Colbran t/a Tablelands Coffee v State of Queensland; Hatmill P/L & Anor v State of Queensland; Maloberti & Anor v State of Queensland [2008] QCA 418

SUPREME COURT OF QUEENSLAND CITATION: Colbran t/a Tablelands Coffee v State of Queensland; Hatmill P/L & Anor v State of Queensland; Maloberti & Anor v State of Queensland [2008] QCA 418 PARTIES: BENJAMIN COLBRAN and NORMA VIOLET COLBRAN trading as TABLELANDS COFFEE (plaintiff/respondent) v STATE OF QUEENSLAND (defendant/appellant) HATMILL PTY LTD ACN 010 818 327 (first plaintiff/first respondent) JAQUES AUSTRALIAN COFFEE PTY LTD ACN 097 895 531 (second plaintiff/second respondent) v STATE OF QUEENSLAND (defendant/appellant) MARIA MALOBERTI, BRUNO MALOBERTI and LUISA MALOBERTI (first plaintiff/ first respondent) NORTH QUEENSLAND GOLD COFFEE PTY LTD ACN 010 436 334 (second plaintiff/second respondent) v STATE OF QUEENSLAND (defendant/appellant) FILE NO/S: Appeal No 6576 of 2008 Appeal No 6577 of 2008 Appeal No 6575 of 2008 SC No 441 of 2002 SC No 437 of 2002 SC No 458 of 2002 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 23 December 2008 DELIVERED AT: Brisbane HEARING DATE: 18 November 2008; 19 November 2008 -- 1 of 20 -- 2 JUDGES: McMurdo P, Keane and Fraser JJA Joint reasons for judgment of Keane and Fraser JJA; separate reasons of McMurdo P, concurring as to the orders made ORDER: 1. In Appeal No 6576 of 2008: Appeal dismissed; each party is given leave to file and serve any submissions as to costs on or before 4.00 pm 6 February 2009 and otherwise in accordance with Practice Direction No 1 of 2005, para 37A 2. In Appeal No 6577 of 2008: Appeal dismissed; each party is given leave to file and serve any submissions as to costs on or before 4.00 pm 6 February 2009 and otherwise in accordance with Practice Direction No 1 of 2005, para 37A 3. In Appeal No 6575 of 2008: Appeal dismissed; each party is given leave to file and serve any submissions as to costs on or before 4.00 pm 6 February 2009 and otherwise in accordance with Practice Direction No 1 of 2005, para 37A CATCHWORDS: APPEAL AND NEW TRIAL – INTERFERENCE WITH JUDGE'S FINDINGS OF FACT – FUNCTIONS OF APPELLATE COURT – FINDINGS ON ISSUE OF NEGLIGENCE – GENERALLY – where the appellant was granted a permit from the relevant Commonwealth authority for the use of a pesticide spray on fruit trees – where the learned trial judge found that the appellant had not complied with the permit in spraying the pesticide on the respondents' property – where the appellant was found to be in breach of its duty to exercise reasonable care not to harm the respondents' property – whether the finding of liability against the respondent was, on the balance of probabilities, open to the learned trial judge on the evidence before him DAMAGES – MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT – MEASURE OF DAMAGES – IN GENERAL – where the learned trial judge ordered the appellant to pay damages representing the net loss of future revenue to the respondent caused by the appellant's negligence – where the quantification of lost future revenue was the subject of conflicting expert evidence – whether the learned trial judge erred in preferring the evidence of one expert over the other in calculating the damages payable by the appellant to the respondents Agricultural and Veterinary Chemicals Code 1994 (Cth), s 18, s 21, s 23, s 108, s 109, s 110, s 111, s 112 Agricultural and Veterinary Chemicals (Queensland) Act 1994 (Qld), s 5 Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842; [1985] HCA 61, considered -- 2 of 20 -- 3 Colbran v State of Queensland [2008] QSC 132, approved Devries v The Australian National Railways Commission (1993) 177 CLR 472; [1993] HCA 78, cited Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, cited Henderson v Jenkins [1970] AC 282, applied Ray Teese Pty Ltd v Syntex Australia Limited [1998] 1 Qd R 104; [1996] QCA 259, cited Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23, cited COUNSEL: W Sofronoff QC SG, with D K Grigg, for the appellant M M Stewart SC, with A P J Collins, for the respondents SOLICITORS: Crown Law for the appellant Williams Graham Carman for the respondents [1] McMURDO P: The appeals should be dismissed for the reasons given by Keane and Fraser JJA. [2] Orders: In each case: 1. The appeal is dismissed. 2. Each party is given leave to file and serve any submissions as to costs on or before 4.00 pm 6 February 2009 and otherwise in accordance with Practice Direction No 1 of 2005, para 37A. [3] KEANE AND FRASER JJA: The respondents to these three appeals were growers of coffee on the Atherton Tableland in North Queensland. In late 1995 fruit in North Queensland was found to be infested by the papaya fruit fly ("pff"). This insect posed a serious threat to the public interest in terms of the maintenance of fruit exports from Australia. As a matter of urgency, agencies of the States and the Commonwealth Governments formulated and implemented a program of pff eradication described in detail by the learned trial judge.1 The appellant's campaign against the pff was successful. Total eradication of the pff in North Queensland was achieved by 1999.2 Unfortunately, in the course of this campaign the respondents suffered collateral damage. [4] One technique employed in the appellant's eradication program was male annihilation whereby male insects are attracted to an absorbent material which has been laced with insecticide. This technique was referred to as "blocking" because it involved the use of absorbent blocks hung in the vicinity of fruit trees: it did not involve spraying insecticide directly onto plants. The eradication program also included use of the technique of protein bait spraying, that is, the spraying of a protein attractant to the insect together with an insecticide onto a plant which might harbour the insect. The spray which the appellant used for the purpose of this technique was Maldison 500, which was comprised of approximately equal amounts of a high boiling point aromatic hydrocarbon, Solvesso 150, and an insecticide, Malathion. 1 Colbran v State of Queensland [2008] QSC 132 at [9] – [48]. 2 [2008] QSC 132 at [72]. -- 3 of 20 -- 4 [5] Maldison 500 was sprayed onto fruit trees in North Queensland from the end of 1995. Before its use on the respondents' coffee plants, the spray was used without adverse effect upon fruit trees, save in one case which is largely immaterial.3 [6] In March 1996 pff was discovered in a sample of coffee fruit provided by the respondent, Mr Colbran. In early September 1996 the appellant commenced spraying the respondents' coffee trees with Maldison 500. This spraying ceased in December 1996. After this treatment the respondents' coffee plants suffered degradation, and the respondents' incomes were adversely affected as a result. [7] In 2002 the respondents commenced proceedings in the Supreme Court against the appellant for damages for negligence in respect of the damage to their coffee plants. The actions proceeded to trial between July and October 2007. It was agreed that the three actions be heard together and that the evidence in each case be admissible in the others. [8] On 12 June 2008 the trial judge delivered his decision upholding the respondents' claims and awarding the respondents substantial damages. Mr and Mrs Colbran recovered judgment for damages of $1,066,400, Jacques Australia