A.M.I.E.U. v. Mudginberri Station Pty Ltd [1987] FCA 313

CATCHWORDS TRADE PRACTICES - secondary boycotts - picket of abattoir by union - economic loss - damages - general principles - appeal as to quantum - findings by trial judge as to measure of damages -

whether findings open on the evidence - whether interest charges too remote.

DAMAGES - causation - loss of revenue for export sales of meat - Commonwealth meat inspection requirements - refusal of meat inspectors to cross picket line - Commonwealth duty to provide inspectors - whether picket caused loss.

DAMAGES - mitigation - injunctions restraining picketing at abattoir ~ union disobedience - temporary closure of abattoir - whether failure to mitigate loss - whether disobedience should

have been expected.

DAMAGES - mitigation - Commonwealth meat inspectors unavailable - slaughter under Northern Territory supervision - Commonwealth power to certify meat for export - stockpiling - hindsight - whether failure to mitigate loss.

APPEAL - findings of fact and as to credit of witnesses by trial judge - whether open on the evidence.

Trade Practices Act 1974, sub-ss.45D(1), 82(1).

Export Control Act 1982

Export Control (Orders) Requiations Prescribed Goods (General) Orders, 0.12,13,14

Australian Meat and_ Live-Stack Corporation Act 1977 Agricultural Development and Marketing Authority Act '1990 (N.T.)

THE AUSTRALASIAN MEAT INDUSTRY EMPLOYEES' UNION v. MUDGINSERRI STATION Ply. LID.

No. G 330 of 1986

CORAM: Fox, Woodward and Sheppard Jd. 16 June 1987

Sydney

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IN THE FEDERAL COURT OF AUSTRALIA )

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NEW SOUTH WALES DISTRICT REGISTRY ) No. G 330 of 1986

GENERAL DIVISION

JUDGES MAKING ORDER: DATE OF ORDER:

WHERE MADE:

THE COURT ORDERS THAT:

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ON APPEAL from a single judge of the Federal Court of Australia

BETWEEN :

THE AUSTRALASTAN MEAT INDUSTRY EMPLOYEES" UNLON

. Appellant AND:

MUDGINBERRI_ STATION PTY. LTD.

Respondent

OF ORDER FOX, WOODWARD AND SHFPPARD a7. 16 JUNE 1987

Sydney.

1. The amount of the judgment. entered by this Court on 24 July 1986 be varied by reducing it from $1,759,444.00 to

$1,458,810.00.

2. There be Liberty to either party to apply within 14 days in relation to the calculation of the amount to which the judgment has been reduced.

3. The appeal be otherwise dismissed.

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The appellant pay one third of the respondent's costs of the appeal.

Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

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IN THE FEDERAL COURT OF AUSTRALIA

} ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 330 of 1986 ) )

GENERAL DIVISTON

ON APPEAL from a single judge of the Federal Court of Australia

BETWEEN :

THE AUSTRALASIAN MEAT INDUSTRY EMPLOYEES' UNION

Appellant AND: MUDGINBERRI STATION PIY. LTD. Respondent CORAM: FOX, WOODWARD AND SHEPPARD Jv.

DATE: 16 JUNE 1987

REASONS FOR JUDGMENT

THE COURT:

We have heard together appeals in two related cases from decisions of a Judge of this Court (Morling J.). At first instance, his Honour found that the appellant had breached s.45D

of the Trade Practices Act 1974 and he granted permanent

injunctions against it. After a further hearing, he awarded $1,759,444 in damages against the appellant. This appeal is from

that award.

The other appeal (No. VG 307 of 1986) is from a decision

of a different nature. An order was sought that the permanent

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injunctions be set aside on the ground, principally, of the alleged falsity of some of the evidence. The appeal is from the rejection of this application by his Honour. It is the subject of a separate judgment. The award of damages was made in reliance on s.82 of the Trade Practices Act and it is on that basis that the respondent supports it. Sub-section 82(1) of that Act provides:- "82.(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a

provision of Part IV or V may recover the amount of the loss or damage by action against that other

person or against any person involved in the contravention."

The conduct relevant to the case is that referred to in sub-s.45D(1) which prohibits "conduct that hinders or prevents

the supply of goods or services..." in certain circumstances.

There have been a number of court applications related to the situation which existed, but it is not necessary to itemise them. Several have been reported and we refer, in addition to the judgment of the Judge from whom this appeal comes (which is now reported: (1986) 8 A.T.P.R. 40-708), to Mudginberri Station Pty. Ltd. v. Langhorne (1985) 7 F.C.R.

482. In view of these reports it is only necessary to introduce the facts of the

case by a brief statement.

The respondent operates in the dry season at Mudginberr1i in the Northern Territory an abattoir at which it slaughters feral buffalo anda small percentage of cattle. It conducts a

business of the sale of buffalo meat (mainly for export), of

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beef, and of buffalo and cattle hides. Between 10 May 1985 and 8 September 1985 the appellant union maintained a picket at Mudginberri. This conduct was in breach of s.45D of the Trade Practices Act (see Mudqinberri Station Pty. Ltd. v. Australasian Meat Industry Emplovees' Union (1985) 61 A.L.R. 280; Australasian

Meat Industry Employees' Union v. Mudginberri Station Pty. Ltd. (1985) 9 F.C.R. 425). The damages were awarded for the

disruption of the respondent's business arising from the presence

of the picket. They are concerned with economic loss.

The picket interfered with the movement of some freight into and out of Mudginberri. However, its most important effect

was on the inspection of the meat produced there.

At all relevant times, the effect of the Export Control Act 1982 (Cth.) and the regulations thereunder was that, except in special circumstances, the meat produced at Mudginberri had to be examined and passed by qualified meat inspectors before it could be exported. The meat inspectors had to be officers of the Commonwealth Department of Primary Industry or be appointed by

the Secretary of that Department. The inspectors were usually provided on request by the Export Inspection Service ("E.I.S.")

which is part of the Department.

The three unspectors who had originally been detailed by

the E.I.S. to do the inspection at Mudginberri refused to do so, on the instructions of the secretary of their union, after the

picket was in place. The establishment and maintenance of the

picket had the support, or, at least, the endorsement of the

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Australian Council of Trade Unions. The inspectors themselves obviously feared the consequences of "crossing the picket line". It should be explained that Mudginberri could be entered at many

places from nearby roads and tracks, and the picket was at one

point of entry only.

Between 10 May and 23 June 1985 there was no killing done at Mudginberri, except for the slaughter on humanitarian grounds of 29 head of buffalo oni13 May. From 24 June to 7 September, some killing was done under the supervision of inspectors from the Northern Territory Department of Primary Production, who could approve meat for local, but not for export, consumption. The meat produced was stockpiled, and eventually disposed of on the local wmarket resulting in lower prices than might have been expected on the export market. The quantity of meat and hides produced by the respondent in the 1985 season was

greatly reduced.

CAUSATION An initial question raised in this appeal is whether the appellant can be said to have caused the damage suffered by the

respondent.

The major submission in this regard derived from the fact that the absence of the three inspectors of the E.I.S. rendered the operation of the abattoir impossible so far as the export trade was concerned. The loss of that trade was therefore said to be due to an independent (and not foreseeable) cause.

Counsel for the appellant submitted that, even 1f the reaction of

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the meat inspectors to the picket was foreseeable, the failure of the E.I.S. to take any action to ensure that meat was inspected,

could not have been foreseen.

The submission makes an assumption about what would have

happened if E.I.S. inspectors had continued to work at

Mudginberri. It seems to us that on any view the picket was there to achieve the purpose of blocking the trading activities of Mudginberri and that even if the inspectors had been prepared to inspect and certify the meat it is not clear either that the animals for slaughter would have been obtained or that, if meat was prepared, the trucks would have been allowed to enter and to carry it away. Indeed, there was evidence before his Honour to

suggest that one purpose of the picket was to render Mudginberri

insolvent.

The fact was, as must have been anticipated, that the inspectors did not attend for duty. Their absence made it impossible to produce meat for export. In our view it can hardly be said that their absence was not caused by the presence of the

picket.

It was conceded that between 10 and 15 May the picket could be said to have been the cause of loss to Mudginberri because some allowance had to be made for time to adjust to the absence of the inspectors. For the remainder of the period, so far as concerns the export trade, it was put that there was an additional intervening factor, namely that the Director of the

E.I.S. and the department had taken the view that under the

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Export Control Act there was a discretion whether inspectors would be provided for any particular operation. This was indeed the view of the learned Judge before whom that issue was subsequently contested. His decision was over-ruled in Langhorne's case, already referred to, in which the decision was delivered on 19 December 1985. It was therefore argued that the loss in question was due not only to the inaction of the meat inspectors but also to the misconceived view of the law taken by their superiors who might otherwise have directed them or others

to "cross the picket line" and carry out duties at the abattoir.

{ft should perhaps be interpolated that unlike the rest of the abattoir workers, who were living at Mudginberri, the inspectors were living outside. This circumstance however only serves to emphasise that the expression "crossing the picket line" is largely metaphorical. As we have said, Mudginberri Station and the abattoir could be approached from many directions without any physical impediment. But the presence of the picket, particularly when endorsed by the Australian Council of Trade

Unions was a physical display of the hostility of the union and of its intention that the abattoir not function. The picket was in fact located on the principal track leading into Mudginberri,

where 1t was able to impede and demonstrate against traffic going

to and fro.

It seems to us that in the circumstances the only conclusion could be that the picket caused the impediment to the respondent's production. As his Honour found, this is what was intended and this is what happened. The precise mechanism which

would bring about the result was perhaps not known on either

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side. Certainly, the respondent endeavoured to maintain

production and endeavoured to get qualified inspectors, but this

it was unable to do.

It seems to us to be Little to the point to say that if the Director of the E.I.S. had understood the law correctly he would have directed inspectors to work at the abattoir. In fact, they were directed at an early stage to carry out duties there but they declined. Plainly, this was not on any refined view of the law which they then held, but simply because they thought they should follow trade union principles. What was sought by the union was an industrial result and the picket was an

instrument to that end.

Associated with an argument concerning causation, but affecting the claim to a substantial extent, was an argument that the presence of the picket did not cause the abattoir to remain closed between 10 May and 24 June because it was unreasonable for

Mudginberri to have remained closed during that period.

It was submitted that the respondent should have mitigated its damage by conducting operations during this period for the purpose of producing meat for the local market. In fact, it closed on1l May. Its work force, leaving aside inspectors, remained on the premises. It appears that the inspectors from the Department of Primary Production in the Northern Territory who were qualified to examine and certify meat for local consumption were available and prepared to work during this

period. It was therefore said tharf it was umreasonable for the

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respondent not to have sought their use and to have arranged its killing program accordingly. It did in fact do this from 24 June, killing under Department of Primary Production supervision, for the most part stockpiling the meat produced, and thus mitigated the damage it would otherwise have suffered. The matter was not of course as easy as this succinct recitation suggests because there were the questions of transport and of

storage, with which we will deal later. At this stage, it is

desirable to deal with the submission as made.

The principal answer made on behalf of the respondent is that the situation looks very neat when viewed in hindsight, but that one has to have in mind the circumstances as they appeared at the time. One is that the volume of buffalo meat which cculd be sold on the domestic market was very much less than that which could be sold on the export market and the price was much lower. Another relates to the precccupation that the management of the abattoir had with various legal proceedings designed to bring an end to the boycott imposed by the union. Injunction proceedings, relying upon s.45D of the Trade Practices Act were commenced on 24 May. Ex parte orders were made by a Judge of this Court on 27 May (suspended until 30 May) ordering the lifting of the picket. There was thereafter a contested hearing which took place on 3, 4, 5 and 7 June and on 12 June an interlocutory injunction was granted by the same Judge. On 3 June there were compulsory conferences under s.88D of the Conciliation and Arbitration Act 1904. These not being productive of a satisfactory result and the boycott continuing, contempt proceedings were initiated on 14

June which resulted in fines being imposed on 21 June. Legal

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action continued into July and thereafter the arrangements made to obtain the services of the Northern Territory inspectors took some time and of course there had to be arrangements made

concerning the collection of the buffalo and of the cattle and

the mobilisation of the staff.

We will deal in more detail with aspects of this matter later in these reasons. At this stage we can state our conclusion that no adequate reason has been shown why we should interfere with his Honour's conclusion that the respondent acted reasonably in the circumstances. Certainly, it is not shown that

it acted otherwise.

It would indeed be a strange result if the Court were to hold that disobedience of the injunction should have been anticipated or that, disobedience continuing, steps should have been taken other than to enforce compliance with the injunctions in order to mitigate damages. As a matter of public policy, apart from all other considerations, it would seem to us that

non-compliance with the Court's orders should not be used asa

basis for arguing that damages should have been mitigated. Disobedience of the statutory prohibition against the conduct in question can possibly be put in the same category, but it is unnecessary to deal with this aspect. The proposition to which we find we cannot accede is expressed in the typewritten argument:

"that the applicant had no reasonable cause for

believing that the union would not be intransigent even

to the point of disobeying court orders. So much was in

any event confirmed by its disobedience of the order of 27 May."

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It therefore appears to us, with respect, that his Honour's view as to the general ambit of the inquiry was quite correct. It will be necessary to consider subsidiary elements

when dealing in detail with the assessment his Honour made.

