NZLII Home | Databases | WorldLII | Search | Feedback

Court of Appeal of New Zealand
You are here:  NZLII >> Databases >> Court of Appeal of New Zealand >> 2018 >> [2018] NZCA 28

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

AP & AW Hughes Limited v Lyall [2018] NZCA 28 (1 March 2018)

Last Updated: 9 March 2018

IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 Appellant
AND
 First Respondent
AND
 Second Respondent
Hearing:
9 November 2017
Court:
Gilbert, Lang and Ellis JJ
Counsel:
R M Reeve and D R Tobin for Appellant J C D Guest for First Respondent
Judgment:


JUDGMENT OF THE COURT

  1. The appeal is dismissed.
  2. The appellant must pay the first respondent costs for a standard appeal on a band A basis together and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Ellis J)

[1] In the High Court the appellant[1] AP & AW Hughes Ltd (the Hughes) sued the first respondent, Mr Lyall, for breach of contract and/or negligence. The claim related to the February 2014 harvesting by Mr Lyall of 31.5 hectares of pea and barley crop sown by the Hughes with the intention that it be made into silage to provide the Hughes’ lactating cows with winter feed.
[2] There was no dispute that the silage subsequently produced was substandard. The cows refused to eat it. Testing confirmed its poor quality. The dry matter (DM) content was too high, the metabolisable energy (ME) content was too low, and it was significantly contaminated with soil.
[3] The Hughes therefore had to make other arrangements to feed their stock over winter. They said that Mr Lyall should bear the cost of the steps they took.
[4] In the High Court Dunningham J disagreed.[2] She found that the poor quality of the silage was largely due to the Hughes leaving it too late to engage Mr Lyall to do the harvesting. This meant that by the time of harvesting, the crop had become over-mature and lignate and (she said) it was those features that led to the decrease in quality, the protein levels, and the palatability of the resulting silage.[3]
[5] As well, the Judge held that the toughness of the stalks had caused Mr Lyall’s harvesting machine (called a “whole crop front cutting unit”) constantly to jam and, eventually, to break. Mr Lyall immediately hired a substitute unit, but quickly became concerned that that would break too.
[6] There was no dispute that using a whole crop front cutting unit was the preferred harvesting method (the whole crop method).[4] But because of the mechanical difficulties Mr Lyall was experiencing, it was necessary to come up with a different method (“mow, rake, lift”) to which (the Judge found) the Hughes had agreed.[5] She held that although the raking caused a large quantity of soil to get into the harvested crop, and therefore the silage, that did not mean that it was an unreasonable method to adopt in the circumstances or that the raking had been done carelessly. The mowing, which was done by the Hughes, was also causative of the soil contamination although in a far more limited way. Moreover, the Judge accepted expert evidence that the presence of soil did not render the silage inedible or wholly unfit for purpose.
[7] The Hughes now appeal Dunningham J’s decision. They challenge the Judge’s key factual findings and the conclusions she drew from them.
[8] The second respondent Mr Bennett was joined to the proceedings by
Mr Lyall. He is alleged to have been Mr Lyall’s sub-contractor who, in turn, employed Mr Andrews who undertook the raking which (indisputably) contributed to the soil contamination. Accordingly, in the event that Mr Lyall was found liable, there would be an issue about the extent to which that liability might be shared by Mr Bennett. Although Mr Andrews gave evidence in the High Court, Mr Bennett took no steps and nor did he participate in this appeal. He relies, it seems, on Mr Lyall’s defence of the claim.

Approach on appeal

[9] In Green v Green this Court summarised the current approach to appeals from findings of fact as follows:[6]

[28] As the Supreme Court held in Austin Nichols, those exercising general rights of appeal are entitled to judgment in accordance with the independent opinion of the appellate court. That is so even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the court below, the appeal must be allowed even if it was a conclusion on which reasonable minds might differ.

[29] Austin Nichols reaffirmed the appellate court's obligation to form its own independent judgment on the merits of an appeal by way of rehearing. But two fundamentals remain constant.

[30] First, it is still axiomatic that the appellant bears the onus of persuading the appellate court to reach a different conclusion. Of necessity, in discharging that onus the appellant must identify the respects in which the judgment under appeal is said to be in error.

