The Supreme Court
Supreme Court No: 45/2011
O’Donnell J.
MacMenamin J.
O’Malley J.
John Hanrahan
Plaintiff/Respondent
- and -
The Minister for Agriculture, Fisheries and Food
Defendant/Appellant
Judgment of O’Donnell J. delivered on 18th day of October 2017.
1 These proceedings concern the consequence of a seizure of cattle by the defendant (who for ease of reference I will refer to the “Department of Agriculture” or the “Department”) from the plaintiff (“Mr. Hanrahan”) which was carried out over a two day period on the 15th and 16th March, 2006. However an agreement was made less than a month later on the 11th of April of the same year for the return of so many of the cattle as would bring the total on Mr. Hanrahan’s farm up to a maximum of 328. This was not done in circumstances which were the subject of substantial dispute at the hearing of the action. Instead 223 cattle were sold. After a hearing on liability which occupied nine days, the High Court (McMahon J.) delivered judgment holding that the Department was in breach of contract in failing to return the 223 cattle to Mr. Hanrahan. ([2009] IEHC 304). There is no appeal against that finding. The assessment of damages occupied another seven days before the same judge, who was of course, fully familiar with the events. The High Court judge delivered judgment on 26th November, 2010, ([2010] IEHC 442) and assessed damages at €304,320 together with interest from the date of judgment. Against that judgment both parties have appealed. The Department contends that the trial judge erred in two significant respects, and Mr. Hanrahan cross-appeals, contending for perhaps as many as 16 material errors in the judgment.
2 It is easy to be wise in hindsight, and it is important to say that even at this remove, it is apparent that this is a case which presented more than usual difficulties. Mr. Hanrahan for his part is no stranger to court proceedings having been the plaintiff in the celebrated case of Hanrahan v. Merck Sharp and Dohme (Ireland) Ltd. [1988] ILRM 629, but he has also been a familiar figure in these courts in recent times, often acting for himself, advancing his contentions passionately but nearly always it should be said politely and respectfully.
3 It is also the case that his method of conducting his forms of business during the relevant period was somewhat unorthodox. Two examples are perhaps sufficient. It appears that the assessment of damages was conducted on the basis that there were no relevant books, records or even tax returns establishing the profitability or otherwise of the farm during the relevant period. This obviously poses significant difficulties for proceedings designed to assess the damages suffered in respect of a breach of contract. In the event, it emerged only at the end of the proceedings that there had been a complicated and undisclosed arrangement between Mr. Hanrahan and a brother-in-law in England, to fund the operation of his farm in a sum in excess of €1 million. It is also clear that there was a degree of distrust and misunderstanding between the parties, and frustration and skepticism on the part of the Department with Mr. Hanrahan. As often happens, parties may become entrenched to the point where the logic of pursuing a claim or its defence becomes secondary, and it would not be surprising if this occurred in this case. Making allowance for all these matters, it must be observed that a seven day trial on an assessment of damages runs the risk of incurring costs that may outweigh the damages in issue. This is no criticism of the trial judge who was obliged to permit the parties to advance the respective cases they wished to make however unrealistic, and who in fact, addressed the case with commendable sympathy and skill. In due course, this Court required two days to determine whether those damages were properly assessed. It is difficult to believe that justice could not have been done more cheaply and speedily if a more focused and realistic approach had been taken.
4 In considering this matter the Court also cannot ignore the fact that both parties presented expert evidence as to the calculation of damage, which diverged quite dramatically. On behalf of the plaintiff, it was maintained that he had suffered losses in excess of € 834,638 before interest, while the expert retained by the defendant estimated the losses at € 1,979, and in effect virtually nil. Experts are permitted to give evidence of their opinion, while lay people are not. This is because experts are understood to have professional expertise, and to owe an obligation to the Court to give their own expert opinion to the Court. I do not wish to criticize the individuals who gave evidence in this case, since this was a difficult case and in any event the “high ball – low ball” approach which occurred here is only an example of a more widespread phenomenon. However, it is surely not coincidental that it was the independent expert on behalf of the plaintiff whose opinion was that the damages were extremely substantial, and the expert on behalf of the defendant who considered that in effect there was no loss at all. I addressed this issue in my judgment in Lett &Co v Wexford Borough Council [2012] I.R. 198. Parties, and witnesses, should appreciate that an approach which presents unrealistically high claims or low responses may well be counterproductive. If, for example, a court correctly rejects the method of calculation of loss a plaintiff will not be in a strong position to challenge the Court’s own calculation and may receive less than a more reasonable approach may have yielded The time and cost involved in the assessment of damages could be reduced, sometimes significantly, by a more realistic approach to the dispute by the experts involved, and if necessary, a more robust approach by courts to the evidence. The acceptance of any expert evidence is dependent upon the reputation of the witness. An expert who merely advances a party’s case rather than his or her own independent opinion may, and perhaps should, be criticised, sometimes severely.
