St Ce. A eS ae Pn CATCHWORDS TRADE PRACTICES - action of industrial union and its officers in breach of s.45D Trade Practices Act - picket - interference with applicant's business - claim for damages for loss or damage under s.82 - whether causal relationship between loss and damage and conduct of respondents - intervening cause. .- multiple causation - liability of umion - liability"Of union's officers - principles of assessment - method of calculation of damages Trade Practices Act 1974 (Cth) ss. 45D and 82 Export Control Act 1982 (Cth) ss.7, 20 Prescribed iGedds_ (General) Orders (Cth) MUDGINBERRI STATION PTY LIMITED ve THE AUSTRALAS TAN MEAT INDUSTRY "EMPLOWEES UNION; JACK 0' TOOLE; TREVOR SURPLICE; DICK ANNEAR; PAT ROUGHAN No. G 123. of 1985 Morling J. 21 July 1986 Sydney ney me ee a ira. Shs waiver re «vw IN_THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVIESTON JUDGE MAKING. ORDER DATE OF ORDER WHERE MADE a Rwy es No. G123 of 1985 ee ee ee we BETWEEN : MUDGINBERRI STATION PTY. LIMITED Applicant AND: THE AUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION ; Pirst Respondent AND: JACK 0' TOOLE ' —_ Second Respondent AND: TREVOR SURPLICE Third Respondent AND: DICK ANNEAR Fourth Respondent AND: PAT _ROUGHAN Fifth Respondent MINUTE OF ORDER Morling J. — 21 July 1986 o Sydney THE COURT ORDERS AS FOLLOWS: l. The first respondent pay the applicant damages in the sum of $1,759,444. wee ee ee a - ee = omer eT ote 8 te tk Ae Note: ' 2. Judgment be entered for the applicant against the first respondent in the sum of $1,759,444. The claim for damages against the second, third, fourth and fifth ~ respondents be dismissed. The question of costs be reserved. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. ape eens a ioe) ar wi owes, 6 eee ESO ee wre ne te IN_THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION MORLING J. No. G123 of 1985 ad MUDGINBERRI_ STATION PTY. LIMITED Applicant | THE AUSTRALASIAN MEAT INDUSTRY. EMPLOYEES UNION ; : First Respondent JACK 0" TOOLE Second Respondent TREVOR SURPLICE Third Respondent DICK ANNEAR Pourth Respondent PAT ROUGHAN Fifth Réspondent 21 July 1986 =yas- 8. SONS FOR DECISION SUMMARY The background to the clain. Events preceding the picket. The picket and its effects on the abattoir operations. Liability for applicant's losses. Measure of damages. Method of calculating damages Likely 1985 production but for picket (A) (B) (C) (D) (EB) (PF) (G) (H) (I) (J) Applicant's estimate Respondents' estimate Availability of livestock in 1985 Kill rate in 1983 Kill rates after picket lifted The new chiller claim Factors affecting 1985 prospects Physical capacity of the abattoir Basis of respondents' estimate Conclusion on likely 1985 kill rate Likely 1985 revenue but for picket (A) (B) (Cc) (D) Quantity of meat Meat sales revenue Failure to appoint quality assurance staff Revenue from hides. a i es at io 3. ' 9. Revenue received or receivable from 1985 production (A) Delay in resuming operations (B) Reduced output under Northern Territory 7 inspectors i (Cc) Stockpiling of meat (D) The ADMA transaction (EB) Meat sales 1n 1985 : "CP Meat produced after picket lifted but not : exported : (G) Hide sales in 1985. 10. ° Summary of loss of revenue ll. Reduction in variable costs 12, Additional costs 13. Summary of damages awarded aera "a 2" +. l. The background to the claim D This is the first case in which an applicant has pursued a claim for damages in respect of loss or damage alleged to have been caused by action taken by an industrial union and its officers in breach of s.45D of the Trade Practices Act 1977 (Cth). On 12 July 1985 I held that the Australasian Meat Industry Employees Union ("the Union") and Messrs. O'Toole, Surplice, Annear and Roughan who are officers of the Union. had engaged in conduct proscribed by s.45D(1), and granted injunctive relief (see 61 A.L.R. 280). I then stood over the applicant's claim for damages against the respondents. An appeal against my decision having failed "(61 A.L.R. 417), the claim for damages has been brought on for hearing. To understand the claim it is necessary to advert to some of the facts referred co in my earlier decision. The applicant conducts an abattoir and meat processing works at Mudginberri Station near Jabiru, approximately 200 kms. east of Darwin.- It leases from thé~Commonwealth an area of about 800 sq. miles- upon which | it runs and musters feral' stock. The abattoir and meat works are situated on some 60 hectares of the leased area. Most of the stock killed at the abattoir are buffalo, but cattle also are slaughtered. The applicant obtains its stock from the properties which it leases from the Commonwealth, from pastoralists who have buffalo and cattle on <p Si bellied beds Eire tle ad ei 5. their properties and from contractors who have the right to take animals from Aboriginal and Crown lands. The applicant holds a licence under the relevant legislation permitting it to process meat and to export it and the abattoir itself is registered as an export abattoir by the Department of Primary Industry. Mest of the output from the abattoir is seld to overseas buyers. The Union is an organisation of employees registered under the Concdliation_ and Arbitration Act 1904 (Cth). Mr Jack .O'Toole its the Federal Secretary of the Union. Mr Trevor Surplice is an organiser for the Union based in the Northern Territory. Mr Dick Annear is the Federal President of the Union and the Secretary of its Queensland Branch. Mr Pat Roughan is a national organiser for the Union. Because of climatic conditions, killing operations at th< abattoir are confined to the period extending from April-or . May to November each year. Except in the special circumstances referred to in order 12 of the Prescribed Goods (General) Oxmders made pursuant to the Export -Control (Orders) Regulations which find their authority in the- Export Control. Act 1982 (Cth) before meat can be exported from Australia it is necessary that it be inspected and passed by appropriately qualified meat inspectors. In the absence of a certificate that meat has been properly inspected a licence to export it cannot be obtained, save in cases covered by order 12. Meat ae ee eee cre etre es nee a eee ee mee me mere nrepererenneene a 8 Sen +e 6. inspectoys employed by the Commonwealth {who are officers employed in the Export Inspection Service of the Department of Primary Industry) are members of the Meat Inspectors Association. another registered organisation of employees. As the present proceedings were originally framed, the Meat Inspectors Association and two of its officers were joined as additional respondents but the proceedings against them have - not been pursued. Ze Events preceding the picket a in June 1984 the Union set up a picket line on the road leading to Mudginberri Station. Because of the picket, members of the Meat Inspectors Association refused for some time to enter the premises to perform their inspection duties and as a result production at the abat.wir ceased. In July 1984, the applicant sought and obtained orders restraining the Union from engaging in conduct proscribed by s.45D of the Trade Practices Act. The dispute which gave rise to the setting up of the picket line arose out of the Union's claim that employees at Mudginberri Station should 'be paid in accordance with a wage system described as the tally system. This system is the basis of payment of meat workers under some State awards, including the Queensland Meat Industry Award. -In 1984 the applicant did not employ labour itself, but engaged ' St. id Me ate 8 A eor in a h contractors who, in turn, hired workmen to curry out work at the abattoir. According to Mr Pendarvis., who is the applicant's managing dinector, O'Toole told him in 1984 that the applicant must accept the tally system as prescribed in the Queensland Meat Industry Award and that, if it did not, the abattoir would not be allowed to open. On another occasion in 1984 0O'Toole gaid: "You can take us to Court. By the time the case is heard and the decision is made the season will be over and you will be broke." (7.317) It was subsequent to this conversation that the picket line was set up. After the orders were made by this Court in July 1984 aap rae the picket line was disbanded. Subsequently the Conciliation and Arbitration Commission heard an application by the Union for an award to cover meat industry employees in the Northern Territory. Pendarvis gave evidence, which was not contested, that in August "or September 1984, during the course of the proceedings which led up to the making of the new award, Annear said to him: "You bastards, you are up now but we will fix you up next year." When asked , to explain this statement Annear further said: "You bastards have had it your way for a long time but we will close you down next year." (T.319) ed Ye fee wees sil 8- | According to Pendarvis on 23 April, 1985, during the | course of a discussion concerning the form of the award which i - the Commission was expected to publish soon thereafter, Roughan ~ told him that "if the award did not consider a tally system they would take legal and industrial action tp force the tally system into the Northern Territory." (7.322) I accept Pendarvis' accounts of his conversations with O'Toole, Annear and Roughan. I refer to the conversations for the purpose only of showing that the dislocation of the applicant's business as ayresult of the 1985 picket was not only foreseeable but, indeed, intended by the Union. = In due course the Commission made the Northern Territory Meat Processing Award, 1984 which came into force on 2 May 1985. The award did not adopt the tally system as the basis for the remuneration of workers, but instead included a provision enabling the use, on certain conditions, of = system of payment by results. After the award was published the applicant set about employing labour for the 1985 season and "was in a position to start operations on 9 May. - An appropriate form of agreement was entered into by the applicant with its employees and lodged with the Industriai Registrar in conformity with the terms of the award. The total number of employees whose services were engaged was 44, of whom about 26 were engaged in production of meat, the balance being involved in supervision, maintenance, domestic work and administration. -- ee et trey ey ene ee re . weet e » wa oeme sa ey ee aon 9. 3. The picket and its effects on the ahattoir operations The applicant commenced operations for the 1985 season on 9 May. The following day the picket line was established and was maintained until 8 September. Roughan why the picket had been imposed, When Pendarvis asked Roughan replied: "There's no tally system in the award. We want to negotiate a tally systen. If we can come fo a satisfactory arrangement, the pickets will he removed." (T.326) not dispute that the first respondent was The respondents did instrumental in organising the picket line and was responsible for maintaining it. Neither was it disputed that the second, third, fourth and fifth respondents all took part in the maintenance of the - picket. The effect of the picket was seriously to disrupt the applicant's operations. It is the responsibility of the Export. Inspection Service, a division of the Department of Primary Industry, to allocate inspectors to the applicant's abattoir. Three inspectors were assigned to Mudginberri. In May 1985 they resided at Jabiru township, which is situated about 15 In 1984 -the inspectors -had kms. from Mudginberri Station. been accommodated on the Station itself. After the picket line was established in May 1985 the three inspectors were instructed by Mr Gordon McColl, the general secretary of the if Meat Inspectors Association, not to cross the picket line. This instruction was not countermanded until 8 September, on } ' I | i eo ra Ce et Mn ee 1 eT x 10. which date the picket was lifted. Roughan told one of the inspectors that, if necessary, physical force would be used to prevent them working if they crossed the picket line. On 28 May 1985, O'Toole informed McColl and others that a black ban would be imposed on anyone who crossed the picket line. McColl was asked why he gave the instruction that "the picket line should not be crossed. His answer was as follows: "Your Honour, the work that our people do places them in between the meat workers and management in inspection and the actions that they are often = called upon to take irritate one or other or both of -those parties, and I believe they- have a - difficult enough task to sort of maintain a oo batrance, and we are concerned that if our people were to cress picket lines they would face danger, physical danger at the time of the picket and afterwards; that particularly but not exclusively in situations like the Northern Territory these . people come from other towns and go to work up ad there and then when the work is finished they have - to go back to their own headquarters and work with other meat workers who support the issues, and they . are likely to be faced with harassment and they - certainly are concerned about that, and for their property. We are concerned that the dispute may well escalate if we were forced to go across the picket line and we are also of course concerned because of our position in the trade union move- ment, in the ACTU, and the ACTU have endorsed these pickets or support these pickets." (T.286) McColl's answer exemplifies the well known reluctance of members of one industrial union to cross a picket line set up by fellow workers who are members of another union. , ' oe re ee ee ot ee gerne = me -4-- oe - Hy srr Nigy 11. { Dr Prenzler, a veterinary officer employed in the i Export 'Inspection Service and who is not a member of the Meat npppectors Association. said that on 10 May he travelled from J iru to Mudgdnberri in company with Mr Kohler, one of the tree Commonwealth inspectors. Their vehicle was stopped at the Picket line and they were engaged in conversation by | see Kohler asked Roughan: "What would the picket line Y to do if we intended to go through the picket line into Midginberr and work?" (7.410) According to Prenzler, who I vse a a reliable witness. Roughan replied to the effect P the picketers would use physical resistance if necessary . [ preven then going in to work. Following this conversation enzler| and Kohler returned to Jabiru. Later- the same day F. enzleri returned to _Mudginberri in company with Kohler and Lyle, anothet inspector. Prenzier passed through the picket line. but Kohler and Lyle did not do so. In later discussions b tween prenzler and Roughan it was agreed that inspectors juld be permitted to cross the picket line so tha. some 29 animals which were in the yard and showing signs of distress could be slaughtered. These animals were slaughtered on 13 May. However, Roughan refused permission for the inspectors to cross the picket line for the purpose of supervising the boning of the 'animals. I am satisfied that, apart from the isolated ! ol fF occasio $ to which I have referred. the picketers refused ii ' Permass on for the inspectors to cross the picket line to carry out the r duties. Iam also satisfied that the inspectors i | : detined to cross the line. The line was abandoned on | | write: ve ve an - Ay Ze "\ i] 8 September and the inspectors resumed their duties the following day. | | | The requirement that meat be inspected before it may t be exported from Australia arises from the provisions of the Export Control Act 1982 and the regulations made thereunder. Subsection 7(1) of that Act provides, inter alia, that the regulations may prohibit Phe export of prescribed goods either absolutely or unless specified conditions are complied with. "Prescribed goods" imeiuses goeds that are declared by the regulations to be prescribed goods for the purposes of the Act (3.3). Meat derived erbm cattle or buffalo slaughtered at a registered establishment s been declared to be prescribed j goods. It is umnecessary to! refer to all the relevant provisions of the ort |\Control Act and the reguiations and ey are referred to in detail in the in Mudqinberri Station Pty. Limited v Langhorne _& Anor. (19| December 1985). The effect of the j legislation is that, except' in the special circumstances orders made thereunder. decision of the Full Cour i referred to in order 12 of the Prescribed Goods (General) Orders, without inspection by an authorised officer meat cannot he exported from Australia. "Authorised officer" is defined in 8.3 of the Export Control Act! to mean an officer of the Department of Primary Industry 'of a person appointed under 3.20 of the Act to be an authorised fficer. Pursuant to s.20 the Secretary of the Department may appoint persons to be authorised efficers for tne purpose of the exercise by those persons of the powers of |an auth vised officer under the Act. \ wae ee ee ee ee Ree et ee me ee oe 13. On 13 May, Dr Robert Irwin, the Regional Director of the Department of Primary Industry in the Northern Territory, went to Mudginberri and spoke to the meat inspectors. They told him that, irrespective of any direction that he might give them, they would not cross the picket line if their union directed them not todo so. On 17 May Irwin directed the inspectors to perform their normal duties at Mudginberri but they declined to do so. He issued a further direction to the same effect on 29 May but again the inspectors declined to carry out their duties. On 22 June the Department of Primary Industry suspended the licence of the Mudginberri Station abattoir as an export abattoir since production of meat for export had been suspended because of the refusal of the inspectors to carry out their duties. The applicant requested the Secretary 'of the Department of Primary Industry to exercise the power vested in him by s.20 "of the Export Control Act %o appoint authorised | officers to perform the duties which the meat inspectors refused to carry out. The Secretary decided to refuse this request. The applicant thereupon applied to the Court "under the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) for an order of review of this decision. The application failed, when heard at first instance, but succeeded on appeal - see Langhorne's Case (supra). res pe eee oe Se ii a ae RP wwe ate eer, ee ee 14. I am satisfied that the presence of the picket line at Mudginberri Station was the effective, indeed the only, cause of the Commonwealth meat inspectors refusing to perform their duties at the Station during the period from 10 May to 8 September. , The evidence also establishes that the presence of the picket line had some effect on the carriage of freight to and from Mudginberri. On 23 May 1985, Mr Barry Carne, a truck driver employed by Hall's Transport, when stopped at the picket line, declined to deliver a load of cartons because, as -he said: "I didn't want any trouble at all for my company." (T.397) There is also evidence, which I accept, that pressure was brought on suppliers of stock not to cross the picket line. However, whilst some contractors who would normally have carried stock and goods to and from the abattoir declined to do so whilst the picket was in place, others ignored the picket. _ 4. Liability for applicant' s losses — . _— I am satisfied that the dislocation of the abattoir' s operations between 10 May and 8 September caused the applicant 'substantial losses. However, the respondents argue that any losses sustained by the applicant were not due to conduct - for which they are responsibid. They submit that such losses were caused by the failure of | the Secretary of the Department of Primary Industry to provide meat inspectors for the abattoir - —: f ry €? failure. 