BAKER & ORS v. ELDERS LIMITED (ACN 004 045 121) [2005] NSWCA 298

Reported Decision : (2006) Aust Contract Reports 90-216

New South Wales Court of Appeal

BAKER & ORS v. ELDERS LIMITED (ACN 004 045 121) [2005] NSWCA 298 CITATION: This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 29/06/2005

JUDGMENT DATE: 2 September 2005

JUDGMENT OF: Beazley JA at 1; Ipp JA at 43; Hunt AJA at 44

DECISION: 1. Appeal allowed in part;; 2. Set aside Order 5 made by English DCJ on 25 June 2004 and in lieu thereof enter verdict and judgment in favour of the first and second appellants against the respondent in the amount of $249,174.60 in respect of Grounds 3-10 as set out in the first and second appellant's cross-claim;; 3. Order that the amount awarded to the first and second appellants in respect of the cross-claim be set off as against the amount awarded to the respondent in respect of its contract claim against the first appellant, namely, $134,823.60.; 4. Order that each party pay his and its own costs of the trial at first instance and of the appeal.

CATCHWORDS: CONTRACT - goods purchased by party but amount owed charged to another person's account - whether purchasing party liable for cost of goods - TORT - negligence - duty of care - breach - failure of party to advise on and monitor insect infestation programme for cotton crop - damages flowing from breach of duty - diminution of crop yield - CONTRACT - unjust enrichment - whether monies paid under a mistake of fact - restitution - relevant principles

CASES CITED: David Securities v. Commonwealth Bank of Australia (1992) 175 CLR 353

Larry Roger Baker (First Appellant) PARTIES: Strathaven Cotton Pty. Limited (ACN 081 441 634) (Second Appellant) Elders Limited (004 045 121) (Respondent)

FILE NUMBER(S): CA 40594/2004

J.R. Young (Appellants) COUNSEL: K. Odgers (Respondent)

Leary & Company (Appellants) SOLICITORS: Locke Harris McHugh - Tamworth (Respoondent)

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): Tamworth DC106/2000

LOWER COURT JUDICIAL OFFICER: English DCJ

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40594/2004 DC 106/00

BEAZLEY JA IPP JA HUNT AJA

2 September 2005 BAKER & ORS v ELDERS LIMITED (ACN 004 045 121)

HEADNOTE

The first appellant and his father, the second appellant, owned and managed a cotton-producing property near Moree. Both appellants had separate credit accounts with the respondent, from whom they purchased goods for their property. The appellants also engaged the respondent to regularly inspect the crops on their property and advise on the amount and type of chemicals to be used to control insect infestation.

The first appellant purchased goods from the respondent for his property; however, these were charged to the second respondent's account. In an action brought by the respondent claiming the amounts outstanding on the account, the first appellant claimed he was not liable to pay the monies owed because they were not charged to his account ("the contract claim"). The first appellant cross-claimed against the respondent, alleging the respondent was liable in negligence because the programme it recommended to monitor and control insect infestation was ineffective and this diminished the property's crop yield ("the negligence claim"). The appellant included a further claim in cross-claim in which he alleged he was entitled to monies paid in respect of local court proceedings brought by the respondent because those monies were paid under a mistake of fact ("the mistake of fact claim").

HELD per Beazley JA (Ipp JA and Hunt AJA agreeing):

1. The contract claim

(i) The respondent expressly pleaded a claim against the first appellant in respect of the monies owed for the purchase of goods.

(ii) The first appellant knew that the goods were being charged to the second respondent's account, and as the purchaser of the goods, the first appellant was liable for the cost of them. The respondent's mistake of debiting the wrong account did not negate the contractual obligations that arose between the first appellant and the respondent when the former purchased the goods.

2. The negligence claim

(iii) The trial judge, having found that the respondent's negligence affected the crop yield, ought to have found a verdict for the appellant and assessed damages.