5 It is worth perhaps standing back for a moment and recognising that what was involved here was the assessment of damages to a farmer by reason of being deprived of 223 cattle as of April, 2006. Those damages were to be assessed by the High Court on the basis that the contract had been performed. Therefore the Court was asked to determined how much it required to put Mr. Hanrahan in the position he would have been if the cattle had been returned in April, 2006. Prima facie that might involve the value of the cattle (or the cost of replacement cattle if different) together with any additional loss suffered between the breach of contract by the failure to return the cattle, and the point at which it is estimated the plaintiff ought to have been able to purchase and put in place an adequate replacement herd. There are clearly a number of possible qualifications and variables, but the principal assessment is not unduly complex. I accept that additional difficulties were created because the assessment had to proceed on the basis of hypothesis, since there was little independently verifiable information forthcoming as to the manner in which Mr. Hanrahan had managed his farm; a difficulty which is compounded by the fact that the Department maintained that his practices were unusual, uncommercial in some respects, and not successful. But Ireland is an agricultural country, and the profitability of a general livestock dairying business during the relevant period, is something which ought to have been well known, particularly to the Department of State with responsibility for agriculture. Furthermore, many financial advisors will of necessity have available to them information as to the profitability of broadly comparable farm businesses. In other words, it ought to have been possible to reach some reasonable degree of common ground as to what an average farm would have lost during the relevant time, and the possible variations in that calculation, and then perhaps to debate any question as to the extent to which there should be subtraction from or addition to the basic amount because of practices and matters peculiar to the Hanrahan farm.
6 One approach which the Court might usefully take is to consider what the respective claims made mean for the business being conducted. In this respect, if the Department’s expert was correct, then it was in effect being contended that the Department did Mr. Hanrahan a favour when it breached its contract to return the cattle, since it was being contended that the business would not have been profitable, and indeed the cattle would have lost nearly all value over the period. Conversely, if Mr. Hanrahan’s claim was correct, then the years between 2006 and 2010 were a bonanza for the average farmer. It is hardly surprising therefore that in the event the trial judge accepted neither approach, and assessed damages at a figure somewhere between the two. This emphasizes the strong desirability of a realistic approach by respective experts. This is something which is ultimately in the interests of not just of the courts system, but of the parties. If the process of adjudication, particularly in respect of damages, involves ambitious claims being met by an equally extreme response, the parties can hardly complain if a judge is forced to seek some apparently sensible resolution which may, because it is based on very limited information, either underestimate or overestimate the true loss. It will also be difficult in such circumstances to persuade an appellate court to interfere unless there are clear and glaring errors. Nevertheless, as already observed, both parties challenged the award in this case on a number of grounds.
The Department’s Appeal
7 The Department advanced two broad arguments. First, it was said that the award in the High Court involved a double recovery. Second, the Department challenged the award of €25,000 for damages for distress. The bulk of the argument related to the first issue.
8 The trial judge had awarded the plaintiff the sum of €141,320 in respect of the value of the animals and a further €145,000 for loss of profits. This latter figure was calculated as follows: the judge took a figure of €50,000 per annum as a loss of profit figure derived from a Teagasc report in relation to which there was a measure of broad agreement. Four and a half years was the agreed period from the breach of contract to the judgment, and that would therefore amount to a loss of profit of €225,000. The trial judge also accepted however that he should allow a further year’s loss of profits before it could be considered that the farm would be back at the point at which it would have been if there had been no breach of contract. This gave a total award for loss of profits of €275,000. From this he deducted a figure of €110,000 to represent the cost of rearing heifers in the years 2006/2007 and 2007/2008 after which he considered the heifers would have gone into the milking herd. He deducted a further €20,000 in respect of labour costs which he considered the plaintiff could have saved. This reduced the total award under this heading to €145,000. While all of these matters were the subject of considerable controversy in the High Court, the defendant now does not question the calculation of either of the figures of €141,320 as for the value of the cattle or €145,000 for loss of profits. However, the central argument made by the Department is that however the figures are calculated, the plaintiff as a matter of law, and also as a matter of fact to be determined from the uncontested evidence, cannot maintain a claim for both loss of profits and loss of capital value.
9 The defendant’s argument mixes legal principle and extracts from the evidence. It is said that if an asset generates profit, then if a loss of the asset is to be calculated, that it is appropriate to award either the capital value or the loss of profits which would have been earned. So far as the evidence is concerned, it was argued that the calculation in this case was carried out on the basis of the so called Teagasc figures. Those figures were not directed towards assessing loss of earnings, but rather were directed to the profitability of farms in the relevant years. It was argued that the relevant profit figure included an amount in respect of the cost of the ongoing replacement of the herd, so that an award of loss of profits based on the Teagasc figures included an amount which would be used for replacement, or as counsel put it in argument, not just the purchase where relevant but also the cost of feeding and rearing replacement calves. A key passage in this regard is the evidence of the accountant, called on behalf of the defendant:
“Q. I have been asking you about those two bases and the judge has been hearing about those two bases. Are they alternatives or is it permissible, from your perspective in calculating the loss to both include the value of the animals in terms of their value at the time they should have been returned and to add into that the income stream from those animals over the following five or seven years?
A. If you look at the Teagasc model figures they include for stock replacement in them. I don’t think they can go together. I think it has to be either one or the other. Because in doing the economic loss model, the figures allow for the building up of the herd in the background, because the replacement calf is automatically in the price with the milk in the way Teagasc compile the figures.
Q. In other words, if you take the Teagasc estimation of the net profit per litre for whatever year it is, am I correct in saying there is built into that the need, over a four-year cycle perhaps, to have replaced that animal with another animal?