15. and that they are not responsible for losses caused by such The claim for damages is founded upon s.82(1) of the Trade Practices, Act, which is in the following terms: "82. (1) A person who suffers loss or damage by conduct of another person that was done in contra- vention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other pesson or against any person involved in the contravention." However, 3.45D (6){a) and (b) provide as follows: "(6)} Where an organization of employees engages, or is deemed by sub-section (5) to engage, in conduct in concert with members or officers of the organization in contravention of sub-section (1) or (1A) - {a) any loss or damage suffered by a person as a result of the conduct shall be deemed to have been caused by the conduct of the organization; - i. oe (b) if the organization is a body corporate, -no action under section 82 to recover the amewnt of the loss or damage may be brought against any of the members or officers of the organization;" It is common ground that the Union is a body corporate. This being so, and since O''Toole, Surplice, Annear and Roughan are officers and members of the Union, s.45D (6)(b) precludes damages being awarded against them. Accordingly, the claim for damages against those respondents must fail. i ne sa ee me = 16. The question which remains is whether the losses suffered by the applicant were suffered "by conduct of" the Union that was done in contravention of s.45D(1). In view of my earlier finding that the conduct in which the respondents (including the Union) engaged was, indeed, conduct proscribed by 3.45D(1) the real question is whether the applicant's losses were suffered "by" that conduct. The wording of s.82(1) is somewhat unusual; cf. the reference in 3.74B(1)(e) to cases where the consumer suffers less or damage "by reason that" goods are not reasonably fit for a' particular purpose; see also s.74F(1)(e) where the liability of a corporation to pay compensation arises where the consumer suffers loss or damage "by reason of the failure of the corporation" to take certain action therein referred to. Notwithstanding the change in language, I think itis plain that 3.82(1) contemplates that there must be a causal relationship bet..scen the losses suffered by an applicant "and the conduct of the person said to be responsible for those losses. In Brown v Jam Factory Pty Limited (1981) 35 ALR 79... 'at 88, Fox J. expressed himself as being of the same opinion, as did Northrop J in Mister Figgins Pty Limited v Centrepoint Freeholds Pty Limited [19811 36 ALR 23 at p. 59. In Myers & Anor v Transpacific Pastoral Co Pty Limited (18 February 1986) Pincus J. said (at p.5) that "by" in s.82(1) means "by reason of" or "as a result of". All these cases were concerned with breaches of s.52 of the Act but that is not of importance for present purposes. ae OTS BP a eer Hi ht '| "kefuse to "perform their duties thus closing the appli So ee 1 t , | In Hubbards Pty Limited v Simpson Limited £1982] 41 !, ALR 509 a claim for damages was made in respect]of conduct proscribed by s.48 of the Act. In that case Lockhart J said ' 4 that there must be some causal connection Detsoen Fhe conduct constituting the contravention of the Act and t e loss or damage claimed. This decision was affirmed on appeal (44 ALR |! 695) and at p.696 of its judgment the Full cout referred, without dissent. to his Honour's observation E to the necessity for some causal connection between the ontravention am eek L - tf i and the loss or damage claimed. In ny opinion there is areal and direct ' causal relationship between the losses claimed by the ap licant and : '| the conduct of the Union. The applicant's losses! lowed | from the disruption of its business caused by its inability to |} carry on normal operations at the abattoir. The applic 's business | was, almost exclusively, the production of meat hides. for export. 'It was necessary that meat produced at the, abattntr be .. |: inspected by appropriately qualified and authorized insprctors . i} before it could he exported. The setting up of the picket Yine caused the inspectors to decline to cross the line and to ant's export meat business. , it, | mds | | | ' _it must have been apparent to the Union tha the inspectors might well refuse to cross the picket line. '! When-— | in 1984 a similar picket line was set up the inspectors | | \ Aye TT eee ase - 7 4 date en 18. refused, at least for some time, to cross the line and to perform their inspection duties andas a result. production ceased. Quite apart from the well known reluctance of members of industrial unions to cross picket lines set up hy other unions, the events of June 1984 made it probable. that if a fresh picket line were set up in 1985 the Commonwealth inspectors would refuse to cross it. In any event, any doubt whether they would cross the line and perform their duties was dispelled on 10 May, when they refused to do so. In these circumstances, whatever the degree of causal comnection required between the losses suffered by the applicant amd the conduct of the Union, that degree of connection has been established in the present case. The refusal of the Commonwealth inspectors to perform their duties was the direct and foreseeable consequence of the setting up of the picket line. Indeed, the picket was intended to produce that result. The damage sufrered by the applicant is damage of the kind contemplated by s.45D(1), and the conduct of the Union is one of the classes of conduct which s. 45D(1) seeks to prevent. It would be strange indeed 'if, in these circumstances, the losses sustained by the applicant were not recoverable under s.82(1). It would be erroneous to treat the failure of the Secretary of the Department of Primary Industry to provide meat inspectors for the abattoir as the cause of the applicant's ae RE SR eS ne gt ete iad oO Bare IN rye it fe 19. losses. Those losses commenced as soon as the picket line was set up and continued whilst it remained in place. It is true that the losses would have been smaller if the Secretary had acted in accordance with the applicant's request to appoint Northern Territory inspectors as authorized officers for the purpose of carrying out inspection duties at Mudginberri, but the losses were caused by the respondents' conduct, not by the Secretary's inaction. Even if I be wrong in this view, and it is proper to regard the Secretary's inaction as being an additional cause of the applicant''s losses, I would nevertheless be of the opinion that all the applicant's losses can be identified as having been caused by the Union's conduct. It would be to deny reality to say that the picket did not cause the disruption of the applicant's business which occurred between 10 May and 8 September. It.was within the Union's power and control at.- ail times within that period to stop the losses running. it chose, quite deliberately, to inflict continuing losses on the applicant in the knowledge that the applicant was being "unsuccessful in avoiding the losses. None of the losses would have been incurred but for the picket. Inno sense did the failure of the Secretary to discharge his duty under s.20 of the Export Control Act break the chain of causation linking the Union's conduct and the applicant's losses. The respondents rely upon the dictum of cere mre gar eee Ge ar t,o ted 20. Smith J in Haber v Walker (1963) V.R.» 339 at 358 where his Honour said that for an intervening act to relieve a wrongdoer from ilability for his wrongdoing it must be "an occurrence which is necessary for the production of the harm and is sufficient in law to sever the causal connexion". The Secretary's failure was not necessary for the production of the losses suffered by the applicant. Those losses commenced immediately the meat "inspectors refused to _cross the picket line and continued until the picket was lifted. It should also be observed that even if the Secretary. had appreciated that he was under a duty under 3.20 to appoint authorized officers to carry out inspection duties at a ae Mudginberri, it would not necessarily have followed that the : applicant's losses would have been avoided. Quite apart from any delay which might have occurred before other inspectors were found, it would have been a question whether any inspectors would have been prepared to ct.3s the picket line for the purpose of doing the Commonwealth inspectors' work, i.e. certifying meat as being fit for export. In the-idiom of the Ufion movement this would have been regarded as "scab labour". There were several sources (including professional staff from within the Department of Primary Industry and non-union labour from private industry) from which the Secretary might well have been able to obtain qualified persons ete ne te + ey grr rr ane eee — on ed ee et a a Fen ee "vee eee Tae et it 21. to act as inspectors. It seems that Northern Territory inspectors would have been approached only in the last resort. The work which they normally perform is similar in many respects to the work performed by Commonwealth inspectors. But there are important differences in the responsibilities of the two classes of inspectors. The Northern Territory inspectors may have regarded work done pursuant to temporary authorization under s.20 as "scab labour" and refused to do it, as may have other persons approached to do such work. Whether the Secretary could have found inspectors who would have crossed the picket line to perform the Commonwealth inspectors' jobs must remain a matter of conjecture. Mr Langhorne, the Secretary of the Department, expressed the opinion that if the government had appreciated that he was under an obligation to appoint inspectors to carry out inspection duties at Mudginberri it would- have acted very quickly to change the law. (7.3333) In the light of his evidence any assistance that the applicant may have derived from action taken by the Secretary under 3.20 may well have proved temporary. The respondents put a further argument that there were two causes of the applicant's losses, i.e. the Union's conduct and the Secretary's failure to appoint authorized officers under s.20. As I understand the argument, it accepts that 8.82(1) of the Trade Practices Act extends to a case where —— F wen -s - meme eee tae , 22. there are multiple causes of damage. But, so it is argued, the applicant cannot succeed in the present case because it failed to prove that the respondents' conduct was of itself sufficient to cause the losses. I reject this argument because, for the reasons I have already given, I am of the opinion that the respondents' conduct was of itself sufficient to, and did in fact, cause all the applicant's losses. - Nor do I think there is any substance ina further argument that since the judgment given in these proceedings on 12 July 1985 established a breach of s.45D{(1)(b)(i) only during the period up until that date, no damages can be awarded -in respect of - losses incurréd after" that date. The - evidence establishes that the picket was not lifted until 8 September. Iam satisfied that the maintenance of the picket between 12 July and 8 September was further conduct by the Union "in contravention of Part IV of the Act. As such, s.82(1)- gives the applicant the right to recover the losses sustainec by it as a result of that conduct. 5. Measure. of damages ~ I turn now to consider the measure of the damages to which the applicant is entitled. In Gates v City Mutual -Life Assurance Society (1986) 60 A.L.J.R. 239 at p. 240-241, Gibbs C.J. said: | uy iia ae si i 1a 2 Serre es ei ae 23. "Actions ppased on ss.52 and 53 are analogous to actions in™ tort and the remedy in damages provided by s.82(1) appears to adopt the measure of damages applicable in an action in tort. That sub-section refers to loss or damage by the conduct of anether that contravened a provision of Pt.IV or Pt.V; it therefore looks to the loss or damage flowing from the offending act of the other person. The acts referred to in ss.52 and 53 do not include the breach of a contract, and in awarding damages under s.82 for a breach of either of those sections, no question can arise of damages for loss of a bargain. The contractual measure of damages is therefore inappropriate in such a case. It has been held in the Federal Court in a number of cases that the measure of damages in tort, and not that for breach of contract, will apply in the assessment of damages under s.82 where there has been a contravention of s.52 or 3.53: see Brown v Jam Factory (1981) 35 A.L.R. 79, at p.88; Mister Figgins! v Gentrepoint (1981) 36 A.L.R. 23, at p.59 and Brown v Southport Motors (1982) 43 A.L.R. 183, at p.186. This view is plainly correct." In Jam Factory (supra, at p. 88) Fox J said in respect of a claim for damages for toss or damage caused by a breath of _ s.52: . _"The correct way to approach the assessment of damages in this case, in my view, is to compare the position in which the applicants might have been . - expected to be' -if the misleading conduct had not - occurred with the situation they were in as a result of acting in reliance on that conduct (see Esso Petroleum Co Ltd v Mardon £19761 1 QB 801; £1976] 2 All JER' 5). This is the same, or analogous to, the general principle respecting the measure of damages in tort. There was not anything promissory in the state-~ ments relied upon, and no basis exists for adopting the measure of damages applicable in contract. As an action based on s 52 is more appropriately classified as one of tort, it is possible that the measure of , damages will always, fundamentally, be based on principles affecting' torts." In Mister Figgins (supra, at p.59) Northrop J agreed with the views expressed by Fox J. The present case is _ oo eee He ey ne ee emcee ee ee cee omen geen Sook al ene 6. _ Method .of. calculating damages 24. plainly akin toa claim in tort. as was Hubbard. In the last~mentioned case, damages were assessed by comparing the position in which the applicant might have expected to have been if the contravention of Part IV of the Act had not occurred with the position it was in as a result of the contravention. I agree with that approach, which is consistent with the approach taken in both Jam Factory and Mister Figgins. I propose to adopt the measure of damages applicable in an action in tort in assessing the damages. sustained by the applicant. D shea ts la The applicant claims that an appropriate, and the most satisfactory, methed of calculating its losses is to determine the amount of revenue it lost in 1985 as a result of the picket, to deduct from that sum an amount equivalent to the reduction in its costs due to the diminished production whilst the picket was in place, and then to add certain additional costs which it claims it incurred as a result of the picket. The appropriateness of this method was supported in evidence by Mr Joseph Bracher, an accountant who has specialised for many years in calculating damages for interruption of business. Properly followed, the method should disclose the true measure of the applicant's loss. The approach taken by Mr Justin wero, wT rt +r ITER Bar OE REPS es ce awe 25. Gardener, an experienced accountant called by the respondents, was to construct a profit and loss account for the applicant's business in 1985, and to compare that account with a notional profit and loss account for the same period, assuming the business had not been affected by the picket. Any reduced profit (or increased loss) revealed by the comparison, plus any additional costs, was said to be the measure of the applicant's damage." "I think that both methods should return the same result provided, of course, the same basic revenue and cost items and assumptions are used. I prefer to use Mr Bracher's approach since, on the facts of the present case, it is less complicated. Further, many of the assumptions made in Mr Gardener's calculations do not coincide with "some of the findings of fact I make later in these reasons. In calculating the applicant's losses I have used ny own estimates, based on the evidence, of the income which would have been earned and. the costs which would have beeu incurred : but for the picket. I agree with the submission made by counsel for the respondents that it would be _unsafe to. base _these estimates on figures which appear in the applicant's budget for 1985. -- - ee I turn now to consider the extent of the applicant's loss of revenue due to the picket. I shall first consider the volume of production that would have been achieved in 1985, and then consider the revenue that would have been derived from that production. 26. 