[31] Second, it is also axiomatic that in determining whether the judgment was wrong the appellate court will take into account any particular advantages enjoyed by the trial court. The advantages possessed by a trial judge in determining questions of fact are obvious, especially where assessments of credibility and reliability are involved. The trial judge gets to see and hear the witnesses, and is able to evaluate the strength of the evidence as it progressively unfolds within the context of the trial as a whole. As this Court pointed out in Rae v International Insurance Brokers (Nelson Marlborough) Ltd:

As the evidence unfolds the trial Judge gains an impression from the evidence which is not necessarily or usually apparent from the cold typeface of the transcript of that evidence on appeal. The Judge forms a perception of the facts in issue from which he or she adds or subtracts further facts as witnesses give their evidence, and so obtains as complete a picture as is possible of the events in issue. The Judge perceives first-hand the probabilities inherent in the circumstances traversed in the evidence and can obtain a superior impression of those probabilities as a result.

[10] That is the approach we adopt here.

Issues on appeal

[11] Shortly before the hearing of the appeal counsel filed a joint memorandum recording that the parties were agreed as to the issues requiring determination in this appeal. They can be paraphrased (and reordered) as follows:
[12] These issues largely form the structure of the latter part of this judgment.

Preliminary legal matters

[13] Before turning to consider those issues, however, it is useful to say something about the legal relationship(s) between the Hughes and Mr Lyall.

The contract between the Hughes and Mr Lyall

[14] There was no written contract between the Hughes and Mr Lyall. Mr Lyall had been engaged by them before. The Hughes pleaded that the oral contract entered into involved an implicit agreement by Mr Lyall to:
[15] For his part, Mr Lyall accepts that it was agreed that, in harvesting and processing the peas and barley, he would use the care and skill expected of a reasonably competent silage contractor. However, he denied any more extensive contractual obligation, saying it was not his task to determine the correct time of harvest or to ensure that the resulting silage would have a particular nutritional value. Dunningham J accepted that position as correct and so do we.

The scope of the duty owed by Mr Lyall

[16] Similarly, the Hughes alleged that Mr Lyall owed them a duty of care to:
[17] Again, however, the Judge held that the duty did not extend this far. She said:[8]

Where there are concurrent duties claimed both in contract and tort, they will, in most cases, be co-extensive. In the absence of a written contract, or of evidence as to particular matters being agreed orally, there is nothing in this case to suggest that the duty of care owed by the defendant to the plaintiff was anything other than co-extensive with his implied contractual obligation. In other words Mr Lyall was required to do no more than use the care and skill expected of a reasonably competent silage contractor in the circumstances presented to him.

[18] And again, we endorse that approach.

Discussion

[19] We now turn to consider the identified factual issues in turn.

Was the crop over-mature at the point of harvest?

[20] The alleged over-maturity of the crop is a fundamental causation issue in this case. It has two key aspects. The first is essentially that over-maturity both lowers the energy content of the crop (rendering it unsuitable feed for lactating cattle) and renders it less digestible. The second is that Mr Lyall’s position was that it was the over-maturity and consequent lignification (toughness and brittleness) of the crop which made it unable to be harvested by the preferred (whole crop front cutting) method. In turn, it was the need to adopt another means of harvesting that led to the adoption of the “mow, rake, lift” method which resulted in the silage being contaminated with soil.[9]
[21] On either analysis, therefore, it is over-maturity that is potentially the fundamental cause of the poor quality silage and the Hughes’ losses. The focus of this aspect of the appeal was that the Judge’s conclusion of over-maturity was wrong because she disregarded the evidence about the date of sowing and the various opinions as to the subsequent time it would take for the crop to reach maturity.
[22] Dunningham J began her analysis by noting that the precise date of sowing was not known and so the number of days between planting and harvest could not be calculated with accuracy.[10] She noted that the experts gave a wide range of dates between sowing and ideal harvest time, ranging from 70–90 days, to 110–125 days. It was for these reasons that she said:

[54] In my view, little assistance is to be gained from reference to average sowing to harvest periods when these were not agreed, and when the date of sowing was not known with certainty. Instead I placed weight on the evidence of physical inspections of the crop, both shortly before and at the time of harvest, and of the silage produced from the crop.