A. Not only is that built into it, the value of the calf is built into it as well.
Q. So it’s one or the other?
A. It’s one or the other yes.”
In this regard the Department also relies strongly on the fact that the witness was not cross-examined on this evidence, and argues therefore that it must be taken as uncontradicted.
10 Counsel also relied on the principle against double recovery. This is set out for example in the Supreme Court decision in Waterford Harbour Commissioners v. British Rail Board (Unreported, Supreme Court, 18th February, 1981). In that case, the British Rail Board had been held to have breached a contract to carry out ferry services from Waterford Harbour. To service the new ferry business it would have been necessary to build a new berth. The majority of the Supreme Court per Henchy J., held, that Waterford Harbour Commissioners were not entitled to recover both the cost of building of the new berth, and the loss of profits.
11 In oral argument, counsel also referred to a vivid example with some resonances with this case, contained in the judgment of Lord Evershed M.R in Cullinane v. British Rema Manufacturing Co. Ltd. [1954] 1 Q.B. 292 a case relied on in the judgment in the Waterford case At pages 303-304, Lord Evershed said:
“During the course of the argument many analogies were taken, and I find some assistance from the simple agricultural analogy of the cow. If, for example, A sells to B a heifer for £100, and warrants that for the next five lactations she will produce milk at the rate of four gallons a day, but it is discovered that the cow’s performance is not at the rate of four-gallons-a-day, but it only one–gallon-a-day, and if a one gallon a day cow is worth not £100 but £10, then the buyer might elect to follow one of two courses. He could claim to cover the difference between the £100 which he had paid for a four-gallon-a-day heifer, and £10, the true value of the one-gallon-a-day heifer, and he could recover the difference, £90. That would put him in the position in which he would have been if he had bought, and intended to buy, the cow which in fact he got. Alternatively, he might say: “I keep this cow and I shall sue you for the loss I have suffered because her performance was not as warranted: I am getting not four gallons but one gallon a day, and therefore I am losing what I would have got on the sales (less necessary expenditure) of, approximately, an extra thousand gallons a year.” If the latter course is chosen, it seems to me as I have indicated that the depreciated, or depreciating, value of the cow has nothing whatever to do with the claim. So much I think, is conceded; and it has, therefore seemed to the court that it would be impossible to combine in this case a claim for the capital loss with a claim for the total loss of profit; as it would be impossible to recover, in the hypothetical case, both the £90 (being the capital loss on the cow) and the full amount of the loss due to the shortage of milk.”
12 In response to these arguments, the plaintiff points out that the Cullinane case was criticized in Chitty on Contracts: Specific Contracts, 31st Ed., (London: Street & Maxwell, 2012), p.1671 where it was said:
“It is submitted that the position taken by the majority in this case is confusing: their concern to avoid double recovery led them to overlook the fact that net loss of profit can be calculated in such a way as to avoid overlapping with the wasted capital expenditure.”
The plaintiff also denies that the evidence of the accountant can now be given the significance which the Department contends. When the evidence is viewed as a whole, this was a very short passage which cannot now bear the weight sought to be placed upon it.
Discussion
13 In my view, it is wrong to assume first, that there is a single lawful way to assess damages such as this, and second, that the calculation of loss is essentially a matter for expert witnesses. There is, so far as I know, no accountancy standard for the calculation of damages, and it does not follow, and is not required, that damages to be assessed should approximate to some heading in annual accounts such as net profits, or the value, which according to an accountancy convention must be attributed to a fixed asset. The function of the Court is to assess the loss suffered by a successful plaintiff by reason of the wrong of the defendant, and in that regard to first understand, and then apply, the expert evidence, and the case law to the facts of the case.
14 An important feature of this case, which has not been particularly remarked upon, is that it is accepted, as the trial judge observed at paragraph 7 of his judgment, that the “plaintiff did not have the money or ability to borrow money from the banks to purchase immediately animals similar to those that ought to have been returned”. This could have been an issue of contention, but was not. In perhaps more run-of-the-mill, and less substantial cases, where an income producing asset is lost, say an item of agricultural machinery, a plaintiff will normally be expected to purchase a replacement and thus mitigate any loss of profits. In such a case, while there may be argument about the cost of the replacement, the calculation of damages will normally be the cost of the replacement item, together with interest between the date of replacement and the date of judgment, in this case a period of four and a half years. Here however, it is accepted that it was reasonable for the plaintiff not to be in a position to replace these animals immediately, and furthermore that this was reasonably foreseeable to the defendant. This means that the assessment of loss as of the date of the judgment must proceed to consider what sum of money is required to put the plaintiff in the position he ought to have been at that point had the breach of contract not occurred.
15 Again, while this was not seriously debated, the factual scenario envisaged was that the plaintiff as of the date of judgment and absent the breach of contract, would have had a herd of the same composition as that which was taken by the Department and not returned to him in 2006. It is not seriously contested that such a herd could not have been assembled immediately as of the date of judgment, and it might take a little time to put in place such a herd. In this case the High Court judge assumed that would take a year. It also follows that in principle a business deprived of its asset would have lost profits over the intervening period. I say “in principle” because of course the first line of the Department’s defence was to contend that the plaintiff’s business was heavily loss-making. But in principle therefore, once it is accepted that damages are to be assessed on the assumption that a loss-making asset, in this case a mixed herd of cattle is to be replaced a significant period after they should have been, there is nothing unusual or wrong in damages including both the capital cost in the herd, and also the net profits lost. There is in principle no double counting or double recovery here but, as the extract from Chitty suggests, there may be a question of overlap, particularly if the figure for loss of profits includes monies which would have been expended by the farmer in maintaining the herd whether by simple acquisition, or by rearing and feeding calves.
