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New South Wales Supreme Court

Crump v Equine Nutrition Systems Pty Ltd t/as Horsepower
New South Wales
[2006] NSWSC 512

Case Details
Printable Version
Summary:   The plaintiffs claimed that they purchased horse feed from the first respondent and that the feed was contaminated with monensin. The second respondent manufactured the feed. They claimed that as a result, one of their horses died and five others were permanently injured so that they could not be used for the desired purpose. After addressing several factual issues, the trial judge found for the plaintiffs in regards to the issue of negligence by the second respondent and proceeded to assess damages with regard to the economic value of the horses to the plaintiffs, the cost of replacement, loss of profits and maintenance.

Judge Hoeben J delivered the opinion of the court.


Opinion of the Court:
1 HIS HONOUR: By the Fourth Further Amended Statement of Claim, which achieved its final form on 13 December 2005, the plaintiffs Vanessa Crump (VC), Bernard Crump (BC) and Rodney Crump (RC) allege negligence, breach of contract and breach of various provisions of the Trade Practices Act (1974) (C’th) (TPA) against Equine Nutrition Systems Pty Limited (ENS) the first defendant and George Weston Foods Limited (GWF) the second defendant in relation to the alleged negligent manufacture and supply of contaminated horse feed. The horse feed was known as “Horsepower Equestrian Pellets” (HEP).

Nature of Claim and issues in dispute

2 ENS was a wholesaler and retailer of various horse feeds. Included in its range was HEP. This was a product, which ENS through its managing director, Mr Greathead, had “formulated”. By this word (which is used in the pleadings) I understand that Mr Greathead had developed the product HEP on behalf of ENS. HEP was, however, manufactured and packaged by GWF and then delivered to ENS.

3 The plaintiffs allege that on either 30 or 31 July 1998 BC purchased 5-7 bags of HEP from ENS at its store at 1/3 Rob Place, Vineyard. They allege that the bags of HEP thus purchased were contaminated with monensin, a substance used in the production of cattle and poultry feed, which is extremely toxic to horses if consumed by them. The plaintiffs allege that as a result of consuming the contaminated HEP one of their horses died and five others were permanently damaged so that they could not thereafter be used.

4 As against ENS the plaintiffs have alleged:

(i) Breach of contract by breach of implied warranties under ss 71 TPA and 19 Sale of Goods Act (1923) (NSW) (SGA) – goods not reasonably fit for their purpose and not of merchantable quality.

(ii) Misleading and deceptive conduct in breach of s52 TPA for representing that the contaminated HEP was beneficial to horses and of merchantable quality.

(iii) Negligent misrepresentation.

(iv) Negligence in the supply of the contaminated HEP to the plaintiffs in failing to implement adequate quality control and in failing to properly recall the contaminated HEP.

5 As against GWF the plaintiffs have alleged:

(i) Breach of ss 74D, 75AD and 75AF TPA in manufacturing defective and unmerchantable horse feed.

(ii) Negligence in the manufacture of the contaminated HEP and in its failure to properly recall the product.

6 The plaintiffs claim the following damages:

(i) The value of the deceased and damaged horses.

(ii) The costs of maintaining the damaged horses.

(iii) The cost of acquiring replacement horses.

(iv) The cost of maintaining the replacement horses.

(v) The loss of profit from breeding from the damaged horses.

(vi) The loss of opportunity to achieve success in competition with the damaged horses.

(vii) Damages for personal injury to each of the plaintiffs in the nature of nervous shock.

(viii) Aggravated and exemplary damages against each defendant in relation to the claims in negligence.

7 In its defence, which was filed with the leave of the court on 12 May 2005, ENS denied that the plaintiffs bought contaminated HEP from it. It denied that it breached the duty of care, which it owed to the plaintiffs. In relation to the personal injury claims it relied upon the limitation provisions in the TPA, the Limitation Act 1969 (NSW) (LA) and the Civil Liability Act 2002 (NSW) (CLA).

8 In its defence GWF admitted that it manufactured the contaminated HEP, that some of the plaintiffs’ horses had ingested the contaminated HEP and that it had breached the duty of care it owed to the plaintiffs in supplying and manufacturing the contaminated HEP. It did not admit breach of duty in relation to the recall, nor did it admit breach of the TPA. It also relied upon the same limitation provisions as ENS by way of defence to the personal injury claims.

9 In relation to damages, the defendants not only challenged quantum but the basis of much of the claim. They disputed the entitlement to both the value of the damaged horses and the cost of the replacement horses. They disputed the entitlement to the maintenance of the damaged and replacement horses in that the plaintiffs failed to reasonably mitigate their loss in that regard. They disputed that any of the plaintiffs had suffered a psychiatric illness sufficient to give an entitlement to damages. The entitlement to aggravated and/or indemnity damages was denied.

Factual background

10 Although there were a number of factual disputes, it is important to understand the background against which the plaintiffs’ claim is made. I have indicated those matters which are disputed. Except as otherwise indicated, I find the factual background to be as set out in the following paragraphs.

11 BC, the second plaintiff, was born on 22 March 1939 and was therefore 59 at the time when the horses ingested the contaminated feed. He first rode a horse at the age of three, and thereafter maintained a strong interest in horses. He is now 67.

12 He left school in 1953 at the age of fourteen. Between 1953 and 1956 he worked in racing stables at Randwick, on a cattle station in Queensland and for Bruce Carnes, who trained show horses. In 1956 he joined the Army and served in the Corps of Engineers for three years. He drove trucks while in the Army.

13 Upon his discharge in 1959, he worked for an asphalt contractor. In 1961 he commenced working at the Mona Vale Markets as a driver/salesman and in 1969 commenced working at the Flemington Markets as a fruit buyer. He has continued to work at the Flemington Markets for various employers since that date. He usually commenced work at 4 am and was finished by lunchtime. Throughout this period he maintained his close association with horse riding, in particular show riding in the hack category. His hours of work enabled him to spend afternoons preparing, riding and grooming horses. On most weekends during summer there was a show being conducted and he used compete at those shows in the hack category.

14 In 1974 he married the first plaintiff, VC. She shared his interest in riding and preparing show horses in the hack category. In either 1974 or 1975 they purchased their property at Cattai. That property comprised six acres. From that time BC and VC maintained approximately five horses on the property. It was also at about that time that BC reduced his involvement in showing horses and began participating in camp drafting. He would assist VC in preparing and showing her horses. That was generally the situation with BC during the 1980’s and the early part of the 1990’s.

15 The activity of camp drafting is quite different to showing a horse. Stock horses, rather than thoroughbreds, are usually used. A camp drafter is a horse that works cattle. In competition seven or eight cattle are placed in a yard and the rider has to pick out a beast, take it to the front of the pen and thereafter hold and manoeuvre the beast through a figure of eight course. The activity is significantly more vigorous and physically demanding for a horse than performing in the show ring.

16 The first plaintiff, VC, is the wife of BC. She was born on 20 August 1948 and was 49 when the contaminated feed was consumed. She reached intermediate level in her schooling and in 1963 completed a secretarial course. Between that date and 1966 she occupied secretarial positions with Pearl Assurance Company and the Government Insurance Office of New South Wales. In mid 1966 she commenced employment as a secretary with a firm of solicitors, Messrs G J Sharah Henville & Co. She left that firm in 1976 because it was difficult to commute from Cattai. She worked for Messrs Grech & Bannerman, another firm of solicitors, until 1978. She ceased employment to have her first child, Nathan, who was born in June 1978.

17 VC from an early age had a keen interest in horses. She commenced riding on a regular basis from the age of twelve. She was particularly interested in showing horses and paid for lessons to improve her riding skills for show purposes. By the time she met and married BC she had already achieved a measure of success as a show rider. BC provided advice and assistance to her and helped her to further develop her skills.

18 Exhibit R sets out the achievements of VC in show riding competitions. It is apparent from that document that her most successful period as a show rider was during the 1980’s and early 1990’s. She achieved considerable success on a horse “Protégé” at Royal Shows between 1982 and 1985. “Protégé” was owned by Mr and Mrs Crump. The significance of a good performance at a Royal Show is that a hack was not eligible to compete at a Royal Show until it had achieved first placing at five regional or agricultural shows. “Protégé” performed well in 1982 and 1983 at the Sydney Royal Show and at the Brisbane Royal Show. It achieved first placing at the Canberra Royal Show 1984, the Adelaide Royal Show 1984 and the Canberra Royal Show in 1985.

19 The high point of VC’s show riding career occurred between 1986 and 1990. The horses concerned were “Persian Gem” and “Persian Amber”. These horses were not owned by Mr and Mrs Crump but had been loaned to them by a friend, Colleen Boyce, to be prepared, trained and shown in competition. “Persian Gem” gained numerous first placings in agricultural and regional shows between 1986 and 1989. Between 1987 and 1989 she achieved two first placings at the Canberra Royal Show and two first placings at the Brisbane Royal Show. In 1988 she was the runner up in the Crane Trophy at the Sydney Royal Show and in 1989 she won the Crane Trophy. “Persian Amber”, a younger sister of “Persian Gem”, was runner up in the Crane Trophy at the Sydney Royal Show in 1990.

20 The Crane Trophy is a very prestigious award in hack show riding. It is an event for mares, showing thoroughbred qualities, which are between 14.2 and 15.2 hands in height. The competition is conducted annually at the Sydney Royal Show. 

21 On 20 June 1985 VC was injured when she was thrown from a horse. The accident occurred on a road near her home when the horse was frightened by two dogs belonging to a neighbour. The precise injuries suffered by VC were an issue in the proceedings. In particular the nature, extent and duration of any emotional and psychological sequelae to the accident was disputed. What was not in dispute was that she suffered a fracture of the left collarbone and an injury to her left shoulder with some psychological consequences.

22 Although VC retained Messrs GJ Sharah Henville & Co to act on her behalf in relation to that incident, those solicitors did not commence proceedings within the six year limitation period and consequently VC’s claim against her neighbour became statute barred. She then commenced proceedings against the solicitors. Those proceedings came on for hearing in the Supreme Court on 28 June 1999 before Acting Justice Davies. VC was successful and judgment in the sum of $279,869 was entered in her favour by his Honour on 2 September 1999. I will have more to say about those proceedings and the emotional and/or psychological consequences of the 1985 injury when dealing with the claim by VC for nervous shock.

23 Between 1974 and 1998 Mr and Mrs Crump were not conducting a business. Their interest in horses and horse related competitions was purely a hobby. This is despite the fact that it occupied a significant amount of their time and was expensive. They prepared and trained their own horses and the horses of others and engaged in competition for the enjoyment of doing so and for the prestige associated with being successful. 

24 At no time before 1998 did Mr and Mrs Crump breed their own horses. They acquired and disposed of horses so as to maintain a relatively steady number of five-six on the Cattai property. Some of those horses were purchased and subsequently sold, others were acquired by way of loan or gift and others were made available to them for training and showing such as was the case with “Persian Gem” and “Persian Amber”.

25 That was the situation leading up to 1998. As Exhibit R reveals, VC had not enjoyed the same success with her show riding in the mid to late 1990’s, as she had in the second half of the 1980’s. In August 1993 she resumed fulltime employment as an Administration Officer with the Commonwealth Rehabilitation Service at Blacktown. She was in that employment during 1998 and at the date of trial.

26 RC, the third plaintiff, was the second son of BC and VC. He was born on 1 September 1980 and was almost eighteen and completing his HSC year at high-school when the horses consumed the contaminated feed. Despite his family’s commitment to showing horses and engaging in equestrian competition, he only became interested himself in about 1995. He was never particularly interested in showing horses, but became enthusiastic about camp drafting. In 1997 and 1998 he had some success at junior level in camp drafting competition.

27 At the time of the contaminated feed incident, the following horses were located on the property at Cattai. I will hereafter refer to these horses as the “original horses”:

(i) “Noelene” (“Noeleon”) (“Serenade”) - an 11 year old mare purchased on 29 October 1995 for $1,000 and used as a show hack.

(ii) “Al” (“Vaudeville”) – a 7 year old gelding purchased on 1 February 1996 for $1,500 and used as a show hack.

(iii) “Topsy” – a 6 year old mare purchased on 1 August 1996 for $1,200 and used as a show hack.

(iv) “Subiaco” – a 4 year old mare purchased on 1 January 1998 for $1,200 and used as a show hack.

(v) “Jimmy” – a 13 year old gelding purchased on 23 November 1997 for $5,250 and used in camp drafts.

(vi) “Cracker” – a 16 year old gelding acquired by loan in early 1997 from John Smith and used in camp drafts.

28 There was also a small pony on the property at that time. His name was “Timmy” and he was aged 23. His position was that of a family pet. Since no claim was made in respect of that pony, there is no need to say anything more about it except that the plaintiffs alleged that it also consumed HEP contaminated with Monensin.

29 There was a dispute between the parties as to the level of success and potential of these horses at the time when the contaminated horse feed was consumed. I will deal with that issue when assessing the loss suffered by the plaintiffs in respect of the original horses.

30 VC used feed the horses in the morning and BC would feed them in the afternoon. This was because of their respective hours of work. They had started using HEP as a food for their horses at the beginning of 1997. The first purchase of HEP was said to have taken place at the ENS warehouse at Rob Place, Vineyard. Thereafter purchases were said to have been made weekly with quantities of six-eight bags being purchased at a time.

31 The evidence of BC was that HEP would be purchased on either a Thursday or a Friday since Thursday was his pay day. He would usually pick up RC from school and buy the feed on the way home. BC usually paid for the feed in cash, although occasionally a cheque was used. Having paid for the feed at the office, he would receive a docket, take the docket into the warehouse and the storeman would then pick up the feed on a forklift and it would be loaded into the back of his utility. Each bag weighed 40 kgs. BC said that he did not buy any type of feed other than HEP in the 18 months leading up to the consumption of the contaminated feed. He said he did not purchase HEP from any location other than the ENS store at Vineyard.

32 This evidence was largely corroborated by that of RC. In respect of the purchase of the contaminated HEP, BC said that although he had no specific recollection of the actual purchase, he knew that it had occurred a little over a week before 8 August 1998 after he had returned from holidays and that is why he was able to identify 30-31 July 1998 as alternative dates for the purchase. In accordance with his usual practice, such purchase would have taken place on either the Thursday or Friday of that week. The importance of 8 August was that this was the day on which one of the horses died.

33 That evidence as to the fact of purchase and as to the date was disputed by ENS. It asserted by reference to its records and other evidence that no purchase of HEP by BC from the Vineyard store had taken place in May, June, July or August 1998. Since this factual issue is fundamental to the plaintiffs’ claim against ENS, I will deal with it separately.

34 What is not in dispute is that HEP was consumed by some of the plaintiffs’ horses in the week before 8 August 1998 and that the HEP so consumed contained Monensin.

35 The evidence of the plaintiffs was that contaminated HEP was fed to the horses on the Friday night, and that on Saturday morning it was observed that none of the horses had eaten their feed. That feed was then tipped out and new feed from the feed bin was given to the horses on the Saturday morning. On Saturday afternoon it was observed that the horses had once again not eaten their feed. In order to make it more palatable, BC and VC mixed molasses with the feed on the Saturday afternoon. On Sunday morning BC observed that “Jimmy”, “Cracker” and “Topsy” had eaten all their feed but that “Al”, “Subiaco” and “Noelene” had eaten some but not all of their feed. That pattern of mixing the horse feed with molasses was followed throughout the following week with the horses “Jimmy”, “Cracker” and “Topsy” eating all of their feed and the other three horses eating about seventy percent of it.

36 BC gave evidence that on the Thursday of that week (6 August) he and RC again attended the Vineyard store of ENS and purchased six-eight bags of HEP as feed for the next week. BC thought that he had paid cash as was his usual practice, but could not specifically recall. Although he believed he was given a receipt, he did not retain it. BC agreed under cross-examination that he said nothing to anyone at the ENS store about the problems he was having with the horses not eating all their feed. The fact of this transaction was also disputed by ENS.

37 On the Friday night (7 August) “Topsy” was observed to be unwell and was brought from her paddock to a stable near to the house. She was very lethargic and wasn’t interested in consuming any feed even with molasses added. BC went to work at approximately 3am on Saturday, 8 August.

38 The evidence of VC was that at approximately 6.15 or 6.30am on Saturday, she was awakened by what she described as a “very shrill whinny”. When she looked towards the stable:

“I saw her trying to scramble over the back of the stable so I rushed down and I couldn’t go in because she was thrashing around making funny noises, whinnies, trying to climb over the back fences. Her back legs were going underneath her, it would have been dangerous to go into the stable with her. And I called out to Nathan “Quick come down”. Nathan came down. We just stood and watched, she was just in such a horrible state.

She was trying to climb over, she didn’t appear to know what she was doing and eventually she fell down a couple of times and got up and then she fell, had a couple of breaths and that’s it.” (T.417)

These events occurred over a period of about five minutes.

39 The only persons present when this occurred were VC and her son Nathan. BC and RC were away from the property at work. Nathan did not give evidence. Although the above description is somewhat dramatic, VC has consistently described the incident in similar terms since that date. Veterinarians have confirmed that such a description is consistent with death by heart failure as a result of Monensin poisoning. Accordingly, I generally accept the description of VC as accurate and I accept that it was very distressing to her.

40 VC tried to contact her local veterinarian but because of the time, all she could do was leave a message on the answering machine. In due course Dr Robson, the veterinarian, returned her call and she explained what had happened. In the course of that conversation, Dr Robson mentioned to her that he was aware of a problem with HEP. VC said that she would arrange for the horse to be taken to Dr Robson’s surgery so that an autopsy could be carried out.

41 VC telephoned BC at his place of work and told him what had happened. She also arranged for someone to attend the property in order to transport “Topsy” to Dr Robson’s surgery for autopsy. She removed all of the uneaten feed from the other horses. Some of this feed she subsequently placed in bags, which she labelled and took to Dr Robson’s surgery for analysis. This was done at the request of Dr Robson.

42 Later in the morning RC arrived home and was told by VC what had happened. Not long afterwards a Mr Malcolm arrived to remove the dead horse. Because the ground was wet it was not possible for him to bring his vehicle to the stable, so it became necessary to place a cable around the horse’s neck, which was connected to a winch on the back of the truck. VC found this distressing and went inside the house. RC remained. He observed the horse as it was pulled across the ground and then winched onto the truck. He found that sight distressing. The horse was then taken to Dr Robson’s surgery.

