Atkinson & 30 Ors v State of NSW

LEGISLATION CITED : Civil Procedure Act 2005 (NSW) - ss 56, 57, 58 59, 60, 61 & 62 Uniform Civil Procedure Rules 2005 (NSW) - Rule 28.2

ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037 Admiral 1 Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105 Dunstan v Simmie Co Pty Ltd [1978] VR 669 Idoport Pty Limited v National Bank Ltd [2000] NSWSC 1215 CASES CITED : Perre v Apand Pty Limited (1999) 198 CLR 180 Pioneer Park Pty Limited v ANZ Banking Group Limited [2005] NSWSC 832 Tallglen Pty KLimited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130 Tepko Pty Limited v Water Board (2001) 206 CLR 1 State of New South Wales v Lepore (2003) 212 CLR 511

Roger Stafford Atkinson & 30 Ors (Plaintiffs) PARTIES : State of New South Wales (Defendant)

Mr F Kunc (Plaintiffs) COUNSEL : Mr S Gregory (Defendant)

Blake Dawson Waldron (Plaintiffs) SOLICITORS : Frances Allpress (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20371/2002 - ROGER STANFORD ATKINSON & ORS v STATE OF NEW SOUTH WALES

JUDGMENT (Separate determination of issues - bushfires) 1 HER HONOUR: By notice of motion filed 16 September 2005 the plaintiffs seek an order that the quantification of any damages payable to them by the defendant be determined separately from and after the determination of all the other questions in the proceedings pursuant to Rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The defendant opposes the order sought. 2 While there are 31 named plaintiffs they represent nine plaintiff groups or farming enterprises. The plaintiffs are farmers whose farming enterprises are directly adjacent to or near the Goobang National Park (the Park) near Parkes. The State of New South Wales is sued in respect of the National Parks and Wildlife Service and the Minister for the Environment. The defendant is the State of New South Wales. The plaintiffs relied on the affidavit of Hayden Carlisle Fox filed 16 September 2005. The defendant relied on the affidavit of Gary Doherty filed 12 October 2005. 3 The Director-General of National Parks and Wildlife has the care, control and management of the Park. In December 2001, there were two major bushfires in the Park. On 20 December 2001 it is alleged that the second fire escaped from the Park and caused damage to the plaintiffs. It is alleged that between December 1995 and December 2001, there was a failure to undertake any or any adequate prescribed burning off, with the consequence that in December 2001 fuel levels in the Park were very high and increased the risk of uncontrollable fire. The plaintiffs plead causes of action in negligence, breach of statutory duty and nuisance. 4 The plaintiffs sought an order that the quantification of damages (and by this it is meant the dollar value) be determined after all other issues are determined. The defendant submitted that, in essence there is "no bright line" by which separate the quantification of damages if separated from the other issues in these proceedings.

Determination of separate question 5 Rule 28.2 of the UCPR states: "28.2 Order for decision The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings." (Rule 28.2. is in terms identical to the former Part 31 rule 2(a) Supreme Court Rules 1970) 6 The defendant's counsel referred to the decisions of the High Court in Tepko Pty Limited v Water Board (2001) 206 CLR 1; Perre v Apand Pty Limited (1999) 198 CLR 180 at [436]; State of New South Wales v Lepore (2003) 212 CLR 511 at [187]; Dunstan v Simmie Co Pty Ltd [1978] VR 669 at 671.30; and per Rolfe J in ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037. In Idoport Pty Limited v National Bank Ltd [2000] NSWSC 1215, Einstein J at [7]-[8] helpfully provides a compendium of cases upon this topic which I need not reproduce here. 7 In Tepko Callinan and Kirby JJ cautioned against the severing of issues by the court. Their Honours stated (at [168] - [171]): "… we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests.

Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.