16 At the heart of this case is not so much an issue of principle, as one of evidence, both as to the particular business involved here, and what is encompassed in the figures for profits derived from the Teagasc reports. In principle it is clear that where a profit-making asset is lost and not replaced for some time (and that course is a reasonable one to adopt) then the loss involved may be both the loss of the capital value of the asset and the loss of profits which would have been earned in the intervening period. That is because if the breach of contract (or tort) had not occurred, that is what the plaintiff would have had as of the time of assessment of the damages. There is however a potential overlap, which in some cases may indeed be total, and in others non-existent.
17 If for example a fleet of trucks was confiscated in 2006 and not returned as agreed, and damages failed to be assessed until 2010, on the assumption that it was not feasible or reasonable to replace the trucks until then, then one way of assessing the damage in 2010, would be to consider the 2010 value of the existing trucks which would of course have depreciated by then, together with what might be described as the gross profit, which would include amounts which would be used in the normal course for replenishing the stock. Alternatively it might be appropriate to take the value a fleet would have had in 2010 which would include replacement vehicles, together with the loss of profits but now net of the amounts which would have been invested in such replacements. I should make it clear that I am not using the terms gross or net as terms of art. If, and this must be unusual, the asset would be consumed and fully replaced out of profits within the time which is the subject of assessment, then it may be appropriate simply to award gross profits. Again, this depends on evidence, and the particular business and asset. It is, for example, possible to conceive of assets which do not depreciate and indeed may appreciate, and have minimal cost of maintenance. If, for example, in 2006 a landlord did not receive an apartment building which he or she intended to let out, then, (and on the assumption no other replacement property could be obtained) if the market increased in the intervening time, the landlord might be entitled to the value of an equivalent building in 2010 (which would be greater than the building when not received in) plus rental loss less any costs which would have been incurred in rates, taxation, repairs and maintenance.
18 The examples just given illustrate in my view the fact that the case is unusual both because loss was permitted to be calculated on the basis than an income producing asset was not replaced for a significant period after the breach, and because of the limits of the evidence in this case on the critical issues.
19 First, it is I hope clear that Lord Evershed’s cow example cannot resolve this case. In that case, the purchaser got a cow which was milk producing although at a lower rate, and therefore of less value. More importantly however, the example also contains certain assumptions which are in issue in this case. First, it is assumed (not unreasonably in 1953) that the values remain static over time and therefore the time value of money need not be factored in. Second, and more significantly, the alternative assessment assumes damages calculated as the present value of all future loss of income, less expenditure. In any given case the period of time over which it is appropriate to assume income may be different. It was not necessary to determine that in the example because it was not necessary to illustrate the point then being made. Finally the assessment of damages in the example is being carried out, or is capable of being carried out, as of the date of the breach. If it was accepted that the cow was only a one gallon a day cow, rather than a four gallon a day cow, then if the seller repaid the difference in value, the purchaser could have no complaint because he would in effect have an assert worth £10 and costing him £10, capable of generating one gallon a day milk. Alternatively if the seller retained the £100 but agreed to pay the purchaser the present value of the difference in net sales over the anticipated lifetime of the cow (and assuming in this example there was no residual value in the cow once no longer milk producing) the purchaser again can have no complaint. He or she has an asset for which he has paid £100 but which now generates the anticipated sales, first, by the one gallon a day produced by the actual cow, and second, by the figure for damages which should make up the difference between the actual return and the anticipated return from a four gallon a day cow worth £100.
20 Thus, the simplified example illustrates the point being sought to be made: in this example it must be one or the other, adjustment in price or all lost sales. To award the plaintiff £90 (being the difference in value) and the future loss of profits, would be to give the purchasers a four gallon a day cow for the price of a one gallon a day animal. It is however noteworthy that Lord Evershed defined damages as being the sales (less necessary expenditure) on the extra gallonage. This is not the same as net profit, at least as that is commonly described.
21 In this case however, the facts are quite different. The plaintiff did not receive a replacement inferior herd at the time of breach. He was deprived of his herd completely, and had to get a replacement and is assumed to have done so five and a half years after the breach. If it is accepted that the value of the herd would have remained constant between 2006 and a point one year after the High Court judgment, then in my view it would not wrong to award damages calculated by reference to the capital cost of such a herd, together with loss of profits less any sum which would have been expended in maintaining the herd and its value. This indeed is what the trial judge attempted to do, albeit by some rough and ready calculations he was required to make on the limited information which was available to him.
