KCPC Pty Ltd v Ivamar Pty Ltd

These proceedings broadly concern two families: the Wallaces and the Burkes. The Wallace family acquired three properties (“the properties”) near the Manning River and Khatambuhl creek in Northern New South Wales, two in Cundle Flat and one in Mount George, in their own right or through companies established by the Wallace family for the purposes of developing an agricultural business. In the course of developing that business, Harry Wallace employed Ivan Burke as a station hand at one of those properties. Ivan Burke and the Burke family had historically resided in Cundle Flat and undertook farming work in the surrounding Mount George (Manning River) region (“the region”) [1] . Over time, a close professional and personal relationship developed between Harry and Patricia Wallace and Ivan and Colleen Burke. This culminated in shared overseas trips and the attendance of special familiar events such as weddings and funerals.

The employment relationship between the Wallaces [2] and Ivan Burke commenced with Ivan performing work as a station hand. However, in 2010 the professional relationship between the families transformed into yearly lease arrangements that delegated complete management of the properties to the Burkes [3] including Ivan’s son, Mark, with the central activity being the rearing, maintenance and sale of cattle. Those yearly arrangements continued until 2014 when a four-year lease agreement (“2014 Lease Agreement”) was established. In 2017, another four-year lease agreement (the “2017 Lease Agreement”) was entered into.

At least from the beginning of 2019, the region experienced drought which reached its peak at the end of November 2019. In November and December of 2019 bushfires broke out which burnt boundary fences on one of the properties (the Burkes were involved in fighting the fires).

After a meeting between representatives of the Wallaces and the Burkes on 28 November 2019 (“the November 2019 meeting”), the 2017 Lease Agreement was terminated on and from 1 December 2019. [4] By the time of the termination of the 2017 Lease Agreement, the Burkes were 10 months in rent arrears.

Thereafter, the Burke family supplied feed for a short period until the Wallace’s took over the purchasing of feed to maintain the cattle on the properties. [5]

The Burke family continued to work on the properties. The nature and terms of those arrangements for work were controversial.

In December 2019, 309 cattle from the properties were sold by the Burkes. [6]

A meeting between the Wallaces’ and the Burkes’ interests occurred on 20 January 2020 (“the January meeting”). A further agreement emerged from that meeting.

Mr John Hannaford (“Mr Hannaford”), a stock and station agent, begun working on the properties in February 2020 and conducted a cattle count on the properties between 26 February and 27 March 2020. The count was initially scheduled to begin on 10 February 2020, but heavy rains caused flooding in Khatambuhl Creek and delayed the commencement of the count until 26 February 2020. [7]

At the conclusion of the count, Mr Hannaford found a significant deficiency in cattle numbers compared to the cattle herd profile stated in the 2017 Lease Agreement.

By a Statement of Claim, filed on 14 July 2020 (“SOC”), KCPC Pty Ltd (“KCPC”), Khatambuhl Somerset Pty Limited (“KS”), Silknote Pty Limited (“SN”), and Patricia Anne Wallace (“Patricia”), herein after referred to collectively as “the plaintiffs” or “the Wallaces” (or “the Wallace family”), brought proceedings against Ivamar Pty Ltd (“Ivamar”), Mark Ivan Burke (“Mark”) and Ivan Charles Burke (“Ivan”), herein after referred to collectively as the “the defendants” or “the Burkes” (or “the Burke family”).

The defendants filed a Defence on 24 August 2020, which was thrice amended. The final amended Defence (“FAD”) was filed on 18 October 2020. The defendants also filed a cross-claim on 24 August 2020, which was thrice amended. The final amended cross-claim (“CC1”) was filed on 18 October 2022.

The plaintiffs filed a Defence to the cross-claim (“DCC”) on 17 November 2020. The plaintiffs additionally filed a cross-claim (“CC2”) on 5 December 2022. There has been no Defence to the second cross-cla Annexures (1509009, docx) im filed by the defendants.

These proceedings took place over a five-day hearing on 5, 6, 7, 8 December 2022 and 31 March 2023. In between 8 December 2022 and the resumption of the matter in 2023, a mediation between the parties took place under Court order which was ultimately unsuccessful.

At the outset of this factual background, it is useful to identify key persons (natural or legal) and properties central to this dispute.

Patricia, the fourth plaintiff, was married to Mr Harry Lachlan Wallace (“Harry”) who died in January 2018. Patricia and Harry, as well as the Khatambuhl Creek Trust and its trustee, KS and KCPC were parties to the 2017 Lease Agreement, as were Ivan, Mark and Ivamar.

Mr John Wallace (“John”) and Ms Kirstie Anne Wallace (“Kirstie”) were the children of Patricia and Harry and took over management of some Wallace family companies, in the capacity of directors, as Harry and Patricia aged. [8]

The properties, that the Wallace family either owned or controlled through companies, can be described as follows: [9]

Most of the Wallaces’ cattle were on Somerset. [10] There was a much smaller number of cattle on Westwood. Combined, those two properties were nearly double the size of the cattle on Khatambuhl. [11]

Khatambuhl is one of the largest stations in the region. There are two valleys in Khatambuhl that are divided by a range which comes from the south end. There are escarpments of each side of the range. There is a creek which runs through the centre of the property.

Mark, the second defendant, is the son of the third defendant, Ivan. Mark and Ivan are the sole directors of the first defendant, Ivamar.

A description of the additional parties who provided evidence in this hearing are as follows:

The parties prepared a joint memorandum of issues (“JMOI”). Whilst the parties did not delineate the issues by reference to causes of action, it is appropriate that issues be corralled in this way. The three broad causes of action were as follows:

Under the first of those causes of action, the plaintiffs prosecuted a claim on these alternative bases:

The particularisation of those claims only fully materialised during the course of the plaintiffs’ submissions. The claims for damages in these respects were as follows:

The claims in 1 and 2 of the proceeding paragraph were admitted by the defendants (collectively “the admitted matters”).

I also note at this juncture that the plaintiffs confirmed (in their written submissions) that they abandoned their pleaded claims for damages in four respects: for the return of missing property of the first plaintiffs; arising from a breach of the defendants’ obligations under the 2017 Lease Agreement to manage the herd profile via ensuring each animal received a NLIS tag arising from diverted feed from the first plaintiffs’ cattle to cattle not owed by the plaintiffs; arising from the agistment of cattle not owed by the plaintiffs on the plaintiffs property.

The issues from the JMOI that correspond to those causes of action were stated as follows:

The issues associated with the defendants CC1 was as follows:

The claims advanced by the defendants in this respect were not clearly articulated in the CC1. I will take a moment at this juncture to discuss them.

By the time of the final submissions, the claims made by the defendants, in this respect appear to be as follows:

I will now break down, one by one, each claim. Prayer 1 is extracted from CC1 and affirmed in the closing written submissions. Prayer 1 comes from both the CC1 and closing written submissions.

Prayer 3 appears in the closing written submissions as “[t]he agreement [sic] regarding the $20,000 should be enforced”. I have made the assumption that the “agreement” being referred to appears in the January 2020 email that alleges to sum up the January meeting between the Wallace’s and the Burke’s where it was allegedly agreed there will be a one-off payment by the Wallace family to the Burke family of “$20,000 to cover all old issues i.e./equipment, hay sheds etc this will be paid prior to 30th June”.

Prayer 4 appears in the CC1 as “[a]n order permitting the Cross-Claimants to access the Cross-Defendants’ properties for the purpose of retrieving the Cross-Claimants ‘plant & Equipment located on the properties”. The same claim appears in the defendant’s closing written submissions as “[t]he plaintiffs should also be required to deliver up the Burkes personal property”. The personal property being referred to appears in the table in CC1 at [41].

There were some claims pursued in CC1 which remained at the end of the proceedings unsupported by evidence and/or were not referenced in the defendants’ closing written or oral submissions. I will refer briefly to those particular matters at the close of this judgment.

The plaintiffs claimed damages under ss 236 and 237 of the ACL (which appear in Schedule 2 of the Competition and Consumer Act 2010 (Cth)), for misleading and deceptive conduct pursuant to s 18 of the ACL, in relation to the representation that there were enough cattle for the defendants to sell 400 animals in December 2019 and the ‘herd profile’ would still remain intact. The issues identified in that respect of the JMOI were as follows:

The JMOI identified three miscellaneous claims brought by the defendants as follows:

The relationship between the Wallace and Burke families, as briefly outlined in the introduction, begun in the 1970’s between Harry and Patricia Wallace and Ivan and Colleen Burke and over the decades developed into a significant professional and personal relationship.

In 1974, Ivan was appointed as a station hand at the Khatambuhl property which was purchased by Harry some years prior to that date. During Ivan’s employment at the property, he undertook work to renew and upgrade fences, construct new steel cattle yards, clear areas of regrowth and slash and fertilize open areas of the property to assist in the development of the agricultural business of the Wallace family overall.

The close relationship between the Burke and Wallace families was demonstrated by occasions attended by both families outlined in Ivan’s affidavit sworn on 9 June 2021:

Ivan described the relationship as familial, stating the following in his affidavit of 9 June 2021:

On 20 June 1990, SN was registered. Patricia was appointed as a director to SN in December 1990 and Kirstie was appointed as a director in August 2001. Harry Wallace was the registered proprietor of Khatambuhl until 24 June 2019. At some point thereafter, SN became the registered proprietor. SN was also the trustee for the Khatambuhl Creek Trust.

On 12 May 2004, KS was registered. Patricia was appointed as a director on 12 May 2005 and Kirstie was appointed as a director on 1 September 2008. KS was the registered proprietor of Somerset at the time of the proceedings. The evidence does not reveal when the Somerset property was purchased and who was the original registered proprietor.

On 25 January 2005, KCPC was registered. Kirstie was appointed as a director on 15 May 2007, Patricia was appointed as a director on 28 February 2018 and John was appointed as a director on 12 September 2018. KCPC was the owner of the cattle on the properties.

It is unclear when Westwood Park was purchased and by whom. Patricia Wallace was the registered proprietor of the land at the time of the proceedings.

The Wallace and Burke Families entered into a yearly lease agreement for the financial year of 2010 to 2011. The lease does not appear in evidence. That lease agreement was followed by a number of other yearly lease agreements between the families between 2011-2012, 2012-2013 and 2013-2014.Those leases also do not appear in evidence.

The next lease in sequence was titled “LEASE AGREEMENT v5” but for the purposes of this judgment will be referred to as the “2014 Lease Agreement”.

The 2014 Lease Agreement was entered into between Harry, Patricia, SN as the trustee of Khatambuhl Creek Trust, KS, KCPC and Ivan, Mark and Ivamar. [12] The 2014 Lease Agreement was signed on 5 May 2014 and the term of the agreement was from 1 April 2014 to 30 June 2017. [13] Each page of the agreement is initialled by five signatories to the 2014 Lease Agreement: Harry and Patricia, Mark and Ivan, and Kirstie on behalf of the SN as trustee of the Khatambuhl Creek Trust and KCPC.

The assets stated under cl 1 of the lease were: [14]

Clause 1(a) to (c) concerns property, cl 1(e) concerns motor vehicles but of most significance is cl 1(d), which deals with the number of cattle.

The 2014 Lease Agreement spans five pages with the first three pages making up the primary agreement. An appendix begins halfway down page three that lists the “main plant & equipment items” at the Khatambuhl and Somerset properties. Page five contains a handwritten tally (“the tally”) which deals with the total cattle asset under the lease with a delineation of the cattle on each property as of 1 July 2010. The tally records 1065 cows counted at the Khatambuhl property, 70 cows counted at the Westwood Park property and 87 cows counted at the Somerset property. The sum of those numbers is 1222 cows, which is recorded correctly as the total number of cows in the tally and in cl 1(d) of the 2014 Lease Agreement. The tally further showed a total of 556 calves, 29 bulls and 620 weaners being the total cattle counted across the three properties.

Clause 1(d) refers to the cattle asset as the “cattle herd profile”, however, the parties generally used the expression “herd profile”. The common meaning of herd profile, conveyed throughout both parties’ submissions, was that it meant the total number of cows, calves, weaners, and bulls, and I will use that term consistently in this judgment. The term “cattle” will also be used to refer to a group of animals regardless of whether they are cows, calves, weaners, or bulls.

The tally in the appendix to the 2014 Lease Agreement also provides the herd profile (across the properties). However, the Appendix incorrectly records the herd profile as 2377 (a fact accepted by all the parties). The correct sum is 2,427 cattle.

Various forms of ‘maintenance’ were required under the 2014 Lease Agreement. Clause 2 read:

There were additional clauses in the agreement that required the Burke family to report on the status of the herd. Clause 3 was titled ‘Heard Count’ and read:

Clause 4 was titled ‘Reporting’ and read:

Reporting of cattle numbers and maintenance, as I understand, occurred during meetings every few months between KCPC and Burke Cattle Co Pty Ltd. Figures were sometimes reported in a word document form or communicated verbally. Attendees of these meetings were usually John, Kirstie, Mark and Ivan.

Clause 9 specified that a lease payment of $13,000 was payable every calendar month (plus GST), paid in advance on the 28th day of each proceeding month, until 30 June 2015. After 30 June 2015, for each subsequent year, the lease payments would increase by the greater amount of either (1) a 3% per annum increase or (2) the NSW CPI increase for the previous 12 months until 31 March.

Clause 10 in the agreement dealt with profit share from cattle sales between the Wallace and Burke families and reads as follows:

The termination clause of the agreement read as follows:

The 2014 Lease agreement ran its term.

The 2017 Lease Agreement substantially replicated the 2014 Lease Agreement. It was entered into between the same parties. These parties are specified in the preamble to the 2017 Lease Agreement, the signature provision of the 2017 Lease Agreement and John’s affidavit of 22 February 2021 at [12]. [15] It was signed by the Burke parties on 3 April 2017 and the Wallace parties on 24 April 2017. The anticipated term [16] of the agreement was from 1 July 2017 to 30 June 2021. [17]

The assets stated under the 2017 Lease Agreement in cl 1 were very similar to those under the 2014 Lease Agreement. In relation to the real property and motor vehicle assets, cll 1(a)-(c) were the same except the “Jane Russell blocks” were included in cl 1(a) rather than “Tommy’s Hut”, and cl 1(e) does not appear. Most significantly, cl 1(d) in the 2017 Lease Agreement is identical to cl 1(d) in the 2014 Lease Agreement but does not contain the parenthetical words “(being 941 cows, 194 replacement heifers and 87 culls)” to describe the make-up of the herd of cows­. Clause 1 is extracted below:

The 2017 Lease Agreement spans five pages with the first four pages making up the primary agreement. Appendixes I and II appear on page five and are both typed. Appendix I of the 2017 Lease Agreement provides a “Valuation of equipment for Mark Burke”. Appendix II is titled “Cattle numbers” for 30 June 2010 and consists of a table with columns bearing the titles, “year”, “cows”, “calves”, “weaners”, “bulls” and “total”. The entries for each column are as follows: the cows are recorded as “1122”, the calves are recorded as “556”, the weaners are recorded as “620”, the bulls are recorded as “29” and the total is recorded as “2377”. I note that Appendix II provides less details of the breakdown of the herd profile compared with the tally that appears in the 2014 Lease Agreement. As earlier mentioned, both parties accept that 2377 is an incorrect sum of the total cattle.

The number of cows mentioned in Appendix II of the 2017 Lease Agreement, being “1122”, stands in contrast to the number of cows specified in cl 1(d) of the 2017 Lease Agreement, being “1222”. As such, there is an inconsistency between the terms of the agreement, as specified in cl 1(d) and Appendix II as to the number of cows (as mentioned, the 2014 Lease Agreement refers to the number of cows as 1222 in both cl 1(d) and in the Appendix to that agreement). The defendants maintained that the parties agreed that the 2017 Lease Agreement provided for the number of cows being “1122”. That is disputed by the plaintiff.

This issue will be addressed shortly, under the heading ‘Issue of Number of cows specified in the 2017 Lease Agreement,’ which appears immediately after the remaining outline of the terms and form of the 2017 Lease Agreement.

The maintenance clause of the 2017 Lease Agreement (cl 2), is different to the 2014 Agreement and reads as follows:

Similar to the 2014 Agreement, cl 4 and 6 of the 2017 Lease Agreement provide reporting responsibilities of the Burkes. Clause 4 was titled “Herd Count” and read as follows:

Clause 6 was titled “Reporting” and read as follows:

Clause 11 specified the lease payment of the agreement would be $17,000 per calendar month (plus GST) paid in advance on the 28th day of the preceding month. Clause 11 also had an additional section, titled “PLUS” that dealt with profit shared under the agreement. This read as follows:

Lastly, the termination clause of the 2017 Lease Agreement, cl 10, read as follows:

The terms of the 2017 Lease Agreement are not in issue except the inconsistent figure of cows stated in cl 1(d) of the primary agreement and in the table of appendix II. This issue is addressed below.

Counsel for the plaintiffs submitted that ascertaining the correct “definition of the herd profile” in the 2017 Lease Agreement is to be resolved as a matter of construction. Counsel for the defendants did not identify the means of resolving the issue or, in substance, address this issue other than making reference to 1122 cows in his closing written submissions. In my view, the plaintiffs are correct.

As mentioned, there is an inconsistency between the figure of cows stated in cl 1(d) of the 2017 Lease Agreement, being “1222”, and the figure of cows stated in Appendix II of the 2017 Lease Agreement, being “1122”. The resolution of this discrepancy is a matter of construction as it requires the Court to construe the 2017 Lease Agreement.

A related issue, is what is the correct total number of cattle under the herd profile having regard to the 2017 Lease Agreement. It was common ground that the number of cattle was incorrectly recorded in both the 2014 and 2017 Lease Agreements as 2377. The plaintiffs submitted a finding of cow numbers at 1222 would yield a total of 2427 cattle, whereas the defendants contended the herd profile was a total of 2327 cattle corresponding to its contention as to the proper construction of the 2017 Lease Agreement as to the number of cows.

As to the first proposition, counsel for the plaintiffs submitted that the figure for cow numbers under the 2017 Lease Agreement and corresponding sum of cattle under the herd profile “can be corrected as a matter of construction of the 2017 Agreement either by applying the principle of falsa demonstratio non nocet or by recourse to the surrounding circumstances in which the 2017 Agreement was made”.

Counsel sought to rely on the authority of Ryan v Wright [2004] NSWSC 749 (“Ryan v Wright”) stating that “Gzell J found that a restraint provision in a contract was not unenforceable due to inaccuracy in the contract’s definition of “business” and that the inaccurate description should be struck out as a falsa demonstratio”.

Ryan v Wright was a case where Mr Ryan and DeMorgan Pty Ltd (“DeMorgan”) brought proceedings against Mr and Mrs Wright for contempt of Court for breaching an undertaking given to the Court to refrain from, in broad terms, directly or indirectly carrying on a business in competition with DeMorgan and directly or indirectly approaching a customer of DeMorgan (at [3]). Mr Ryan was a shareholder of DeMorgan and Mr and Mrs Wright were former shareholders of DeMorgan. Mr and Mrs Wright were sole shareholders of Ridges Estate Pty Ltd (“Ridge”). The undertakings given to the Court resembled cl 13.1(a) in the shareholder agreement of DeMorgan, which counsel for the plaintiffs referred to as the ‘restraint clause’, which read as follows:

Additionally, cl 1.1 defined the term ‘business’ to mean the development and sale of the “product” in Australia and overseas. There was no definition of “product”. Counsel for Mr and Ms Wright submitted that the defendants were only restrained from carrying on a business of development and sale of a “product” in competition with DeMorgan and since neither DeMorgan nor Ridge carried on such a business, the provision was meaningless. Counsel submitted DeMorgan and Ridge provided security services to users of computer systems not sale of a “product”.