DAMAGES

INTRODUCTION

Questions were raised from time to time as to the proper approach to the determination of the amount of damages. On both sides it was accepted that the principles applicable were those concerning the assessment of damages in the law of torts or at

least principles closely analogous thereto, and Gates v. City

Mutual Life Assurance Society Ltd. (1986) 60 A.L.J.R. 239 was

reil1ed upon. We do not think any real question arises in this regard, but would only point out that what must ultimately guide any solution are the words of s.82(1) - "suffers loss or damage by conduct..." - with due regard for the nature of the conduct relied upon. We are not concerned here with loss of profit under any particular contract or contracts but with the measure of damage due to the disruption of a business. This must of course take into account in a general way the profits that would, or would probably, have been earned. This information will come from a mumber of sources but must rely heavily on statistical data. The budgets for several years were referred to but they of course were only estimates of what was to be expected. In assessing the profit lost, the fact that the abattoir was not working, or was working on a reduced scale, carried with it some

savings which are of course to be deducted.

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The learned trial judge used a four-stage process to

calculate the quantum of the respondent's damages. First, he

assessed the revenue the respondent would have received during the 1985 season but for the picket, at $6,056,640. This involved findings as to the number of head which would have been slaughtered, the resulting quantity of meat and hides which would have been produced, and the prices which they would have fetched. The second stage was to deduct the revenue which should have been received during 1985 in spite of the picket, which was assessed at $3,321,115. This figure was obtained by starting with the revenue actually obtained, and then investigating whether the respondent had failed to obtain a higher revenue and thus mitigate its loss. Subtracting $3,321,115 from $6,056,640 yielded a figure for loss cf revenue due to the picket of $2,735,525. The third stage was to subtract from the loss of revenue the extra costs the respondent would have incurred but for the picket, which were assessed at $1,281,989. Finally, the learned trial judge added extra costs incurred by the respondent as a

result of the picket, which he calculated at $305,908.

By way of background to its challenge to specific items relied on by the learned trial judge in his assessment of damages, the appellant invited the Court to look ina broad way at the revenue and the profitability of the respondent in recent years. The appellant provided a written submission, based on

evidence at the trial, which provided information as follows:

Year Total income Notional trading profit (loss) 1982/3 $1,340,333 $115,918 1983/4 $4,582,125 $172,390

1984/5 $3,700,000 $(10,000 +)

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As against these figures, his Honour found that, if Mudginberri had had an uninterrupted year in 1985, it could have expected $6,056,640 in income with a before-tax trading profit of $878,655 (according to the appellant's calculations) or $779,656 (according to the respondent's calculations). Accepting the latter figure for the purposes of comparison, it is clear enough that, whether one looks at total income or trading profits, the projected results for 1985 would have represented a marked

turnaround in the respondent's fortunes had they been achieved.

The appellant sought to underline this argument by pointing to the budgeted profits of the earlier years and showing how optimistic these had proved to be inthe event. These

budgeted profits were

Season Budgeted profit 1982 561,000 1983 1,016,354 1984 (lst budget) 490,749 1984 (2nd budget) 804,120 1985 770,559

The point made was that, from 1982 to 1984, the results had fallen far short of the budget. Yet in 1985 the amount allowed by his Honour, as calculated by the respondent, was

marginally higher than the budget figure.

Counsel for the respondent commented on these calculations of the appellant in a document submitted, by leave, after the hearing of the appeal, and dated 16 April 1987. They drew attention to the difficulty of comparing seasonal figures

with financial year figures, which cover parts of two seasons.

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They also pointed to circumstances which had disrupted expected work in June 1984 and the later part of the 1984 season (Which is dealt with below), and the early part of the 1985 season (which

gave rise to these proceedings).

Making due allowance for these points, and without attributing precise figures to the various years, one is left with a general impression that the damages awarded by his Honour were based upon the expectation of an unusually profitable season for the respondent. It does not follow that there is any defect in the calculations, but it does suggest the need for a critical

assessment of the detailed figures relied upon.

HEADKILL

An essential element in the calculation of the damages suffered by the applicant was the number of beasts (buffaloes and cattle) that would have been slaughtered at Mudginberri in 1985

had the season not been disrupted by the union's activities.

After a detailed consideration of many factors involved

in the calculation, the learned trial judge held that "but for the disruption of its business caused by the Union's conduct, the applicant would have actually processed about 18,000 animals in 1985. This would have given an average daily net kill of about 116.75." (The 'net' kill excludes those animals condemned as unfit for human consumption. All figures given are 'net' in this sense unless otherwise stated). It is common ground that the number of killing days in the 1985 season would have been 155. This yields an average daily kill of 116.13 rather than 116.75

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but the difference is not significant because his Honour based

his further calculations on the total figure of 18,000 animals.

The appellant alleges that a more realistic finding

would have fixed the daily head kill at 106 and the total for the season at 16,430. It points toa number of errors which, it

alleges, led his Honour to adopt the higher figure.

In the first place, it was said that his Honour was too selective in his review of actual experience at Mudginberri on

which he based his estimates for 1985. The periods on which he relied were the 1983 season, excluding the month of April, and the month of October 1985. He chose not to bring into account the experience of 1982 or 1984 or the other killing days of 1985. The result, according to the appellant, was that the daily rate fixed on as an average for the whole season "exceeded anything that the applicant ever achieved previously save for very short

periods".

His Honour excluded 1982 from his calculations because that was the first year that Mudginberri had operated under the applicant's ownership, although the applicant's manager, Mr Jay Pendarvis, had been at Mudginberri for 12 years. It is certainly reasonable to assume that the first year might have seen some

problems due to establishment difficulties or inexperience, and

thus to exclude that year's average kill per day (85.08) from any averaging process. However, the figures from that year might be thought to be instructive in other ways. Thus, by September

1982 the number of animals killed had risen to 2623 for the

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Month, which was a higher monthly total than in September of 1983 or 1984, and yielded an average of 101 per killing day. However, the numbers then fell off to 2186 in October (average 91) and an average in the first ten days of November (when killing ceased) of 95. There were also marked fluctuations within a month. Thus

the first seven killing days in October averaged 100, the next

ten days averaged 70 and the last seven days averaged 112.

1984 was rejected by his Honour for purposes of comparison because there had been a union picket which prevented

killing between 2 August and 12 August. His Honour said,

"So far as 1984 results are concerned, that was a year

which was affected by industrial action leading to the imposition of a picket. The picket did not last long,

but it is not possible to say on the evidence whether it

cr the industrial dispute which gave rise to it had any

continuing effect on production."

One could readily assume that during the month of August there would be continuing effects from the disruption, although the average daily kill from 13 August to the end of the month was 100. This rose to 101 in September, dropped back to 95 in

October and rose again to 100 in the first half of November.

Counsel for Mudginberri were unable to point to any direct evidence that the industrial disputes of July to September 1984 had any effect on production after 12 August. Mr Pendarvis referred in his evidence to the late start to the season that

year due to reconstruction works at the abattoir. He also

\\ ceterred to the loss of production while the picket line was

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"We lost 10 days of production. If we are looking at running close to budget, 100 animals or so a day, it is a 1000 animals that it cost us, just industrial

problems.

..- In 1984 our season finished on 23 November. We were trying our darndest to get as much meat out as we could. We extended the season as long as we possibly could before the rains absolutely stopped us." There appears to be no suggestion here of any continuing effect of the industrial dispute, and the figures achieved from 13

August onwards were "close to budget".

While not suggesting that his Honour should have embraced the present appellant's argument for an averaging of the relevant months in 1982, 1983 and 1984, there seems to be no adequate reason for putting the 1982 and 1984 figures out of

consideration entirely.

Another submission of the appellant relates to the figures relied on by Mudginberri at the outset of the case. Giving evidence on 9 July 1985, Mr Pendarvis stated simply "our average daily production is 110 animals". Later he conceded "... never at any time has Mudginberri averaged 110 animals in any one season or composite of any seasons". He said that his earlier evidence had been directed to the capacity of the chillers and

the average production which that capacity would permit.

In reaching his conclusion about the daily kill rate, his Honour placed particular reliance on the figures achieved in 1985 after the picket was removed. He said.

"Between 9 September and 17 October 1985 3,302 buffalo

and 587 cattle were slaughtered. During this period

there were 33 kill days, the average daily gross kill being about 118. Allowing for the condemn rate of 1.6%

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during this period, the average daily net k111 was about 116 per day. In the whole of October there were 26 kill days and 3003 net head were killed, giving a daily average of 115.5. I think these figures afford a useful guide to what the daily average would have been over the whole season had the picket not been set up, but they do not take account of any increased production which may have been achieved with the completion of the new chiller."

Leaving aside the question of the new chiller for the time being, it is necessary to consider in some detail these

figures of 116 and 115.5.

It was said by Mr Pendarvis, and accepted by his Honour, that there were still some continuing effects of the picket after it was lifted. The suggestion was made that some regular suppliers to Mudginberri had entered into other commitments, which Limited their capacity to supply stock after the picket was lifted. However, as Mr Pendarvis conceded, the October monthly average of 115.5 had only been achieved in two previous months of Mudginberri's operations. And Mr Pendarvis himself answered a question from his own counsel as follows:

"During an uninterrupted season, unaffacted by industrial disruption, would October have been any different from any other month and if so, in what respects? ---April would have been a bit different than say November or May because you are getting some interference from rain, in both of those months, April and November or May and November. October would have been an average month for all of those months where you do not have rain interference."

In these circumstances it is difficult to escape the conclusion that his Honour, to this point in his judgment, assumed too many things in Mudginberri's favour. Bearing in mind

the uncertain nature of supplies of feral animals from a number

of sources, the limitations of chiller capacity and yarding

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capacity (of which there was some evidence) and the vagaries of weather at the beginning and end of the season, it seems to have been overly generous to Mudginberri to place reliance on the September/October figures as an appropriate average for the whole

season.

When the season opened on 9 May, only 25 animals were killed on the first day and 29 were presented for killing on the second day, before the picket was put in place and prevented

killing on later days. This is consistent with the gradual

build-up in other years. Even in the good year of 1983 the .

average headkill in the first part-month (April) was only 73. This was left out of calculation by the learned trial judge, when he used the 1983 figures to deduce 1985 results, for the understandable reason that there was no killing in April 1985. However to do that is to remove from the equation the apparently invariable period of build-up to full production which occurs in the early days of each season. At the other end of the season, the average headkill in November 1985 was 94, which was again

well below the figures on which his Honour relied as an

appropriate basis for averaging over the whole year.

There can be no doubt that his Honour's task of inferring the likely headkill in 1985, had the respondent's breach of the Trade Practices Act 1974 not occurred, was a very difficult one. However, accepting all his Honour's findings of fact and of the credibility of witnesses, we are left with the distinct impression that his Honour erred in placing the reliance

which he did on the 1983 post-April figures and the 1985

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September/October figures. If all the available material is brought into account we find it difficult to conclude that (still leaving aside the question of the new chiller) the average headkill would have exceeded the average in 1983 of 106.36, bearing in mind the average in September-November of 1984 of 99. An assumption that by far the best previous year's average daily

headkill will be repeated is not an ungenerous assumption.

In saying this we do not overlook other factors referred to by his Honour in his judgment. These related mainly to buoyant overseas markets for Mudginberri in 1985. But there is no suggestion that production in 1983 or 1984 was depressed by any marketing problems; the difficulties seem always to have related to supplies of stock, storage, weather or industrial

disputes.

The question of storage leads conveniently to a consideration of the new chiller. Having, in the extract quoted above, referred to a daily kill of 115.5 or 116 «in September/October 1985 as providing "a useful guide to what the

daily average would have been over the whole season..." his

Honour turned to consider the question of the new chiller.

He accepted Mr Pendarvis'' evidence that a new chiller would have been completed by the end of June had it not been for the picket line and its attendant problems. However he pointed out that the existing chiller was not always used to ifs full capacity and there were other constraints on production such as

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20.

in a continuous stream so as to permit optimum production". Finally he said, "It is inappropriate to treat the proposed new chiller as a factor separate from and independent of the other factors which would have affected the level of

production in 1985. The betler approuch is to treat it as one of many factors which would have affected the

overall level of production for the 1985 season if there

had been no picket."

This led him to arrive at a figure which gave an average daily net kill of between 116 and 117. It therefore seems clear that his Honour made only a slight allowance for the impact of a new chiller, and we would respectfully agree with this approach to such a speculative element in the assessment. In these circumstances it is umnecessary to consider the detailed attack

made by the appellant on his Honour's finding that the new chiller would probably have been completed early in the season. Certainly there was no sign of any further work being done on it up to the institution of the picket on 10 May and, although only

some $27,000 was needed to complete the task begun the previous

year, Mudginberri did have cash-flow problems at the beginning of the 1985 season. The appellant had an arguable case on this point but, for the reasons already given, we do not find it necessary to consider it in detail. Some small allowance was appropriate to provide for the possibility of extra killings due

to extra capacity, and this his Honour did.

We should do the same and, having determined that his Honour's deductions concerning 1985 were in error, in that they depended on selective experience only, we must make our own

deductions. Doing the best we can with an admittedly difficult

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21.

task, we would arrive at an average daily net kill of 108. This would give 16740 as the total number of animals which would have been processed in the year. Using the agreed condemn rate of

1.75%, the gross kill for the season would have been 17033.