The fourth of our comments is related to evidence compiled, committed to writing and filed in advance of the hearing. Parties frequently, either together or separately, compile "books of documents". Although most of these have the potential to be admitted in evidence, often they are defective in form. Many of them are often irrelevant, or their significance is either not recognised or adverted to during the hearing. Their status, as in the case of the letter written by Mr Rhodes, can be ambiguous. Discrimination and economy should be exercised by those who prepare cases in which documentary evidence is likely to be extensive and important. Those who conduct such cases should ensure that what is actually in evidence, and its relevance and significance, are clearly identified." [Footnotes omitted] 8 In Pioneer Park Pty Limited v ANZ Banking Group Limited [2005] NSWSC 832 (cited in Admiral 1 Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105 at [19] per Barrett J), Einstein J rejected an application for separation of liability and quantum. His Honour's reasons cited (at [7]) as "far and away the most significant factor" the fact that the evidence of a plaintiff was likely to be critical both as to liability and as to damages/quantum in a number of ways. Additionally, expert evidence which both parties anticipated putting on in relation to liability was also material to any assessment of loss or damage: "It is envisaged that the same experts would be used relating to those issues both as to liability and as to quantum. Certainly, the same or very similar expertise is required and there is obviously a substantial overlap in the … [material] … the experts will need to review for the purpose of addressing the liability issues on the one hand, and the quantification issues on the other. It is obviously illogical and inefficient for the experts to engage in that exercise on two different occasions." [8] 9 In Tallglen Pty Limited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130, Giles CJ in Commercial Division (as he then was) explained at 141-2: "In the ordinary course all issues in proceedings should be decided at the one time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties' dispute." 10 Since these decisions were handed down the Local, District and Supreme Courts in New South Wales have been effected by the Civil Procedure Act 2005 (NSW) (CPA). Sections 56 to 62 are relevant. 11 Sections 56, 57 and 60 of the CPA relevantly provide: "56 Overriding purpose

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. …

60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute." 12 The plaintiffs' solicitor Hayden Carlisle Fox deposed (at [4] of the affidavit referred to above), that the plaintiffs' costs including expert's fees incurred in the preparation of the case up to and including 15 July 2005 were approximately $970,000. This includes the work done in articulating their claim for quantum of damages. Mr Fox estimated that no more than approximately $250,000 of these costs have been incurred in the preparation of lay affidavits and expert evidence in support of the plaintiffs' claim on all issues other than quantum of loss (at [5]). Most of the balance of the plaintiffs' costs have been incurred in relation to discovery, which has been conducted on all issues and not just liability. Further, he deposed that to date [16 September 2005] the defendant had not filed any evidence and had not indicated whether it intended to contest the evidence of the plaintiffs' witnesses (at [6]). The plaintiffs' claims are for the sum of approximately $7,600,000 (excluding interest) across the nine relevant farms (at [14]).

13 The plaintiffs' solicitor estimated (at [7]) that a trial of all issues excluding the quantification of damages would take no less than 18 hearing days comprising as follows: Plaintiffs' case on all issues except quantification of loss

Opening 1 day View 1 day Lay Witnesses (13 witnesses @ approx 3 per day) 4 days Expert Witness 2 days Plaintiffs' submissions 2 days

Sub total 10 days

Defendant's case on all issues except quantification of loss Opening 1 day Lay Witnesses (10 witnesses @ approx 3 per day) 3 days Expert Witness 2 days Defendant's submissions 2 days

Sub total 8 days

Total length of hearing 18 days

14 The defendant's solicitor estimate is comprised of the following allowances (affidavit of Gary Doherty referred to above at [28]): Plaintiffs' case regarding liability

Opening 1 day Tender of documents (with any argument re admissibility) 2 days View (including travelling time) 2 days Lay Witnesses (approx 2 per day) 6 days Expert Witness 2 days Plaintiffs' submissions 2 days

Sub total 15 days

Defendant's case regarding liability Opening 2 days Tender of documents 2 days Lay Witnesses (exceeding 10 witnesses @ approx 2 per day) 12 days Expert Witnesses 3 days Defendant's submissions 2 days