In that respect, Gzell J held as follows: :

Gzell J held consideration of cl 13.1(a) was not strictly relevant to whether Mr and Mrs Wright were guilty of contempt of court for breaching an undertaking. However, his Honour determined that the undertakings might be construed in light of cl 13.1(a) (at [15]) but that the final determination must be made upon the terms of the undertaking per say. In that respect, Mr Wright was found to have breached the undertaking. The Court found a contempt of Court with respect of that breach (at [62]), but not by dint of cl 13.1 as such.

This case offers some support for the plaintiff’s contention, in that Gzell J stated in obiter that ­cl 1.1 of the shareholders agreement could be “stuck out” under the falsa demonstratio non nocet (a false description does not injure) maxim (at [9]) on account of the consideration that “in this commercial document the parties intended that there should be a constraint upon the carrying on of business in competition with DeMorgan” (at [9]). However, that is a case far removed from the present circumstances and, in any event, there must be at least some doubt that the principle extends as far as was contemplated by his Honour in obiter dicta.

The counsel for the plaintiffs also sought to rely on the case of Egan v Egan [2018] NSWSC 202 (“Egan v Egan”). In Egan v Egan the defendant “executed a mortgage to secure a loan from the plaintiff” (at [1]) but failed to make any repayments. The plaintiffs sought possession of the property.

An issue arose as to whether the “Deed of Loan” was effectively incorporated into the mortgage as neither the mortgage or Annexure A of the mortgage referred to a “Deed of Loan”. Instead, Annexure A of the mortgage referred to “the Deed of acknowledgment of loan” rather than “the Deed of loan”.

At [83], Davies J followed what had been said by Kunc J in New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Limited [2015] NSWSC 176 at [46] that “A ‘misnomer’ is an error in naming something or someone” and that the test for a misnomer was “whether the misnomer was the product of a mistake made in circumstances in which it would have been plain to all who are concerned with the relevant document as to who the party was that was referred to in the document” (at [49]). Following that principle, Davies J held (at [84]) that it would have been plain to the parties to the present arrangement that what was meant by the words “Deed of acknowledgement of loan” was the “Deed of loan” because the only documents executed on the date of the mortgage was the mortgage and the “Deed of Loan” and there was no such document as a “Deed of acknowledgement of Loan”. The words “Deed of acknowledgment of loan” were found to be falsa demonstratio and Annexure A did incorporate the “Deed of loan” into the mortgage.

In reliance upon that authority and the principle of falsa demonstratio, counsel for the plaintiffs submitted that “the figures of 1,122 and 2,377 are the products of mistakes made in circumstances in which it would have been plain to the parties that 1,122 is a typographical error for 1,222 and that 2,377 is a restatement of the error found in the second appendix to the 2014 agreement”.

That submission may be accepted for two reasons. Firstly, cl 1(d) of the 2017 Lease Agreement not only refers to 1222 cows but references Appendix II in such a way as would indicate that figure was intended to be reflected in the Appendix. The words in brackets “(See Appendix II)” gives that impression. It may also be noted that the number for calves, weaners and bulls in cl 1(d) were accurately translated into Appendix II.

I also accept the submission of the plaintiffs that the same conclusion may be reached by reference to the relevant surrounding circumstances known to both the plaintiffs and the defendants at the time of the formation of the 2017 Lease Agreement. These were as follows:

Of particular note, in cross-examination, Ivan acknowledged that at various places in his affidavit evidence when he referred to a “cattle quota” he understood that to be made up of 1,222 cows. The questions immediately prior to the reference to cattle quota concerned the 2017 Lease Agreement which indicates that Ivan’s answers concerned the 2017 Lease Agreement, rather than the 2014 Agreement. The relevant part of the transcript from 7 December 2022 is extracted below:

The same conclusion may be reached by application of principles that a contract may be reconciled by construction. Leeming JJA in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11 provides a useful summary of principle where a contract can be rectified by construction (at [6] – [8]):

The sole place the cow numbers are recorded as 1122 in the 2017 Lease Agreement is in Appendix II. The terms of the 2017 Lease agreement appear before the Appendix. Clause 1(d) specifies 1222 cows in the herd profile (which incidentally accords with cl 1(d) in the 2014 Lease Agreement). The erroneous sum figure of 2377 cattle, that is mistakenly carried across from the 2014 to the 2017 Lease Agreement, additionally demonstrates a pattern of mistaken figures in the Appendix and is supportive of the conclusion that the figure of 1122 cows in Appendix II of the 2017 Lease Agreement was a plain mistake.

Notwithstanding the error in Appendix II to the 2017 Lease Agreement being numerical, in my view, the principles of rectification by construction apply. The figure for cows in Appendix II of the 2017 Lease Agreement as “1122” is an absurdity. as it is plainly inconsistent with the terms of the agreement. It is self-evident that the objective intention of the parties is that the figure was intended to read as “1222”.

It follows that the figure for cows, being “1122”, in Appendix II of the 2017 Lease agreement is an error and should be read “1222.

Taking into account all the above factors, the correct construction of Appendix II of the 2017 Lease Agreement, in my view, is that the figure for cows in Appendix II of the 2017 Lease Agreement should be read as “1222” not “1122” so as to rectify a mistake or error. It follows that the 2017 Lease Agreement specifies the number of cows in the herd profile as 1222.

It is unnecessary to make reference to subsequent events to reach that conclusion. However, I record the plaintiff’s contention in that respect as an introduction to other aspects of the factual background and because they are, in their terms accurate. They are as follows:

At the meeting between the Wallace and the Burke families on 20 March 2019, Mark reported that 150 old cows had been culled and that, when 62 heifers that had been put with bulls were included, the cows then numbered 1,250. [18]

In the light of this analysis and the FAD, the following pleadings in the SOC with respect to the terms of the 2017 Lease Agreement may be accepted. These are extracted below (adjusted to the style of this judgment):

I note that pars [15](a), (b), (f) and [16] were admitted in full per the FAD.

The defendants admitted [15](c) but stated that the herd profile was overstated by 100 cows (in that the true number was 1122 cows, rather than 1222 as alleged by the plaintiffs). That issue has been resolved above in favour of the plaintiffs.

The defendants also admitted [15](d) but repeated the response “pleaded at [15](g) of the defence as above”.

Similarly, the defendants admitted [15](e) but repeated “the grounds pleaded at 15(f) of the defence as above”.

While the caveats in the FAD in [15](d) and [15](e) are not entirely clear, they appear to be a reference to the defence of [15](g) of the FAD.

In that respect, the defendants admitted [15](g) but stated that “agency was implied and not specified, in the written agreement.”

Specifically, the 2017 Lease Agreement provided, inter alia, that the defendants had an obligation to maintain the herd profile as specified in that Agreement. The sole disputed issue raised by the defendants, in that respect, was the correct number of cows under the agreement. I have found, as a matter of construction, that number was 1222. The herd profile was, therefore, a total of 2427 cattle consisting of 1222 cows, 556 calves, 620 weaners and 29 bulls.

It appears likely the defendants moved cattle around nine different properties available to them to assist in raising the cattle: six properties controlled by the Burkes and three properties owned by the Wallace family.

Counsel for the plaintiffs submitted that the Burkes moved cattle around eight different properties on account of the oral evidence from Mark where he stated that the Burkes only weighed cattle at one of the eight properties available to them.. Ivan outlined nine properties (6 Burke properties and 3 Wallace properties) available to the Burke family more precisely in cross-examination and, therefore, his evidence in this regard will be preferred.

Ivan referred to six properties that the defendants and his other son, Craig Burke, raised cattle on. [19] These included one property owned by Ivan that adjoined the Khatambuhl and Westwood property (“Burke Khatambuhl”), a second property owned by the Burke family located 45 minutes from Somerset (“Rushfield”), a third property owned by the Burke family located 20 minutes from Somerset (“Burrell Creek”) [20] , a fourth property leased by the Burke family located 45 minutes from Somerset (“Gloucester”) [21] , a fifth property owned by Craig Burke located nearby at Mount George (“Mount George”) and a sixth property leased to Ivan near Nowendoc River (“Nowendoc River”). [22] When combined with the properties, there are nine separate properties.

There were separate Property Identification Codes (“PICs”) in the NLIS for each of the Burke properties. It emerged in the cross-examination of Mark that the Burke family did not record the movement of cattle from Wallace properties to Burke properties in the NLIS. It was also noted by Ivan in cross-examination that the Burke family bought or leased other properties to provide additional space for cattle to graze in order to relieve the pressure on the Somerset property in the drought conditions when there is less grass for grazing.

The undertaking of the 2017 Lease Agreement was carried out in line with the terms of the agreement until September 2018, where the Burke family were beginning to have difficulty in making the monthly lease payments. An ongoing drought in the Manning River region had an impact on the grass grown on the properties and consequently on the amount of feed the defendants had to purchase to ensure the cattle were maintained. The extent of the drought is an issue in dispute between the parties in these proceedings. I will return to this issue later in this decision.

As previously mentioned, meetings between KCPC and Burke Cattle Co Pty Ltd [23] occurred every few months where reports were received and discussions were had on matters concerning the lease. At a meeting on 21 January 2019, the Burkes were four months in rent arrears and reported they had to spend “$180,000 on grain this past season” [24] . Mark advised “cattle numbers were up and they have a buffer of 100-150 to sell if worse comes to worse”. The Burkes estimated that there were approximately 1400 cows. [25] In item 3 of the meeting, it was indicated, as an “action”, Mark would provide overall cattle numbers to KCPC within the coming week. That did not occur. Mark also discussed fencing issues with power outages and electric fences losing electricity, resulting in cows getting out.

At a meeting on 20 March 2019, the Burkes were five months in rent arrears. Meeting minutes recorded that cattle numbers were discussed during that meeting. It was agreed by Ivan that the Burkes wanted to demonstrate in that meeting they had adequate assets given the rental arears and the outstanding equipment payments and that those assets included cattle numbers. The minutes recorded that year-to-date cattle numbers were “sitting at 2617 head + 55 steers + 85 wagyu = 2755.” It was further recorded that “the lease states a total of 2377 head so the extra cattle as Burke equity = 378. Calving rates estimated to be around 80%.”

A document was provided by Mark to John at the meeting outlining in greater detail the cattle numbers as of March 2019 (extracted in Annexure A). The typed entries on the document were made by Mark. The handwritten entries at the bottom of the document were made by John. A further handwritten entry in the box, indicating sales forecast, was also made by John. Mark accepted in cross-examination that the estimates of cow numbers were speculative. Nonetheless, Mark reported that 150 old cows had been culled and that, when 62 heifers that were put with bulls were included, the cows were numbered at 1250. Those numbers were consistent with what Mark said in January 2019 about 1400 cows and a buffer of 100-150 but, as I shall find, this did not mean the estimates were reliable. This reflected his estimate of how many cows formed part of the Wallace herd at that time.

There was an objection taken in the cross-examination of Ivan by counsel for the defendants that was not raised in submissions as to whether the document was “minutes” of the meeting or just a “note”. [26]

Whilst the record of the meeting of 20 March 2019 was not titled meeting ”minutes”, I have treated the record as minutes because that is the way John, in his affidavit of 22 February 2021, and Kirstie, in her affidavit of 22 February 2021, refer to them. This appears to be the regular form which is used to record the meetings held between the Wallaces and the Burkes. There was no cross-examination of John or Kirstie on this issue.

Furthermore, there was no rejection of that characterisation of the document by Ivan or Mark and, in cross-examination, Mark referred to a document (recording the contents of the meeting of 21 January 2019) in essentially the same way, as “minutes”.

Whilst Mark raised some difficulties with making corrections to minutes, and that the minutes principally focused on information concerning the Burkes, the evidence does not suggest inaccuracy as such in the text of the minutes. On the balance of probabilities, the meeting “minutes” are accurate.

Item 5 of the minutes dealt with Fencing and Yards and stated the following:

On 4 June 2019, KCPC sent Mark and Ivan a formal letter to notify them that they were 6 months in rent arrears and as such in breach of the 2017 Lease Agreement. On 30 October 2019, Kirstie sent an email to Mark asking how they were doing financially with the cattle and feed. Mark replied on 4 November 2019 stating they were “doing it tough” and spending about $10,000 a week “trying to keep the cattle going”. Mark said that irrigation was restricted to nights only, they were out of irrigated feed, “effectively every animal [was] being fed” and asked for help to continue feeding the cattle.

Additional to the drought, in November and December of 2019 bushfires broke out in the region and burnt hills on the properties and surrounding hills. This prompted a visit by John and Kirstie on 10 November 2019 to the properties to “see what damage fires had done”. On 23 November 2019, Kirstie spoke with Mark to discuss the farm conditions and the possibility of a “mutually beneficial exit plan”. Kirstie sent an email to John and Mark summarising that discussion, which included the following: [27]

On 26 November 2019, Kirstie sent an email to Mark and John which outlined a proposed agenda for a meeting to be held on 28 November 2019. The proposed agenda read as follows:

The meeting proceeded between John, Kirstie, Mark and Ivan on 28 November 2019. The meeting was also attended by Mr Willock who, as outlined by the dramatis personae, was the accountant of the plaintiffs. By this stage, the Burke family were 10 months in rent arrears. Kirstie gave evidence that she took notes during the meeting. These are extracted below:

Following this meeting, an email was sent from Kirstie to John, Mark and Mr Willock on 29 November 2019 with the subject line “Memorandum of Understanding – Burke Family and Wallace Family”. The email of 29 November 2019 (“MOU”) [28] read as follows:

No immediate response was received from the Burke family.

There is no dispute that, in the aftermath of the November 2019 meeting, that the parties treated the 2017 Lease Agreement as terminated on and from 1 December 2019. In the defendants’ final written submissions, counsel made reference to the plaintiffs “having elected to terminate”. In my view, , despite propositions put in cross-examination to John and Kirstie that the termination was not made by consent, it was a mutual termination. I will return to this consideration below.

However, there is a residue of controversy about whether an agreement was put in place at that time in terms of the MOU as to ongoing arrangements between the parties. I will return to that issue below.

At this juncture, I note that in Ivan’s affidavit of 9 June 2021, he refuted the proposition of cl 4 of the MOU that stated that proceeds from the 400 cattle being sold in December 2019 should be “used firstly to repay outstanding rent, the balance of the equipment and then any remaining funds”. [29] It is clear from the evidence that Mark proffered in the November 2019 meeting not only that the herd profile was intact in accordance with the provisions of the 2017 Lease Agreement but further, that there was sufficient cattle in excess of the herd profile under that agreement to permit the sale of 400 cattle, (which had been, in fact, booked for sale in December 2019) whilst having the herd profile intact. So much is clear from John’s evidence, in his affidavit of 22 February 2021. Even though Ivan prevaricated in cross-examination about whether he knew the exact numbers, he did not dispute that Mark had provided that number of excess cattle. I accept John’s evidence that he was advised that the 400 cattle had been booked for sale in December 2019.

In my view, it is equally clear that the November 2019 meeting addressed the termination of the lease in the context of rental arrears. The mechanism for sale of excess cattle and the rectification of rental arrears, consistent with the operation of the 2017 Lease Agreement, was entirely plausible given the issues addressed at the November 2019 meeting. That such an arrangement was put in place is consistent with Kirstie’s contemporaneous notes. It is also consistent with Mark’s and Ivan’s response to the MOU. [30] In my view, it was the intention of the Wallaces and the Burkes that the sale proceeds would be used to pay the outstanding rent and amounts owing on plant and equipment.

On 2 December 2019, Kirstie began ordering feed for the cattle and between 4 and 11 December 2019, 309 KCPC cattle were sold by the defendants. [31] Despite the Burke family moving ahead with the sale of cattle, they had not responded to the MOU. On 14 December 2019, Kirstie sent Mark an email asking for a response to the MOU by 20 December 2019. The Burke family, again, did not meet this request.

On 23 December 2019, Mr John Snelgrove (“Mr Snelgrove”), the lawyer acting for the Wallace family, sent a letter via email to Mark, requiring a response from the Burke family to the MOU by 5pm on 31 December 2019.

Mark and Kirstie communicated by telephone and email about purchasing the necessary feed for the cattle between December 2019 and March 2020 and on 23 December 2023, Mark stated that there was enough water in the dams for the next few months. This conversation is evidenced by an email from Kirstie to John and Mark Willock that sought to provide an update on a conversation Kirstie had with Mark.

On 3 January 2020, at 5:05pm Kirstie sent another follow up email to Mark and John reiterating the need to get a response to the MOU from the Burke family as the bank required such details in order to loan the Wallace family more money. Later that day at 7:37pm, Mark and Ivan sent an email response to Kirstie which stated they intended to provide a response to the MOU by 8 January 2020. In the background of this communication John had asked Mr Hannaford, the principal stock and station agent of HSLA, to organise and supervise a stock count of the cattle at the properties. This was initially scheduled for 27 February 2020 but was brought forward to early February 2020. Despite this, the count did not occur until 26 February 2020.

On the 9 January 2020, Mark and Ivan emailed Kirstie their response to the MOU. The response was contained in an attachment to the email which is extracted below (“MOU response”):

In cross-examination, Mark stated the stocktake, completed on 29 November 2019, provided only a “rough estimate” based off Ivan’s records.

The 2017 Lease Agreement was terminated effective from 1 December 2019 following the November 2019 meeting. By the date of the termination of the 2017 Lease Agreement, the defendants had been managing the properties for about 9 years. At the point of termination, the defendants were 10 months in rent arrears.

As mentioned, an issue arose in the proceedings as to whether or not the 2017 Lease Agreement was terminated by consent. [32] In that respect, I have come to the conclusion that the 2017 Lease Agreement was ultimately terminated by consent of the defendants.

The starting point for that assessment was the November 2019 meeting.

Before turning to the accounts of the November 2019 meeting, I would observe that my overall impression of John and Kirstie in cross-examination is a favourable one. Kirstie’s evidence was measured, considered and frank. John’s evidence may have exhibited some argumentative aspects but, generally speaking, his answers were responsive and considered. I consider they were honest and reliable witnesses, even though there is, as I have mentioned, some equivocation in Kirstie’s evidence about the intention of the Wallaces’ prior to the November meeting and some minor inconsistencies in their accounts at that meeting.

John was cross-examined as to whether he and Kirstie had determined, prior to the meeting, they would terminate the lease. His response was that, whilst both of them had in mind the prospect of termination in the circumstances, they would await the outcome of the meeting to reach a final position.

In certain aspects of cross-examination of Kirstie’s evidence she seemed to have suggested (sometimes in combination with other propositions) that she had determined the 2017 Lease Agreement would be terminated prior to the November meeting. There is one passage of Kirstie’s evidence where this issue was put squarely:

Plainly, Kirstie’s evidence vacillates in this passage between an indication of an intention to terminate as the only option and on which left open the prospect of other options. I consider a fair reading of Kirstie’s evidence to be that, whilst there was every prospect the 2017 Lease Agreement would be terminated, as a result of breaches of the agreement, her and John had left open the prospect, albeit a slender one, that there might be an alternative course of action.

Overall, I do not consider John’s evidence in this respect to be shaken in cross-examination. Kirstie’s evidence was equivocal in the respects I have mentioned but my assessment is as I provided above. Neither pieces of evidence would suggest that John and Kirstie were other than honest and reliable witnesses particularly as their statements as to their thoughts prior to the meeting broadly accorded with that which transacted at the November 2019 meeting. Nothing in that survey of the evidence is determinative alone of that which eventuated at the November 2019 meeting.

Comparing affidavit evidence as to the accounts of the November 2019 meeting, there would seem to be a substantial similarity in John and Kirstie’s accounts of the opening components of the meeting including a rejection of Mark’s suggestion to sell down the young cattle and a reference to the need to consider termination of the 2017 Lease Agreement in those circumstances. On John’s account, he refers to himself as saying the only option is to terminate the agreement. Kirstie attributes to John the words “We don’t see that this can continue”.