MEAT SALES REVENUE The learned trial judge found that 96.4% of total meat

production from Mudginberri in 1985 would, in normal circumstances, have been exported. He also found that there were four probable sales to Taiwan and Sweden which had been arranged at an average price of $A1.20 per 1b, and that, even if these Sales had not come to fruition, the same quantities of meat could

have been sold to those markets at about that price. The balance

qQ

of production would probably have been sold to West Germany.

The appellant argues that one of the four suggested sales had no substance and would not have occurred. Without it, the average price of the other sales would have heen 31.1AR5 per lb and this is the most that could have been obtained on the

Swedish and Taiwanese markets for the amounts which his Honour

found would probably have been sold there. The difference in the two figures is not great but it does represent $37,204 in revenue

to Mudginberri.

It is convenient to consider first the evidence of

prices generally available in the Swedish and German markets.

An experienced meat purchaser, Mr Agnew, gave evidence

in October 1985 that he had made sales "at around $1.15". He

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22.

later made it clear that this price was for the balance of the meat after separating the 2% of tenderloin fillets for which the price was $3.44 per lb. This would have given an average price for the whole boneless carcase of $1.196 per lb. On the subject of sales to Germany at that time, he said that he would have offered $1.05, but $1.08 would be a reasonable figure. The price of fillets would be the same as for Sweden - $3.44 - giving an

average for each animal of $112.72.

Another expert witness, Mr Hubl, gave evidence that at the beginning of he season he offered Mr Pendarvis 95c¢ to $l per lb, which was not accepted. He went on to say,

"In the middle of the season, in July, we probably could

have paid $1.10; today £23 October 19853 we probably could pay $1.15, $1.17."

Mr Hubl made it clear that he would have tried to contract for as much meat as possible early in the season, because the Australian currency was depreciating and prices were going up. Asked to put an average price on the full season he said it "would probably be somewhere in the area of $1.12, $1.14". This would precisely match the evidence of Mr Agnew and

suggest that an appropriate price for that part of Mudginberri's production which would probably have gone to West Germany would

be $1.13 per 1b.

His Honour acted on this evidence of Mr Hubl but said,

"I think it is fairly clear from his evidence that these prices related to meat other than fillets, so that an average price for

both fillet and non-fillet meat would have been in the vicinity

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23.

of $1.18 per 1b". This was the figure which his Honour adopted. With respect to his Honour, this assumption ignores the evidence

of Mr Agnew, which his Honour otherwise relied upon. Moreover, having read all Mr Hubl's evidence, we are unable to conclude that he was drawing the same simple distinction between fillets and the balance of the boneless carcase which Mr Agnew drew. Mr Hubli did not volunteer any reference to fillets or to differential prices in the course of his evidence. In cross-examination he said the bulk of the meat (perhaps 60-70%) would go to the smallgcods industry, two cuts accounting for some 6-7% (including 'the 2% of tenderloin fillets) would go to the restaurant trade, and the balance would go to the game meat processors. In these circumstances there seems to be no reason to assume that the figures he was quoting were anything other than the contract figures for the whole boneless carcass. Had the figures been artificially low by reason of Mr Hubl's failure to refer to premium cuts at higher prices, counsel for Mudginberri could easily have clicited the full facts. Mr Hubl gave evidence in October and then returned for cross-examination

and re-examination in February.

In our respectful opinion his Honour erred in adjusting Mr Hubl's figures as he did, and the proper figure to bring into

calculation is $1.13 not $1.18.

So far as the sales to Sweden and Taiwan are concerned, we believe that even if there was no subsbanie im Lhe Swedish No l contract (as to which the appellant's arguments were persuasive

but we make no finding), other evidence establishes that $1.20

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24.

was the proper figure for his Honour to adopt for these markets. It was conceded that even if there had been no Sweden No 1 contract, the same quantity of meat would have been sold to

Sweden in any event.

HIDES

In considering what price Mudginberri would most probably have obtained for its buffalo hides if 1985 had been a normal season, unaffected by the union's conduct, the learned trial judge arrived at the figure of 82c per kilo, free of

handling charges and commission. This was an average price,

assuming that sales would have been spread through the season.

Mr Pendarvis gave evidence of an arrangement with Mr Phillips, Managing Director of A.H. Hides and Skins Pty Ltd, to sell all his buffalo hides at 90-92 cents net. He was supported in this by Mr Phillips, but his Honour did not accept that evidence. He said any such discussion "must have related to some year other than 1985". He was not satisfied of any

arrangement to sell all buffalo hides produced in 1985.

However, his Honour did not reject all of Mr Phillips' evidence and apparently accepted that "he had enquiries froma buyer at 82c" but the evidence did not make clear whether this was net of handling charges and commission or not. 82c was the price paid by Phillips for the first hides he purchased from Mudginberri in the 1985 season. This occurred in August. He also accepted Phillips' evidence that prices for hides were

strong at the beginning of the season and weakened quite

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25. significantly by the end of the year.

His Honour said of Phillips, "I do not think he was a dishonest witness, but I am satisfied that his recollection of

past events and prices was not always accurate".

His Honour was unwilling to place reliance on evidence of a purchase of buffalo hides from Meneling, a nearby station, at 70c per kilo because the purchaser, Johnston, who gave evidence, seemed to have had little experience in the hide export trade and the hides might not have been of the same quality as

Mudginberri's.

The appellant argued that Phillips' evidence was so totally unreliable that no part of it could be trusted and the only dependable cvidence of aclual prices was the 70c per kilu

paid by Johnston to Meneling.

Certainly it seems a little strange that his Honour was not prepared to take Johnston's evidence into account. He did not suggest that he doubted its truth and Phillips referred to Johnston as one of his two or three competitors in the buffalo hide trade. If Meneling could have obtained a better price, from Phillips or anyone else, it would no doubt have done so. And there was no suggestion in the cross-examination of Johnston that

Meneling hides were likely to be of a different quality from

Mudginberri's.

There was other evidence which his Honour did not refer

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26.

to that might have suggested a lower average price than 82c per kilo. Because there were over 1000 hides unsold from the 1984 season, Mr Pendarvis was negotiating with Phillips for their sale at about the time the budget for 1985, which he required in order to obtain substantial bank finance, was prepared. He budgeted for an average selling price of 65c per kilo and was hardly

likely to have understated his expectations in doing so.

A figure of this order was reflected also in the damages claim made in the present case. The figure claimed for normal 1985 sales of buffalo hides was 72c. "This figure remained unaltered through several versions of the claim from September to late December 1985. It was only after considerable evidence had been given in the damages hearing that the claim was amended to

$1.04 on 20 February 1986.

As to these circumstances, his Honour said, "I think it is much safer to rely upon the evidence in the case rather than the way in which the applicant particularised and amended its claim. I gained the impression that some of the amendments were occasioned by the failure of the applicant to ensure that [the accountant who prepared the claim] was fully briefed on all aspects of its operations".

With respect to his Honour, Mr Pendarvis was cross-examined at some length about these claims and failed to give any satisfactory explanation as to how the average figure of 72c came to be relied upon. It is generally consistent with the end-of-season sales of 65.5c and with the Meneling sale of 70c. When the more direct evidence was so unacceptable or fragmentary

there seems to be no good reason for not giving the figure

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27.

Claimed at least some weight. When the fragments of evidence upon which his Honour relied are examined closely, they are seen not to be very persuasive. Phillips spoke of an enquiry in June or July at 82c per kilo. But this related only to one container load and it was not clear whether it was gross or net (a

difference of some 20-25c).

Apart from Phillips' evidence which his Honour found to be plainly wrong - concerning an actual offer to purchase all Mudginberri's 1985 producLian - Lhe appellant points to a number of other inconsistencies in his evidence which, it is said, make

the evidence totally unreliable, however honest it may have been.

In their written submissions, counsel for the appellant made the following points:

"(1) Phillips says that Hungary was variously interested in 20 containers and 25 containers.

(2) Phillips says that he bought a few containers of 1985 produced hide from Mudginberri in May 1985. Mudginberri had operated for two days in May and had killed 54 head.

(3) Phillips stated that the market was steady with no fluctuations and that the price of $1.15 applied throughout the year except for a hiccup in August and into September or October and yet he also said;

(i) he had offered 82c in June/July;

(ii) he had offered 99c some time during the season; (iii) he had bought for 66.5c¢ in December; (iv) when he bought from Mudginberri the market had

collapsed;

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28.

(4) Phillips stated that buffalo hides were very wanted at the beginning of the year, yet:

(i) there were 3,000 hides on hand in early 1985 which could not be sold at 92c;

(ii) in February 1985 he wanted to buy from Mudginberr1 at depressed prices.

(5) Phillips stated that he definitely did not buy from Mudginberri at 66.5c in December 1985, but in late September or October when the picket was on. Yet in evidence on the llth of December, 1985 he said that he had purchased the hides in the previous week.

(6) In evidence in chief, Phillips stated that he had purchased 15,000 to 16,000 hides from Mudginberri in 1982 and 1983, and 13,000 to 14,000 in 1984. In fact

only about 11,000 were produced in each of 1982 and 1984."

These criticisms of Phillips' evidence all appear valid and make it dangerous to rely upon any of his evidence as to figures, however honest his errors may have been. In these

circumstances we think, having regard to the whole of the evidence, that justice would be done if the average selling price

for hides, had the 1985 season not been interrupted, were allowed

at the figure originally claimed, namely 72c per kilo.

HIDE SALES REVENUE Mudginberri sold its 1985 buffalo hides to A.H. Hide and Skins Pty Ltd (Mr Phillips) at 66.5c per kilo at the end of the

1985 season. This was criticized by the union at the trial, and

owes wove, See pare er ene

29.

before usS, on the basis that the hides should have been sold earlier in the season, when prices were higher, and not allowed to accumulate so that a stockpile was created which had then to be sold ata lower price. The appellant's written submissions claimed that Mr Pendarvis "could not reasonably have entertained a belief that the market was rising or likely to rise" at the time an offer of 82c per kilo was rejected in July. "The

ebjective indicators all show that prices were weakening at the

relevant times", Mr Pendarvis' conduct "was commercially irresponsible." His Honour said in his reasons for judgment, "...I do

not think CMr Pendarvis] can be criticized for holding out fora better price and for not having the foresight to predict that prices might fall". We respectfully agree. It was not until September that any continuity of hide production could be assured, and the Chicago Hide Market, which Mr Pendarvis rather belatedly referred to as the main indicator on which he relied,

did fluctuate after that time.

There is no good reason to suppose that Mr Pendarvis did not do his best to obtain the highest price available - he could not be sure of enforcing a successful claim against the union and he obviously needed all the cash he could get: Ina case such as this the respondent has a difficult task in trying to show Lhat the applicant has been negligent in failing to mitigate damage. It is not enough to show that, in the event, it has been

unfortunate, or even unwise. The appellant has entirely failed

to persuade us that Mr Pendarvis' commercial decisions were so

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30.

Clearly wrong that the applicant should be deprived of part of

its damages.

MEAT PRODUCED AFTER THE LIFTING OF THE PICKET BUY NOT EXPORTED

This challenge to the learned trial judge's decision relates to some 149,000 lbs of meat. His Honour dealt with it in these terms,

"Pendarvis said ..... that the reason why this meat could not be exported is that it is made up of trimmings which are normally included as part of a larger quantity of meat of superior quality. He said, in substance, that after the picket was lifted the applicant strove to fill orders for superior quality meat such as fores, hinds and fillets and that it was unable to dispose of the trimmings as part of those orders. His evidence on this matter is consistent with the fact that, in any event, in anormal year about 3.6% of total production would have been sold on the domestic market. Bearing in mind the significantly higher price obtainable for meat sold on the export market, it seems improbable that the applicant would have placed this meat in domestic cold store if 1t could have been exported. I accept Pendarvis' evidence as to why this meat could not be sold on the export market."

Tt is true, as the appellant points out, that at different points in his evidence Mr Pendarvis seemed to give differing explanations as to why this meat was sold on the local market. However his final position was that it was made up essentially of trimmings and other less popular cuts. In normal circumstances these could have been sold as an adjunct to larger orders for the more favoured cuts. With Mudginberri's export

season cut to just over two months, this was not practicable.

His Honour accepted this evidence, strengthened as it

was by the unlikelihood that Mr Pendarvis would deliberately sell

meat locally which could have been exported at a substantially

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31.

higher price.

We see no reason to interfere with his Honour's

conclusion on this point.

STOCKPILING AND THE ADMA TRANSACTION

INTRODUCTION

We next deal with submissions made by counsel for the appellant in relation to the stockpiling of meat during the 1985 season. His Honour found that Mudginberri had acted reasonably in stockpiling a substantial quantity of its 1985 production and not endeavouring to sell it earlier. Mudginberr1i's expressed reason foc stockpiling the meat was that it hoped eventually to be able to export it. The meat was available for sale on the local market, but not available for export sale because the appellant's actions prevented the meat from being inspected for that purpose. A related issue concerns the question whether Mudginberri sold a substantial quantity of the stockpiled meat to a public authority, the Agricultural Development and Marketing

Authority ("ADMA"), which was established by the Agricultural

Development and Marketing Act 1980 (N.T.).