Coffee Pty Ltd recovered judgment for $6,256,575, and Maria, Bruno and Luisa Maloberti recovered judgment for $1,840,000 together with interest to be assessed. [9] The appellant seeks to appeal against the judgments. Before we discuss the issues raised on the appeal and the arguments advanced by the parties, we propose to summarise the respondents' claims at trial and the decision of the trial judge to the extent necessary to provide a context for the discussion which follows. The respondents' claims [10] At trial, the respondents' claims were supported by the expert opinion of Dr Beattie, an expert in plant science. He was of the view that, although both components of Maldison 500 are generally not phytotoxic, that is, not apt to cause damage to a plant by the uptake of toxins through the leaves or root system, the amount of spray applied by the appellant to each of the respondents' plants exceeded a safe level. As a result the Solvesso 150 component in the protein bait spray had a phytotoxic effect on the respondents' coffee plants.4 [11] Dr Beattie's opinion was challenged by the evidence of three witnesses called by the appellant, but the trial judge preferred the evidence of Dr Beattie.5 It may be noted here that, in this Court, the appellant does not challenge the trial judge's preference for the evidence of Dr Beattie over the evidence of expert witnesses called by the appellant. As it happens, any such challenge would have had only forlorn prospects of success given that, as his Honour observed, none of the witnesses called by the appellant to challenge the opinion of Dr Beattie offered a convincing alternative explanation of the cause of the damage to the respondents' coffee plants.6 The Solvesso 150 component of the Maldison 500 spray was the only plausible candidate as the cause of the degradation of the respondents' coffee plants. 3 [2008] QSC 132 at [60] – [63]. 4 [2008] QSC 132 at [148] – [153]. 5 [2008] QSC 132 at [156] – [163]. 6 [2008] QSC 132 at [158], [170]. -- 4 of 20 -- 5 [12] Dr Beattie's opinion was not that Solvesso 150 in any quantity, however small, would have had a phytotoxic effect upon coffee plants. Rather, his opinion was that the use of Solvesso 150 in "excessive amounts" would have that effect. Dr Beattie did not identify the precise quantity of Maldison 500 at which phytotoxic effects on coffee plants commence; but he did say that use of Maldison 500 at the concentration in the quantities and with the frequency known to have been used by the appellant was sufficient to damage them. [13] At trial, the respondents' claims against the appellant were propounded on the basis that there was no sufficient justification in terms of the need to eradicate the pff to warrant the risk of harm to the respondents' coffee plants which was involved in protein bait spraying with Maldison 500. The respondents' claims drew colour from what the trial judge accepted was a degree of unwillingness of the appellant's officers to accept responsibility for the decision to resort to protein bait spraying of the coffee plants, especially when the male annihilation technique had worked well elsewhere.7 The decision of the trial judge [14] In the upshot, the trial judge found that the appellant's spraying of the respondents' plants with Maldison 500 caused them to fail.8 His Honour found that it was the Solvesso 150 component of the Maldison 500 which caused the damage.9 In this Court, the appellant does not challenge these findings as to the cause of the respondents' loss. [15] The trial judge found that protein bait spraying of the coffee plants was unnecessary in terms of the efficiency of the eradication program, and ought not to have been undertaken as it exposed the respondents' coffee plants to an unnecessary risk of harm. 10 [16] His Honour held that, in spraying the respondents' coffee plants with Maldison 500, the appellant failed in its "duty to [the respondents] to take reasonable care to avoid damage to their crops."11 In particular, his Honour held that the appellant was duty-bound to undertake trials and testing to ensure that Maldison 500 was safe for use on coffee plants and would not damage the plants,12 and that it failed to do so.13 In this regard, the trial judge said: "I am satisfied that had a rudimentary search of the formulation of Maldison 500 been undertaken and a consequential inquiry made as to the characteristics of the various components of that spray product, then the risk to plants of its use outside normal limits would have been identified. By not making this preliminary inquiry the defendant never properly identified the risk to plants and thus gave no consideration to the undertaking of trials nor to inquiring as to how the product might be sprayed in a way that was consistent with the eradication of PFF and with safety to the coffee plants. This risk was not limited to coffee plants but to any plant that was likely to be 7 [2008] QSC 132 at [85]. 8 [2008] QSC 132 at [168] – [170]. 9 [2008] QSC 132 at [151] - [152], [163]. 10 [2008] QSC 132 at [164]. 11 [2008] QSC 132 at [139]. 12 [2008] QSC 132 at [127] and [140]. 13 [2008] QSC 132 at [86]. -- 5 of 20 -- 6 sprayed frequently. In most situations where the plant had no commercial value, the risk was of no consequence. But in the commercial setting the duty to take reasonable care to avoid the risk did exist. That duty arose specifically when the eradication programme involved for the first time protein bait spraying in commercial coffee plantations. As a further consequence of the failure to enquire, the decisions at the local level to spray in high volumes and with excessive frequency using ATVs and motorised spray equipment, were made in ignorance of the risk. Were the risk known, the alternative strategies by which the PFF eradication could have been achieved would most likely have been employed. In my view, it is this combination of factors which establishes the breach by the defendant of its duty of care."14 [17] The appellant had alternatives to courting the risk to the respondents' coffee trees involved in protein bait spraying using Maldison 500. In this regard, his Honour summarised the evidence of Dr Beattie which he accepted: "Dr Beattie acknowledged that normal field use of Maldison 500 - .2% concentration - would not be phytotoxic. But if the Maldison 500 concentration in the spray increases to the level of the off-label permit it does carry the risk of being phytotoxic. If the frequency of spraying increases so too does the risk. In ordinary field applications a grower would be unlikely to treat the same plant twice. However, at the volumes which the defendant claims it applied – 8–12 litres per hectare – and with the almost weekly frequency as set out above Dr Beattie regarded the application as a risk to the crop and opined that the application was inappropriate where safer alternatives were available. He expressed the view that the more appropriate method was to use male annihilation technique or an alternative spray product which did not include Solvesso 150. Such a product was the malathion based Hymal. A wettable powder would also be safer but malathion in that form would not have been available in the required quantities."15 [18] The trial judge concluded that Dr Beattie had "correctly assessed [that] the plant damage was caused by the application of the spray product in excessive quantities and with too high frequency." 