelstein J). With these principles in mind, I turn to the facts of the present case. 79 At all relevant times, compensation under the Cattle Compensation Act was paid out of the Cattle Compensation Fund under two distinct and different procedures. The first was as set out in Circular 84/24, issued by NSWAg in June 1984. This procedure related essentially to compensation payable to cattle owners in respect of relatively small numbers of cattle destroyed. The Fund simply paid the owner the difference between the "market value" as defined in s.3 of the Cattle Compensation Act , determined in accordance with s.7, and the residual value, which the circular explained was, in practice, the net amount received by the owner from the abattoir after deducting such expenses as freight in getting the animal to the abattoir for slaughter, slaughtering fees, inspection fees and agents commission.

Cases Cited (23)

CITATION : R.T. & Y.E. Falls Investments Pty Ltd v. The State of New South Wales and Ors [2001] NSWSC 1027 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4422/93 HEARING DATE(S) : 25 to 28 September and 3 & 5 October, 2001 JUDGMENT DATE : 15 November 2001

COUNSEL : P.T. Taylor [Plaintiff] T.H. Barrett [Defendants] SOLICITORS : Taylor & Whitty [Plaintiff] State Crown Solicitors Office [Defendants] CATCHWORDS : CONTRACT - INFORMAL CONTRACT - Whether concluded agreement comprised by facsimile and conversations - significant commercial transaction involved - whether parties evidenced common intention to be bound prior to formal contract - principles discussed - as a general rule, Court should be reluctant to find informal contract where parties negotiating substantial commercial transaction in contemplation of formal contract. - FAIR TRADING ACT - GOVERNMENT DEPARTMENT - BUSINESS - Whether NSW Department of Agriculture carrying on a business in paying compensation to cattle owners under Cattle Compensation Act, 1951 - principles discussed - Department relevantly carrying on a business to the extent it was engaging in an activity in which a private trader would engage. - FAIR TRADING ACT - REPRESENTATION - Whether representation involving express or implied statements as to present circumstances excludes representation being "with respect to" a future matter - expression of presently held opinion as to what is likely to happen is representation "with respect to" a future matter within s.41 FTA. - DAMAGES - ECONOMIC LOSS - Loss of sales of stud cattle - whether additional compensation payable for loss to value of Plaintiff's business - principles discussed. - NEGLIGENCE - DUTY OF CARE - Government Department aware of possible impending change of policy - Department keeps possible change secret from field officers dealing with persons foreseeably likely to suffer loss by reason of misleading information - whether Government Department has duty of care - whether field officer has independent duty of care - whether both Department and field officer have breached duty of care. - WORDS AND PHRASES - "Representation with respect to any future matter" - s.41(1) FTA. Cattle Compensation Act, 1951 (NSW) - s.3, s.7 Commonwealth Fair Trading Act LEGISLATION CITED : Conveyancing Act, 1919 (NSW) - s.54A Fair Trading Act, 1987 (NSW) - s.3, s.4, s.42 Supreme Court Act, 1970 - s.94 - ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 - Air Great Lakes Pty Ltd v K.S. Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 - Bakewell v Deputy Federal Commissioner of Taxation (S.A.) (1937) 58 CLR 743 - Baulkham Hills Private Hospital Pty Ltd v G.R. Securities Pty Ltd (1986) 40 NSWLR 622, on appeal, ibid 631 - G.R. Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 - Branca v Cobarro [1947] KB 854 - Clifton v Palumbo [1944] 2 All ER 497 - The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 - Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 - Corrections Corporation of Australia Pty Ltd v Commonwealth (2000) ATPR 41?787 (Finkelstein J) - Easts Van Villages v Minister Administering the National Parks & Wildlife Act [2001] NSWSC 559 (Matthews AJ) - Fasold v Roberts (1997) ATPR 41-561 (Sackville J.) - Filby v Hounsell (1896) 2 Ch 737 - Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 CASES CITED : - Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 - Global Sportsmen Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 - Godecke v Kirwan (1973) 129 CLR 629 - Jones v Schiffman (1971) 124 CLR 303 - Re Ku-ring-gai Co-operative Building Society (No.12) Ltd (1978) 36 FLR 134 - J.S. McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 (Emmett J.) - Masters v Cameron 91 CLR 353 - Niesmann v Collingridge (1920) 29 CLR 177 - Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 - Paramedical Services Pty Ltd v The Ambulance Service of New South Wales [1999] FCA 548 (Hely J.) - Perre v Apand Pty Ltd (1999) 198 CLR 180 - Plimer v Roberts (1997) 80 FCR 303 - Rossiter v Miller (1878) 3 App Cas 1124 - B. Seppelt & Sons Ltd v Commissioner for Main Roads [1975] 1 BPR 9147 - Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 - Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 DECISION : No informal contract found; First Defendant liable to Plaintiff for misleading conduct under FTA and in negligence; Third Defendant not liable to Plaintiff in negligence.

(1988) 18 NSWLR 540

(1985) 2 NSWLR 309

(1937) 58 CLR 743

(1986) 40 NSWLR 622

(1986) 40 NSWLR 631

(1991) 174 CLR 64

(1990) 169 CLR 594

(1986) 160 CLR 1

(1984) 2 FCR 82

(1973) 129 CLR 629

(1971) 124 CLR 303

(1978) 36 FLR 134

(1997) 77 FCR 337

(1920) 29 CLR 177

(1963) 109 CLR 9

(1999) 198 CLR 180

(1997) 80 FCR 303

(1929) 43 CLR 310

(1988) 164 CLR 387

[1999] FCA 548

[2001] NSWSC 559