Sub total 21 days

Plaintiffs' case in reply regarding liability 1 day

Total length of hearing 37 days

15 While the defendant's solicitor estimated that the total duration of a trial regarding liability would be no less than 37 days, the plaintiffs' solicitor estimated no less than 18 days. The main areas of difference lay in the estimate of the lay witnesses (4 days for the plaintiff and 2 days for the defendant). In relation to estimate regarding liability, the main difference arises from the lay witnesses (6 days for the plaintiffs and 12 days for the defendant). 16 The defendant, in a letter to the plaintiffs' solicitor dated 24 August 2005, took the view that "there appears to be a real prospect of a factual overlap between the "liability" case and "quantum" matters, concerning, inter alia, the cause and course of the fire and matters of causation and damages" (affidavit 12.10.05, exhibit GD4, p3). In addition the defendant stated in that letter, that from the lay evidence it had received from the plaintiffs it appeared probable that a number of plaintiffs could give evidence on matters relating to liability and quantum, and that findings as to the credit of witnesses may be involved in determination of liability issues.

Quantum - estimate of hearing time 17 The plaintiffs submitted that to establish all matters necessary to make good the plaintiffs' claim under each head of loss would require extensive expert evidence as to all commercial aspects of the plaintiffs' farming enterprises, and that at the point of quantification the case becomes the equivalent of nine separate damages claims. They would require specialised experts. 18 The plaintiffs' solicitor estimated that any hearing on the quantification of damages would take no less than 33 days, made up as follows: Plaintiffs' case on the quantification of damages

Opening 1 day Lay Witnesses (no less than 9 witnesses, One per farming enterprise taking 1.5 days each) 13 days Expert Witness 5 days Plaintiffs' submissions (half a day for each plaintiff) 5 days

Total 24 days

Opening 1 day Expert Witness 5 days Defendant's submissions 3 days

Total 9 days

Length quantification of damages 33 days

19 The plaintiffs estimated a complete hearing of the issues would take 49 days - a very long time. The defendant unhelpfully submitted that because the particulars of damage provided by the plaintiffs did not, in the absence of supporting evidence, enable the defendant to determine what will be in issue and that consequently (prior to the plaintiffs serving the supporting evidence) it was not possible to make an informed assessment of the evidence that the defendant would have to lead regarding those issues and the likely time that the hearing of those issues would take. 20 The plaintiffs' claim heads of damage being fencing damage; crop loss; stock loss; pasture re-sowing costs; tree loss; buildings, fittings, equipment, consumables and labour; losses through stock deaths; losses through forced sales; reduced lambing; substitute feed; costs associated with substitute feeding; agistment; costs associated with agistment; and remaining losses from pasture damage. The heads of damage claimed are particularised in [12] of Mr Fox's affidavit as follows: "12.1 Fencing Damage …[T]he cost of replacing damaged fences and gates. Incorporates the cost of clearing the destroyed fences, the cost of labour and materials to construct replacement fences of the same type and quality as those destroyed. Detailed evidence and findings will be required as to number, length, characteristics and quality of fences destroyed.

This head represents the market value of crops which were under production at time of the fire but were destroyed. It is based on an estimate of the ultimate crop yield, and the market price at the forecast time of harvest, less estimated total costs of production. Detailed evidence and findings will also be required as to types, quantity, quality, time until harvest of crops destroyed.

This head of loss represents the market value of stock killed, taking into account the age, weight and other characteristics of the stock, and in the case of sheep, the weight of wool carried at the time of the fire, less the costs of sale. Detailed evidence and findings will also be required as to the number and type of stock killed.

This head of loss represents the cost of re-establishing crops and pasture burnt by the fire, including the cost of labour and materials. It requires identification of the type of materials (for example particular fertiliser or other chemicals) and processes (for example ploughing) required to best rehabilitate burnt pasture. Detailed evidence and findings will also be required as to the volume of pasture burnt by the fire.