16 The issues on appeal [19] In this Court, the appellant submits that the trial judge erred in concluding that the appellant was guilty of a breach of its duty to exercise reasonable care not to harm the respondents' property. The appellant emphasises that it was engaged in responding to a serious emergency and contends that, having regard to the information available to the appellant at the time the pff eradication program was undertaken, there was no reason why the appellant should have known that the use of Maldison 500 as a protein bait spray posed a risk of harm to coffee plants so as to require the use of different techniques or trials and testing of Maldison 500 as a 14 [2008] QSC 132 at [165] – [166]. 15 [2008] QSC 132 at [152] – [153]. 16 [2008] QSC 132 at [163]. -- 6 of 20 -- 7 precaution to exclude that risk before it was sprayed onto the respondents' coffee plants. [20] The appellant also submits that his Honour erred in his finding of fact that Maldison 500 had been sprayed onto the respondents' coffee plants in excessive quantities. [21] Finally, the appellant submits that the trial judge's assessment of damages in each case was flawed because of the insufficiency of the evidence available to establish whether any loss had actually been suffered by the respondents by reason of the damage to their coffee plants. [22] We will discuss these submissions in turn; but by way of preliminary comment we should draw attention to the difficulty of the exercise which confronts the appellant in challenging the conclusion that it was negligent in the conduct of the operations which caused the damage to the respondents' coffee plants. [23] It was no part of the appellant's case that the pff could not have been eradicated from the respondents' properties without damaging their fruit trees even if all due care had been used. That being so, the fact of the damage to the respondents' plants, in circumstances in which it is not disputed that the damage was caused by the activities of the appellant, gives rise to an inference of negligence against the defendant. In the absence of evidence sufficient to raise the possibility that the damage occurred notwithstanding the exercise of reasonable care by the appellant, it may reasonably and fairly be inferred that the spray was applied without that care. In Henderson v Jenkins,17 Lord Pearson said: "In an action for negligence the plaintiff must allege, and has the burden of proving, that the accident was caused by negligence on the part of the defendants. That is the issue throughout the trial, and in giving judgment at the end of the trial the judge has to decide whether he is satisfied on a balance of probabilities that the accident was caused by negligence on the part of the defendants, and if he is not so satisfied the plaintiff's action fails. The formal burden of proof does not shift. But if in the course of the trial there is proved a set of facts which raises a prima facie inference that the accident was caused by negligence on the part of the defendants, the issue will be decided in the plaintiff's favour unless the defendants by their evidence provide some answer which is adequate to displace the prima facie inference. In this situation there is said to be an evidential burden of proof resting on the defendants. I have some doubts whether it is strictly correct to use the expression 'burden of proof' with this meaning, as there is a risk of it being confused with the formal burden of proof, but it is a familiar and convenient usage." [24] It will be seen that the arguments advanced on the appeal on behalf of the appellant proceed without regard to the consideration that the appellant's eradication campaign could have been pursued with all necessary efficiency without damaging the respondents' interests. Reasonable care was required to achieve that end, of course, but the appellant was obliged to exercise that care. The appellant seeks to be absolved from the obligation to exercise care because of its failure to recognise one of the risks that made the taking of care necessary. For that reason the 17 [1970] AC 282 at 301. -- 7 of 20 -- 8 appellant's arguments have an air of unreality about them; and even though there is force in some of the appellant's criticisms of aspects of the trial judge's reasoning, in the end, these criticisms are inconsequential. [25] As to the trial judge's view that protein bait spraying of coffee plants, as opposed to the alternatives, posed an unnecessary risk to the safety of coffee plants, the appellant argues that the trial judge erred in misunderstanding the evidence of expressions of misgivings about protein bait spraying by the appellant's officers prior to the spraying of the respondents' coffee plants. There is force in this argument. None of the evidence to which his Honour referred in this regard disclosed any concern that bait spraying might adversely affect coffee plants or that this technique posed a greater risk to plant safety than the blocking technique. Expressions of opinion by officers of the appellant that protein bait spraying was unnecessary were not concerned with any perception of risk to the safety of the coffee plants. Rather, they were concerned simply with the cost effectiveness of the bait spraying technique as a technique for the eradication of pff. [26] The trial judge found that the respondents were the only commercial growers whose plants were subjected to protein bait spraying.18 On this basis his Honour considered that it was "important to look at the justification for singling out the coffee crop."19 The appellant attacks this step in his Honour's reasoning, pointing out, accurately, that bait spraying was used, without any real mishap, on other commercial fruit plantations earlier in the eradication program. The appellant also attacks his Honour's view that Maldison 500, while said to be suitable for use on fruit trees, was not "known to be suitable for coffee."20 The appellant makes the points that coffee is a fruit and there was no suggestion that coffee was, or was known to be, different from other fruits in its susceptibility to damage from Maldison 500. [27] The appellant also points out that the circumstance that no individual amongst the appellant's officers responsible for the formulation and implementation of the pff eradication program was able to assert or accept individual responsibility for the decision to use protein bait spraying on the respondents' coffee plants is readily explicable as a result of the collegial approach adopted by the appellant's officers, and the circumstance that the decision to use bait spray on the respondents' coffee plants was made by committee as an unremarkable step in the continuation of the pff eradication strategy. [28] It may be granted that there is some force in these criticisms, but they do not establish that the use of the protein bait spraying technique was truly necessary to the efficient prosecution of the appellant's campaign to eradicate pff bearing in mind the risk of damage to the respondents' coffee plants involved in the use of Maldison 500 sprayed directly onto the plants. The simple fact, undeniable and indeed undenied by the appellant, is that the appellant's officers did not advert to this risk at all. 18 [2008] QSC 132 at [63]. 