7. Likely 1985 production, but for picket (A) Applicant's estimate Leaving on one side for the moment an additional claim (the "new chiller claim") to which I shall subsequently refer, the applicant claims that but for 'the disruption of its business it would have slaughtered and processed 17,762 animals during the 1985 season.. This is a net figure after allowing for diseased animals ("condemns") which are unsuitable for meat production. According to the applicant the gross kill figure would have been 18,435, which was calculated using a condemn rate of 3.65% In making these estimates reliance was placed on the actual average net kill per day in October 1985 after the picket was lifted. Adopting a 1985 season average of 384 lbs. dressed weight per head, it estimates that the total production of meat during the year would have been 6,820,800 lbs. dressed weight. It claims that this quantity of meat would have produced 4,665,427 lbs. of boneless meat. This last calculation is made by adopting an estimated yield of 68.4%, this being the actual figure achieved during the _ 1985_ season. I am satisfied that in 1985 the average dressed weight per head was about 384 lbs. and that the yield of boneless meat was about 68.4% per lb dressed weight. Except in one minor respect these last mentioned figures were not challenged. ale Ds Mie in ae 27. The new chiller claim is a claim that, but for the Picket the applicant would have completed by l July 1985 the installation of a new chiller at the abattoir, and that this would have enabled an additional 20 net head to be slaughtered and processed each day save for the last few days of the season. There were 111 kill days between 1 July and 15 November. Thus, so it is claimed, an additional 2220 net head would have been killed. Applying a. condemn rate of 3.65% it is claimed that the additional gross head killed would have been 2304. Adepting the 1985 season averages for dressed weight per head and boneless meat yield the applicant claims that if the new chiller had been functioning as from 1 July an additional -852,480 'Ibs' of meat would have been produced, yielding 583,096 lbs of boneless meat. . The applicant claims that total production for 1985, if there had been no picket, would have been as follows: 28. HEAD KILLED Gross Prineipal claim 18,435 Plus chiller clain (2,304 Total Gross kill 20,739 Net . Principal claim 17,762 Plus chiller clain 272220 Total net kill 19,982 MEAT PRODUCTION Meat (Dressed Weight) . ids Principal claim Chiller Claim Total 6,820,800 852,480 7,673,280 Boneless Meat lbs 4,665,427 583,096 5,248,523 a. "twee ds Fa ote ee os Ei lal ae De tt a 29. The condemn rate of 3.65% used by the applicant in estimating the net kill of 17,762 (excluding the new chiller claim) was apparently adopted because it was the condemn rate in 1985 whilst the Northern Territory inspectors were carrying out inspection duties at the abattoir. However, if it be assumed that no picket had been imposed the inspectorial duties would have been carried out by Commonwealth inspectors. There seems no reason 'to suppose that the condemn rate under their surveillance would have varied much from condemn rates in past years. The rates under their surveillance in 1982, 1983, and 1984 were 1.8%, 1.6% and 1.8% respectively. The average rate for those years was about 1.75% and I think this is the correct condemn rate to adopt when calculating the net production that would have been achieved in 1985 but for the picket. If this rate were to be applied to the abovementioned gross kill figure of 18,435, the resultant net figure would be about 18,112. This figure, when added to the new chiller claim of 2,220 net would give a total net ('.211 figure of 20,332. Consequential amendments would need to be made to the meat production figures if the lower condemn rate is adopted. (B) Respondents' estimate The respondents dispute that the applicant would have achieved the levels of production for which it contends. They contend that the number of stock that would have been killed in ares 30. 1985. but for the picket, is about 15,161 net, calculated as appears in the following table. The table, which is taken from Ex.40, also sets out details of the weight of meat which the respondents contend would have been produced. Kill Head Weight Yield Pounds days (1) (2) (3) (3) Mav 15 110.05 383 0.679 429289.09 June 23 85.53 383 0.686 516855.57 July 25 97.1 386 0.683 639981.25 August 26 98.72 389 0.665 663971.96 September 24 104.99 389 0.667 653784.49 :. October 26 98.78 378 0.688 667917.17 November 16 91.32 382 0.737 411354.96 - 3983154.48 | No. of head 15161.32 | (1) Kall days : May _ - adjusted budget ~ > June - budget +. July to November - actual (2) Average net head killed per day for each -month 1982 - 1984 - - (3) Actual 1985 weight & yield (except "May "& June weights are combined averages — for she two months) 2 - The respondents claim that the gross kill would have been 15,393. This estimate is made adopting a condemn rate of 1.5%. - week . ohne ee 2 ih. a awe 31. (C) Availability of livestock in 1985 There was much evidence as to the availability of stock for slaughter and as to the applicant's ability to process the numbers of animals it claimed to be able to process at its abattoir. I am satisfied that the applicant could have obtained adequate supplies of livestock to enable it to achieve the kill rate for which it contends. The evidence as to the availability of stock does not consist only of Pendarvis' evidence on the matter. Mr Sullivan, the general manager of Bouglas Station, gave evidence. that he supplied buffalo and cattle to the applicant in 1982 and 1983. He has considerable knowledge of the market for and availability of cattle and buffalo in the Northern Territory. He said that the supply situation for buffalo in 1985 was excellent and that there was "plenty of stock around". (T.1205) He also said that the applicant wowld not have had a problem in getting access to 20,000 buffsio in 1985 (T.2205) and that although the buffalo killing programme had led toa reduction ever the years in the overall numbers of buffalo, it had not affected the supply of stock to the abattoir. He supplied stock to the " applicant between 24 June and 8 September when the picket was in _ place. He said that he was limited in his ability to supply' stock during that period because some truck drivers refused to drive their trucks across the picket line. He nominated several carriers (including Ottley Transport, Road Trains of Australia and Dodds Transport) whose drivers were apparently unwilling to = - - - = 7 - meee mee era — - cel 32. cross the line. Road Trains of Australia were his principal carriers. Mr Alan Woods, the managing director of North Australia Cattle Company Pty Limited gave evidence to the effect that some buffalo had not been turned-off in 1985 because of the lack of a market for them. His company carries on business as a dealer in livestock, contract musterer and advisor to people in the livestock and pastoral industries. Mr Reginald Wilson, who has been a professional musterer of cattle in the Northern Territory since 1981, said that buffalo were plentiful in 1985. He supplied about 1500 head to the applicant after 9 September, and about 1,000 before that date. (1.1212 and 1582) —| The evidence satisfies me that had there been no picket line in 1985, the applicant would have been able to acquire as many 'stock as it requ.red to operate its abattoir at full capacity. However, that is not to say that_it would have actually processed the number of livestock it claims it would have processed. I now turn to consider what would have been the level of production. OURS 4 ore nat ey a. le ee lliate al 33. (D) Kall rate in 1983 According to the applicant (Ex S(3) schedule 9.0) the gross number of stock killed in the 1983 season was 19,679, the net figure after allowing for condemns being 19,362. The respondents' evidence' was that the net figure for 1983 was 19,464 (Ex.29). That was a year in which there was no industrial trouble at Mudginberri and the applicant submits that it affords the best guide to likely production in 1985 in the absence of the picket. The season commenced on 11 April and finished on 18 November. The number of buffalo and cattle killed in April 1983 seems very low compared with the rest of that year as may be seen from the following table, which is based upon material extracted from Ex 29: - " eee /p.34 —_— fy a. as co PE tears ee AT te a, t - Buffalo ! Cattle Total April 11 - | 3 3 12 20 5 25 13 . 74 27 101 14 28 { 44 72 15 45 | - 45 19 30 ' - 30 20 - | 121 1221 21 - 121 121 22 - ' 66 66 23 - 1 i 25 - 41 41 26 - 102 102 27 17 98 115 28 - 123 _ 123 29 61 10 71 30 - 86 86 275 848 1123 ao : . — _---Biiffalo and cattle killed in April 1123 Kill days in April 16 Average kill per day in April 70 Total number of buffalo and cattle killed in 1983 season 19,464 Number of kill days in 1983 season 183 , Average kill per day in 106.3 1983 season Excluding April, the net kill in the 1983 season was approximately 18,341 on 167 kill days, i.e. an average of about 110 head per day. le is tele 35. (E) Kill rates after picket lifted The average daily net kill in the period from 9 September to the end of the 1985 season on 25 November was about 108. This average was influenced by the low killing rates immedtately 'after 9 September and at the end of the season when production was coming to an end and climatic conditions were becoming adverse. Pendarvis gave evidence, which I accept, that even after the picket was lifted there were still some continuing effects from it. For instance, the applicant's inability to accept stock from its normal suppliers whilst the picket was in place meant that those suppliers entered into fresh arrangements with other customers, and those arrangements limited their capacity to supply stock to Mudginberri after the picket was lifted. Between 9 September and 17 October 1985 3,302 buffalo and 587 cattle were slaughtered. During this period there were 33 kill days, the average daily sross kill being about 118. Allowing for the condemn rate of 1.6% during this period, the average daily net kill was about 116 per day. In the whole of October there were 26 kill days and 3003 net head were killed, giving a daily average of 115.5. I think these figures afford a useful guide to what the daily average would have been over the whole season had the picket not been set up, but they do- not take account—ef-any increased production which may have been achieved w:.th the completion of the new chiller. | ; "Rams OF mere ane apne paper ee semen 36. (FP) The new chiller claim I am satisfied that prior to the commencement of the 1985 season the applicant intended to complete the installation of a new chiller by the end of June that year. §§ The new chiller was part of a programme of improvements commenced in 1984. The improvements were required to ensure that the abattoir met the standards required for the export of meat to countries within the European Economic Community. In 1984 over $1 million was spent on the improvements, mainly on the rebuilding of the slaughter room floor. Work on the new chiller was commenced and approximately §56,000 was spent , on its construction in that year. This work included completion of the foundations and of the steel structures which support the rails upon which carcasses are hung, and an overhead stucture to hold the cooling equipment. The work remaining to be done included the installation of the cooling equipment which was already'-on site and the~- erection--of insuJ>tion - panels. Pendarvis said he had a firm oral. quotation of $27,000 to complete the installation- of the chiller and -that had the 1985 season not been interrupted by the picket he would have expected to finish the installation by the end-of June. In his opinion the completion of the chiller~ would have permitted an additional 20 head per day to be processed. Pendarvis said that the reason why the work on the chiller was not completed by the end of June 1985 was that he eae + ou: oe ' 37. lacked finance to complete it, and that his lack of cash flow deterred him from obtaining finance. The applicant was not flush with;funds at the beginning of the 1985 season and I am satisfied that it was the picket and the consequent reduction { . in the applicant's cash flow that was the reason why work on the chiller was not completed by June of that year. ! ' ' However, I am not satisfied that if the new chiller had been available from July onwards the applicant would have . | processed an additional 20 animals per day. There were constraints on production other than the physical capacity of the abattdir. Those constraints included the difficulty of arranging Lox stock to arrive at Mudginberri in a continuous stream so'as to permit optimum production. Another, but less significant, censtraint was the capacity of the yards, but this was a problem which could have been easily overcome. hen in February 1985 the applicant prepared it budget for the! goming season it budgeted fora net kill of 18,480. is This f4gure was based on an estimated 154 kill days and an average n t kill per day of 120 over the whole season. The estimate to k account of the planned completion of the chiller. Counsel for the respondents submit that the budget shows that/'the , pplicant itself did not believe that the new Tn . chiller would ha e made it feasible to increase production by an extra 20 head, per day. I think there is force in this je | submission but it is somewhat diminished because the budget was | te el ot oe ee eens ———— ee at we ER BR. ! 38. apparently prepared on the basis that the operators of Rt te abattoirs at Point Stuart and Katherine would be competing with the applicant for! stock supplies. The budget noted that the estimated daily kill of 120 should be easily achieved and that "if Pt Stuart ah Katherine do not open seasons (sic) kill would increase dramatically". Neither Point Stuart nor ; Katherine abattoirs were killing buffalo for export in 1985. They were killing buffalo only for domestic consumption in that year. (T.2025) "4 | It appears to 'have been the case that the existing ! chiller was not always used to its full capacity and this - is another reason x rejdcting the applicant's claim that the increase in ¢c ler capacity would have been matched _ by increased productiion of 20 animals per day. However, the additional chiller capacity . would have given greater flexibility to thi applicant's operations and in conjunction with the acaittopel yards which were proposed to be constructed it would have enabled he applicant to better programme the stock and so increase the level of | supply and slaughter o production. to some exte t. The respondent: did not call any witnesses to contest Wt, Pendarvis' evidence as , te the beneficial effect which the t' 'da construction of the new chiller would have had on production | % levels. Whilst the absence of such evidence is no substitute 1 ; for proof of the lapplicant's claim, it does make it easier to | 39. a a accept that there is some substance in this aspect of the applicant's case. Mr Byrne, who was employed as the manager of t the abattoir at the beginning of the 1985 season, was called by i the respondents in the earlier proceedings in which the claim for injunctive relief was determined, but was not called to give evidence on the hearing of the damages -clain. It is fairly clear from his evidence that his sympathies lie with the respondents. I would have thought that he, and the numerous other former émployees of the applicant who did not work for it in 1985, may well have been in a position to give relevant _evidence on the issue whether the construction of the new chiller would have had any beneficial - effect on - production. - However, fio suth witnesses were called by the respondents. On the evidence as it stands, I have reached the opinion that the construction of the new chiller would have improved the applicant's prospects of achieving higher killing rates, but not nearly to the extent of an additional 20 head rer day. (G) Factors affecting 1985 prospects There were several factors operating in 1985 which would have made it likely that, but for the picket, the number of stock killed by the applicant would have been high. In 1985 Mudginberri was the only abattoir in the Northern Territory 7 killing buffalo for export. This was in contrast with the moe 2 bat w - fan ey trae 40. position in earlier years when other abattoirs produced for the export trade. I have already referred to the ready availability of stock in 1985. The depreciation of the Australian dollar against other currencies, particularly the Deutschmark, would have made imports from Australia more attractive to foreign buyers. This would have provided an incentive to the applicant to maximize its production so as_ to take advantage of the favourable export conditions. Further, the completion at considerable expense of the improvements to the abattoir would have provided an additional incentive to put it to optimum use. (H) Physical capacity of the abattoir It was practicable to slaughter and process much larger numbers of stock per day than the average daily kill rates to which I have referred. The applicant's records show-- that kill rates averaging 120 or more were sometimes achieved. For instance, in July 1983 some 3190 -stock were killed~ on 26 kill days, an average of .122.7 per day; and ~ between 17 October and 26 October 1983 some 1102 head were killed on- 9 kill days, an average of 122.5 per day. © After the picket ~ was lifted in 1985 the average kill per day during the period from 26 October tb 6 November was 120. 3 : : , ' . i] i ?t ' ' ' i | H F i] oS ed fat ty eee, ee oe Be ee » ail 'al. (I) Basis of respondents' estimate If the respondents' submission is adopted, the average net kill per day in 1985 would have been about 98. This figure is calculated by averaging the net head killed per day for each month in 1982, 1983 and 1984. However, I do not think it is proper to use averages derived from the experience of past years, unless all those years were comparable to 1985. I do not think they were. 1982 was the first year the Mudginberri abattoir operated under the applicant's ownership. Whilst Pendarvis had some prior experience of the abattoir, he did not have any experience as the owner of it or of any other such undertaking. So far as 1984 results are concerned, that was a year which was affected by industrial action leading to the imposition of a picket. The picket did not last long, but it is not possible to say on the evidence whether it or the industrial ddspute which gave rise to it had any continuing effect on production. Moreover, thre is evidence (T 1348 et seq) suggesting that the export market for the applicant's production in 1985 may have been larger than in 1984, in consequence of a visit Pendarvis made to Taiwan. Sweden and Germany for the purpose of finding new buyers. The average daily kills in 1982, 1983 and 1984 were 85.77, 106.36 and 93.28 respectively. The better approach | is Dt to use the kill rate in the most comparable of those years, in conjunction with the other evidence, as a guide to likely "1985 ae emepemae tem ce = aaae - + ee ed ee oc er ee to agen 42. = production, rather than the average of the three years. Of the years preceding 1985, 1983 provides the best guide. (J) Conelusion on likely 1985 kill rate There are s0 many factors which may have affected total production in 1985 that it is impossible to achieve a high degree of accuracy in calculating the number of head which would have been killed if there had been no picket. The best that can be done is to make an estimate taking into account the whole of the evidence. It is inappropriate to treat the proposed new chiller as a factor separate from and independent of the other factors which would have affected the level of production in 1985. The better approach is to treat it as one of many factors which would have affected the overall level -of production for the 1985 season if there had been no picket. Having regard to all the evidence I think that, but for the disruption - of -its ~business caused by the Union's conduct. the applicant "would have actually processed about 18,000 animals-in 1985: This would have given an average daily net kill of ~ about 116.75. " Allowing for a condemn rate of 1.75% the gross kill for the season would have been about 18,321. eee eee see - eee Ste Se ree ce prereset emcee cere 43. te Bk tere a These figures are slightly less than the gross and net kill figures in 1983, if April of that year is excluded. | Excluding that month, the gross and net kill figures in t. he ; il respondents' figure is adopted). However, an average daily were 18,556 and 18,239 respectively (or 18,341 if net kill of 116.75 is higher than the rate achieved in 1ghs. There were 167 kill days in 1983 from the beginning of May,|to the end of the season, the average gross daily kill in that | period being about 111. In the light of ail the evidence I think the estimates of 18,000 net and 18,321 gross for 1985 /are realistic. 