The meat was stockpiled between 24 June 1985, when the abattoir reopened after being closed down, and early September 1985. The quantity produced during this period was approximately

500 tonnes. It was stored in cold stores in Darwin.

It is not in contest that there was a transaction

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32.

concerning a large portion of the stockpiled meat - 431.6 tonnes - between Mudginberri and ADMA. The question is whether the transaction was one of outright sale or, as his Honour held, of sale by way of pledge or mortgage to provide security for advances totalling $992,654.82 made by ADMA to Mudginberri. If the transaction were one of outright sale, the evidence establishes that Mudginberri repurchased the meat when a further transaction was entered into on 29 August 1985. That transaction is the subject of a formal written agreement. But the transaction which is in substance either a sale or a mortgage was not in writing and there are no contemporary documents which provide conclusive evidence of its nature. It would appear to have been entered into about 2 July 1985 in the course of a conversation at which were present Mr. and Mrs. Pendarvis, Mr. S.P. Saville, who is the Permanent Secretary of the Department of Primary Production in the Northern Territory and the Chairman of ADMA, and Mr. Hatton who was the Minister in charge of the Department. Thereafter invoices were sent by Mudginberri to ADMA for various quantities of meat all charged at the price of $2.30

per kilogram which is equivalent to $1.04 per pound.

The principal significance which the stockpiling and ADMA issues have for the case is that they raise a question whether Mudginberri acted reasonably in not endeavouring to sell the meat on the domestic market as it was produced. In the submission of counsel for the appellant the stockpiling not only had the effect of depressing the domestic market price; it was also the cause of Mudginberri having to incur substantial

expenditure for interest on borrowed money and in storage

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33.

charges. These expenses would not have been incurred 1f the meat had not been stockpiled. The ADMA transaction, if an outright sale, would have an added significance. It would mean that Mudginberri had obtained $2.30 per kilogram or $1.04 per pound for the meat, a higher price than it was able to achieve when the

meat was eventually offered for sale on the domestic market in

late 1985 and 1986.

In the end, of course, the question is whether Mudginberri has been shown not to have acted reasonably in the

various decisions which it made. If the ADMA transaction were an outright sale, the question would nevertheless arise whether Mudginberri acted reasonably in repurchasing the meat in the hope of selling it on the export market. The matters raised by the stockpiling and ADMA issues are complex. A starting point for a consideration of the problem which they pose is to determine

first of all what the nature of the ADMA transaction was.

THE ADMA TRANSACTION

ADMA was established pursuant to s. 5 of the Agricultural Development and Marketing Act. It is a body corporate with perpetual succession and is capable of acquiring, holding and disposing of real, leasehold and personal property. It consists of three members. Section 12 provides that the chairman shall call such meetings of ADMA as are necessary for the exercise of its powers and the performance of its Cunclaons. The interval between meetings is not to exceed three months. A

quorum at a meeting 18 constituted by the chairman and one other

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34.

member. Questions arising at meetings are to be determined by a

majority of the members present and voting. In the event of an equality of votes, "the matter shall be taken to have been

defeated". Records of the meetings are to be kept.

The functions of ADMA are "to investigate, organize and assist in the development and continued operation of agricultural

projects in the Territory, including the processing and marketing

of agricultural products, and such other functions as are imposed

upon it by or under a law of the Territory"; (s. 13). The expressions "agricultural projects" and "agricultural products"

are not defined in the Act.

The powers of ADMA are provided for in s.

14. Te i

10)

vested with power to do all things that are necessary or convenient to be done for or in connection with or incidental to the performance of its functions and the exercise of its powers. Without limiting the generality of this grant of power, powers are conferred upon it, inter alia, to enter into contracts, to acquire, hold and dispose of personal property or any interest therein, to co-operate with any person or body in the development of agricultural projects or the marketing of agricultural products, to act as agents and to do anything incidental to any of its powers. By s. 15 ADMA, in the exercise of its powers, and the performance of its functions, is subject to the directions of

the Minister.

Section 22 provides for the moneys of ADMA. These are

to consist of such moneys as are appropriated by a law of the

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35.

Territory for its purposes, interest earned on money lent by it, money lent to it by any statutory body or financial institution, the proceeds of the sale of produce in the course of its administration of a marketing scheme and certain other amounts to the detail of which it is unnecessary to refer. The reference to interest earned on money lent by ADMA would suggest that it was intended that it have power to lend money, but there is no

express provision conferring such a power upon it.

In reaching his conclusion that the various sales of meat were by way of mortgage, his Honour relied on the evidence of Mr. Saville. His Honour also accepted the evidence of Mr. S.R. Cavanagh, who is the General Manager of ADMA. His Honour said that both Mr. Saville and Mr. Cavanagh were honest and reliable witnesses. He also described Mr. Saville's evidence as

impressive.

The appellant's submission has involved us in a lengthy consideration of the oral and documentary evidence which bears on the point. We shall refer to the material relied upon by both

parties as briefly as we can.

The commencing point for a consideration of the probiem is the agreement dated 29 August 1985 made between ADMA and Mudginberri. ADMA entered into the agreement in order to assist Mudginberri in obtaining finance from Westpac Banking Corporation. The relevant parts of the agreement are as follows:-

"In order to provide financial assistance to Mudginberri Station Pty Limited (hereinafter referred to as

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36.

'Mudginberr2z'') ain the light of the current industrial action being taken by the Australasian Meat Industry Employees Union (hereinafter referred to as the 'AMIEU')

and

the Meat Inspectors Association (hereinafter

referred to as the 'MIA'), the Agricultural Development and Marketing Authority (hereinafter referred to as 'ADMA') proposes:-

l.

That Mudginberri be assisted in obtaining a loan facility of up to Two Million Dollars

($2,000,000.00) principal from Westpac Banking

Corporation (hereinafter referred to as 'Westpac' ) by the provision by Northern Territory of Australia to Westpac of an Unconditional Guarantee of principal and interest on the said loan. The Guarantee to be issued in accordance with the

requirements of the Agricultural Development Marketing Act of 1980 (as amended).

The guarantee to be supported by a floating charge

registered pursuant to the Companies Act over the meat product produced by Mudginberri prior to 30th November, 1985 held in cold stores where it is lodged prior to sale, and to this end Mudginberri will deliver to ADMA at the time each drawdown under the facility is to be made, valid cold store warrants evidencing title to the meat, the subject of such drawdowns.

That following receipt of the aforesaid cold store warrants, ADMA will authorise Westpac to allow drawdown from the loan of an amount equivalent to the value of meat covered by the warrants, ata rate of Two Dollars and Thirty cents ($2.30) per kilogran.

Mudginberri shall call an initial drawdown from the Westpac facility to repay to ADMA the advance of $992,654.82 (together with interest thereon at 14% per annum calculated on a daily basis) which

advance has been made by ADMA to Mudginberri for operational purposes. -

Security over the meat will be released

progressively upon delivery of sale proceeds to Westpac in repayment of the loan.

10.

(a) Mudginberri shall use its best endeavours to sell the aforesaid meat product on the export market and if unable to complete such export sales then to sell such meat product at the highest possible sales price on the domestic market.

(b) No meat product shall be sold by Mudginberri at a price less than $2.30 per kilogram.

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37.

Should Mudginberci be unable to obtain such a price then it shall refer all offers of les: than $2.30 per kilogram to the Chairman of ADMA for his consideration and instructions. (c) Mudginberri shall also use its best endeavours to complete the reinspection or reclassification of all meat product so that

such product can be eligible for sale on the export market".

It is to be observed that the agreement is consistent with there having been a loan by ADMA to Mudginberri and not consistent with ADMA having purchased the meat from Mudginberri; see clause 4. His Honour referred to the agreement and said that its terms were entirely consistent with the account given by Mr. Saville and Mr. Cavanagh of the arrangement made with Mudginberri. Undoubtedly that is a correct statement of the effect of clause 4. His Honour also said that, unless the agreement were a sham, it was supportive of Mr. Saville's description of the ADMA transaction as a loan. His Honour said

that he did not think the agreement was a sham.

The appellant challenges, upon a number of grounds, his Honour's conclusion that the nature of the transaction was accurately described in the evidence of Mr. Saville and Mr. Cavanagh and in paragraph 4 of the agreement of 29 August 1985. These grounds were based on oral and documentary evidence which, in counsel's submission, compelled the conclusion that the evidence given by Mr. Saville and Mr. Cavanagh, however reliable it may have seemed, could not have been correct. In their

submission it was overwhelmingly against the probabilities.

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38.

The matters upon which counsel relied may be summarized

as follows:-

(a)

The hearing of these proceedings at first instance

commenced on 16 October 1985. The matter was opened on 2L October 1985. Also in October Mr. Pendarvis gave evidence of moneys which had been borrowed by Mudginberri. Nothing was said in the opening or by Mr. Pendarvis concerning a transaction involving ADMA. In support of Mudginberri's case on damages Mr. J.W. Bracher, who is a chartered accountant, prepared detailed particulars of the claim. These were amended from time to time and became known in the case as Duesbucy 1, Duesbury 2 and Duasbury 3, "Duesbury" being a reference to Mr. Bracher's firm. Schedule 6 attached to Duesbury 1 consisted of details of the make-up of additional costs incurred as a result of disruption to

Mudginberri's business, One of these costs was

interest. Reference was made to an overdraft facility it had and to the extent to which this had been draw upon at the relevant time. There was also reference to additional credit being obtained from a company, Nationwide Farmers Australia Limited. The calculation showed that an additional sum of $119,430 had been incurred for interest as a result of the appellant's activities. The amount of the claim was increased in schedule 6 attached to Duesbury 2. In neither was mention made of any loan by ADMA to Mudginberri. No

mention of ADMA whatever appeared in the documents which

(b)

39.

Mr. Bracher had prepared. The matter was, however, mentioned in an amended schedule 6 to Duesbury 3. It was there said that Mudginberri negotiated "a deal" with ADMA pursuant to which $992,600 was borrowed during the period 2 July to 2 September 1985 upon the security of the 1985 product. The amount of $992,600 was repaid on 2 September 1985 from a special loan from Westpac of $2 million. It was said that interest of $12,584 was paid from Mudginberri's bank account to ADMA. The $12,584 was claimed as part of the claim which was made

for interest.

Mr. Pendarvis gave evidence on a number of occasions in retation to the ADMA transaction. Merition of it was first made by him in Lhe course of his cruss- examination. He consistently claimed that the transaction was one of sale and purchase and that ADMA had repurchased the meat from Mudginberri in September 1985. On 6 February 1986, a fortnight before Duesbury 3 was prepared, he said, "We were in fact selling product to ADMA at a price and they were paying us for it". Later he usserted, with some emphasis, that Mudginberri

did not pay ADMA any interest. His evidence continued: -

"Mr. Pendarvis, I give you the opportunity to re-answer that question and I suggest to you that you incurred on moneys received from ADMA interest payable on a daily basis at 14 per cent? ---I am not aware of any arrangements to pay ADMA interest; we were selling them product at $2.30 per kilo.

HIS HONOUR: What were they doing with

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40.

it? ---They were stockpiling it, sir, because we were waiting on the - - -

Stockpiling? ---Yes.

So that at the end of the deal you did not owe them anything but they had meat which they had acquired from you? ---Yes.

If that is the case why did Westpac have to pay them out when the Westpac money came through? ---Because we used the $2,000,000 facility to purchase the meat back from ADMA, with the thought of

exporting the meat".

On 10 February 1986 Mr. Pendarvis' evidence was that ADMA could have sold the meat at any time. He agreed

that as at 9 July 1985 Mudginberri was selling meat to

ADMA at $2.30 per kilogran. Counsel for the appellant acknowledged that later evidence given by Mr. Pendarvis was to a different effect. On 17 duly 1986, during the hearing of the application No. VG 307 of 1986. Mr.

Pendarvis gave evidence as follows:-

"Do you withdraw from evidence that you gave previously before this Court that ADMA was entitled during the period it

had paid you money for the meat to dispose of it? ---No, in this respect, that if I had defaulted, if I had gone bankrupt, then ADMA would h.ve had every right to sell that meat to recover whatever was owing to then.

So when you told his Honour on a number of occasions in the earlier proceedings that ADMA was the absolute owner of the meat and could have sold it, what you really meant was that ADMA was not the owner absolutely but could have sold it

if you had gone bankrupt? ---That is correct".

mre =

a .

(c)

41.

By that time, of course, Mr. Saville and Mr. Cavanagh had given evidence and the claim made in Duesbury 3 had

been formulated.

Counsel for the appellant relied on contemporary

documents consisting of a purchase order dated 3 July

1985, a mumber of invoices dated between 2 July and 20

August 1985 anda payment voucher dated 11 July 1985.