43 When BC returned from work, he and VC went to another horse food store, Robank Feeds, to obtain alternative feed for the horses. VC then had a number of telephone conversations with persons in the neighbourhood, including Frank the proprietor of Robank Feeds, on the Saturday and Sunday. The only significant matter to arise from those conversations was that VC became aware that other horse owners, Mr and Mrs Blunt, had experienced problems with HEP about two or three weeks earlier. She also had a conversation with Greg Murphy, an employee of ENS, on that Sunday.

44 On Monday, 10 August the feed samples requested by Dr Robson were delivered by VC to his surgery. By that time VC had been told the results of the autopsy of the dead horse. The mare had died from a heart aneurysm, consistent with Monensin poisoning.

45 VC purported to record in a diary the events of the next few months, including telephone conversations. Extracts from that diary were tendered by consent (Exhibit BBB), otherwise the diary was used to refresh the memory of VC or extracts from it were read onto the transcript. There were problems with the diary. It was not comprehensive in that it did not record all telephone conversations and events. To the extent that conversations were recorded in it, they were on occasions clearly self serving and intended for use in litigation. In that regard the plaintiffs had consulted solicitors in relation to this matter not long after 8 August 1998. Accordingly, I regard the diary and extracts from it as being reasonably accurate as to dates and the fact of conversations having taken place as recorded in it, but not as to the content of those conversations. For reasons not explained, only some diaries in respect of subsequent years were available.

46 VC had conversations with Mr Greathead from ENS in mid August as to the testing of the uneaten feed, which had been delivered to Dr Robson, and also blood testing of the surviving horses. On 15 August Mr Greathead went to the plaintiffs’ property and said that he was sorry for what had happened and that he would do what he could to help. He said that he would pay for the blood tests on the horses and would arrange a meeting with Millmaster (GWF), the manufacturer of the contaminated HEP.

47 The results of the testing of the uneaten feed became available on 13 August. No trace of Monensin was found in two of the samples described by their labels as “mare’s feed” and feed “bottom of bin 3” but relatively high amounts in two of the samples – “leftover feed” 4.5 ppm and “feed (not eaten 4)” 31.2 ppm (Exhibit FF). The blood test results for the horses became available on 18 August. The results were normal for “Jimmy”, “Cracker”, “Noelene” and “Vaudeville”. In relation to “Subiaco” and “Timmy” there was evidence of some muscle damage. 

48 On 18 August a meeting took place at the plaintiffs’ property between VC, Dr Robson, Mr Murphy and Mr Pittolo from Millmaster (GWF). Mr Pittolo said at that meeting “We need to have all your remaining horses stress tested at the University”. Mr Pittolo agreed that Millmaster would pay for the cost of the blood testing, the cost of the pellets to be tested and the cost of transporting the horses to and from the university for the stress tests. Mr Pittolo asked VC to think about what price she wanted for the dead mare and when doing so, to take into account the stress which she had suffered. Mr Pittolo offered to pay for the agistment of the remaining horses until they were tested. Alternatively he offered to provide feed free of charge for those horses for that period. Mr Pittolo also agreed to pay all veterinary costs associated with the horses.

49 VC did not respond, except to refuse the offer of horse feed. Later in August there were two telephone conversations between VC and Mr Pittolo in which Mr Pittolo again requested VC to advise how much she wanted for the dead mare. On the last occasion VC responded that she would put in writing the amount she wanted.

50 On 28 August the following was faxed by VC to Mr Pittolo:

“Further to our discussions I confirm that you want me to put a price on my mare “Topsy Turtle” who died on 8 August 1998.

“Topsy Turtle” was purchased by myself and my husband for the purposes of showing and then breeding from. I have spent two years training her and have incurred the cost of purchase, feeding, training, shoeing, horse dentist, worming etc and I now have to replace her with a trained horse of equivalent standard who is able to have foals.

Payment of expenses to replace her and the reimbursement of the cost of her feed, training, shoeing, teething etc to date would only be accepted on the basis that it didn’t limit or any way restrict any claims I may have as to my losses in respect of our six other horses or in relation to her death.

I confirm that I am still waiting to see the position of the other horses. 

I understand that you will attend to payment of vet fees, blood testing, autopsy and food analysis and continue to attend to the costs associated with blood testing, vet fees, university testing of our other six horses.

On this basis I have calculated the cost of replacement and reimbursement for all my expenses associated with “Topsy Turtle” to date at an amount of $23,350.

Yours faithfully” (Exhibit T.)

51 In a fax from VC to Mr Pittolo of 7 September the figure of $23,350 was broken into its components, one of which was “cost of replacing with thoroughbred mare of equivalent standard $10,000”. (Exhibit U.) That figure was confirmed in a subsequent fax of 29 September 1998 (Exhibit GG). By letter dated 15 October 1998 Robertson & Co, Loss Adjustors acting on behalf of GWF, offered VC $10,000 for the dead mare plus payment of veterinary and autopsy accounts and the cost of the removal of the carcass (Exhibit HH). This offer was not accepted. 

52 On 9 October 1998 the plaintiffs’ horses were tested at the University of Sydney Veterinary campus at Camden. Ultrasonography and stress tests were carried out by Professor Hodgson and Dr Hoffman from the university. VC and RC were present when the tests were carried out. The results of those tests are set out in Exhibit J. All the ultrasound results were normal. 

53 The stress test was carried out by the horses being restrained and then placed on a specially constructed treadmill. The speed of the treadmill was gradually increased so as to eventually cause the horses to gallop. Echocardiographical results were recorded throughout the test.

54 The stress test involving “Jimmy” had to be stopped shortly after commencement when significantly abnormal heart rhythm was detected. Although “Cracker” completed the test, some heart dysfunction was detected. Some heart dysfunction was also detected in “Subiaco” at the end of her stress test. No abnormalities were detected in either “Noelene” or “Al” following their stress tests. RC was upset by the tests, particularly when “Jimmy’s” test had to be stopped.

55 There was a dispute as to exactly what Dr Hoffman said to VC and RC following these tests. The evidence of VC (T.496.8) was that Dr Hoffman told her that the horses should never be ridden. In this regard I accept the evidence of Dr Hoffman that she did not use those words about any of the horses, but that what she said was that the horses should not be ridden for twelve months. I found Dr Hoffman to be an impressive witness, with no motive to tell anything but the truth.

56 Negotiations were continuing between Robertson & Co, the loss adjustors for GWF, and VC in relation to the payment of compensation not only in relation to “Topsy”, but also for the other horses. On 4 December 1998 GWF offered to pay for the agistment of the original horses at Shipton Lodge between 7 December 1998 and 7 February 1999 whilst negotiations took place. It was common ground that Shipton Lodge was something of a deluxe location for the agistment of horses. The cost was $11 per horse per day. In fact GWF paid for the agistment of the horses at Shipton Lodge until 7 March 1999.

57 In relation to the agistment of the original horses, VC and RC prepared a schedule of locations where their horses were agisted, apart from the time at Shipton Lodge. (Exhibits Y and Z) There was little supporting documentation, other than an agistment agreement and some cheque butts, to support the information contained in Exhibits Y and Z. Those documents appear to have been prepared for the trial from the unaided recollection of VC and RC. Although diary entries were referred to, these were restricted to July – December 1999 and intermittent entries in the years 2002 – 2004. The evidence as to the location of the horses and the payment of agistment fees and other expenses relating to the original horses was incomplete and unsatisfactory. My conclusion as to agistment is set out in my consideration of this head of damage.

58 In relation to the claim for agistment, it should be noted that “Cracker” died of unknown causes in June 2000 and that “Noelene” died of a condition unrelated to Monensin poisoning on 13 October 2004.

59 The plaintiffs’ claim included the purchase cost of replacement horses. It became obvious from the evidence that between August 1998 and the date of trial, more than fifteen horses had been acquired and disposed of by the plaintiffs. From those horses five were nominated as “replacement horses”. The basis for identifying those horses as “replacement horses” was not clear. The identification of them as “replacement horses” seems to have been somewhat arbitrary in that four show horses and two camp drafters were replaced with four camp drafters and two show horses.

60 The following horses were nominated as replacement horses:

“Willow” – a 9 year old mare purchased on 18 November 1998 for $4,000 for camp drafting.

“Rowley” – a 10 year old gelding purchased on 25 January 1999 for $5,750 as a show horse.

“Kate” – a 9 year old mare, purchased on 25 May 1999 for $4,000 for camp drafting.

“Modicum” – a gelding purchased on 13 September 1999 for $7,000 as a show horse.

“Tia” – a 6 year old mare, purchased on 18 April 2000 for $4,000 for camp drafting.

“Cloudy” – a 2 year old gelding purchased on 18 May 2001 for $1,500 for camp drafting.

61 I don’t propose to deal with the performance of the “replacement horses” because I regard it as irrelevant to the claim. I do, however, make this observation. The plaintiffs, in particular VC, deliberately sought to downplay the performance of the “replacement horses” by comparison with the original horses. Insofar as show horses were concerned, what seems clear is that “Modicum” considerably out performed any of the original horses in the show ring. “Rowley” was at least equal in performance to “Al”.

62 The original horses, less “Cracker”, were tested again at the University of Sydney campus at Camden on 15 November 2000. Professor Hodgson and Dr Hoffman carried out the tests. The horses were subjected to ultrasonography and stress tests. The only horse to show any abnormality was “Subiaco”. The following opinion was expressed by Professor Hodgson and Dr Hoffman in relation to the horses:

“In summary, the results of the tests performed indicate that all horses have good exercise capacity, although untrained at the time of the examination. Additionally, none of the horses demonstrated evidence of cardiac dysrhythmias in response to exercise. Three of the horses (“Jimmy”, “Vaudeville” and “Noeleon”) performed the tests as would be expected for normal horses. Similarly results of all other tests performed were within normal ranges. As such we were unable to determine any residual effects of exposure to Monensin in these animals and therefore recommend that they might be considered “fit” to resume normal athletic activity. As mentioned, “Subiaco” had a consistently low cardiac contractility, possibly reflecting decreased ventricular function. Despite this the horse had relatively good exercise capacity. As we have no baseline measurement of this horse prior to exposure to Monensin we are unable to comment as to whether this apparent low left ventricular contractility has any relationship to eating contaminated feed. Given the results of these tests we recommend that the horse should be suitable for low-level athletic activities – eg trail-riding and might be expected to function in other ways eg breeding.” (Exhibit RR)


63 The original horses were not ridden by the plaintiffs nor were they used for any other purpose after 8 August 1998. They were agisted on the properties of neighbours and friends, sometimes for a fee, sometimes free of charge. On occasions one or other of them was kept at the plaintiffs’ Cattai property. Of the three original horses which are still alive, “Subiaco” and “Jimmy” are agisted on a neighbour’s property near to that of the plaintiffs at Cattai and “Al” is agisted on a property at Lithgow. The plaintiffs are presently not paying anything for this agistment, although it has been necessary for them to provide supplementary feed for “Subiaco” and “Jimmy”.

64 It was the plaintiffs’ case that having seen what happened to “Topsy” and not being able to obtain a clear guarantee from Professor Hodgson or Dr Hoffman that the original horses were safe to ride, they were not prepared to ride them themselves or allow others to ride them. The plaintiffs were concerned that if ridden, any one of the original horses could suddenly collapse and seriously injure the rider. It was for that same reason that they were not prepared to sell or give away any of the original horses.

65 The plaintiffs said that they were confirmed in that decision by the opinion of Professor Hall, a veterinarian from the United States, with particular expertise in Monensin poisoning. The plaintiffs gained access to an opinion of his in December 2000.

66 It was the defendants’ case that it was reasonable for the plaintiffs not to ride or use the original horses for twelve months following the testing by the University of Sydney in October 1998. Thereafter, and certainly following the further testing by Professor Hodgson and Doctor Hoffman in December 2000, there was no reason why any of the original horses should not be ridden and no reason why the mares should not be used for breeding. The only qualification was in respect of “Subiaco” which should not have been put into heavy work. The defendants relied not only upon the opinions of Professor Hodgson and Doctor Hoffman but also on the fact that owners of other Monensin affected horses had resumed using them for riding. The reasonableness or otherwise of the plaintiffs’ decision in this regard is one of the issues to be decided. It is fundamental to the plaintiffs’ claim for the cost of agisting the original horses, both in the past and in the future for their anticipated life spans.

67 After August 1998 VC’s participation in show riding continued but at a reduced level. She last participated in a hack showing competition at the Sydney Royal Show in Easter 2002 when she competed on “Modicum”. Thereafter her participation in competition has been infrequent and has been restricted to stock horses used for camp drafting. It was the evidence of VC that after August 1998 and the death of “Topsy” she lost interest in hack showing.

68 This also was disputed by the defendants. They pointed to VC being active as a judge and as a participant in hack showing, particularly during 1999 and 2001 as not indicating such a loss of interest. Their suggested explanation was that VC had simply changed her focus and was now concentrating on camp drafting and that the discontinuance of her hack showing had nothing to do with the events of August 1998. This issue will need to be determined when VC’s claim for nervous shock is considered.

69 The plaintiffs claim that as a result of the Monensin poisoning of their horses they suffered a recognised psychiatric illness, being a form of post-traumatic stress disorder. The plaintiffs claim that they continue to suffer the effects of this psychiatric condition. This is a matter disputed by the defendants and I have reviewed the evidence on this issue in more detail when dealing with that head of damage.

70 The factual analysis so far has focused upon the plaintiffs and the events with which they were directly involved. Although the defendants did not call oral evidence in their case on liability, there was other evidence which enables some findings to be made as to the conduct of the defendants.

71 It is tolerably clear from the pleadings and from exhibit ZZ that on either 29 or 30 June 1998 GWF unknowingly manufactured HEP that was contaminated with Monensin. The factory in which GWF manufactured HEP was also used to manufacture cattle feed and chicken feed, which contained Monensin. The same equipment was used for the manufacture of cattle feed and HEP. On either 29 or 30 June 1998 Monensin had not been properly removed from that equipment before it was used for the manufacture of HEP. As a result five tonnes of potentially contaminated HEP was manufactured and dispatched by GWF in bags with ticket numbers 013648 – 013781. As indicated by the pleadings, GWF accepted that it was negligent in that regard.

72 It is not clear whether all of the bags of potentially Monensin contaminated HEP were delivered to ENS or only some of them. Certainly a significant number were so delivered. From its accounting records it is clear that ENS operated mainly as a wholesaler and sold to retailers of horse feed. It did have as customers some individuals such as BC. 

73 There is no evidence that ENS knew that the HEP, which it received shortly after 29-30 June 1998, was contaminated with Monensin. It is, however, clear that ENS through its managing director Mr Greathead, who was himself a veterinarian, was aware from 1996 of the harmful effects of Monensin if consumed by a horse. ENS also seems to have been aware, at least by May 1998 that the factory of GWF which was producing HEP for ENS, was also producing other feeds which contained Monensin. Document 28 of Exhibit ZZ is a handwritten note produced by ENS on discovery dated 16 May 1998 in which the following is recorded:
“Phil Pittolo 16/598
1. 1-2d separat of Horse feeds FORMALIZED
2. M free Mill unlikely.
3. Other Ionophores – can test.
HPLC – gets all Ionophores/other substances
<.5ppm is classed as – ve)
2 ½ hrs of manufacture ) all
Contin Sampling appendix – may not get enuff
May do both ① Trickle ② Begin mid, end – Test
?Tamworth:-

74 Other documents make it clear that Monensin is an ionophore. A later document (42 of Exhibit ZZ) suggests that the reference to “trickle” may be a reference to trickle sampling, which is a method of testing for contamination problems in production and was one of the methods under consideration by GWF and ENS as a way of eliminating any recurrence of Monensin contamination after this incident had occurred.

75 The authorship of document 28 in Exhibit ZZ is unknown. Its meaning is unclear. It was not explained by either side in evidence. No interrogatories were administered by the plaintiffs in relation to it. Mr Murphy, an employee of ENS, was available to give evidence but neither side called him. Mr Greathead was not called in the case for ENS. On that state of the evidence I can only draw broad inferences from document 28 in Exhibit ZZ. I infer that as of May 1998 ENS was aware that Monensin was being used in the manufacture of other feeds in the GWF factory which manufactured HEP for it. For reasons unknown, the author of the document concluded that a Monensin free mill was unlikely. The only other inference I am prepared to draw is that a discussion had taken place between someone from ENS and Mr Pittolo of GWF about methods of testing horse feed possibly because of the potential danger from Monensin. 

76 It is clear from the evidence of Mr Nathan Noonan, a storeman and forklift driver who was employed by ENS between 1995 and April 2000, and from Exhibit 12 (invoices indicating the replacement of HEP) that by 14 or 15 July 1998 ENS had become aware that some of the HEP sold by it was contaminated with Monensin and that by 16 July 1998 it had implemented a recall process. That is confirmed by the evidence of Mrs Blunt and Mr Van Nieuwboer.

77 The method initially used by ENS was to supply Mr Noonan with a list of customers likely to have purchased the contaminated HEP and to have him telephone the customer and arrange for the collection of any bags of HEP which came within the specified range of ticket numbers which had been given to ENS by GWF. The identity of such customers could be obtained from the ENS accounts system. Within a week of the recall being commenced, most but not all of the contaminated HEP had been returned to ENS. On 14 August 1998 a recall notice was published by ENS in the Hawkesbury Gazette (Exhibit H).

Did Plaintiffs purchase HEP from ENS on 30-31 July 1998

78 The plaintiffs’ evidence on this issue came primarily from BC. To some extent the evidence of BC is corroborated by RC. No corroboration is provided by the evidence of Mr Noonan. Although Mr Noonan in chief agreed with the proposition that he remembered BC purchasing HEP in July 1998, when that was tested under cross-examination it was clear that Mr Noonan had no actual recollection to that effect but could only generally remember BC attending the ENS Vineyard store from time to time during 1998 to purchase HEP.

79 The specific evidence of BC on this issue was:

(a) He commenced purchasing HEP about 18 months before the incident (T.63.51).

(b) He usually purchased 6-8 bags a week (T.64.02).

(c) Such purchases usually took place on Thursdays or Fridays after RC was picked up from school on the way home at around 3.30 pm (T.65.20).

(d) He had only ever purchased HEP from ENS at Vineyard (T.65.35, 68.55).

(e) His practice was to go to the office first and pay, usually with cash, get a receipt and then go into the warehouse where the storeman would pick up the feed on a forklift and it would be loaded into the back of his vehicle (T.66.58-68.15).

(f) He always got a receipt which had his name on it (T.316.46-317.07, T.317.45-317.57).

(g) The storeman’s name was Nathan and he would show Nathan the receipt to indicate how many bags had been paid for (T.96.35).