8. Likely 1985. revenue, but for picket Having established the likely production level , for 1985, I turn to -consider the revenue which -might have bec produced in that year. (A) Quantity of meat _ Adopting the 1985 season average of 384 lbs dressed | weight per head, 18,000 animals would have produced 6, 912, 000 bs dressed weight of meat. This would have yiettea ° 4,727,808 lbs of boneless meat, using the actual 1985 season average of 68.4%. | rex cn omeymaree. Toes es 2 Slee a4. Making an allowance of 15,128 lbs of boneless meat which would have been used by the applicant for its own purposes, there would have been 4,712,680 lbs of boneless meat | available for sale. (B) Meat sales revenue The applicant claims that 98.5% of boneless meat production would have been sold on the export market and 1.5% on the local market. Although it would have been to the applicant's advantage to sell on the export market since export selling prices considerably exceed domestic selling prices, I reject the claim that 98.5% would have been sold For export. Based on experience in past years only about 96.4% of total production would have been exported. Apparently, some cuts and trimmings of mezt are not commercially attractive to foréign buyers. I tuerefore estimate that about 4,543,024 ibs would have been sold on the export market, and about 169,656 ibs on the domestic market. There is very persuasive evidence, which I "accept, that in 1985 the applicant could have— sold its export production to buyers in Sweden, Taiwan and Germany and that $1.20 per lb could have been obtained for most of this meat. The applicant had sales-centracts for, or firm prospects of selling substantial quantities of meat to buyers in Sweden and — . rs | ee ee te te ee ee can tee pe renner eee werent wriae "3° eee. TS a ere 2! rmast - 4s. Taiwan pursuant to four contracts or arrangements which may be summarized as follows: Projected Sale Sales Value Weight _ ° SA lbs Taiwan No. 1 » 1,635,517 1,376,400 Taiwan No. 2 663,047 558,000 Sweden No. 1 535,137 418,877 Sweden No. 2 1,048,631 881,849 i] $3,882,332 3,235,126 lbs . Average price per lb = $3,802,332 + 3,235,126 : = $A 1.20 It is apparent that there was a degree of informality in all the abovementioned arrangements. However the applicant is not. obi-cged to establish that it had firn contracts to sell all or any of its 1985 production. What it has to prove in this part of its claim is the price which, on the balance of probabilities, it would have received for the meat. Quite 'apart from the telexes which evidence the above transactions, the oral evidence of Messrs Pendarvis, Agnew and Hubl (to whose evidence I shall subsequently refer) establishes that a price of about $Al.20 per lb could have been obtained for meat sold to buyers in Sweden and Taiwan and that such buyers would have. purchased at least 3,235,126 lbs of the 1985 season's production. te ' U l ~ - o- . - eee tee ee ore -- er ee erp tee eet Cn ie 4 GA te wre — 46. The quantity available for export after satisfying such buyers would have been 1,307,898 lbs. There was much evidence as to the price that could have been obtained for this meat. This included evidence from Mr Brian Agnew, the principal of Gecel (Aust) Pty Limited, who has had considerable experience in the export' meat trade including the export of buffalo meat. According to him the Swedish market would have taken between 500 and 700 tonnes of the applicant's production in 1985, and would have been prepared to pay about $1.15 per tb ex Mudginberri for the bulk of the applicant's production, and $3.44 per lb for the fillet portion of the production, giving an average price of about $1.20 overall. He thought that the batance of the production could have been sold on the German market. He said that prior to the beginning of the 1985 season he was thinking of offering a price some 7-10 cents per ib less 'than he would have offered for meat destined for Sweden. The price obtainable on the German market was marginally less than the Swedish buyers were prepared to pay. 'However, the weakening of the Australian dollar in 1985 may have caused export prices to firm during the year, with consequent benefit to the applicant. Moreover, it is not to be assumed against the applicant that it would necessarily have accepted offers made to it without bargaining for somewhat higher prices. wean 2 eae eee oe spe a pee mer 47. Evidence was also given by Mr Eckard Hubl, the Managing Director of Tatiara Meat Company Pty Limited, which carries on business as meat processors and exporters. He visited Mudginberri Station in January 1985 to discuss the possible purchase of meat for export to Germany. He appears to have been in the market to purchase up to 2,250 tonnes, and made tentative opening offers to Pendarvis. Apparently no firm arrangenent was made, but both parties agreed to watch the movement of the Deutschmark against the Australian dollar. He said that if he had been able to purchase meat from Mudginberri during the 1985 season the purchases would have been made at —_— graduated prices, depending on currency fluctuations. "He said the average price would have been somewhere in the vicinity of $1.12 or $1.14 per 1b. I enion at is fairly clear from his evidence that these prices related to meat other than fillets, so that an average price for both fillet and non-fillet meat would have been in the vicinity of $1.18 per lb. Hubl said that if sales had been made in July 1985 he probably would have offered about $1.10 per ,ib, but again, this price does not appear to make allowance for the fillet fraction. The respondents rely upon evidence given by Hubl that normally he would have-made a firm offer of purchase by May, that the price he then would have offered was $1.10 per 1b, and that he would not have increased his price later in the season. However,—I-do not think it should be assumed adversely to the applicant that it would have been compelled to sell to Hubl on his terms. t —— -- We ea nee Bowater eee 8 PN SE tS 48. Pendarvis was of the opinion that he could have achieved a price of $1.20 per ib for all meat sold on the export market. He may well have been able to do so, but taking account of all the evidence, I think it more likely that the applicant would have received an average price of about $1.18 per lb for the balance of its export production after it had satisfied its obligations under the particular contracts or arrangements it had with purchasers in Sweden and Taiwan. The applicant claims that the meat which would have been gold on ' the local market would have brought an average price of about 86 cents per ib, and I think this is: a reasonable estimate. i Accerdingly, the total revenue from boneless meat production in 1985 would have been approximately $5,571,375 made up as follows: . 1 - - ? + . - awe Sales to Taiwan and Sweden - 3,235,126 lbs _ @ $1.20 per 1b = $3,882,151 Sales to Germany - or other export ; ; = ° markets - 1,307,898 lbs ~ @ $1.18 per 1b = $1,543,320 Sales on domestic , market - 169,656 lbs @ 86 cents per lb = $145,904 Total revenue - boneless meat $5,571,375 a cee 49. - {c) Failure to appoint quality assurance staff The respondents submit that even if there had been no picket, the applicant's ability to generate income from the sale of meat for export would have been seriously prejudiced by its failure to employ a sufficient number of quality assurance staff at Mudginberri to ensure compliance with the conditions ef the meat export licence issued to it under the Australian Meat_and_ Live=ssteck Corporation Act 1977 (Cth). It was a condition of that litence that there be three quality assurance staff on site at the abattoir. It is true that when the season commenced on 9th May the applicant did not have sufficient quality assurance staff on site. However, Mr Brownlie, the Chief Manager for Licensing and Control of the Australian Meat and Live-stock Corporation, said that if there had been no industrial trouble at Mudginberri in 1985 his officers would have visited the abattoir about the middle of May to check the position as to quality control. His evidence included the following: "HIS HONOUR: Supposing you got there and found it was not in conformity with what was required in " your book, what would you have instructed your officers to have done?---We would have taken action against Mudginberri's quality control administratively to start with. We would have classified it as B category and told him he had. to get the necessary number of inspectors of accredited people there. If he could not recruit those people If would have even put my ewn staff in there to provide him with the requirement. wo eFe + Ire een tee a A ORES Lerriy sr 50. MR COWDROY: Would that administrative action end up in a reprimand?---It probably would have. Apart from that there is nothing at this stage which your corporation could have done?---Nothing that we would have done. I take it no one has complained about any of the meat produced. at Mudginberri?---No to my knowlege." (T 2563-2564) I do not think that the applicant would have had any difficulty in meeting the requirements of its licence under the Australian Meat and Live-stock Corporation Act, and would have satisfied those requirements if it had been producing meat for export under the surveillance of Commonwealth meat inspectors.~ " (DB) Revenue from hides The applicant's other source of revenue from its 1985 production would have been the sale of hides. Assuming a gross kill of 18,321 and adopting the actual proportions of buffalo and cattle killed in 1985, the hide production would have been as follows: Buffalo 84.52% 15,485 Cattle 15.48% | 2,836 Total hides 18,321 Au eee ea <r 51. The average weight of buffalo and cattle hides produced in the 1985 season was 32.47 kgs and 20.34 kgs respectively. {I have found it necessary to refer in these reasons to both imperial and metric measures because both were used in evidence.) The applicant clains that, but for the picket, it could have sold the buffalo hides at an average price of $1.04 per kg and the cattle hides at an average price of $1.265 per kg. The respondents claim that the applicant would have obtained no more than 70 cents per kg for buffalo hides and $1.15 per kg for cattle hides, and they draw attention to the fact that until an amendment was made to its claim at a late stage of the proceedings the applicant asserted that the prices which would have been obtained for buffalo and cattle hides produced in 1985 were respectively 72 cents and 90 cents per kg. The claim was amended in several respects during the course of the hearing. However, I think it is much safer to rely upon the evidence in the case rather than the way in which the applicant particularised and amended 'fs clain. I gained the impression that some of the amendments were occasioned by the failure of the applicant to ensure that Mr Bracher was fully briefed on all aspects of its operations. This is easy to understand because the applicant's business was in a state of turmoil in 1985. . - According to Pendarvis he had an arrangement with Mr F. Phillips, the Managing Director of A.H. Hides & Skins Pty Limited to sell to his company the whole of his 1985 so 7 7 7 . ch era ae oath wr ee we pew ine amar won 4 ape eapiegeewaging ere 52. production. He said that the arrangement was that 'the ~ applicant would be paid $1.15 per kg for buffalo hides and $1.40 per kg for cattle hides and that commission and handling charges would have reduced these prices to 90 or 92 cents net per 'kg for buffalo hides and $1.15 net for cattle hides. He also said that he discovered later in the season that commission would not be payable on the sales and this was the reason why, as finally formulated, the net selling prices per kg were escalated to $1.04 and $1.265 per kg. However, the applicant has not satisfied me that these prices would have been obtained. It is true that Pendarvis' account of the agreement he reached with Phillips gains support from some of Phillips' evidence. However, I am satisfied that any discussion that Phillips had with Pendarvis in the course of which Phillips agreed to pay $1.15 and $1.40 per kg must have related to some year other than 1985. The evidence does not satisfy me that the applicant had a firm, or any, arrangement to sell all buffalo and cattle hides produced in 1985 for $1.15 and $1.40 per kg respectively. ~ However, Phillips' evidence did not rest only on his belief that he had made an agreement with Pendarvis at the beginning of the 1985 season. He gave other evidence, which - included the following: "eee now had you had an orderly delivery of say 15,000 to 20,000 buffalo hides during the eee wo me a a ea a "4 a Oe ee A A tt ER ERI Fe iy Py ots a's By 53. season from May to November, would you have purchased them from Mudginberri?---Yes, I would. And how much would you have paid?---$1.10, $1.15." (T 1648, renumbered T 1822) The evidence does not clearly disclose whether the applicant would have been liable for handling charges and commission upon asale at such a price. 'According to Phillips he had enquiries earlier in the season 'from buyers prepared to pay $1.15 per kg but he could not make agreements with them because the hides were not available. He said that in June or July 1985S he had enquiries from a buyer at 82 cents, but Pendarvis did not want to take such 7 low price, and would not drop his price below 92 cents. Again, the evidence does not make it clear upon whom the responsibility for payment of handling charges and commission would have fallen if sales had taken place at these prices. _ Phillips said that he first took delivery of hides from the applicant in August 1985 and by that time the "market had fallen and the price had dropped to 82 cents. There are inconsistencies in Phillips' evidence and I do not think I can safely act upon his evidence that he would have purchased the whole of the applicant's buffalo hide production at prices between $1.10 and $1.15 per kg. I do not think he was a dishonest witness, but I am satisfied that his recollection of past events and prices was not always accurate. However, I accept his evidence that the market for hides was Pon wo pee lee ae ee pe wae ew oye 54. strong at the beginning of the season and that it weakened to the point where, at the end of the year, prices had fallen quite significantly. Since nothing had been agreed in writing between the applicant and Phillips before the season commenced in May, I do not think I should assume in the applicant's favour that, in the face of a falling market, it would have been able to dispose of its entire production at the prices which might have been obtainable before the season commenced. Doing the best I can on the evidence, I think that the applicant probably would have obtained an average price of about 82 cents per kg "tor buffalo hides and $1.265 per kg for cattle hides, both prices being net to the applicant after payment of handling charges and commission. It appears that the applicant did, in fact, mm receive $1.265 per kg for cattle hides produced in 1985. T-am not unmindful of the fact that evidence was given by Mr Johnston that he purchased 'a quantity of buffalo hides -from Meneling Station during 1985 at 70 cents per ko. (T 2571) "However, Johnston was umable to. give much detail of the quantity purchased, or the date of sale, except that "it could be 100 tonnes throughout the season." (1.2571) "He also said he did not have a licence to export hides, and he seems to have — had little experience in the hide export trade. Moreover, there is evidence that the applicant went to some trouble to improve the quality of the hides which it produced and the - -- -_~ me en ee tee ee PRS 7, ee 2 ee ie = [__.__i aS =. 55. evidence does not permit a comparison to be made between the quality of the hides sold by Meneling and those produced at Mudginberri. It would have been open to the respondents to call the owner of Meneling Station to prove in greater detail the circumstances surrounding the sale to Johnston, but they did not do so. Adopting the above prices of 82 cents and §$1.265 per kg the revenue which would have been generated from the sale of hides in 1985 would have been as follows: Buffalo 15,485 x 32.47 x 82 cents $412,294 Cattle 2,836 x 20.34 x $1.265 §$ 72,971 Total expected revenue from hides $485,265 ~ pe eee "Pps seta — ~*~ eer Fda it ie te tot A alt — 56. 