22 The Department maintains however that no amount should have been awarded for loss of income or profits in the period between 2006 and the notional replacement of the herd in 2011. Alternatively, once an amount for loss of profits had been awarded, no amount should have been awarded for capital. Accordingly the Department argues not for a partial overlap of damages, but rather that these headings of damage in this case are mutually exclusive. In theory it is possible that if the loss of profits is calculated as the loss of income over the entire lifetime of an income producing asset, that there is no replacement value and therefore no capital loss to be calculated. This is indeed the thrust of the Department’s case. However, it appears to me that the evidence falls significantly short of establishing this. In the first place we do not know what the anticipated lifecycle of the income producing animals in the herd was. The implication of the Department’s case is that this cycle is four and a half years or less. There is however no primary evidence addressed to this crucial issue, and indeed the only evidence is the very vague assent by a financial expert to suggestions made by counsel. Even in the short passage of evidence relied on by the appellants, what was described as the “income stream” varied from five to seven to. A related question was what exactly was covered by the Teagasc figure of profit per litre, even assuming for present purposes that that figure involved some element of replacement. Do those figures assume a limited replacement of some animals only, or as the Department’s argument implicitly contends, do the figures contemplate the entire replacement of a herd over a four and a half year period or less?
23 Stepping back from the figures here, it is possible to see difficulties with both assertions. The Department now accepts that the herd was worth just over €140,000 in 2006. It now argues that the original 2006 herd would have disappeared by 2011, and itself would have no value and would require to be replaced. Replacement would have to be funded from profits but on the Department’s case, the herd would generate just over €140,000 profit. This would seem to suggest that the business was barely, if at all, profitable for anyone during those five years. On the other hand, the figures now supported by the plaintiff suggest a steady and very substantial net profit per annum, which would have made farming a very desirable and profitable activity over that period.
24 Fundamentally however the difficulty here is with an absence of evidence. The fact that the parties maintained unrealistic positions meant, that once the trial judge had rejected those positions (correctly in my view), there was very little evidence upon which the Court could rely. I do not think that the extract from Mr Bagnall’s evidence is at all sufficient to establish the proposition for which the Department contends. If this issue has been as central in the High Court as it was on the appeal, it might have been possible to make the calculation of damages more precise and accurate. It is possible that there was in the calculation of damages arrived at in the High Court, some degree of overlap, but if so, the evidence in the High Court was entirely insufficient to demonstrate this and certainly insufficient to permit this Court to come to a more accurate assessment of damages than that arrived at by the trial judge who heard both the liability aspect of this case, and the lengthy damages hearing. Accordingly I would reject the appellant’s appeal on this point.
Damages for stress, upset and inconvenience
25 At paragraph 41 of the High Court judgment, the trial judge awarded the plaintiff an additional sum of €25,000. The Department appeals this award. Recently this Court in Murray v. Budds & ors [2017] IESC 4, reaffirmed the general rule set out in Addis v. Gramophone Company Ltd [1909] AC 488, that, in general, damages for breach of contract do not include damages for distress, upset and inconvenience. Whatever the theoretical limits of this principle, I am satisfied that in general it must be necessary to show that the object of the contract was to provide pleasure, peace of mind, or freedom from molestation. Here the claim arises out of breach of contract to return cattle. Although the defendant has laid heavy stress on the extent to which the plaintiff and his family were attached to the cattle involved, and the inevitable upset that has been experienced, I do not think it can be said that this contract falls within an exceptional class of contract which would permit general damages for distress to be recovered for breach. Furthermore, it is apparent that the award of damages for breach of contract was, if anything, calculated on a generous basis. Accordingly I consider that the Court must set aside this aspect of the award.
Cross-appeal
26 The judgment in the High Court rejected a number of claims of additional heads of damages made by the plaintiff. These, and further issues, have been raised by the plaintiff/respondent in a cross-appeal. Some of these matters are interdependent and contingent and others assume that the defendant’s appeal would be successful. In the circumstances it will, I hope, be possible to deal with these items briefly.
Deduction of €110,000
27 This deduction has already been touched on. It was an amount allowed by the trial judge for the cost of rearing 152 heifers in 2006/2007 and 107 heifers in 2007/2008. The plaintiff now contends, in what is a reverse mirror image of the appellant’s principal ground of appeal, that this deduction ought not to be made because the Teagasc figures were for net profit which already took account of the cost of production. While the plaintiff maintains that his expert Dr. Butler did not agree with this deduction, it necessarily follows that there was evidence from the defendant’s expert, Mr. Brady, justifying such a reduction. This is indeed a further illustration of the lack of clarity about the manner in which the Teagasc figures were arrived at, but on familiar principles of appellate review, if there was credible evidence upon which the trial court could come to the conclusion he did, then the appellate court cannot simply substitute its own views. Furthermore, this point is very closely linked to the principal ground of appeal made by the Department, and which is discussed above. The logic of the plaintiff’s argument in that regard, namely that the trial judge heard all the evidence and was in a position to assess the loss in this regard in a fair manner, which the Court accepts in upholding the bulk of the plaintiff’s award, must apply with equal force here against the plaintiff and means however, that the plaintiff cannot succeed on this point.
Deduction of €20,000
28 Again, this issue has been touched on already. The trial judge deducted this sum from the loss of profits originally arrived at to represent some cost of labour, which was or ought to have been saved by the plaintiff by reason of not having the 223 cattle. Apart from the general point that this was a constituent part of the calculation which, at the plaintiff’s urging this Court has upheld, the fact is that the deduction of €20,000 is nominal when it is considered that it is calculated by reference to a five year period. In essence, it suggests that the plaintiff saved, or ought to have been able to save, an expenditure of €4,000 per annum by reason of not having a fully stocked farm. There was evidence to support this finding and it is one which if anything was generous to the plaintiff.