(h) Upon arriving home the bags would be tipped into the master feed-bin in the shed straight away (T.68). 

(i) He could specifically recall purchasing HEP on either 30 or 31 July. He went to the ENS Vineyard Store to buy food for the following week. He went to the office, paid one of the ladies in the office, backed his van into the warehouse where the bags were loaded. He probably paid cash because it was pay day. He received a receipt but did not keep it (T.95.20, 95.30, 95.35, 319.25)

(j) He could also specifically recall going to ENS at the end of the first week in August and buying HEP (T.325.55) but could not recall seeing Mr Greg Murphy on this occasion, or Mr Greathead (T.95.55, 96.07).

80 Although RC did not have the same specific recollection as to 30-31 July 1998, his evidence corroborated an attendance at ENS at about that time. He corroborated BC’s evidence as to the usual procedure when purchasing HEP from ENS. (T.825) He said that the receipts had the Horsepower logo on them (T.826.29). It was his recollection that the number of bags purchased from ENS varied from between 5 and 12. (T.900.45) RC was unable to tell the court how many bags had been purchased on the Thursday or Friday in the week before “Topsy” died (T.900.50-901.01).

81 The plaintiffs were not able to produce any documentation to substantiate this evidence. That is not surprising. BC pointed out (quite reasonably) that once the HEP had been collected and paid for, he saw no reason why he should keep any of the documents. Somewhat strangely, however, the plaintiffs were able to produce their chequebook up to May 1998 but not for the period thereafter, in particular June and July 1998.

82 The plaintiffs appear to rely upon the fact that conversations took place between Mr Murphy, an employee of ENS, and Mr Greathead, its managing director, and VC following the death of “Topsy” as an admission that the HEP had been purchased from ENS. I do not draw that inference. The conversations with and statements attributed to Mr Greathead after 8 August 1998 are equally consistent with the concern of the managing director of a company in which a product developed by it and bearing its name had become contaminated. The direct involvement of Mr Greathead is further understandable in the context of earlier complaints of a similar kind concerning HEP having been made by other customers such as Mr and Mrs Blunt.

83 I do not take the involvement of Mr Greathead after 8 August 1998 as in any way confirming that a purchase of HEP by BC from ENS took place on either 30-31 July or 6 August 1998.

84 The plaintiffs also relied upon the evidence of Dr Robson (T.1085.37) as to what VC said to him in August 1998:

“Then I mentioned to her that Monensin had previously been identified a few weeks previously in feed samples from this same feed she was feeding and she was very distressed and said “Why didn’t they tell us when we bought feed there recently?” “Why didn’t Horsepower?”

Q. What did you say?
A. She said “Why didn’t Horsepower tell us when we bought feed there recently?” She was very upset.” 

85 That evidence if VC were telling the truth at the time, is certainly consistent with VC believing that the contaminated HEP had been purchased from ENS “recently” but it does not, however, support the actual fact of purchase. VC could have been told that by BC even though he may have acquired the HEP from another source.

86 It was submitted on behalf of the plaintiffs that an adverse inference should be drawn against the first defendant because neither Mr Murphy nor Mr Greathead was called to give evidence on this issue. I am not prepared to draw such an adverse inference. There is nothing in the evidence of BC or RC as to seeing or talking to Mr Murphy or Mr Greathead on either 30-31 July or 6 August 1998. Accordingly, it is difficult to see what evidence either of those persons could have given on this issue if they were not present on the occasions that the plaintiffs allege the contaminated HEP was purchased. The plaintiffs had the opportunity to call Mr Murphy (he having attended court to produce documents in answer to a subpoena) but declined to do so. 

87 The plaintiffs also relied upon the affidavit of Mr Greathead of 7 May 2004, which was attached to the Defence of 11 May 2004 of ENS, and in particular the affidavit’s endorsement of paragraph 4 of that Defence which read:

“4. Admits paragraph 4 only insofar as the second plaintiff entered into a contract with the first defendant with respect to the goods (as defined) in or about July 1998 but otherwise does not admit the allegations contained therein.”

88 Until May 2004 there had been a blanket denial by ENS of all of the allegations in paragraph 4 of the Statement of Claim. The plaintiffs submitted that the combination of the pleading and the affidavit in support constituted an admission of a sale of HEP to BC by ENS on some date in July 1998.

89 That submission by the plaintiffs is clearly correct, ie that although the pleading disputes the nominated dates of 30-31 July 1998, it does admit a sale on some earlier date in July 1998. In that regard it should be noted that I gave leave to ENS to amend that Defence in May 2005 so as to place in dispute any sale of HEP to BC or any other of the plaintiffs after May 1998.

90 Although the plaintiffs are entitled to rely upon that submission, its force is not decisive. It is clear from the whole of the evidence that sales of contaminated HEP by ENS to other persons (Mr Murphy and Robanks Feed) had taken place in early July 1998. Those sales were the subject of the recall action, which took place on 16 July 1998. In that context one can see how in May 2004 the legal advisers of the first defendant might consider it important to challenge a sale on 30-31 July 1998 (which impacted on the indemnity and aggravated damages question) but not be too concerned about sales which took place before 15 July 1998 when ENS first learned of the contamination problem. This is particularly so since I suspect that the legal advisers of ENS in May 2004 did not appreciate the effect of the accounting records of ENS.

91 ENS submitted that the evidence of BC was essentially unreliable and on an issue as important as this, it should not be accepted without some corroboration.

92 ENS relied upon the following matters to support that submission:

(i) It was clear from the analysis of the residual horse feed, particularly that taken from the bin used by “Topsy”, that feed other than HEP was being fed to the plaintiffs’ horses in the week before 8 August 1998. Exhibit 7, which deals with the analysis of the feed samples delivered to Dr Robson by VC made it clear that stud mix a product of Pauls Stock Feed was being fed to some of the plaintiffs’ horses including “Topsy” in that week, contrary to BC’s assertion that the only food given to them was HEP.

(ii) There were some inconsistencies in his evidence as to whether he purchased the contaminated HEP on 30 July or 31 July. Initially he said he purchased the HEP on 30 July 1998 but later said he went on Friday 31 July (T.154.34) but then could not remember whether it was the 30th or 31st (T.319.35). It then turned out he had no specific recollection and his identification of those dates was based on his usual habit and on some reconstruction (T.320.50).

(iii) The records of the first defendant as to purchases by BC of HEP between January 1998 and 30 April 1998 indicated that weekly attendances to purchase HEP were the exception and that normally BC’s attendance at the ENS Vineyard store was fortnightly.

(iv) His failure to make any complaint to Mr Murphy or Mr Greathead concerning the HEP when the horses refused to eat it in the week leading up to 8 August 1998 is not only surprising but incredible, particularly on the occasion of his alleged visit to ENS at Vineyard on 6 August 1998. This is to be contrasted with the conduct of the Blunts who immediately contacted Frank from Robanks Feeds when their horses refused to eat HEP. In the same category is BC’s subsequent failure to complain to either Mr Greathead or Mr Murphy in terms about the sale to him of the contaminated feed and the failure to request his money back for the contaminated HEP thus purchased. (T.326.30, 326.50-327.15, 340.10-340.35)

(v) BC’s evidence was that he emptied the newly bought feed immediately into the master feed bin and that it did not get stored in bag form in the shed. In contrast an explanation as to why the horses were off their feed was that BC thought their dog “Wally” may have urinated on the feedbag (T.325.35, 405.10). This evidence was inconsistent with that of VC that there were present in the shed bags of HEP unopened for a number of weeks before they were emptied into the master feed bin (T.705.05) and RC to similar effect (T.943.30).

93 A similar attack was directed at the evidence of RC. ENS submitted that his evidence was unreliable because:

(i) He had no specific recollection of purchasing the feed on 30 or 31 July but relied essentially on his father’s usual course of conduct (T.825.24).

(ii) If his father received a receipt in July (T.825.51) then according to the evidence of Ms Skye Smith and Mr Brian Waterhouse there should have been a corresponding invoice, payment and stock entry in the accounting records of ENS which there was not.

(iii) Although RC said the receipts had the Horse Power logo on them (T.826.29), the receipts in evidence which were issued at that time (Exhibits AAA and 28) did not have any such logo.

(iv) RC was not able to tell the court how many bags had been purchased in the week before “Topsy” died (T.900.50-901.01).

(v) He agreed that there were weeks when he and his father did not go to ENS to purchase HEP and that they could have gone only twice a month (T.904.29-.34).

94 The principal challenge by ENS to the plaintiffs’ claim that contaminated HEP was purchased on 30-31 July 1998 was based on its accounting records. Those records, it was submitted, were inconsistent with any purchase of HEP from ENS by BC having taken place in May, June, July or August 1998.

95 ENS relied upon the evidence of Ms Skye Smith, its clerical and accounts officer at the time:

(i) The last transaction recorded in the “Debtor Account Inquiry” for BC occurred on 21 May 1998. That transaction was a payment in respect of a purchase which had taken place in April. The “Debtor Account Inquiry” recorded all of the purchases and payments made under customer number 200153 which was the customer number for BC (Exhibit 16 and T.1605.17).

(ii) The miscellaneous cash sales were accounted for in a specific ledger bearing account number 200208 (Exhibit 30, T.1612.45). The “cash book and bank deposit” lists and “cash book transaction” lists for 30 and 31 July 1998 did not indicate that BC purchased, by cash, any HEP on either of those days (Exhibits 18-22, 26-28).

(iii) There were entries for BC under his customer account number (200153) and of a payment by BC to the NSW cash account (200208). This seems to have occurred because the person accepting cash from BC was not aware that he had a separate “customer account number”. Nevertheless the identity of BC when paying cash was entered against the NSW cash account and was at all times clearly set out in the accounting records identifying BC as the payer (T.1624.50).

(iv) A review of the bank deposit lists and the transaction lists of ENS for the period May 1998 to the end of July 1998 and from the end of August 1998 through to October 1998 revealed that no invoice was issued to or payment was recorded as having been made by BC for the purchase of HEP from ENS in the months of July and August 1998 (T.1667.05-1668.06).

96 ENS also relied upon the evidence of Mr Brian Waterhouse, its accountant as follows:

(i) The system used was the Arrow Accounting System. On that system once an entry is made it cannot be removed. It can only be reversed by a journal entry. Thus a record of the entry is always available (T.1731.35).

(ii) The stock ledger for July and August 1998 contained no record of BC’s customer number appearing (200153) as having purchased any HEP (Exhibit 31, T.1737.23).

(iii) The “Debtor Account Inquiry” referred to by Ms Skye Smith (Exhibit 16) showed the total of entries from 1 October 1997 to 14 April 2005 for customer number 200153 (T.1741.50 –1742.13). There was no entry after May 1998.

(iv) The ENS bank reconciliations did not identify in the period July-August 1998 any purchase, or any record of any purchase by BC of HEP, either by customer number 200153 or by cash sale number 200208 (T.1742.15 -1743,01).

(v) Mr Waterhouse had never heard of an error occurring where a sale was not recorded against a particular customer’s account number or the cash sale number but as against an entirely different customer’s account number. If such a mistake occurred, it would be highly likely to be noticed since the customer wrongly debited would almost certainly complain (T.1743).

(vi) There was no material in the accounting system which provided evidence that any such purchases as alleged by BC were made on 30-31 July 1998 or 6 August 1998 (T.1744.50).

(vii) Mr Waterhouse was not aware of any incident of dishonesty or theft occurring during 1998 (T.1746.15).

97 In oral submissions senior counsel for ENS raised an additional argument based on Exhibit 31 – the “Stock Location Ledger”. That ledger identified by a specific code the 40 kg bags of HEP. There was no reference in the ledger to customer number 200153 in either July or August 1998. There was only one debtor invoice in that period under the New South Wales cash account (200208) and that did not relate to BC.

98 At no time did the quantities of bags of HEP shown by the ledger as going out in July or August 1998 match the quantities of bags said by BC to have been purchased on 30-31 July or 6 August 1998.

99 The Stock Location Ledger showed that at the beginning of July, 158 bags of HEP were on hand. On 2 July 500 bags were received. 500 more bags were received on 8 July and 500 bags on 10 July 1998. On the assumption that Mr Noonan’s evidence was correct that old stock was sold before new stock, and by reference to actual sales of HEP bags, it was clear that by 10 July 1998 all of the 658 bags of HEP, comprising the 158 bags on hand at the start of July and the 500 bags received on 2 July (which almost certainly included if not all of the 133 bags of contaminated HEP, then most of them) had been sold. In other words as of 30-31 July 1998 when BC said that he purchased the contaminated HEP there would have been no bags of the contaminated product available for sale, it having already been sold on or before 10 July 1998.

100 ENS submitted that the accounting records were comprehensive and complete and that there was no evidence that any were missing. The records covered the three sides of the business – the debtors’ section, ie the invoice side of the accounting system; the cash section, ie the bank deposit lists and the transaction lists and the stock section, ie the stock location ledgers. Those documents balanced each other for the months of July and August 1998. Crosschecking showed consistency between each section of the accounting system. No error in the system had been revealed. The accounting records were inconsistent with any purchases by BC having taken place on 30-31 July and 6 August 1998 as alleged by BC.

101 ENS submitted the only possibilities which could explain the discrepancy between the allegations of purchase by BC and the accounting records of ENS were:

(i) That there was an error in the accounts of ENS.

The evidence of Ms Smith and Mr Waterhouse demonstrated that this was highly unlikely. If there were such an error, it would not be a single error, but would have needed to have been continuously repeated over a four month period (May, June, July and August 1998). It is incredible that such a series of errors would not have been noticed if they had occurred.

(ii) That there was dishonesty or fraud of an ENS employee.

This is inconsistent with the evidence of BC that he received a receipt and handed it to the storeman. The evidence of Ms Smith and Mr Waterhouse is inconsistent with such a proposition. The most likely person to engage in such an activity would have been Mr Noonan, the storeman, and no such suggestion was ever put to him. Mr Waterhouse said he was unaware of any such dishonesty occurring.

(iii) BC did not purchase HEP from ENS on 30-31 July 1998 or 6 August 1998.

ENS submitted this was the most plausible explanation.

102 I accept the submissions by ENS. I am not satisfied that BC purchased contaminated HEP from ENS on 30-31 July 1998, nor am I satisfied that he made any purchase of HEP on 6 August 1998. In fact I am not satisfied that BC purchased HEP from ENS in May, June, July or August 1998.

103 I found the accounting records of ENS to be internally consistent and to be easily understood. A mistake, for example, on the invoice side of the accounting system would inevitably have shown up not only when bank deposits were made but also on the stock location ledger. As was submitted on behalf of ENS, for the evidence of BC as to purchases of HEP in July and August 1998 to be accepted, there would not have been just one error in the accounting system of ENS but numerous errors. An error in an invoice would have to be duplicated in the bank deposit lists and also on the stock account ledger for the error to go undetected. It was then necessary for those errors to be missed in the monthly reconciliation.

104 If the evidence of BC were accepted that he was regularly attending ENS to purchase HEP up to and including 6 August 1998, there would have been between two and three purchases of HEP in the months of May, June and July with one purchase on 6 August 1998. The accounting records of ENS have no reference to any purchase by BC of HEP during those months. To accept the evidence of BC on this issue it would also be necessary to accept that between 7 and 10 transactions had been entirely missed by the ENS accounting system. I find that not capable of acceptance.

105 The only successful challenge to the ENS accounting system was that in relation to BC at least one invoice was marked “paid” at the time when the invoice was issued, when the accounting records demonstrated that such a payment was made after the invoice was issued and after the goods were collected. The obvious explanation for that discrepancy is that the invoice was wrongly marked as “paid” when it was issued. That mistake does not in any way challenge the integrity of the whole of the accounting system and in no way explains how, if the purchases had been made as alleged by BC, they would not have shown up in the accounting records of ENS. 

106 The attack by ENS on the credit of BC has also been successful. Exhibit 7 provides objective confirmation that feed other than HEP was being provided to at least some of the original horses in the week leading up to the death of “Topsy” on 8 August 1998. That is contrary to the unequivocal assertion by BC that the only feed provided to all of the horses at that time was HEP.

107 I also find an inherent improbability in the evidence of BC as to the purchase of contaminated HEP on 30-31 July 1998. By 15 July ENS knew that up to 133 bags of HEP were potentially contaminated with Monensin. On 16 July it commenced its recall process. Within a week most but not all of the contaminated bags of HEP had been recovered by ENS. In those circumstances it is extraordinary and incredible that ENS would intentionally sell bags of HEP which it knew were within the range of numbers which were subject to Monensin contamination.

108 The only other explanation for such a sale would be if, in an unexplained way, some of the recovered bags of HEP, which were potentially contaminated with Monensin, had been once again offered for sale. There is no evidence to support that hypothesis. On the contrary, the evidence of the storeman, Mr Noonan, is that the recovered bags were separated from the others, were sealed in plastic, and then were marked (T.1460-1461.11). Finally they were returned in one batch to GWF. It was never suggested to Mr Noonan that his system of isolating the recovered bags of HEP was defective, nor was it suggested to him that there was a possibility of any of those bags being resold at the end of July.

109 Finally there is the surprising evidence that after the death of “Topsy”, none of the plaintiffs contacted ENS to complain in terms about the fact that they had been sold contaminated HEP on 30-31 July 1998. This would be the natural and predictable response to such a situation. No explanation was ever offered by BC or any of the plaintiffs as to why such a complaint was not made and as to why ENS was not asked to replace the contaminated bags of HEP or reimburse the plaintiffs for what they had paid for the contaminated HEP.

110 It was common ground that the HEP fed to the original horses by the plaintiffs in the week before 8 August 1998 came from the contaminated batch of 133 manufactured by GWF on 29-30 June. It is not necessary to speculate how the plaintiffs gained access to those bags of HEP. What is clear is that those bags of contaminated HEP were not purchased by BC from ENS on either 30 or 31 July 1998.

111 As was suggested by ENS, the plaintiffs were customers of Robanks and it sold HEP. Colleen Boyce, the plaintiffs’ friend, worked at a produce store that sold equestrian supplies and BC and Mrs Boyce on occasions purchased feed jointly (T.181.29, T.303.29). BC used to purchase HEP on behalf of a Mrs Stewart (T.336.15) and RC worked for her and got paid occasionally in kind, ie rugs and boots (T.899.45-T.900.20). RC could not recall whether the plaintiffs received HEP from Mrs Stewart (T.900.23-.32). Accordingly were it necessary to so find, there were other sources from which the contaminated HEP could have been obtained by BC.