This head of loss represent the cost of removing the burnt and damaged trees from plaintiffs' land the costs of establishing replacement trees. A value must also be imputed representing the value of the loss of shade provided by the destroyed trees in period until new trees are well grown. Detailed evidence and findings will also be required as to the number, type, size and age of each of the trees destroyed.

12.6 Buildings, Fittings, Equipment, Consumables, Labour

This head of loss represents the cost of replacing or repairing items of plant, equipment and buildings damaged in the fire. Costs include labour and materials. Detailed evidence and findings will also be required as to the nature and quality of each item of plant, equipment and each building destroyed or damaged.

This head of loss represents the lost farm production after the fire resulting from stock deaths and the inability to replace the lost stock immediately because of fire damage to pasture. It requires an assessment of the period after the fire when the pasture destroyed would have been unable to support stock. Detailed evidence and findings will also be required as to:

(b) the number of lambs and calves not born because of death of pregnant stock and their value;

(c) the gain in liveweight of each animal destroyed which would have accrued to the plaintiffs' benefit during the post-fire period; and

(d) the quantity of wool which would have grown during the post fire period on sheep killed in the fire and not replaced immediately.

(a) This head of loss represents the loss flowing from selling stock below ideal age and weight shortly after the fire. Detailed evidence and findings are required as to the quantity of stock sold early because of damage to pasture which reduced the stock carrying capacity of properties and an estimate of the ideal time and weight for sale and the likely price to be achieved.

(b) This head of loss represents additional net income which would have been received if the livestock were grown to planned age and weight before sale. The amount is calculated based on an estimated liveweight or dressed weight at planned time of sale, multiplied by the sale price less the running costs per head for the period from early sale until planned sale.

(c) In the case of sheep, the lost profit from wool production from forced sale of livestock during the period from actual sale until the planned time of sale is also claimed.

(a) This head of loss represents losses of the stud operations of Gullendah Pastoral Co, the tenth plaintiff, which conducts an artificial insemination program for lamb production. The effects of the fire included a substantial reduction in the success rate for producing lambs from artificially inseminated ewes. This head represents the reduction in earnings (market value after running, marketing and sale costs are deducted) flowing from the drop in lambing success rates. Detailed evidence and findings will also be required as to pre-fire rates of successful artificial insemination and the number of livestock actually inseminated at the time of fire.

This head of loss represents the cost of fodder required to substitute for destroyed pasture which, had it not been destroyed, would have provided grazing feed for stock. In partial substitution for this grazing pasture, stock was hand fed with various types and quantities of fodder. The cost of this substitute fodder is claimed. Detailed evidence and findings will also be required as to:

(a) the type and quantity of substitute pasture fed to stock

(b) the amount of fodder which would have been fed to stock in any event to supplement pasture;

(c) the market value of fodder which was taken from inventory and used as substitute feed.

This head of loss represents the costs of hand feeding substitute fodder to stock. These costs comprise labour and machinery costs. The claim is for an average combined cost per tonne of substitute fodder having regard to the processes and costs involved in feeding out the substitute feed. Detailed evidence and findings will also be required as to quantity of feed and time taken in feeding.

This head of loss represents the cost of extra agistment required because of destruction of pasture. In substitution for some of the damaged pasture, some stock were agisted on other properties. The cost of agisting stock is claimed at the actual rate, per week per head, incurred. Detailed evidence and findings will be required as to the area of pasture destroyed and the stock supported by this pasture.

(a) This head of loss represents the costs incurred as a necessary incident of agisting stock on other properties. These are the costs of carting stock to and from the agisting property, the cost of labour necessary in loading, unloading and supervising agistment, and the cost of travel necessary for inspection of stock on agistment.

(b) In respect of the Atkinsons, the first and second plaintiffs, a further cost was incurred. Sheep were unknowingly agisted on a property affected by Ovine Johnes Disease ( OJD ) and accordingly could not be returned to the Atkinsons' property and were sold for slaughter. The agisting property did not have shearing facilities. The stock were transported to another OJD affected property for shearing before sale. The costs associated with the transportation to this further property are also claimed.