The accounts that then follow do not necessarily align in the order of events, and to some extent in content, but two aspects are clear on the respective accounts:

There was also a discussion about selling Somerset, although it is not entirely clear whether that was raised by John or Mr Willock, who also attended the meeting. There then followed a further stage at the meeting, at which there was a discussion about post termination arrangements. John records Mark as saying “That will simplify things and now we can move forward” after describing the business dealings following termination. Kirstie recalled that John stated the 2017 Lease Agreement was terminated and followed on from him stating “Let’s note we are terminating the Lease, move on and talk about the exit strategy…”. On Kirstie’s account, the Burke’s asked for an opportunity to consider the termination of the lease after John had mentioned termination of the lease because of breaches.

Both John and Kirstie describe Mark as stating that there was an intention to work together in selling properties and the herd.

Overall, I consider John and Kirstie’s evidence as to the November 2019 meeting to be an honest attempt to recall the exchanges that occurred in an obviously heated and difficult meeting in which, on their accounts, there was an open discussion about business models moving forward and a recognition by Mark (obviously after some real agitation) to accommodate those new arrangements upon termination.

This assessment is consistent, in my view, with the documentary record. The starting point in that respect, is the notes Kirstie took during that meeting which stated, inter alia, “Terminate Lease decision made. Burkes requested time to think about it”.

Immediately after the meeting, an email was sent by Kirstie (on 29 November 2019) with John’s agreement which stated, inter alia, “1. As of 1st December Wallace Family (WF) and the Burke Family (BF) by mutual agreement agree to the termination of the Lease signed and dated 24/4/2017.”

That assessment was shared by the Burkes. In the MOU response, sent on 9 January 2020, the Burke’s stated, inter alia, “The Burke and Wallace families agree to terminate the lease as at 1st December 2019 with respect to the livestock trading enterprise”. This is plainly a reference to the 2017 Lease Agreement, which was the only lease between the parties operating as at that date. [33]

Whilst the Burkes used the word “agree” in the present tense, the communication can only be sensibly understood as referring to a state of affairs that Mark and Ivan understood to have operated since 1 December 2019 as arising from the November 2019 meeting. This communication is an affirmation of the counterpart aspect of Kirstie’s communication of 29 November 2019 (the MOU).

Ivan and Mark hesitated to acknowledge that the 2017 Lease Agreement was terminated by consent. In cross-examination Mark said the following in relation to termination by consent:

When seen in the light of the communication sent on 9 January 2020, Mark’s response not only represented indignation (and as was found there were many occasions in Mark’s evidence where he gave somewhat aggressive responses) but some prevarication even though his answers may be properly understood as the Burkes consenting to the termination with reluctance.

Looking more broadly at credit issues, counsel for the plaintiffs submitted that the Court would not find Ivan or Mark to be dishonest but were unreliable witnesses. It was submitted that many crucial factual issues were not the subject of mention in Mark and Ivan’s affidavits, and they gave no coherent accounts of what happened at various meetings in chief or in cross-examination. They were poor historians.

Those credit submissions by the plaintiffs may be readily accepted upon the basis of my close consideration of Ivan and Mark’s evidence. Additionally, in a number of respects, I have found many aspects of their evidence to be unsatisfactory, which I comment upon during the course of this judgment.

The plaintiffs pleaded the existence of an agreement emerging from the November 2019 meeting, the terms of which were contained in the MOU.

Whilst I have concluded that the parties mutually agreed to the termination of the 2017 Lease Agreement, as recorded in the MOU and elsewhere, I consider that the defendants were correct to submit that the Court should find no agreement was reached in November 2019 or thereafter in terms of the MOU, even though the MOU referred to remuneration that was to be paid to the Burkes for managing the properties and an incentive payment in respect of cattle sales both occurring from the date of termination.

The MOU was stated to be provided on a without prejudice basis. There were clearly terms within it that remained unresolved. No reply was provided to the email for quite some time. Kirstie followed up the email with a request for a response for 4 December 2019 and Mark responded in a manner consistent with their being remaining issues under the proposed agreement. Mark stated that things would be sorted out “this week”. On 23 December 2019, Mr Snelgrove sent a communication asserting that an agreement had been made but nonetheless demanded a response by 31 December and that the arrangement was without prejudice to his clients’ rights under the 2017 Lease Agreement.

John accepted that the MOU was merely a proposal and stated that the Burkes had accepted it when they responded in January 2020, even though variations were introduced to the terms of the purported November 2019 Agreement.

In classic terms of the requirement of offer and acceptance for the formation of a contract, I consider that an offer was made but no acceptance was communicated in clear and unequivocal terms: Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678 (per Griffith CJ). Furthermore, if it were the case that the proposed agreement was in some way accepted, it is a real question whether acceptance was communicated.

An email was sent by John to Mark on 16 January 2020 arranging the January meeting with the subject line “Re: Response to the MOU”. The January meeting took place at Khatambuhl on the 20 January 2020 between John, Mark and Ivan. John provided a recollection of the meeting in his affidavit of 22 February 2021 which corresponds to the January 2020 email that provides a “summary of the points”.

The January 2020 email from John to Mark is extracted below:

John did not receive a response to the above email from Mark or Ivan. In cross-examination, Ivan stated he could not recall this meeting. His evidence at [59] of his affidavit of 9 June 2021, where he discusses the January meeting, should therefore be rejected. In his affidavit of 10 June 2022 at [10], Mark describes this email from John as a “summary of our meeting on 20 January 2020”. Mark’s evidence in that respect is as follows:

I consider the email from John should be found to be an accurate record of the content of the January meeting. The email corresponds to John’s affidavit and is contemporaneous to the meeting it records. In my view, the January 2020 email clearly represents an agreement reached between the parties in January 2020 in accordance with the content of that email (the “January 2020 Agreement”). I resolve the issues stated in the JMOI as to whether the email “records the terms of agreement” in these terms.

On 30 January 2020, KCPC paid the council rates due for each of the properties. In early February 2020, Mr Hannaford informed John that the defendants were intending to sell 200 head of cattle in mid-February. In response to this, John contacted Mr Snelgrove and on 5 February 2020, Mr Snelgrove sent a letter to Mark stating “it has come to the attention of our clients that you intend to shortly sell cattle from those properties through Wingham Abattoir.” The letter also reinforced that no cattle were to be sold without authorisation from the Wallace family until a stocktake of the cattle was completed and requested a response from Mark by 10:00am on 10 February 2020, stating that he would act in accordance with those directions. No response or acknowledgement was ever received from Mark or Ivan.

Mr Snelgrove sent another letter to the livestock manager of the Wingham abattoir, Mr Stephen Moy, on 5 February 2020 which similarly stated, “It has come to the attention of our clients that cattle from these properties may shortly be offered for sale to you by or on behalf of Mark and/or the Burke Cattle Company.” The letter stated that Mark and Ivan did not have authority to sell any cattle owed by KCPC and requested to be contacted if there was any attempt to sell KCPC cattle that could be recognised by “a registered large stock brand and earmark”. A follow-up email was sent by Mr Snelgrove on 6 February 2020 to Mr Moy which also copied in Mark confirming that all the proceeds of the sale of KCPC cattle being sold are to be deposited into a bank account that John would elect and later provide those details.

Later in the evening on 5 February 2020, John sent an email to Mark asking for an update on the “cattle sorting” and advised him that the cattle count was planned to begin on Monday 10 February 2020. On 7 February 2020, John sent another reminder email to Mark stating he would be at the Khatambuhl property at 8:00am on Monday 10 February with Mr Hannaford, another stockman and Mr Peter Fry to assist with the stock count and would aim to come down to Somerset by late Tuesday or Wednesday to begin the cattle count at that property.

Heavy rain fell on 10 February 2020 which flooded the properties and resulted in a delay to the stock count. Mark stated, in his affidavit of 10 June 2021, that the heaviest day of rainfall in this period was 280mm which caused a large amount of damage to the properties. Although the rain broke the drought, purchasing feed was still necessary.

The overall effect of the drought from at least the beginning of 2019, the bush fires in November and December of 2019 and the flood in February 2020, on the health of the cattle and the fencing at the properties is an issue in dispute. The defendants submitted that many cattle perished as a result of the harsh climate during these periods. The plaintiffs contended that there was no evidence of such deaths (save for one case). The plaintiffs disputed the severity of the impact upon the herd and the properties by these climatic events. I will return to those issues separately in dealing with factual controversies.

On 14 February 2020, John sent Mark an email stating he was planning to resume the stock count on Wednesday 19 February, depending on water levels. Later on 14 February, Kirstie forwarded John an email from Wingham Beef of 10 February 2020 confirming the booking to receive 200 KCPC cattle on 11 February 2020 for slaughter on 12 February 2020. John sent an email to Mr Moy on 19 February 2020 asking about the number of cows booked for slaughter in March. Mr Moy replied to John the same day and advised John that 200 KCPC cows were booked for slaughter on 5 March 2020 and that the numbers in the February delivery had been “well short of booked numbers”. [34]

On 15 February 2020, Kirstie sent Mark an email outlining the amount owing in rent arrears and the purchase price of the plant and equipment. This email also outlined that the Wallace family, to date, had spent $474,557.93 on feed for the cattle.

A meeting was scheduled for 20 February 2020 between John, Mr Hannaford, Mark and Ivan (“February Meeting”). At the meeting stock numbers at the three properties were discussed. John asserted, in his affidavit of 22 February 2021, that Ivan provided the following numbers of cattle at that meeting: 1558 head counted which is made up of 878 cows and 680 calves and weaners. Those cattle numbers do not appear in the email John sent to Mr Hannaford on 21 February 2021 that provided a summary of the meeting or in the typed copy of the handwritten notes recounting the meeting, which John made later that day after the February Meeting ended. John emailed these typed notes to Kirstie on 22 February 2020. Neither Ivan nor Mark set out a detailed version of the February Meeting except to briefly recount an argument with John.

On 25 February 2020, Kirstie received a phone call from Mark where he stated John had behaved “out of line”, [35] sought to reiterate that the defendants had not stolen any hay or cattle and demanded all outstanding payments (it would seem, for work undertaken by the defendants on the properties since the termination of the 2017 Lease Agreement), should be made immediately before the end of business that day. Kirstie typed notes regarding the contents of the conversation shortly after the call ended and emailed them to John. In those notes, Kirstie recorded that during the call Mark threatened that if those payments were not received, they could “have a contamination problem” at Somerset which would result in a $35,000 fine from the Local Council.

On 26 February 2020, Mr Hannaford commenced the stock count of the cattle at all the properties. This was completed on 27 March 2020, when Mr Hannaford emailed a copy of the final stock count to John and Kirstie. In that document, Mr Hannaford stated that the count consisted of 821 cows, 456 calves, 457 weaners and 10 bulls which came to a total of 1744. [36]

On 30 March 2020, Mr Snelgrove sent a letter to the defendants that outlined the results of the cattle count, the amount of cattle there should be, as per the 2017 Lease Agreement, and gave the number of deficit cattle being 343 cows, 100 calves, 163 Weaners and 11 bulls totalling 617 animals less than the herd profile. [37] The letter also raised with the defendants that some KCPC branded cattle on the Somerset property belonged to them and as a result, were not included in the cattle count. The letter sought proof of purchase of those cattle and an explanation as to the deficit cattle numbers by 5:00pm on 2 April 2020.

A further letter addressed to the defendants was sent by Mr Snelgrove on 30 March 2020 which stated:

Two additional emails were sent from Mr Snelgrove on 30 March 2020 to the manager of Gooch Agencies and Ray White Gloucester stating “it has come to our attention of Our Clients that cattle may shortly be offered for sale through your agency by or on behalf of the Burke Interests. Please note that the Burke Interests do not have any authority to sell cattle for Our Client” and requested to be contacted if any such sale was offered.

On 1 April 2020, John and Ivan spoke over the phone on three occasions.

John provided an account of that call in an email to Mr Snelgrove at 8.58am on that day (“the first phone call”). Ivan did not provide any details of that call. John advised Ivan that the shortfall in cattle was as high as 606 cattle. John’s recollection of the first call was that Ivan told him he thought there were 41 deaths of cattle since 1 December 2019 and that he had documented that fact by hand in a book. Ivan agreed a deficit was unacceptable. In cross-examination, Ivan confirmed his shock at being informed of that deficit. John also asked Ivan whether cattle on a Burke property with the KCPC brands on them belonged to the plaintiffs to which Ivan responded in that the Burke family had bought the KCPC cows they claimed were theirs on Somerset 12 months ago from “Auction Plus”. Ivan stated that he had records for the purchases.

A second phone call occurred a few hours later (“second phone call”). John also documented the second call in an email to Mr Snelgrove, Mr Hannaford and Kirstie at 10.55am. John recorded that in that call Ivan provided clarification on the number of documented cattle deaths since 1 December 2019 which he now believed was 37, according to his field book. However, John stated in this email that Ivan had no photographs or ear tags to confirm those deaths. It is reasonably clear that the 37 cattle referred to in the second phone call was a reference to the same cattle the subject of the original estimate of 41 deaths but adjusted downwards.

John’s account of the conversation was as follows:

That evidence would appear to concern an assertion of loss at Khatambuhl.

A third phone call (“third phone call”) took place between Ivan and John on 2 April 2020 which contradicted aspects of the first and second phone calls. This call is discussed in detail shortly.

Later on 1 April 2020, Mr Snelgrove sent a letter to the defendants which stated the following:

Mr Snelgrove also sent a follow-up letter to Ray White Gloucester on 1 April 2020 regarding the “avoidance of doubt [that] the Burke Interests have no authority, agency or other right in respect of the cattle of our client.”

John dropped off a copy of Mr Snelgrove’s letters of 30 March 2020 and 1 April 2020 to the letter box at Ivan’s property and then phoned Ivan at 5.15pm on 2 April 2020 to see whether he had received the letters.

John emailed a recollection of this third phone call with Ivan about cattle numbers to Mr Snelgrove shortly after. John stated that Ivan advised him that he now thought a lot of cattle had been lost over the last 12 months despite the fact that Ivan acknowledged that Mark, in the November and January Meeting, had stated that all the cattle were there and accounted for. John recounted that Ivan asked, “If we are short, what value are you putting on them, surely not today’s value” and stated that a disagreement followed regarding what market value would be placed on the cows if the Burkes were found to be short. John again reiterated that the Wallace family would commence legal action (as he did in the first phone call) if they did not “get a response soon on what their plan is to fix the problem”. Ivan did not provide a detailed recollection of the phone call except acknowledging it occurred and that John asserted they were “600 down” to highlight that the figure was different to the last number of cattle John stated were missing. [38]

On 3 April 2020, Mr Hannaford sent Mark an email attaching a spread sheet of the results of the cattle count which also appears to show numbers of the cattle deaths Ivan reported and some cattle sales to Wingham Abattoir in February and March of 2020. [39] This spread sheet recorded the count as: 821 cows, 456 calves, 457 weaners but did not include final numbers of bulls. Those figures amounted to the total number of 1734 cattle and represented the herd profile arising from the cattle count conducted by Mr Hannaford at the date of that communication (Annexure B).

Around this date John received some information from Mr Hannaford that made him suspect the defendants were attempting to sell cattle into the Japanese export market through Edwards Livestock Company of Oakey Queensland (“Edwards Livestock”) and, on 3 April 2020, John sent an email to Matt Edwards of Edwards Livestock that is extracted below:

On 7 April 2020, John instructed Mr Snelgrove to send another letter to Matt which included the following:

The letter also requested that Edwards Livestock should contact Mr Snelgrove immediately if any of the Burke family or any other third party on their behalf present cattle for sale.

On the same date, Mr Snelgrove sent a letter to the defendants referring to the letters of 30 March 2020 and 1 April 2020, noting the lack of response as demanded and that “It has recently come to the attention of the Wallace Family Interests that you are in the process of selling 65 Angus Wagyu cross teers, which our clients believe are their property”. This letter demanded the defendants produce evidence that they were the legal and beneficial owners of these cattle before 4:00pm on Thursday 9 April 2020, otherwise court proceedings would be commenced against the defendants without further notice to them.

Additionally, on 7 April 2020, John inspected the fencing at the Khatambuhl and Westwood properties with a fencing contractor, Mr John Turner (“Mr Turner”) and stated, in his affidavit of 22 February 2021, that the condition of the fencing was not good and that “many fences had broken wires, were laying over and did not have creek blocks. I made a list of repairs that needed to be done.” Whether the poor state of the fencing was the fault of the defendants who failed to maintain them as per the 2017 Lease Agreement or whether the fires and floods had destroyed the fencing is a further issue in dispute.

On 9 April 2020, John instructed Mr Snelgrove to send a letter to the defendants. This letter firstly referred to the letters of 30 March, 1 April and 7 April 2020, noted the lack of response by the Burkes and went on to allege the defendants had not met their obligations under the 2017 Lease Agreement in relation to fence maintenance and provided a list of maintenance work that was required to be done on the properties but excluded any part of the fencing that “have been affected by the fire.” [40] I also note that a liability owed to the Elders Rural Services Australia Limited was also raised in this letter but as that liability is not the subject of claims made by the plaintiffs I will not include those details except to note that items ordered from that company included fence parts. [41]

Following John’s visit to the properties with Mr Turner, fencing work was undertaken by JT’s Landscaping and Rural Maintenance (“JT’s”). This work was undertaken, along with other general works on the properties, between 10 April 2020 and 10 July 2020.

On 15 April 2020, in response to the email and letter sent to the defendants by Mr Snelgrove on 9 April 2020, [42] Mark sent a formal response to the “questions asked by the Wallace family” [43] from himself and Ivan. The contents of that email are extracted below: [44]

Mr Snelgrove replied to the email from Mark and Ivan a few hours later stating that, although his response did not represent “a final reply to your email response” “your reply is both short and does not provide the documentation we expected let alone demanded. As to the latter we repeat our demands”. On 23 April 2023, Mr Snelgrove sent a letter to the defendants reiterating that they are not permitted onto the Wallace properties without Mr Hannaford’s permission and any such unauthorised access will not be tolerated and treated as a trespass. This communication by Mr Snelgrove was after the cattle count and reflected Mr Snelgrove’s doubts as to the reliability of the estimates of cattle deaths. In the absence of proof those concerns were no doubt exacerbated by the substantial difference between Ivan’s earlier estimates of cattle deaths and those provided on 15 April 2020. Those doubts were well foundered as I will later discuss.

On 26 April 2020, John and Ivan spoke on the phone. John sent an email, with typed file notes outlining this conversation, to Mr Snelgrove and Kirstie later that day. John recalled that Ivan was very upset as he had been told by Mr Hannaford that he was no longer needed to work on the properties and that Bill would be kicked out of Westwood. John stated Ivan said he “just put Bill in an ambulance” and accused Mr Hannaford of being a cattle thief. John told Ivan to focus on “the fact that we are up to 450 cows short with no explanation”, the property is in a terrible state and criticised Ivan for not even having the courtesy to respond to their requests for information. John recounts the final discussion on the phone as follows: [45]

John went to Taree Police after the phone call to report the matter. [46]

Ivan refuted that recollection of the phone call in his affidavit of 9 June 2021. Ivan acknowledged that he was upset because it was clear to him, after being told he was no longer required and hearing many rumours regarding the future plans for the Khatambuhl and Westwood properties, that there would be no possibility of a caretaker role for him after June 2020. Ivan states that John “harangued me in extremely derogatory terms about my son Mark and Mark’s not replying to the barrage of legal letters on behalf of the Wallace family” and “used considerable expletives”. The number of cattle stated on the phone call being “450 short” was consistent between Ivan and John’s recollection. Ivan noted that John’s file note did not label the end of the phone calls as threats but John did in his email to “Sector Supervisor” at the Gloucester Police Station, Mr Scott Chester (“Mr Chester”). Mr Chester’s email of 26 April 2020 confirms that he spoke to Ivan, served and advised Ivan of the contents of “the letter” (I believe this is the letter sent by Mr Snelgrove on 23 April 2020 as the letter from Mr Snelgrove on 27 April 2020 referred to that letter in conjunction with Mr Chester, serving a formal letter), [47] and that Ivan denied the making of threats towards John or his children and was just trying to ask John to stop his children driving or riding on the council road.

