Handbury v Nolan

(1977) 13 ALR 339

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(Judgment by: Stephen J) Court:

Judges: Barwick CJ
Gibbs

StephenJacobs
Aickin JJ

Subject References:
Appeal
Contract
Terms
Partly oral
Partly written
Meaning of
Question of fact
Trial judge
Determination in light of circumstances of case
Whether meaning open to trial judge
Auction
Cattle
Description
Cattle "to be pregnancy tested prior to sale"
Oral statement
Auctioneer
Result of pregnancy test positive
Whether term that cow pregnant at time of sale
Partly in writing
Construction
Question of fact for jury
Cattle auction
Positive pregnancy test

Hearing date: 24, 25 February 1977 -- Melbourne
Judgment date: 15 March 1977

Sydney

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Judgment by:
Stephen J

The fourth annual Murray Grey Breeders' Sale was held at Wodonga Saleyards on 9 April 1970. The Handburys went to the sale with their son, who was then the manager of their Murray Grey stud near Shepparton. They bought at auction for $3200 an eight-year-old pedigree Murray Grey cow, The Glen Nola, believing it to be in calf to a stud sire. The Glen Nola proved not only to be not in calf but was ultimately found to be infertile; she was worth only about $160.

The Handburys sued the vendor Nolan, a breeder of Murray Greys, claiming damages for breach of contract. They succeeded before Judge Hewitt in the Victorian County Court but Nolan succeeded in his appeal to the Full Court of the Victorian Supreme Court. The Handburys now bring their appeal to this court.

It is not in doubt that Nolan sold The Glen Nola as a cow which had calved in the past, which had been running with a stud sire and which had been pregnancy tested shortly before the sale, with a positive result. There is no suggestion of any want of good faith on his part. The cow had indeed been pregnancy tested a week before the sale by a veterinary surgeon who manually examined her internally and certified that she was pregnant. As it happens, the Handburys had her pregnancy tested some three months later by another veterinary surgeon, and yet again, by still another veterinary surgeon, in December 1970. Each time The Glen Nola was found to be pregnant. By the time of the last testing the Handburys had become incredulous about this ever-pregnant yet unproductive cow; they required the last of these veterinarians to re-examine her and when he did so he concluded, contrary to his earlier view, that she was probably not in calf. She has not calved since and, as I have said, has been pronounced sterile.

The learned trial judge has found as a fact that The Glen Nola was not in calf when sold at the Wodonga auction. This finding is not challenged. If, then, it was a condition of that sale that the cow should be in calf, if the subject matter of the sale was a cow in calf, the plaintiffs must have been entitled to the damages for breach of contract which they were awarded.

His Honour, in response to the question which he asked himself, "What was the contract between the parties?", gave the answer that it consisted of the relevant parts of the sale catalogue together with the statement by the auctioneer, when The Glen Nola came up for sale, that the result of the pregnancy test was positive. His Honour went on to find that "this was the sale of a cow in calf" and that it was an express condition of the contract "that the cow was pregnant". It emerges from the later parts of his judgment that he reached this conclusion because he regarded the auctioneer's statement that the result of the pregnancy test was positive as meaning not merely that a certificate had been obtained but that the cow was in fact pregnant.

The Full Court regarded this conclusion as erroneous and his Honour as not justified in construing the auctioneer's statement that the test was positive to mean that the cow was in calf. In the absence of any evidence that the words were used and understood in a sense other than their ordinary meaning it was that meaning which must prevail; the statement meant only what it said, that a test had been carried out with a positive result.

I agree with all that the Full Court has said in its rejection of the view that it was any term of the contract that The Glen Nola was in calf. I would have been content merely to adopt as my own the relevant reasoning of the Full Court but for the fact that other members of this court take a contrary view. In the circumstances I shall attempt to state, as briefly as may be, how I approach this matter.

If the contract consisted, as the learned trial judge no doubt rightly held, of relevant portions of the catalogue together with the auctioneer's announcement about the outcome of the pregnancy test it must be in that material that the express terms of the contract are to be found. An obviously relevant part of the catalogue was the entry concerning this cow:--

Lot 8

THE GLEN NOLA (726A)

Born: 1962 Colour: Silver Brand: 239A

SIRE AND DAM: Gadd Foundation Stock

Depastured with The Glen Hector (85) -- refer Lot 5 -- from mid-October '69 to January '70. To be pregnancy tested prior to sale.