3. Revenue received or receivable from 1985 production {A) Delay in resuming operations The respondents submit that the applicant acted unreasonably in delaying until 24 June before recommencing production at the abattoir. On that date production of meat commenced under the surveillance of Northern Territory inspectors. The applicant acted promptly after 10 May in seeking-relief against the respondents and by 27 May it had obtained from Beaumont J ex parte orders (suspended until 30 May) requiring them to lift the picket. It was entitled to act on the basis that the Court's orders would be obeyed and "tHat? once the picket was lifted, the Commonwealth inspectors _ would resume their duties. The applicant was far from inactive in the period from °27 May to 24 June. Having obtained orders" ex parte it moved on 3, 4, 5, and 7 June for continuation of those orders. AS well, on 3 June, it was represented at a compulsory _ conference held pursuant to s. 88DC of the Contiliation and Arbitration Act 1904 for the purposes of settling the dispute. On 12 June - Beaumont J made orders continuing the orders made by him on 27 May. When these orders were disobeyed -proceedings for contempt were initiated on 14 June and heard on 21 June. It is readily understandable that Pendarvis' time and attention were engaged by these legal procedures (all held in Sydney or a - Be wine eee ee nee ee eee a wee een te = D 57. Melbourne and thus requiring bis absence from Mudginberri), leaving him little opportunity to consider whether he should try to re-open the abattoir in the hope that the applicant might subsequently obtain permission to export any meat it could produce in spite of the picket. By arranging for Northern Territory inspectors to work at Mudginberri the applicant ran the risk of worsening the industrial dispute. It was justified in postponing the taking of that risk until it became clear that the respondents did not intend to desist from their illegal conduct and obey the Court's orders. Moreover, it must have taken some little time to obtain the services of the Northern Territory inspectors and" © to make the necessary arrangements for them to travel to Mudginberri. In all the circumstances, especially the industrial climate which obtained at the time. it was not unreasonable for.the_. applicant to delay until 24 June before recommencing operations. ; onl I am also of the opinion that there is no substance in a further argument advanced on behalf of the respondents that the failure to recomence operations before 24 June fitted into what counsel described as "a pattern of both overt and covert political support in a campaign_ of attack upon the first respondent". This support is said to have come from the Northern Territory Government and the National Farmers' Federation. The evidence establishes that the applicant . 1 . f, i ' a a Le ee 58. 'l { \ The. ] 1 applicant sought advice from an industrial officer of; the}' Y received considerable support from both these sources. National Farmers' Federation. : After the picket 1inel had' t achieved its intended result of closing down the abattoir) the. applicant sought and obtained financial assistance from the \ Federation to enable it to meet its financial obligations; I. shall refer later in these reasons to the constaabtel assistance that the Northern Territory Government gave t the! applicant. However, I am satisfied that the applicant's' conduct was motivated by the desire to protect its own legitimate commercial interests and to mitigate its losses. -It is grotesque to characterise its conduct as a campaign .. of 'inca attack upon the Union. It did no-more-than attempt to-protect' |! itself against the financial _consequences of the JU actions. (B) educed outpu: under Northern Territory ins ectors ' , \ 'i the abattoir was operating with Northern Territory inspectors the applicant slaughtered a total of 5123 animals. : This, number was made up of 4182 buffalo and 941 cattle. There were' 58 kill days during this period, the average kill per day /peing about 88. The respondents argue that the applicant was "jable to kill at a higher rate during this period and that! its failure to do so demonstrates a failure on its part to nitigate ; its damage. | wre + 59. Pendarvis said {T 2467) that the number of stock killed during this period was down because the majority of his suppliers would mot cross the picket line. He also said (T 2486) that he let it be widely known that operations were to re~commence on 24th June, presumably for the purpose of notifying suppliers of his need for stock. Mr Donald Stewart who supplies stock to the applicant said that his trucks took~ stock to Mudginberri in May. They were stopped on the road. leading to the abattoir and his drivers were apparently told that they were not allowed to carry any more animals into Mudginberri. On three occasions truck loads of stock were escorted through the picket line by police officers. I am satisfied that after 24 June some truck drivers were unwilling to deliver stock to Mudginberri because of the presence of the picket line and that asa consequence the availability of stock for slaughter was reduced. Some contractors who normally supplied stock to Mudginberri were prepared to, and did, cross . the picket line, whilst others were not. It was put to Pendarvis that he should have taken more stock from preperties over which a company controlled by him and his wife had harvesting rights. He- said he did not take more stock from these properties out of loyalty to other contractors who normally supplied him with stock. Pendarvis' ability to attend to the applicant's ordinary business affairs and to run the abattoir efficiently t yaevona a a veeet Cee eo, ae 60. I must have been grossly affected by the plethora of litigation between the parties in July and August 1985. One round of the litigation was fought in Darwin but the rest of the litigation was heard in Sydney and would have required Pendarvis to be absent from Mudginberri on numerous occasions. The litigation included an appeal against orders fining the Union for contempt, the application for final injunctive relief, an application for leave to issue a writ of sequestration against the Union, an application for a stay of the orders granting final injunctive relief, an application for a stay of the order granting leave to issue a writ of sequestration, an application. for a Mareva injunction , and Langhorne's Case (supra) at first instance. Iam not satisfied that the reduced killing rate during the period of the picket was due to causes within the applicant's control and for which it was responsible. In my - opinion the : applicant acted ssasonably in all the circumstances. {C) Stockpiling of meat - * On 24 June the applicant recommenced the slaughtering of animais and the production of meat. The Northern Territory - inspectors did not have authority to certify meat for export - a ~ ns trot et wy ee ee A eo re a OS mm ene a A ollie Bik et tne Melee r te # ol. since no steps had been taken under s.20 of the Export Control - Act to appoint them as authorised officers for the purposes of that Act. Although the meat produced between 24 June and 8 September was saleable on the domestic market the applicant did not take steps to sell the meat as and when it was produced. Instead, it stockpiled the meat in cold storage because, according to Pendarvis, he had some expectation that action would be taken by the Department of Primary Industry to permit the meat to be exported notwithstanding that it had not been inspected by Commonwealth meat inspectors. The value of the meat on the export market was much higher than its value on the local market. The applicant's decision to stockpile the meat is --- eee — criticized by the respondents. It is argued that Pendarvis had no reasonable basis for believing that the meat could ever be exported and that it should have been sold for the best available price as and when it was produced. It is common ground that the value of the meat on the domestic market had fallen at the time it was sold by the applicant, and the respondents claim that- any damages awarded to the applicant should be assessed upon the basis that the meat ought not to have been stockpiled. , It was open to the Secretary of the Department of Primary Industry, by instrument in writing made under order 12 of the Prescribed Goods (General) Orders to exempt the meat eee t : 62. from the application of those orders, including order 10 which prohibits the export of, inter alia, meat- unless the yestrictions specified in the Orders have been complied with. The exercise of the discretion under order 12 is conditioned upon the Secretary holding the view that there are reasonable grounds for believing that the meat is being exported or has been prepared "in exceptional circumstances". A decision by the Secretary under order 12 is susceptible of review by the Administrative Appeals Tribunal - see orders 112-117 inclusive. The evidence establishes that if the applicant. had made an application to the Secretary under order 12 it probably would have been refused. In fact the applicant did not make such an application, but whilst the picket was in place Pendarvis was actively seeking the aSsistance of the Minister for Primary Industry and his officers to overcome the problems the applicant was encountering because the Commonwealth meat inspectors were not performing their duties. -* Plainly Pendarvis was looking to the Minister for any assistance that he could give him and I think it was not unreasonable for him -to believe that _he had some prospect of obtaining it. The Minister was under both legal and political pressure to come to the aid of the applicant. The legal pressure came from the proceedings (Langhorne's Case, supra, which ultimately proved successful), to compel the Secretary of his . Department to provide inspectors for the abattoir. The political pressure came from the support which the applicant was receiving from we eee ae ee sor pyro ee oe Sr ad FLAS EO Ar et i ' 63. j ', the National Farmers' 'Federation which was espousing the | applicant's cause. | | No doubt political considerations and the applicant's economic difficultips were unlikely to have been given much weight when considetation was given to the applicant's request for assistance. But there were other important considerations which were proper de be: considered and which could reasonably have led veniewey to believe that his company had some prospect of being ' permitted to export the meat. These included the facts that. the meat had been produced in an abattoir which. compiied with the standards required of export abattoirs and had | been ;inspected by meat inspectors whose certificates suffic d to | permit it to be sold for human consumption on the ustralian market. The facts giving rise i to the applicant's Mifficulty bore no resemblance to the facts which gave rise to} the horse meat substitution scandal which was mentioned in evidence!and which was the subject of a Royal ha Commission. ] I The respondents draw attention to the fact that the applicant did not make an application to the Secretary under order 12. This is.so, but Ido not think it is of siqnificance in considering the reasonableness of Pendarvis' I 1 1 t belief that permission might be given to export the meat. He | 5 is not a lawyer, ine his failure to advert to the terms of order 12 and to nate an application under that provision is not ! al) } 3 64, : i . indicative of any lack of belief on his part that the Minister i ; might take thle appropriate action to permit his company to t export the meat. Pendarvis said, and I accept his evidence in this respect,| ithat between June and November 1985 he-was in regular contact with officers in the Department of Primary Industry and that he was not told by any of them that permission would not be given| to export the meat. When asked whether he was ever warned by the ' Minister or his officers that it would be unlikely that 'the meat would be certified as fit for export pendarvil said that "they were not encouraging at any point ~in time ab le the i meat being certified, particularly after they had bee bashed about the ears in parliament" (T.2442a) but that the did not ever tell him that it would not be. - & I am satisfied that Pendarvis raised. with Messrs. . Prenatei Dever and Langhorne * ~ the possibility of permission Yr being g¢: ted to export the meat. He appears to have first raised the matter in early July 1985. - (9.2349) He said it was not until about 15 'November 1985 that 'he first appreciated ; that approval was not going to be- grarited+- (T.2438) At that time he had a jconversation with the Minister on an informal occasion and: /decnrdins to Pendarvis. the Minister instructed 'him to "apply 'for exemption under certain sections of the Export Control Act, and they would be considered." A telex was cherblupon dent to the Minister seeking permission for the ; i meat to|pe expdrted, but permission was refused. a Ist = al ' ! ee mes we eer Nan mm Fe Or LC, es 65. It appears from some of the evidence given Langhorne that the Department by considered the possibility of granting permission for the meat to be exported and did not reject the following: "HIS IMRatter out of hand. His evidence included the HONOUR: Mr Langhorne, some of the answers rather tend to convey that you did, in fact, turn your mind to whether you should exercise er delegate your power under ord.. 12. Dida you, in fact, do that?---Yes, we did; I did. I did that at the time that the minister neceived the telex and I would point out that I was aware that there had been, I believe it was an oral request to the regional director in Darwin in August to have the product exported. Of course, we were under considerable political pressure through the opposition parties and from the Northern Territory government who were lobbying to enable the product, to allow the preduct to be exported during that pericd that it was being actually produced and at the end of that period. So, Iwas fully aware that there were pressures on to allow that product to be exported, so naturally I was looking at the processes that I believed we would have to go through if we were to ever consider granting . an exemption and that really, from my point of view, although no final decision was ever -made because we did not receive a direct request, I guess one would say that the final firming up of a view came at the time that the minister received the telex request from Mr Pendarvis. - The minister gave a view in - that telex, — although he indicated at the time that he was - not a delegate." (T. 3339) Langhorne said he made enquiries to ascertain whether the meat would be acceptable in the Taiwan market. He described the possibility of the meat being exported to that country as being "a possible option, but never "a serious consideration on my part". (7.3349) pee ee ee wen The ee eo ete! te oe eed eeerey wer . 66. Langhorne referred to a number of matters which would have weighed with him in deciding to refuse permission for the meat to be exported. Notwithstanding the importance of these matters to Langhorne, I do not think they were such as would necessarily have led Pendarvis to believe that permission to export the meat would certainly he refused. In my opinion if Langhorne had thought that any of the matters were so important as to negate any prospect that the meat would be approved for export he would have communicated that view to Pendarvis well before November. canine Pendarvis' expectations appear to have been shared 'by officers of the Agricultural Development and Marketing Authority ("ADMA") a statutory authority set up by the Northern Territory Government. Mr Stanley Cavanagh, the General Manager of ADMA said that in early 1985 "it was believed that the picket would not last more than a month and that the meat would be able to be. reinspécted and "go on the export market". (T. 2493a) —____» Pendarvis' evidence as to his state of mind at the time when production commenced on 24 June included the following: , — "Did you open for production in June hoping that i your production, although not initially i} inspected by the EIS inspectors-would in fact | be permitted to be exported?---We were : absolutely confident at that time, yes, sir. ' We could not see any reason in the world why a +4 ne cre 67. government today, with exports in the situation that they are, would refuse and I still do not, for that matter." (T. 2466) | This evidence which was given in February 1986 during the hearing of the clain for damages |must be contrasted with evidence given by Pendarvis~ in July 1985 during the claim for injunctive relief. He then gave evidence that the applicant was incurring losses as a result of the picket, and supported his evidence by reference toa document (Ex D) which was described by his counsel as "a schedule which indicates the aifference in return by way of sale of your product on the export market compared with sales on the domestic market." (7.335) In the document a claim was asserted that. inter alia, the applicant was incurring continuing losses which were calculable by reference to the difference between the export value of the meat being produced (stated to be $2.76 per kg) and its domestic value (stated to be $1.77 per kg). This evidence might be thought to be inconsister: with Pendarvis' evidence that although the abattoir was operating under surveillance of Northern Territory inspectors he nevertheless entertained hopes that permission would be granted to export the meat being produced. . *. - . Ido not think this apparently inconsistent evidence demonstrates that Pendarvis did not entertain some hope that the applicant might obtain permission to export the meat heing stockpiled. As at July 1985 the meat could not be exported. ac ee won aes wre ee i a aT Set Aa Se PAE ee rn 68. It was therefore not unreasonable for Pendarvis to state in evidence that the value of the meat was its value on the domestic market, i.e. $1.77 per kg. What the applicant had to show to succeed in its claim for injunctive relief was that the respondents were engaging in conduct proscribed by 3.45D, that s.45D(3) did not afford the respondents any defence to the applicant's claim, that the respondents were intending to persist in their illegal conduct and that, in the exercise of its discretion, the Court should grant relief. It was, of course, incumbent on the applicant-to establish that the respondents conduct was likely to have the effect of causing substantial loss or damage to its business. But to establish that. it was sufficient for it to prove that it was then suffering an immediate and serious loss of revenue. The possibility (which never eventuated) that the meat might later become exportable and hence more valuable would not have disentitled the applicant to the relief which it sought. —_Pendarvis would have given a more complete account of the applicant's probable continuing losses if he had _ given additional evidence of his hopes of ultimately gaining permission to export the meat. But such additional evidence would have been largely irrelevant to the claim for injunctive relief and I do not find it surprising that it was not given. Pendarvis was not asked in July 1985 whether he had hopes of obtaining permission to export the meat. His failure a wn oe > yhoo wenpirwe age open er 69. to mention such hopes does not incline me to disbelieve his evidence that he did entertain then. His decision to "stockpile the meat was entirely consistent with, and only explicable by, his hopes that permission would be given to export it. In the light of all the evidence I am satisfied that there was only a minimal chance that any meat which had not been inspected by Commonwealth inspectors would have been permitted to be exported. But to express that opinion is to be wise after the event. It ignores the circumstances as they would have appeared to Pendarvis at the time when the meat was — produced. Moreover, in considering the reasonableness of Pendarvis' decision, regard must be had to the fact that if he had been able to obtain consent to export the meat the applicant steod to achieve a much higher price for it than was available on the Australian market. Pendarvis took a commercial decision which turnez out to be wrong, but I do not think it was unreasonable. For all that appears in the evidence, the domestic price of meat might have risen, not falien, in the latter part of 1985. As at 24 June there were essentially three options open to the applicant. First, it could have decided not to recommence operations until it had obtained the services of Commonwealth inspectors. It could not have been criticized if it had taken this course because its business was essentially To. ° © Fras wa says wee oF se 70. the production of meat for export and in the absence of Common- wealth inspectors there was. on any basis, a serious risk that any meat produced would not be exportable. Secondly, it could have decided to recommence operations for the purpose only of producing meat for the domestic market. In this event. it would have seld the meat as and when it was produced, but ata price known to be much lower than might be obtained for it if permission could be obtained to export it.: Thirdly, it could have taken the course which it did, that is to say, recommence operations, and hold the meat in store so as, hopefully, to obtain a higher price for it. I do not think that the risks attendant upon taking up the third option, albeit substantial, were so great as to justify the Court holding that it was unreasonable for the applicant to take then. Even if the option taken up by the applicant had resulted in it sustaining greater damage than it otherwise would have incurred, that would not have been the end of the- matter. Provided the applicant acted reasonably it is entitled to recover the losses - it actually sustained: see Lloyds & Scottish Finance v Modern Cars_and Caravans (Kingston) (1966) 1 Q.B. 764, Esso Petroleum Co. v Mardon (1976) Q.B. 801 and McGregor on Damages, 14th ed., 7) para. 243. ~ - -e oe oye The respondents go further' than submitting that Pendarvis had no reason to believe that permission might be given to export the meat. They submit that at no stage did Pendarvis hold the belief, reasonable or otherwise, that there geen an 4 ore ae mate Aen an eee Sa en 71. was any prospect of obtaining consent to export the meat. I reject this submission. Unless Pendarvis held such a belief his decision to defer selling the meat would have been irrational and against the applicant's commercial interests. The applicant was in sore need of revenue in 1985. The obvious and most credible explanation of the decision to defer selling the meat is that Pendarvis believed that the applicant would obtain a higher price for it if permission could be obtained to export it. The explanation advanced by the respondents was that Pendarvis' conduct was motivated by a desire on his part to pursue a political campaign against the Union and its industrial policies. I do not think there is any substance in this argument. I am satisfied that Pendarvis' motivation was to achieve the best commercial result for his company. As was pointed out by Lord Macmillan in Banco de Portugal v Waterlow (1932) A.C. 452 at p.506 caution needs to be exercised in using hindsight to criticize steps taken by a party to protect himself against the wrongful conduct of another, °Waterlow was a breach of contract case but his Lordship's observations are equally applicable to a case such as the present. His Lordship said: "Where the sufferer from a breach of contract .finds himself in consequence of that breach placed in a position of embarrassment the measures which he - may be driven to adopt in order to extricate himseif ought not to be weighed in nice scales at the instance of the party whose breach of contract has ee ld "Sy vse *- 72. occasioned the difficulty. It is often easy after an emergency has passed to criticize the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be 'held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken." See also Scott v The Commonwealth (1982) 64 F.L.R. and McGregor on Damages, 14th edn, para. 233. £3 Having regard to all the evidence, I do not think the applicant can be criticized for deferring the sale of the meat produced during the subsequently be given to export it. picket in the hope that permission night The onus of establishing that the applicant acted unreasonably in failing to mitigate its losses rests on the respondents; see Garnac Grain Co. Vv Faure and Fairclough (1968) A.C. 1130 at 1140 and The World Beauty (1970) P.144 and McGregor on Damages, 14th ed., 246. This onus has not been discharged. {D) The ADMA transction The respondents also argue that the effect of para. a transaction entered into between the applicant and ADMA was that most of the meat produced beforé 9 September was sold to ae vee me wr 73. ADMA with the consequence, inter alia, that the applicant should be treated as having received the proceeds of sale from ADMA and thus not entitled to recover interest and storage charges incurred in holding the meat in cold storage. The Chairman of ADMA is Mr Sydney Saville, who is also the permanent Secretary of the Department of Primary Production in the Northern Territory Government. At all relevant times the Minister fer Primary Production was Mr Hatton. Saville gaid that he and the Minister took a decision on or about 2 July 1985 that ADMA should offer assistance to the applicant. The offer of assistance was made because a brucellosis and - tuberculosis control programme ("the BIEC programme") was being actively conducted in the Northern Territory in 1985. It was part of the BTEC programme that buffalo should be eradicated. Further, the development of the export trade in buffalo meat was seen as _ being of importance. Both these considerations meant chat it was desirable that' the applicant's abattoir- - should continue working. Saville said that he had discussions with Pendarvis and that it was determined by-him 'and --the 3 Minister that advances would be made to the applicant "to cover ._ the cost of the production of meat at its abattoir. Since Saville's evidence as to the nature of the ADMA transaction is of considerable importance it-is desirable to refer to the most relevant part of it in some detail. His evidence included the following: , ee ew ee Re Molt we tek Oe , De a Co tt a Co ed ava ty acre 74. Was a cost of production established in discussions with Mr Pendarvis?---Yes. sir. Was there an acceptance of the cost which he discussed with you?---Yes. We went through figures that were prepared by Mr Pendarvis and his accountants and we examined and agreed on a cost of production. Was it ever intended that the authority would purchase the meat?---No, sir. Did the authority ever purchase the meat?---No. Was it ever intended that the authority would sell the meat?---No. Was it ever intended that Mr Pendarvis would retain the money advanced to him for his own purposes and not repay it?---It was intended that the money be repaid. ' Was a rate of interest struck?---Yes. A rate of - interest - from memory, it was 14 per cent which was the interest that the organization, ADMA, paid on money borrowed byit. Was it intended that Mr Pendarvis or that the abattoir would pay that interest?---Yes, sir. When was that? When was the interest rate struck and when was it communicated to him that he would have that obligation to pay interest?---I could not put a date on it but my memory is it was during the discussions of that week of 2 duly. It was some time during that period when we were dotting the i's on the procedures. Was this something which had to be done fairly quickly?---Yes; because, as I understood, the abattoirs would close at any day if _ assistance was not given. Did you contemplate at the time that the arrangement was made that it—would be a long-term arrangement?---No, it was purely a short-term arrangement. Why did you believe it to be a short-term arrangement?---Well, the court had ruled that it-was-an illegal picket and consequently we thought that the picket would be withdrawn, then that the Mudginberri Abattoir would operate normally. 75. So was very much attention' paid, in the early stages, to documentation or the need for dt?+--No, it was considered purely to be a very short-term arrangement and the arrangements were oral between myseif and the general manager. I think it appeared, at one stage at least and it may have been on more than one occasion, that a document described, I think, as a purchase voucher, was used by your authority. Are you aware of that?--~I was not really involved in the detail of it. I have seen a document called a purchase voucher. My memory is that we just used the available stationery. We were not going to go into the stage of panting special stationery for it. - In fact, advances were made from time to time upon the basis of documents produced by Mr Pendarvis?---That is correct. I think he may have used an invoice: are you aware of that?---I have seen an invoice, yes. An invoice which simply stated the weight and the cost of production of the meat. Was there ever any intention, or was it indeed ever the fact that the authority bought the meat?~---No, sir. Whose property did the meat remain, at ali times?- --The meat remained the property of the Mudginberri abattoir. : i It is now common ground that, 'of course, the picket remained on and illegally for some considerable time. You are aware of that?---Yes. Did it become apparent to you then that some other arrangement would have to be made?---Yes. Why did some -other arrangement have to be made regarding the advances to Mr Pendarvis?~--There waS a limit to the budget of ADMA and at that time it was a matter of having an increase in the budget which had to go to Treasury Department and/or putting in alternative arrangements. And after discussion, it was decided to put in alternative arrangements as it had continued a lot longer than. we anticipated. \ 2 cee ene AG owes 76. Did you anticipate (sic) in, or did the authority participate in the arrangement of alternative funding for Mr Pendarvis?~--Yes, sir. Were officers of the authority involved in discussions with the bank that provided the facdlity ultimately?---I do not think there was any direct discussion between officers of the authority and the bank. That is my memory. But the authority was certainly interested in the arrangement of an alternative facility, is that so?---Yes. Was that put in place, to your knowledge?---Yes, it was. Was the authority repaid the money that- it was advanced?---Yes. . Was it paid interest at 14° per cent on that -- - advance?=--Yes. By the way, did the authority take any legal advice at any stage regarding the question whether the authority could enter into the loan arrangement?-~-Yes, we sought advice and we were assured that it was within the powers of the authority. From whom did you seek advice?---The exact person I cannot tell you; it was from our Department of Law - officers of the law department in the Northern Territory. And indeed, I think when the alternative arrangement _ was made the authority gave a guarantee; is that so?---That is correct. And the guarantee, or one of the documents, makes . provision for the obtaining of a floating charge, over Mudginberri's assets?---Yes." (T.2695 - 2697) ty Between 2 July and 20 August an amount of $992,659.82 was paid by ADMA to the applicant. On 3 July ADMA sent the applicant a document described as a "purchase order" which bore Ann ee Sweat em erie Oe ee ee wtwsn aw ap is 77. the words, inter alia. "Confirmation Order only", and "Bulk Order - Purchases - Variable". From time to time the applicant sent documents described as "invoices" to ADMA. The invoices referred to details of various items of buffalo meat and beef and against each item there was a reference to a quantity, a rate and an amount of money. Upon receipt of each invoice ADMA brought into existence a document described as a "payment voucher" which referred to the particular invoice and contained the words, inter alia, - "the above goods and services have been satisfactorily delivered and received in good condition".- These documents are, of course, apt to describe goods which are the subject of a sale rather than a transfer of goods by way of security for moneys advanced. a Saville agreed that no document was brought into existence before 29 August 1985 in which the transaction with the applicant was described as a loan. He said, however, that -interest on moneys advanced to the applicant was assessed from time ta time ,by an accountant on the staff of ADMA (T 2706). His explanation of the document described above as "purchase order form" was _ that someone had typed it out in error (T 27121). He also said that the invoices were merely documents which gave authority to ADMA officers to - make advances pursuant to the arrangements which had been entered into. He said that he considered that the fact that the meat was in store was security for ADMA''s loan. It was put to Saville that when the document of 29 August was brought into ee ee rete ae te on 78. existence he thought that it was desirable for political reasons to characterize the previous transactions as an advance rather than a purchase. His reply was as follows: "It certainly was not in my mind at ali. I had always understood it to be an advance. There had never' been any occasion where ADMA was concerned in buying the meat. It was an advance all the time. It was considered to be an advance." (T.2714) He also said that there was never any intention that ADMA would become the owner of the meat and that every time the matter was discussed it was treated as an advance to the applicant. (T.2715) =: Counsel for the respondents submit that Saville lied in giving his evidence but I reject this submission. In my opinion he was an impressive, honest and reliable witness. His evidence is supported by the evidence of Mr Stanley Cavanagh, the General Manager of ADMA. I accept him also as an honest and reliable witness. After. Saville's initial: | discussion with Pendarvis in early July Cavanagh was called to _ Saville's office. Saville told him that the Government was qoing to support Pendarvis while his abattoir was being picketed, that the support was to be in the form of advances _ for meat produced each day and that the advances were to be calculated at the rate of $2.30 per kg which was considered to be the production cost of the meat. He was told that the advances were to carry interest at 14% p.a. He said that a formula was adopted for Mudginberri notifying ADMA of the arr 4 OF ete DR te, a : ' 79. amount of meat being produced. An arrangement was made that the applicant would send invoices from the abattoir each day and that ADMA would pay moneys into the applicant's account as and when invoices were received. He described the sending of invoices as "the simplest way to do it". (T.2494) He further said that it was never intended that ADMA would purchase the meat, or become the owner of it, or attempt to sell it on the domestic or export market and stated: that ADMA had no expertise in meat marketing. (1.2494) — He also said that at the time the arrangement was made it was believed the picket would not _last more than a month. On 29 August an agreement was made between ADMA and the applicant whereby ADMA agreed to assist the applicant hy guaranteeing a loan of $2 million which it was seeking from _Westpac Banking Corporation. The terms of the agreement are entirely consistent with the account given by Saville and Cavanagh of the arrangement made with the applicant. The agreement included the following provisions: "In order to provide financial assistance to Mudginberri Station Pty. Ltd. (hereinafter referred to as 'Mudginberri') in the light of the current industrial action being taken by the Australasian Meat Industry Employees Union (hereinafter referred to as the 'AMIEU') and the Meat Inspectors Association thereinafter referred to as the ''MIA'),. the Agricultural Development and Marketing Authority (hereinafter referred to as 'ADMA') proposes :- 1. That Mudginberri be assisted in obtaining a loan facility of up to Two Miliion Dollars ($2,000,000.00) principal fron Westpac r ee ee a ney Opegnw nein 80. Banking Corporation (hereinafter referred to as 'Westpac') by the provision by Northern Territory of Australia to Westpac of an Unconditional Guarantee of principal and interest on the said loan. The Guarantee to be issued in accordance with the requirements of the Agricultural Development Marketing Act of 1980 (as amended). , The guarantee to be supported by a floating charge registered pursuant to the Companies Act over the meat product produced by Mudginberri prior to 30th November, 1985 held in cold stores where it is lodged prior to sale, and to this 'end Mudginberri will deliver to ADMA at the time each drawdown under the facility is to be made, valid cold store warrants evidencing title to the meat, the subject of such drawdowns. That following receipt of the aforesaid cold store warrants, ADMA will authorise Westpac toe allow drawdown from the loan of an amount equivalent to the value of meat covered by the warrants, at arate of Two Dollars and Thirty cents ($2.30) per kilogran. . Mudginberri shall call an initial drawdown from the Westpac facility to repay to ADMA the advance of $992,654.82 (together with interest thereon at 14% per annum calculated on a daily basis) which advance has been made by ADMA to Mudginberri for. operational purposes." CT ee The agreement was signed by Saville and Pendarvis. Unless was a sham, and I do not think it was, it is supportive Saville's description of the ADMA transaction as a loan. money which had been paid by ADMA to the applicant was with interest. it of The loan was subsequently made by Westpac, and the repaid, PR I Ret eet tt Ut hh dl be Ail in 81. In contrast with the evidence of Saville and Cavanagh, Pendarvis said on several occasions that the meat was sold to ADMA, and that the transaction with ADMA was not a loan. He said that the applicant was selling meat to ADMA, that he was not aware of any arrangenent to pay ADMA interest, and that the meat was "stockpiled by the purchaser". (T.2093-2094) on another occasion, he said that the meat was purchased by ADMA under an arrangement — that it would 'be bought back by the applicant. (T.2097) " However. he also said that ADMA was free to sell the meat between July and September 1985 "but they could not sell it on the export market (T.2098) and agreed that the applicant was under no obligation to repurchase it. He also said that during the period from July to September ADMA was the "absolute owner" of the meat. (T.2098) In other evidence Pendarvis referred to the ADMA transaction in terms appropriate to describe a loan, rather than a sale. He described it as "just a medium to keep us mobile until we organised the $2,000,000 loan with Westpac" (T.2322) and he gave other evidence as follows: "MR CALLINAN;: Well, when did you 'first have discussions with ADMA regarding the provision of financial assistance?---Prior to the opening of the abattoir under the DPP _ inspectors on 24 June, sir. And as a result of those discussions were you provided with any money by ADMA?---Yes, I was. How much?---$992,000-odd, sir. Was that provided all at once?---No, sir. seme we ee Ce ww ee ee a ep sir oe sR re Pe Ne pe 82. Was it provided over a period of time?---That is correct. Over what pericd of time?---From about 2 July through about 2 September, I believe, sir. And was its provision from time to time simultaneous with any other event - anything you did in relation to meat produced?---Yes. He were producing meat. Now, we have stated earlier that I would have had to have further finance of about half a million dollars, at least, to carry on my operation. Because we were not able to export that meat and get an immediate cash flew we had to look outside commercial lending institutions for finance. Yes?---Because we had to hold the meat in store. So, I discussed this with ADMA and with the Minister for Primary Production, Mr Hatton, about how we could accomplish this. All right; and this money was provided - what - as - and when the meat was delivered into cold store tn Darwin?---As meat was delivered into cold store, they were invoiced for the amount of meat and a copy of the cold storage docket when the cold store actually received the meat was given to ADMA. ADMA then paid us - or. transferred to our account that number of dollars. In due course [I think, when you obtained the loan from Westpac, you repaid all of the money that had been provided to you by ADMA; is that so? MR ASHLEY: Before the witness answers, to characterise it as a repayment is an attempt to characterise the nature of the transaction. If he was to say did he pay certain money to ADMA or--- HIS HONOUR: Wesitpac an amount equal the amount which ADMA had paid to you - - - . MR CALLINAN: Had provided to you? Did you understand that? Did you pay to ADMA, when you received money for Westpac, money representing that which you had been paid by ADMA?---I did. Was that all that you paid?---At that particular time, yes. Later on we paid an additional $12,584 with interest,.sir. To make it neutral, aia you "pay to. oi fe a+ ee tere ene seep ene ee mee wees a ae Ce Seo, ee eed Lene i ey waa id 83. What rate was that?--~14 per cent, sir. On what - 14 per cent on what?---14 per cent on the amount of money that we had withdrawn from ADMA between 2 July and 2 September." (T. 2459-2460) In re-examination Pendarvis was asked whether he understood the true nature of the transaction with ADMA and he said he did not understand it "in strict legal terms". (T.2458) I think this was an honest answer. Iam satisfied that Pendarvis' evidence as to the nature of the transaction with ADMA is confused and that his interpretation of its legal affect was erroneous. There are several features of the transaction which make it highly improbable that it was intended to operate as a sale. in the first place, the amount paid to the applicant by ADMA was $2.30 per kg, which was the approximate cost of production. There was no point in the applicant rvoducing meat 'and selling it to ADMA at the cost of production. Plainly, the applicant hoped to make a profit by selling the meat to advantage when it was able to do so. Pendarvis must have believed that when the meat was sold it would be sold by the applicant, and not ADMA. Secondly, the evidence shows that the applicant was obliged to pay the storage charges on the meat. The position would surely have been different if the meat belonged to ADMA. Thirdly, if the meat had been sold to ADMA, there was no occasion to pay interest at 14% on the moneys paid to the applicant by ADMA. ot Shoe oe : - cee ~ : . . - . Ff L7ak eee eK - . Se meer nent eye cece eR weer to Meare a rs we pet ON PA BS mag wre Ae wat Sp ee EO me sa | os | B84. | ; Interest would have been payable only,,on_money lent, not money i paid as the purchase price for the meat. Foureyays | the fact that the moneys paid to the applicant were repaid) with interest confirms Saville's account of the transaction. ' | | Moreover, Pendarvis' continuing roy to 'obtain jabove under 1d be 'obtained consent to export the meat '(referred to "Stockpiling of meat") so that a higher price cod - for it are much more consistent with the applicant's continued ownership of the meat than with the notion that ADMA was the absolute owner of it. It is significant that Pendarviis' own description of the interest payment made to AD was. that © it I was "14 per cent on the amount of money that we /had withdrawn . from ADMA between 2 July and 2 September". (tT. 2460) THe term "withdrawn" is quite inapt to refer to proceeds ° sale, but. is an appropriate description of the receipt of fund from a bank or other source of borrowed funds, such as ADMA was. I found Pendarvis' evadence to be reliable on most issues, and, } do not think he qave any deliberately untruthful evidence. ! However, . i I think the account given by Saville and Cavanagh of the ADMA trafisaction is plainly correct. r } "oe The respondents submit that since Hatton 'and Mrs Pendarvis were both present at the conversation which Pendarvis — if t had with Saville when the arrangement was made jin July, the applicant's failure to call them as witnesses should cause ne to reject Saville's account of the conversation, Hat | been ; . i te te es tie ed wort tee awe nrew aw ke 85. in any doubt as to the accuracy or truth of Saville's evidence, this would have been a persuasive argument. But I do not have any such doubt. In my opinion, the ADMA transaction was in the nature of a loan against the security of the meat produced during the picket and was not a purchase by ADMA of that meat. (EB) Meat sales in 1985 I turn now to consider the revenue which the applicant has received, or will receive, from its 1985 production of boneless meat. Some 3,142,742 lbs of such meat was produced and the applicant claims it will receive $3,053,626 for it. This sum is made up as set out in the following table. The table is substantially taken from Ex. S(3), schedule 1.1 as anended in counsel's final submissions. + , 7é , Buffalo. - i Beef - ' : " "Balance of Sales to a : - Gecel (Aust) Pty. Ltd. : Various sold ex Cold Stores ' Fillets (average price $3- 44/l1b) * Other ( ~ $€.709/1b) " Fillets ( ° " 33, 44/l1b) r *x Other « * " $0.709/1b) Unsold 86. Value of Revenue to be derived from 1985 Season Production Boneless Meat | | Export Sales to Sweden Taiwan U.S.A. Available for sale Used for Station rations etc. and held at Mudginberri Station for own consumption Revenue to be derived Export Sales achieved to date x Other - 305 tonnes at $1.35/KG net to Muginberri - i.e. 672,525 lbs x $0.612/1b - - LBS 632,262 747,009 227,283 1,606,554 1,521,060 15,128 3,142,742 LBS 1,269,411 227,283 109,860 ~~ | 1,606,554 11,664 392,631 19,710 424,530 672,525 — Stock for consumption and rations 15,128 3,142,742 x "Other" refers to non-fillet fraction. Total production boneless meat for 1985 season - 3,142,742 lbs. lbs ibs | 5 Lg — F SAD. - 1,556,485 273,474 "*__ 24 ,642- 1,954,601 40,177 - 278,469 67,802 300,992 _ . . 412,585 Nil SA 3,053,626 saeco eye "fF eee a nears: wy iy 87. Ir accept, that the meat which has already been sold was sold at the best available prices. The respondents contend that the price of $0.709 per 1b attributed to the sales ex cold stores of the non-fillet meat is too low, since Pendarvis said this meat was sold at prices varying between $1.55 and $1.70 per kg, The price of $0.709 per ib is equivalent to $1.56 per . kg. However, Pendarvis also said that the average price achieved for the sale of this meat was $1.56 per kg and 'there does not appear to be any evidence to the contrary. The average price of §0.709 per lb was first asserted in Ex.S(3) which was tendered well before the conclusion of the evidence. The applicant's sales records would have shown that the average Saie price exceeded $1.56 per kg, if "that chad been the case. - No such records were referred to in evidence or tendered. in ee the light of the evidence there is no basis for fixing "the average price of the non-fillet meat already sold on the domestic market at a sum in excess of $0.709 per lb. ' The respondents criticize the claim that the 305 tonnes of unsold meat will bring only $1.35 per kg net to Mudginberri. They say it will bring a higher price, and not. - less than $1.50 per kg. As I understand the evidence.- which - is not entirely clear on this issue. the unsold meat is -still An store in Darwin and the'best offer which the applicant has so far been able to obtain for it is $1.35 per kg f.o.b. Darwin. This price is equivalent to a price of $1.50 per kg - free into store Sydney. Pendarvis said that the meat already t - ae ne we ieeinnente meted Trmer tm are ae ot, wart eae fot a 88. sold on the doméstic market had been sold ex stores in Darwin, Adelaide and Sydney (T.3356) but as I understand his evidence (at T3359) the meat which is unsold will need to be transported into store in Sydney at a cost of 15 cents per kg. However, he has some expectation of achieving a price of $1.55 per kg free into store Sydney for the unsold meat, and this would give the applicant a met return of $1.40 per kg. I think it is reasonable to adopt this price as the value of the unsold meat. "+ The respondents did not call any evidence to support a higher value fer the unsold meat. It seems likely to me that there would be people with experience in the Australian meat trade who could have' beem--called- by the respondents to give evidence that the unsold meat could be sold for a price higher "than $1.40 per kg f.0.b. Mudginberri, if that is the case. The absence of such evidence makes it easier to conclude that $1.40 per kg is a reasonable estimate of the value of this meat. Accordingly, the applicant''s calculation of the value of the unsold meat should be increased by $15,250 (i.e. 305 tonnes at an additional 5 cents per kg) with the consequence that the figure of $411,585 in the above schedule should be increased to $426,835. The resultant total value of boneless meat produced should therefore be increased to $3,068,876. ak ON ot 89; [ (F) Meat. produced after Lasting of picket but not exported The respondents further 'argue that about 149,000 lbs of the unsold meat was produced after the picket was lifted and wrongly placed in domestic cold store, thus making it unsaleable on the export market. It appears to be the fact {t that this meat was place | in domestic cold store. The réspondents argue that if it had been exported it would have achieved a price higher than the price for which it is likely | to be gold on the domestic market. , Pendarvis said (T.2909 et seq) that the reason why this nieat could not be exported — is that it is made up of trimmings which are normally included as part of a larger quantity -meat of superior quality. . He - | said, in substance, that | after i the picket | was_ lifted the - appiicant strove to fill orders for- superior quality meat such as fores, hinds and fillets and 'that it was unable-to dispose of the trimmings as part of jthose beders. His evidence on this matter is consistent with [Pe fact that, in any event, in a. normal year about 3.6% of total prpduction would have been sold on the domestic market. Bearing in mind the significantly .- ; -higher price obtainable for meat 'spla on the export market, it seens improbable that the applicant would have placed this meat in domestic cold store if it could have been exported. I accept Pendarvis' evidence [es tq why this meat could not be sold on the export market.' I do not think its value was 1 reduced because it was placed in 'domestic cold store. \ tran srt Pie a: on th a | ' 90. (G) Hide sales in 1985 The applicant produced a total of 12,399 buffalo and 1 ' - cattle hides in 1985. 'The revenue derived from the sale of the \nides, was $252,239 made up as follows:: Buffalo Number of hides used for leather 9487 Number of hides cestroved 60 Average weight per hide 32.47 kgs Selling price per kg $0.665 ' | Revenue = 9487 x 32.47 x §0.665 = $ 204,851 . t ~ Cattle ~ r Number of hides used for leather 1589 Number of hides destroyed 2 Average weight per hide 20.34 kgs Selling price per kg $1.265 mL '+*Revenue = 1589 x 20.34 5 $1.265! = $ 40,885 1 Mixed (sudtable for geletine production only). " —-S Number of hides 1261 Net weight of hides 34,227 kgs Selling price per kg . $0.19 _|Revenue. = 34,227 x $0.19- = . ... | $6,503 TOTAL REVENUE FROM HIDE SALES : , $ 252,239 ' The buffalo hides were sold to A.H. Hide & Skins Pty. pimited at 66.5 cents per kg. The respondents contend that 8 " ° | Pendayvis could have solid these hides at a higher price earlier 'in the] season and that he ought to have done so. However I do i LI { 91. not think he can be criticized for holding out for a better price and for not having the foresight to predict that prices might fall. . Further, I see no reason not to accept the amounts claimed by the applicant as the value of the cattle hides and mixed hides. Accordingly I assess the value of all hides actually produced in 1985 at $252,239. 10. Summary of loss of revenue I therefore assess the loss of revenue due to the picket at the sum of $2,735,525, calculated as follows: Likely revenue from boneless neat production, if no picket - $5,571,375 ~ Likely revenue from hide Te production, if no picket 485,265 . Lo LESS 96,056,640 Value of boneless - - - meat produced : 3,068,876 Value of hides produced 252,239 3,321,115 wy ' LOSS GF REVENUE $2,735,525 fod Ld - - twee - ere Sey ee ee ee were ae ae nee 92. 11. Reduction in variable costs The loss of revenue was offset by substantial reductions in variable costs due to the lower production levels achieved. I now consider the nature and extent of these reductions. Cost of livestock The shortfall in boneless meat production in 1985 was 1,585,066 lbs calculated as follows: Expected production if no picket 4,727,808 lbs LESS actual production 3,142,742 lbs Shortfall 1,585,066 lbs eos - i According to the applicant, the reduction in the cost of purchasing livestock should be calculated by multiplying 1,585,066 by 61.5 cents since 61.5 cents was the average price per lb boneless weight paid during the 1985 season. In 1985 a total of $1,932,455 was paid for stock from which 3,142,742 lbs boneless weight of meat was produced. However, the respondents i ' 'appropriate figure is 63 cents. This argument is based on argue that 61.5 cents per lb is too low, and that the levideace given by Pendarvis (T.2384) that, averaged over the 2 + wu aoe ee ee entire season, cents because of the in the earlier part of the the average 93. paid in respect of heavier carcasses. The details of livestock purchases in 1985 the following schedule 5.3. May dune duly Aug Sep Oct Nov 15 Nov 16/25 table, 1,921 2,367 2,722 3,005 1,048 which 15 Boneless Weagnt ibs 17,633 69,032 505,717 612,776 706,636 780,528 289,204 161,216 © eee fact that carcasses are normally extracted fron 12,151 39,942 313,667 388,803 446,941 472,126 153,981 104,844 er 1,922,455 price paid would have been about 63 heavier season and higher ratesiper 1b are ' appear from Ex $(3) Average tote' ere en em we? do a PE Re 94. = Pendarvis'' evidence that the average price would have been about 63 cents per Jb was given without reference to his records. However, his evidence seems generally consistent with Ex S(3) because it can be deduced from the exhibit that the average price paid for all stock purchased from May to August was about 0.626 cents per lb. I therefore think it is appropriate to adopt the average price for which the respondents contend. Accordingly I estimate the saving in variable costs occasioned by the reduced livestock purchases at 1,585,066 x 63 cents, i.e. $1,998,592. Reduction in payroll - Apart from some small. savings which the applicant 'concedes it-made in wage costs, it contends that the amount of- wages it has paid, or will be obliged to pay, to its "employees for the 1985 season is not less than the amount which it would have~ been obliged to pay them~ for a full year's production. uninterrupted by -the picket. In substance, the applicant contends that, in order to keep faith with its employees and to induce them to stay at Mudginberri whilst the picket was in place, it agreed to pay them the same remuneration for the 1985 - season as they would have been likely to have earned in the absence of the picket. But for the picket, their wages almost Lenses — eos - te ee ee _- os mn ne eee eee we ee wee ee a i oe ie Ae en Vw tre wef rope ee ee ae pene + ore 1a 95. certainly would have averaged at least $500 per week because of production incentives in the award. In my opinion the proper approach to this part of the claim is to ascertain the terms of any agreement which may have been made by the applicant with its employees, and then to determine whether it was reasonable for the applicant to enter into any such agreement. I accept Pendarvis' evidence that if the employees had dispersed after 9 May.it would not have been practicable for him to get them to return to work after the picket was lifted. He said that the applicant had employed a good team of men and that it was highly desirable to retain their services. Some twenty-six men were engaged directly in the production of meat, as distinct from hide production and other duties at Mudginberri Station. Pendarvis gave the following evidence as to the arrangements he made with the empiovees when-work ceased - because of the picket: "What arrangement did - you make with _ the men-to have a them sitay on?---That we would pay them $175 a-week for - the period that they were not working. - That was during the period before you started domestic production?---That is correct. And what was the arrangement with respect to payment of further sums of money - I am sorry. Was it during the period when you were not producing, or was it throughout the period of the picket?---No, it was for the period that we were not producing we were paying them their $175 per week. ; i That is when you were not producing at all?---At all. for pe a eee ee A A ll a Ge ane free 96. Did you make an agreement with them to pay them further sums of money?---Yes, we did. What further sums of money did you agree to pay them?---We agreed to pay them, as I mentioned earlier, that in the event there was a damages claim and we were successful in the damages claim, that we would pay them that amount of money that they should have earned had the picket not been there and they had been working." (T.2516) Mr Peter Glenn, a yardman employed at Mudginberri, also gave evidence as to the arrangement that Pendarvis made with the employees. He said that after the picket was imposed he did not do any work but was paid money for staying at Mudginberri. His evidence included the following: ~- "MR CALLINAN: All right. Can you remember what . -? it was that you were paid?---Yes. -* re And it was how much?---s175 a week. oa All right, thank you. Did you make any other arrangements or agreements with Mr Pendarvis 7 with respect to additional payments?---Yes." (1.2718) i, "I will approach it differently. What was your expectation regarding your earnings had there been a normal season and had you been paid at the amount that you had agreed to accept of 26 cents a carton, -what you would have expected to earn during the season?---The full season earning 26 cents a carton, I was expecting to earn in the vicinity of $18,000, but during that period when we weren't working we all had a meeting together, all the workers, and we had a meeting later on with Jay and Jay said, if there -are-any claims or any damages suit or anything like that, he would be putting aclaim infor us for loss of wages on the \ average of that, average payment a week, for the rest of the year, of the year. VTP en ee F ie ha te se ab '| follows: 97. If you had not had that assurance would you have stayed working?---Oh, no way known; I would havé left straight away. Was any agreement reached amongst the workmen at the workmen's meeting regarding that offer and that proposed arrangement by Mr Pendarvis?---Yes. What was that?---We all said that if we all get paid the average wage for the time we were not working we would all stick together and stay at MudgGinberri. The feeling was that if we were not going to get anything at all for it we would all pack up our bags and go home. We were not going to stay there. Had you not been paid, or rather you told me if that arrangement had not been made you would have left. Had you left would it have been practical for you to come back?---No. Why not?---It costs too much money to fly from say Canberra or somewhere like that up to Darwin and I would not have even thought of going back 'up there again. 'Would you have had to get another job?---Yes." (T.2720-2721) Under cross~examination he gave further evidence as -"So far as anything about payments beyond $175 was Goncerned, I suggest that you and the other workers stayed on 'the basis that Mr Pendarvis —- had-a valid claim and if that claim succeeded, and if the claim - if it succeeded - was paid and if there were money available to pay you chaps, then you would get the money?---We would get the money. We were promised money, yes. It was on those contingencies that you * accepted?---Contingencies? Accepted what? You said you would stay?---Yes. Not for the $175?---Not for the $175, no." (1.2725) a ee, oon oe rae rt ee te ey 98. I think Glenn was a reliable witness. Indeed, his credit was not attacked. : Counsel for the respondents submit that, even if accepted, the evidence does not support a finding that a firm agreement was made between Pendarvis and the employees. In my opinion, the evidence does establish the making of an agreement, but not_ in the terms claimed by the applicant. According to Glenn, the arrangement was that "if we all get- paid the average wage for the time we were not working we would all stick together and stay at Mudginberri". In my opinion, the agreement—which was reached was that the payment of what =~ was-described as the "average wage" would only be made during _— the time when the men were not working. Ido not think Pendarvis or the men directed their minds to what the position would be if, despite the picket, the abattoir was working and producing meat, albeit at a reduced level of production. : 7 = Tam not in any doubt that it was reasonable for. Pendarvis to make the agreement that was made. As I have already observed the applicant was entitled to act on the basis that the Court's orders requiring the lifting of the picket — would be obeyed and that therefore the agreement would be of short duration. It would have been disastrous for the applicant if the men had left Mudginberri. Indeed, had they done so, the damage which it would have suffered as a result of the picket may well have been increased considerably. In fact -- wp tee eee - - w+ - 99. some 5 men did leave Mudginberri and did not return. Accordingly, only 21 men became entitled to the benefit of the agreement. It is common ground that, but for the making of the agreement and ignoring the applicant's obligation to pay the minimum award wages between 9 May and 24 June, it would have been liable to pay the men about $185,000 more in wages had it achieved the production levels asserted in its clain. In order to arrive at the reduction in the variable wage cost due to the decreased production, I think the appropriate course is — to treat the applicant as having paid, or being liable to pay, approximately $500 per week to 21 abattoir workers in the pericd between 9 May and 24 June This is a period of about 6.5 weeks, so the amount of about $3,250 should be allowed in respect of each of the 21 workers. This gives a total sum of about $68,250 which, after deduction from the figure of $185,000 gives s net saving in variable labour costs of about $116,750. _, The applicant contends that on any view of the facts, it would have been liable to pay to all its workers the minimum ; amount due to 'them under~The Northern Territory Meat Processing Award, 1984 which governed the terms and conditions of their employment. I think this submission is correct. According to my calewlations each worker would have been entitled, as a matter of law, to a wage of about $300 per week from 9 May to - nnn oy ' "7 if tee ose eee 2 ome ee we ee ie > eS tlle bd hed 100. 24 June - see cl. 7 and 33 of the Award. Thus, if I be wrong in my opinion that the applicant made an agreement in the terms I have found, the net saving in labour costs would he about $144,050, calculated as follows: - Estimated reduction 1n labour costs $185,000 ; Less! wages payable t 6.5 weeks x $300 x 21 workers 40,950 Net saving in labour costs $144,050 Packaging 7 The cost of packaging was $1.038 per carton of 60 lbs, which is equivalent to 1.73 cents per lb. Since the shortfall in production was 1,585,066 lbs I estimate the saving at about $27,422. i '- 7 Salt and Fluoride Approximately 20 kgs of salt and fluoride (which costs 17 cents per kg) are used in the preparation of each hide. The shortfall in hide production was 5,922 (i.e. 18,321 less 12,399) and hence the cost saving was approximately $20,135. mn oe rete ere On te ree ete ee ce ee ee ee ee ee ay ee LS ares ow fae or fae fan te A TES —* "~~ 101. - ' Ballets and Packaging for Hides The estimated cost of packaging is 50 cents per hide. The cost saving was therefore approximately $3,000. Property Lease Rentals The applicant concedes that, because of the interruption to preduction in May and June, its lease rentals abated in those months. The saving was $8,846. Meat Inspectors' Overtime The applicant would have incurred liability for additional overtime payable to Commonwealth meat inspectors if. the year had been picket~free. It estimated the cost saving at $28,751, but this estimate was based on a budgetted figure which seems to me to have been unrealistic, and counsel for the respondents virtually conceded that this was so. About $10,000 was actually paid in overtime to meat inspectors in 1985. and I think it is reasonable to assume that an additional sum of approximately $8000 would have been paid if production had not been interrupted by the picket. I arrive at this sum by ct. ee ee SWS eraigs et Ee ian 102. reference to the increased production which would have been achieved but for the picket. I therefore estimate the total saving at $18,000. Hide Men - Wages * During May and June when the picket was in place the two hide men were not paid their wages. I accept the applicant's calculation of consequent saving as follows: 2 men x $31,200 per annum x 6/52 7,200 - = Commission The applicant would have been liable to pay commission in respect of the Sweden No. 1 contract which was not fulfilled © because of the picket. The commission would have been 5 cents per lb which would have been payable on 418,877 lbs. © The saving of commission was therefore $20,944. Cleaning Materials Although Pendarvis at one stage of his evidence said. that cleaning is a variable expense, he also said that cleaning f a aA er ee ed Fas Sen z i il eA Op mite tape 103. materials are generally perishable products which absorb Moisture and which cannot be kept over a wet season. Nevertheless, some small allowance should be made for saving in cost of cleaning. I estimate the saving at $2,000. Fuel _ and Oi1 Pendarvis said that there were no savings made in fuel and oil because the generators had to be operated throughout the season in any event, particularly as there was a small amount of meat in store. Nevertheless I think some allowance should be made for fuel, oi1 and repairs and maintenance of the generators. I estimate the saving at $5,000. Consulting The cost of consulting was bound up with services rendered to the applicant by Mr Des Pearson, who left Mudginberri during the course of the year. The applicant contends that there was no saving in consultants' fees because of the reduced production during. the year, but I think that the evidence shows that there would have been a reasonably significant overall saving, which I estimate at $16,000. a a od ~ @aran ~ owt tam "2 oe oe New EN ee ENS Ewe 104. Repairs and Maintenance The applicant claims that there was no saving in respect of this item because the plant had to be maintained and kept in repair. Whilst I accept that this was so, the reduced wear and tear on the plant was probably reflected in lower costs for repairs and maintenance, which I estimate at 56,000. Accounting The applicant had intended to spend a substantial sum of- money in 1985 improving its accounting system. This money was not spent, but I do not think it is proper to regard the non-payment as acost saving in 1985. Ordinary accounting expenses continued unabated. The fact that the substantial sum was not spent does not mean that it will not need to be spent in the future. I therefore do not think there "3s any significant sawing in accounting costs. Payroll Tax - . Because of the reduction in the applicant's payroll, there would have been a reduction in payroll tax. According to the evidence, payroll tax payable by the applicant was about 5% of- wages paid. Since the total saving in wage costs a ee - ore - ne ee ee Tet eee gee ee ne eye wee ake ae 8 Le Baer "STN te -* FF 105. (including meat inspectors' overtime and hide men's wages) was in the order of $142,000 I estimate the saving in payroll tax at $7,100. Legal Expenses Pendarvis said that had it not been for the picket the applicant 'would have spent about $30,000 on legal fees. When asked what these fees would have been for, he said: "We are doing some work on our lease. That was part of it." IT am not satisfied that the applicant made any real saving in respect of legal expenses. Some of the expenses may have been postponed, but they will be incurred in due course. Insurance Premiums ~ Insurance premiums, particularly workers' compensation insurance Premiums, would have been higher ina full year of production. I estimate that the additional premiums would have been approximately $20,000. : Woo--- ines 7 oiler eel Serres SE srarcrye terete vegas 106. Other Costs D There were no savings in the wages of he | | i | administration staff, since all such staff were retained and paid their normal wages. It appears that up to five employes left Mudginberri shortly after the picket was imposed and were not replaced, at least for some period. However, I think that any saving in wages referable to these men would be comprehended within the sum of $116,750 referred to above. I doubt very much whether any significant savings were was made in respect of items such as entertainment, travél, small tools and power, but I think some marginal savings were probably made because of the decreased activity at Mudginberri in May and June. Doing the best I can I estimate the saving on such items at approximately $5,000. The tetal of all the above savings in variable costs is $1,281,989. It is— impossible to- be completely accurate in estimating the reductions in variable costs, just as it is impossible to be completely accurate in estimating the value of lost production. Any inaccuracy in one of the estimates may well be counter-balanced by an inaccuracy in the other. ae ee ge ee eee oe eae) Yo rane te Pee SA rae re om et 107. 12. Additional Costs Interest The applicant incurred additional costs as a result of the disruption of its business in 1985. The most significant of these costs was the interest which it had to pay on borrowed funds. It was necessary for the applicant to obtain substantial overdraft accommodation because of its reduced income and the postponement of the time when sales revenue was received. The claim for interest is set out in considerable detail in Ex. 38(3), schedule 6. After making allowance for interest charges which the applicant would have incurred in any event, a claim is made for additional interest of $179,637. I think this claim is made out. storage charges The applicant also claims that it incurred additional Storage charges because meat was held in stere in the expectation that permission would be given to export it. This claim is also set out in considerable detail in Ex. 8({3} schedule 6. the amount claimed being $147,066. I think this claim is generally reasonable. However, the amount claimed should be reduced to allow for the fact that. even if there had been no picket some storage charges would have been incurred in ere - - oe ee a ad seep tte awe gt ae ti te lee - = Arete - ve mearsg- Sinope 5 as ~ oA I = ape ep me S EE mer " from 16 September 1984 to 18 August $22,009. Since the 108. any event, including storage charges on meat produced in the 1984 season and still in store at the beqinning of 1985. I think the proper amount to allow for storage charges on this meat is about $30,000. I arrive at this sum by reference to experience in past years. Storage charges incurred by the applicant from 1 July 1983 to 30 June 1984 were $25,740 and quantity of meat produced in 1985 would have been much:the same as in 1983, I think it is appropriate to adopt the storage costs incurred in that year, escalated to allow for inflation. Accordingly the claim for additional storage costs should' be reduced to $117,066. Freight The remaining item of additional cost incurred by the applicant was freight. ~The additional ~ amount "claimed" is $9,205, particulars of the claim being set out in considerable detail in Ex. S&(3). schedule 6. I think- the claim is- cand reasonable. : oe ee UT eta I therefore assess the total additional costs incurred by the applicant at the sum of $305,908.- The respondents submit that the applicant paid too much for livestock whilst the picket was in place, and that its are ele ee te ae 24° 2a eae ins 109. damages should be reduced agcordingly. Ido not think the applicant paid any more than it was commercially prudent to pay having regard to the desirability of maintaining the goodwill of its suppliers and continuity of supplies from then. 13. Summary of damages awarded For the above reasons I assess the loss and damage incurred by the applicant at the sum of $1,759,444 made up as follows: .eee/Pe110 Peeks ee ee et meee eo © oT a as \ we tees | . . Phe e = BO} H é F ! coe 4 \ ' Fy { 1 ! 1lo. ; jt Expected Revenue from 1985 Season { ' 1 Boneless meat Hides $6,056,640 | : Revenue received or ; Hy receivable in respect | v of "1985 production | ; i, Boneless meat #37068 ,876 ( Hides 252,239 3,321,115 , 7 LOSS OF REVENUE ii $2,735,525 | 7 LESS ! ' Reduction in variable costs |! 7 $1,281,989 ' I — ' I . ! _317453,536 PLUS : - . oe . Additional costs incurred "4 305,908 | 1 i , TOTAL LOSS AND DAMAGE | $1,759,444 — - ! ' | ' * } | ; | ! " Hy ll an t aril I , | ! — ye \ J i | | i | = = zor} - mn canned ——— ~ sd - Bre A wo set lil. " The applicant originally claimed additional dqeneral damages for loss of goodwill caused bv its inability to service the needs of its overseas customers in 1985, but this claim was subsequentlv abandoned. = After the evidence and arqument in this case was concluded I heard matter No. VG 36 of 1986, in which the respondents sought orders setting aside the orders made by me on 12 Julv 1985. I permitted the respondents to re-open their case in the present proceedings and to tender the record in VG 36 of 1986 and the evidence given in that case. Nothing in that additional evidence causes me to change the views I have expressed in these reasons. It is convenient to express mv views on the effect of the additional evidence in mv reasons in 1 ; VG 36 of 1986 rather than repeat them in these reasons. and this I have done. Iorder the first respondent to pay the applicant y damages of $1,759,444 and judgment will be entered for the applicant aqainst the first respondent in that sun. The claim for damaqdes against the other respondents is dismissed. "I will hear the parties on the question of costs. Cte) I certify that this and the one hundred ~ ten preceding pases are a true copy of the Reasons for Judguent herein of his Honour Mr. Justice Morling. Associate \ Dated: 2) July Fast