19 [2008] QSC 132 at [63]. 20 [2008] QSC 132 at [138]. -- 8 of 20 -- 9 The appellant should have been aware that the use of Maldison 500 as a protein bait spray was risky [29] Initially, the principal argument advanced on behalf of the appellant in this Court was that, while the appellant owed the respondents "a duty to take reasonable care to avoid damage to [the respondents'] crops",21 the content of that duty did not encompass an obligation to take steps to ensure that protein bait spraying of the respondents' coffee plants with Maldison 500 would not harm them. The basis on which this argument was advanced in the appellant's written submissions and in the appellant's oral submissions in chief was that "there were no circumstances proved in the evidence which could justify a conclusion that the State knew or ought to have known that spraying might harm coffee plants – whatever the level of spraying." [30] In oral submissions on behalf of the respondents in this Court, Mr Stewart SC, who appeared with Mr Collins, drew attention to the circumstance that Ms Wright, the officer of the appellant's Department of Primary Industries ("DPI") responsible for obtaining the necessary permit for the use of Maldison 500, had previously been supplied with a Material Data Safety Sheet relating to Maldison 500 by Nufarm Ltd, one of the manufacturers of the product. This document showed that Maldison 500 contained 30 per cent to 50 per cent "High boiling aromatic solvent". The second edition of the DPI's Pesticide Application Manual contained a table which stated that "high b.p. (scil boiling point) aromatic hydrocarbons" have "high phytotoxicity", which was said to "indicate undesirable characteristics for a pesticide solvent". This table was produced by Maas as long ago as 1971. The trial judge referred to Maas' table in his discussion of the pre-1996 literature which attested to the relatively high phytotoxicity of Solvesso 150.22 Although the trial judge did not refer to the circumstance that Maas' table had been reproduced in the DPI's Pesticide Application Manual, his Honour was clearly correct to conclude that this information was readily available to the appellant and should have led it to identify the risk to commercial crops of protein bait spraying with Maldison 500. [31] After the revelation that the appellant's own Pesticide Application Manual identified the risk of phytotoxicity involved in the use of Maldison 500, the appellant's Counsel conceded in their oral submissions in reply that they were unable to maintain their principal submission in the absolute terms in which it had previously been propounded. On the appellant's behalf, it was then said that although the use of Maldison 500 was: "a risk, the question is whether the form in which they came to intend to use it, the 2% solution and the number of mls per tree and so on, whether there was any reason whether they knew or ought to have known that that itself was risky as Dr Beattie would have it … We submit the answer is in the negative because otherwise one must reach the conclusion that the permit – for example, the permit permitting the use of the substance is of no value because … to comply with the permit is to destroy the trees." This reformulation of the appellant's principal submission cannot be accepted because it attributes to the permit an operation which, as we will explain directly, it 21 [2008] QSC 132 at [139]. 22 [2008] QSC 132 at [151]. -- 9 of 20 -- 10 did not have under the law and which it did not purport to have. In our respectful opinion, the appellant's principal submission cannot be sustained in any terms. [32] It may be accepted that none of the experts who were involved by the appellant in the pff eradication program actually adverted to any risk to plants in protein bait spraying plants with Maldison 500. That is perhaps understandable given their focus upon the formulation and prosecution of a cost effective strategy for the eradication of pff and their familiarity with the pesticide malathion. But while it may be understandable that none of the experts engaged by the appellant adverted to the risk that the solvent in Maldison 500 posed to the health of plants with which it might come into contact, it is impossible to accept that officers of the appellant had no reason to know that Maldison 500 was a product which included a solvent which was potentially phytotoxic. To say this is not to insist upon a counsel of perfection: the appellant's objective was to prevent the ravages of the pff, not to do the pff's job for it. [33] The terms of the appellant's own Pesticide Application Manual showed the appellant clearly ought to have known that the use of Maldison 500 on plants posed a risk to their health. Accordingly, the appellant was duty bound, either to use an alternative technique to protein bait spraying with Maldison 500, or to take precautions to satisfy itself that protein bait spraying with Maldison 500 could be used on any plants on which it was applied in such concentration, volume and frequency that it did not adversely affect the plants. [34] In the appellant's submissions, and especially its written submissions, much rhetorical effort is expended on emphasising the emergency in which the appellant was obliged to act and the time constraints which limited its ability fully to assess the risks involved in the protein bait spraying technique and particularly the use of Maldison 500. The persuasive force of the appellant's rhetoric is diminished by the fact that when the respondents' coffee plants were sprayed, the eradication program was well-advanced – indeed it had been in operation for almost a year and was almost complete23 – and six months elapsed between the identification of pff in the Colbran's coffee plants and the commencement of spraying them. In these circumstances, one cannot accept that the emergency constrained the appellant's decision-making and choice of appropriate technique so as to absolve the appellant of the obligation to take account of the risk of damage to the respondents in the formulation and execution of its pff eradication strategy. The exigencies of the efficient prosecution of the eradication program in the public interest did not necessitate that the respondents' coffee plants should be exposed to the risks of damage involved in the use of protein bait spraying. [35] These conclusions are sufficient to dispose of the challenge to the trial judge's finding that the appellant's damage to the respondents' coffee plants was inflicted as a result of the appellant's failure to take reasonable care for the safety of the respondents' property by identifying the risk to commercial crops posed by spraying with Maldison 500. But there is, we think, a further reason why the appellant ought to have been aware of a risk to plants in the use of Maldison 500 in the quantities and concentrations in which it was applied. 