A daughter of this cow being offered as Lot 5.

The precise finding as to what the auctioneer said about the cow's pregnancy was that he made a statement: "to the effect that the result was positive with respect to the pregnancy test carried out prior to the sale".

From the entry, coupled with the auctioneer's statement, emerges a term that the cow had been pregnancy tested and that the test had produced a positive result. What cannot be extracted from the words used, understood in their ordinary meaning, is such a term as the appellants require, that the cow was in fact pregnant and sold as such.

The court has no evidence before it of any special meaning which the words used might bear in the business of cattle breeding or in the selling of cattle by auction and without such evidence a court is not free to give to the words of the parties' bargain any meaning other than that which they are capable of bearing in ordinary, common usage. That meaning is, and is only, that a pregnancy test showing positive results had been performed; and so it had, of this term no breach was proved.

The catalogue also contained other material of relevance to calving: the sale was described as a "Breeders'" sale; the female cattle to be sold at it had ("where applicable", as it no doubt was in the present case) been "mated to Stud Murray Grey Bulls"; vendors had been "recommended to pregnancy test sale females where applicable and results not already shown in the catalogue will be announced at the sale". However none of this advances the appellants' case that there was a breach of an express term.

Unless a course be adopted which I regard as impermissible, that is, in the absence of any evidence of special usage, to give to words of plain and, as I shall hope to show, of sensible meaning a purport which according to their ordinary meaning they do not bear, no breach of an express term of the contract can be shown. In the present case, to do this would not only be to depart from the terms of the parties' bargain but would also be to impute to the parties an intention which may, as like as not, be wide of the mark.

Before pursuing further this aspect I should refer briefly to the possibility of implying some term as to this cow being in calf. The express terms of the contract adverted to this very question; two matters germane to the topic were dealt with, the recent depasturing of the cow with the Glen Hector and it having been subsequently pregnancy tested with a positive result. The presence of these express terms leave no room, in my opinion, for the implication of any term such as the appellants' case calls for.

One submission which was much pressed by the appellant's counsel was that the express term as to the pregnancy test being positive must, in the light of the surrounding circumstances, be taken to have been understood by the parties as meaning that the cow was sold as being in calf. Accordingly this meaning should, it was said, be adopted as a matter of construction. This submission possesses, at first sight, a certain attraction despite the fact that, on analysis, it amounts to a statement that the parties did not mean what in plain terms they said but something rather different for which no evidence of special usage is advanced. The submission's initial attraction, specious though I think it is, lies in its ability to quiet any feeling of incredulity to which the facts of this case may at first sight give rise; for it may initally seem improbable that at a sale of breeding stock a cow, worth only some $160 as a source of beef, should be bought and sold for 20 times as much in the common anticipation that she will drop a pedigree calf, yet without there being any promise given by the seller to the buyer that she is in fact in calf.

This incredulity is, however, dispelled once two features of the business of buying and selling stud cattle, as revealed by the evidence, are appreciated: first that the parties to such asansactions are apparently content to rely upon pregnancy tests such as those here in question and, secondly, that those tests are not in all cases infallible. At least in 1970 pregnancy was, it seems, customarily tested not by any scientific analysis of blood or urine but by a quite brief examination, both manual and visual, by a veterinary surgeon. The experience of the Handburys shows that it was fallible; a cow, fertile in the past and which had been joined with a bull, might not conceive, or, having conceived, might abort, and yet might, perhaps because of some temporary abnormality of the uterus, appear on successive examinations by trained veterinarians to be in calf. In those circumstances it would be a bold vendor who would assume the risk of positively contracting that what he was selling was a cow in calf: some there were at the Wodonga sale who did just that; thus lot 22 may be seen from the catalogue to have been sold as "in calf to" a nominated bull. A prudent vendor might well prefer to sell upon Mr Nolan's terms, selling not a cow in calf but a cow which had been pregnancy tested with a positive result. He thereby offered rather less and, should the buyer properly assess the risk of such a test being wrong, might expect to receive a somewhat lesser price; but he was at least protected against any possible error in testing.