The letter of 27 April 2020, that I raised above, was addressed to the defendants and referred to a visit from Mr Chester and a letter of 23 April 2020 that was served and explained to Ivan, namely, that Ivan had no right to access the properties of the Wallace family interests. The letter also stated that Ivan had removed property owned by the Wallace family being a molasses trailer and fencing equipment. A chain of emails between Mark and Ivan and Mr Snelgrove ensued but concern matters no longer in issue in this claim.

After the cattle count Mr Hannaford continued to work on the properties. In between April and October 2020, after the completion of the stock count, he found an additional 69 cattle. The addition of these numbers made the final reported stock numbers of Mr Hannaford’s count 896 cows.

I note that in John’s affidavit of 22 February 2021 he includes a table with the cattle count numbers and deficiencies that are not consistent with Mr Hannaford’s final cattle count numbers. This table appears as follows:

On 14 May 2020, John emailed Mr Edwards from Edwards Livestock and requested the sale values of the 110 sales made by Burke Sons Investments in December 2019 which came back at $90,724.95. Mr Edwards also confirmed Edwards Livestock did not purchase cattle under any other entities. Following discovery of this sale John instructed Mr Snelgrove to send a letter to the defendants on 18 May 2020. The body of that letter is extracted below:

John stated, in his affidavit of 22 February 2021, the defendants did not respond or supply any information about these sales in December 2019 or pay over any of the proceeds of such sales. Mark, in cross-examination, stated that these sales were part of the 400 animals they were permitted to sell in December 2019.

Mark vacated the Somerset property on 29 May 2020.

The plaintiffs relied upon, in this respect, several causes of action. These were as follows:

In oral submissions, counsel for the plaintiffs clarified that the above causes of actions were “alternatives”.

The plaintiffs made the following submissions in relation to the first claim, being the 2017 Lease Agreement:

The plaintiffs submitted that the existence of a shortfall in cattle was an important factual element to make out each of the cause of action. The plaintiffs submitted that to establish the shortfall in cattle requires consideration of the following:

The issue surrounding the definition of the herd profile of the 2017 Lease Agreement has been resolved earlier in this judgment, as a matter of construction, in favour of the plaintiffs, such that the 2017 Lease Agreement was construed to record 1222 cows in the herd profile.

The plaintiffs contended that the cattle count in February and March of 2020, undertaken by Mr Hannaford, was conducted in a careful manner and yielded reliable results.

The plaintiffs submitted the cattle count, taking into account the 65 cattle which were sold in early 2020 and one confirmed cattle death, yielded a deficiency of 343 cows, 100 calves, 160 weaners and 14 bulls. Furthermore, between April 2020 and October 2020, another 69 cattle were found which adjusts the deficit to 300 cows, 87 calves, 157 weaners and 4 bulls, making a total shortfall of 548 cattle.

The plaintiffs submitted a deficit of 548 cows as of 1 December 2019 was “entirely possible and, in the absence of any plausible explanations for the shortfall found later, probable”. To support that contention, the plaintiffs made five submissions as follows:

Those submissions are the subject of elaboration below:

The plaintiffs contended that it is clear that the defendants did not keep reliable records of the stock on the properties and hence did not know how many cattle there were in November 2019 when they made a representation to the plaintiffs that there were cattle on the properties in excess of the herd profile.

The plaintiffs submitted that the defendants had no reasonable basis for their representation that the herd profile was intact in November 2019 and that there were strong reasons to conclude that a deficit of 548 animals on 1 December 2019 “was entirely possible and, in the absence of any plausible explanations for the shortfall found later, probable”.

The plaintiffs submitted that the defendants provided feed for the cattle in the first two weeks of December 2019 and after that time the plaintiffs took over the supply of the feed for the herd. The plaintiffs bought a large amount of feed from early December 2019 onwards such that there was no reason why the cattle would die from lack of feed. Between December 2019 and March 2020, the first plaintiff spent a total of $471,393.05 on the provision of feed to the herd.

The plaintiffs submitted that on numerous occasions over the above-mentioned period, Mark communicated with Kirstie about the necessary feed for the herd and on 10 December 2019 Mark assured Kirstie that there was sufficient feed for the cattle. Further, it was submitted that John had visited the Khatambuhl property between 19 and 21 January 2020 “and did not see cattle that were severely emaciated” and that Mr Hannaford did not consider the cattle on the Somerset and Khatambuhl property to be distressed as such.

The plaintiffs submitted there was no reason why the cattle in the herd would die from lack of food.

The plaintiffs submitted that the suggestion by the defendants the herd died from a lack of water was unfounded. They relied on John’s statement in cross-examination that the properties had a large number of dams on them, some of which did not run out of water; Mr Hannaford’s statement in cross-examination that in January of 2020 when he visited the properties, he saw water in dams and in the creek where the cattle could drink; and a statement by Mark on 23 December 2023 that there was enough water in the dams for the next few months.

The plaintiffs submitted that there is strong evidence against the proposition that the shortfall in cattle of the herd can be explained by cattle wandering away from the properties. The only property where wandering cattle was “potentially relevant” was Khatambuhl. The plaintiffs pointed to evidence which demonstrated that it was quite unlikely that cattle would wonder off Khatambuhl either into the bush or onto other properties.

The shortfall in cattle numbers cannot be explained by the theory that the cattle wandered away from the property and were not recovered.

The plaintiffs submitted that it can be safely inferred that the animals were not dying and the defendants’ contention that the shortfall could be explained, at least in large part, by numerous deaths of animals in the herd, is mere speculation unsupported by any evidence. The evidence is rather to the contrary effect.

In the result, the plaintiffs submitted that a shortfall of cattle was made out which extended to each alternative subsidiary cause of action: the 2017 Lease Agreement, the agreement formed in November 2019 or the January 2020 Agreement. I will discuss the submissions on the existence of an agreement formed in November 2019 or in January 2020 under separate headings below.

The defendants submitted that the plaintiffs’ case does not establish “that there was a deficiency in the herd at the relevant time, i.e., 28 November 2019”.

To support that contention, counsel for the defendants made submissions on the burden and standard of proof. The plaintiffs’ claim was backed, in effect, on a proposition that the defendants “converted or stole the stock”. From that starting point, the defendants made the following submissions:

The defendants made further submissions (a)-(h) under the primary submission that “there was no shortfall in the herd profile” as follow:

The expanded summary of these contentions appears below.

The defendants submitted that the first hurdle facing the plaintiffs was that they failed to comply with the 2017 Lease Agreement when it came to determining if there was a shortfall in the herd profile.

The 2017 Lease Agreement was terminated in November 2020, seven months short of its full five-year term that was to have expired on 30 June 2021.

Clause 10 of the 2017 Lease Agreement enabled the plaintiffs to terminate that agreement without notice, “in the event that BF has not made the lease payments in full for two consecutive months.” “BF” appears in the 2017 Lease Agreement as an abbreviation for the Burke Family.

There is no issue that the plaintiffs were entitled to terminate the 2017 Lease Agreement at that time, given that the lessees were more than two months behind in the payment of rent, however, it was incumbent on them, having elected to terminate, to carry out the stock count that was mandated and expressed in urgent and imperative terms.

It was submitted this is clear from cl 10 of the 2017 Lease Agreement, which provided that:

The defendants submitted that the plaintiffs failed to comply with cl 10 when they terminated the 2017 Lease Agreement as no engagement was made with a qualified person to carry out the herd count for months until Mr Hannaford was engaged to do so in February 2020. Furthermore, this failure is made worst by the fact that John agreed that he, Kirstie and Mr Willock had discussed the fact that they needed to do a stock take if they did terminate the lease.

It was contended by the defendants that it was typical of John to blame the Burkes for the plaintiffs’ failure to comply with the 2017 Lease Agreement, and that it was relevant that the plaintiffs could have, but did not, initiate a stock count at the termination of that agreement. A contemporaneous stock count was crucial as it would have established, one way or another, the size of the herd at that time and the failure to take that action is a material matter in evaluating whether the plaintiffs have established a deficiency for the purposes of s 140(2) of the Evidence Act 1995 (NSW).

It was submitted that the fact that the plaintiffs chose to do nothing to initiate the count, while also being in contact with Mr Hannaford, was “all the more telling given the threat that they perceived to the herd from the ongoing effect of drought and fire that had been the catalyst of the decision to terminate…”.

The second hurdle the defendants submitted the plaintiffs faced was that, notwithstanding the fact that they knew they had to carry out a stock count, could have carried out a stock count and had already had some discussions with Mr Hannaford about doing so, they did nothing to effect a stock count until March 2020. The defendants submitted that, while the flooding in February 2020 limited access to parts of Khatambuhl, there was no reasonable explanation for the delay. The stock count was inadequate and inaccurate.

The third hurdle the defendants submitted the plaintiffs faced was how little time was spent carrying out the stock count, given the size of the properties, and in particular Khatambuhl. It was put by the plaintiffs in written submissions that Mr Hannaford carried out the count in a careful manner and the count yielded reliable results but the defendants submitted that he, in fact, did not.

It was contended that despite Mr Hannaford’s experience working with cattle, he was completely unfamiliar with the properties in question and with Khatambuhl in particular.

The defendants submitted that Mr Hannaford was engaged by the Wallace family for work additional to the cattle count, which is demonstrated by the invoices he issued, including the following: [48]

Mr Hannaford’s rate was $80/hour + GST including travel time from Gloucester and his station hands were at $45/hour plus GST.

Mr Hannaford’s time at the properties, together with that of his staff, was recorded for posterity in the time sheets that he kept, and the invoices based upon them, all of which was in evidence. [49] Mr Hannaford’s first substantive interaction with the Wallace’s occurred on 21 and 22 January 2020 when he met John on 21 January. His invoices record a total of 6 hours in respect of a four hour meeting with Mr Wallace on 21 January 2020 and 2 hours in respect of further work on 22 January 2020. The second meeting is described as “Administration John Hannaford – Office – Formulate Selling and Stock Plan”. That stock plan does not appear to be in evidence.

The records also indicate a 5 hour meeting with the Burkes on 30 January 2020 at Somerset, “re future direction and selling Plan.”

No further work was carried out by Mr Hannaford until 20 February when one of his employees, Mark Howard (“Mr Howard”), carried out 10 hours of stock work. Later in February, there was a seven hour meeting with the notation, “Steve Brown (Pregnancy Tester) and Mr Howard regarding testing of cows, sorting cattle and which Paddocks to use, started process.” [50]

The results of that testing [51] are in evidence and reveal that of the 237 cows tested, only 33 were pregnant, contrary to the claim that ordinarily 80% of cows should calve. However, as other evidence demonstrates, that season was not normal given the stress that the cattle were under in light of the drought.

The HSLA tax invoice for March records Mr Hannaford being at the properties on the following occasions (the data represented here also appears in the defendants closing written submissions as a summary of the March Invoices): [52]

The time onsite was taken in the defendants’ submissions from Mr Hannaford’s time sheets at the various properties. That was the extent of the physical work carried out in country by Mr Hannaford in respect of the stock count.

In so far as Khatambuhl is concerned, the total time recorded for Mr Hannaford included an hour travelling to the properties from his home in Bretti, his office in Gloucester, and a further hour travelling home. This was confirmed in cross-examination.

On the basis of those figures, Mr Howard did a total of 71.5 hours of stock work on all properties across 10, 11, 12, 13, 17, 25, 26 and 27 March 2020. 53.5 of those hours were spent at Khatambuhl. It is not at all clear how much of this was related to the stock count. It is not clear whether this included travel time or not, but it is to be observed that the Wallace’s agreed to pay for travel time for station hands from Gloucester.

Mr Hannaford agreed that the delay in getting the stock count up and running was attributable to the breaking of the drought in early February. He said that he did Somerset and Westwood first because, “they were the most accessible cattle to get to initially”. He also said that in so far as Khatambuhl was concerned, he was, “waiting for the fencing team to give us some security.”

Mr Hannaford agreed that there is no record of any, “reconnaissance or survey carried out by yourself about familiarising (himself) with Khatambuhl, and explained this in these terms:

As for what this meant he stated:

Khatambuhl had a thousand acres of “what you would call timber at the back. You know, from a stock point of view, you wouldn't run a great deal of cattle on that.”

Mr Hannaford did not carry out an examination of the boundary and explained why in these terms:

He was then asked:

Mr Hannaford agreed that cattle dying in a drought like that, disintegrate very quickly. He also agreed that foxes and eagles and other birds would take whatever is left of the carcass.

It was put to him that he did not know how many were left unaccounted for in these terms:

The defendants submitted that it is telling that Mr Hannaford failed to mention Khatambuhl.

Mr Hannaford explained that the trip with Ivan to check boundary and realignment, referred to in his invoice, involved him and Ivan going up to the top end of the property, because he:

When Mr Hannaford was asked whether they found cattle up there, he said that from May to October 2020 they found 37 heads in about 4 lots. He said:

Mr Hannaford agreed that in the northern part of Khatambuhl there was extensive fire damage to the fencing and that the boundary fencing up there was still being fixed when he finished up in the last week of November 2020. The defendants submitted that Mr Hannaford had no idea about the length of the boundary fencing.

The defendants contended that nothing demonstrated more clearly that the stock count was inadequate than Mr Hannaford’s evidence that some additional cattle were found on four separate occasions in the months following the conclusion of the cattle count.

Mr Hannaford agreed that if neighbouring cattle could get out of their paddock and start roaming around Khatambuhl, there was nothing to stop KCPC cattle doing the same thing. However, he speculated that, “neighbours would've indicated to us if cattle had of turned up.” In this respect, Mr Hannaford said that one neighbour reported a number of cattle up in the high country that he thought belonged to KCPC, but they were never returned.

The defendants highlighted that Ivan disagreed with the proposition that it was unlikely that the cattle would wander away from the areas where they were feeding, saying that they would be looking for extra pasture. Ivan conceded that older cattle would return to where there was good quality feed being put out to them. However, he also stated that some cattle will roam away, and some do not; younger cattle are more likely to walk away.

Ivan stated he asked for daily tallies but never received them and was shocked when he was told of the alleged number of cattle missing.

Mr Hannaford’s count is said to have established a shortfall of 343 cows, 100 calves, 163 weaners and 11 bulls. The first indication that the stock count was unreliable came between April and October 2020 when a further 69 cattle, comprising 43 cows, 13 calves, 3 weaners and 10 bulls were “found” on the property.

The defendants submitted that “to be fair to Mr Hannaford” an expectation that he should be able to complete a comprehensive count in the timeframe of his invoices was “optimistic to say the least”.

The defendants submitted that there has been no transparency from the plaintiffs regarding the numbers of cattle on the properties following the count and that there is no subsequent evidence of the count.

In this respect, I interpose to note that the documentary evidence of the cattle found between May and October 2020 in the Court Books does provide evidence on subsequent checks for additional cattle by Mr Hannaford.

The defendants further submitted that there was evidence to clearly establish cattle sales of 2,045 animals between 1 December 2019 and 31 August 2021.

The defendants submitted that, on the question of the onus and standard of proof, the nature of the plaintiffs’ case was that there was a substantial shortfall in the number of cattle worth, on their case, in excess of $500,000. The plaintiffs must, therefore, deal with or engage with what they say happened to the cattle. It is only in that context that the question of whether the Court can be satisfied to the requisite standard that their case is made out.

The defendant submitted that the plaintiffs’ written submission “glosses over” the fact that, if there was a deficiency as of 28 November 2019, what became of the animals that were missing.

The defendant submitted that the plaintiff made a “faint attempt in cross-examination” to suggest that the Burkes may have moved cattle from the Wallace properties onto their own, but no submission is made that there was any conversation or otherwise unlawful sale of the cattle.

The defendant submitted that it was “inherently implausible that the Burkes would not have been interested in the count.”

At the time the lease was terminated, there had been a long period of drought at Khatambuhl and Somerset not the “dry spell” that John sought to convey. That drought continued until early February when 153 mm fell on the 9ᵗʰ of February, following some showers in January.

Mr Hannaford described the cattle at Khatambuhl in these terms:

This is consistent with what Ivan told John on 18 December 2019 when he told her things were not looking good with heat stress that week. In her reply, Kirstie described the situation as being extremely grim. Mr Hannaford said that he gave advice to the Wallace’s about the distressed cattle on Khatambuhl in these terms:

This was consistent with a theory that Mr Hannaford employed during a drought:

Mr Hannaford recognised that weaker and older animals were under dire threat in those conditions.

Later in 2020, Mr Hannaford said that he sold off the weak and old cattle at Khatambuhl after he took over. [53] The Burkes, on the other hand, were prevented from doing this by the terms of the 2017 Lease Agreement and the requirement to maintain the herd profile. The defendants asserted that there was simply no evidence that they sold anything in this period unless it was specifically agreed upon and that, in February and March of 2020, in respect of the sales arranged, the Wallace’s unfairly complained about the sales organised by the Burkes who only acted in accordance with the selling plan of the plaintiffs. The defendants submitted that the Burkes were directed to action the sales and Mr Hannaford was informed.

The defendants highlighted that, in cross-examination, Mr Hannaford stated he had suffered stock losses of cattle on his unirrigated property as a result of the drought.

On closer examination of Mr Hannaford’s evidence, it is clear that he did not state in evidence that he suffered losses as asserted by the defendants. The effect of Mr Hannaford’s evidence was that he did not suffer losses, but he sold his cattle in early 2019 “when the season started to get dire”. The evidence, in this respect, is extracted in full below:

Mr Hannaford agreed that Mr Burke told him that the February 2020 flooding, meant that he was unable to get up onto Khatambuhl for about a week to feed the cattle, but added “they're not all going to die in a week.”

The defendants then pointed out that in oral evidence John had a “different view” to Mr Hannaford and extracted the following evidence:

John suggested that so long as you keep up the feed during a drought, weak cattle would not die:

The defendants submitted that Ivan said that at the time of that meeting it was costing the defendants around $10,000 a week to feed the cattle and that that was “not easy to find in a drought every week”. It is not clear what meeting the defendants are referring to but it appears to be the November 2019 meeting.

Ivan agreed that by November it was around $15,000 a week.

The defendants submitted that Ivan rejected the proposition that the Burkes would not have been able to fund the feeding of the cattle over the next few months in these terms: “I disagree with that. We would've been able to find money to keep feeding.”

The defendants submitted that the preceding submissions and evidence provides that the Burkes were committed to protecting and maintaining the herd. The Burkes had a long-standing relationship with the Wallace family and were well regarded by the Wallaces.

The Burkes protected the properties from fires that ran through them throughout the second half of 2019 and were acknowledged for that. As late as November 2020, Patricia went so far as to give Ivan a flight centre voucher for $3,000 in respect of his efforts.

The Burkes were honest with the Wallaces about the pressures they were under which is demonstrated by the emails leading up to termination. The fact that the Burkes did not walk out when the 2017 Lease Agreement was terminated, despite there not being an agreement reached about their remuneration, the defendants contend is to the Burkes considerable credit.