The detail of these documents is as follows:-

(i) The purchase order is on a printed form carrying the name of ADMA. It is described as a purchase order and addressed to Mudginberri . In

typescript are written the words, "CONFIRMATION

CRDER ONLY". In the body of the order ace the words, "BULK ORDER - Purchasers". No units or

prices are inserted and in ome of the columns is typed the word "VARIABLE". At the bottom of the purchase order is a reference to Mr. Cavanagh and a statement that the price basis is, "VARIABLE". There is thus no reference to quantities nor to prices, let alone a price of $2.30 per kilogram. (ii) Thirty-eight invoices are in evidence. Each of these 1s headed with the name of Mudginberri. All are addressed to ADMA and refer either to cartons of buffalo meat or beef as the case may be. Sometimes there are references to "Cow", "Steer" and "Bull". Typical of the invoices is one dated

12 August 1985 for 194 cartons of boneless buffalo

meat, 191 cartons of buffalo hind meat, 10 cartons

wey pce cet es ve ie

—

en r,

(d)

42.

of beef bull fores and 10 cartons of beef bull hinds. Each carton was priced at $2.30 per kilogram. Four hundred and five cartons were involved and the invoice price was $25,351.70. (iii) The payment voucher is ona printed form provided

by ADMA. It records a payment by cheque of

$23,598 made on 11 July 1985.

Counsel for the appellant relied upon two proposed agreements which had been prepared prior to the

agreement of 29 August 1985, but which were never signed. The first of these was headed, "AGREEMENT BETWEEN ADMA AND MUDGINBERRI PTY LIMITED RE MEAT".

Paragraphs 3 and 4 of the agreement were as follows:-

"3) THE GUARANTEE TO BE SUPPORTED BY

SECURITY OVER THE MEAT HELD IN

THE COLD STORES WHERE IT IS

LODGED PRIOR TO SALE AND TO THIS

END MUDGINBERRI WILL DELIVER TO ADMA, AT THE TIME EACH DRAWDOWN UNDER THE FACILITY IS MADE, VALID

COLD STORE WARRANTS EVIDENCING

VALID TITLE TO THE MEAT THE SUBJECT OF SUCH DRAWDOWNS.

4) THAT ALL MEAT SOLD TO DATE BY MUDGINBERRTI TO ADMA ... BE RE-SOLD BY ADMA TO MUDGINBERRI AT

A PRICE EQUAL TO THE PRICE PAID

BY ADMA TOGETHER WITH HOLDING

COSTS ON THE PURCHASED PRODUCT

AND THAT THE INITIAL DRAWING

UNDER THE WESTPAC FACILILTY BE FOR THIS PURPOSE. NO FURTHER

DRAWINGS UNDER THE WESTPAC

FACILITY WILL BE MADE UNTIL THIS HAS TAKEN PLACE".

The second agrecment was a proposed agreement between

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43.

ADMA and Mudginberri. Many of its provisions are similar to, if not identical with, those of the agreement which was signed on 29 August 1985. However,

Clause 4, Which was introduced with the words, "ADMA

proposes", was as follows:-

"4, that the quantity of meat amounting to four hundred and thirty-one thousand, five hundred and ninety one point two three (431,591.23) kilograms sold to date by Mudginberri to ADMA ata price totalling nine hundred and ninety-two thousand six hundred and fifty-nine dollars eighty-two cents ($992,659.82) be re-sold by ADMA to Mudginberri ata price equal to the price paid by ADMA, together with holding costs, 1f any, on the purchased product. The unitial drawdown on the Westpac facility is to be for this purpose and no further drawdown on the facility will be made until this transaction has taken place".

There was no counterpart of clause 10 of the agreement that was signed on 29 August 1985. Clause 93 provided that unless otherwise agreed, the agreement was to

terminate on 26 August 1986 (not 1985).

These were the principal matters which provided the base from which counsel launched his attack on Mr. Saville''s evidence and also that of Mr. Cavanagh. There were other matters relied upon, but it is appropriate to mention these after we have referred to the necessary portions of the evidence of Mr.

Cavanagh and Mr. Saville. We mention Mr. Cavanagh first because

Sate cae ad

iT id

44.

he gave evidence before Mr. Saville. Mr. Cavanagh said that he was called to Mr. Saville's office about 2 July 1985. Present

were Mr. Saville and Mr. and Mrs. Pendarvis. Mr. Saville told him that the Government was going to support Mr. Pendarvis whilst his abattoir was being picketed. To do that it was going to make advances to him for the meat to be produced each day. The amount of the advance was to be $2.30 a kilogram which was said to be the production cost of the meat. It was thought that the advance would only be necessary for about a month. Mr. Saville gave Mr. Cavanagh details of how it was proposed the transaction would be implemented. Amongst other things he said that the money would be repaid with interest at the rate of 14 per cent, presumably, per annum. Mr. Cavanagh was referred to the invoices and agreed that they were used as a matter of cenveniences. He was adamant that it was never intended that ADMA would purchase the meat or become the owner of it. In counsel's submission Mr. Cavanagh's evidence did not take the matter far. He qave evidence only of what he was told by Mr. Saville in the presence of Mr. and Mrs.

Pendarvis.

Mr. Saville said that he had had a discussion with the responsible Minister, Mr. Hatton, at the beginning of July 1985. He said that about 2 July 1985 a decision was taken by ADMA in consultation with Mr. Hatton to assist Mr. Pendarvis. The transaction was to take the form of advances made to Mudginberr1. The advances would cover the cost of production of the meat as ascertained at the time. He said that it was never intended that ADMA would purchase the meat. He said that il was intended that

Mudginberri would repay the money and that it would be at

aw ety

mee

45.

interest of 14 per cent per annun. He thought that the

arrangement would be a short term one.

He was referred to the purchase order. He said that they "just used the available stationery. We were not going into

the stage of printing special stationery for it". He was also referred to the invoices, but said that these simply stated the weight and the cost of production of the meat. He said the meat

remained the property of Mudginberri at all times.

He said that it eventually became apparent to him that some other arrangement would have to be made because of the fact that the picket showed no sign of dispersing. He said that ADMA was repaid the money it had advanced together with tne interest which was due. He said that ADMA had had legal advice from the Law Department in the Northern Territory that the transaction was

within ADMA's power.

Mr. Saville conceded that at no time did he consult

either of the other members of ADMA about the transaction. The

inference is that he relied solely on Mr. Hatton's authority and direction. No minute or other record of the transaction exists in ADMA's files, so that there is not even a record of what Mr. Saville agreed to. The only records available are the purchase order, the invoices and the payment voucher. As counsel for the appellant emphasized in his cross-examination of Mr. Saville and in his submissions before the learned primary Judge and before us, the implementation of the transaction, whatever its nature,

was highly irregular. Not to put too fine a point on 1t, the

poc-me en

sae ere

costo

46.

transaction was implemented clandestinely notwithstanding that it involved expenditure of almost $1,000,000 of public moneys. The only record of the transaction, apart from the contemporary documents, appears in the agreement of 29 August 1985 which described it. That agreement was not intended to implement the transaction, but to describe what had happened in order that the agreement with Westpac might be entered into. It does not provide conclusive evidence as against the appellant of the true

nature of the transaction of 2 July 1985.

Mr. Saville was cross-examined about the two draft agreements. He did not recall the first. He said there were numerous drafts bul could nol remember whether he saw "this exact one". He added that he would have thought that being involved in the meetings he would have done so. However, he said that, to the best of his knowledge, neither of the drafts originated in ADMA. But he said, "... it originated From meetings of people involved there and drafts could have been prepared by our legal advisers, by representatives from the Department of Treasury or

people at the meeting. I cannot guarantee who originated it".

It does not appear that Mr. Saville was asked specifically about the second draft agreement, but what he said in the evidence to which we have referred would seem to embrace

all drafts that came into existence at the relevant time.

Mr. Pendarvis said that a copy of the first draft was obtained from a member of Mr. Saville's staff early in July 1985.

This would have been close to the time the arrangement took

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47.

effect about 2 July 1985. It may be that the member of staff to whom Mr. Pendarvis referred was an officer of the Department of

Primary Production of which Mr. Saville was Permanent Secretary. Mr. Pendarvis said that he understood the draft agreement to be a note of the agreement reached orally between ADMA and Mudginberri early in July 1985. Mr. Pendarvis said that the second draft agreement came to him from ADMA. He remembered 1t was sent by Mr. Saville. The document came by post accompanied by a letter

of which Mr. Pendarvis did not have a copy.

A number of other matters were relied upon by counsel for the appellant in support of his submission that the meat was sold for a price of $2.30 per kilogram. Except for one, we do not mention them, but we have taken them intc account. The one matter we do mention is a submission that, in the absence of the evidence of Mr. Hatton and Mrs. Pendarvis, who were both present at the conversation at which the agreement was made, the Court

should more readily infer that the agreement was one of sale and

purchase rather than one of Inan. His Honour dealt with this malker by saying Lhat, had he becn in any doubt as to the accuracy or truth of Mr. Saville's evidence, this would have been a persuasive argument. But he did not have any such doubt. For our part, we would say that Mr. Hatton ought not to be regarded as a witness in the camp of either party. If he were able to give relevant evidence, he was available to be subpoenaed by the appellant. That is not the case in relation to Mrs. Pendarvis.

The significance of her absence from the witness box is a matter

to which we shall return.

Cot alae

waew ce cr

SPEND ce rete ye

ee toe ay yd

48.

It must be said that the transaction, whether 1t was of

sale or loan, was implemented ina highly irregular manner. One

can only draw the conclusion that the absence of any record

evidencing it and the failure of Mr. Saville to consult the other members of ADMA, must have becn because {L wus thought that public knowledge of the arrangements may have had political

implications which would have reflected adversely on the

administration. That said, however, we have not found a great

deal of assistance in resolving the question from a consideration of the unsatisfactory way in which the transaction was implemented. In other words, it throws little light on the true nature of the transaction. In fairness to counsel for the appellant, he did not claim that it did. Rather, he used the evidence to attack Mr. Saville's credit. His case was that Mr. Saville's evidence that the transaction was one of loan and not

of sale should not be accepted.

His Honour's view of Mr. Saville as a witness has already been referred to. A party challenging a finding that a witness seen by a trial Judge is honest and reliable has a difficult task. But what counsel for the appellant seek to do here is to put that finding on one side of the scales and to put on the other the totality of the objective material on which they rely. In their submission, notwithstanding his Honour's favourable impression of Mr. Saville as a witness. the scales are borne down by the probabilities which force one to conclude that

Mr. Saville's evidence could not passibly be correct.

The submission makes it necessary for us to pay

we gS

treatment of the conflict between the evidence of Mr.

49.

particular attention to the way in which his Honour dealt with

the matters relied upon by the appellant, and, especially, his

that of Mr. Pendarvis. His Honour said:-

"I am satisfied that Pendarvis' evidence as to the nature of the transaction with ADMA is confused and that his interpretation of its legal affect was erroneous. There are several features of the transaction which make it highly improbable that it was intended to operate asa _ sale. In the first place, the amount paid to the applicant by ADMA was $2.30 per ky, which was the approximate cost of production. There was no point in the applicant producing meat and selling jit to ADMA ak

the cost of production. Plainly, the applicant hoped to make a profit by selling the meat to advantage when it was able to do so. Pendarvis

must have believed that when the meat was sold it would be sold by the applicant, and not ADMA. Secondly, the evidence shows that the applicant was obliged to pay the storage charges on the meat. The position would surely have been different if the meat belonged to ADMA. Thirdly, 1f the meat had been sold to ADMA, there was no eccasion to pay interest at 14% on the moneys paid to the applicant by ADMA. Interest would have been payable only on money lent, not money paid as the purchase price for the meat. Fourthly, the fact that the moneys paid to the applicant were repaid with interest confirms Saville's account of the transaction.

Moreover, Pendarvis' continuing efforts to obtain consent to export the meat (referred to above under 'Stockpiling of meat') so that a higher price could be obtained for it are much more consistent with the applicant's continued ownership of the meat than with the notion that ADMA was the absolute owner of it. It is significant that Pendarvis' own description of the interest payment made to ADMA was that it was '14 per cent on the amount of money that we had withdrawn from ADMA between 2 duly and 2 September'. The term 'withdrawn' is quite inapt to refer to proceeds of sale, but is an appropriate description of the receipt of funds from a bank or other source of borrowed funds, such as ADMA was. I found Pendarvis' evidence to be reliable on most issues, and I do not think he gave any deliberately untruthful evidence. However, I think the account given by Saville and Cavanagh of the ADMA transaction is plainly

Saville and

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50.

correct".

The evidence to which his Honour referred reflects an

understanding by Mr. Pendarvis which is inconsistent with the

transaction being ome of outright sale. It is consistent with the evidence given by Mr. Pendarvis on 17 July 1986, to which reference was earlier made, namely, that ADMA was not the absolute owner of the meat, but could have sold it if Mudqinberri "had gone bankrupt". But the evidence upon which his Honour relied was given at a much earlier stage, namely, on 24 February

1986.

Having reflected on the competing submissions of the parties, we have reached the conclusion that the appellant's submission should be rejected. In reaching our conclusion we have been careful not to overlouk Mr. Pendarvis' repeated assertions that the transaction was one of outright sale, the form of the contemporary documents and the form of the draft agreements which preceded the agreement of 29 August 1985. We have also taken into account the absence of Mrs. Pendarvis from

the witness box.