If, as seems to have been the case, these pregnancy tests were treated at the time as reasonably reliable, although not infallible, it can occasion no surprise that buyers were willing enough to accept the inherent but, as they no doubt thought, slight risk involved. They may also, perhaps, assume, dealing as they are with stud breeders whose reputation is valuable, that a vendor will always seek to safeguard the reputation of his herd by making suitable reparation, regardless of the precise terms of sale, should one of his beasts be the subject of complaint. In any event the risk run may only be that the cow will have to be joined again when the error is discovered; here, of course, the Handburys have had the double misfortune of purchasing a cow which was not only not in calf but has ultimately turned out also to be infertile.

What I have said shows, I think, not only that the apparent attraction of the appellant's argument is specious but also that it is far from clear that the unexpressed intention of the parties, to be gained from all the surrounding circumstances, must have been that what was bought and sold was to be a cow actually in calf. So long as the dictation of the terms of sale lay in the vendor's hands one might well infer that a knowledgeable vendor would be astute to avoid a sale upon such a basis, involving, as it must, the risk that the pregnancy test may prove to have been erroneous.

I would conclude this aspect of the case by two observations. The first is that, for my part, I see no room for any finding of fact by the trial judge as to the meaning to be attributed to the auctioneer's statement that the pregnancy test was positive. His Honour said in his reasons for judgment that the statement "that the result was positive means, in my opinion, not merely that a certificate has been obtained, but that the cow is in fact pregnant". In the absence of evidence of special meaning according to trade usage or the like I cannot accept the correctness of the process implicit in this statement.

It is true that the construction of an oral agreement is a matter for the jury and that to construe a contract partly oral and partly in writing all the surrounding circumstances may be looked at ( Deane v City Bank of Sydney (1905) 2 CLR 198 at 209 per Griffith CJ) but, as the Chief Justice there pointed out, if upon the evidence as to a verbal agreement there is nothing to warrant the jury in placing any but one construction upon it, there will be no real question for the jury, and the judge will be practically bound to treat the construction as a matter of law. A judge sitting without a jury, having determined as a matter of fact what was said between the parties, is not then free to depart from established rules of construction in determining the meaning of the words so spoken. The more so is this the case when, as here, the spoken words serve no purpose other than to supplement what has been written, answering in one of the only two possible ways a question left open by the writing. When so supplemented the term of the sale relating to the condition of the cow is clear and free from ambiguity; it is that it has been subjected to a pregnancy test with positive results. Secondly, nothing in the surrounding circumstances of this case can, I think, add or subtract from the unambiguous meaning of this term of the sale. The circumstances of course included the belief, held on both sides, that this cow was in calf, was being bought for breeding and that its high value lay almost exclusively in its breeding potentials. That, no doubt, was the very reason why the results of a pregnancy test were to be supplied by the vendor. But the nature of the case prevents absolute certainty as to fertility and pregnancy, at least in the absence of tests more sophisticated than those here in question, and there must therefore always exist a risk of error. That risk the vendor chose not to assume.

Agreeing, as I do, with the Full Court that there was no evidence upon which the learned trial judge could properly conclude that what was sold was a cow in calf, rather than a cow which had been pregnancy tested with a positive result, I see no reason to disturb the findings of the Full Court on this issue.

The plaintiffs also relied upon an implied term that the cow was fertile. This was an issue upon which the learned trial judge found it unnecessary to pass because of his conclusion concerning pregnancy. The fact of fertility is, like pregnancy, an uncertain affair, at least in the absence of more scientific tests than those which the parties were content to adopt and have carried out both before and after the auction sale. It may readily be accepted that each of the parties believed that the cow was both fertile and pregnant, but the very fact of the critical importance of those two circumstances in the sale of stud stock for breeding purposes serves to emphasize the significance of the absence of any express term as to either other than the reporting of the result of a pregnancy testing. No term as to fertility can in the circumstances be implied. On the contrary the parties were content to buy and sell on the basis of pregnancy test results and no other footing.

I would accordingly dismiss this appeal.