23 [2008] QSC 132 at [138]. -- 10 of 20 -- 11 [36] The appellant made a formal admission in the proceedings below that it "was not aware of any other agent or authority using Maldison 500 at that strength [ie a 2% solution] in any other pest eradication or control campaign prior to the pff campaign." There were at the relevant time two manufacturers of Maldison 500: Nufarm Ltd and Rhone-Poulenc. The label attached by the manufacturer, Nufarm Ltd, to its Maldison 500 product contained directions for use as bait for fruit fly at a rate of "110 ml + 110 ml protein hydrolysate per 100 L water". These directions may be contrasted with those on the label on the Maldison 500 manufactured by Rhone-Poulenc, which describes a rate for fruit flies of "2.0L/100L water. Apply 100 ml to 200 ml solution/tree." The permit for which the appellant applied reflected the Rhone-Poulenc label rather than the Nufarm label. The Rhone-Poulenc product was used on the respondents' coffee trees until mid-September 1996 when the Nufarm product was used. [37] The point for present purposes is that the difference in the descriptions was itself apt to raise a concern as to safe rates of application because of the evident divergence of opinion on the part of the manufacturers. Because the appellant did not know that Maldison 500 had previously been used at the strength suggested by Rhone-Poulenc but not by Nufarm in any earlier pest eradication program, the appellant should have been alert to this divergence and astute to resolve it. It is to be emphasised that the rates in each case were upper ranges of usage for an agricultural chemical product. Such a product cannot be assumed to be harmless to all and any living organisms, so that differences in the manufacturers' statements of the upper-ranges may be significant for the safe use of the product. The appellant should have appreciated the possible significance of the differences in the labels for the safe usage of the product. That this is so is confirmed by the very circumstance that the use of these kinds of products is closely regulated by a legislative regime involving registration of the products and the issuing of permits in relation to their use. The very existence of the regime of registration and permits is eloquent of the hazardous nature of activities involving the propagation of these kinds of products. The permit did not excuse the appellant's negligence [38] The permit obtained by the appellant does not afford any justification or excuse which might relieve the appellant of liability for the damage which it negligently inflicted on the respondents. There are two reasons for this: first, any "comfort" which the appellant might have been entitled to draw from the permit did not extend to relieving it from the negligent use of the products the subject of the permit; and, secondly, as the trial judge found, the volume and frequency of protein bait spraying with Maldison 500 by the appellant exceeded that authorised by the permit. [39] Section 5 of the Agricultural and Veterinary Chemicals (Queensland) Act 1994 (Qld) ("the AVCQ Act") adopts, as a law of Queensland, the content of the Code regulating the use of chemicals such as Maldison 500 enacted by the Agricultural and Veterinary Chemicals Code Act 1994 (Cth) ("the AVC Act"). Under the Code, the Australian Pesticides and Veterinary Medicines Authority ("the APVMA"), formerly known as the National Registration Agency ("the NRA"), must keep a register of agricultural and chemical products,24 and may approve a label for 24 See s 18. -- 11 of 20 -- 12 containers of a chemical product,25 or conditions it thinks appropriate.26 The NRA was authorised to grant a permit in respect of chemical products.27 [40] The appellant argues that the NRA was the national agency which was authorised to grant a permit for the use of chemical products used for killing pests if it was satisfied that "the use of … the constituent or product as proposed in the application for the permit … would not be likely to have an unintended effect that is harmful to … plants."28 On the appellant's behalf, it is said that the appellant was entitled to proceed on the basis that the permit would not have been issued had the NRA not been so satisfied. It is appropriate at this point to refer to the terms of the permit. [41] The permit obtained by the appellant from the NRA was effective from 6 November 1995. It allowed the use of the following products: "All registered products containing 1150g/L maldison, 1000g/L maldison or 500 g/L maldison as their only active constituent …". The Directions for Use included use on, inter alia, fruit trees at the following rates: "Preparing Bait Prepare 100 L bait by mixing: either 870 mls of product (with 1150 g/L maldison); or 1L of product (with 1000g/L maldison); or 2L of product (with 500 g/L maldison) … Applying Bait Rate of 100 – 200 ml of prepared bait per tree." [42] The permit contained the following critical comments in the Directions for Use: "Apply the bait to the vegetation as a foliage spray. Apply bait using powered sprayers in utilities or backpack sprayers. Use large spray droplets (coarse spray) as these are more effective. Avoid contact of the bait with the fruit. Apply at weekly intervals as required. Withholding Period: Do not harvest fruit for 3 days after application." [43] The permit also contained the following note: "In making a decision, whether to issue a permit, the NRA must often balance the need for the permit against known and uncertain scientific and other factors. Persons using actives or products under a permit issued by the NRA must make their own judgement as to the suitability, effectiveness and safety of the chemicals for that use, and do so at their own risk." In the course of argument on the hearing of the appeal, it was said on the appellant's behalf that the legislation does not authorise the addition of a note in these terms to a permit issued by the NRA. But the note does no more than state – accurately as it happens – the position that a permit serves only to excuse what would otherwise be 25 See s 21. 26 See s 23. 27 See s 108 to s 112. 28 Section 112(2)(f)(iii). -- 12 of 20 -- 13 an offence, and in no way affords the holder lawful justification for conduct which would otherwise be negligent. [44] By virtue of s 116 of the Code, the effect of a permit "in respect of an active constituent for a proposed or existing chemical product, or in respect of a chemical product" is to afford the user a complete answer to what would otherwise be an offence against the Code. The effect of a permit is not to relieve a person who has the benefit of a permit from an obligation to exercise reasonable care in the use of the product the subject of the permit. The appellant did not comply with the permit [45] The permit authorised the use of Maldison 500 as a spray on fruit trees. The trial judge was of the view that the appellant was not entitled to regard this authority, which related to use on fruit trees, as extending to use on coffee plants. As the appellant correctly observes, coffee is a fruit, and there was no evidence at all that coffee is in some way special or different from other fruit so far as susceptibility to any of the components of Maldison 500 is concerned. There were, however, other respects in which his Honour's findings of non-compliance with the permit on the part of the appellant can be sustained. [46] The permit authorised a maximum rate of application of the specified bait of 100 to 200 ml per tree and at a frequency of "weekly intervals as required". The trial judge found that the bait sprayed on the respondents' coffee plants exceeded that permitted volume and that it was sprayed at an excessive frequency.29 [47] In making those findings the trial judge accepted the evidence of some of the appellant's employees who had sprayed the trees using sprays driven by pumps on motorised bikes, which satisfied the trial judge that the volumes of spray applied exceeded what was intended or instructed by the appellant;30 that they had sprayed the trees to the point of "run off";31 that there was no meaningful supervision of the sprayers;32 that sprayers were instructed to use all the spray provided; and that to achieve this at least one sprayer did so by increasing the pressure settings of the pump and varying the nozzle distance33 and even drilling the nozzle bore out to a larger size.34 [48] The trial judge's findings also drew on the respondents' and sprayers' evidence of their observations of the amount of bait generally sprayed over the coffee trees and the extent to which the spray covered the foliage. For example, the trial judge accepted as accurate statements by the respondent, Mr Colbran, that he observed "a mist emanating from my coffee trees as they sprayed", that the spraying was "very heavy", that each entire tree was the subject of "cover spraying", and that he frequently saw the spray "dripping off the leaves".35 As the trial judge pointed out, that description was not challenged in cross-examination.36 Some of the sprayers gave similar evidence. For example, Mr Alifraco said that the amount of spray he applied to the trees was so heavy that it would "drip off the trees like rain". 29 [2008] QSC 132 at [102], [166]. 30 [2008] QSC 132 at [96]. 31 [2008] QSC 132 at [98]. 32 [2008] QSC 132 at [101]. 33 [2008] QSC 132 at [96]. 34 [2008] QSC 132 at [95]. 35 [2008] QSC 132 at [97]. 36 [2008] QSC 132 at [98]. -- 13 of 20 -- 14 [49] The coffee trees varied in size of course, but there was evidence (in the form of photographs and also in statements by various witnesses) that the height of the trees was some three or four metres. One of the appellant's witnesses, Mr Cunningham, agreed that if the trees were sprayed from top to bottom that would require the application of "a hell of a lot more than 100 mls". That is even more obviously the case if the trees were sprayed to the point of "run off" in the manner accepted by the trial judge. On this evidence it is unsurprising that the trial judge concluded that the maximum volume of spray of 100 to 200 ml allowed by the permit was exceeded. [50] Not all of the sprayers who gave evidence agreed that the coffee trees were sprayed in the same manner but the appellant does not contend that the finding of the trial judge could or should be displaced for that reason. The appellant, recognising the advantage enjoyed by the trial judge but denied to this Court of seeing and hearing the witnesses give evidence, instead argues that this is a case where "incontrovertible documents" falsify the finding of the trial judge. That submission invokes the example given in Brunskill v Sovereign Marine & General Insurance Co Ltd 37 of a case in which a finding of fact can be seen to be clearly wrong on grounds which do not depend merely on credibility, namely where the accepted evidence is "inconsistent with facts incontrovertibly established by the evidence". [51] The appellant contends that its contemporaneous records provided incontrovertible evidence of the volume of bait sprayed on each day on which identified farms were sprayed. It argued that those daily figures divided by the numbers of trees sprayed on the relevant days (derived from reliable estimates of the number of trees on particular farms) resulted in reliable figures of between 3.5 ml and 11.6 ml per tree, a small fraction of the allowable maximum of 100 to 200 ml per tree. [52] That submission assumed that the appellant's records of its spraying operation on the respondents' farms were reliable, but the trial judge accepted the respondents' challenge to the reliability of the records so far as they recorded volumes. 38 [53] The appellant's submissions did not grapple with the large body of evidence which supported that view. The appellant's records of volumes were said to have been derived from figures contemporaneously provided by the appellant's "team leaders" who, on the trial judge's findings,39 could have derived most of those figures only from the individual sprayers themselves. Yet many of the sprayers who gave evidence for the respondents (Messrs Emberg, Alifraco, Rains, Brosnan and Wilson) denied having given such estimates at the time and they also gave evidence that cast serious doubt over the reliability and accuracy of the figures in the appellant's records. [54] For example, Mr Emberg gave apparently convincing evidence that the appellant's records of the volumes of bait sprayed on the respondents' farms were neither contemporaneous nor reliable. He said in his statement tendered at trial that it was only after complaints were made that the coffee trees had been damaged that one of the appellant's employees, Mr Smithwick, started to create the records; that Mr Smithwick admitted that the appellant did not have contemporaneous records, 37 (1985) 59 ALJR 842 at 844; [1985] HCA 61 referred to with approval in many subsequent decisions, including Devries v The Australian National Railways Commission (1993) 177 CLR 472 at 479; [1993] HCA 78, and Fox v Percy (2003) 214 CLR 118 at 127 [26] - [27]; [2003] HCA 22. 38 [2008] QSC 132 at [102]. 39 [2008] QSC 132 at [98]. -- 14 of 20 -- 15 that Mr Smithwick then sought the sprayers' assistance in "re-creating" them; that Mr Emberg refused to participate in that process; and that he later saw Mr Smithwick write out such records, curiously using a variety of different coloured pens to make different entries in the records. That evidence was not challenged in cross-examination. [55] The appellant did not argue that its records justified a challenge to the trial judge's related finding that the bait was applied with excessive frequency, that is to say, more frequently than at "weekly intervals as required". The appellant’s own records suggested, for example, that trees on the Colbrans' farm were sprayed on each of 9th , 12 th , 16th , 24th , and 30 th September 1996. Whether or not the same trees on that farm were sprayed on each of those days was the subject of a dispute at trial, but for present purposes the relevant point is that the appellant's records did not provide any reliable evidence on that question. [56] In these circumstances we think it clear that the appellant's records were not proved to be worthy of such reliance as to justify overturning the trial judge's conclusion that the bait was sprayed on the respondents' coffee trees in excessive volumes and excessively frequently. [57] The appellant also advanced an alternative volume calculation which, instead of using the volume figures stated in the appellant's records, adopted estimates given by some of the sprayers that each used a total of between about 80 to 100 litres, or a total of some 360 to 600 litres of spray on each visit to each farm: on that basis the maximum volume sprayed on each tree was between 13 ml and 21 ml. That is some two or three times greater than the range derived from the appellant's records but it is still only about one-tenth of the allowable maximum range of 100 to 200 ml per tree. [58] There are a number of difficulties in the way of accepting this alternative argument. The trial judge was not bound to choose between the