The various matters relied upon by counsel for the appellant are undoubtedly extremely cogent. But, 1n our opinion, they are outweighed by two principal considerations. Firstly, it seems inherently unlikely to us that ADMA would have heen instructed by the Minister to enter into a transaction of outright purchase. It is much more probable that the transaction

was in reality a loan, but that, as in so many cases of mortgages

ag A ap eee

qr eyes ny wie

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_

51.

of personal property, the course was taken of Fransferring the property in the meah to the lender in order to give it the best

possible security.

Secondly, and more importantly, we are of opinion that his Honour's conclusion that he should accept Mr. Saville's evidence as reliable places an insurmountable obstacle in the path of the appellant's submission. His Honour's earlier quoted analysis of the effect of his acceptance of Mr. Saville's evidence does not, in our opinion, disclose error of any kind. Indeed, when one takes into account the inherent probability that ADMA would not have purchased the meat outright, it provides the more satisfactory explanation for the transaction and, at the same time, explains why Mr. Pendarvis was under the

misapprehension his Honour found him to have.

In relation to Mrs. Pendarvis' absence from the witness box, we say that, in ordinary circumstances, it might have been expected that she would have been called to give an account of her recollection of what Mr. Pendarvis and Mr. Saville had agreed upon. In a sense there 1S no escape from the criticism of the conduct of Mudginberri's case which arises as a result of this matter. But it must be remembered that Mr. Pendarvis' evidence of the nature of the transaction is substantially opposed to that of Mr. Saville. Mrs. Pendarvis' evidence, assuming she had a

recollection of the matter, would have been more likely to be in accordance with that of her husband. Since he vehemently

asserted that the transaction was an outright sale, i1t is

difficult to see what Mrs. Pendarvis' evidence would have added

Ape

oe ee eee - ers

ees re

52.

to the strength of the appellant's case or what adverse inference can be drawn against Mudginberri as the result of her not being

called.

Before concluding this part of the judgment we mention that there is another way in which the matter may be looked at. His Honour formed a generally favourable view of Mr. Pendarvis' evidence. He was the person who negotiated the transaction on Mudginberri's behalf. Mr. Saville negotiated 1t on behalf of ADMA. If one were to accept that each had given an honest account of his recollection of the negotiations and his understanding of the transaction, there could be a question

whether the parties to the transaction were ever agreed, that is,

ad idem, about the nature of it. This in turn would raise a question whether there was any binding transaction at all. This is nota matter which was the subject of any submission or discussion during the argument. Because we find no error in his Honour's findings, we do not need to pursue it. But if, contrary to the conclusion at which his Honour arrived, the transaction into which the parties purported to enter about 2 July 1985, was of no effect because they were not agreed, what they did would not have involved an outright sale of the meat to ADMA. We do not express a concluded view, but in those circumstances it would seem that ADMA would have been able to recover the moneys it paid as moneys had and received by Mudginberri to its use and that Mudginberri would have at all times retained title to the meat with the consequence that ADMA would have had no security over

it.

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53.

It follows that, if one were to conclude that there was no consensus, that is, no agreement, reached between Mr. Saville and Mr. Pendarvis, the appellant's case would stand in no different condition. The case which it wishes accepted is one where the Court finds that there was in fact an outright sale so that the meat wags sold progressively to ADMA for $2.30 per kilogram. In that event a floor would be placed underneath Mudginberri's claim for damages because, subject to the appellant establishing that it was unreasonable for Mudginberri to have repurchased the meat, its losses arising as a result of its inability to sell on the export market would need to be calculated on the basis of an actual selling price of $2.30 per

kilogram or $1.04 per pound, a figure substantially higher than

that which has been taken into account fn quantifying its claim (86c per pound). This positive finding shich Lhe tppellant seeks is not, in our opinion, one which this "Trurt cold meke, this

Honour's acceptance of Mr. "Saville's evidence as honest and reliable prevents it. The most that could be found is that there

was no binding transaction at all.

It remains to say that there 15 also a question whether the transaction was ever authorized by ADMA. The provisions of the Act, pursuant to which ADMA was established, require at least two members present at a meeting and a majority decision. There is considerable doubt whether Mr. Saville had any authority to enter into the transaction at all. Again this matter was not the subject of any submission by either party. In the view we take,

it has no bearing on the outcome of the appeal.

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54,

STOCKPILING

Those being our conclusions in relation to the ADMA transaction, it is now appropriafe to come directly to the appellant's submissions claiming that the stockpiling by Mudginberri of meat after it recommenced slaughtering on 24 June

1985 was unreasonable.

The reason given by Mr. Pendarvis for so doing was that he hoped on reasonable grounds that Mudginberri would eventually be able to sell the meat on the export market notwithstanding that it had not been inspected for export at any stage of the slaughtering, butchering and packaging processes. The matter was treated by his Honour as one of mitigation. That is how counsel for the appellant treated the matter before us notwithstanding some discussion in which there were suggestions that it may have

been for Mudginberri to prove that it was reasonable to stockpile

the meat as part of its damages clain.

After a detailed consideration of the evidence, his

Honour said:-

"In the light of all the evidence I am satisfied that there was only a minimal chance that any meat which had not been inspected by Commonweaith inspectors would have been permitted to be exported. But to express that opinion is to he wise after the event. Tt ignores the circumstances as they would have appeared to Pendarvis at the time when the meat was produced. Moreover, in considering the reasonableness of Pendarvis' decision, regard must be had to the fact that if he had been able to obtain consent to export the meat the applicant stood to achieve a much higher price for it than was available on the Australian market. Pendarvis took a commercial

sora

sat . ay

>

55.

decision which turned out to be wrong, but I do not think it was unreasonable. For all that appears inthe evidence, the domestic price of meat might have risen, not fallen, in the latter part of 1985".

His Honour went om to say that, as at 24 June 1985, there were essentially three courses of action open to Mudqinberri. It could have decided not to recommence operations until it had obtained the services of Commonwealth meat inspectors; it could have decided to recommence operations for the purpose only of producing meat for the domestic market; or it could have taken the course which it did. "that 1s to say, recommence operations, and hold the meat in store so as, hopefully, to obtain a higher price for it". His Honour

continued:-

"I donot think that the risks attendant upon taking up the third option, albeit substantial, were so great as to justify the Court holding that it was unreasonable for the applicant to take then. Even if the option taken up by the applicant had resulted in it sustaining greater damage than it otherwise would have incurred, that would not have been the end of the matter. Provided the applicant acted reasonably it 1s entitled to recover the losses it actually sustained: ..."

In the appellant's submission Mudginherr1 had no reasonable grounds for believing that the ment produced hetween 24 June 1985 and 7 September 1985, when, on one view of the case, it might be thought that Mudginberri had decided that the meat would have to be sold on the domestic market. would ever become exportable. A further submission relied upon by the appellant

was that Mr. Pendarvis, and thus Mudginberri, had no belief at

ee me se ee ree eee Sor - . a Testy Fer whe .

56.

all that the meat would ever become exportable. Confronting this submission is the fundamental difficulty that his Honour accepted

Mr. Pendarvis' evidence on this question.

The evidence establishes that buffalo meat comprises about 85 per cent of Mudginberri''s ordinary production. There is a year-round domestic market for buffalo meat which, except for fillets, is used in the manufacture of smallgoods. The domestic

market is not large, It was about 2-3,000 tonnes in 1983 and 2,000 tonnes in 1984. The domestic market opened at about $1.85

to $1.90 per kilogram in 1985.

Mr. W.N. Johnston is the Managing Director of Australasian Meat Brokers Pty Limited. He has had 14 years experlence inthe meat trade. Mr. Johnston said that. once brokers and buyers learnt that the stockpile of meat existed, there was created a situation of over-production which had the effect of bringing the domestic price down. Early in September 1985 Mudginberri telexed for bids for the purchase of about 500 tonnes of buffalo meat. The purpose of the telexes appears to have been to assist Mudginberri in the calculation of its damages claim, but they emphasized to the trade that there was a

large quantity of meat which might become available to the local market. Mr. Pendarvis acknowledged that, even before 24 June

1985, he realized that the effect of stockpiling a large quantity of buffalo meat would be to depress the market. He also said that, had the market not been depressed, he believed that the price which buffalo meat would have brought on the local market

in the period June to September 1985 would have been between

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57.

$1.60 a kilogram and $1.90 a kilogram.

The appellant's complaint is that the stockpiled meat sold at prices reduced by its having been stockpiled. Additionally, it sold more slowly with the consequence that storage charges and interest were substantially increased. But the fact that that was so, as it probably was, did not itself Make Mudginberri's conduct unreasonable. Its conduct was unreasonable, so the appellant submitted, because the only reason for the stockpiling was the quite unreasonably held belief that

in some way the meat would be approved for export after all.

In the appellant's submission it was at alli times quite unréasonable and wholly unrealistic to take the view that the meat had any chance of being exported. Reasonableness required Mudginberri to sell meat produced after 24 June on the domestic market as it became available. There was "a plethora of material" which showed that his Honour's statement that the prospects of the meat becoming exportable amounted to no more than "a minimal chance" was no understatement. In summary the

matters relied upon were as follows:-

(a) At all material times Mr. Pendarvis believed that the Minister or officers in his Department were empowered to grant "retrospective certification" of the meat for export.

"Retrospective certification" was a concept unknown to the relevant law which was comprised in an order made under regulakions éthe Export Control Regulations) made pus vist

to the Export Control Act 1982. What was available was an

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58.

application for exemption from the operation of the relevant provisions of the orders; see orders 12, 13 and 14 of the Prescribed Goods (General) Orders. Order 12 provides in part that, where there are reasonable grounds to believe that prescribed goods (buffalo meat falls within this description) are being exported or being prepared in exceptional circumstances or in special commercial circumstances, the Secretary may specify orders that are not to apply to, or in relation to, the goods. It was submitted that Mudginberri could not have held a reasonable belief that the meat could become exportable

when Mr. Pendarvis was at all times ignorant of how and in

what circumstances exemption might be granted. The evidence established:-

(i) The abattoirs were not premises licensed for export

production at the relevant time; Mudginberri's

licence had been suspended.

(ii) The inspectors who were available to inspect the meat were not authorized under the provisions of the Export Control Act. Mr. P.H. Langhorne was at the relevant time the Director of the Export Inspection Services ("E.I.S.") of the Department of Primary Industry. He was asked whether, if an application for exemption had been made. he would have granted it or refused it. He said that he would have refused it

for anumber of reasons. These included the fact

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(iii)

(iv)

59.

that the meat was never "controlled" under the supervision of inspectors from the Department of Primary Industry from the time it was "prepared" to the time it was stored. He was not prepared to accept inspections of the meat by inspectors who were in the service of the Department of Primary Production of the Northern Territory. One of his reasons was inconsistency in the standard of the inspections because of the number of different

inspectors who were employed during the period.

The meat had been stored in "non-registered export"

cold stores.

There had been no compliance with the requirements of

an order (Order M14/83) made under the Australian

Meat and Live-stock Corporation Act 1977. The Corporation established by that Act has, as some of

its Functions, the improvement of the production of meat and live-stock in Australia and the making of a report and the formulation of plans for the consideration of the Minister with respect to the quality, standards and grading of any particular class or kind of meat to be exported from Australia. By s. 16H of its Act the Corporation may make orders to be complied with by the holders of export licenses which may make provision with respect to a number of Matters including the quality, standard and grading

of meal. Order No. M14/83 was made pursuant to this

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(v)

60.

section. It 1s unnecessary to go to the detail of it, but it provides for the establishment of programmes designed to control the quality of meat to be exported. The requirements of the Order had not been complied with. Mr. Pendarvis had been aware of

this. The attention of Mudginberri had been drawn to the problem in a letter written by the Corporation to it on 7 February 1984. Amongst other things the letter said that persons nominated by Mudginberri as quality assurance staff did not meet the corporation's requirements. In the course of his evidence Mr. Pendarvis conceded that, as at 9 May 1985, there was only one accredited person, although three were required. Between 9 May and 7 September the position was the same. Later he said that there was no accredited person present at the abattoir between 24 June and 8 September. Mr. Langhorne said that this would have been another factor militating against the grant of exemption from the operation of

the requirements of the orders made under the Export

Control Act and requlations.

Mr. Langhorne was not the only person to express the opinion that the meat would not have become exportable. Mr. R.T. Irwin is a Regional Director of the Department of Primary Industry in the Northern Territory. He said that, in his opinion, "exemption of this sort would serve to undermine our integrity

and the integrity of the Department as a requlatory

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(vi)

(vii)

61.

authority in this regard". Mr. L.E. Brownlie is an officer of the Australian Meat and Live-stock Corporation. He said that it was his opinion~that, once the meat was slaughtered in circumstances where it was not inspected at the time by E.I.S. inspectors, it was "never going to be exported no matter what happened to it after that". He added, "It was not in the export chain and therefore was not

subject to Corporation quality control".

In his representations to the authorities. including the Minister, that he be permitted to export the meat, Mr. Pendarvis did not disclose Mudginberri's non-compliance with Order M14/83 ocr the storage of

the meat in non-~export cold stores.

Mr. Pendarvis hoped to sell most of the meat ta Taiwan. He acknowledged that he knew that Taiwan required a form, known as a form 8, issued by the Department of Primary Industry before Taiwan would accept imports of buffalo meat from Australia. The

form is a form prepared by E.I.S. inspectors at the

time of export. Mr. Pendarvis acknowledged that such a form would not be issued unless the meat had been inspected by such inspectors in accordance with the requirements of the orders made pursuant to the

Export Control Act and the requlations thereunder.