[23] Having identified her preferred approach Dunningham J turned to the evidence about the state of the crop at the time of harvest. In particular she noted that Mr Moate, who oversaw the planting and growth of the crop, gave evidence that it was most likely on 7 February 2014 that he assessed the barley heads as being at 35 per cent DM and recommended that it be harvested “the following week”, namely the week beginning Monday, 10 February.[11] But the crop was not harvested in that week. It was not disputed that Mr Tony Hughes did not telephone Mr Lyall until Thursday, 20 February 2014 with a view to him commencing the harvest on Monday 24 February. The dates of actual harvest — between 24 and 27 February — were therefore outside Mr Moate’s recommended time-frame.[12]
[24] Although Mr Tony Hughes gave evidence that Mr Moate did not advise him until 20 February that the crop should be harvested within a week or ten days, the Judge preferred the evidence of Mr Moate. There is no basis upon which we could go behind that credibility finding. It is relevant in that regard that Mr Moate’s evidence derived further support from witnesses who observed the crop at the point of harvest. Thus:
[25] As well as the evidence that the crop was seen to be over-mature, the Judge also referred to the expert evidence that it was likely to be over-mature.[13] In particular, the results of tests done on the silage also provided support for the proposition that the crop was over-mature when harvested. They showed a DM content ranging from 34.9 per cent to 54.5 per cent over the six samples, but averaging 46.4 per cent, which all relevant witnesses acknowledged was too high.[14]
[26] By contrast, there were no witnesses with relevant expertise who said that the crop was in good condition at the point of harvest.
[27] Accordingly, even if we were to accept the Hughes’ contention that Dunningham J’s view that the likely planting date was “early November” and her reliance on that finding as supporting over-maturity were wrong, such an error would not undermine her overall finding on the point. We consider that there was ample evidence to support her conclusion that, on the balance of probabilities, the crop was over-mature.
[28] There was no real challenge to that factual finding and we do not address it further.
[29] In our view, therefore, no relevant error has been identified. It was for good reason that the Judge preferred to place weight on what witnesses observed rather than theoretical maturity periods running from a date of sowing that was disputed. We consider that her approach to the evidence was wholly unexceptional and cannot be impugned on appeal.

Did Mr Lyall discuss the “mow, rake, lift” method of harvest with the Hughes and did they authorised its use?

[30] Although aspects of the narrative relating to this issue were disputed, it is clear that at some point on Monday 24 February, Mr Lyall’s whole crop head broke down. We accept for present purposes Mr Lyall’s telephone records, which suggest this was mid-afternoon and that he was required to travel from Clutha Downs (east of Balclutha) to Allanton (south of Dunedin) to obtain a replacement.
[31] Mr Lyall’s evidence was that he experienced the same difficulties with the replacement machine and, fearing that it too would break, he needed to come up with a “work-around”. This work around involved mowing the crop followed by the use of a mechanical rake to rake the mown crop into rows. The combined rows were then lifted by Mr Lyall with his grass head so that it could be chopped and delivered into a truck.[15] It is, of course, this raking that was the principal cause of the soil contamination.
[32] Mr Lyall’s evidence was that he telephoned the Hughes who agreed to this “work around” on the Monday. While Tony Hughes acknowledged that Mr Lyall had called him and said that he was having trouble getting the crop to travel through the auger because of the pea stalks, and to say that the borrowed front cutter was not going to work, he denied the existence of any agreement to the work around. Rather, he said that he was simply told to mow the crop, and knew nothing about the raking arrangements.
[33] Dunningham J found that it was improbable that the Hughes simply complied with a request to begin mowing the crop without having some wider discussion about the wider alternative harvesting proposal. She was fortified in her view because:
[34] Again, we are unable to discern any error in the Judge’s reasoning or analysis. But in any event, it seems to us to be largely irrelevant whether or not the Hughes expressly agreed to the “mow, rake, lift” proposal. That is because on their own pleadings they contracted with Mr Lyall for his harvesting knowledge and experience expertise. They did not plead that they contracted with him specifically to use a front cutter and thus it is difficult to see why it was necessary to obtain their agreement before adopting a different harvesting methodology. They were in no position to argue with what he recommended, under conditions of some urgency, and nor did they say that they would have done so. The fact that they called evidence at trial which arguably suggested that different approaches might have been preferable (discussed further below) does not alter the fact that they themselves had no expertise. And in any event their subsequent participation in the mowing operation seems to be clear evidence of acquiescence on their parts.
[35] The principal, relevant, issue about the “mow, rake, lift” methodology is therefore the one which follows. The question is whether it was one which a reasonable and competent person in Mr Lyall’s position could have adopted.