(iv) The trial judge's subsequent finding that she was not satisfied that the negligence caused damage to the crop was inconsistent and erroneous. There was no evidence of any other cause of damage to the crop. (v) The trial judge's error may have stemmed from her failure to have regard to the second report relating to damage prepared by the first appellant's expert.

(vi) As both parties requested the court to assess damages if the appeal in relation to the negligence claim succeeded, and as there had been no challenge at trial to the expert's report on damage, the Court was in a position to do so.

(vii) The damages should be assessed in accordance with the expert's assessment.

(viii) The liabilities of the first appellant and the respondent, respectively, should be set off against each other. 3. The mistake of fact claim

(ix) The underlying basis for an entitlement to a refund of monies paid under a mistake of fact is that the other party has been unjustly enriched: David Securities v Commonwealth Bank of Australia (1992) 175 CLR 353

(x) There was no evidence that the first appellant paid the monies under an operative mistake of fact, that is, believing the monies were owed when in fact they were not. Accordingly, there is no basis for a claim in restitution. Orders 1. Appeal allowed in part; 2. Set aside Order 5 made by English DCJ on 25 June 2004 and in lieu thereof enter verdict and judgment in favour of the first and second appellants against the respondent in the amount of $249,174.60 in respect of Grounds 3-10 as set out in the first and second appellant's cross-claim; 3. Order that the amount awarded to the first and second appellants in respect of the cross-claim be set off as against the amount awarded to the respondent in respect of its contract claim against the first appellant, namely, $134,823.60. 4. Order that each party pay his and its own costs of the trial at first instance and of the appeal.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40594/2004 DC 106/00

BEAZLEY JA IPP JA HUNT AJA

2 September 2005 BAKER & ORS v ELDERS LIMITED (ACN 004 045 121) Judgment 1 BEAZLEY JA: This appeal raises three discrete issues. The first is whether the first appellant, Larry Baker, is liable to the respondent, Elders Limited (Elders), for the sum of $139,769.00 for goods supplied to him by Elders (the contract claim). The second is whether Elders is liable in damages to Larry Baker for the negligent management of an insect infestation programme on a cotton-producing property known as Strathaven, located at Moree. This issue was raised in a cross-claim brought by Larry Baker and Strathaven Cotton Pty Limited, both of whom were defendants in the contract claim (the negligence claim). The third is whether Larry Baker is entitled to the repayment of a sum of approximately $7,500 paid to Elders in respect of a claim brought in the Local Court and which Larry Baker alleged he paid under a mistake of fact (the moneys paid under a mistake claim). This issue was also raised by Larry Baker on the cross-claim.

First issue: The Contract Claim 2 Larry Baker's father, Alan Baker, had conducted a cotton growing enterprise at Strathaven for a number of years. Larry Baker had assisted his father on the property. In the 1999 season, Alan Baker handed over the cotton farming enterprise to Larry Baker to operate on his own account. Over a period of years, both Larry and Alan Baker had purchased goods from Elders and both had operated credit accounts with it. However, in early 1999, Larry Baker's 30-day credit account had been suspended. 3 Notwithstanding Larry Baker's credit status with Elders, he continued to purchase goods from Elders, mostly chemicals, for the cotton farm. Elders then charged Alan Baker's account with the cost of the purchases, without Alan Baker's authority. The debit balance on Alan Baker's account eventually reached $164,546.26 and remained unpaid. 4 Elders commenced proceedings in the District Court at Tamworth claiming this sum. Initially, the proceedings were brought against Alan Baker. In the Notice of Grounds of Defence, Alan Baker alleged, inter alia, that Elders had wrongly debited various amounts to his account and that he was, therefore, not indebted to them as alleged. Subsequently, Elders joined Larry Baker and the company, Strathaven Cotton Pty Limited, as defendants in the action. 5 In the Amended Pleadings to which Larry Baker and the company were added as defendants, Elders pleaded independent claims against each defendant. First, as against Alan Baker, it had alleged he had purchased the merchandise utilising his credit facility and that he had failed to pay the moneys upon demand. Alternatively, Elders alleged that Larry Baker acted as Alan Baker's "agent, employee, partner, or representative" in purchasing merchandise from Elders and that he had purchased the merchandise with Alan Baker's authority and consent and on his behalf. 6 Secondly, as against Larry Baker, Elders pleaded a claim alleging that if he did not obtain the merchandise on behalf of Alan Baker then he obtained it on behalf of himself and had caused the purchases to be debited to the account of Alan Baker. Elders pleaded an alternative claim against Larry Baker alleging he had "failed to pay for the merchandise items he [purchased] from [Elders]". 7 Thirdly, as against Strathaven Cotton Pty Limited, Elders pleaded that Larry Baker had obtained merchandise on its behalf or alternatively, the company itself had purchased the goods and owed Elders the moneys for those purchases.