LIABILITY
Liability of ENS
Breach of Contract – sections 71 TPA and 19 SGA

112 It follows from my rejection of the plaintiffs’ submission that contaminated HEP was purchased from ENS on either 30 or 31 July 1998 and in fact at any time in July 1998 that the claim for breach of contract by reason of breach of the implied warranties in those sections must fail. No sale as alleged by the plaintiffs took place.

Negligent misrepresentation

113 The only evidence of any representations by anyone on behalf of ENS is of representations that were made well before July 1998. There is no evidence of any representation having been made by anyone on behalf of ENS in respect of the contaminated HEP. It follows from this and the rejection of the breach of contract claims that the plaintiffs’ claim for negligent misrepresentation against ENS must fail.

Negligence

114 Those particulars of negligence which relate to a failure to warn and other conduct or omissions associated with the supply of HEP by ENS to the plaintiffs in July 1998, for the reasons set out above, must fail. That, however, does not finalise the claim in negligence against ENS. 

115 The plaintiffs allege that ENS owed a duty to exercise reasonable care, not only to those customers who purchased HEP directly from it, but also to those end users of HEP who may have been supplied with HEP by one of those customers. By way of illustration, it is known that Robanks purchased contaminated HEP from ENS and then sold some of that contaminated HEP to Mr and Mrs Blunt. The plaintiffs assert that ENS in those circumstances owed a duty to exercise reasonable care, not only to Robanks, but also to Mr and Mrs Blunt. The same duty, it was submitted, was owed to the plaintiffs even if they had not purchased contaminated HEP from ENS.

116 The content of that duty was never articulated other than by reference to the alleged breaches of the duty. As was made clear in the judgments of McHugh, Gummow and Hayne JJ in Graham Barclay Oysters Pty Limited v Ryan [2002] HCA 54; (2002) 211 CLR 540 defining the content of a duty of care in terms of breach will usually result in error.

117 The start point for the plaintiffs’ analysis was that ENS knew that Monensin was being used by GWF in the factory which also produced HEP. In those circumstances it was foreseeable that HEP could become contaminated with Monensin. Accordingly, ENS owed a duty to end consumers, such as the plaintiffs, to check the GWF manufacturing processes to satisfy itself that such contamination could not occur, to obtain from GWF certificates in relation to each batch of HEP that it was not contaminated and to itself carry out testing and inspections of deliveries of HEP received from GWF before that HEP was sold so as to be used by ultimate consumers. ENS failed to meet those obligations and therefore it should be liable to the plaintiffs in negligence.

118 There are a number of problems with that analysis. As indicated, an obvious difficulty is defining the content of the duty of care in terms of breach. Another problem is a failure to understand the position of ENS in relation to GWF.

119 Although ENS had “formulated” and developed HEP, the product was manufactured, packaged and delivered by GWF to ENS in sealed 40 kg bags. ENS as the developer of the product had a vested interest in the product being successful and maintaining its good name, but in other respects the position of ENS was little better than that of an intermediate distributor or wholesaler of the product.

120 Another problem is that the plaintiffs appear to have followed the line of reasoning deprecated by McHugh J in Tame v State of NSW [2002] HCA 35; (2002) 211 CLR 317 in that having determined that Monensin contamination of the HEP was foreseeable, the next inquiry was whether that foreseeable danger was preventable and if so, negligence should be found. At no point in the plaintiffs’ analysis is there a reference to the Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 enquiry, ie what was a reasonable response to the foreseeable risk.

121 Finally, the whole approach by the plaintiffs to the question of duty and breach of duty is grounded in hindsight. Nowhere did they seek to examine the question of breach from a prospective point of view given the state of knowledge of ENS and the circumstances prevailing at the time when the contamination took place. As Gummow and Hayne JJ said in Barclay:

“A duty of care that is formulated retrospectively as an obligation purely to avoid the particular act of omission said to have caused loss, or to avert the particular harm that in fact eventuated, is of its nature likely to obscure the proper inquiry as to breach.” (para [192])

The problems associated with such an approach have been recently restated by Hayne J in Vairy v Wyong Shire Council [2005] HCA 62; [2006] 80 ALJR 1.

122 It seems to me that the duty owed by ENS to ultimate consumers such as the plaintiffs should be expressed in more general terms than that suggested by the plaintiffs. The duty owed by ENS to such persons was to take reasonable care that the HEP which it sold was safe for consumption by horses. The knowledge of ENS that Monensin was used in the same factory which produced the HEP, needs to be looked at against that statement of duty.

123 Quite clearly the risk that Monensin in the factory might contaminate the HEP was not farfetched or fanciful. Having said that there was no evidence, which would indicate the likelihood of that happening. There was no evidence of the magnitude of the risk and the degree of the probability of its occurrence. What has to be decided is what was a reasonable response to that foreseeable risk, having regard to the questions raised in the Wyong Shire Council v Shirt calculus.

124 The fact that there was no evidence as to the magnitude of the risk and the degree of the probability of its occurrence is a problem for the plaintiffs, not for ENS. On the only material before me, there is no evidence of Monensin in this factory or any other factory of GWF contaminating products such as horse feed on any previous occasion. Moreover the expense, difficulty and inconvenience in taking alleviating action, such as that suggested by the plaintiffs, was significant. It seems to me that what was shown to exist by the plaintiffs was a bare possibility of a known risk, which until July 1998 had not previously eventuated.

125 In those circumstances I do not assess the responses suggested by the plaintiffs of checking the engineering systems in place in the GWF factory and of requiring compliance certificates as reasonable for a wholesaler/distributor in the position of ENS. No evidence was adduced by the plaintiffs to suggest that there was any reason why ENS should do anything more than the sort of inquiries which document 28 in Exhibit ZZ suggests were made.

126 The suggested response of carrying out sampling and checking of opaque sealed bags also seems to me to be quite unrealistic and unreasonable. In the absence of any knowledge of a significant risk, which was likely to occur, no such response was required.

127 The practical difficulties associated with an examination of sealed bags of HEP were substantial. What sort of analysis was to take place? Was it only to be for Monensin or for other possibly deleterious substances? What was to be done with the open bags? How was the testing to be conducted? Were all bags to be tested or only a sample? If a sample, how big a sample and would that still prevent the possibility of contaminated HEP going into circulation? None of those questions was raised or explored.

128 I am of the opinion that the response of ENS to the bare possibility of a known risk of Monensin contamination was adequate. It was using an apparently experienced and reputable manufacturer of the product. It had used that manufacturer without any problem relating to HEP for at least two years before this incident. It had apparently raised the question of a Monensin free mill with GWF but had been told this was not possible to achieve (document 28, Exhibit ZZ). I am not persuaded that any other response by ENS was reasonable or called for.

129 The only other area where negligence is alleged against ENS is in relation to the recall of the contaminated HEP. There seems to be no issue that ENS first became aware that there was a problem with certain bags of HEP on or about 15 July 1998. By the next day it had in place a recall program, which covered customers to which bags of HEP within the nominated range of numbers had been sold. For the reasons previously stated, the plaintiffs were not included in that customer list because ENS had no record of any of them having purchased contaminated HEP. That recall program appears to have been reasonably successful in that most, but not all, of the contaminated bags were recovered. It cannot be said that ENS was negligent in failing to directly contact the plaintiffs since it had no record of any of the plaintiffs having purchased any of the contaminated HEP.

130 It is true that the recall notice (Exhibit H) did not appear in the Hawkesbury Gazette until 14 August 1998. No doubt an earlier recall notice could, and perhaps should, have been published. This, however, does not help the plaintiffs. As a matter of causation, earlier publication of the recall notice would not have alerted the plaintiffs to the problem. The evidence was that the plaintiffs did not regularly read the Hawkesbury Gazette (T.254.55-255.10). They only learned of the recall notice because Ms Colleen Boyce brought it to their attention (T.158.27,T.450.40).

131 Had a notice been placed in the Hawkesbury Gazette earlier or in another newspaper, there is no evidence that it would have made any difference to the plaintiffs’ awareness of the existence of contaminated HEP. There was no evidence of whether any of the plaintiffs read newspapers and if so, what newspapers. For a notice to be effective the plaintiffs would have had to have a ticket with a number within the nominated range. Nowhere in their evidence did any of the plaintiffs say that they knew about or had recourse to such tickets. There was no evidence that such tickets remained on the bags of HEP, which were used by the plaintiffs in the week before 8 August 1998. BC’s evidence was that the bags were not kept but were burnt (T.99.18).

132 The claim in negligence by the plaintiffs against ENS has not been made out.

Misleading and deceptive conduct in breach of s52 TPA

133 There is a preliminary difficulty to be overcome by the plaintiffs and that is the time limit in s82(2) TPA. ENS in its Defence pleaded that reliance upon s52 TPA was out of time. The plaintiffs’ Statement of Claim was not filed until 30 July 2001. If the conduct, which was relied upon as being in breach of s52 TPA, occurred before 30 July 1998 ENS submitted that the claim could not be maintained.

134 ENS further submitted that the plaintiffs were not assisted by the change in the limitation period in s82(2) TPA from 3 years to 6 years because that change was introduced by amendments that commenced operation on 26 July 2001. Pursuant to those amendments, the 6 year limitation period applied to claims based on conduct engaged in on or after that date, and to claims based on conduct engaged in before that date, for which the previously applicable 3 year limitation period had not expired at that date (Trade Practices Amendment Act (No 1) 2001 (Commonwealth) Schedule 1 Items 20 and 21). Accordingly if the conduct relied upon occurred before 26 July 1998 the plaintiffs did not get the benefit of the 6 year limitation period. 

135 I do not accept the submission by ENS. Wardley Australia Limited v Western Australia [1992] HCA 55; (1992) 175 CLR 514 makes it clear that in a case such as this time will not commence to run against a plaintiff until the cause of action under s82 TPA accrues. That does not occur until a plaintiff becomes aware or ought reasonably to have become aware of the alleged loss or damage. In this case the earliest date from which time might commence to run for the purposes of s82 TPA was 8 August 1998 (ie the death of “Topsy”). Accordingly, the plaintiffs’ claims under s52 TPA are within time. 

136 In their pleadings the plaintiffs relied upon oral representations as to the efficacy of HEP made by either Mr Greathead or Mr Murphy in or about 30 July 1998. That allegation was never substantiated by evidence. On the contrary, the evidence of BC was that he did not see those persons on the occasion of his alleged purchase of HEP on either 30 or 31 July 1998. In any event I have found that such a purchase did not take place. There is no evidence of any other representation by anyone on behalf of ENS in respect of the batch of contaminated HEP. Accordingly, this part of the s52 claim by the plaintiffs must fail.

137 In their pleadings the plaintiffs also alleged certain implied representations from the fact that the bags of contaminated HEP had no warning on them and purported to be horse feed when in reality their content was poisonous for horses. This argument was developed in written and oral submissions by reference to document 16 in Exhibit ZZ. That document comprised an advertisement for HEP. Included in it was a photocopy of a photograph of two HEP 40 kg bags. Each bag had depicted on it the Horsepower logo with the word “Horsepower” underneath it. In a prominent position in the centre of each bag were the words “Equestrian for Pleasure Horses” with the word “Equestrian” in large, bold type. Towards the bottom of the bag in smaller print were the words “a grain free feed containing all the energy, protein, minerals, trace elements and electrolytic ingredients for the pleasure horse”.

138 The plaintiffs’ submission was that even if the factual issues as to sale and representations were decided adversely to them (which has occurred) by allowing the contaminated HEP to be distributed under its logo and in bags which expressly described the contents as horse feed which was beneficial to pleasure horses, ENS had engaged in misleading conduct, or conduct which was capable of misleading contrary to the provisions of s52.

139 Section 52 TPA is deceptively simple in its terms.

“52(1) A corporation shall not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

140 A difficulty for the plaintiffs is the state of the evidence as to a breach of s52 TPA. There is no specific evidence that document 16 in exhibit ZZ depicts that which was displayed on bags which were sold in 1998. The evidence of Mr Noonan was that these were the “types” of bags in the storeroom in 1998. It is not clear whether that answer went to the size of the bag, its construction or to the logo and writing upon it. Mr Noonan was not referred to any writing on the bags, nor was he asked to give evidence as to what writing was on the bags in store in July 1998.

141 There was no evidence as to the authorship of the writing and depictions on the bags. There was no direct evidence that ENS designed that which was written on the bags. Since GWF were responsible for the production of the bag, I am not prepared to infer that it was ENS that designed that which was depicted on the bag. It can, however, be inferred that whatever was on the bag in July 1998 had the implicit approval of ENS. It would be incredible if ENS had not had some input into what was depicted on a bag which carried its name and which contained a product which it had developed.

142 Even though there was no evidence that the plaintiffs or any of them specifically relied upon anything which was written on the bags of contaminated horse feed, I accept that there was a general reliance on the fact that the product was being sold as horse feed. Implicit in that general reliance was an assumption by the plaintiffs that the feed was safe for consumption by horses.

143 It is not open to the plaintiffs to argue that the wording on the bags was misleading or deceptive when originally devised for use on the bags and when used up to July 1998. If the wording was misleading and deceptive contrary to s52 TPA, it only became so when contaminated horse feed was placed in the bags. It was common ground that this occurred without the knowledge of ENS and that ENS had no intention of selling contaminated HEP.

144 Assuming in the plaintiffs’ favour that the bags shown on document 16 of exhibit ZZ contained the same writing and information as those which contained the contaminated HEP, it cannot be said that there was a positive misrepresentation. The information on the bag so far as it went, was accurate. There was nothing to suggest that the feed in the contaminated bags was other “a grain-free feed containing all the energy, protein, minerals, trace elements and electrolytic ingredients for the pleasure horse”. What the bags did not contain, so it was submitted, was a warning that the feed might be contaminated. What the plaintiffs are relying upon is misleading and deceptive conduct by silence, ie an omission to include such a warning on the bags of horse feed which were contaminated.

145 Some useful statements of principle in relation to misleading conduct by silence are:

“Obviously it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive. However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed.” (Winterton Constructions Pty Limited v Hambros Australia Limited [1992] FCA 582; (1992) 39 FCR 97 Hill J).

“Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of “mere silence” or of a duty of disclosure can divert attention from that primary question. Although “mere silence” is a convenient way of describing some fact situations, there is in truth no such thing as “mere silence” because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case for if particular matters exist they will be disclosed.” (Demagogue Pty Limited v Ramenesky [1992] FCA 557; (1992) 39 FCR 31 – Black CJ); 

“In my view, to inquire in such a case whether an independent “duty to disclose” has arisen is to digress from the application of the terms of s52”. (Demagogue – Gummow J).”

146 Some controversy has arisen in relation to misleading and deceptive conduct by silence in the context of s52 TPA. Generally speaking, if conduct is misleading or deceptive it does not matter for the application of s52 that a failure to disclose the true situation was not deliberate (Taco Co of Australia Inc v Taco Bell Pty Limited (1982) 2 TPR 48 at 72). On the other hand regard has been had to s4(2) TPA which relevantly provides:

“(2) In this Act -

(a) A reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, ...
(b) ...
(c) A reference to refusing to do an act includes a reference to -
(i) Refraining (otherwise than inadvertently) from doing that act; or
(ii) making it known that that act will not be done...”.

147 Because of that definition and by specific reference to the words “refuse” and “refrain” it has been held in some cases that where an omission is relied upon as constituting a breach of s52, the omission must be the result of a deliberate decision (Costa Vraca Pty Limited v Berrigan Weed and Pest Control Pty Limited (1998) 154 ALR 714 at 722, Alpine Hardwood (Aust) Pty Limited v Hardys Pty Limited [2001] FCA 1876 at [317], Fitzwood Pty Limited v Unique Goal Pty Limited (2001) 188 ALR 566 at 578). In those cases unintentional non-disclosure was held not to amount to a breach of s52.

148 This exclusionary construction of the definition of “conduct” in s4(2) TPA sits uneasily with the principle that proof of intention is generally not required in order to establish that s52 has been contravened. As has been pointed out by Colin Lockhart “The Law of Misleading or Deceptive Conduct” 2nd ed Butterworths 2003 paras 5.2 and 5.3, since it was not unusual for an alleged breach of s52 to arise out of a course of conduct, including both positive conduct and non-disclosure, it was by no means clear how such conduct was to be assessed pursuant to the restrictive approach to the definition of “conduct”. To require that conduct “must have been deliberately engaged in”, in order for it to amount to a contravention of s52 wherever a breach was alleged by conduct that included non-disclosure, would have the effect that the accompanying positive conduct would also be subject to the intention requirement.

149 A partial resolution of the difficulty is to be found in Johnson Tiles Pty Limited v Esso Australia Pty Limited [2000] FCA 1572:

“[66] There is a question whether, in non-disclosure cases, the facts which are not disclosed must be known to the party failing to make disclosure. As a general proposition it is not necessary in order to show misleading or deceptive conduct for the purposes of s52, that the contravenor intended to mislead or deceive – Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Limited[1978] HCA 11; (1978) 140 CLR 216 at 228. In the case of an alleged non-disclosure it is not necessary to show that the contravenor knew of the facts not disclosed. In Fraser v NRMA Holdings Limited (1995) 55 FCR 452 at 467 the Full Court said:

“For the purposes of s52, if by reason of what was said and what was left unsaid, the conduct of the corporation is misleading and deceptive or likely to mislead or deceive, a contravention would occur even if the corporation through its directors and officers did not have knowledge of the undisclosed fact which rendered the conduct in breach of s52. A contravention of s52 may occur without knowledge or fault on the part of the corporation, and notwithstanding the exercise of reasonable care: Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 142 CLR 191 at 197.”

That is not to say that knowledge may not be a relevant circumstance. For in a case where disclosure would reasonably be expected of a fact if that fact were known to the corporation, failure to make disclosure may convey the implication that that fact is not known.” (French J with whom Finkelstein and Beaumont JJ agreed.)

150 The conclusion of Mr Lockhart at para 5.3 on this issue seems to me to be reasonable and correct:

“In view of these difficulties, it is suggested that the better view is that the “expanded meaning given by [the definition] to “conduct” should not distract attention from the fundamental issue” where breach by non-disclosure is in issue, namely, “whether in the particular circumstances the silence constitutes or is part of misleading or deceptive conduct”.

In accordance with that approach, the impugned actor’s intention or knowledge will be a relevant, but not decisive consideration in the determination of whether a contravention by non-disclosure has occurred.”