(a) The fire caused the destruction of pasture and certain things were done to ameliorate the effects of this destruction. These things (for example providing substitute feed to stock, selling stock before the planned sale time, not immediately replacing destroyed stock and agisting stock) are the subject of other heads of loss.

(b) To the extent that these other actions did not wholly ameliorate the effects of the pasture destruction, further loss was suffered. This loss is quantified by identifying: (i) the quantity of feed represented by the pasture destroyed; (ii) the quantity of feed represented by the totality of all things which ameliorated the effects of the pasture destruction; and (iii) the quantity of feed represented by the difference between the two. This represents the amount of pasture damage which is not compensated under other heads of loss."

Quantum - legal costs 21 The plaintiffs' solicitor estimated the cost of conducting the hearing on quantum of damages to be approximately $1,473,000 made up as follows: Plaintiffs' estimation of costs on quantification of damages

Preparation of lay evidence $290,000 Preparation of expert evidence $327,000 Preparation of evidence in reply $158,000 Preparation for hearing $160,000 Conduct of hearing $528,000 Expert's fees for preparation and attendance of hearing $ 10,000

Total estimated costs $1,473,000

Whether the application should be granted 22 On liability the focus of the plaintiffs' lay evidence is the bushfire; on quantum the focus will be on the practices and economics of farming. The need to make findings of fact, which may involve issues of credit, may arise and is a consideration which weighs against the granting of a separation order. 23 However, there will be a clear distinction in the expert evidence anticipated by the plaintiffs on liability and quantum. Mr Athol Hodgson is the plaintiffs' expert on the liability issue. His areas of expertise include forest fire behaviour and ecology, emergency management (fire), prescribed fire and aerial firefighting (exhibit GD6, to the affidavit of Gary Doherty referred to above, p45). The plaintiffs' anticipated expert on the quantum issue will be an agronomist whose area of expertise would include matters of farming practice and economics. While there may be some overlap of witnesses, most likely the plaintiffs themselves, the experts in relation to quantum are unlikely to be required to give evidence at both trials. 24 As it is the plaintiffs who have sought this order it is less likely they would feel that an aggrieved because of the type of hearing adopted (see the second comment of Callinan and Kirby JJ in Tepko extracted above). I acknowledge that by severing issues may give rise to an extra appeal. 25 It must be remembered that the overriding purpose of the CPA is the just, quick and cheap resolution of the real issues in the proceedings. These proceedings will take some months to be heard - a very long time in the court calendar. The liability trial will take between an estimated 28 to 37 days. It is more likely that the defendant's estimate is more accurate, being the estimate of 37 days. On the plaintiffs' estimate the quantum issue would involve no less than 33 days with anticipated costs of preparation in the sum of $1,400,000. 26 Overall it is my view that there is much benefit in severing the issue of calculation of damages. Should the other issues be decided in favour of the defendant, these proceedings will be brought to an end. Should the determination be made in favour of the plaintiffs, the quantum issues may be referred out to a suitable referee. At this stage both parties will not be burdened with the substantial costs involved in the preparation of quantum reports. The court's time may be used more efficiently if liability is determined and in accordance with those findings the experts on quantum may be able to agree on the methodology for the calculation of the head of damage. It may also be possible for the experts to agree on the value of various items. If this approach is adopted it would shorten the trial and lessen the expense to the parties. 27 I make an order that the quantification of any damages payable to the plaintiffs by the defendant be determined separately from and after the determination of all the other questions in the proceedings pursuant to Rule 28.2 of the UCPR. 28 Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiffs' costs as agreed or assessed.

(1) I make an order that the quantification of any damages payable to the plaintiffs by the defendant be determined separately from and after the determination of all the other questions in the proceedings pursuant to Rule 28.2 of the Uniform Civil Procedure Rules .

(2) The defendant is to pay the plaintiffs' costs as agreed or assessed. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.