Findings of the trial judge on the contract claim 8 English DCJ found that there was no evidence that Strathaven Cotton Pty Limited was indebted to Elders. That finding is not challenged on the appeal. 9 The trial judge also found that Alan Baker was not indebted to Elders and that Elders had taken it upon itself to debit Alan Baker's account with the cost of the merchandise, notwithstanding that he had not purchased it. Her Honour found that Elders had done so without Alan Baker's consent. Accordingly, she entered a verdict in favour of Alan Baker against Elders. Elders has not appealed against that verdict although, as I will explain below, it appears that her Honour overlooked that Alan Baker accepted responsibility for an indebtedness of approximately $900 on his account. 10 Her Honour found a verdict and judgment for Elders against Larry Baker on the basis that he had purchased the goods on his own account and had accepted delivery of them. Her Honour also found that Larry Baker was aware that the merchandise was being debited to his father's account and that his denials of that proposition were untruthful.

Arguments on appeal on the contract claim 11 Larry Baker's case on the appeal in respect of the contract claim was put on two bases. First, he said that there was no case pleaded directly against him in relation to the moneys claimed to be owing. Secondly, he contended that although he had ordered and used goods on his own account and for his own purposes and had signed for them, as Elders had chosen to debit his father's account for the goods, it could not claim the moneys owed from him. 12 The first argument can be disposed of quickly. As I have already indicated, Elders expressly pleaded a claim against Larry Baker that he was personally liable for the purchases. The claim was pleaded alternatively to any claim made against Alan Baker or Strathaven Cotton Pty Limited. The trial judge held against Larry Baker on the alternative claim pleaded against him. Accordingly, this argument must be rejected. 13 The second argument raised by Larry Baker on the contract claim was put in quite simple, even blunt, terms. It was that Elders was bound by their own choice to charge Alan Baker for the goods purchase by Larry Baker. This submission was based firmly on Larry Baker's own evidence. He was asked in cross-examination: "Why do you say that you don't owe Elders for the amount of these chemicals?". A: "Because it's not on my account". 14 In his submissions to the court, Larry Baker's counsel stated that Elders chose to debit the account of his father, his father had not authorised it and he had not done anything to indicate that the goods should be debited to his father's account. Counsel then submitted "if they made that choice then…they are bound by it…". 15 There are two difficulties with this submission. First, the trial judge made a finding that Larry Baker did know that the goods were being debited to his father's account. Secondly, as a matter of simple contract law, Larry Baker was the purchaser of the goods and, in the absence of any different agreement that bound Elders, was thereby liable for them. There was no other such contractual arrangement. A mistake or error of the type made by Elders in debiting a third party's account for goods for which the first party (in this case Larry Baker) purchased, does not negative or neutralise the contractual obligations that arose between Larry Baker and Elders when he purchased the goods. I would only add that the appeal on this ground was so hopeless it should never have been raised. 16 It follows that Larry Baker's appeal on the contract claim should be dismissed save for two matters of accounting. Alan Baker has admitted liability for two purchases in 1998 in a total amount of $945.40 ($186.90 on 20 October and $758.50 on 7 November 1998). Counsel for Elders conceded that Alan Baker was liable for those amounts, although attempted to say that if Elders had not obtained payment from Alan Baker, "it must follow…that…Larry Baker is [liable]". I trust the submission was put with faint heart. It ought to be rejected. This sum must therefore be deducted from the judgment sum.