151 There is no issue here that ENS was unaware that 133 of the bags, which it had received from GWF in June/July 1998, contained contaminated HEP. Although its logo and name were upon the bags, it was in the same position as a retailer or wholesaler who receives goods in a form which makes impossible any intermediate examination before the goods are sold. The crucial question, so far as the Trade Practices Act is concerned, is whether in those circumstances it was misleading or deceptive for ENS to sell those bags without a warning that their contents might be contaminated by Monensin.

152 It is difficult to conceive how mere silence of that kind could be sufficient to attract the operation of s52 TPA. To so find would significantly extend the operation of s52 beyond its already broad boundaries. Against the factual background and circumstances of this case such an extension of the operation of s52 is not warranted and I find that ENS did not engage in conduct which was misleading or deceptive or which was likely to mislead or deceive.

153 The claim by the plaintiffs against ENS under s52 TPA therefore fails.

Liability of GWF
Liability for defective goods in breach of ss 74D, 75AD and 75AF TPA

154 Subject to one important qualification, the admissions made by GWF as to breach of duty and its acceptance that the contaminated HEP consumed by the plaintiffs’ horses was manufactured by it, would establish a breach of s74D TPA. Although it is not clear how the plaintiffs obtained bags of contaminated HEP, it is reasonable to infer that there was a trail of supply such as is specified in s74D from GWF to the plaintiffs as the ultimate consumer. The qualification is this. Section 74D is to be found in Division 2A Part V. Under the definition of “manufactured” in s74A the following is provided:

“(2) In this Division:

(a) A reference to goods shall, unless the contrary intention appears, be read as a reference to goods of a kind ordinarily acquired for personal, domestic or household use or consumption”

Quite clearly 40 kg bags of horse feed do not come within that definition. The plaintiffs’ claim under s74D TPA against GWF therefore fails.


155 Section 75AD is found in Part VA. The word “goods” is not limited as in Division 2A of Part V. Accordingly the requirements of s75AD have been made out provided the plaintiffs or any of them can establish that they have suffered an injury because of the defect. Because s75AD(f) refers to a person dying “because of the injuries”, I interpret the word “injury” as used in s75AD(c) as referring to personal injury. It follows that if the plaintiffs, or any of them, can establish that he or she suffered personal injury because of the defect, then GWF is liable to compensate that plaintiff for the amount of the loss suffered as a result of the injury.

156 In submissions the plaintiffs abandoned any reliance upon s75AF. For the reasons set out in [154] that concession was properly made. 40 kg bags of horse feed are not “goods of a kind ordinarily acquired for personal, domestic or household use”.

Negligence

157 In its defence GWF admitted that it owed a duty of care to the plaintiffs and that it breached that duty in manufacturing and supplying HEP which was contaminated with Monensin. It denied that it breached that duty by failing to appropriately recall the contaminated product.

158 The particulars of negligence which are disputed are:

(i) Failing to issue an immediate product recall upon receiving notice of the contamination on or about 14 July 1998.

(ii) Failing to advise the plaintiffs or any one of them of that problem on or about 14 July 1998.

(iii) Continuing to sell HEP after 14 July 1998.

(iv) Through ENS failing to institute an immediate recall of HEP after 14 July 1998.

(v) Continuing to sell HEP through the ENS store at Vineyard after 15 July 1998.

159 There is no direct evidence as to what action GWF took to recall the contaminated HEP. From the evidence of Mr Frank Nieuwboer of Robanks and from the participation of Mr Pittolo in discussions with VC after 8 August 1998, I infer that GWF relied upon ENS to effect a recall of the contaminated bags of HEP. That was not an unreasonable approach since ENS was in the best position to identify those persons to whom it had sold the contaminated product by reference to the specified ticket numbers. The fact that Mr Noonan was able to telephone customers and refer to ticket numbers on bags on 16 July 1998 indicates that by that date GWF had been able to not only identify when the contaminated batch of HEP was manufactured but was also able to advise the range of ticket numbers which related to it.

160 No evidence has been adduced, nor were any submissions made, either in writing or orally on behalf of the plaintiffs, to indicate what more GWF should have done by way of reasonable response in respect of recalling the contaminated batch of HEP. No evidence was adduced, nor were any submissions made to indicate how any failure on the part of GWF to recall the product was causative of the damage suffered by the plaintiffs. The same matters referred to in relation to ENS apply equally to the position of GWF on this question. I find that GWF did not breach the duty of care which it owed to the plaintiffs by failing to act reasonably to recall the contaminated batch of HEP.

Conclusion as to liability

161 It follows from the above analysis that there must be a verdict entered in favour of ENS. As against GWF, the plaintiffs have succeeded in negligence. Subject to establishing personal injury, the plaintiffs have also succeeded against GWF under s75AD.

DAMAGES
Value of deceased and damaged horses
“Topsy”

162 The plaintiffs’ evidence in relation to the value of this horse was of two kinds. The first was that of BC and VC, based on their observations of “Topsy” and their expectations as to her likely success as a show hack, particularly as a competitor in the Crane Trophy. Their evidence was that she was a beautiful horse with great potential. It was common ground that “Topsy” satisfied the basic criteria for that competition in that she was a thoroughbred, a mare and was between 14.2 and 15.2 hands in height.

163 At about the time of her death, VC in a document which was not identified, put a value of $2,500 on “Topsy” (T.576.35-577.10, T577.50). In correspondence with GWF in late 1998 VC asserted on at least three occasions that the cost of obtaining a horse of equivalent standard would be $10,000.

164 In relation to that latter value, VC said that she was taking into account “Topsy’s” temperament and potential. It should also be noted that in the annexure to Exhibit 11, which was the assessment of the value of “Topsy” by an experienced show rider, Mr Corvi is reported as thinking that “Topsy” would be worth $10,000. When making that assessment Mr Corvi had not seen the mare.

165 The evidence of Ms Maureen Walker and Ms Gina Beck was not particularly helpful. They gave evidence of a range of prices which could be obtained for successful show horses. In relation to show horses with an established record of success, some of these figures were quite high. The relevance of those figures to “Topsy”, a relatively young and untested horse, was problematic at best. “Topsy” had never been ridden in competition but had been successful in two regional/agricultural shows in the led class.

166 The second kind of evidence related to the cost, both actual and notional, incurred by the plaintiffs in maintaining, training and preparing “Topsy” for competition. These costs were variously assessed by VC at $13,000 and $20,000.

167 That approach was picked up by the two accountants from Evidex, Messrs Prior and Davy, who prepared economic loss reports on behalf of the plaintiffs. Mr Prior under the heading “Loss of Utility of Poisoned Horses” tried to calculate the value of the horses including “Topsy”, by reference to the loss suffered by the plaintiffs in the sense that the plaintiffs, in particular VC and BC, were not only very fond of the horses but had considerable expectations for success. In order to calculate that special loss to the plaintiffs, Mr Prior carried out a calculation which took into account the maintenance costs and a notional cost of training and preparing the horses. This was calculated by reference to an hourly rate in the same way as a Griffiths v Kerkemeyer claim for care. On this approach “Topsy’s” value was estimated at more than $35,000.

168 GWF challenged the second kind of evidence as inappropriate when seeking to value a chattel such as a horse. It relied upon the approach of the accountants, Messrs Horwarths, that the appropriate method of valuation was either the value of the horse which was lost, or the value of a replacement horse of equivalent standard (which value ought be the same) calculated by reference to what a willing but not anxious purchaser would pay on the open market.

169 GWF submitted that the approach followed by the Evidex accountants, Messrs Prior and Davy, was not an approach recognised by any rule of accounting. It referred to the evidence of Mr Prior that he had never before used that approach in valuing a chattel. Neither Mr Prior nor Mr Davy had ever valued a horse before, nor had they been involved in a horse valuation case. GWF submitted that not only was the approach in the Evidex reports flawed, but the various calculations were not based on actual costs incurred, but on hypothetical costs which when compared with actual costs, were shown to be significantly inflated.

170 I agree with the submissions of GWF in relation to the second kind of evidence. It seems to me that what Mr Prior was trying to do was to inject into the valuation of the original horses, a subjective element to reflect in monetary terms the special value which they had to the plaintiffs. If such subjective considerations have any part to play in the assessment of damages, it is not in respect of valuing the horses. It may come into play under the heading of “nervous shock and/or distress”.

171 By way of illustration, if the approach of the Evidex accountants was correct the value of a motor vehicle on which an owner had lavished years of care and attention would be calculated by reference to those hours of work, rather than by reference to market value. Such an approach seems to me to be patently absurd. 

172 Accordingly, the value of the damaged horses, in particular “Topsy”, needs to be assessed in the conventional way advocated by the GWF accountants, Messrs Horwarths. They refer to either the value of the lost horse or its replacement cost calculated in accordance with normal valuation principles, ie what a willing but not anxious purchaser would pay.

173 The only independent valuation of “Topsy” is that of Mr Enemark, the valuer retained by the defendants, who gave evidence and whose report is Exhibit 11. It is true that he never saw “Topsy” and that his valuation is based on photographs and on advertised prices for the sale of horses of a similar standard in a publication “Horse Deals”. The advertisements in “Horse Deals” that he took into account were placed at about the time when “Topsy” died. He concluded (somewhat generously in my opinion) that the value of “Topsy” was $7,500 at the time of her death.

174 That valuation, as Mr Enemark pointed out under cross-examination, takes into account not only the horse’s qualities at the time of death, but its potential. That potential was almost impossible to evaluate with any accuracy because the horse was only just starting out in its hack showing career and had achieved so little at the time of its death. Its temperament in a show ring when being ridden was unknown.

175 When one compares the figure of $7,500 with the figure of $10,000, which VC sought in her correspondence with GWF, I am satisfied that it represents a reasonable assessment of the value of “Topsy”.

176 It is clear from the correspondence between VC and GWF that her claims in respect of “Topsy” were inflated. That is particularly so when one compares the figure of $10,000 with the other figure of $2,500 which VC had in mind as the true value of “Topsy” at about the same time (T.577.50). I assess the loss to the plaintiffs in respect of “Topsy” as at August 1998 at $7,500. I do not propose to award interest to the plaintiffs in respect of the loss of this horse because I regard the refusal by VC of the offer of $10,000 by GWF in October 1998 to be unreasonable.

177 In relation to the other horses there are some preliminary questions which need to be dealt with. GWF submitted that because ultrasonography and stress testing of the horses “Noelene” and “Al” in October 1998 and November 2000 had not shown any sign of physical damage, the plaintiffs had failed to show that these horses had consumed any Monensin. GWF also relied upon the test results in Exhibit 7 of the feed removed by VC from the horses, following the death of “Topsy”. These indicated that the presence of Monensin even in the contaminated feed was uneven, in that there was no sign of Monensin in two of the samples tested.

178 I do not accept this submission. The evidence of VC, BC and RC was that on the weekend before “Topsy” died, all of the horses had refused to eat their feed and it was only when the feed was mixed with molasses that the horses had consumed it. Thereafter, three of the horses including “Noelene” and “Al”, had only eaten 70% of the feed put out for them. The plaintiffs have been consistent in their evidence on this issue and it was not challenged in cross-examination. From the fact that all of the horses initially refused to eat their feed and even after molasses was mixed with the feed “Al” and “Noelene” would only eat 70% of it, I am satisfied that all of the original horses including “Al” and “Noelene” consumed Monensin.

179 GWF submitted that the decision by the plaintiffs not to ride the original horses after 8 August 1998 was unreasonable particularly after the test results of November 2000 were communicated to them. GWF relied upon the evidence of Dr Robson that he formed the opinion in late 1998 that VC had made up her mind that the original horses should not be ridden, and consequently he did not raise the question with her again. GWF also relied upon the fact that other Monensin affected horses, such as those owned by the Blunts, were used for long distance riding events after a period of rest and after testing.

180 On behalf of the plaintiffs it was submitted that the death of “Topsy” had a significant effect on both VC and BC so that they were concerned that the original horses might unexpectedly collapse if ridden and thereby cause serious injury to the rider. This concern extended not only to themselves but to other riders. These concerns were confirmed by the warning given by Dr Hoffman following the first stress tests in October 1998.

181 Although I have accepted the evidence of Dr Hoffman that following the 1998 stress tests she told VC that the horses should not be ridden for 12 months, it seems to me that it was not unreasonable for the plaintiffs to refrain from riding the original horses until further stress tests were conducted in November 2000. I find that the plaintiffs’ decision not to ride the original horses before November 2000 to be reasonable.

182 Following the tests in November 2000, except for “Subiaco”, expert advice was received from Professor Hodgson and Dr Hoffman that the horses could be ridden. Shortly thereafter, however, it seems that the plaintiffs gained access to Exhibit 8 being the e-mail from Professor Hall to Colin Hickman, another owner of horses which had been affected by contaminated HEP. Whatever one may think of the contents of that e-mail and the inference implicit in it, ie that Professor Hall was prepared to be an advocate for those persons wishing to bring legal proceedings in relation to Monensin affected horses, the e-mail contained a warning in clear terms that riding Monensin affected horses was dangerous.

“5. Any horse that has heart damage is potentially dangerous!!! It may die while being ridden, dropping out from under a rider and potentially harming the rider. Thus, I recommend that ANY horse that has been ionophore poisoned never be used for riding!!!!!!”

183 Given the litigious setting in which the November 2000 tests took place, and the suspicion which the plaintiffs had that Professor Hodgson and Dr Hoffman may have been in the defendants’ camp, the opinion of Professor Hall which was so contrary to that of Professor Hodgson and Dr Hoffman posed a real dilemma for the plaintiffs. Their decision to “play it safe” and not ride the original horses, even after the tests of November 2000 was not, in my opinion, unreasonable.

184 Applying the common sense test of causation specified by the High Court in March v E and MH Stramare Pty Limited (1991) 171 CLR 560 I find that this decision by the plaintiffs was a direct and foreseeable consequence of the Monensin poisoning and did not constitute a novus actus which broke the sequence of causation.

185 It follows from the above findings that I approach the valuation of the original horses on the basis that their value to the plaintiffs insofar as they were able to be ridden was virtually nil following 8 August 1998.

“Subiaco”

186 This mare was a thoroughbred but had not participated in any shows at the time that she ingested the contaminated HEP. Apart from photographs, there was no objective evidence as to how she would have performed as a show hack. There is some evidence as to her temperament from the plaintiffs but as with all of the original horses that evidence seems to be quite optimistic and in the case of VC and BC, I suspect, motivated by a desire to maximise the damages which could be recovered. The only objective assessment which has been attempted of “Subiaco” is that of Mr McDuie in his report of 12 August 2003, which forms part of Exhibit 15.

187 In that report Mr McDuie gave to “Subiaco” a residual value of $2,000 on the basis that even affected by Monensin, she had breeding potential. Unfortunately Mr McDuie does not set out the basis upon which that assessment of $2,000 was made. The residual value was fixed as of 2003 and I do not know whether the residual value in August 1998 would have been larger or smaller. 

188 Doing the best I can on the limited information available, I accept Mr McDuie’s valuation of “Subiaco” in August 1998 at $4,000. It seems to me that a residual value of $2,000 is out of proportion to that value, particularly since Mr McDuie was prepared to give to “Subiaco” a value of $9,000 if she was assessed in 2000 after two years of show competition. It seems to me that the residual value of $2,000 in 2003 may have been influenced by that higher figure. I assess “Subiaco” as having a residual value of $1,000 in that she could have been used for breeding purposes in August 1998. I find that the loss suffered by the plaintiffs in respect of “Subiaco” is $3,000 as of August 1998.

“Al”

189 As indicated in para [61], I found the evidence of BC and VC concerning the performance of this horse before August 1998 to be exaggerated. It had never qualified for a Royal Show. There was no objective evidence as to its value, other than that of Mr McDuie. The fact that it had achieved 19 points in the Horse Magazine Leader Board does not assist in its valuation since it is clear that this was very early in the competition year and that its position would have been rapidly overtaken once the results of Royal Shows were taken into account.

190 The value given to “Al” of $8,000 by Mr McDuie is a generous one. This can be seen by a comparison with “Modicum”, which was also a gelding purchased in September 1999 for $7,000 and whose performance in shows was far superior to that of “Al”. “Modicum” was eventually sold for $6,000 in 2002.

191 I find that the loss suffered by the plaintiffs in respect of “Al” to be $8,000. I disregard the residual assessment value of $500 which is the equivalent to the horse being sold for pet food. Being a gelding and not being capable of being safely ridden, I regard its residual value as nil. 

“Noelene”

192 The same comments apply to the plaintiffs’ assessment of the performance of this horse before August 1998. Her achievements were significantly less than “Modicum”, even though she had performed at Royal Shows. In those circumstances the value given to “Noelene” by Mr McDuie of $9,000 as of August 1998 is a generous one.

193 The evidence of VC and BC was that “Noelene” was offered for sale during 1998 and that they had in mind $15,000 as a price which they were prepared to accept for her. I reject that evidence. There was nothing in her performance to justify such a figure. By reference to the achievement of some of the horses referred to by Ms Beck and Ms Walker, and the prices paid for those horses, a figure of $15,000 was quite unrealistic for “Noelene” during 1998. The evidence of BC and VC to that effect is also contrary to the notes of instructions produced by Evidex to the effect that “Noelene” was offered for sale for a figure of $10,000 in 1998. That latter figure supports the accuracy of Mr McDuie’s assessment.

194 The other complication with “Noelene” is that she died in October 2004 for reasons unrelated to Monensin poisoning. GWF submits that this would have happened in any event and accordingly, the value placed on “Noelene” by Mr McDuie needs to be significantly reduced. I do not agree. More than six years passed between August 1998 and the death of “Noelene”. “Noelene” had already been offered for sale during 1998. Although there was no specific evidence on this issue, it is clear that as a result of the Monensin contamination, VC and BC lost the opportunity of selling “Noelene” in that period. There should be some reduction in the value of “Noelene” but not a significant one.

195 Mr McDuie gave to “Noelene” a residual value of $3,000 because of her looks and breeding capability as of 2003, despite the Monensin poisoning. I make the same comment as I did in relation to “Subiaco”. I do not know what the residual value would have been in 1998. Using the figures of Mr McDuie as a guide, I assess the loss to the plaintiffs in respect of “Noelene” as of August 1998 at $5,000.

“Jimmy”

196 This horse was a gelding stockhorse purchased in November 1997 for $5,250 when he was 12 years old. RC’s evidence was that the horse still required a lot of training and was not as good as “Cracker” as a camp drafter. On it RC won an encouragement draft and ran second in a novice draft in 1998. It is also not without significance that the date of purchase is relatively close (9 months) to the date on which the horse ingested Monensin. Accordingly, it seems to me that the value of $6,000 put on it by Mr McDuie is reasonable. I assess the loss to the plaintiffs in respect of “Jimmy” at $6,000 as of August 1998.