His Honour failed to qive adequate weight to a number of

cee ae en ane

i eo

(d)

(e)

62.

matters including the following:-

(i) Mr. Pendarvis telexed for bids for all the meat on 4 September and 16 October 1985. The bids were sought from the domestic market. Notwithstanding these telexes, he maintained that until towards the end of

1985, he was endeavouring to obtain an exemption so

that he could sell on the export market.

(ii) No steps were taken to rectify the quality assurance

personnel deficiency until after 7 September 1985.

His Honour said that Mr. Pendarvis' expectations that the meat would be approved for export appeared ta have been shared by officers of ADMA. He referred to the evidence of Mr. Cavanagh who said that it was believed that the picket would not last more than a month and that the meat would be able to be re-inspected and go on the export market. Counsel, however, submitted that Mr. Cavanagh was not expert in the field of meat export legislation. He did not

claim to be. That is understandable because that was a field which concerned, not the Department of Primary Production of the Northern Territory, but the Commonwealth

Department of Primary Industry.

His Honour said that there were "important considerations which were proper to be considered and which could reasonably have led Mr. Pendarvis to believe that his company had some prospect of being permitted to export the

meat". He said that these considerations included the

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63.

fact that the meat had been produced in an abattoir which complied with the standards required of export abattoirs and had been inspected by meat inspectors whose certificates sufficed to permit it to be sold for human consumption on the Australian market. He added that the facts giving rise to Mudginberri's difficulty bore no resemblance to the facts which gave rise to the horse meat substitution scandal which was mentioned in evidence and which was the subject of a Royal Commission. The appellant's counsel's answer to these conclusions was based on the earlier material to which they had referred which established that at the relevant time the premises were not licensed for killing meat intended for the export market and that there were oo F.1.5. inspectors available to inspect the meat during the various processes which were

involved. His Honour's conclusions were, therefore, said

to be "unfounded".

The principal matters relied upon by counsel for

Mudginberri were as follows:-

(a)

His Honour's acceptance of Mr. Pendarvis' evidence that he believed until the end of November 1985 that there was a prospect that he would be permitted to export the meat. In the course of his evidence Mr. Pendarvis said more than once that he could not believe that he would not be allowed to export the meat which, although not inspected for

export, had been prepared under the same conditions as it

would have been prepared if the inspectors had been

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(b)

(c)

(d)

(Ce)

64.

present. He referred to Australia's balance of payments problem and the fact that the export of 500 tonnes of buffalo Meat would have made a not insignificant contribution to Australia's export income in the relevant

period.

No matter what the difficulties may have been, Mr. Pendarvis maintained his pressure onthe Minister and Departmental officers throughout the periad. His efforts did not cease early in September 1985 when the picket was

lifted. They continued unti the middle of November.

The evidence established that, if an exemption were granted from the operation of the export control legislation, there would be no problem because of non-compliance with the order made by Australian Meat and Live-stock Corporation (Order M14/83). The Corporation would not have taken it upon itself to endeavour to prevent the export of the meat

if an exemption had been granted.

Mr. Langhorne's views were not known to Mr. Pendarvis. It would be very wrong to use hindsight to determine the matter. The question is whether Mr. Pendarvis, and thus Mudginberri, acted r2asonably in all the circumstances. Until November 1985 it was never made clear to him by the Minister, mor any officer in the Department. that the

prospect of exportinc the meat was hopeless.

The circumstances of the case were indeed remarkable. They

eae eee pe epee a. re at -

oe eee ae et ae 7

65.

were well within the words of order 12 of the Prescribed

Goods (General) Orders made pursuant to the Export Control Act and regulations, namely, "exceptional circumstances" and "special commercial circumstances". Until the

Department made its attitude clear, there remained a

prospect that the export of the meat would be permitted.

(f£) It was important to keep firmly in mind that the essential reason the meat could not be exported was because of the wrongful conduct of the appellant in preventing inspection of the meat by Department of Primary Industry inspectors. It was the appellant which had created the problem. Care must be taken. in assessing the submission which was made, to ensure that losses suffered as a consequence of the appellant's wrongful conduct, were not excluded from the amount of Mudginberri''s damages by making a judgment based

on hindsight.

Having reflected on the matter, we have reached the conclusion that Mudginberri's submissions should be accepted and his Honour's reasons and conclusions upheld. Whilst a claimant for damages, in circumstances such as these, must always act reasonably, his conduct should be looked at at the relevant time and not with the use of hindsight. It cannot be stressed too strongly that a claimant, such as the respendent in this case, which is placed in a dilemma by the wrongful conduct of the party sued, very often has to make difficult decisions on inadequate

information. Here Mudqinberri was in the hands of the

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66.

Department of Primary Industry. If 1t had made 1t clear at an earlier stage that the export of the meat was out of the question, that would probably have produced a different result, but it did not do so. It did not give a final answer to the

requests which Mr. Pendarvis made until November 1985.

We do not find it necessary to deal exhaustively with each of the submissions relied upon by the appellant which we have listed above. But we mention some of them. In relation to the first, we do not find any strength at all in the circumstance that Mr. Pendarvis thought that the appropriate application for him to make was one for "retrospective certification" of the meat or purported to quote non-existent provisions of the legislation tc the Department and the Minister. The Departmental officers were under no misapprehension as to what the appropriate procedure was. If they had been prepared to assist, they would have turned whatever application Mr. Pendarvis made into an appropriate one or informed him of the need to make a different

kind of application. There is nothing in this point at all.

In relation to Mr. Langhorne's evidence, we have already referred to the danger of using hindsight. The reasons he has given as to why the meat could not be approved for export are compelling. But the evidence was given well after the event. If, contrary to the decision which was made, he had decided to invoke order 12 of the Prescribed Goods Orders to exempt the meat either because of exceptional circumstances or because of special commercial circumstances, he would no doubt have developed

equally powerful reasons why that was an appropriate course to

wee ene ome oy

PPM te a re ene mentee pre a we - as er,

- oe

67.

take. The same may be said of Mr. Irwin's evidence.

As to the proposed export of the meat to Taiwan, all we

would say is that everything depended on the grant of an exemption. If exemption had been granted, the probabilities are that Taiwan would have accepted the meat. The evidence suggests that the grant of an exemption would also have overcome the

difficulties of the Australian Meat and Live-stock Corporation.

It remains to mention disclosure to the Department of the non-compliance with Order M14/83. The answer to this is that it is reasonable to infer that the Department was well aware of the whole of the relevant circumstances relating to the production of the meat. Further, the critical question is whether it was established that Mr. Pendarvis acted unreasonably.

In our opinion he did not act unreasonably in thinking that the

Department was fully informed of all relevant circumstances.

For the reasons we have given we reject the appellant's submissions made in conmnection with the stockpiling issue. Before leaving that matter, however, we should say a word about the recoverability of interest. There was discussion during the argument concerning the question whether interest on borrowed money was a head of loss or damage which was recoverable in proceedings such as this. Reference was made to The Liesbosch £1933] A.C.

449. In Trans Trust §.P.R.L. v. Danubian Trading Co. Limited C19523 2 9.8. 297 Somervell L.J., having referred to The

Liesbosch, said (p. 302):-

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68.

"The result 1s stated by Lord Wright in the former case, CThe Liesbosch case], namely, that damages due to impecuniosity may not be too remote if the loss might reasonably be expected to be un contemplation of the parties. The judge Cthe trial judged stated his conclusion as follows:

'Here I have reached the conclusion, on the facts of this case, that the loss of profits claimed by the plaintiffs is not too remote, although consequent upon the plaintiffs' impecuniosity, because the loss was such as might reasonably be expected to be in the contemplation of the parties as likely to flow from the breach of the obligation undertaken by the defendants'. I agree with that conclusion, and have only one comment to make upon it. The real question is what was the loss contemplated by the parties rather than the reason for it. Even if the plaintiffs had been very rich it might still have been 'contemplated' that if the defendants did not procure the

obtaining of the credit the plaintiffs could not and would not themselves have used their resources for the opening of a credit for this steel".

In the same case Denning L.dJ. (as he then was) referred (p. 306) to the general rule at common law that interest was

"generally presumed not to be within the contemplation of the

parties". He referred to Bu n_& Leake, 3rd ed. at p. 51L and

London, Chatham and Dover Railway Co. v. South Fastern Railwav Co. £18933 A.C.

429. His Lordship said that that was the only

real ground on which damages could be refused for non-payment of

money. He added (p. 306):-

"It is because the consequences are as a rule too remote. But when the circumstances are such that there is a special loss foreseeable at the time of the contract as the consequence of non-payment, then I think such loss may well be recoverable. It is nok necessary, however, to come to a firm conclusion on this point, because I regard the provision of a credit as different from the payment of money and not subject to the special

rules, if any there are, relating thereto".

me oe ap ie +

oer

69.

The Liesbosch was a case in tort; the Danubian Trading Co. case

was a case in contract.

What was said by Denning L.J. was approved by Brightman L.J. when delivering the principal judgment of the Court of Appeal in England in Wadsworth v. Lydall £1981] 1 W.L.R. 598; see pp. 603-4. Wadsworth v. Lydall was approved by the House of Lords in The President of India v. La Pintada Compania Navigacion S.A. £1985] 1A.C.

104. Both Wadsworth v. Lydall and the La Pintada case were cases in contract, not in tort. The matter was

the subject of discussion in the Court of Appeal in N.S.W. in

Simonius Vischer and Co. v. Holt & Thompson £1979] 2 N.S.W.L.R. 322; see per Samuels J.A. at pp. 365-6. We also note that this

Court, in cases under Part- V of the Trade Practices Act, has awarded interest from time to time. An example is provided by

Frith v. Gold Coast Mineral Springs Pty Limited (1983) 47 A.L.R. 547 at pp. 572-3.

The question in the present case is whether the claim for interest is too remote. In our opinion it ius clearly not. The appellant's purpose in engaging in the wrongful conduct in which it did was to prevent the export of Mudginberri's meat. That is a purpose which it achieved for a period of some six months. We have decided that it was reasonable, in all the circumstances, for Mudginberri to stockpile the meat in the hope

that it might eventually be able to be sold on the export market for a price higher than it would bring on the domestic market.

In the view of both Somervell and Denning L.JJ. in tne Danubian

Trading case, the question becomes one of the reasonable

mores as *

70.

contemplation of the parties in a case involving a breach of

contract. In our Opinion it is also one of reasonable contemplation of the parties, or rather of foreseeability, ina case of tort or one which is akin to tort as this case is. Given our conclusion that it was reasonable for Mudginberri to

stockpile the meat, it must have been within the foresight of the appellant that it was likely that Mudginberri, in those circumstances, would incur expense for storage charges (as to which there is no argument) and also that it might need to borrow money at interest in order to provide it with funds during the period in which it was unable to obtain money from the normal

sales of the meat which would otherwise have occurred.

CLOSURE BETWEEN 9 MAY and 24 JUNE 1995

The next issue with which we deal arises from a submission made by counsel for the appellant that Mudginberri did not act reasonably in closing down the abattoir altogether between 10 May and 24 June 1985. In their submission Mudginberri should have continued to operate the abattoir, if not throughout this period, then at least for most of it. His Honour rejected the submission. As previously noted, Mr. Pendarvis' time and attention were engaged by a number of legal proceedings (all held in Sydney or Melbourne and thus requiring his absence from Mudginberri) leaving him little opportunity to consider whether he should try to re-open the abattoir in the hope that Mudginberr: might subsequently obtain permission to export meat

it might produce.

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71.

His Honour said that, if Mr. Pendarvis had arranged for inspectors from the Northern Territory Department of Primary Production to work at the abattoir, he would have run the risk of making matters worse. He said that Mudginberr1 was justified in postponing the taking of that risk until it became clear that the appellant did not intend to desist from its illegal conduct and obey the Court's orders. Furthermore, the inspectors would not have been available immediately. Time would have been needed to engage them and to make the necessary arrangements for their travel to the abattoir. In those circumstances, his Honour thought that it was not unreasonable for Mudginberri to delay until 24 June 1985 before recommencing operations. His principal reason for this view was based upon what he referred to as "the

industrial climate" which prevailed at the time.

His Honour rejected a further submission advanced on behalf of the appellant that the failure to recommence operations before 24 June "fitted into a pattern of both overt and covert political support ina campaign of attack upon the appellant". We shall deal with this submission after we have considered the

other submissions made in relation to closure.

The particular matters relied upon by counsel in support of their submission, and our views about them, may be summarized

as follows:-

(a) There was evidence that Muddinberr1 had the ability, as from 10 May 1985, to obtain and process stock subject to

the availability of inspectors. So much was acknowledged

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(b)

(c)

72.

by Mr. Pendarvis. There is no need to refer to other

evidence to the same effect.