Deduction of €18,000 in respect of milk quota
29 The plaintiff let out his milk quota to improve cash flow during the period when he did not have his own cattle. He received a total of €29,119. The trial judge did not deduct the full amount received, but rather a sum of €18,000 on the basis that he considered that the plaintiff would not have fully used his quota and would have let a portion of it out. Again, there was certainly evidence upon which the trial judge could take this view, and it was, on the evidence, if anything generous to the plaintiff. Like many of the points made by the plaintiff in his cross-appeal, the logic of the plaintiff’s success in defeating the Department’s principal ground of appeal makes it particularly difficult for the plaintiff to succeed on these subsidiary issues. The fact is, that in each case, there was evidence upon which the trial judge could come to the conclusion which he did.
Cost of eleven cows and twenty in-calf heifers
30 The trial judge accepted that it was reasonable for the plaintiff to buy these substitute animals, but held he could not recover the cost of them because he had already compensated the plaintiff for the failure to return the whole herd and therefore any damages under this heading would amount to double counting. The plaintiff challenges this conclusion arguing that this was an expenditure in mitigation of damages which the plaintiff should recover. This, I think, misunderstands the trial judge’s conclusion. This was a purchase which mitigated the damage sustained by the plaintiff in respect of loss of profits and loss of winter milk bonus. But it is not suggested here that the plaintiff suffered any loss by reason of buying these animals. If he had, then such a loss would have been recoverable if the Court concluded that the purchase was justified in attempted mitigation of damages. The plaintiff had the benefit of these 31 animals. If he received the total cost of purchasing them on top of the cost of a replacement herd the plaintiff would in effect be receiving from the Department the equivalent of 254 animals rather than 223.
31 The plaintiff also contends that the purchase of these animals meant that his loss of winter milk bonus was lower (and therefore his claim for damages would have been higher) had it not been for the acquisition of these animals. However, the fact that this was an appropriate step in mitigation does not give rise itself to a claim for damages. Otherwise the loss would not be being mitigated. There are a number of grounds of cross-appeal that are related to this issue of the purchase by the plaintiff of the 31 animals. It is important for the analysis of those issues to recognize that technically it would have been more correct to award the plaintiff the cost of acquiring 192 new cattle as of 2011 together with the cost actually incurred in acquiring these 31 animals. Since one of the defendant’s arguments was that the cost of the replacement animals was effected at very generous prices, the fact that in this respect the plaintiff received an award of the cost of replacement animals likely favoured the plaintiff.
32 The plaintiff also claims for a loss of €72,000 in his failure to receive the waste management grant which he claims he would have obtained if not for the actions of the defendant, and a further loss in excess of €48,000 for the additional cost of forage and accommodation which he contends was incurred by reason of not having a waste management grant. In each case he contends that this loss flowed from the breach of contract obstructed in completion of his application by not having available to him a Teagasc employee as a farm advisor. He argues that the in-house solicitor from the Department of Agriculture had advised that the person could or should not assist the plaintiff in his application because he was or was likely to be a witness in the case. All of this is however too far removed from the breach of contract here, (and in any event is speculative) and cannot be a head of damages here. To put it at its lowest, the trial judge was clearly entitled not to award damages under this heading.
Loss of winter bonus
33 This point is related to the claim for the cost of purchasing the eleven cows and 20 in-calf heifers. This purchase allowed the plaintiff to obtain some winter bonus, and thus reduced the total loss in this regard. The plaintiff however contends that he should have been entitled to recover a sum of at least €20,000 in this regard (rather than the €6,000 awarded) being the amount he argued he would have lost had he not purchased the substitute animals. However, this point was correctly rejected by the trial judge because, again, the purchase of the animals was an appropriate step to take in mitigation of his loss. Since no additional loss had been incurred, he could not be awarded damages under this heading. Once it is accepted that this purchase was an appropriate step in mitigation of damages, it is illogical to contend that the plaintiff should be entitled to recover the loss which he successfully mitigated. An issue of consistency of approach does arise however and it will be necessary to return to it in considering the next issue.
Interest
34 The plaintiff sought interest on the capital sum being the value of the unreturned animals. In fact, as the plaintiff acknowledges in his written submissions, this issue does not arise if the plaintiff is successful (as he has been) in resisting the Department’s principal ground of appeal a recovers both the value of the animals and the loss of profits. However, the plaintiff also contends that he is entitled to interest on the sum of €42,550 in respect of the cows and in-calf heifers that were purchased. If the principal damages recovered by the plaintiff had been calculated on the basis of the cost of replacement of 192 cattle together with the actual cost of purchasing these 31 animals, then logically this argument would be correct whether or not the plaintiff had to borrow to purchase the animals. If the plaintiff used his own money, then he was at a loss of this money during the period, or deprived of the opportunity of making alternative investment. However, if this claim were allowed, there would have to be a corresponding reduction in the claim of loss of profits in respect of the 31 animals. The loss of profits claim should be limited to the loss of profits on the 192 replacement animals. In fact the way in which the trial judge approached the assessment of damages in this regard, by awarding capital value and loss of profits, calculated on the basis of 223 animals, favoured the plaintiff. In effect he treated these cattle as surplus additional cattle which increased the size of the herd, rather than a purchase which should be taken into account in mitigating the loss suffered. In those circumstances it does not appear to me that the argument that the plaintiff should be entitled to interest on the monies expended can succeed.