“Cracker”

197 This stockhorse gelding was loaned to RC by a friend of the family, John Smith, in August 1997. It was then 16 years of age and was experienced in camp drafting. It died in June 2000. The terms of the loan were never made clear in evidence. I infer that “Cracker” was made available to RC by Mr Smith for him to ride for as long as he wished at no cost provided he maintained the horse. Accordingly, what was lost was the use of that horse for the 1998/1999 and 1999/2000 camp drafting seasons. Because the horse was on loan GWF has valued the loss at nil. The plaintiffs have ignored the fact of the horse being borrowed and treated it as if it were owned by them. Both approaches are wrong.

198 The loss of the use of an experienced camp draft horse for 2 years does have a value. At the very least the use of a replacement horse would need to be obtained at some cost. No-one has attempted to value this loss. Nevertheless a real loss has been suffered and the court has to do the best it can to place a value on that loss. (State of NSW v Moss (2000) 54 NSWLR 536. The value I place on that loss of the use of an experienced camp draft horse for those two years is $1,000.

199 In summary, I assess the loss to the plaintiffs of the original horses as at August 1998 as follows:

“Topsy” $ 7,500.00
“Subiaco” $ 3,000.00
“Al” $ 8,000.00
“Noelene” $ 5,000.00
“Jimmy” $ 6,000.00
“Cracker” $ 1,000.00
$30,500.00

Since this loss was suffered in August 1998 the plaintiffs are entitled to interest on the figure of $23,000 at a rate of 7 % per annum for 7.8 years which amounts to $12,558.00. The figure of 7% per annum for interest was agreed. As indicated I have not allowed any interest in respect of the loss of “Topsy”.

Costs of agisting and maintaining the damaged horses

200 The plaintiffs’ claim in respect of this head of damage was made up of two parts. The first related to costs actually incurred by the plaintiffs for the agistment, feeding and maintenance of the original horses from 8 August 1998 until 31 December 2005. The second part of the claim was in respect of future costs for those horses until their anticipated deaths. A 25 year life expectancy was assumed for each horse.

201 The basis for this claim is to be found in exhibits C, Y and Z. Exhibit C is the series of reports from Evidex prepared by the two accountants, Messrs Prior and Davy. In relation to the cost of maintaining the original horses to date (allowing for the death of “Cracker” in 2000 and “Noelene” in 2004) those accountants calculated the cost of the maintenance of those horses by reference to figures provided by Mrs Maureen Walker, who for many years has run the “Marena Stud and Riding Academy”. She provided an estimate of the costs of maintaining a horse by way of veterinary fees, hoof care, rugs, teeth care and worming. Allowing for the fact that shoeing costs were very limited because the horses were not being ridden, the amount calculated per horse was $20.41 per week. Past costs of agistment and of providing additional feed for the original horses was calculated by the accountants at approximately $76 per week. That produced a claim for past maintenance and agistment costs of $64,448.

202 Exhibit Y comprised cheque butts, invoices and diary notes of VC relating to the actual costs of agisting some of the original horses between August 1998 and 31 December 2005. Those documents were not complete nor were they in any kind of continuous sequence. The invoices and cheque butts related to the years 2003 and 2004 while the diary entries related to the years 1999, 2002, 2003 and 2004.

203 Exhibit Z comprised a schedule of where the original horses and the “replacement” horses were agisted between August 1998 and 31 December 2005. As indicated [57] much of this document appears to have been prepared from the unaided recollections of VC and RC.

204 GWF disputed this claim on a number of bases. At a fundamental level GWF submitted that it was unreasonable for the plaintiffs to keep the original horses if they had concluded that they were permanently affected by Monensin. GWF submitted that the horses should have been sold, given away or put down. It was unreasonable that GWF should be expected to bear this cost.

205 In the alternative, GWF submitted that the calculations by the Evidex accountants ought be disregarded. This was because they had no relationship to expense actually incurred by the plaintiffs. At no point in the accountant reports was there a reference to actual expenditure by the plaintiffs. The calculations were hypothetical and based upon assumed not actual costs. There was not one document referred to by the accountants which substantiated any such actual expenditure by the plaintiffs.

206 Insofar as exhibits Y and Z are concerned, GWF submitted that regard ought be had to the cheque butts and invoices for agistment but that the diary entries and schedules should not be accepted. They were, it was submitted, self serving and unsupported by the sort of documents one would expect, ie invoices and bank records. 

207 I have already found in favour of the plaintiffs on the issue of the reasonableness of them not riding the original horses once they became aware of the implications of Monensin poisoning. Consistent with that ruling, I am of the opinion that it was reasonable for the plaintiffs to retain the horses and not to pass their problem onto others, either by way of gift or sale. Since I have found that BC and VC were genuinely concerned that a person might be hurt if he or she attempted to ride one of the original horses, the best way to ensure that that did not happen was to retain ownership of them. I do not accept putting the horses down as a reasonable option.

208 It seems to me that it ought to have been in the contemplation of GWF that, if horses consumed contaminated feed manufactured by it, the owners of those horses might decide that it was unsafe to use those horses and yet still decide to keep the horses thereby incurring a cost. I am of the opinion that the cost of maintaining the original horses was properly recoverable by the plaintiffs from GWF. 

209 The criticisms directed at the Evidex reports are well founded. The underlying principle in a tortious claim is that the plaintiffs should be put in monetary terms in the same position as they would have been in had they not suffered damage. Accordingly, the loss which is claimed must be grounded in fact, ie it must have been a real loss actually suffered.

210 The calculations in the Evidex reports have no relationship with reality. They form an artificial construct which does not in any way reflect the monies actually expended by the plaintiffs for the maintenance and agistment of the original horses from 8 August 1998 until 31 December 2005. Other than some general statements by BC and VC there is no evidence, particularly in documentary form, of payments being made for veterinary fees, for hoof care, for rugs, for teeth or for worming in respect of those horses in that period. Throughout most of the period the original horses were agisted on the property of friends at no cost. “Cracker” was returned to his owner and no expense was incurred in respect of him. At the date of trial the three surviving horses, “Al”, “Subiaco” and “Jimmy”, were being agisted on the property of neighbours at no charge. 

211 Annexed to the defendants’ submissions is a document called “Attachment G”. It comprises a coloured chart which sets out by reference to the evidence of the plaintiffs where from time to time between August 1998 and 31 December 2005 the original horses were said to have been agisted. It is obvious from that document, that no costs were incurred by the plaintiffs for most of that agistment. The only payments seem to have been made in respect of the Riverstone property and Gordon’s paddock. The information provided by “Attachment G” supports the rather modest amounts set out on the cheque butts and invoices in exhibit Y, but does not support the diary entries by VC.

212 I propose to allow in favour of the plaintiffs the amounts on the cheque butts and invoices in exhibit Y, plus a small amount for supplementary feed provided to the original horses. That latter provision is to take account of the evidence of BC that even when the horses have been agisted on neighbouring properties or at Cattai, they cannot live on grass alone and some supplementation of their feed needs to be made. Because of the unsatisfactory nature of the evidence, the allowance which I make in that regard is modest. The problem with the cheque butts and invoices in exhibit Y is that I suspect that some of them may refer to the “replacement horses” rather than the original horses. Nevertheless, the reasonably close temporal relationship between the dates on those documents and the agistments identified in “Attachment G”, when the plaintiffs were likely to have incurred a cost, have persuaded me that these amounts should be awarded to the plaintiffs.

213 I do not accept the accuracy of the diary entries by VC in exhibit Y on this topic. There is no consistency or pattern to those entries. Not only are the entries unsupported by appropriate documentation, but as indicated previously [45] I have found the diary to be generally self serving and not particularly accurate in its detail. I make similar findings in relation to exhibit Z. The unaided recollection of VC and RC was not particularly good when it came to the acquisition and disposal of horses after August 1998 as cross-examination revealed. I am not persuaded that their unaided recollections would have been any better when preparing the schedules which comprised this exhibit.

214 Allowing for duplication between the invoice of 4 October 2003 and cheque butt number 000021, I find that the costs for agistment incurred by the plaintiffs in respect of the original horses for the past were $3,015. I allow an additional $2000 for supplemental feed provided for those horses in respect of that period, ie a total of $5,015. I allow interest on that amount at 3 ½ % per annum, which adds a further $1,400.

215 In relation to agistment and maintenance costs for the affected horses for the future, there was an issue between the plaintiffs and GWF as to the normal life expectancy of a horse. The plaintiffs relied upon the evidence of Mrs Walker for their figure of 25 years. GWF relied upon the assessment of Mr McDuie that the average life expectancy of a thoroughbred was 20 years and of a stock horse 21 years. That assessment was not based upon any research but Mr McDuie’s personal experience. I propose to use a figure between those two estimates of 23 years.

216 As of 31 December 2005 the ages of the surviving horses were:

“Subiaco” - 11 ½ 
“Al” - 14 ½ 
“Jimmy” - 20 ½ 

The claim on behalf of the plaintiffs for the future is for agistment at the Shipton Lodge rate of $123 per horse per week, or at Mrs Walker’s rates at Morena Stud of $44 per horse per week. With a life expectancy of 25 years, using Shipton Lodge rates, this would amount to $195,000 and using Mrs Walker’s rates, $87,500.

217 The claim by the plaintiffs assumes that from 31 December 2005 the original horses would be agisted at commercial rates. That assumption is not made out. Except for brief periods in the past, commercial agistment rates were not paid by the plaintiffs. When they were paid they were at a significantly lower level than the rates charged by Shipton Lodge and by Mrs Walker. There is nothing to indicate that the arrangements for the original horses would be any different in the future than they have been in the past.

218 GWF made the following additional submissions in respect of this aspect of the plaintiffs’ claim. It submitted that as these horses became older and were unable to compete in competition they would have required the same sort of agistment and maintenance in their later years in any event. There should be a reduction for vicissitudes because of the many adverse contingencies which are likely to affect horses. It was submitted that the deaths of “Noelene” and “Cracker” provided good examples of this. In the alternative, GWF relied upon the rates for agistment by Mr McDuie in his report of 25 August 2004 (exhibit 15). For properties within one hour of Sydney, the average cost of paddock agistment was $33.75 per week per horse and for properties between one hour and three hours of Sydney, the average cost of paddock agistment was $23. Mr McDuie had obtained those figures after contacting 40 persons who offered properties for commercial agistment within those distances from Sydney. I propose to use a figure between those obtained by Mr McDuie, ie $28 per horse per week as an appropriate commercial rate for agistment.

219 As indicated, it seems to me that the most likely scenario is that the original horses will be agisted and maintained for the future in the same way as they have in the past, which will involve the plaintiffs in a relatively modest expenditure. Nevertheless, in the case of “Subiaco” and “Al” we are looking at periods into the future of 11 ½ years and 8 ½ respectively. Much can happen within that period. As Mr McDuie has indicated, the drought conditions which have affected Sydney and its surrounds have led to a significant increase in agistment costs. That same drought may prevent the plaintiffs being able to rely upon their network of friends in the future to provide agistment free of charge for the surviving horses.

220 It seems to me that some allowance needs to be made for the chance that the plaintiffs will in the future have to pay commercial rates for agistment for the original horses. I assess that chance at one-third and I have made calculations accordingly. I have also made a modest allowance for maintenance costs such as veterinary fees, hoof care, rugs, teeth care and worming despite the fact that there is no documentary evidence of such expenditure having been incurred over the last 8 years. I have used the 3% tables in calculating these amounts and I have deducted 15% for vicissitudes. Using that approach I find that the agistment costs for the future, which the plaintiffs are likely to incur, are $8,140 and I allow a further $2,000 for maintenance costs, ie a total of $10,140.

Cost of acquiring replacement horses

221 In addition to the claim for the value of the original horses, the plaintiffs claimed the cost of acquiring replacement horses. The detail of those horses nominated as “replacement” horses has already been set out [59] – [60]. I do not understand the basis of this claim. It seems to me that the plaintiffs are entitled to either the value of the original horses or to the cost of replacement horses, but not to both.

222 I have calculated the plaintiffs’ damages by reference to the value of the original horses. I have done this because I am not satisfied that the “replacement” horses in fact match that description. The choice of those horses, which were nominated as “replacement” horses, seems to me to be quite arbitrary and not to provide a true indication of the plaintiffs’ actual loss. It follows that I reject the claim for the cost of acquiring replacement horses.

Cost of maintaining the replacement horses

223 This claim is rejected. I have already made an allowance for maintaining and agisting the original horses. I can see no basis in law for awarding damages to the plaintiffs by reference to the cost of maintaining the replacement horses.

Loss of profit from breeding from the original horses

224 It was submitted on behalf of the plaintiffs that because of the Monensin poisoning, they lost the chance of breeding from their three mares: “Topsy”, “Noelene” and “Subiaco”. This claim was based on the evidence of Mrs Walker as follows:

(i) Horses commence breeding at 10 years of age.
(ii) A mare could be expected to produce 2 foals every 3 years.
(iii) A mare was able to breed until 23-24 years of age.
(iv) Foals could be sold as yearlings.
(v) The cost to raise a foal as a yearling was $1,985.
(vi) The expected sale price for each yearling would be $8,000 from “Topsy” and $6,000 each from the other mares.

Relying upon those assumptions a loss of $18,000 for the past and $84,000 for the future was claimed.

225 On behalf of GWF it was submitted that there was no evidence that the plaintiffs intended to undertake any breeding program prior to their mares being affected by Monensin. BC and VC had not attempted to breed any of their horses before August 1998. There was no business plan put forward and no sire had been selected prior to the exposure to Monensin.

226 In the alternative GWF submitted that breeding was a more expensive and more speculative exercise than the assumptions relied upon in the plaintiffs’ claim would indicate. It was the evidence of Mr McDuie that the plaintiffs may well have lost money in attempting to implement the suggested breeding program. It was submitted that the foaling rates that Dr Robson gave (exhibit A) were obtained from one of the best studs in Australia (T.1116.40-1118.25) and were not representative. The rates would be much lower for hobbyists such as the plaintiffs. Since no fertility tests had been carried out it was not even known whether the mares would have been capable of breeding. Finally it was submitted that engaging in competition and breeding were mutually exclusive. A decision would have to have been made by the plaintiffs for the mares have been taken out of competition if they were to engage in a breeding program.

227 GWF submitted that the evidence did not establish that even affected by Monensin, the surviving mares “Subiaco” and “Noelene” could not have engaged in a breeding program.

228 I am not satisfied that the exposure to Monensin prevented “Noelene” and “Subiaco” being used in a breeding program. The evidence of Professor Hall in his report of 17 March 2003 was:

“Although ionophores have no direct effect on reproduction, animals that have been ionophore-poisoned could die acutely due to stresses of breeding or foaling. It is possible to breed and raise foals from ionophore-poisoned horses, but the potential for the animals to die, due to the stresses, is a concern. This is an additional medical concern that would not be present if the animals had not been ionophore-poisoned.”

229 Professor Hall did not resile from that opinion in his evidence:

“Q. Is that excitation or activity of breeding likely to cause or aggravate damage to a Monensin affected horse, that is, to put stress on the heart muscle?
A. It has the possibility of putting additional stress on the muscle and thereby exacerbating the damage that was previously there.” (T.1142.17)

“Q. And lastly you, in such cases, recommend caution in using ionophore-poisoned horses for breeding?
A. Yes sir. I do recommend that if horses are used for breeding that they are used with the understanding that there is a risk involved.” (T.1162.34)

230 Dr Robson, the plaintiffs’ veterinarian, had not recommended against breeding from the Monensin affected mares:

“Q. Leave aside riding for a moment. You’ll have to help me about this. Is the breeding process more vigorous for one half of the process or the other?
A. The riding is a lot more stressful than breeding. Breeding is just a short, quick procedure and there is no-one on the horse’s back. If the horse happens to have a heart attack and die, well, you have got to die of something ...

Q. The point is, doctor, I want to come to this, that you don’t say, and you have not ever given any advice to suggest that, leave aside acute phases and until tests are done, but once tests are done and they are clear that there is any reason not to breed from such horses. You have not given anyone that advice have you?
A. I think it is not really a risk to the rider, which is the main concern. The main concern would be the risk to the rider and in breeding there is no-one sitting on their back so it’s certainly not the same sort of concern as a ridden horse.” (T.1108.18)

231 The evidence of Professor Hodgson and Dr Hoffman was that the Monensin affected mares could be used for breeding purposes [62]. This was confirmed in oral evidence.

232 If BC and VC genuinely had an intention to breed from the mares “Topsy”, “Subiaco” and “Noelene” before those horses were affected by Monensin, I am not satisfied that in the case of “Subiaco” and “Noelene” that this affectation prevented that plan being implemented. Because of safety concerns, I have found that it was reasonable for the plaintiffs not to ride nor allow anyone else to ride the original horses after they had come in contact with Monensin. I consider breeding to be in a very different category.

233 The only risk involved was to the horse. The risk was expressed in terms of a possibility, not a probability. Unlike riding the horses, there was no absolute or even qualified prohibition in that regard communicated to any of the plaintiffs.

234 I do not regard it as reasonable conduct on the part of the plaintiffs to refrain from breeding from “Subiaco” and “Noelene” because there was a possibility that this might damage the heart of the horses or lead to the horse’s death if it had a heart attack. The plaintiffs had an obligation to mitigate their damages by attempting to breed from “Noelene” and “Subiaco”. In failing to do so they failed to mitigate their damages. It follows that I do not award damages to the plaintiffs for the loss of an opportunity to breed from “Subiaco” and “Noelene”.

235 The situation in relation to “Topsy” is different. That horse died as a result of Monensin poisoning so that the plaintiffs lost in a final way any chance of breeding from her. The difficulty is to assess the value of that loss.

236 I am not persuaded that had “Topsy” not died from Monensin poisoning that BC and VC would have necessarily bred from her. There is considerable force in the submission by GWF that until the Monensin poisoning incident occurred and these proceedings were commenced, no attempt over a considerable period of time had been made by them to breed from any of their horses. On the other hand they had attempted to breed from some of their horses after this event, although with only mixed success. (“Tia” for example was an unsuccessful breeder (T.142.2)).