Mr. Pendarvis was aware, as from 1984, that the Department of Primary Production and the Department of Primary Industry would "facilitate such a course being taken by the respondent". This proposition was clearly established as regards the Department of Primary Production. It was not established in relation to the Department of Primary Industry. The senior officers of that Department were no doubt desirous of assisting, but inspectors from the E.I.S. would mot go to the abattoir and the E.1I.S. would not accredit Department of Primary Production inspectors without additional training and testing. Mr. Langhorne said that the E.I.S. would protect his export status if he was required, that is, forced, to produce for the domestic market during disputes which were occurring during 1984. He told Mr. Pendarvis during that year that he, Mr. Langhorne, would do everything he could to ensure that Mudginberri's "export status" was protected. That was all very well for Mr. Langhorne, but if he could not provide E.I.S. inspectors, his assurance was not of much practical

worth.

There was no evidence of delay in the provision of Northern Territory inspectors once Mudginberri sought them. That may be so, but it does not remove the force of his Honour's remarks about then. In any event, as we have said, his

Honour's principal reason for rejecting the submission was

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(d)

(e)

(f)

73.

that to re-open the abattoir at that stage may have

worsened the industrial problems which existed.

Mudginberri was incurring continuing costs whilst deriving no income from the abattoir. The conduct of the abattoir. even if sales were limited to the domestic market, would, to an extent, have minimised Mudginberri's continuing losses. That consideration does not touch the question at issue. The question is the reasonableness of Mr.

Pendarvis' actions.

Mudginberri had no reasonable cause to believe that the appellant would not be intransigent, even to the point of discbeying Court orders. Se much was confirmed by its disobedience of an order made on 27 May 1985. This is an absurd submission. To accept 1t would tnvolve the Court in saying that knowledge by a wronged party that its opponent was likely to commit a contempt of Court made the wronged party's conduct unreasonable if that conduct proceeded on

the basis that the Court's order would or might be obeyed.

The bulk of the matters relied upon by the learned primary Judge were not advanced by Mr. Pendarvis as reasons why Mudginberri did not re-open Che ubattoir before 24 June 1985. His reasons for not re-opening were stated by him to be because he expected every day to have either the Department of Primary Production inspectors appointed as officers of the E.I.S. or that the E.I.S. inspectors would

return. It is enough to say that, on the basis that Mr.

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74,

Pendarvis' evidence was accepted, as 1t was, 1ts acceptance provided a sufficient ground to make Mudginberr1's conduct in not re-opening the abattoir until 24 June 1985

reasonable.

We are satisfied that each of these submissions should be rejected. The comments we have made in relation to them

constitute our reasons for this conclusion.

It remains to deal with the submission made by the appellant that the conduct of Mudginberri in not re-opening the abattoir was part of a political campaign. Counsel for the appellant said that the appellant sought to establish that Mudginberr1i, in collabcration with the National Farmers' Federation, had resolved in 1984 that it would refuse to negotiate payments by results with the appellant as representative of the meat workers and that it would "take on" the appellant and not seek an industrial settlement of the dispute that would inevitably arise. Instead, 1¢ would pursue litigation against the appellant with a view to breaking it financially, thus rendering it incapable of acting for its members. In this way the tally system, which was advocated by the appellant as the method by which payments to meat workers were to be calculated, would be broken down throughout Australia. Mudginberri's conduct during the picket was deliberately designed to increase its loss and damage. The submission said that matters such as stockpiling of meat and hides and the ADMA repurchase (if such 1t was) were more readily explicable if

Mudginberri's conduct were seen as part of "an industrial grand

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75.

design". Particularly would that be so if it were insulated from loss by moneys made available by "its industrial collaborators" including the National Farmers' Federation. The closure of the abattoir during the period in question was attributed to this

alleged conspiracy.

The matters upon which the appellant relied were raised in its counsel's cross-examination of Mr. Pendarvis. Eventually his Honour ruled that the questions were irrelevant and rejected them. The appellant complains about this ruling. For a time the questions were admitted subject to objection. Eventually his Honour asked counsel to indicate what relevance the questions could have "beyond the mere fact that financial support was given". Counsel was unable to satisfy his Honour, who rejected a question whether advice received from the National Farmers' Federation was that Mudginberri should not enter into negotiations with the appellant. There was lengthy discussion between counsel and his Honour. It is unnecessary to set out the detail of it. We are satisfied that his Honour made no error in the ruling which is challenged or in relation to rulings made in

respect of other questions along similar lines.

More importantly, we agree with his Honour that there was no substance in the argument that the conducl of Mudginberri in closing the abattoir was part of a political campaign. The submission is contrary to the probabilities. Mudginberri,. by taking action to bring about the return to the abattoir of the meat inspectors, was endeavouring to put itself in a position to

export meat at the earliest opportunity and thus put an end to

es

Tr ee ere rr rn a 7 ee a se

76.

its losses. Furthermore, it re-opened the abattoir despite its

inability to persuade the inspectors to return. Notwithstanding Mr. Pendarvis' confidence that he would eventually be given permission to export the meat, there was a risk that he might not obtain it. There is much to be said for the view that it may have been reasonable for him to keep the abattoir closed until the E.I.S. inspectors came back. His actions in re-opening the abattoir mitigated his damages which may well have been greater had he chosen to await the day when he could with certainty produce meat for export. This is hardly the action of a man engaged in a conspiracy designed to inflict as much damaqe as

possible upon a trade union.

In the result we are satisfied that Mudginberri's conduct in not re-opening the abattoir until 24 June 1985 was reasonable. The appellant's submissions to the contrary are

rejected.

SALT AND FLUORIDE

One of the respondent's variable costs was for salt and fluoride (which can be taken together) used in curing the hides produced at Mudginberri. Apparently, a truck carrying salt to Mudginberri was turned back by the picket. The respondent was not charged for the salt, but its absence meunt that the hictes could not be properly cured, and 62 were destroyed and 1,761

rendered useless for leather production as a resulk.

The learned Lerat judge made albowinee Cer lite lage af

Bp ge as rr en ero ere ea

77.

these 1,323 hides in assessing the respondent's hide revenue, i} the appellant argues that he should also have allowed for a saving in salt and fluoride in respect of them. The correctness of this approach is not in dispute. The ordinary cost of salt and fluoride per hide was $3.40. The appellant claims a deduction of 1,323 x $3.40 = $4,498. A complication 1s that a considerable amount of sait (in doubtful condition) left over from the previous season was used. The amount and value of this is unknown. Because there was not enought for each hide, it was ineffective. It is a matter of estimate, and we think an

allowance should be made of $2.20 per hide, i.e. $2,911.

WAGES

Certain employees (not named or clearly indicated) were

paid by Mudginberri during the necessary stand-down an amount of $175 per weck. In order to keep employees on hand, and available for work, Mr Pendarvis agreed with them to pay them amounts which his Honour assessed at an extra $68,250. The evidence is that

without that promise they would have left for other work.

Although his Honour dealt with the matter as a reduction in the payroll savings which would have been made but for the picket, it is more easily understood as a question of whether the respondent's damages should include $68,250 as an extra cost

flowing from the picket.

The appellant made three main attacks on the judge's

findings that the amount of $68,250 should be included in the

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78. amount of damages.

First, it argued there was no sufficient basis for the finding that the agreement existed. This submission should be

rejected. Certainly the evidence was vague as to the terms of the agreement, and witnesses who might have been expected to be more familiar with it were not called, but it is clear that an understanding to the effect mentioned existed, and the appellant never suggested otherwise in cross-examination of the

respondents' witness Glenn, one of the employees.

Second, the appellant argued that the agreement, if any, was intended to be binding in honour only and that the respondent had not previded consideration, in the sense of undertaking a definite obligation. But the agreement can be looked upon as a contract to pay in the event of a condition occurring. Furthermore, it is most unlikely that the men would have

performed their side of the bargain 1f they did not think that it

was enforceable; seemingly, they would have left if the agreement

had not been made.

Third, the appellant argued that the learned trial judge was wrong in concluding that 1t was reasonable to make the agreement. There is no substance to this submission. His Honour said that he was "not in any doubt" that it was reasonable, and there was ample evidence of the difficulty of reassembling the

respondent's workforce once it had been dispersed.

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79.

CONCLUSTON

In the event, the appellant has succeeded to some extent in four of the twelve or more issues which it raised. The argument on these issues, with necessary introductory matters, occupied a significant part of the nine days of hearing time and the amounts involved in three of the issues are quite substantial. However, the issues on which the appellant failed were even more siqnificant in both time expended and sums involved. We believe that justice will be done if the appellant is ordered to pay one third of the respondent''s costs of the

appeal.

In the result we have decided that the amount of the judgment should be varied by reducing it from $1,759,444 to the sum of $1,458,810. Subject to that matter, the appeal should be dismissed. The calculation of the sum of $1,458,810 to which the amount of the judgment has been reduced has involved us ina complex arithmetical exercise. The Schedule, which we have attached for the benefit of the parties shows how the amount is arrived at. For that reason we propose to grant each of the parties liberty to apply in relation to our calculation of the amount. Such liberty is to be exercised within 14 days from today. We order the appellant to pay one third of the

respondent 's costs of the appeal.

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ca

Counsel for the Appellant:

Solicitors for the Appellant:

Counsel for the Respondent:

Solicitors for the Respondent:

Dates of hearina:

Date judgment delivered:

80.

that this and the nine (79) preceding

true copy of the herein

I certify seventy pages are a Reasons for dJudamentk of the Court

iv

Associate

Dated: 16 June 1987

D. Ashley 9.C. with A.M.North

R.L.Whyburn & Associates as Sydney agents for Ryan Carlisle Needham Thomas

I.D.FP. Callinan Q.C. with D. Cowdroy

Tress Cocks & Maddox as

Sydney Agents for Mildren Silvester & Partners

9,10.11,12.13, 16.17,18.19 March 1987

16 June 1987

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THE SCHEDULE

RESULT _OF_RECAICULATED DAMAGES

Net kill Net dailv k111 Gross kill

Dressed weight

Boneless weight (68.4% of dressed weight)

Own purposes

Available for Sale Export market (96.4%) Domestic market (3.6%)

Sales to Taiwan & Sweden

Sales to Germany etc

Domestic sales

Total meat revenue

Total hides Buffalo hides (84.52%) Cattle hides (15.48%)

Buflalo hide revenue

Cattle hide revenue

Total hide revenue

Morling J 18,000 116.5 18,321

EXPECTED REVENUE

MEAT

18,000 beasts at 384 lbs/beast = 6,912,000 lbs

4,727,808 15,128 4,712,680 4,543,024 169,656

lbs lbs lbs lbs

lbs

3,235,126 lbs

at $1.20/1b

= $3,882,151

1,307,898 lbs

at $1.18/1b

= $1,543,320 169,656 lbs

at $0.86/1b

= § 145,904

a $5,571,375

HIDES

18,321 15,485 2,836

15,485 hides at 32.47 kq/nhide and $0.82/kg

= $412,294

2,836 hides at 20.34 kg/hide and $1.265/k¢ = $ 72,971 $485,265

Full Court

16,74017,033

16,740 beasts at 384 lbs/beast = 6,428,160 lbs

4,396,861 lbs 15,128 lbs 4,381,734 lbs 4,223,991 lbs 157,743 lbs

3,235,126 lbs

at $1.20/1b

= $3,882,151 988,865 ibs

at $1.13/1b

= $1,117,417 157,743 lbs

at §0.86/1b

$§ 135,659

$5,135,227

17,033 14,396 2.637

14,396 hides at 32.47 kag/hide and $0.72/kg = $336,562

2,637 hides at 20.34 ka/hide and $1.265/kg $ 67,843 $404,405

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REDUCTION IN VARIABLE COSTS

Expected meat

Actual meat Reduction in meat

Reduction in cost of livestock

Reduction in cost of packaging

Expected hides Actual hides Reduction in hides

Reduction in cost of salt & fluoride

Reduction in cost of packaging

Reduction in cost of salt & fluoride for damaged hides

4,727,808 lbs

3,142,742 lbs 1,585,066 lbs

1,585,066 lbs at $0.63/l1b

= $998,592 1,585,066 lbs at $0.0173/1b = $ 27,422

18,321 12,399 5,922

5,922 hides at $3.40/hide = $ 20,135 5,922 hides at $0.50/hide = $ 3,000

4,396,861 lbs 3,142,742 lbs 1,254,119 lbs

1,254,119 lbs at $0.63/1b

= $790,095 1,254,119 lbs at §0.0173/1b = $ 21,696

17,033 12,399 4,634

4,634 hides at $3.40/hide = $ 15.756 4,634 hides at $0.50/hide =¢ 2,317

1,323 hides at $2.20/hide = $ 2,911

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Other items of reduction in variable costs remain unchanged, therefore total reduction in variable costs would be $216,374 less than Morling J allowed, i.e. $1,065,615.

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SUMMARY (See Appeal book 1201) Expected revenue from 1985 Season Boneless meat $5,135,227 Hides 404,405 $5,539,632

LESS Revenue received or receivable in respect of 1985 production Boneless meat $3,068,876 Hides 252,239 $3,321,115 LOSS OF REVENUE $2,218,517

LESS Reduction in variable costs 1,065,615 $1,152,902

PLUS Additional costs incurred 305,908 TOTAL LOSS AND DAMAGE $1,458.810

I certify that this and the preceding two (2) pages are a true copy of the Schedule to the Reasons for Judgment

herein of the Court, Associate: (Corl Date: 16 June — .

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