35 The manner in which the trial judge assessed damages and which has been upheld by this Court, had the effect of converting this transaction into one which falls out of the equation when loss is calculated. Had the purchase of these cattle been loss-making, then it would have been possible to include a claim for such loss. However, they were not and accordingly, the plaintiff cannot be entitled to recover the interest on the purchase price, particularly when it now appears that the money used was lent by his brother-in-law and did not incur any interest charged to the plaintiff. I appreciate that there is a slight inconsistency in this regard in the approach of the trial judge, but if anything it favoured the plaintiff. In addition to the benefit of the capital value being assessed on a generous scale, the loss of profit claim could and perhaps should have been limited to the 192 animals which the Plaintiff did not have during the period. The purchase of the 31 cattle was partial mitigation of the damage, and the allowance of a loss of profit claim in respect of 223 animals was a somewhat anomalous. But that is no reason to compound the anomaly by overturning the disallowance of part of the winter bonus loss claim because in this respect the purchase was correctly treated as mitigation. Equally if that purchase had been consistently treated as mitigation, which would have resulted in a significant reduction in the award for loss of profits, it would have been appropriate to allow the interest claim in respect of the expenditure incurred on the 31 cattle.
36 However, it is absolutely clear that what this Court cannot or at least should not do, is alter one component of this in isolation. It is also probable that the Court does not have sufficient information to substitute its own award of damages in this respect, and in any event it seems likely that any substituted calculation would not favour the plaintiff. The gain on interest on expenditure would not outweigh the reduction in the loss of profits claim. For all these reasons I would not interfere with the decision of the trial judge.
Stress, upset and inconvenience
37 The plaintiff contends that he should have been entitled to a higher award in this regard. However, since I have already held that no amount should have been awarded under this heading, this issue does not arise.
Refusal of an adjournment
38 On the second last day of the quantum hearing, the plaintiff applied for an adjournment to call a number of witnesses including his brother-in-law, two solicitors who had acted for him, an accountant, a friend who had given him financial assistance, and a creamery manager who had dealt with him on the sale of milk. The plaintiff argues that an application was not made earlier because the plaintiff was under cross-examination. This however ignores the fundamental question why such witnesses were not anticipated in advance. It is fully understandable given the length of time which had already been expended in this case that the trial judge not disposed to permit further delay. An appellate court should be slow to second guess the manner in which a trial court manages the hearing. However, and in any event, there is a fundamental question as to the effect of this ground of appeal. If the plaintiff were to succeed, the only possible outcome would be to set aside the entirety of the decision for the High Court, including those portions awarding the plaintiff substantial damages which have been upheld by this Court, and directing a retrial. It is difficult to see what benefit could accrue to the plaintiff from this course. I understood this ground to be included in part to guard against the contingency that the defendant’s principal appeal might succeed. In any event, I would reject this ground of appeal.
Showing of a film
39 Similar issues arise in relation to a further ground of appeal under which the plaintiff complained about the trial judge’s refusal to permit him to show a film which had been referred to in evidence. Again, this is in principle something within the discretion of the trial court, but in any event could only result in a setting aside of the entirety of the determination in the High Court. In the light of this Court’s resolution of the principal issue in this appeal, I do not think that this is a useful or desirable course.
ERAD compensation
40 In the course of evidence on its counter-claim the defendant/appellant produced an invoice from a valuer which was recorded as valuing the plaintiff’s animals under the ERAD scheme. The plaintiff now complains that this should have been discovered earlier but was not. The significance of this matter is that the plaintiff contends that, in effect, the compensation payable by reference to the ERAD scheme is more generous than the open market valuation. This is because the scheme seeks to provide an incentive to farmers to cooperate with it. The plaintiff contends that if the Department was at some stage prepared to treat the plaintiff’s herd as a herd for the purposes of the ERAD scheme, then that provides some support for a higher valuation of the animals contended for by the plaintiff.
41 It must be apparent that this is highly speculative. The invoice referred to is a general invoice listing a large number of cattle which were valued by the valuer, and including the plaintiff’s herd. There is no evidence that any such valuation was carried out and if so whether it was carried out under the ERAD Scheme, whether there was any basis for doing so, and if so the amount arrived at. Again, this point, tenuous as it is, suffers from the difficulty that if it were acceded to, it could only result in a setting aside of the award and a retrial at which these and other matters would be explored. I do not understand why this course is pressed by the plaintiff, but in any event, I would not be prepared to accede to it.
Expert evidence of Colin Johnson
42 The plaintiff had called an expert valuer, Mr. Colin Johnson, to provide evidence of the value of the plaintiff’s herd at the time which it ought to have been returned to him. As it happens, Mr. Johnson had seen the herd when detained by the Department. The trial judge broadly accepted his opinion of value, but nevertheless accepted the defendant’s contention that Mr. Johnson operated at the “upper end of the market”, and accordingly that it was appropriate to discount his valuation. The trial judge did so by €20,000. The plaintiff complains about this, and also the fact that the Department was permitted to keep the sum of €55,250 realised for the sale of the animals in June, 2006.