Second issue: The negligence claim

Background 17 During the cotton-growing season that commenced in late October 1998 and ran through to June 1999, Larry Baker engaged Elders to manage the insect infestation on the crop. Pursuant to this engagement, Elders inspected the crop on a regular basis and advised on the amount and type of chemicals to be used to control insect infestation. When carrying out the inspections, Elders staff kept a diary of dates upon which the inspection was carried out, what was discovered on each inspection, and what remedial action was to be taken. 18 The trial judge found that Elders was under an obligation to check for and identify insect types, identify the impact of insects, regularly monitor the crop, provide recommendations for the control of insects and conduct follow-up inspections. Her Honour held that Elders breached its duty of care in their performance of the management of the infestation programme, in that the programme recommended by Elders was ineffective and failed to control the insects which ultimately affected the yield of the cotton crop. English DCJ found that the expectation was that the crop would have a high yield that year. The actual yield was, however, only about one half of the average yield for the Lower Namoi area in which the farm was located. Her Honour then stated: "I find the cross-defendant breached [its] duty of care in that the programme recommended by [Elders], was ineffective and failed to control insects which ultimately affected the yield of the Strathaven cotton crop". This latter finding was a finding that Elders' breach of duty was causative of Larry Baker's eventual loss sustained because of the lower yield. 19 Notwithstanding that the trial judge found duty of care, breach of duty and causation, she dismissed the claim for the following reasons: "…there is no evidence from Mr Ghirardello or otherwise as to what the cross-defendant should have done in terms of appropriate application of chemicals and as to what effect, if any, such appropriate applications would have had upon the crop yield. The expert evidence does not go so far as to satisfy me of the steps a reasonably competent agronomist would have taken in relation to correctly advising and supplying an adequate type and quantity of chemical and nor does the evidence establish that a failure to carry out those steps caused [Larry Baker] suffered (sic) the loss and damage. The evidence of Mr Ghirardello establishing [sic] that Elders failed to sufficiently monitor and report on the state of the crops and applied inappropriate chemicals on various nominated occasions. I am not satisfied, however, that the failure to monitor and keep proper records itself caused the damage to the crop. The evidence falls short of satisfying me of the steps which ought to have been taken consequent upon proper monitoring or record keeping. Nor does the evidence satisfy me of the damage which flowed by reason of the failure to take such steps. I am unable to make any findings, on the evidence, as to what chemicals ought to have been applied; what damage flowed from the alleged inappropriate or insufficient application of chemicals and, more importantly, I am unable to make a finding as to the damage so caused. Nor am I able to find that had the correct or sufficient quantity of chemicals been applied, what the crop yield might have been if it had not sustained the damage alleged". 20 The reference to Mr Ghirardello in the above passages is a reference to the expert retained by Larry Baker, and his evidence was accepted by the trial judge in finding breach of duty and causation. 21 Contrary to her Honour's finding, however, Mr Ghirardello had given evidence to the effect that if the insect management programme had been properly carried out the crop would have been much more profitable than was actually achieved. Further, he had provided a second report in which he specifically calculated the likely loss that flowed from Elders' negligence. Her Honour failed, however, to make any reference to Mr Ghirardello's second report. I will turn to that report shortly. Before doing so, I should first deal with her Honour's findings that the evidence was not sufficient to satisfy her of the steps that a reasonably competent agronomist would have taken to correctly advise on the types and quantities of chemicals to be applied, and that the failure to carry out those steps caused the cross-claimants to suffer the loss and damage. 22 Mr Ghirardello gave evidence that there were a number of specific and regular tasks that needed to be undertaken in a pest control programme. They are set out at clause 3.5 of Mr Ghirardello's report, and include regular monitoring at least once every 5 days; representative sampling of test infestation on each visit; and appropriate measures being taken depending upon the extent of the infestation. In a careful review of Elders' documents, Mr Ghirardello explained how Elders had failed to comply with reasonable standards in carrying out the pest control programme. Given her Honour's finding of breach of duty, it is not necessary to review Mr Ghirardello's evidence in detail. However, an example of the type of omission and poorly performed inspection that characterised the management programme was the inspection on 5 January 1999. Mr Ghirardello said it was apparent from the concentration and size of larvae found on a later inspection (15 January 1999) that those larvae had been missed on the inspection carried out on 5 January. 