Was the “mow, rake, lift” method was appropriate/reasonable in the circumstances?

[36] The Judge dealt with this issue quite briefly. She said:[16]

I heard several witnesses give evidence that, while not the preferred method, the mow, rake and chop option is used on occasions to harvest whole crop. These included two of the contractors who appeared as witnesses, Mr Conijn and Mr Mills, but more importantly, this was acknowledged by Mr Millar, the plaintiff’s expert contracting [sic] witness. I therefore do not consider the assertion that it was an “unacceptable” method of harvest was sustained on the evidence. While not the preferred method, I am satisfied that a reasonably competent silage contractor would propose that method and would use it in the circumstances faced by the parties in this case, where there was a need to harvest the silage in a timely way and little prospect of getting an alternative contractor at short notice. ...

[37] The difficulty for the Hughes here is that, despite the fact that the experts largely agreed that, in theory, the whole crop method would be best practice, there was simply nothing in the evidence to suggest that option remained available to
Mr Hughes as a matter of fact. There was (for example) no evidence that there were other contractors with whole crop head machines (or windrowers, as one witness suggested) who were available to help at short notice. And as the Judge noted, the Hughes’ own cropping expert accepted in cross-examination that while the direct cut method “would be the preferred way”, he himself had harvested in the “workaround” way adopted by Mr Lyall and he would have done the same as Mr Lyall in the circumstances.
[38] In light of the practical exigencies with which he was faced, Mr Tobin’s submission that Mr Lyall had a duty “of care and competence” to advise the Hughes of their options “including engaging an alternative contractor, rather than applying an ad hoc, experimental, ‘work-around’ method of harvest” has an air of unreality about it. No error in the judge’s understanding of or approach to the evidence has been identified. We agree with her conclusions.

Was over-maturity the root cause of the poor silage, rather than Mr Lyall’s actions?

[39] It follows inexorably from our conclusions above that we agree with the Judge that crop over-maturity was the principal cause of all that followed. More particularly, it was the over-maturity that caused:
[40] There were, however, two decisions made by Mr Lyall which were criticised as being independent or intervening causes of the soil contamination in their own right. The first was the decision to rake, rather than simply mow and lift. The second was his suggested failure to make any efforts to obtain a windrower, as an alternative means of harvesting.
[41] In relation to the decision to rake, the high point of the Hughes’ case came in the evidence given by Mr Watson, the director of a company specialising in making baleage and silage. In his evidence in chief, Mr Watson opined that the Hughes’ crop was “not harvested in an approved method”. And when he was questioned about the harvesting alternatives that were reasonably open to Mr Lyall in the circumstances in which he found himself Mr Watson said:

I would have very seriously considered putting the crop on the ground with the mower and picking up straight out of the mower rows. At no point would I ever consider putting the rake into the paddock.

[42] But as Mr Watson also made clear in his evidence he had not used the word “approved” in any formal sense. Rather, he meant that he would not, himself, rake such a crop. And importantly, it became clear under questioning that the reason for his antipathy to raking was based on difficulties he himself had experienced when using that method in the past; it was not suggested either by or to him that his doing so had been negligent. When that fact is taken together with the evidence given by a number of other witnesses that the “mow, rake, lift” was a harvesting method quite commonly used in the industry, the Judge’s rejection of the proposition that
Mr Lyall’s adoption of that method was in breach of a duty he owed the Hughes was, in our view, amply supported.
[43] As far as the possibility of using a windrower is concerned there are two points. The first is that, even if it were established that a windrower might have been better, that does not mean that Mr Lyall’s decision not to go down that route was not one that a reasonable or competent person might make. The second is that the only specific evidence on the point was to the effect that a Mr Bottings had a windrower that might have been available at short notice. That evidence was given short shrift by Mr Lyall. He said that he not know whether or not the Bottings had a windrower but that if they had, they (like a number of others) would not have been willing to work for the Hughes. Even putting to one side the first and more fundamental point, that was evidence that it was entirely open to Dunningham J to accept.
[44] Lastly, we record that the Hughes also contended that the “work-around” harvesting method was the cause of part of the mown crop being left on the ground overnight on two separate nights (Tuesday and Wednesday). On the first occasion crops were left on steep slopes, on which the trucks had been having difficulty.[17] On the second, crops were left overnight because, late in the evening, Mr Lyall’s machine had picked up a metal object and could not continue. These incidents were alleged to have led to the crops wilting and a decrease in both moisture levels and plant sugars, rendering them unsuitable for silage.
[45] All we intend to say about that is that the Judge did not accept that those two incidents had any material bearing on the quality of the silage. We do not intend to repeat her reasons here, which appear to us to be entirely sound.[18] The point is, in any event, effectively moot in light of our agreement with the Judge that no issue can fairly be taken with Mr Lyall’s decision to adopt the “mow, rake, lift” methodology.

Was the Hughes’ mowing, in addition to the Mr Lyall’s raking, partly responsible for the soil contamination?

[46] In light of the conclusions we have already reached this question is essentially moot. Accordingly, we merely record that, again, there was an ample evidentiary basis for Dunningham J to conclude as she did. Put briefly, there was evidence which pointed to the ground being disturbed by the mowing process. This included evidence of:
[47] Conversely, there was evidence that pointed against the raking being responsible (or largely responsible) for the soil contamination. Thus:
[48] In any event, the Judge held only that mowing was responsible in a relatively small way for the soil inclusion. Thus, she substantially agreed with the Hughes that the raking was the major cause of soil inclusion.[19] There is no reason to disturb that finding.

Are the Hughes entitled to damages representing the value of the lost silage or replacement costs?

[49] Given our answers to the foregoing questions there is no need to address this issue.

Result

[50] The appeal is dismissed.
[51] The appellant must pay the first respondent costs for a standard appeal on a band A basis and usual disbursements.


[1] AP & AW Hughes Limited is a dairy farming company. Tony and Wayne Hughes are its directors and shareholders.

[2] AP & AW Hughes Ltd v Lyall [2017] NZHC 1109 [High Court judgment].

[3] At [26].

[4] This method involves harvesting the crop and processing it for silage in one pass. A whole crop front cutting unit does this by cutting the crop, chopping it into short lengths and then blowing the processed crop out into trucks for transporting to the silage pit.

[5] High Court judgment, above n 2, at [71].

[6] Green v Green [2016] NZCA 486, [2017] 2 NZLR 321, at [28]–[31] (footnotes omitted).

[7] As the Judge noted, however, the claim in negligence (unlike the claim in contract) did not allege that Mr Lyall’s duty extended to achieving a particular (silage quality) result.

[8] High Court judgment, above n 2, at [47] (footnote omitted).

[9] Subject of course to any contributory negligence in the execution of the “mow rake lift” harvesting method.

[10] High Court judgment, above n 2, at [53].

[11] Mr Moate was unsure whether he had inspected the crop on 7 or 9 February but thought that the earlier date more likely. Under cross-examination he said he told the Hughes at that time that the crop was “about ready” and that it should be harvested within 15 days.

[12] All witnesses who commented on the issue agreed that there was a narrow window of harvesting opportunity, ranging from between 5–10 days to 7–14 days.

[13] High Court judgment, above n 2, at [50]–[63].

[14] The witnesses nonetheless differed on whether this reflected the fact the crop was over-mature at harvest or whether it could have been caused by the crop drying out between cutting and being processed for silage.

[15] Because Mr Lyall’s rake was out of commission, Mark Bennett was engaged to do the raking.

[16] High Court judgment, above n 2, at [73].

[17] These crops were subsequently made into baleage rather than silage.

[18] High Court judgment, above n 2, [97] and [99].

[19] High Court judgment, above n 2, at [85].

NZLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.nzlii.org/nz/cases/NZCA/2018/28.html