43 First, there can be no objection to the Department being permitted to keep the sum of €55,250. Once the plaintiff received the full compensation on the basis of his valuation of the cattle, it fell that the Department must be entitled to retain the sum it realised when it sold the cattle.
44 I have some sympathy with the instinct of the trial judge in discounting the valuation figure presented by Mr Johnson. There was a very considerable difference between the valuation provided by him (approximately €160,000) for the cattle as of April 2006, and the sum actually realised by the Department two months later of €55,250. Even allowing for the fact that a professional auctioneer was not employed, and the plaintiff’s contention that this was a fire sale price, there is a very substantial discrepancy. However, I consider that the plaintiff is correct to say that there was no evidential basis for the conclusion that Mr. Johnson’s valuation of replacement cost should be treated as a valuation at the upper end of the market which should be discounted to reflect the fact that the seized herd was not of that quality. In fact what occurred was that Mr. Johnson accepted in cross-examination that he dealt at the upper end of the market. Nevertheless, he was asked to give his opinion as to “what it would cost at that time to replace those categories of cattle on the open market”. This clearly referred to the cattle he had seen himself when in the possession of the Department. There was no evidential basis therefore for the suggestion that because Mr. Johnson accepted that he dealt with the upper end of the market that his valuations were too high, or assumed higher grade animals, and there was no other evidence to this effect. While I suspect that the judge was doing no more than applying a certain amount of prudence and skepticism to the evidence before him in this case, I consider that the plaintiff is entitled to maintain that there is no basis for discounting the evidence given as to the value of the herd, and in particular that there was no suggestion that Mr. Johnson was giving the value of a superior herd. Accordingly I consider the plaintiff is entitled to succeed on this ground.
The Department’s counterclaim
45 The plaintiff observes that pursuant to clause 3 of the contract, the defendant was entitled to deduct from the proceeds of sale of the animals the costs of the removal of the animals, their maintenance in lairage in Waterford, the cost of sale and cost of return of animals and other costs. The total of the counterclaim was originally €81,648.72 and eventually reduced to €58,961.72. The plaintiff contends that there was an internal email discovered which showed that a true figure was €33,036.89. The plaintiff also contends that the counterclaim was not properly proven, and that while invoices were produced no witnesses were called to prove them. The plaintiff also complains that the defendant was entitled to put the proceeds of sale of the animals against the sum claimed in the counterclaim.
46 I have some difficulty in understanding the points made by the plaintiff in this regard. It seems clear that there was some forensic jostling involved in the High Court in that the plaintiff wished to force the defendant to call certain witnesses so that they could be cross-examined on other issues and the defendant for its part clearly did not wish to do so. However, none of this appears relevant now, particularly in circumstances where no amount was allowed under the counterclaim. It appears that the plaintiff may also be labouring under a misapprehension as to the manner in which the sum of €55,249 realised from the sale of the plaintiff’s animals in June 2006 was dealt with. For reasons already discussed, the logic of the ruling in the High Court was that the plaintiff was entitled to recover what the High Court considered to be the full value of the herd. It follows that once damages were assessed on this basis, the defendant was entitled to retain the proceeds of sale of the actual animals.
Award
47 Accordingly it follows that I would vary the award of the High Court’s somewhat in allowing the plaintiff the sum of €161,320 in respect of the value of the cattle, (the net figure of € 141,320 allowed by the trial judge together with the €20,000 restored by the decision of this Court) and the sum of €145,000 in respect of the loss of profits. I would however disallow the award of €25,000 for stress, upset and inconvenience. The remaining sums, the award of €5,000 for the late breeding of 25 heifers, the award of €6,000 for the loss of the winter milk bonus and the deduction of €18,000 because Mr. Hanrahan rented out his milk quota, are unaltered. This accordingly brings the total award of damages to €299,320, a net difference of €5,000 from the High Court. To this figure it is necessary to add interest.
Interest
48 The issue of interest was debated in this case. The order of the High Court of the 21st December, 2010, imposed a stay on the plaintiff’s award on terms that the defendant paid to the plaintiff the sum of €180,000 and undertake to pay to the plaintiff interest on the balance of any damages over and above that sum which may be payable. On the 16th January, 2017, the Supreme Court made a further order directing the part payment of a further sum of €54,000 to the plaintiff on the same terms. For the reasons set out above, I would dismiss the defendant’s appeals save insofar as it relates to the amount of damages for distress and inconvenience, and dismiss the cross-appeal save insofar as it relates to the amount of €20,000 in respect of the valuation of the plaintiff’s herd. Accordingly, it appears the plaintiff is entitled to interest under the Court’s Act at the standard rate on the sum of €299,320 from the date of judgment until payment to the plaintiff of the sum of €180,000 pursuant to the stay ordered by the High Court, interest on the balance of €119,320 from that date until payment of the sum of €54,000 pursuant to the order of the 16th of January; and on the sum of €65,320 between the said date and today’s date. I will give the parties liberty to apply, if necessary, in relation to the final calculation of the award in accordance with this judgment.