237 What the plaintiffs lost was the opportunity to breed from “Topsy”. That opportunity should not be valued as a certainty because there is no evidence that “Topsy” would have been a successful breeder. If “Topsy” had been a successful show hack, then she would not have commenced breeding until somewhat later than the age of 10 suggested by Mrs Walker. I do not think the rather optimistic assumptions in the Evidex reports of 2 foals being born every 3 years of breeding being able to continue until 23-24 years of age and continuous profits being made in relation to each foal, have been established. There was a chance that all of those favourable assumptions might have fallen into place but we will never know since “Topsy” was aged 6 when she died.

238 In the Evidex report, the value calculated for the loss of breeding opportunity in respect of “Topsy”, both past and future, was put at $46,000. The reports of Mr McDuie place considerable doubt on the high level of profitability which those calculations assume. The statistics reviewed by Mr McDuie also place doubt on the high level of successful foaling which the assumption also relies upon. Taking those matters, together with the comparatively young age of “Topsy” and the speculative nature of the calculations put forward on behalf of the plaintiffs, it seems to me that what the plaintiffs have lost is a chance of achieving that high level of success as a breeder. Doing the best I can, I propose to assess that loss of a chance at 25%, ie $11,500.

The loss of opportunity to achieve success in competition with the damaged horses

239 This appears to be a claim in the nature of general damages for distress or disappointment, consequent not only on the actual damage to the original horses including the death of “Topsy”, but which also encompasses disappointment because the horses were unable to achieve their potential, whatever that might have turned out to be.

240 I do not consider that this claim can be brought as a separate head of damage. If it is a claim which can be maintained by the plaintiffs then it ought be considered under the next head of damage which deals with their individual claims for personal injury. I do not make any award to the plaintiffs under this head of damage.

Damages for personal injury to each of the plaintiffs

241 The plaintiffs’ claim for damages for personal injury is made on three alternative bases. Their primary position is that each of the plaintiffs is entitled to damages for “pure nervous shock” manifested by a recognisable psychiatric injury – a form of post-traumatic stress disorder. As an alternative they claim in respect of the same recognisable psychiatric injury not as a direct consequence of the actions of GWF, but as resulting directly from the damage to property by reason of the death and damage to the horses. This sort of claim has been loosely described as being parasitic on the property damage claim. The final alternative is a claim for vexation, distress, worry and anxiety – again resulting directly from the property damage.

Bernard Crump

242 BC relied upon the evidence of Professor Kennett to support his claim for pure nervous shock. Professor Kennett concluded that BC had suffered “permanent psychological injuries” and “an adjustment disorder”. Professor Kennett seemed to equate the psychological injury which he diagnosed to a form of post-traumatic stress disorder. In his report of 2 October 2002 in para 10.1.2 he said:

“He reports aspects of the essential features of post-traumatic stress disorder; the development of characteristic symptoms following exposure to an extremely traumatic stressor involving direct experience of an event that involved actual death (the horse “Topsy”) and serious injury to other horses ... (DSM-IV 1994 p 424: Category A).”

That diagnosis and expression of opinion was repeated in later reports.

243 There are a number of difficulties with that diagnosis. The histories set out in Professor Kennett’s reports were admitted not as to the truth of the matters there set out but as indicating the assumption which Professor Kennett used in reaching his opinion. The evidence of BC did not substantiate those matters. He gave no evidence of any symptoms experienced by him which could be characterised as a psychiatric or psychological illness. His evidence was that the death of “Topsy” and the damage to the other horses caused him sadness and regret. In the case of “Topsy” his reaction seemed to be a combination of anger and frustration at the loss of the horse which, in his opinion, had considerable potential to be successful as a show hack.

244 Not surprisingly, Professor Kennett was extensively cross-examined as to the discrepancy between his interpretation of DSM-IV and the facts of this case. Specifically DSM-IV has regard to exposure to an extremely traumatic stressor with direct experience involving a threat to one’s self or to someone close. It does not contemplate the injury or death of a pet in that context.

245 That cross-examination, in my opinion, was effective and successful. In my opinion the criteria, broad as they are, in DSM-IV were not satisfied in the case of BC. That was also the opinion of Dr Skinner, psychiatrist, and Dr Roberts, psychologist, who were qualified on behalf of the defendants.

246 In June 2003 it seems that BC was experiencing some psychological/psychiatric difficulties and he was referred by his family doctor to Dr Schultz, psychiatrist. Dr Schultz provided a report to that doctor on 2 July 2003. The usefulness of that report is that it does not appear to be contaminated in any way by litigation considerations but appears to be a genuine attempt by a treating psychiatrist to provide guidance and advice to a general practitioner in respect of his patient.

247 The history which Dr Schultz received was that following the Monensin exposure, BC experienced sleep disturbance, depressed mood, bad dreams and ruminations about what might happen, but that those symptoms had resolved by mid 2003. As of that latter date, BC was stressed and worried predominantly as a result of the ongoing court proceedings. It was the opinion of Dr Schultz that BC had experienced a period of depression following the exposure to Monensin of the horses.

248 Dr Skinner, psychiatrist, saw BC on behalf of the defendants in July 2003. She took a history that for some time after the incident, BC would lie awake fantasising about a catastrophe that might have happened, that his son might have fallen if one of the horses died while he was camp drafting and that his son could have been seriously injured. Apart from thinking about the horses from time to time, BC’s mental state seemed to be quite normal. The history recorded by Dr Skinner differs significantly from that taken by Professor Kennett. Dr Skinner concluded that BC was not suffering from a psychiatric and psychological disorder.

249 Dr Wendy Roberts, psychologist, saw BC on behalf of the defendants in August 2004. BC underwent a battery of psychological tests and provided a very comprehensive history. Dr Roberts concluded that BC did not meet the criteria for any diagnosable emotional disturbance attributable to the Monensin exposure of the horses. Dr Roberts thought that BC was understandably distressed when “Topsy” died and when the initial tests were done on the horses. She also thought that he was feeling distressed over the process of litigation and some dysfunction within the family.

250 I am of the opinion that BC did develop a recognisable psychiatric condition as a result of the death of “Topsy” and the exposure to Monensin of the horses. That condition was the period of depression diagnosed by Dr Schultz. The period of depression was not sufficiently serious to cause BC to seek medical attention, nor did it result in any time away from work. Nevertheless if it involved the symptoms recorded by Dr Schultz it must have been quite distressing for BC at the time. From the histories recorded by Dr Schultz, Dr Skinner and Dr Roberts it seems to me that the period of depression had certainly resolved by the middle of 2003 and probably resolved within 12 months of the incident occurring.

251 That finding is not decisive in entitling BC to damages for “pure nervous shock”. It is necessary for BC to establish that GWF should have had in contemplation when it manufactured the contaminated HEP that an owner of horses who were damaged by consuming the product, would have suffered a period of depression as a result of being told about the death of one horse and by observing the other horses, particularly when they were tested.

252 The leading case on this issue is Tame v State of NSW; Annetts v Australian Stations Pty Limited [2002] HCA 35; (2002) 211 CLR 317. Whereas the majority of the court rejected the “normal fortitude” test as being one which if not met would prevent an entitlement to damages for nervous shock, all of the court accepted it remained an important consideration. Gleeson CJ considered the basic test to be “reasonable foreseeability”. He refined that test as follows:

“The variety of degrees of susceptibility to emotional disturbance and psychiatric illness has led courts to refer to a “normal standard of susceptibility” as well as the number of “general guidelines” in judging reasonable foreseeability ... it is a way of expressing the idea that there are some people with such a degree of susceptibility to psychiatric injury that it is ordinarily unreasonable to require strangers to have in contemplation the possibility of harm to them or to expect a stranger to take care to avoid such harm.” [16]

253 Gaudron J approached the matter as follows:

“To say that “normal fortitude” is not and cannot be the sole criterion of foreseeability, is not to deny that, ordinarily “normal fortitude” will be a convenient means of determining whether a risk of psychiatric injury is foreseeable. However, it will be otherwise if the defendant has knowledge that the plaintiff is particularly susceptible to injury of that kind or is a member of a class known to be particularly sensitive to the events in question.” [62]

254 McHugh J supported “normal fortitude” as a disqualifying test but also stressed the concept of reasonableness:

“Once it is accepted that a risk is not necessarily reasonably foreseeable because it is not far fetched or fanciful, criticism of the “normal fortitude” test wears a different complexion. Once the notion of reasonableness regains its rightful place at the front of the negligence inquiry, it must follow that the defendant is entitled to act on the basis that there will be a normal reaction to his or her conduct.” [109]

255 The approach of Gummow and Kirby JJ was:

“However, the concept of “normal fortitude” should not distract attention from the central inquiry which is whether, in all the circumstances, the risk of the plaintiff sustaining a recognisable psychiatric illness was reasonably foreseeable, in the sense that the risk was not far fetched or fanciful ... where the plaintiff’s response to the defendant’s conduct is so extreme or idiosyncratic as to render the risk of that response far fetched or fanciful, the law does not require the defendant to guard against it.” [201]

256 Both Hayne and Callinan JJ supported the continuation of the “normal fortitude” test:

“Reasonable or ordinary fortitude is, and should be recognised to be, a control mechanism the application of which will require consideration of what, as a matter of general community expectation, could reasonably be foreseen to be the reaction of the reasonable or ordinary person to a particular kind of stressful event.” [274]

257 Applying those formulations of the appropriate test to the facts of this case, I am not persuaded that it was reasonably foreseeable by GWF that an owner, in the position of BC, having been told about the death of “Topsy” and being aware that his horses had been affected by Monensin, would experience a psychiatric illness, ie a period of depression. As was made clear in this case, horses do become ill and die suddenly from a number of natural causes. Owners would be expected to have a certain level of resilience. This would be the understanding of a manufacturer of horse feed.

258 It follows from that analysis that BC’s claim for damages for pure nervous shock fails.

259 The entitlement to damages for a “parasitic” psychiatric injury resulting from other compensable damage, ie in this case the damage to the horses, was comprehensively examined by Sheller JA in Avenhouse & Anor v Hornsby Shire Council (1998) 44 NSWLR 1 at 37 ff. His Honour quoted with approval the following extract from Fleming, Law of Torts 9th ed (1998) at p 285:

“It used to be thought that damages for non material injury were allowed only consequent on physical injury but not damage to property, such for example as grief over the death of a cat or distress and inconvenience over damage to one’s home or car. But there has lately been a change: damages for foreseeable worry and anxiety, or physical inconvenience are now being awarded in cases of negligently constructed homes, even business premises, and at least for intentional shooting of pets. Equally in cases of purely economic loss, such as resulting from conversion and misrepresentation.”

260 A statement to similar effect was made by the Court of Appeal in Campbelltown City Council v Mackay (1989) 15 NSWLR 501. As McHugh JA pointed out in that case (p 511) the question was whether the consequential damage was the reasonably foreseeable result of the defendant’s negligence. That last qualification is important. It seems to me to import into this type of claim for damages the same limitations which the High Court expressed in various ways in Tame, ie that the particular condition has to be “reasonably foreseeable” by the tortfeasor. I have already found against BC on that issue and consequently his claim for damages in respect of his depression, resulting directly from the damage to his property, ie the horses, must also fail.

261 This then leaves for consideration the last alternative, ie that is damages for vexation, distress, worry and anxiety. That sort of claim, as Sheller JA pointed out, results directly from the other compensable damage, ie the damage to the horses, but the vexation and upset need not amount to a psychiatric injury.

262 It is quite clear from BC’s evidence that he was upset and distressed at the damage to his horses. Such vexation and upset would have been reasonably foreseeable by GWF. BC was a part owner of the horses and as such is entitled to bring such a claim for damages.

263 That vexation and upset although real does not justify significant damages. He was not disabled by it. His attendance on Dr Schultz was due to the stress of the litigation not the earlier period of depression. In those circumstances I assess BC’s entitlement to damages for vexation and upset associated with the injury to the horses at $5,000. Since most of that upset was experienced in the period immediately following the incident, I propose to award interest on that amount at 4% per annum from January 2000 to date, ie $1,300.

264 I have found that subject to proving personal injury, the plaintiffs have established a breach of s75AD TPA on the part of GWF. It seems to me that the period of depression diagnosed by Dr Schultz which BC experienced following the incident would amount to personal injury. There is no requirement under s75AD for any test of reasonable foreseeability to be satisfied. All that has to be proved is a defect in the goods and personal injury caused by that defect.

265 Although the level of depression experienced by BC was of a relatively low level and was restricted in point of time, ie it ceased some time before 2003, its effect on BC seems to have been rather more significant than the vexation and upset in relation to which I have awarded damages at common law. It seems to me that BC’s entitlement to damages for his period of depression pursuant to s75AD is greater. My assessment of BC’s entitlement to damages pursuant to s75AD for his period of depression is $15,000. As with the damages for vexation and upset, most of that depression was experienced in the period immediately following the incident. Accordingly I award interest on that amount at 4% per annum from January 2000 to date, ie $3,900.

266 The fact that GWF has been found liable to BC in both negligence and under s75AD TPA gives rise to the unresolved question of election between such rights which was referred to by Gummow and Hayne JJ in Graham Barclay at 130:

“The relationship between claims made for relief in respect of contravention of provisions of the Trade Practices Act and common law claims, whether in negligence, deceit or otherwise, has not been examined in detail in any decision of this Court and was not the subject of detailed argument in the present matter. In those circumstances, we proceed on the assumption (which was not challenged) that a plaintiff may frame alternative claims in negligence and under the provisions of the Trade Practices Act relied on here. But it is to be recognised that claims of the kind which were made in these matters, in negligence and under theTrade Practices Act, were alternative claims, and that, if a group member succeeds in establishing the elements of both claims, that group member must elect which remedy will be taken. That election would have to be made no later than at the time of seeking final judgment in the action.”

267 In accordance with that observation BC needs to elect whether he wishes to claim damages at common law for vexation and distress or damages for personal injury under s75AD. No submissions were made on this question at trial. Accordingly, in due course, leave will be given to BC to make such an election before judgment is entered and final orders are made in respect of his claim.

Rodney Crump

268 RC’s claim for personal injury depends entirely upon the assessment of Professor Kennett. As with BC, there was a significant discrepancy between the evidence of RC as to his reactions to the damage suffered by the horses and that which was recorded by Professor Kennett. The matters relied upon by Professor Kennett in reaching his conclusion that RC suffered psychological injuries as a result of the damage to the horses and the death of “Topsy”, were not made out. For that reason alone I reject the diagnosis of Professor Kennett. I also reject his finding that RC reported “the essential features of post-traumatic stress disorder”. I do so because the cross-examination of Professor Kennett made it clear that the criteria set out in DSM-IV were not made out in the case of RC. I also accept the opinions of Dr Skinner and Dr Roberts that RC was not suffering from post-traumatic stress disorder.

269 His evidence at trial went no higher than that he was initially upset and did not see the horses for a couple of months and that he missed “Jimmy” and “Cracker” (T.867). He felt “cranky” and “deprived” that he could not ride the horses.

270 Otherwise the evidence was that RC had not missed school or work, had completed his HSC without incident, had not sought or received any medical treatment and had otherwise remained healthy. His sleep was “generally OK”. He had worked in a variety of jobs and had established a successful business as a farrier. He had continued to participate fully in camp drafting and in other equestrian activities.

271 I am not satisfied that RC suffered any psychiatric illness as a result of the death of “Topsy” or the damage to the other horses. I am not satisfied that he has even suffered vexation, upset or distress so as to be entitled to some damages in accordance with the principles set out by Sheller JA in Avenhouse. In any event there is no evidence that RC had any proprietorial interest in the horses which were damaged, other than a licence to ride “Cracker” and “Jimmy”. Accordingly, he lacks the precondition to be entitled to recover damages for vexation or upset consequent on damage to property.

272 It follows that RC’s claim for personal injury fails.

Vanessa Crump

273 The claim for personal injury by VC is somewhat different to that by her husband and son. She witnessed the death of “Topsy” and has described that scene in graphic detail [38]. She was clearly very distressed at the time and in that regard I accept the evidence of RC and BC as to their observations of her. Her evidence at trial, if accepted, was consistent with the history recorded by Professor Kennett. She gave evidence of anxiety, feelings of guilt and resolved grief. She spoke about abnormal levels of stress. She gave evidence about being depressed when seeing the horses and when thinking about them. She says that the effect of the death of “Topsy” and the damage to the horses on her was such as to cause her to give up participating in hack competition. She has had difficulty in sleeping and has suffered recurrent nightmares, which relate to the death of “Topsy”. Professor Kennett diagnosed post-traumatic stress disorder, unresolved grief, acute anxiety and “a permanent psychological disorder” which he did not specify.

274 A substantial attack was made on the credibility of VC. That attack was based primarily, but not entirely, upon a case which was conducted in this court on behalf of VC against a firm of solicitors, Messrs Sharah Henville & Co. Those proceedings were heard by Davies AJ on 28 June 1999. The background to the proceedings has already been referred to [21-22]. VC had been thrown from a horse on 20 June 1985 and was suing her previous solicitors because they had allowed the action to become statute barred.

275 The Part 33 Statement referred to a head injury, a depressive reaction, an anxiety disorder, irritability and crankiness, tearfulness, an apprehension about riding horses, an apprehension about riding horses off the property, inability to ride horses at her previous level of competence, nervousness, loss of confidence and post-traumatic stress anxiety as having been caused by the June 1985 accident. It also claimed the following disabilities as a direct result of the conduct of the solicitors: anxiety, disappointment, anger and frustration, a sense of helplessness, loss of self-esteem, depression, inability to sleep, moodiness, tearfulness, distress and vexation.

276 In preparation for those proceedings VC attended a number of doctors at the request of her solicitors who were the same solicitors representing her in this matter. In December 1994 she told Dr Allam about some depression which she experienced after the 1985 injury. In August 1995 she told Dr Dent, psychiatrist, that following the 1985 accident she could only ride her horse in hacking competition at shows but not at her previous level of competence. Her main problem was of a nervous nature. She told him that since the accident she had not done well at all riding any of her own horses and had lost a lot of confidence. Feelings of depression had lasted for a couple of years but had not persisted. Dr Dent thought there was some post-traumatic anxiety, but not enough to qualify for a diagnosis of post-traumatic stress disorder. That history does not sit well with her success as a show rider and winner of the Crane Trophy between 1986-1990.

277 VC saw Dr Gertler, another psychiatrist, in January 1998. VC told Dr Gertler that her major emotional problem related to her confidence as a horse rider. She had a fear of being thrown again. She was able to ride at shows but asked her son to ride the horse first. At times she became depressed about this loss of confidence. She tended to ruminate about the accident and the fact that the first set of solicitors had let her down. Dr Gertler diagnosed an anxiety state which had some phobic components. 