The defendants submitted that Patricia, despite being one of the plaintiffs, was not called to give evidence in these proceedings despite the fact she visited the properties prior to November 2020. The defendants contended that Patricia’s evidence as to the state of the stock at that time would have been helpful. Additionally, her evidence as to the trustworthiness and reliability of the Burkes, and in particular Ivan, would also have been helpful. Kirstie admitted that her mother and Ivan had a strong relationship.

The Court should infer that the uncalled evidence would not have assisted the Burkes; Jagatramka v Wollongong Coal Ltd [2021] NSWCA 61 at [49]; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at [64]. See Justice Dyson Heydon AC, Cross on Evidence (12th ed, 2019, LexisNexis) at [1215].

Instead of calling Mrs Wallace, the plaintiffs chose to make further serious allegations against the Burkes in their affidavit evidence, suggesting that the Burkes made threats to contaminate dams, injure children and sell cattle without consent, none of which were pursued in cross-examination and do not seem to form part of the plaintiffs’ case. These allegations should not have been made.

The defendants submitted that the 2017 Lease Agreement provides a clear method for determining the consequences for the Burke’s in respect of any deficiency of cattle numbers upon termination of that agreement and as such it follows that the plaintiffs’ claim is not a claim for damages, but a claim for an accrued entitlement under the contract. However, if the claim is assessed as damages, as a general rule, they are assessed at the date of breach.

The plaintiffs were at liberty to adduce evidence of the market for beef cattle in the location or vicinity of the properties and has elected not to do so.

The defendants did not make any oral or written closing submissions on claims three and four, despite the fact counsel for the plaintiffs expressly raised that “additional payments under cl 11 of the 2017 agreement... [is] not mentioned in the defendant’s written submissions… so I don’t know if there’s anything further that my friend wishes to say against it”.

The plaintiffs made the following submissions in relation to fence maintenance:

The defendants made the following closing written submission in relation to fence maintenance:

In oral submissions the defendants outlined the evidence as the following:

The defendants then submitted, in relation to that evidence, as follows:

The plaintiffs made the following submissions in relation to the second basis for the claim in contract:

The defendants contended that there was no agreement formed at the November 2019 meeting. Their submissions in relation to that were as follows:

The plaintiffs made the following submissions in relation to the third basis for the claim for breach of contract:

The defendants submitted that the January agreement did not include a term to the effect of the term pleaded. Their submissions on that issue are as follows:

The plaintiffs made common submissions in relation to claims one, being the payment for unpaid invoices after termination of the 2017 Lease Agreement and, two, being the payment of 10% of the net proceeds of cattle between January and June 2020, and three, being the payment $20,000 to cover all old issues, of the cross-claim.

In that respect, the plaintiffs submitted the following:

In the result, the plaintiffs submitted that if it is found that the plaintiffs and the defendants made an agreement in January 2020 providing for payment to the defendants of management fees, or an incentive payment (10%) or the $20,000 one-off payment, the plaintiffs sought orders under s 237 of the ACL relieving them of the burden of each of those obligations. Further, in relation to the payment of $20,000, that was a payment offered as part of an overall deal that depended on the defendants’ representation that the herd numbers were intact. The defendants had no legal entitlement to the $20,000 or any other amount for compensation.

The defendants provided very brief submissions on their cross-claim which are extracted below:

In relation to claim 4, being the return of the defendants’ property, the plaintiffs submitted the following in their closing written submissions:

Despite the above extracted submission ([187] of the extract) being made, the issue was not expanded upon in oral submissions.

The plaintiffs submitted that the defendants have contravened s 18 of the ACL and that the shortfall in cattle, that they say is established per the submissions above, is an important factual element to make out the following causes of action:

The plaintiffs made submissions under the following headings:

The content of those submissions appears below:

The plaintiffs pleaded contraventions of s 18 of the ACL, claims for damages under s 236 and claims for other relief under s 237 of the ACL. All of the claims depend on allegations that the defendants made misleading representations to the plaintiffs regarding the numbers of cattle in the herd either in late November 2019 or in January 2020.

At the November 2019 meeting, the defendants represented to the plaintiffs that there were enough animals in the first plaintiff’s herd on the properties that the defendants could sell 400 animals from the herd in December 2019 and the herd profile would remain intact.

The claims for damages and other relief arising from the herd representation in 2019 are pleaded at SOC [35]-[40]. These are extracted below:

In November 2019, Mark and Ivan were both parties to the 2017 Lease Agreement and were directors of Ivamar. [54]

The herd profile to which the 400 head were excess was the herd profile that included 1,222 cows.

The herd representation was made during the November 2019 meeting, when the plaintiffs and the defendants were engaged in commercial negotiations about the termination of the 2017 Lease Agreement and the terms on which the defendants would work for the plaintiffs after the termination. The conduct of its nature bore a commercial character. It was therefore made in trade or commerce for the purposes of s 18 of the ACL.

The herd representation made at the November 2019 meeting was incorrect, as the herd numbers were in deficit and could not sustain the removal of any animals, still less 400 animals, and preserve the herd profile.

The plaintiffs relied on the herd representation made in 2019 in several ways:

The defendants sold at least 309 head as part of the agreed 400 in December 2019. The plaintiffs claimed damages and interest with respect to the sale of those cattle.

The plaintiffs submitted that they should be relieved of the obligation to pay that remuneration in whole or in part: Nobile; Kizbeau at 298.

That submission was predicated upon the premise (which was disputed) that the plaintiffs agreed to remunerate the defendants for the defendants’ services in relation to the first plaintiff’s herd on and from 1 December 2019 and the plaintiffs were otherwise liable to pay the defendants in accordance with that agreement. A similar submission was made with respect to the January agreement.

The plaintiffs fixed upon aspects of the purported November agreement wherein it was said that the plaintiffs proposed rates for payment of the defendants and coverage of casual labour and an incentive payment based on sales of cattle between 1 January 2020 and 30 June 2020. It was submitted that the last figures discussed by the plaintiffs and the defendants (in January 2020) were an all-inclusive figure of $6,000 per week plus GST as management fees and a 10% incentive payment.

The proposals purportedly arising at the November 2019 meeting and the January meeting were made on the basis that the herd profile would be intact even after the sale of 400 head in December 2019.

The plaintiffs’ submissions in this respect were predicated upon representations made in the January meeting. I will further discuss those submissions in my considerations below. The plaintiffs also made submissions as to the implications of the ACL with respect to certain entitlements said to arise for the defendants under the January agreement. Again, I will return to those matters below.

The defendants rebutted the plaintiffs claim in respect of misleading and deception conduct. Their submissions as to the making of the representations was as follows:

In the case of the herd representation at the November 2019 meeting, it was said that the defendants represented there were enough animals on the properties on 28 November 2019 to make up the herd profile and that the defendants could sell 400 animals from the herd in December 2019 and the herd would remain intact. It was alleged that this representation was made at the November 2019 meeting. There is no issue that during the course of the discussions at the November 2019 meeting the conversation extended to the herd profile being in terms that corresponded with the herd representation. That is what the Burke’s believed. The evidence does not establish that they were wrong about that.

In the case of the herd representation in January 2020, it is said that at the January meeting the defendants represented to John that the herd profile was then intact.

The plaintiffs relied upon the January 2020 email referred to above as proof on this representation being made.

As previously indicated, the January 2020 email does not bear out that submission. There is nothing in that email to suggest that such a representation was made at that time.

The evidence does not support the claim that the plaintiffs relied upon the representation in respect of any of these matters.

The MOU does not suggest that a representation that the herd profile was intact was a condition of the agreement that Kirstie was proposing or that any of the other terms she was proposing were conditional upon it. If a conditional agreement was what was intended, it would have been easy to express the offer in those terms.

For similar reasons, which apply to the herd representation allegedly made at the November 2019 meeting, the defendants denied, in the event that it is determined that such a representation was made, that it was relied upon.

In this respect it is to be noted that the plaintiffs submitted that they relied upon the herd representation in January 2020 in the following ways:

Precisely how they would have reversed the agreement about the sale of 400 head is far from clear.

The plaintiffs’ case is that it suffered a loss by reason of permitting the sale of 309 head as part of the agreed 400 in November 2019. The measure of damages claimed are the prices for comparable stock that were achieved by the plaintiffs after the drought broke. This does not represent the actual loss, as the animals were sold in December 2019 before the drought broke. Relying on post drought prices to fix a loss that accrued during the drought is impermissible as it does not reflect loss.

The plaintiffs relied upon s 237 of the ACL.

It is fundamental requirement to the grant of relief that the orders sought either compensate for loss or damage of prevent or reduce the loss or damage suffered. The relief is also discretionary.

The plaintiffs’ will not suffer loss or damage by reason of the entitlement of the defendants under the January agreement.

The remuneration that was agreed for the ongoing management of the herd from the date of termination onwards. If the plaintiffs had not agreed to pay the Burkes for this work, they would have had to pay someone else, most likely Mr Hannaford. After the Burkes left the property, this is precisely what eventuated. Viewed in these terms, there is no rational basis to suggest that the Burkes ought not to be paid their remuneration in full.

The same can be said about the agreement to pay $20,000 to resolve other outstanding disputes, which had nothing whatsoever to do with the size of the herd. This promise was not a loss attributable to any misleading and deceptive conduct on the part of the Burkes.

The agreement to pay 10% of ongoing sales as an incentive was offered in November as a means of enticing the Burkes to stay and oversee. The Wallace’s did not suffer a loss as a result of that commitment. It is very much tied to the obligation to remunerate the Wallace’s for their work. It follows that the claims made by the plaintiffs for relief in respect of their obligations to pay the Burkes the remuneration due to them, the 10% on any sales, the $20,000 to resolve other outstanding issues must fail.

In relation to the miscellaneous claims and corresponding issues outlined in the JMOI, these were earlier discussed.

The question of whether there was a shortfall in the herd numbers at the time of the November 2019 meeting by comparison to the herd profile specified, (as required to be maintained) in the 2017 Lease Agreement, was a central issue in the trial and I will, therefore, commence my considerations in that respect. The related question is the state of the herd numbers as at the January meeting.

Logically, it is appropriate to commence those considerations by evaluating the parties’ submissions as to the reliability of the cattle count conducted by Mr Hannaford in February-March 2020. The plaintiffs contentions were premised upon the reliability of the count in itself, or as adjusted, by 69 head of cattle found in between April and October 2020.

In my view, Mr Hannaford was well qualified to conduct the cattle count based upon his qualification and experience. He was a stock and station agent of 20 years’ experience and had a lifetime of experience of cattle farms and mustering. This was not gainsaid by the defendants.

The defendants’ submission that Mr Hannaford “was completely unfamiliar with the properties in question and with [Khatambuhl]” must be rejected. Mr Hannaford had been raised in the same country as Khatambuhl and he had worked on a large property, Giro Station, that was “very similar” to the Khatambuhl property. He was familiar with the layout of Khatambuhl. He was not initially familiar with Somerset but came to know the property well. Mr Hannaford described the property as a high-quality property with some timber up the back.

Mr Hannaford conducted the cattle count in a careful manner. He conducted the muster according to an orderly method, creating secure yards and moving out progressively to the boundaries. The counting system involved constant double checking of numbers and was recorded both on paper and electronically. If the cattle were found not to have NLIS tags, the tags were placed upon them. Any unbranded calves were branded.

In his affidavit of 7 June 2021, Mr McLoughlin complained of an apparent irregularity in Mr Hannaford not recording previous NLIS tags during the cattle count. However, he does not state that there was other than a consistent process of entering NLIS tags in the computer system.

Mr McLoughlin also complained that Mr Hannaford was wrong to state (in [11] of his affidavit of 22 February 2021) that the scanning of cattle took place in the presence of either of the Burkes or himself. However, Mr Hannaford simply indicated that the Burkes were frequently present on the properties when work was being carried out and provided some assistance in the stock count process such as pushing up cattle and mustering. What Mr Hannaford emphasised was that the Burkes did not provide him any useful or detailed information about the number of cattle that could be found in the various locations on the properties.

By way of contrast, Mr Hannaford was, in fact, assisted by skilled stockmen on horseback, accompanied by dogs and directed by walkie-talkies, who could get to ground that was otherwise inaccessible. It was suggested to Mr Hannaford that there was no record of any reconnaissance or survey carried out by himself to familiarise himself with Khatambuhl. That proposition collides with Mr Hannaford’s familiarity with the region and similar properties within it, as well as the layout of Khatambuhl.

Khatambuhl was a large property, but Mr Hannaford adopted a methodology to gather as many cattle as possible. He indicated that Mr Peter Fry was “a fellow who knew the country intimately” and that the objective was to muster and get enough cattle to start the process. Whilst Mr Hannaford’s health prevented him from examining all boundary areas, he indicated that by use of 4-wheel drive vehicles, he could see most of the country including getting to the ridges. Mr Hannaford accepted that he was limited in getting to the high country, but he had described the unlikelihood of cattle moving into that area. He ultimately did find, by further search, a limited number of cattle (37) in about four lots when he travelled up to some boundary points at the top end of Khatambuhl from May to October 2020.

Without repeating the earlier summary of submissions of the defendants, a contention was put that too little time was spent carrying out the stocktake. Reliance was placed upon timesheets, invoices, records of meetings, the stress cattle were placed under at Khatambuhl and that various steps contemplated by the stocktake were not taken. For the reasons discussed below, I reject that submission.

It was put to Mr Hannaford that he did not know how many cattle were on Khatambuhl and Somerset when the count was finished. Mr Hannaford replied that he knew exactly how many cattle were on Somerset and Westwood. Mr Hannaford stated that there was pre-testing at Somerset and that he had a written plan for the carrying out of the stock count. Mr Hannaford then proceeded to provide an explanation as to how he had reconciled the number on Khatambuhl.

I will turn to various other propositions that were put to Mr Hannaford but overall my impression was that he robustly maintained that the process he had embarked upon was thorough and was in accordance with appropriate stocktaking methods. Mr Hannaford’s print outs from his electronic records were in evidence.

An illustration of his evidence under cross-examination was as follows:

I find Mr Hannaford to be a very credible witness. In the absence of a concession by Mr Hannaford or plausible rebuttal evidence by another independent expert evidence called by the defendants suggesting that the time spent and allocation of resources was inadequate or the stock count was inherently flawed in some way, I do not accept that the submissions advanced by the defendants challenging the reliability of Mr Hannaford’s work (the count) based upon an analysis of records such as invoices and timesheets or Mark or Ivan’s evidence (such as that evidence went to the issue) may be accepted over the evidence of Mr Hannaford.

The defendants’ time-based analysis was rejected by Mr Hannaford. Other challenges to the count arising from the evidence of Mark and Ivan in these proceedings as to the adequacy of the count were quite insubstantial. In any event, I reject them.

No complaint was made by Ivan or Mark during the course of the count or its aftermath about the actual methodology used in the count. The high point of the defendants’ complaints in this respect was that Ivan asked for daily tallies but did not receive them and was shocked when he was told of the shortfall. However, it was not unreasonable for Mr Hannaford to provide the Burkes his count at the end of the process. There was certainly no proper basis for them to perform a supervisory role. As I will discuss below, their own record keeping had been poor and John had, for some time, then been asking for accurate estimates on cattle numbers.

There was also a criticism of a single dyslexic stockman employed by Mr Hannaford to assist in the count. [58] Mark additionally recited a conversation between himself and Mr Hannaford where Mr Hannaford purported to refuse to sign the daily tally sheet to shift responsibility to stockmen. [59] Mr Hannaford stated the conversation never occurred. [60] Mr Hannaford was not cross-examined on this point, however, Mark was. Mark confirmed his allegation that Mr Hannaford had refused to sign the daily tally but I doubt the reliability of Mark’s account. I accept Mr Hannaford’s evidence in preference to that of Mark, as Mark’s account is implausible given the manner in which Mr Hannaford approached his work and because I have not found Mark to be a reliable witness.

The defendants submitted that there were inadequacies in the count occasioned as a result of Mr Hannaford and his team not examining the far reaches of the properties, particularly around the boundaries or higher areas around the escarpments, ridges, or bush areas. A related submission was that there was extensive damage to fencing and that fencing was still being repaired when Mr Hannaford finally concluded work at the properties in November 2020.

It was submitted that the cattle could have strayed into nearby properties, particularly up in the high country and the cattle could wonder into neighbouring properties. Finally, it was put that the stragglers that were found on four separate occasions, months following the conclusion of the count, was clear evidence of the inadequacy of the stock count.

One significant difficulty with this aspect of the defendants’ case was that, as earlier mentioned, a significant proportion of the Wallace cattle were on Somerset and Westwood where boundary fences were not affected by the fires or flooding. [61] As Mr Hannaford observed, there was no reason to suppose that any cattle were lost on those properties from that factor. Mr Hannaford, in cross-examination, stated he knew exactly what was on Somerset because “there was no problem with fences down that way”.

Mr McLoughlin gave evidence that Westwood was partially a flat grazing property and partially hilly and timbered. He said there were no fires on Westwood, there was hand feeding and water was available to the cattle. If the gate from Westwood to Ronny Murphy’s property had been left open, to get to the Nowendoc River, the cattle on Westwood would have had to leave guaranteed feed and water on the Manning River flats to cross several steep timbered ridges in very hot conditions. [62] Such a departure from Westwood is implausible.

On the evidence, it was only at Khatambuhl that loss of wandering cattle was potentially relevant. However, I do not consider that, even on that property, cattle escaping to other properties, particularly in significant numbers, is, on the evidence, a reasonable proposition.

Ivan had a property which shared a boundary with the Khatambuhl and Westwood properties but never informed John that any Wallace cattle had gone onto his property.

John was in contact with other neighbours of the Khatambuhl property and none of those neighbours had reported that any Wallace cattle were on their properties except Rolf Kern who informed John and Mr Hannaford that there were a few cattle at the top end of Khatambuhl creek that may have been Wallace cattle.

In June 2020, John set up two motion sensitive cameras in the northwest of Khatambuhl, but no cattle recorded by those cameras were identified as Wallace cattle.

On 7 August 2021, John rode through two neighbouring properties of Khatambuhl, one to the northeast, and one to the north, however, did not see any Wallace cattle.

Although the boundary fences on the Khatambuhl property were damaged, they were in remote areas where the cattle were less likely to go. Most of the cattle on the Khatambuhl property remained near the feeding points and the available sources of water. In November 2019, the cattle that had been grazing in areas that were approached by fires had been allowed to move away from the fires through gates that were left open to give access to lower paddocks.

As to the proposition that the cattle had strayed into rugged or high country or into areas where there was bush, I consider the following aspects of Mr Hannaford’s evidence to be compelling in this respect:

The remaining issue, raised by the defendants, was that further cattle were located after the count prior to Mr Hannaford’s departure.

It is true that Mr Hannaford continued to work on the properties until November 2020 and rounded up a further 69 head between April to October 2020.

Mr Hannaford, in his affidavit of 22 February 2021, stated that in May 2020 he located 9 bulls and in August 2020 he located 17 cows, 7 calves, 3 yearlings and a bull. Mr Hannaford later clarified, in his affidavit of 10 March 2022, that those additional 37 cattle found after the count was concluded were in fact found at various times up until October 2020 when the last 14 of the 37 were located at Baxter’s creek (located at the Khatambuhl property).

Mr Hannaford also indicated that 19 further cattle were found in April 2020 on Khatambuhl (13 cows and 6 calves). Additionally, another 13 animals were recovered, however it is unclear on which of the properties they were found. It would appear from the evidence that all but 23 of that cattle were found on Khatambuhl. [63]

In summary, 33 cattle were confirmed by Mr Hannaford’s affidavit of 22 February 2021 and 10 March 2022 to have been found at Khatambuhl while it remains unclear which of the properties the remaining 36 cattle were found.