23 In making her finding that there was no evidence as to what should have been done in terms of appropriate application of chemicals to control the pest infestation, her Honour appears to have misunderstood what evidence was necessary and sufficient to establish causation. In a case of this nature, the evidence of what should have been done could not be given with any precision. The reason for this is simple. If the pest programme had been carried out efficiently, then such pests as were present on each inspection would have been eradicated, or at least effectively controlled by an appropriate application of chemicals. The type and quantity of chemicals required would depend on the nature and extent of the infestation at the time. It was not possible some years after the event to state what pests would have been present and what should have been treated had inspections been carried out regularly and with reasonable care. 24 Accordingly, her Honour's understanding of the evidence that was necessary was misconceived. Her Honour also overlooked, misunderstood or ignored Mr Ghirardello's evidence in his first report that had a proper pest control programme been carried out effectively the yield would have been greater than was achieved. 25 There is even a more fundamental problem with her Honour's finding in this regard as, in the passage quoted above at [19], her Honour had already made a finding of causation, which was a finding open to her on the evidence. Her Honour also found that she was unable to make any findings on the evidence as to what damage flowed from the appellant's breach. As I have said at [21], however, her Honour failed to deal with Mr Ghirardello's second report. 26 In that report, Mr Ghirardello provided a calculation as to the likely average potential yield for the crop. He approached this task on the assumption that the anticipated yield from the crop, had it been free of excessive insect loss, would have been the average for the lower Namoi. On that basis, he calculated the yield of the five fields that had been sown. He calculated that the difference between the actual yield and the potential yield based on the average for the area was 485.35 bales for which an average price of $526.99 per bale would have been received. After deducting the cost of baling and lifting, he estimated the loss due to Elders' negligence to be $249,174.60. There was no evidence to the contrary. 27 The trial judge did not refer to this evidence at all. 28 Counsel for Elders submitted that Mr Ghirardello's evidence was deficient in that he only engaged in a detailed critical analysis of the actual and potential yield in relation to one field. That submission is factually correct. However, Mr Ghirardello pointed this out in his report and stated that, in his opinion, the analysis he had undertaken in respect of one field would apply in relation to each of the other fields. He said he was happy to provide a critical analysis of each field separately if requested. This was not taken up on behalf of Larry Baker. However, counsel for Elders did not cross-examine Mr Ghirardello upon this, so that his opinion that the detailed analysis of the other fields would have produced the same result remained unchallenged. 29 It follows, therefore, that her Honour erred in the following respects in the passage to which I have set out above. First, there was evidence as to what Elders should have done in respect of the appropriate application of chemicals at appropriate times and what the result of that would have been. There was evidence as to what a reasonably competent agronomist would have done in managing the insect infestation programme. There was evidence that Elders' breach caused the yield of the crop to be less than what was expected and what was the average for the area. And there was evidence as to the damage that flowed from Elders' negligence, which would have enabled her Honour to make a finding on the matter. 30 Both parties have indicated to the Court that if it found that the appeal on this issue should be upheld then this Court should proceed to assess damages. There was both sense and folly in the parties adopting this stance. The "sense" is that if the Court assesses the damages, that would avoid an expensive re-hearing on the question of damages. The folly is that there is no primary factual findings of her Honour on the question of damages, such so that the parties will have the damages determined (for the first time) by this Court. However, in circumstances where both parties have urged the court to make a finding as to damages, and as there was uncontested evidence before the trial judge on the issue, there appears to be no reason why the evidence of Mr Ghirardello as to the quantum of damages ought not to be accepted. It may be that there were deductions that ought to have been taken into account by Mr Ghirardello but again, there was no cross-examination of Mr Ghirardello to that effect. On the other hand, it may be, as Mr Ghirardello himself pointed out, that the value of additional or unnecessary insecticides which were applied to the crop should have been taken into account. However, in the absence of any specific evidence on either of these points, and any challenge to Mr Ghirardello's report in respect of his calculation, it is appropriate in all the circumstances to accept his assessment of damage. Accordingly, on this part of the cross-claim there ought to be a verdict in favour of Mr Baker against Elders in the sum of $249,174.60. Interest on that sum to the date of judgment is also payable.

