Case: Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] FCA 206 ; (1992) 35 FCR 535
Outcome: cited
So, for example, as observed by Sheppard J in Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] FCA 206 ; (1992) 35 FCR 535 at 541: Obviously the evidence needs to be looked at as a whole and put in context. There may be cases in which it will be found that later statements, whether written or oral, replace those made earlier or affect or modify them in some way... 156 If the respondents provided Mr Tracy with the Block Summary data during negotiations for purchase of the relevant properties, then even if I am wrong in my previous findings concerning the representations with respect to historical production in the 1 June 2004 Valuation Report, I consider that the information in the Block Summary data effectively replaced those representations, with the result that Mr Tracy was in full possession of accurate information prior to entering the contract to purchase the relevant properties. 157 A crucial issue in the proceedings, however, was whether the first respondent provided Mr Tracy with the Block Summary data on 3 December 2004 as the respondents claimed. Mr Tracy claimed that he did not receive it from the first respondent or Mr Strahley at any time (Tracy statement in reply sworn 26 September 2006 at [4(e), (f)]). 382 In any event, even if I am wrong in holding that no representation was made by the first respondent through Mr Strahley on 3 December 2004 that the net realisable value of the lemon crop would be $1.5 million, I consider that information provided to Mr Tracy after that meeting qualified any such representation to the extent that the initially misleading effect of the representation did not persist (cf Lezam Pty Ltd [1992] FCA 206 ; 35 FCR 535 at 541). In particular I take into account the following evidence: &#8226; On or about 6 December 2004 Mr Tracy had sought "parent company directors' guarantee" on the net realisable value of the current lemon crop for $1.5 million, however this request was refused. Mr Tracy's evidence was that the first respondent was not prepared to guarantee the net income for the lemon crop (TS 415 ll 36-37). This refusal suggests that the first respondent could not undertake that the net realisable value of the lemon crop was $1.5 million. &#8226; The purchase agreements were negotiated on the basis that the risk was with the purchaser and that the picking of the lemon crop was subject to weather. Contractual clauses were included to that effect. &#8226; Mr Tracy confirmed at the hearing that he had told Mr Breed before settlement of the purchase of the properties that he did not expect to obtain $1.5 million for the lemon crop, but had told Mr Breed that he was expecting to receive between $750,000 and $850,000 for the lemon crop (TS 264-265). &#8226; Not one of the budgets prepared by the first respondent and provided to Mr Tracy forecast such a return on the lemon crop. &#8226; Following the meeting of 3 December 2004 the first respondent provided Mr Tracy with information including budgetary forecasts for revenue, prices, yield and packout by carton for lemons. All of this documentation indicated that, in general, an expected price for lemons was $30 per carton. This material, provided by the first respondent and Mr Strahley within a short time of that meeting, included: o the 2005 Sunstate Budget provided to Mr Tracy on 10 December 2004, which forecast the net profit for all of the fruit crops would be $755,760, and recorded the budgeted price per carton for lemons at $30; o considerable additional documentation including: &#9642; an Australian Daily Fruit Report (exhibit A12) (emailed by Mr Strahley to Mr Tracy on 10 December 2004); &#9642; a schedule with historical prices and cartons together with the 2004/2005 estimates which recorded the budgeted price for lemons for this period at $22 per carton (exhibit A21) (emailed by Mr Strahley to Mr Tracy on 21 December 2004); &#9642; a lemon pricing schedule for the 2005 season including estimated lemon prices for January-March 2005 (exhibit A37); &#9642; an updated pricing schedule (exhibit A38) provided to Mr Tracy on 7 January 2005 recording the average price for lemons at $27.70 per carton with comments that the average price of lemons was $30 per carton; and &#9642; re-forecasted estimates of yields by number of bins and re-forecast estimates of number of cartons of lemons provided by the first respondent in a Yield Summary, Carton Yield Summary and Valuation Yield Summary. &#8226; The valuation report of Mr Anthony Bailey, prepared at Mr Tracy's request and dated 11 January 2005, estimated the net realisable value of the lemon and lime crop at the orchards as only $407,610. The report states that this was calculated on the basis of: o estimates of volume provided by Mr Strahley, which appeared to be reasonable at that stage but could vary at the time of harvest due to adverse seasonal conditions; o fluctuating prices depending on the time of harvest and supply, and demand pressures existing at the time of marketing; o a 2005 crop estimate of 2,160 cartons of limes at $10 per carton and 43,722 cartons of lemons at $30 per carton, giving a gross of $1,333,263; o cost of picking, transport to Packing Shed, packing and transport to market being $12.91 per carton, and totalling $592,337; o a 25% profit and risk; o the resultant equation being: Total crop income $1,333,263 Less 25% profit and risk $333,316 $999,947 Less picking, packing and transport $592,337 $407,610 383 In relation to Mr Bailey's report the applicants submitted it "was infected with the false crop production figures provided to Mr Neubecker by Mr Breed" and "cannot be relied upon by the respondents in equity to negative reliance". Further, the applicants' refer to the fact that the 2005 valuation figure of $407,610 was after deduction of a profit and risk factor of 25%. However in my view: &#8226; There is no evidence that false crop production figures, including as to packout rates, were provided by the first respondent to Mr Neubecker, which could in turn taint this estimation of crop and realisable value. I have already addressed issues relating to the 1 June 2004 Valuation Report. &#8226; Mr Bailey's evidence at the hearing was that he asked Mr Breed for the number of cartons ex-farm gate and had not discussed packout rates with Mr Breed (TS 825 ll 21-22). In relation to this information: o there is no evidence that material in Mr Bailey's valuation report as to the value of the 2005 crop in s 9 of the valuation report was tainted by false figures provided by Mr Breed or any other person associated with the first respondent; o the report, produced within a short time frame at Mr Tracy's request, contained a clear statement that the predicted net realisable value of the lemon crop was considerably less than $1.5 million, and indeed indicated that any belief of Mr Tracy that the lemon crop would receive anything near $1.5 million did not take account of costs in getting the fruit to market, and risk. 384 In these circumstances the applicants could not claim to be misled by any representation by Mr Strahley on 3 December 2004 that the net realisable value of the lemon crop would be $1.5 million.