Mr Hannaford gave a plausible explanation as to why the 37 cattle were not caught by the earlier count in addition to the explanation he gave for Westwood as follows:

There is, therefore, a rational basis for the relatively small number of cattle not caught by the count being found at a slightly later time. The significance of this is twofold. First, these explanations point against propositions that the original count was unreliable. Secondly, they indicate that, as Mr Hannaford put at the end of his answers in the extract immediately above, it is quite improbable that there are any cattle not accounted for by the count, when the additional 69 cattle are taken into account.

It follows then that the count may be treated as a reliable estimate of the number of cattle at the time of the count, if adjusted by the number of 69 cattle found at various times during the period Mr Hannaford worked on the properties, up to November 2020. In coming to that conclusion, I have also had regard to the various factors pointed to by the defendants as a possible explanation for any shortfall in cattle as against the herd profile in the 2017 Lease Agreement which I will discuss below.

Those considerations as to the cattle count represent the logical starting point for the consideration of whether there was a deficiency in the number of cattle on the properties as at the date of the termination of the 2017 Lease Agreement. The number of cattle on the properties identified by the count, adjusted by the number of later cattle found between April and May 2020 was 821 cows, 456 calves, 457 weaners and 10 bulls. The total number of cattle except bulls was 1734. If bulls are included the total herd profile was 1744. To that total must be added the 69 cattle subsequently found which gives a total adjusted count of 1813 cattle. I will return to further dissect those tallies, but it is clear in the face of the adjusted count that there is a significant shortfall in the herd profile in the 2017 Lease Agreement.

The defendants contended that the plaintiff’s case must be understood as representing allegations of serious misconduct. It was suggested that the plaintiffs had alleged active wrongdoing whereby the defendants had “effectively converted or stole cattle that they say was worth well in excess of $500,000”. That contention was made upon the basis that, if all other possibilities were excluded, that must be the effect of the plaintiffs’ submissions. The other possibilities alluded to were that the cattle did not die, did not wander away, had ample feed and water and had survived the drought. Emphasis was placed upon the longstanding positive relationship between the Wallace and Burke families and the unlikelihood of the Burkes engaging in wrongdoing by removing a large number of cattle from the properties.

From these propositions there developed a contention that the plaintiffs’ needed clear and strict proof of the allegations of fraud, conversion or theft and that the plaintiffs could not make good these allegations on the basis of inexact proof, indefinite testimony or indirect inferences.

As a broad proposition, the defendant’s reliance upon s 140 of the Evidence Act and their discussion of general legal principles in that respect (see [229] of this judgment) may be accepted as a matter of legal principle as long as they are understood to be directed to the onus of proof as opposed to the standard of proof. The state of satisfaction required, in that respect, will be greater where, for example, the gravity of the matters alleged is more serious such as criminal conduct or fraud.

A difficulty confronting the defendants in their reliance upon what, in substance, was the application of Briginshaw principles [64] and, in that respect, the necessity for clear or cogent or strict proof is that the plaintiffs’ neither placed reliance upon fraud, or serious misconduct constituting theft or conversion in their pleadings (regarding the shortfall of cattle) nor advanced any such proposition in their submissions in relation to the shortfall of cattle. [65] This no doubt accounts for the way that the defendants constructed their submissions to assert that the plaintiffs’ were alleging active wrongdoing, because excluding other considerations such as the cattle wandering off, the Court was left with “the only possible reason to account for the deficit as [being] active wrongdoing on the part of the Burkes”.

However, the plaintiffs’ submissions proceeded upon the basis that the defendants did not, in substance, have proper accounting for the number of cattle on the properties and, therefore, inadequate control over or management of them.

I agree with the submission advanced by the plaintiffs that the defendants’ position as at the November 2019 meeting was itself incompatible with an allegation of dishonesty as they had asserted that, at the time of the termination of the 2017 Lease Agreement, there was an excess of cattle over the herd profile in that Agreement. I have found that the asserted excess by Mark, at the time of the termination of the 2017 Lease Agreement, was 400 cattle.

Before I turn more closely to the state of the herd numbers as at time of the November 2019 meeting, it is also important to return to the judgment in Weissensteiner v The Queen (1993) 178 CLR 217 upon which the defendants had placed reliance. The relevant passage of that judgment is at par 227 in the judgment of Mason CJ, Dean and Dawson JJ as follows:

The application of that principle in the present matter does not assist the case for the defendants. At the time of the termination of the 2017 Lease Agreement, the Burkes’ had operated under the lease for 2 years and 4 months. They had been in continuous management of the properties for at least 9 years by that time. Accordingly, the plaintiffs had not been in a position for a considerable period of time to independently assess what cattle were on the properties. They were reliant upon the defendants to tell them what the cattle numbers were and where the cattle were located. A herd count was to be conducted by the Burkes and “advised” to the Wallaces (cl 4).

This difficulty was exacerbated by the way the Burkes managed the cattle, as will be discussed below. Many of the cattle did not have functioning NLIS tags and there was movement of cattle from the properties to the Burkes properties and vice versa. As I will now discuss, the information provided to the plaintiffs in meetings held in January and March 2019 was scant and inadequate.

One of the assets under the 2017 Lease Agreement was the cattle herd. An obligation under the lease agreement was for the defendants to maintain the herd profile as well as progressively improving the genetics so that “a premium product is produced”. It followed that it was the defendants and not the plaintiffs that held the requisite knowledge about cattle numbers at the point of the termination of the Agreement about which evidence could be given as to the state of the herd at the date of termination (beyond bald assertions as to the number of cattle).

As mentioned above, cl 4 of the 2017 Lease Agreement required that the defendants do a full stocktake at 30 June of each year and by 15 August each year will advise the plaintiffs of the count. This clearly indicates that the knowledge of the herd numbers was held by the defendants and that the plaintiffs relied upon their statement of herd numbers in order to keep check on the herd.

There were two meetings in 2019 between the parties prior to the November meeting. There is not in evidence a record of such meetings in 2018. As I will now discuss, there was throughout the period 2019 up to and including the termination meeting, a great deal of concern about herd numbers by the Wallaces (and a justifiable uncertainty after inquiries were made of the Burkes).

The plaintiffs made a compelling submission that the Burkes had little or no reliable records of stock on the properties and did not know how many cattle there were for at least the 2019 period.

In addition to my earlier findings, that conclusion is available for the following reasons:

I accept the submission of the plaintiffs that there is no reliable basis, on the evidence, to conclude that the herd numbers on the properties at the end of November 2019 were equivalent or greater than the herd profile specified in the 2017 Lease Agreement. [73] There is no proper basis to accept the assertions of the Burkes during the November 2019 meeting of the parties as to cattle numbers.

In my view, the various estimates are for cattle numbers provided by the Burkes up to and including the MOU response (where they again assert 400 excess) are unreliable and should not be used as a basis for the assessment of cattle numbers during the operation of the 2017 Lease Agreement up to the time of the termination of that agreement or for that matter to the time of the giving of the MOU response.

However, what is reliable is the cattle count conducted by Mr Hannaford as adjusted by the cattle located during the balance of his work (April – October 2020). Upon the basis of that count, the deficit in cattle, when viewed against the herd profile specified in the 2017 Lease Agreement, was as follows:

I will return to the implications of the sale of 309 cattle in December 2019 later in this judgment.

If the Burkes’ estimate of cattle numbers on and from 1 December 2019 (or on any other occasion where such estimates were given during the year 2019) were, as I have found, unreliable, then there is no direct evidence of the number of cattle on the properties as at the date of the termination of the 2017 Lease Agreement. The plaintiffs sought that the Court infer that the deficit of 548 cattle as derived from the count of cattle in March 2020, adjusted in the ways discussed above, constituted the deficit of cattle in the herd profile under the 2017 Lease Agreement as at the date of the termination of that agreement.

A conclusion of that kind cannot be reached on the basis of possibilities. It is necessary for the plaintiffs to establish that the shortfall is more probable than not: Bale v Mills [2011] NSWCA 226 at [73] (Allsop P, Giles JA and Tobias AJA).

A central feature of the debate between the parties, in that respect, was whether the combination of drought, fire and flood constituted circumstances which made any deficit in cattle as at the date of the termination of the 2017 Lease Agreement no more than a mere possibility given those intervening factors (out of the hands of the Burkes) operated to create the shortfall later found in 2020. The defendants contended that the herd was under threat at the time the lease was terminated and remained under threat until well after the drought broke in early February 2020.

As earlier mentioned, there was a drought from at least early 2019, (and most likely earlier, in 2018) which continued through a peak in November 2019 to February 2020 when 153mm fell on 9 February 2020. [74] The circumstances of the cattle at the time of the termination of the agreement through to the breaking of the drought was the subject of some evidence of a general character. Mr Hannaford described the cattle at Khatambuhl as experiencing a “hard time” during the drought but disputed that the cattle were distressed. In mid-December 2019, Ivan suggested that the cattle were experiencing heat stress in the week commencing 16 December 2019. On 18 December 2019, Kirstie stated to John, in the course of discussing the purchasing of feed: “yes it is going to be extremely grim but what options are there? Unless you truck the cattle all off somewhere and even Mark said that would put the cattle under more stress”. John agreed to a question in cross-examination that the cattle were under ‘extreme stress at that time’ being November 2019 when the 2017 Lease Agreement was being terminated.

The defendants placed reliance upon the evidence of Mr Hannaford, that a strategy that may be employed to deal with the drought was to remove by sale older and weaker beasts from the property. Indeed, Mr Hannaford indicated that on his own property he sold his cattle. Essentially, his theory was that if numbers were reduced, the monies that were produced through sale can be used to maintain the rest of the herd (which were younger and stronger) with feed and protein supplements.

He did not, however, agree with the proposition that the maintenance of old cattle or weak cattle including calves during a drought may risk a substantial number of them dying. In substance, Mr Hannaford stated that good management would prevent that outcome.

It is clear that the Wallaces, consistent with the 2017 Lease Agreement, determined not to sell cattle but rather to provide feed to the cattle. That task originally fell to the Burke’s after the termination of the 2017 Lease Agreement but was subsequently taken over by the Wallace’s. That process of feeding the cattle was continuous except for a period where the flood prevented feed getting to cattle at Khatambuhl for about a week. Mr Hannaford denied that cattle would die if deprived of feed for a week.

John insisted that the provision of food at substantial cost would have and did maintain the herd. He indicated that requests had been made of the Burkes to indicate if cattle had died and no reports had been received of that kind. Rather, he emphasised that the Wallace’s had been advised that the cattle numbers were in excess of the herd profile in the 2017 Lease Agreement.

It may be accepted that the Burkes did not quit the property after the termination of the lease, provided feed for the cattle for a short period of time and apparently had determined to continue to do so, except for the intervention of the Wallaces who provided feed from mid December 2019. It may also be recognised that the Burkes were involved in protecting the properties during the fires; a fact that was recognised demonstrably by Patricia in November 2020.

I will return to the defendant’s case based on drought, fires and floods but as their reliance on those events was, in substance, to demonstrate that the cattle on the properties were lost due to those occurrences, the question that should be first asked, as a matter logic, is whether there was evidence as to the deaths of cattle on the properties between the termination of the 2017 Lease Agreement and the completion of the cattle count.

I agree with the submission by the plaintiffs that the shortfall in cattle cannot be explained by numerous deaths of animals in the herd. As I will discuss below, the evidence is to the contrary effect.

As earlier discussed, after Mr Snelgrove sent a letter to Mark on 30 March 2020 setting out the shortfall in cattle numbers. Three telephone conversations occurred between John and Ivan regarding the shortfall.

What is evident from those conversations for present purposes of evaluating the extent of the death of any cattle from the termination of the lease to the declaration of the cattle count (based upon the evidence of Mark and Ivan) was that it was clear that Ivan was surprised by the shortfall. It must follow that he could not previously have seen evidence of large numbers of deaths or noticeable absences of cattle.

What Ivan did in conversations with John was to assert a relatively small shortfall in Khatambuhl based upon loses from 1 December, although he later speculated that the losses may have occurred over a 12 month period.

Ivan’s evidence in cross-examination, as to the reliability of the estimates, was unsatisfactory and went more generally to the credibility of his evidence. The following passage of his evidence represents dissembling and evasive evidence and underlines the speculative nature of his estimates:

The same assessment may be reached with respect to the estimate of losses given by the Burkes on 15 April 2020.

Ivan conceded that he had not seen 370 carcasses “or anything like that” figure on the properties or Khatambuhl in particular in December 2019 and January-February 2020. When Ivan was pressed that 370 deaths was not a reasonable estimate of deaths, he avoided answering the question directly and deflected as follows:

Similarly, Mark was unwilling to confirm the estimate of 370 deaths and suggested the cattle may have wandered off. The following represents an unsatisfactory part of his evidence:

In the communication of 15 April 2020, Mark said that the information in that email was “highly likely”. His justification was that it was less than 20% of the herd. He conceded that the Burkes had estimated what had died. The Burkes stated in the same email that around 140 cows, 180 calves, 30 heifers, 30 calves, 20 weaners and 4 bulls “had died from the 1st December 2019 up until mid January 2020…”. If an adjustment is made for the double counting of calves, the total is 374. However, the estimates variously given by the Burke were inconsistent and no basis for them was ever properly provided to the Wallaces or this Court. More significantly, I agree with the submissions by the plaintiffs that it is impossible to reconcile the assertion by Ivan that there were deaths in December 2019 and January 2020 with his statement in cross-examination that there were no deaths prior to 30 January 2020. [75] This is extracted below:

The evidence of the Burkes, with respect to their estimates of death, can be compared with what information they were or were not communicating during the period in which the estimates of death relate. There was no communication to the Wallaces in December 2019 or January 2020 that large numbers of cattle were dying. The contrary was the case, as Mark assured the Wallaces in the January meeting that the cattle numbers were at least intact. Further, Mark’s own evidence was that it appeared to him that most cattle were present in early January 2020 although it was difficult for him to tell.

My overall assessment of the credibility of the Burkes evidence, in this respect, is that their estimates for the death of cattle from the termination of the agreement until the count are unreliable and cannot be accepted.

Further, there is countervailing evidence as to the deaths of cattle.

Mr Hannaford and his stockmen were on the lookout for the remains of dead cattle and found carcases of about 30 dead cattle, which Mr Hannaford assessed to have died between 5 and 10 months before December 2019. It is obvious that Mr Hannaford would have seen many more carcases if the shortfall of more than 500 animals had been the result of deaths. Mr Hannaford did not see evidence of cattle deaths that would have occurred in December 2019 or January 2020 neither near feeding and watering areas that the cattle would have been in during drought conditions, or in the bush after wandering away.

The evidence that any animals had died during December 2019 and January 2020 after being bogged in dams is limited and doubtful. Ivan agreed in cross-examination that only a few cattle were bogged in dams.

It is only speculation by the defendants that the herd may have fed on poisonous plants after rain came. Mr Hannaford rejected the proposition that the herd was in danger from eating toxic weeds when the drought broke. There is no evidence that any animals did eat toxic weeds or died from having done so.

The absence of evidence of the deaths of cattle in the period from 1 December 2019 to the end of the cattle count, was not overcome by the defendant’s reliance, in general terms, on the existence of a lack of water and feed on the properties during the drought. While the drought clearly had distressed the herd, the evidence does not sustain that there was an absence of water and feed on the properties during the drought.

The evidence discloses that there was enough water available to the herd in December 2019 and January 2020 to keep the herd alive until the drought broke, as follows:

A similar conclusion may be reached with respect to the availability of feed for the herd.

As earlier mentioned, the Burkes provided feed to the herd in the first two weeks of December 2019. The Wallaces then took over supply of feed for the herd and purchased a large amount of feed from early December 2019 onwards, spending $471,393 until mid-March 2020.

The amount of feed purchased was, in fact, advised by Mark. Mark also advised on the type of feed and various sources for it. Kirstie made it clear to Mark that the Wallace’s would pay for necessary feed in December 2019. On 10 December 2019, Mark assured Kirstie there was sufficient feed. By late December 2019, 60 bales of hay were arriving per day and additional pellets were being sourced. By that stage, Mark was advising that the feed situation as “okay” although the cattle had not been putting on as much weight as he would have liked. The hay was being driven up to more remote areas. John visited Khatambuhl from 19-21 January 2020 and did not see cattle that were severely emaciated.

Finally, whilst Mr Hannaford had suggested that a methodology in handling the drought was to sell down the herd, he acknowledged that the alternative course (no doubt more expensive) was to purchase feed to keep the animals alive.

It follows that the defendant’s contention that the shortfall could be explained, in whole or substantial part, by the death of cattle in the herd on the properties between the termination of the 2017 Lease Agreement and the cattle count (whether caused by drought or otherwise) is not supported by the evidence.

The defendants also relied upon a number of additional factors which might account for the loss of cattle, one of which was that cattle may have wandered away into the bush or onto other properties. I have earlier rejected those considerations as factors which undermined the reliability of the cattle count. The same evidence is strongly against the proposition that the shortfall in the herd can be explained by cattle having wandered away from the properties, particularly Khatambuhl.

The evidence sustains the conclusion sought by the plaintiffs that the shortfall of cattle cannot be explained by cattle from the Wallace herd going into properties neighbouring Khatambuhl or cattle from the Wallace herd going into the bush areas at the top end of Khatambuhl. In the latter case, the cattle that did go into those areas were retrieved and mustered either in the February-March 2020 cattle count or the subsequent musters up to October 2020. In any event, those factors do not undermine the reliability of the cattle count.

There were some other factors brought to account by the defendants in meeting the claim that there was a shortfall in the herd as at the date of the termination of the 2017 Lease Agreement which it is appropriate to address at this juncture. Those were as follows:

I have earlier summarised the defendant’s submissions with respect to these matters and do not repeat that summary here, but I will deal with some salient points.

The first two factors relied upon by the defendants appear to overlap and have the following features:

The terms of cl 10 of the 2017 Lease Agreement have been earlier set out in this judgment.

It was common ground that the conditions for the termination of that agreement existed in November 2019 because the defendants had not made lease payments in full for two consecutive months without the prior written consent of the plaintiffs.

It was suggested by the defendants that the lease may have been terminated without notice in those circumstances. That was not a matter of debate but there must be some real doubt about that proposition as the first paragraph of cl 10 does not speak in those terms but rather suggests that a condition for the termination of the 2017 Lease Agreement by the plaintiffs was a default in lease payments. It is, however, unnecessary to determine that question because I have found that there was a mutual termination.

As mentioned in the above summary of the defendants’ submissions, it was further suggested that upon termination of the 2017 Lease Agreement it was incumbent upon the plaintiffs to immediately undertake the herd count. This was said to arise by virtue of the second paragraph of cl 10.

There are arguably two difficulties with that proposition. First, the second paragraph of cl 10 establishes, as a pre-condition for the herd count, that “either BF or WF terminates this agreement”. The agreement does not appear to contemplate a mutual termination. On this basis, cl 10 would not have compelled either party to undertake the stocktake at the point of termination. In any event, it should be noted that either party may have instigated the herd count.

Secondly, both parties proceeded upon the basis that the herd count would not occur until a later time at the beginning of 2020. At the time of the termination of the 2017 Lease Agreement, it had been declared by the Burkes that the herd size was in excess of the herd profile. That was the representation made by the defendants and the plaintiffs acted upon it, so much so, that 309 cattle were sold in December 2019. [80] In any event, the defendants asserted that a stocktake was completed as at 29 November 2019 in their MOU response and that it had been agreed that the livestock numbers at the time were “in excess of the lease values”, although, as I have found, the numbers provided, by the purported stocktake, were unreliable and inaccurate. To that it may be added that Mark gave evidence that the Burkes did not have time in late 2019 to carry out a stocktake. The position was no different for the Wallaces who were attempting to grapple with the aftermath of the termination of the 2017 Lease Agreement and the maintenance of the herd during the drought.