Third issue: Claim for recovery of Local Court judgment amount 31 In his cross-claim, Larry Baker also claimed an amount of $7,593.08 which had been paid on his behalf in respect of the claim brought by Elders in the Tamworth Local Court civil proceedings no. 825 of 2000. Larry Baker alleged that the moneys had been paid under a mistake and sought a refund. 32 In the Local Court proceedings, the amount claimed by Elders was comprised of an alleged indebtedness of $7,179.07 together with legal and solicitor's costs of $414. In the pleadings in the Local Court proceedings, Elders alleged that the indebtedness had arisen pursuant to an agreement dated 27 November 1998 pursuant to which Elders had agreed to provide Larry Baker with rural finance credit. It was alleged that the agreement contained a term and condition that interest would accrue on all amounts owing and that as at 26 May 2000, Larry Baker's account with Elders was in debit in a total amount of $7,179.09. This sum included interest calculated up to that date. There was no such account. On 27 November 1998, he had applied on behalf of Strathaven Cotton Pty Limited, a company of which he was a principal, for a rural finance credit loan with Elders, but this had been refused. 33 At the time that the Local Court process was served on Larry Baker, he was away from the property and his father, Alan Baker, believing that the moneys were properly owed, paid the amount. 34 In his cross-claim, Larry Baker pleaded his entitlement to a refund of the moneys so paid upon the following basis: "12. [Elders in the Local Court proceedings] claimed that the amount of $7,179.09 was interest owed [to Elders by Larry Baker] pursuant to an agreement in which [Elders] had the right to charge interest on overdue accounts. 13. [Larry Baker] paid the full amount claimed. 14. There was no agreement to pay interest and therefore [Larry Baker] paid the amount claimed by mistake and claimed a refund of the full amount together with interest on the sum of $7,593.09 paid at the court rate from date of payment by [Larry Baker] until date of refund from [Elders]. 35 The pleading in paragraph 12 does not appear to be correct. In argument before this Court, counsel for Larry Baker said that the amount claimed only included interest in the sum of approximately $700. 36 The trial judge rejected this aspect of the cross-claim on the basis that Larry Baker had a 30-day cash account with Elders, and as at 11 February 1999 that had a debit balance of nearly $50,000. Her Honour found that there was no evidence to refute Elders' claim that it was entitled to charge interest. Her Honour further found that she was not satisfied that the moneys had been paid under a mistake of fact. 37 In his Notice of Appeal, Larry Baker challenged her Honour's finding in respect of this aspect of the claim in the following terms: "11. Her Honour erred in finding that the basis of [Elders] claim against [Larry Baker] in Local Court proceedings was that [Elders] had no contractual right to charge interest." 38 In the way this ground of appeal was framed, it appeared that the entire sum of $7,593.08 claimed as being paid under a mistake related to interest. However, in this Court, Larry Baker's counsel said that a small portion only of the amount claimed was interest. If this is correct, this ground of appeal is wrongly expressed. It appears, when regard is had to the written submissions advanced in support of this ground, the true basis of the challenge was that as there was no agreement dated 27 November 1998 between Elders and Larry Baker, the claim in the Local Court was not properly maintainable. 39 Counsel for Elders, in his written submissions to the Court, contended that in order to establish any entitlement to a refund, Larry Baker needed to persuade the Court that there was no agreement to pay interest entered into on 27 November 1998. Elders contended that Larry Baker did not give any such evidence. Rather, the only evidence was that on 27 November 1998 an application was made for a rural loan credit facility, and that was refused. It was submitted that that was not evidence, that there was no agreement between Larry Baker and Elders of that date. But in any event, there was another facility, the 30-day cash account, which was clearly on foot. In that regard, it is known that at the time the application was made for the rural loan credit facility, the debit balance in the 30-day cash account was at least $6,000. Her Honour, for her part, found that Larry Baker owed at least $50,000. In my opinion, the Court should not countenance this ground. The evidence before the Court was sufficient to establish that Larry Baker owed moneys to Elders. Had Larry Baker defended the claim in the Local Court, the most likely scenario was that a defence which encompassed the contention raised in the cross-claim would have led to an amendment of the pleadings so as to correctly specify the contract under which the moneys were owed. 40 Furthermore, there is a doubt as to whether the moneys were paid under an operative mistake of fact. There was no evidence that Larry Baker paid the moneys believing they were owing when in fact he did not owe any. Rather, the evidence goes no higher than establishing that sometime after the event Larry Baker realised that a wrong contract had been pleaded. The underlying basis for an entitlement to a refund of moneys paid under a mistake of fact is that the other party has been unjustly enriched. That has not been established in this case. No basis was made out, therefore, for a claim in restitution. See generally: Mason and Carter: Restitution Law in Australia (1995) Chapter 4: especially at [438]; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376,392. 41 Finally, I should deal with the question of costs. At the end of the hearing on the appeal, counsel for the appellants and respondent, respectively, acknowledged that the cross-claim had occupied as much time as the hearing of the contract claim, both in this Court and in the court below. Accordingly, it was submitted by both counsel that the appropriate order as to costs should be that each party pay his or its own costs of the appeal and the trial at first instance. I agree that that is an appropriate resolution of the issue as to costs.

Conclusion 42 Elders have been successful on the contract claim and is entitled to a judgment in the sum of $135,769. However, as Alan Baker has admitted that he is responsible for the incurrence of part of this debt, namely $945.40, this should be deducted from the amount owed by Larry Baker to Elders. Accordingly, Elders are entitled to a judgment against Larry Baker in the sum of $134,823.60. Larry Baker has been successful on the cross-claim and is entitled to an award of $249,174.60. These amounts should be set off with the result that Larry Baker is entitled to a judgment in the sum of $114,351.00. He is also entitled to interest on that sum. Subject to the parties bringing in Short Minutes of Order as to the precise amount of the final judgment sum, the orders I propose are:

1. Appeal allowed in part;

2. Set aside Order 5 made by English DCJ on 25 June 2004 and in lieu thereof enter verdict and judgment in favour of the first and second appellants against the respondent in the amount of $249,174.60 in respect of Grounds 3-10 as set out in the first and second appellant's cross-claim;

3. Order that the amount awarded to the first and second appellants in respect of the cross-claim be set off as against the amount awarded to the respondent in respect of its contract claim against the first appellant, namely, $134,823.60.

4. Order that each party pay his and its own costs of the trial at first instance and of the appeal. 43 IPP JA: I agree with Beazley JA. 44 HUNT AJA: I agree with Beazley JA. *********

06/09/2005 - Incorrect name in Headnote - Paragraph(s) -

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