278 VC saw Dr Gertler again in May 1999, ie nine months after the death of “Topsy” and the Monensin contamination incident. She said nothing to Dr Gertler about that incident, or about any psychological or psychiatric consequences. VC told Dr Gertler that she continued to ruminate about the 1985 accident at times and about having been let down by her previous solicitors. Dr Gertler made the same diagnosis.

279 In February 1998 VC saw Dr Coffey, a neurologist. She told him that for the first twelve months following the 1985 accident she was “really out of action”. She had to give up her cleaning job and riding lessons and relied upon her mother and sister to help in the running of the house. After about a year she began to start riding again, but had never regained the confidence she formerly had.

280 In the proceedings before Davies AJ no mention was made by VC of the death of “Topsy” or the Monensin contamination incident. The following evidence was given:

“Q. What has been the situation say from a month after your last shoulder operation in April 1986 about your left shoulder and to the extent there has been any impact, your left upper limb as a whole?
A. It aches a lot, constantly in cold weather even worse. I have restricted movement, I have not got full movement of my shoulder. I have a restricted movement, my shoulder aches extremely so in the cold weather, when I do any activity, when I ride for half an hour or more it aches and my left side of my shoulder is shorter than my right side so my clothing, I always have to wear something padded nothing clingy so I do have to be careful with my clothes. Just aches and my muscles get tense, aches in my neck.” (T.25.12)

And later:

“Q. Did you, following the accident, experience within yourself any change of your normal mood?
A. Yes I became sort of – because the accident sort of shattered me and I felt like I wanted to be in a cocoon. I used to get cranky and irritable because of the pain so I did have a change in my nature for a long while because it was something I was not used to.

Q. How did that manifest itself with you, how you felt?
A. You mean I got moody and cranky?

Q. Yes.
A. I got moody and cranky and snappy with my husband and children but I became a bit of a grouch I suppose for a good while because I was in pain.” (T.31.37)

And later:

“Q. Can I ask you, following the accident, whether in relation to your emotional state you had any change of your previous moods in relation to handling horses, riding horses that kind of thing?
A. Yes very much so I used to go out and ride on the roads, I don’t do that any more. I never have since the accident. I lost a lot of confidence in my ability as a rider because it was such a bad heavy fall. I have lost a lot of confidence as a rider and I am very careful with any new horses. I don’t just get on and ride them, I get someone else to do that. In that respect, yes, and I have lost enjoyment of going out and riding.

Q. Have you ever gone back to coaching and training?
A. No.

Q. Is there any reason why you have not gone back to that?
A. I don’t feel I can do it properly. If a friend was riding I might say do this or that but I don’t teach.” (T.32.50)

281 Under cross-examination the following evidence was given:

“Q. Did you consider that as a result of this accident you had psychological problems?
A. Psychological problems in what respect? As in losing my confidence as a rider? Is that classed as a psychological problem?

Q. Well it is your claim. You claim don’t you, as a result of the accident you have suffered anxiety?
A. Yes I have.

Q. And - 
A. A lot of sleepless nights and I think of the accident, I tried to put it out of my mind. I get upset about it. I don’t know what you call it, but that’s the way I feel.” (T.54.35)

“Q. You say, as a result of the accident you suffered from anxiety?
A. Yes.

Q. An anxiety state?
A. Yes.

Q. Stress?
A. Yes, yep.

Q. And difficulty with sleeping?
A. Yes for a long while yes.

Q. Depression?
A. Well I did, yes, for a long while after.

Q. Did you suffer from difficulty with concentration or memory?
A. Not so much concentration and memory, but all those other things yes.

Q. It is your evidence today, is it, that you have always considered that you suffered these symptoms as a result of this accident?
A. Yes because I didn’t have them before.” (T.54.8)

282 What Davies AJ was not told was that between 1986 and 1990 VC had achieved her greatest success as a show rider with the horses “Persian Gem” and “Persian Amber” including winning the coveted Crane Trophy. [19-20] The inevitable impression Davies AJ was left with as a result of the evidence given by VC before him and set out in the medical reports which were tendered was that the ability of VC to compete in shows had been significantly reduced. Such an impression was incorrect and was known by VC at the time to be incorrect.

283 VC said that she did not tell the court about the death of “Topsy” and the Monensin poisoning incident because the effects of that incident were quite different and there was no overlap. She considered that the psychological symptoms associated with the Monensin incident had no bearing on the case which was being conducted before Davies AJ.

284 While VC did not actually say anything in her evidence before Davies AJ which was false, if she had been affected as severely as she says by the death of “Topsy” and the damage to the other horses, her failure to make any reference to that fact before Davies AJ and to Dr Gertler, a psychiatrist who was examining her some eight months after the event, shows a disturbing lack of candour and a willingness to adjust the truth to suit her own purposes. Not telling the whole story can be just as misleading as telling an actual falsehood.

285 When VC initially consulted Professor Kennett she did not disclose the earlier claim and in particular the mental effects of it. She positively denied any previous mental problems when she saw Dr Skinner in September 2003. She failed to tell Dr Canaris when she saw him in 2003 about the previous mental problems (T.728.35). There was a significant difference between the history given by VC to Dr Roberts and the evidence given in the proceedings before Davies AJ (T.1658.26). For example, Dr Roberts was told that VC had no emotional problems at the time when “Topsy” died. VC used a different set of doctors in the proceedings before me to those she had relied upon in the proceedings before Davies AJ.

286 The evidence of VC before me in chief was that her moodiness after the 1985 accident had only lasted a short period and that problems with sleeplessness and depression, following the 1985 accident, had not lasted long. That evidence was inconsistent with the evidence before Davies AJ on those subjects and to the histories recorded by the doctors whose reports were before Davies AJ.

287 I have difficulty in accepting the reports of Professor Kennett in relation to VC. In his second report, after VC’s solicitors had forwarded to him the medical reports which had been relied upon in the proceedings before Davies AJ, he sought to exculpate VC from any responsibility for misleading him and went to considerable pains to differentiate between the two sets of symptoms, ie those of which she had complained in respect of the 1985 incident and those which related to the Monensin contamination incident. Professor Kennett’s report gave the impression of being an advocate’s submission rather than an independent assessment of the psychological consequences for VC flowing from the Monensin contamination incident. Accordingly, I am not prepared to place much weight on the opinion of Professor Kennett in relation to VC.

288 The conclusion which I have reached is that VC was prepared to adjust her evidence with a view to obtaining the best result which she could in court proceedings. Whereas this might not necessarily involve saying things which were untrue, it certainly involved withholding information which she regarded as being adverse to her case. On the issue of the psychological/psychiatric consequences of the Monensin contamination incident, I am of the opinion that the evidence of VC is unreliable.

289 In such circumstances it is useful to contrast what a witness says and what the witness has in fact done. In the case of VC, she has never taken any medication as a result of the incident. She did not see a medical practitioner, let alone a psychiatrist or psychologist, for treatment. Those whom she has seen, she was referred to by her solicitors for the purposes of this case. She has not taken a day off work by way of sick leave in relation to the incident. Her evidence was that she went back to work almost immediately after the incident, only taking off “a couple of flex days”. She continued to work fulltime thereafter and retained good employment appraisal reports. She gained a promotion. Finally, VC continued to actively pursue an involvement in equine activities. Attachment “E” to the defendants’ submissions sets out a schedule of show attendances by VC after the Monensin contamination incident. She appears to have been active as a show judge and participated up to Easter 2002 in a number of show hack competitions. It was in 2001-2002 that she achieved a reasonable level of success on “Modicum” at Royal Shows. To be eligible to compete at a Royal Show of course, the horse has to have successfully competed at regional shows. In recent years she together with BC, appears to have directed her efforts at assisting RC to become more accomplished in camp drafting.

290 In July 2003 Dr Skinner reported on VC as follows:

“I believe it is a very understandable and normal reaction for Mrs Crump to feel so distressed by the loss of her favourite horse and subsequent problems with her other horses. I do not think that her reaction was excessive or abnormal or that she suffered a psychiatric disorder at the time. I note that she did not attend a doctor complaining of emotional symptoms or seeking treatment for any psychological complaint. I also note that Mrs Crump did not take time off work. She was able to continue in her usual occupation. She was prevented from participating in her hobbies of riding and showing horses for a period of time but resumed these activities the following year. ...

Mrs Crump is not suffering from post-traumatic stress disorder. She does not give a history of symptoms of post-traumatic stress disorder. She does not display the signs of anxiety seen in post-traumatic stress disorder. She does not display the avoidance behaviour characteristic of the disorder.”

291 Subsequently Dr Skinner was provided with the reports which had been relied upon by VC in the proceedings before Davies AJ and this led her to change her opinion:

“Thus the additional documents have caused me to change my opinion in relation to the effects on Mrs Crump of the death of “Topsy” and subsequent problems with her other horses. It is clear from the documents that she was suffering from a pre-existing anxiety disorder caused by her fall from a horse in 1985. She had suffered severe symptoms that had been present for more than 12 years and had stabilised before the death of “Topsy”.

I note that Mrs Crump complained to Dr Dent of anxiety and phobic symptoms and he considered that she had symptoms of post-traumatic stress disorder, although she did not meet the criteria for a diagnosis of that disorder. She had complained to Dr Dent that she had lost confidence and was no longer able to ride at her previous level of competence. In 1998 Mrs Crump complained to Dr Gertler of anxiety, with ruminations about the 1985 accident. Thus, ruminations are a feature of her underlying anxiety condition. In May 1999 she complained to Dr Gertler of continuing anxiety symptoms.

Mrs Crump had lost confidence, was no longer riding at her previous level of competence, and was suffering from an underlying anxiety disorder at the time of the death of her horse “Topsy” and when the other family horses were examined at Sydney University. Following the death of “Topsy”, she may have suffered an exacerbation of her underlying anxiety disorder with ruminations about possible catastrophes, a feature of her pre-existing psychological disorder. Her complaints of reduced interest and pleasure related to her pre-existing activities with horses are probably related more to her phobic anxiety condition that was present in May 1999. With respect to causation, I consider that the fall from the horse in 1985 was of greater significance than the contaminated feed, because the fall was undoubtedly a very frightening incident and resulted in serious injuries including a chronic anxiety disorder and phobia.”

292 Dr Roberts’ conclusion in September 2004 was:

“9.9 Mrs Crump presented as superficially co-operative with this appointment and at face value, reports mild current problems with depression and mild to moderate anxiety. On a more detailed questionnaire, the profile was consistent with chronic personality problems. She also, at face value, reported meeting criteria for post-traumatic stress disorder. She also specifically denied having any emotional problems leading up to 8.8.98, indicating that those that had been there previously had resolved, but on specific questioning, became rather vague and talked about feelings of dejection, disillusionment and some previous loss of confidence over horses specifically, which had largely resolved.

9.10 However, the documents available to me indicated that she had a previous claim over an accident in June 1985, which did not settle until after this incident. As of May 1999, she was claiming a wide range of current emotional problems, including anxiety, disappointment, depression, sleeping difficulties, distress, vexation, uncertainty and confusion over the 1985 accident, as well as impairment of her social and recreational and work related activities and physical problems. There was also reference to depressive reaction, anxiety disorder, irritability, crankiness, tearfulness, reduced sex life, anxiety and apprehension relating to horses and dogs, loss of confidence, “post traumatic stress anxiety” and inability to drive a car ...

9.12 On current information, I think it likely that Mrs Crump has a long history of personality problems and preoccupation with litigation issues, in light of the protracted nature of the previous claim, which is likely to have gone on for approximately 15 years. I think that she has suffered understandable distress over the death of the horse and the problems with the feed, but there is little to suggest that she presents differently now from the problems described in the continuing disabilities attributable to the 1985 accident. Given the problems with inconsistent information, including on the issue of post-traumatic stress disorder, I remain to be convinced that she does have any diagnosable psychological disorder attributable to the events of 8.8.98 ...”

293 I am not persuaded that VC suffered a psychological or psychiatric illness as a result of witnessing the death of “Topsy” and because of the damage to her horses as a result of the Monensin contamination. The phone calls, which she made on the weekend of 8-9 August 1998, relate more to preparing a case against the supplier of the contaminated feed than being indicative of somebody suffering severe psychological distress. On the Monday, ie two days after the death of “Topsy” VC delivered plastic bags to Dr Robson which were specifically labelled as to the feed source so that they could be tested. She consulted solicitors within days of the horse dying (T.572)

294 I prefer the initial diagnosis of Dr Skinner that VC’s reaction was not excessive or abnormal and that she did not suffer a psychiatric disorder. That initial diagnosis of Dr Skinner is supported by that of Dr Roberts, namely that the Monensin poisoning incident caused little change to VC’s existing state of mind. I accept that assessment of Dr Roberts.

295 Alternatively, if VC did experience symptoms consistent with a psychological/psychiatric illness as set out in her evidence then their cause was as assessed by Dr Skinner and Dr Roberts, ie she was already suffering from a chronic, long term anxiety and phobic state which was only briefly exacerbated by the death of “Topsy” and the Monensin incident generally. Even on that scenario, applying the tests set out in Tame I do not consider it was reasonably foreseeable by GWF that VC would actually witness the death of the horse and would react in such a way. It could not have been known and therefore could not be reasonably foreseeable by GWF that VC had a particular susceptibility to reacting in that way because of her pre-existing anxiety and phobic state.

296 Accordingly if contrary to my finding, VC did experience psychological/psychiatric symptoms which were in part caused by the death of “Topsy” and the Monensin contamination incident, they were not of a type which were reasonably foreseeable by GWF in the way outlined in Tame. Accordingly, VC’s claim for personal injury for nervous shock fails.

297 It also follows that the claim by VC for psychiatric illness consequent upon property damage, ie the death of “Topsy” and the damage to the horses also fails. It fails because I am not satisfied that VC suffered a psychiatric illness consequent upon the property damage and even if she did, I have found that it was not a reasonably foreseeable consequence of that property damage.

298 That does not mean that VC cannot recover for the distress and upset caused to her consequent upon the death of “Topsy”. That distress and upset, however, is something considerably less than what could be characterised as a psychiatric illness. Just as Mr and Mrs Avenhouse were entitled to recover damages for their vexation consequent upon the council’s negligence in dealing with their planning application, so also VC can recover for her distress and upset consequent upon the death of “Topsy” and the damage to the other horses. While the development of a recognised psychiatric illness consequent upon that incident was not reasonably foreseeable, it was reasonably foreseeable by GWF that an owner could become upset, distressed and angry if horses owned by him or her were damaged or died as a result of consuming contaminated horse feed.

299 Because such distress, upset and anger fall well short of a recognised psychiatric illness, the damages to be awarded for it must of necessity be modest. I propose to award an amount of $7,500. Since most of the upset and distress was caused in the year following the death of “Topsy”, I award interest on those damages at a rate of 4% per annum commencing 1 January 2000, ie $1,950. .

300 As a result of the leave which I granted to the plaintiffs to amend their statement of claim (T.89.48) the Civil Liability Act 2002 (CLA) would not have applied even if the plaintiffs had been successful in establishing that they had developed a recognised psychiatric illness. In any event, the application of Part 3 CLA relates to a plaintiff suffering “mental harm”, which is defined as “impairment of a person’s mental condition”. The findings which I have made of distress and upset would not come within that definition since they do not involve the impairment of a person’s mental condition. The CLA does not apply to this claim.

301 Subject to proving personal injury VC has established a breach of s75AD TPA on the part of GWF. I am of the opinion, however, that the distress and upset which I have found was experienced by VC does not amount to personal injury such as is envisaged by s75AD. It follows that the claim by VC under s75AD against GWF fails.

Aggravated and exemplary damages

302 The plaintiffs’ submissions as to both exemplary and aggravated damages assume a finding in their favour that BC purchased the bags of contaminated feed from ENS on 30-31 July 1998. The submissions are directed at ENS. In view of the finding which I have made as to the acquisition of the contaminated feed, those submissions must fail.

303 For completeness and because these matters have been pleaded, I will briefly deal with them as against GWF.

Exemplary damages

304 The classic description of conduct which merits an award of exemplary damages is “conscious wrongdoing in contumelious disregard of another’s rights”. (Lamb v Cotagno [1987] HCA 47; (1987) 164 CLR 1at 8-9.) It follows from that statement that awards of exemplary damages would be extremely rare in a case based on negligence.

“They will ordinarily not be appropriate where the negligence consists in the failure, notwithstanding bona fide endeavours, to achieve the standard of care towards the plaintiff which the situation or the defendant’s professed skills required that they attain ...” (Trend Management v Borg (1996) 40 NSWLR 500)

And:

“... Exemplary damages could not properly be awarded in a case of alleged negligence in which there was no conscious wrongdoing by the defendant. Ordinarily, then, questions of exemplary damages will not arise in most negligence cases be they motor accident or other kinds of case.” (Gray v Motor Accident Commission [1998] HCA 70; (1998) 196 CLR 1 at [22])

305 As against GWF there is no evidence which would justify exemplary damages. The actions of GWF were careless but not deliberate. No basis has been made out for an award of exemplary damages against GWF. 

306 In view of that finding I do not need to consider the other problems confronting the plaintiffs in relation to an award of exemplary damages, ie the need to have a “host” award of compensatory damages on which the exemplary award is then said to be “parasitic” and whether s21 CLA would prevent an award of such damages in any event.

Aggravated damages

307 The classic description of aggravated damages remains that of Windeyer J in Uren v John Fairfax & Sons Pty Limited [1966] HCA 40; (1966) 117 CLR 118 at 149:

“... Aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done: exemplary damages, on the other hand, are intended to punish the defendant and presumably to serve one or more of the objects of punishment – moral retribution or deterrence.”

308 As with the claim for exemplary damages, there was nothing in the conduct of GWF in negligently manufacturing HEP which caused any special harm to the plaintiffs so as to attract damages of this kind. In any event, there is a real doubt concerning the award of aggravated damages in claims based on negligence:

“The upshot is that I find no clear guidance in Australian case law on the broad question whether aggravated damages are capable of being awarded in a negligence action. In point of principle, I seriously doubt the need to engraft an award of aggravated damages upon a negligence claim. Compensatory damages would normally include damages for mental distress or injured feeling so long as they can be linked to the tort through existing principles of causation and remoteness of damage. To speak of aggravated damages as a separate component can only have the capacity to confuse and run the risk as to double compensation.” (Hunter Area Health Service v Marchlewski [2000] NSWCA 294; (2000) 51 NSWLR 268 at [110].)

309 The evidence does not establish any basis for an award of aggravated damages against GWF.
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