The evidence of John in this respect is telling:

The defendants were critical of John’s explanation in cross-examination as to why he had not conducted a stocktake until February/March 2020, namely, that the plaintiffs had been informed on a number of occasions that there were excess numbers of stock. It was said that this was typical of answers given by John of blaming the defendants for the plaintiffs’ own failures, but that criticism is unfair and the position was in fact as described by John.

The terms of the January agreement do not contradict the earlier conclusion reached in this judgment, that the parties varied the terms of the 2017 Lease Agreement so as to provide for a cattle count in February/March 2020. Rather the January agreement confirms that conclusion by its terms. The January agreement provides for the stock count commencing in late February but otherwise preserves the terms of cl 10 of the 2017 Lease Agreement.

Further, in the January 2020 email, John wrote to Mark and identified that the stock count would be conducted late February “with any adjustments to be agreed and made per Clause 10 of the Lease”. The communication also stated that the Wallaces would be appointing Mr Hannaford to assist with the cattle sales and managing the sale of Somerset. It was suggested that the Burkes would work with Mr Hannaford to “organise the cattle, review feed reqs, prepare for the stock count on the 27th Feb…”.

In April 2020, Mark sent an email to Mr Snelgrove in which he mentioned the livestock numbers on termination of the lease were to be completed immediately before or immediately after the termination of and from 1 December 2019. Having said that, however, he stated “it was physically impossible to do this at the time due to the fires, the destruction of fences, lack of water, heat and physical condition of livestock to move them long distances”. Nor is there an occasion before June 2020 when the Burke’s complained about the cattle count being delayed until February/March 2020 even though they did complain, as I have mentioned, about their level of involvement in the cattle count and about one dyslexic stockman.

In my view, the above analysis of the evidence bearing upon the operation of cl 10, discloses that the Burkes and Wallace’s expressly, or at least implicitly, agreed to vary the terms of the 2017 Lease Agreement so as to vary the term requiring that “a herd count [be conducted] immediately prior to or on the date of termination.” In my view, this approach is to be preferred over the first mentioned consideration whereby the clause would have no operation because of there being a mutual termination.

The third proposition advanced by the defendants as to a failure to provide details of a subsequent count is unclear both in its own terms and as to its connection to a breach of contract. In any event, whilst there was no evidence of a subsequent cattle count, it was plain that Mr Hannaford continued to search the properties which ultimately resulted in the additional 69 cattle being found as referred to earlier in this judgment.

Finally, the defendants relied upon what was described as a failure by the plaintiffs to call Patricia. It was submitted the Court should infer that the uncalled evidence would not have assisted the Wallaces. However, if an adverse inference were to be drawn from a failure to call Patricia, it is not entirely clear from the defendants’ submission just what inference would be available in that respect and, in all the circumstances, whether it would be a matter of any significance in the disposition of this aspect of the plaintiffs’ case.

The inferences sought to be drawn seem to be limited to two matters. The first is that Patricia could have cast a light on the state of the stock prior to “28 November 2020” (which should be properly understood as a reference to the date of the November 2019 meeting). The second is that Patricia would have cast a light upon the trustworthiness and reliability of the Burkes.

As to the first matter, there does not seem to be any real dispute that the herd was experiencing hard or distressed conditions through the drought during 2019 (or at least the latter half of the year) although various expressions were used to describe their condition of the cattle. It is difficult to see what further light Patricia could have shown upon the state of the herd during a drought unless she expressed a view as to cattle deaths which issue was not raised by the defendants in this respect. Secondly, the trustworthiness of the Burkes relates essentially to the notion that allegations of wrongdoing, such as theft and conversion, had been made by the plaintiffs. I have rejected that proposition.

In substance, the plaintiffs contended that the estimates of cattle numbers given by the defendants were unreliable and that, in fact, no proper and reliable estimation had been made by them. It was suggested by the plaintiffs that the Burkes response was driven by their desire to keep arrangements under the 2017 Lease Agreement afloat, notwithstanding rent arrears and that, in those circumstances, the Burkes had engaged in “wishful thinking” in providing their estimates. The Burkes did not have a proper understanding of the herd, at least from a numerical viewpoint, throughout 2019, even though the existence of the drought might have suggested an imperative to do so. The existence of the drought had created the anxiety in the Wallaces to get to the bottom of the cattle numbers which led John to seek accurate cattle numbers throughout 2019.

Overall, the above propositions advanced by the plaintiffs in those respects were reasonable and do not amount to an allegation of serious misconduct. They may involve allegations of mismanagement or a lack of performance in mentioning the herd. But that is a different issue and of significantly less seriousness. In any event, I have taken the allegation expressed in that way into account, pursuant to s 140(2)(c) of the Evidence Act because the allegation is being made with respect to the reputation of experienced farmers.

It may be accepted that the Wallaces and the Burkes had historically had a close relationship for many years, particularly in the case of Ivan and Colleen and Harry and Patricia. However, it is plain that the relationship soured somewhat after the next generation of the respective families become involved in the management of the properties. Nonetheless, my impression of John’s evidence does not correspond to the defendant’s submission that John showed antipathy towards the Burkes. There can be little doubt that during 2019 and early 2020 that John experienced frustrations in dealing with the Burkes and ultimately, expressed some concerns about those dealings to which I will return. No part of Kirstie’s evidence would suggest any animosity towards the Burkes. None is reflected in her dealings with them throughout what was plainly a difficult experience for all parties at the time of the termination of the 2017 Lease Agreement and in the aftermath of that event. On the other hand, it is clear that Mark was openly hostile during the various meetings regarding the 2007 Lease Agreement and negotiations which then followed. That underlying anger was reflected from time-to-time in the witness box.

It was submitted that, instead of calling Patricia, the plaintiffs chose to make further serious allegations against the Burkes in their affidavit evidence which were not pursued in cross-examination and do not seem to form part of the plaintiffs’ case. It was submitted they should not have been made. These matters concerned alleged threats made by Ivan (re: complaint to police about children on roads) and Mark (re: contaminating Somerset).

I have looked closely at the evidence of John and Kirstie when cross-examined upon these issues by the defendants’ counsel. I do not consider that it reflects adversely on their evidence otherwise given in the trial, even though their counsel did not cross-examine Mark and Ivan upon the topics. Their evidence is forthright in response to the propositions put to them. The events which are complained of were obviously matters of grave concern to Kirstie and John and there are contemporaneous records of the complaints made including an email from Mr Chester following up on a police report John made. If it is suggested that the complaints were invented in order to damage the Burkes, then I would reject that proposition.

This is not to say that the Court makes an adverse finding with respect to Mark and Ivan in this respect. In the absence of cross-examination on the issues raised by the plaintiffs, no such finding is available.

Finally, the defendants contended that the plaintiffs had failed to demonstrate what had become of the missing animals as at the November 2019 meeting.

Plainly, many of the conclusions reached earlier in this judgment have a bearing upon this consideration and I will not repeat them here.

In considering whether the plaintiffs have discharged an obligation to demonstrate the existence of the missing cattle as at the November meeting, it must be borne in mind the limits on the plaintiffs’ abilities to adduce evidence on those issues and any failure on the part of the opposing party to call evidence in response: G v H [1994] HCA 48; (1994) 181 CLR 387 at [391]–[392] ( Brennan and McHugh JJ).

The plaintiffs had sought information as to cattle numbers over an approximately 11 month period in 2019 leading to the November 2019 meeting. Such information as was provided was unreliable. The estimates were speculative. There was an absence of proper records kept by the Burkes, including NLIS. The cattle was moved across nine properties. It was clear that any proposition that the herd was in excess of the herd profile, or even that the herd profile was intact involved, to use expression used by the plaintiffs’ counsel, “wishful thinking”, particularly in a context where the only apparent means for the Burkes to raise funds to meet the substantial rent arrears under the 2017 Lease Agreement (10 months by the November 2019 meeting) was via the sale of cattle in excess of the herd profile.

Any obligation existing on the plaintiffs to demonstrate not only the existence of the missing cattle but where those cattle may have gone needs to be considered in that light, and further, in the light of the fact that the defendants had the obligation under the 2017 Lease Agreement of maintaining the herd profile and reporting the state of the herd profile at intervals identified by the agreement (by implication), properly and accurately. That obligation included the requirement to identify cattle that were missing, and if missing, the reasons for their loss. This was simply not done over the 2019 period, notwithstanding the anxiety of the Wallaces to obtain such information; no doubt, concerns amplified by the existence of the drought.

The next aspect of this consideration is as follows. I have found the cattle count to be reliable, although the numbers of cattle found need to be adjusted by the additional cattle located after the count between April and October 2020. The finding of those additional cattle during Mr Hannaford’s engagement at the properties and the absence of any cattle subsequently found gives a high degree of confidence in the assessment of the final shortfall in cattle arising from the cattle count if it is adjusted to take into account the additional cattle found.

The defendant's contentions that the shortfall in cattle, demonstrated in the cattle count, may be explained, or explained in large part, by the deaths of animals in the herd, by cattle going missing onto other properties by their own motion (as opposed to being mustered or driven to the other properties) or by disappearance in the bush and high areas of Khatambuhl has simply not been sustained on the evidence.

It follows that the plaintiffs are correct to submit that there is no reliable basis on which to conclude that the herd numbers on the properties at the time of the November 2019 meeting were at the level of the herd profile or greater. There are substantial reasons to conclude that there was a shortfall at that time in the amount demonstrated by the cattle count as adjusted by the April to October location of cattle (and with due allowance for cattle sold in December 2019.

On the evidence in the proceedings, a deficit in those terms as at 1 December 2019 was entirely possible, and in the absence of any plausible explanation for the shortfall found later (and there is none) probable. I will turn now to the precise calculation of the deficit which should be taken into account in assessing loss.

Clause 2(a) was a term of the 2017 Lease Agreement which required the defendants to maintain the herd profile which was defined as 1222 cows, 556 calves, 620 weaners and 29 bulls.

The evidence before the Court established that it is more probable than not that a shortfall in cattle numbers, by reference to the herd profile in the 2017 Lease Agreement, existed on and from 1 December 2019 and that the defendants failed at that time to hand over the herd in the requisite numbers. As mentioned, I consider that this inference is available upon the basis of strong and persuasive evidence.

The shortfall in cattle was as follows:

Before I come to the central issues raised by the defendants as to the proper assessment of the plaintiffs claim in this respect, it is necessary to return to the cattle sold in December 2019. According to the NILS’s documentation, cattle were sold on 4, 11 and 12 December 2019, the total number being 309. As properly conceded by counsel for the plaintiffs, those cattle must be treated as being available on and from 1 December 2019 and not calculated as part of the shortfall, even though they will become relevant in considering the claims under ACL.

The 309 cattle sent to Edwards Livestock in December 2019 were not, in fact, surplus to the herd profile and their removal caused loss to the first plaintiff. The 309 head comprised 131 heifers and 178 steers. The 131 heifers would have reduced the shortfall of cows to 169. The 178 steers would have reduced the shortfall of weaners to nil and, applying the additional 21 weaners to the shortfall of calves, would have reduced the shortfall of calves to 66.

Adjusted in this manner the shortfall in cattle was as follows:

This makes the total shortfall of 239 head.

I find, therefore, that the defendants breached the 2017 Lease agreement by failing to maintain the herd profile. The loss suffered, in that respect, is the value of the missing cattle. There is also an issue as to the loss occasioned by offspring who would have been born to the missing cows if those cows had been present.

The claim advanced by the plaintiffs, based on calculations by Kirstie in her affidavit of 4 December 2021, is represented in a table as follows:

The amounts appearing under the column “Average Values” are calculated upon the basis of Annexure D to the affidavit of Kirstie of 4 December 2021. In those tables, Kirstie refers to the proceeds of sale excluding GST for cows, weaners (steers and heifers) and bulls between 1 May 2020 and 27 May 2020. Upon this basis, Kirstie worked out the average sales yields of cows, weaners, and bulls (the net cost of sale) which were then applied to the abovementioned table. Kirstie estimated that calves would be sold when weaned.

Putting aside issues associated with the method of assessing value, what is clear from the table is that the plaintiffs’ claim for loss of cattle is predicated upon sales in April and May 2020 and not at the date of the termination of the 2017 Lease Agreement on and from 1 December 2019.

The calculation of lost offspring is based upon the 300 missing cows having an estimated birth rate of 80% being 240. This is based upon the document produced by Mark marked as Annexure A.

The plaintiffs’ claim is for damages arising from the breach of contract. It was submitted that the appropriate date for the assessment of damages was not the date of the breach on and from 1 December 2019 but in 2020 when the count was conducted, and cattle were sold. It was accepted that the starting position is that the date for the assessment of damages is normally the date of the breach of contract when the defendants failed to hand over the requisite number of cattle.

It was submitted by the plaintiffs that the date of breach for the assessment of damages was not an absolute rule and the ultimate purpose for damages was compensation. The bases for this submission were as follows:

The defendant’s submissions on the assessment of loss were as follows:

There is considerable force in the contention by the defendants that in substance the plaintiffs claim is not a claim for damages but a claim for an accrued entitlement under the contract.

I also agree with the submission of the defendants that the contract provides that the calculation of the value of a shortfall in capital is the market price for any cattle that are less than the herd profile at the date of termination.

The proper construction of the second paragraph of cl 10 of the 2017 Lease Agreement is that the market price will be the market price at the point of termination. The agreement does not expressly state that the market price will be calculated in that way but, when read in context, it is the only construction available given the grammatical connection between the conduct of a herd count upon termination and the requirement to pay for any shortfall at the market price.

Neither the variation to the 2017 Lease Agreement, to provide for a head count in February/March 2020 nor the equivalent terms of the January agreement alter that conclusion. In my view, the only term of cl 10 of the 2017 Lease Agreement that was varied in those respects was the date at which the count would occur and not the term for the calculation of the value of the shortfall. No part of the transactions between the parties with respect to the head count contemplates any variation to that term of the 2017 Lease Agreement. The January 2020 Agreement expressly provides for the continuance of cl 10 of the 2017 Lease Agreement save for the date of the count.

No different conclusion would follow if an assessment were to be made of damages arising from the breach.

The general rule is that damages for breach of contract are assessed at the date of the breach. That rule will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation: Vieira v O’Shea [2012] NSWCA 21 at [44] (per Basten and Maegher JJA with whom Handley AJA agreed).

The plaintiffs contended that it was envisaged that “these cattle” would be sold in 2020 and so the appropriate date is an assessment in 2020 when they were sold. Thus, the value was said to be realised in the future and the plaintiffs lost the opportunity to make those sales later.

However, the cattle to which the plaintiffs are referring in that context must be the cattle which represented the shortfall giving rise to the breach of contract at the point of termination of the contract. The contract itself specified that that breach is to be assessed at the point of the termination of the contract because of the breach. It is common ground, and I have found, that the termination occurred on and from 1 December 2019. Furthermore, just compensation must reflect the value of the cattle at the time of the termination of the lease when the shortfall materialised. Finally, the plaintiffs brought no evidence as to the market for beef cattle in the location or vicinity of the properties as would have been appropriate in the assessment of damages under the plaintiff’s case for damages: Golden Strait at [34].

Accordingly, the assessment of compensation for the shortfall of cattle as at the termination of the 2017 Lease Agreement is the market price for the cattle that is less than the herd profile at the date of termination. The actual shortfall of cattle in that respect has been assessed above in this judgment (save for the question of the loss of offspring which will be discussed below). What remains is the assessment of the market price of the shortfall of cattle.

The defendants submitted that the Court may have regard, in that respect, to either the September sale prices or December sale prices for the cattle on the properties.

Both of those sale periods correspond to the ongoing drought but, in my view, the December prices should be used to assess market value at the point of the termination of the agreement. They occurred at a time corresponding to the peak of the drought and at a time proximate to the date of termination (within two weeks of 1 December 2019).

The parties did not address the assessment of appropriate market price arising out of the December sales. I will make a provision for short submissions in that respect in the event that the parties are unable to agree to draft orders reflecting this determination.

As mentioned, there is one further consideration relevant to the losses occasioned by the shortfall of cattle numbers as against the 2017 Lease Agreement herd profile.

The plaintiffs claimed as damages a sum equivalent to lost offspring based upon 300 missing cows having an estimated birth rate of 80%, being 240. The formula of 80% was predicated upon the assessments made by Mark in Annexure A.

Apart from the unreliability of many of the figures given in that document and more generally the defendants calculation of cattle numbers throughout 2019, the figure appears to be purely an estimate and was given in March 2019 at an earlier stage of the drought.

In contrast, Mr Hannaford carried out pregnancy testing at the beginning of the cattle count and found that of 237 cows tested, only 33 were pregnant. That would suggest a percentage of about 14%. If damages were to be assessed on that basis that would be the more reliable estimate on the evidence before the Court. The calculation would be made on the basis of the shortfall for cows found earlier in this judgment, being 169.

However, the defendants advanced a submission which has some real force. It was contended that the appropriate test is the herd that existed as at 1 December 2019 as it is that herd that needs to be assessed (assuming some of the cows were pregnant) whether under cl 10 of the 2017 Lease Agreement or in general damages. That would require an assessment which assumed that the cows would yield progeny after the date of termination. Whilst a pregnant cow may be worth more at that date of termination than cows that are not pregnant, the assessment of market price in accordance with cl 10 of the 2017 Lease Agreement is that of the cows at the date of termination. There is no provision or the assessment of offspring and there is no evidence of the greater value of cows that were pregnant.

In the result, I reject the plaintiffs claim with respect to offspring.

The loss occasioned by the shortfall of cattle shall be assessed in accordance with [478] above and the loss calculated by the market rate as at 1 December 2019 calculated in accordance with the December sale proceeds of cattle from the properties.

The plaintiffs shall be required to bring in Short Minutes making a calculation reflecting that conclusion.

As to the issue of fencing maintenance, cl 2(b) of the 2017 Lease Agreement deals with paddock maintenance. That provision not only required the maintenance of paddocks but regular maintenance of constructed features of the properties including fences.

I have earlier summarised the submissions of the parties in that respect and will not repeat them here. It is sufficient to observe that the plaintiffs made a claim for the costs of carrying out maintenance to fencing on the properties that ought to have been carried out by the defendants under the 2017 Lease Agreement.

In my view, the evidence does establish that there was a failure to carry out maintenance on the fences by the Burkes and that the plaintiffs bore the cost of rectification of the same. It is true, as submitted by the defendants, that maintenance was affected by the climatic conditions which affected the work of the Burkes in the sense that they were taking measures to protect the cattle. However, Ivan’s evidence was that the regular maintenance had not been done in both 2018 and 2019.

Based on the evidence in the form of invoices for fencing work, in my view, the plaintiffs have made good the claim for $13,809 (exclusive of GST). This amount can be brought to account in Short Minutes of Order prepared by the parties in accordance with directions given later in this judgment.

As to unpaid claims under cl 11 of the 2017 Lease Agreement, the plaintiffs pleaded the following (in the SOC):

In the defendants penultimate Amended Defence, the defendants admitted they had made over $700,000 in those respective financial years but corrected the quantum. These are extracted below:

However, the defendants, in their FAD, only admitted the plaintiffs made profits exceeding $700,000 in those financial years but “Otherwise do not admit the balance of the paragraph”, namely, the quantum.

In my view, the plaintiffs have established these claims as stipulated in their submissions set out on the basis of the respective financial statements of Ivamar. In the result, the plaintiffs were entitled to judgment for:

The plaintiffs sought interest from 15 August 2018 for the first amount and from 15 August 2019 for the second amount. The quantum of interest shall be determined under the procedures in the Orders and Directions section of this judgment.

This claim by the plaintiffs was in substance for losses occasioned from the shortfall of cattle and was an alternative to the claim made under the 2017 Lease Agreement.