figures in the appellant's records (which his Honour considered unreliable) and what might be thought to be equally unreliable estimates given by some sprayers years after the event. As the trial judge accepted, even the appellant's "team leaders" were unable accurately to estimate the volumes of spray applied to individual trees.40 The trial judge was entitled to prefer the graphic descriptions given by some of the sprayers and the respondents of the manner in which the respondents' trees were sprayed and to assess the likely volumes sprayed in that manner. As we have indicated, that evidence justified the conclusion that the spraying must have involved the application of more than 100 to 200 ml of bait. [59] We do not accept the appellant's argument that the estimates upon which its alternative calculation was based found objective support in the evidence that the capacity of the tanks on the sprayers' bikes (from which they applied the spray to the trees) was 100 litres. The sprayers who gave the estimates did so with reference to that capacity. Some sprayers said, for example, that they started with 100 litre tanks about three-quarters full and they may have topped that up after arriving at the farms, thus using an estimated total of 100 litres. The example given by the appellant's senior counsel in his oral submissions was Mr Rains' evidence to the 40 [2008] QSC 132 at [98]. -- 15 of 20 -- 16 effect that about six bikes (each with a 100 litre tank) were used at each farm, and each sprayer used in total no more than the total tank capacity of 100 litres. [60] There was, however, a significant body of evidence that pointed in a different direction. There was evidence that the sprayers refilled the tanks on their bikes from drums of pre-mixed spray during the days they were spraying on the respondents' farms. For example, one of the sprayers, Mr Emberg, gave evidence that there were only a "few instances" when the sprayers did not refill their tanks whilst they were out on the farms. [61] Similarly, Mr Alifraco (whose evidence that he voiced his concerns about the volumes he was directed to spray was accepted by the trial judge41 ) said in his statement that that the tanks of each bike "may well have been emptied a number of times on one farm throughout the day". That evidence was not challenged, nor was there any challenge to his further statements during cross-examination that the sprayers often mixed their own chemicals, they re-filled the tanks from drums kept on the back of trucks, and the quantities the sprayers used were determined by the individual sprayers. He said that "a lot of times you'd refill" the bike tanks during the day. That evidence strongly suggests that reliable estimates of the volume of bait sprayed could not necessarily be derived by reference to the 100 litre capacity of the tanks on the sprayers' bikes or other sprayer's estimates of the number of times they refilled the tanks. [62] Evidence was also given of the unreliability of another figure which is critical to the estimates of volumes upon which the appellant's alternative contention depends, namely the number of sprayers operating on a particular farm at any one time. Some of the sprayers gave evidence that the appellant's records understated the number of sprayers operating on the respondents' farms on particular days. For example, Mr Wilson gave evidence that he could recall spraying the Colbrans' farm with two other employees who were not shown on the appellant's records as having sprayed on that farm. There is then the additional level of uncertainty introduced by the conflict in the evidence concerning the frequency with which the same trees were sprayed. [63] In the result, the unreliability of the figures underlying the estimates propounded for the appellant is such that the evidence upon which the appellant relies is of insufficient cogency to justify rejection of the trial judge's findings that the appellant sprayed the respondents' coffee trees excessively frequently and with volumes that exceeded the maximum volume authorised by the permit. Liability: conclusion [64] For these reasons, in our respectful opinion, the appellant fails in its challenge to the trial judge's conclusion that the degradation of the respondents' coffee plants was caused by the negligence of the appellant. Quantum of damages [65] In assessing the quantum of damages recoverable by the respondents, the trial judge proceeded on the footing that the respondents are entitled to recover by way of damages such sum as is necessary to put them in the position they would have been in but for the negligence of the appellant. In this regard, had it not been for the negligence of the appellant, the respondents would have been left in possession of 41 [2008] QSC 132 at [96]. -- 16 of 20 -- 17 coffee plants from which papaya fruit fly had been eradicated. By reason of the appellant's negligence, the respondents lost the opportunity to earn income from the sale of coffee beans harvested from those trees. The damages assessed by his Honour reflected his assessment of the value of that lost opportunity.42 [66] It is convenient here to refer to the evidence bearing upon the contest in relation to the quantification of the net loss of revenue from coffee production. That may best be done by reference to the reasons of the trial judge. His Honour said: "The plaintiffs obtained an expert opinion from Mr Delaney of Horwath, Chartered Accountants, and the defendants engaged the services of Mr Carter of PriceWaterhouse Coopers. The experts were provided with the financial records and tax returns of the various entities through which the plaintiffs’ respective businesses were undertaken. In an attempt to find some common ground for the basis of assessing damages, I directed the expert accountants to confer and to provide statements of points of agreement and areas of disagreement. They also gave concurrent oral evidence. The experts acknowledged that their opinions involved making some assumptions but they have agreed on the appropriateness of those assumptions. Their opinions have also involved the use of industry standards for production costs, modified where appropriate by such actual costs as could be relied upon. There were features in the financial documents which made them unreliable, particularly as to the treatment of retained stock. I found difficulty also in deriving any reliable view of the costs declared which would identify the true cost of production. My approach is therefore to rely mainly on industry standards. I am indebted to each expert for his efforts which has produced some agreement which has assisted in the calculations and which has also significantly reduced the areas of conflict. When considering the industry standards on cost of production on 1 kg of green bean, Mr Delaney relied particularly upon the financial analysis of Hassell [sic] and Associates. Their modelling was based on coffee production in North Queensland which accounts for some 90% of the Australian output. Mr Carter referred particularly to the report of Dr Stewart de Jong which relates to coffee production in northern New South Wales. The costs in each instance was standardised to a 20 hectare plantation so the results are comparable. The main difference relates to harvesting costs. In North Queensland mechanical harvesting has been used efficiently over a number of years because of the flat terrain. Most growers own their own harvester. In New South Wales some growing areas are on steep slopes which might add to this item of cost. Whether it does so depends on the number of passes made along the rows by the harvester and this has not been the subject of evidence. It is appropriate however to consider the ranges of costs identified in both these reports, though in my view greater weight must be given to the report directly referrable to North Queensland by reason of this 42 [2008] QSC 132 at [190] – [193], [199] – [201], [211] – [221] and [230] – [231]. -- 17 of 20 -- 18 area’s dominance in coffee production in Australia and the commonality with the plaintiffs’ location. The most significant difference between the experts concerns what cost items are to be included in any cost analysis. Mr Delaney takes the view that costs should be confined to the true recurring costs of the production cycle. Mr Carter opines that if the Court is considering an assessment over a longer period e.g. 10 years or more, then cost of the turnover of capital cost items should be included. If one confines the comparison to recurring costs Mr Delaney, using the Hassell [sic] report and making modification based on actual costs at the Maloberti property, assessed the average cost to produce green bean at $3.33 per kilogram. Mr Carter, more influenced by the de Jong reports, suggested an average cost for the same item at $4.54 per kilogram. However, when one takes account of the items of a capital nature, his estimate of costs on an 'all in' basis is within the range of $5.20-$7.28 per kilogram. Mr Carter would adopt the average as being a little under $6 per kilogram. The resolution of this difference of approach depends upon the duration of the impact the spraying had on the production. In the case of Colbran, the period is short because after trying assiduously to rehabilitate the plants, he could not justify the expense or the effort of continuing. He ceased producing after the 1998 harvest, surrendering his lease at the end of its term. There is no warrant in his case of making any allowance for the costs of the kind identified by Mr Carter. The losses have to be assessed on an individual case basis. It seems to me that when the loss is being assessed over a relatively short period, the costs of a long term capital nature should not be taken into account. Long term losses in most circumstances are more properly determined on a loss of opportunity basis which will include replacement of capital cost items. To pursue a detailed compilation of revenue and costs over a period beyond seven or eight years would give a false sense of precision, when such precision cannot in truth be achieved."43 [67] The appellant does not suggest that his Honour erred in point of principle in his approach to the assessment of damages. [68] The appellant challenges the trial judge's application of these principles to the evidence in the case in only one respect. The appellant argues that there was no admissible evidence on which the trial judge could have relied to determine the cost of production of green coffee beans by the respondents. On that basis it is said that it was not possible to calculate the net income lost by the respondents. Accordingly, so it is said, his Honour should have held that the respondents had failed to prove any loss at all.44 43 [2008] QSC 132 at [183] – [189]. 44 Cf Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23; Ray Teese Pty Ltd v Syntex Australia Limited [1998] 1 Qd R 104 at 109 – 110. -- 18 of 20 -- 19 [69] The trial judge ultimately fixed upon the figure of $3.50 as the average cost of producing a kilogram of green coffee beans for the purpose of assessing the respondents' claims. 45 The starting point by reference to which his Honour arrived at the figure of $3.50/kg was a figure of $3.33/kg suggested by the respondents' expert, Mr Delaney. It is said that there was no sufficient evidentiary basis for the use by Mr Delaney of his figure of $3.33/kg. The challenge to the trial judge's assessment of damages relates solely to this figure. [70] Mr Delaney derived his figure of $3.33/kg from a document described as the report of Hassall & Associates. It was said in this Court that the appellant objected to the use of this document as a foundation for Mr Delaney's opinion on the ground that it was inadmissible hearsay; but a perusal of the record of the trial does not support the appellant's contention in this regard. Indeed, this report was admitted into evidence as an exhibit without any objection at all by the appellant's Counsel at trial. Similarly, the report of De Jong on which Mr Carter relied was also admitted into evidence without objection. Further, the appellant's submissions at trial did not suggest that it was not open to his Honour to act on the footing that there was admissible evidence to support Mr Delaney's opinion as to the respondents' cost of production of green coffee beans. [71] There are good reasons why such a submission would not have been made at trial, and why this Court should not now entertain it. First, it was apparent that the opinions of Mr Delaney and Mr Carter as to the costs of production reflected not only the information in the reports in question but also their own knowledge derived from their years of experience in relation to coffee production. Secondly, the report of Hassall & Associates was produced under the auspices of the appellant itself; and it asserted that the figures for production costs reflected in the coffee model therein had been reviewed by Dr James Drinnan of the DPI and had been "found to be representative". If the appellant had actually submitted to the trial judge that the report of Hassall & Associates was not admissible as proof of "representative" costs of production of coffee in the industry in North Queensland, the respondents could have applied to call Dr Drinnan to establish these facts, and there can be no doubt that they would have been permitted to do so bearing in mind the absence of merit in the point which the appellant now seeks to agitate. [72] It was reasonably open to his Honour to resolve the contest at trial as to the likely costs of production by adopting the figure of $3.50 per kilogram. Once it is accepted, as it must be, that his Honour had a sufficient evidentiary basis for Mr Delaney's figure of $3.33 per kilogram as the cost of production of green beans, it was reasonably open to his Honour to prefer the opinion of Mr Delaney to that of Mr Carter. In this regard, Mr Delaney's evidence and the Hassall and Associates' report were based upon the circumstances of the industry in Northern Queensland, whereas Mr Carter's evidence was based in large part upon the experience of the industry in the different circumstances of New South Wales. Conclusion and orders [73] In our respectful opinion, there is no substance in the appellant's challenges to the decision of the trial judge. [74] In each case, the appeal should be dismissed. 45 [2008] QSC 132 at [200], [228]. -- 19 of 20 -- 20 [75] As to the issue of costs, each party should file and serve any submissions it wishes to make on the question of costs on or before 4.00 pm 6 February 2009 and otherwise in accordance with Practice Direction No 1 of 2005, para 37A. -- 20 of 20 --