It is therefore unnecessary to consider the matter further in that light but in any event, I have found that a contract was not formed out of the MOU.

The plaintiffs pleaded under CC2 at par [1](d) that the plaintiffs and the defendants had entered into the January agreement and that the agreement included a term that a stock count would be conducted commencing on 27 February 2020 and any adjustment to cattle numbers would be agreed and made in accordance with cl 10 of the 2017 Lease Agreement.

The Court has earlier found that an agreement was made in January 2020 and that the terms of the agreement were those contained in the January 2020 email including the term pleaded in the CC2.

However, the claim by the plaintiffs, in this respect, rises no higher than the claim made for the shortfall of cattle under the 2017 Lease Agreement and is a true alternative to the claim under that agreement. The conclusions reached as to loss for the shortfall of cattle under the 2017 Lease Agreement are equally applicable to this claim, but there shall be no double counting.

However, more will need to be said about the existence of the shortfall of cattle against the herd profile in the context of representations made by the defendants and the operation of the ACL. I will deal with those matters below.

Section 18 of the ACL is in Chapter 2 of the ACL and provides:

The expression “trade or commerce” is defined in s 4 of the ACL and covers “trade or commerce within Australia” including “any business or professional activity (whether or not carried on for profit)”.

By virtue of s 2(2)(a) of the ACL, the expression “engage in conduct” refers, among other things, to doing any act. That includes the making of a representation.

Section 236(1) of the ACL provides:

Section 237(1) of the ACL provides that a court may, on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that was engaged in a contravention of a provision of Chapter 2, make such order or orders as the court thinks appropriate against the person who engaged in the conduct or a person involved in the conduct. Subsection 237(2) further provides that the order must be an order that the court considers will either compensate the injured person in whole or in part for the loss or damage, or prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person. The kinds of orders that may be made under s 237 are described non-exhaustively in s 243 of the ACL.

Section 243 of the ACL provides as follows:

I have found that, at the November 2019 meeting the defendants represented to the plaintiffs there were enough cattle in the first plaintiff’s herd on the properties that the defendants could sell 400 cattle from the herd in December 2019 and the herd profile would remain intact.

I have earlier set out the evidence upon which that conclusion was reached but would mention at this juncture in particular the following:

In November 2019, Mark and Ivan were both parties to the 2017 Lease Agreement and were directors of Ivamar.

As the earlier mentioned, the herd profile under the 2017 Lease Agreement was 1222 cows, 556 calves, 620 weaners and 29 bulls.

The representation was incorrect, as the herd numbers were in deficit and could not sustain the removal of any animals, still less 400 animals, and preserve the herd profile.

The herd numbers had been a matter about which the Wallaces had shown close interest throughout 2019. The responses given by the Burkes (as earlier discussed), involved speculation, were without proper foundation and were most likely directed to mitigating the concerns of the Wallace’s regarding growing arrears of rent under the 2017 Lease Agreement.

The defendants submitted that the MOU did not suggest that a representation that the herd profile was intact was a condition of the agreement that Kirstie was proposing or that any other terms that she was proposing were conditional upon it. This submission is unsustainable.

Central to the issues discussed in the November 2019 meeting was the state of the herd profile which was an extension of inquiries of that kind that had been made by the Wallaces throughout 2019.

The MOU specifically set out the herd profile in the 2017 Lease Agreement and coextensively, in my view, referred to the consent to the sale of up to 400 head of cattle. The Burkes understood this in the MOU response. They referred to a stocktake having been completed at 29 November and that “it is agreed that the livestock numbers at that time were in excess of the lease values”.

The representation made by the Burkes was, therefore, misleading or deceptive or likely to mislead or deceive.

The representation was made by Mark during the November 2019 meeting, when the plaintiffs and the defendants were engaged in commercial negotiations about the termination of the 2017 Lease Agreement and the terms on which the defendants would work for the plaintiffs after the termination. By its nature the conduct bore a commercial character: Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603 (per Mason CJ and Deane, Dawson and Gaudron JJ); McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689 at 695 [30]; All Options Pty Ltd v Flightdeck Geelong Pty Ltd [2019] FCA 588 at [1]-[3] and [95]. It was, therefore, made in trade or commerce for the purposes of s 18 of the ACL.

In response to the plaintiffs’ submissions on reliance, the defendants advanced four submissions, as follows:

Additionally, it was submitted that the plaintiffs’ proposition, that a deficiency in the number of cattle would have meant that none of these matters would have been pursued by the Wallaces flies in the face of the agreement that protected the Wallaces, namely, the provisions in cl 10 of the 2017 Lease Agreement. Put another way, the Wallaces were always protected by a backstop whereby the Burkes would have to make up the difference in the case of a deficiency in any stock count.

My conclusion is that the evidence discloses that the plaintiffs relied upon the defendant’s representation at the November meeting.

As a broad proposition, I accept the submission of the plaintiffs that “it seems impossible that the plaintiffs in those circumstances would have agreed that the Burkes would keep money on the sale of the 309 if they had understood that they were just giving the cattle to the Burkes in effect. So the whole of the arrangement that went forward after that meeting was predicated on the sure, firm assurances from the defendants that the herd profile was there and that there were substantial numbers of cattle in excess of that, such that the defendants could sell up to 400”.

That submission was plainly available on the evidence and accords with the findings that I have otherwise made in this judgment. It is also commercially realistic.

Turning to the particular matters referred to by the defendants responsively to the plaintiffs’ written submissions, my conclusions are as follows:

Overall, it is a commercially unreal proposition to suggest that the plaintiffs would have proposed or agreed to the sale of 400 head unless the representation had been made giving the assurance that the herd profile was intact.

The plaintiffs made the following submissions with respect to damages arising from the sale of the 309 cattle as follows:

The defendant’s alternative case in reply was that if the plaintiffs did suffer any loss, in respect of permitting the sale of 400 head in December 2019, the damages were limited to the value of the stock sold.

The defendants submitted that the plaintiffs’ case is that it suffered a loss by reason of permitting the sale of 309 head as part of the agreed 400 sale in November 2019. The measure of damages claimed are the prices for comparable stock that were achieved by the plaintiffs after the drought broke. It was submitted that relying on this does not represent that actual loss, as the animals were sold in December 2019 before the drought broke. Relying on post drought prices to fix a loss that accrued during the drought is impermissible as it does not reflect loss.

I accept the defendants’ submissions in this respect. The calculation of the damages will be, therefore, based upon the assessment of loss in that respect.

The parties did not directly address the calculation of damages in that respect. I will provide an opportunity for them to deal with that question following the publication of this judgment.

I will briefly repeat and elaborate upon earlier conclusions as to representations arising from the January meeting. These conclusions are coextensive with the conclusions reached as to misleading and deceptive conduct in the November 2019 meeting. They are mirrored in the January meeting. The relief available to the plaintiffs in that respect is equivalent to the assessment of loss under the ACL with respect to November 2019 meeting.

The claims for damages and other relief arising from representations made during the January meeting were pleaded at CC2 ([5]-[10]) and the relief claimed appeared at [2]-[4]. No defence to the CC2 was served by the defendants.

I accept the submissions of the plaintiffs in this respect which may be summarised as follows:

Given that I have found that an agreement was made in January 2020 in terms of the January 2020 email, it is appropriate to turn to the factors identified by the plaintiffs to establish reliance. It is convenient in that respect to commence the consideration of the cross-claims brought by the defendants in that same context. Three parts of the January agreement that are relevant in that respect are set out below, (acknowledging that there is repetition of an earlier extract:

I will first turn to considerations of reliance and the claim by the plaintiffs under the ACL to counter the cross-claim.

The plaintiffs submitted that they would not have agreed to the January agreement provisions if the defendants had not made the aforementioned representations in the January meeting.

It was further submitted that the first plaintiff lost the 309 cattle sold by the defendants in December 2019 and the proceeds of those sales. The plaintiffs sought damages being equal to the value of the 309 animals plus interest in the same terms I have discussed with respect to the loss arising from the misleading and deceptive conduct in the November 2019 meeting.

Upon the basis that the Court had found, as it has, the existence of the January agreement containing the January agreement provisions, then the plaintiffs’ sought orders under s 237 of the ACL relieving them of the burden of each of those obligations.

The plaintiffs’ submission in this respect derived from written submissions of the plaintiffs which focused upon the November 2019 meeting and the purported November 2019 agreement.

I will focus upon those submissions presently so far as they concern the January agreement and the January agreement provisions.

The plaintiffs’ submission in support of them being relieved of the obligation to make payment in accordance with to the January agreement provisions in whole or in part was based upon the following submissions:

The primary basis upon which the plaintiffs resisted the defendants’ contentions as to reliance and claims made under the ACL with respect to the January agreement provisions was that the plaintiffs did not suffer loss of damage by reason of the operation of the January agreement.

The defendant’s submissions in this respect were as follows (following the order in which the January agreement provisions were set out above):

The defendants also submitted that the 2017 Lease Agreement provided “the clearest and fullest remedy to the plaintiffs in respect of any deficiency in the herd”.

Returning to the question of reliance, I do not accept the submission of the defendants that the plaintiffs have failed to demonstrate reliance upon the representations with respect to the 10% incentive.

The 10% incentive had its origins in the proposal advanced by the plaintiffs in the MOU. In my view, it is clear that the incentive offered in 2019 was predicated upon the representation of the Burkes that the herd profile was intact. Numbered par 2 of the November 2019 email referred to the herd profile under the 2017 Lease Agreement immediately following a statement that there was a mutual agreement to terminate that lease (which I have earlier found was in fact the case).

The specification of the herd profile in that paragraph principally performed the function in the Wallaces’ proposal of restating provisions of the 2017 Lease Agreement as to the maintenance of the herd profile. This restatement acted as the foundation upon which the provisions in the MOU then following were based.

The 10% incentive was not a generic incentive but one predicated upon the sale of cattle and therefore had a direct connection to whether or not the herd profile was intact because the cattle were being sold from that herd.

John emphasised in his affidavit that he would not have put forward an “incentive agreement” in par 8 of the MOU if he had known there was a shortfall in cattle numbers. He emphasised that he had approved the expenditure of substantial sums by KCPC on providing food to the herd.

The connection between the MOU and the January agreement with respect to the 10% incentive was made clear in John's evidence in cross-examination as follows:

Furthermore, the reliance by the Wallaces upon the representation of herd numbers in agreeing to the 10% incentive in entering into the January agreement is demonstrated by the following evidence:.

In short, the incentive payment was underpinned by a larger asset pool of the intact herd. Whether or not the 10% incentive was an enticement to the Burkes to “stay and oversee” or not, it is clear from the above considerations that the Wallaces would suffer loss from any such commitment in the manner described.

A different scenario arises however in relation to the management agreement.

Paragraph 6 of the January agreement provides that the management fee is for all labour, to run the properties across seven days per week, together with worker’s on-costs and equipment. The defendants were correct to submit that the plaintiffs have failed to demonstrate loss or damage in this respect. The management fee is simply remuneration for the ongoing management of the herd from the date of termination onwards. I also agree with the submission of the defendants that, if the plaintiffs did not agree to pay the Burkes for this work, they would have had to pay someone else, most likely Mr Hannaford.

I note, in this respect, that I do not consider that a proper basis for any offset has been established as a result of the defendants running their own and Craig Burkes cattle on Khatambuhl and Somerset after the November 2019 meeting, particularly when no specific basis for the claim, in that respect, has been pursued by the plaintiffs.

A similar conclusion may be reached with respect to the one-off payment. The $20,000 was stipulated under the agreement as being to “cover all old issues” which included equipment, hay sheds and the like. In other words, it was designed to deal with outstanding disputes as to property. I do not accept that it had any connection to the size of the herd profile and whether it was kept intact. The promise was not a loss attributable to any misleading or deceptive conduct on the part of the Burkes.

The defendants claimed 10% of the net proceeds of sale of cattle between 1 January 2020 and 30 June 2020.

In that respect, I accept that the representations made by the Burkes were made in trade and commerce and were misleading and deceptive or likely to mislead and deceive in contravention of s 18 of the ACL. The plaintiffs relied upon the representations in entering into the January agreement and suffered loss by reason of the defendant’s contravention. Nevertheless, for the reasons I have given above, the plaintiffs should be relieved of any liability under the January agreement by orders under s 237 of the ACL.

The plaintiffs also claimed that it would be unconscionable for the defendants to rely upon the onerous and adverse terms produced by the 10% incentive and, in the result, the defendants were therefore estopped from doing so. It is unnecessary to decide that matter in view of the conclusion I have reached under the ACL.

Different considerations arise in relation to the management fee. By the cross-claim, the defendants submitted that they had agreed to supply labour to run the properties across a seven-day period without the responsibilities of management, which had ended with the termination of the 2017 Lease Agreement ([15] of the CC1).

It was also pleaded that, at the January meeting, the plaintiffs appointed Mr Hannaford to act as a Regional Manager in relation to properties and that on 1 April 2020, the defendants received an email from Mr Hannaford as agent for the plaintiffs requesting the defendants to provide work on a casual contractor basis. That offer was accepted and they undertook work. On 5 and 13 May 2020, the defendants issued invoices to Mr Hannaford for payment of work undertaken at his request. No payment has been made for those invoices.

At [22] of the CC1, the defendants made the following claim:

The plaintiffs pleaded that the defendants had agreed to provide labour to run the three properties, denied that the supply of labour was without management and responsibility and otherwise did not admit the claim.

In relation to the management agreement, in addition to the earlier arguments to which were referred the plaintiffs responded to the cross-claim as follows:

I reject the plaintiff's submissions in this respect in relation to the management fee for the following reasons:

For reasons earlier given, a one-off payment has no relationship to the representation, there was no reliance upon it and there is no protection available under the ACL. In my view, no issue of estoppel arises in that respect. The cross-claim in that respect is, in my view, successful.

The oral submissions for the defendants make clear that this claim would engulf the fifth item in [22] of CC1 vis-a-via compensation for non-replacement of a hayshed by the Wallaces. Accordingly, that claim will be treated as not pressed. This concession results in the Court no longer having to consider that claim. As earlier outlined in this judgment, the defendants claimed in CC1, “[a]n order permitting the Cross-Claimants to access the Cross-Defendants’ properties for the purpose of retrieving the Cross-Claimants ‘plant & Equipment located on the properties”. The specific plant and equipment claimed is outlined in a table referred to in [41] of the CC1. The same claim appears in the defendant’s closing written submissions as “[t]he plaintiffs should also be required to deliver up the Burkes personal property”.

There is limited evidence in support of this claim but in so far as there is evidence from Ivan about certain pieces of personal property, it is uncontested. Apparently, certain items of plant and equipment were not able to be collected after the Burkes were excluded from the properties. The written submissions of the defendants do not deal in any detail with the particular items of plant and equipment listed in [41] of CC1 that were the subject of evidence. Without the Court receiving the benefit of that assistance by the defendants’ counsel in that respect, my understanding on the evidence of the plant and equipment that was not obtained by the defendants consisted of the follows:

The defendants claim for relief in this respect was expressed as a primary claim and two alternative claims; in prayers for relief 5, 6 and 7 of the CC1. No submissions were made on these alternatives. The defendants should have relief as to the specified plant items but the form of relief can be the subject of discussion and, if necessary, further submissions by the parties. That approach will be accommodated in the final conclusion and directions of this judgment.

By prayer for relief 4 of CC1, the defendants sought damages for “breaches of certain lease obligations”. Those alleged breaches were particularised at [38] of CC1 which placed reliance upon cl 7 of the 2017 Lease Agreement.

I have some doubt as to whether cl 7 of the 2017 Lease Agreement operates in the manner suggested by this claim as the provision states that where major capital expenditure is required then the Wallaces and the Burkes will “mutually agree” on the expenditure to be made. There was no evidence of such an agreement. The provision also refers to the Wallaces providing new material for replacement fencing but there is an absence of evidence which would suggest a breach in that respect.

In any event, this claim may be dismissed as not being pursued by the defendants. Counsel for the plaintiffs expressly raised in his closing oral submissions that the defendants had raised no submissions about this matter and that he presumed therefore the claim was not being pursued. Nothing further was said by the defendants in their oral submissions or at any other time before judgment was reserved.

The same conclusion, for the same reasons, may be reached with respect to the defendants’ silage claim.

In my view, the defendants cross-claim should be resolved as follows:

In the circumstances, the plaintiffs have established that the defendants breached their obligations under the 2017 Lease Agreement in the following respects:

The plaintiffs shall have judgment under the SOC in those respects in accordance with the findings of the Court in this judgment for damages or compensation with respect to claims arising from those breaches. The loss will be assessed by reference to the sales of cattle by the Burkes in December 2019. It should be noted that the calculation of the shortfall of the herd on the termination of the 2017 Lease Agreement was adjusted for the sale of 309 cattle in December 2019 (those losses will be reflected in rectification of loss or damage under the ACL).

There is a counterpart breach to the January agreement with respect to the shortfall in the herd profile as at 1 December 2019. In that respect, the plaintiffs may have judgment under the CC2 corresponding to the findings as to the shortfall of cattle in this judgment but it must be noted that the claim under CC2 in this respect is a true alternative to the claim for the shortfall in cattle under the SOC. The loss will be assessed by reference to the sales of cattle by the Burkes in December 2019.

The Court has found that, at the November 2019 meeting, the defendants represented to the plaintiffs that there were enough animals in the herd on the properties that the defendants could sell 400 animals from that herd in December 2019 and the herd profile would remain intact. The plaintiffs relied upon that representation which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL and, in that respect, suffered loss and damage upon the sale of 309 cattle from the herd in December 2019. The plaintiffs should have relief under s 18 of the ACL in that respect and judgment under the SOC.

Essentially the same conclusion arises with respect to representations made in the January meeting, and in that respect the plaintiffs may have judgment under CC2 although the claim was pursued as an alternative claim with respect to the sale of cattle in December 2019.

By virtue of the January agreement, the plaintiffs had obligations to the defendants with respect to the 10% incentive, the management fee, and the one-off payment. The plaintiffs sought relief from those obligations under the ACL upon the basis that they were induced to take them by the defendants’ misleading and deceptive representations.

The Court grants that relief under s 18 of the ACL with respect to the 10% incentive but not the management fee and one-off payment. The defendants shall have judgment under CC1 in those latter respects.

The Court has granted, in part, the defendants claim with respect to certain personal plant and equipment. However, the final disposition of that claim, and in particular, the granting of the primary or alternative claims in that respect will require resolution in accordance with the terms of this judgment. The Court has otherwise dismissed various claims raised by the defendants under the CC1 on the basis that they were not pursued or there was insufficient evidence. Those claims were as follows:

The plaintiffs shall produce Short Minutes of Order reflecting these conclusions and in particular, in that respect, shall calculate damages or compensation in accordance therewith.

In the event that there is any dispute as to those draft orders, the Court will make directions providing for the resolution of the same, on the papers.

The plaintiffs claimed interest from various dates. The parties should confer as to the calculation of interest. The plaintiffs’ claim for interest should be reflected in separate and additional Short Minutes of Order representing an agreement as to interest or alternatively the plaintiffs claim in that respect. In the event of a dispute, both parties will be given an opportunity to make submissions about claims for interest.

Upon the basis of this judgment, it would seem to be appropriate to have an apportionment as to costs. However, the Court has not received submissions from the parties in that respect. The plaintiffs should include in the separate Short Minutes of Order the orders sought by the plaintiffs with respect to costs, either as an agreed matter or alternatively as stating the plaintiffs claim in that respect. The defendants will be given an opportunity to propose alternative costs orders. Both parties will be provided the opportunity to make submissions in writing with respect to costs, and call evidence with respect to the same.

The Court makes the following orders and directions: