Atkinson v State of New South Wales

Uniform Civil Procedure Rules 2005 (NSW) Rule 28.2, Part 49.4, 49.12 LEGISLATION CITED : Crown Proceeding Act 1988 (NSW) Section 5 Civil Procedure Act 2005 (NSW) Supreme Court Rules Part 31, Rule 2

Fleet v Royal Society for the Prevention of Cruelty to Animals NSW [2005] NSWSC 926 Warren v Coombes (1979) 142 CLR 531 Do Carmo v Ford Excavations Pty Limited [1981] 1 NSWLR 409 Idoport Pty Ltd v National Australia Bank Limited [2000] NSWSC 1215 Dunstan v Simmie & Co Pty Ltd [1978] VR 699 CASES CITED : House v The King (1936) 55 CLR 499 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 Pioneer Park Pty Limited v ANZ Banking Group Limited [2005] NSWSC 832 Admiral 1 Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105 Tallglen Pty Limited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130 ABB Engineering Construction Pty Ltd v Freight Rail Corporation [1999] NSWSC 103 Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 44

PARTIES : Atkinson & Others State of New South Wales & Others

Mr Kunc (Plaintiff) COUNSEL : Mr M Maurice QC (Plaintiff) Mr S Gregory (Defendant)

SOLICITORS : Blake Dawson Waldron Lawyers (Plaintiff) Frances Allpress (Defendant)

LOWER COURT JURISDICTION : Supreme Court (Associate Judge)

LOWER COURT DATE OF DECISION : 21 March 2006

LOWER COURT MEDIUM NEUTRAL CITATION : Atkinson & 30 Ors v State of NSW [2006] NSWSC 152

1 Price J: These proceedings involve an appeal by the defendant against orders made by Associate Justice Harrison on 21 March 2006. 2 Her Honour ordered "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". 3 The defendant was further ordered to pay the plaintiffs' costs as agreed or assessed. 4 The proceedings before Her Honour were brought by the plaintiffs. The defendant opposed the orders sought.

The cause of action 5 The plaintiffs have commenced proceedings against the State of New South Wales for damages arising from bushfires alleged to have emanated from the Goobang National Park in December 2001. There are thirty one plaintiffs who variously operated farming enterprises, owned livestock or plant and equipment on properties to which the bushfires spread. 6 The State of New South Wales is sued in right of acts of officers of the National Parks and Wildlife Service and the Minister for the Environment pursuant to section 5 of the Crown Proceeding Act 1988 (NSW). 7 The plaintiffs plead (Fourth Amended Statement of Claim Ex A GD14) that the defendant owed a statutory and/or common law duty of care to the plaintiffs to prevent the occurrence of, contain within and minimise the effect of bushfires emanating from the Goobang National Park.

8 Further and alternatively, the plaintiffs allege that the defendant is liable to the plaintiffs in nuisance for permitting the second fire and Evandale Sector backburn to travel from Goobang onto the plaintiffs' land. 9 The thirty one named plaintiffs are to be grouped into nine farm enterprises or plaintiffs' groups. The individual claims of the plaintiffs are said to total $7.6 million, plus interest.

10 The plaintiffs in a Notice of Motion filed 16 September 2005 sought (other than the usual orders) 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."

Nature of Appeal under Part 49.4 Uniform Civil Procedure Rules 2005 [UCPR] 11 The appeal from the decision of the Associate Justice was brought under Part 49.4 UCPR (formerly Part 45.4 UCPR) 12 An appeal from an Associate Justice of the Court to a single Judge is subject to the same principles as those governing an appeal from a Judge to the Court of Appeal: Fleet v Royal Society for the Prevention of Cruelty to Animals (NSW) [2005] NSWSC 926 at [16] per Johnson J. Subject to the impact of any evidence admitted under r 49.12 UCPR, the findings of the Associate Justice are to be followed by the Judge unless the facts found, or the inferences drawn, by the Associate Justice are so flawed as to attract review by an appellate court under the principles in Warren v Coombes (1979) 142 CLR 531 at 533: Do Carmo v Ford Excavations Pty Limited [1981] 1 NSWLR 409 at 420 - 421. 13 Her Honour, in making the orders that she did, exercised a discretion conferred by Rule 28.2 (UCPR). As Einstein J said in Idoport Pty Ltd v National Australia Bank Limited [2000] NSWSC 1215 at [7]: "The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J."

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." 15 An exercise of discretion by the Associate Justice may be reversed in accordance with the principles revealed in House v The King (1936) 55 CLR 499 at pp 504, 505 where Dixon, Evatt and McTiernan JJ said: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 16 The defendant filed [and read] in support of the Notice of Motion affidavits of Gary Doherty sworn on 15 June 2006 and 22 June 2006 respectively.

The submissions of the parties on the Appeal 17 The defendant's submissions are conveniently outlined in written submissions (p 3) as follows: (a) This is a case which applies the oft expressed views of judges of the highest superior courts that splitting trials is generally unsatisfactory. It does not satisfy the prerequisite to an order for separate hearing that the utility, economy and fairness to the parties of the order is beyond question, further or in the alternative, clear to see. (b) Her Honour ordered that there first be determined all questions other than the amount of compensation payable to the plaintiffs by the defendant (ie other than the quantum of the damages payable to the plaintiffs by the defendant) and separately, the amount of compensation payable to the plaintiffs by the defendant (ie the quantum of the damages payable to the plaintiffs by the defendant). At the first hearing is to be determined the issues of duty, breach, causation (of damage or loss) and the loss, injury and damage (suffered). At the second hearing is to be determined the amount of the damages to be awarded. (c ) Even before weighing the adverse consequences of the order, little benefit would flow from the order.

(d) The adverse consequences of the order render it entirely inappropriate. These include the factors set out in ground 11 of the Notice of Motion.

(e) Her Honour fell into error in each of the respects identified in paras 2 -14 of the Notice of Motion.

(f) The Court ought make orders 1, 2 & 4 in the motion. 18 The plaintiffs' submissions are summarised as: (a) A careful reading of Her Honour's Judgment leaves no room for doubt that her Judgment is not affected by appealable error of the kind described in House. (b) Her Honour carefully considered the authorities and warnings which had been cited to her and plainly took these into account. Her reasons at Judgment paragraph [22] and following are clear and cogent. Furthermore, counsel for the defendant made the point after the plaintiffs' reply that he considered the estimates in Mr Fox's affidavit were directed to a splitting off of something more than the nine "dollar value" cases. There is no reason to suppose that her Honour ignored this point. Indeed, her Honour preferred the defendants evidence as to the length of the liability hearing over that of the plaintiffs (37 days as opposed to 18 days). In doing so, her Honour plainly made her own judgment about the likely length based on all of the evidence and submissions and her own experience. As to the likely length of the quantum hearing, the defendant declined to offer any assistance. In these circumstances, her Honour was entitled to have regard to Mr Fox's estimate and give it such weight as she thought it deserved in light of all the submissions which she had heard and her own judgement and experience. (c) Her Honour's decision is an unremarkable example of the observation in Ritchie at [28.4.35] that "despite cautionary observations to the contrary…it is a relatively frequent occurrence for questions of liability and damages to be tried separately. This will be appropriate in various instances. For example…if the assessment of damages is particularly complex". (d) Damage caused by the negligent acts or omissions of the defendant is an essential element of the common law tort of negligence. The plaintiffs have always accepted that if there was to be a separate trial of liability issues, that would necessarily involve them in having to prove that the fire (a) caused (b) damage to identified items of property. The defendant understood this at the hearing below (see pages 3 and 4 of ex GD 22 on the appeal), but now appears to suggest that it misunderstood Mr Fox's affidavit. (e) In the absence of any admission by the defendant, the trial judge would be obliged to make findings as part of the liability hearing that specific, identifiable items of property had been damaged as a result of the fire. (f) Therefore the plaintiffs' case for separate trials, outlined in the affidavit of H C Fox sworn 16 September 2005 [ex GD10 on the appeal], anticipated that at the liability trial the plaintiffs would prove the particular items damaged or destroyed as a result of the fire but not otherwise. Detailed inventories of those items had already been provided to the defendant by the plaintiffs and were attached to Mr Fox's affidavit. Converting this material into affidavits identifying the items would be a short exercise. (g) By referring, in reply, to the quantification process to be hived off as a process by which the "dollar value" of the plaintiffs' losses would be established, the plaintiffs did not change the basis of their application. (h) The defendant chose not to cross examine Mr Fox. Moreover, if at the end of the hearing they believed they may have misunderstood the purport of Mr Fox's evidence or that the basis of the plaintiffs' application had changed, it behoved them to seek an opportunity to put further submissions to the Court and, if necessary, to cross-examine Mr Fox (who was present at the hearing and available for cross-examination). They did neither of these things.

Dealing with the Appeal 19 At the hearing before her Honour the plaintiffs relied on the affidavit of Hayden Carlisle Fox filed 16 September 2005 (conveniently referred to as the "Fox affidavit"). The defendant relied on the affidavit of Gary Doherty filed 12 October 2005. Paragraph 8 of the affidavit of Mr Fox was not read nor were paragraphs 18 and 19 of Mr Doherty's affidavit. Mr F Kunc of counsel appeared for the plaintiffs and Mr S.A Gregory of counsel appeared for the defendant. 20 Her Honour in her Judgment [at paras 6 to 10] reviewed the authorities applicable to the determination of a question separately from any other question. Particular reference was made to the caution provided by Callinan and Kirby JJ (at [168] - [171]) against the severing of issues in Tepko Pty Ltd v Water Board (2001) 206 CLR 1. 21 Further reference was made to the reasons enunciated by Einstein J (at [7]) 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 Barret J) in rejecting an application for separation of liability and quantum. Her Honour quoted what was said by Giles CJ Comm D (as he then was) in Tallglen Pty Limited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130 at 141 -2. 22 Because of her Honour's careful review I consider it is unnecessary for this Court to analyse again the cases cited in argument to her and this Court.

23 The acceptance of the defendant's estimate of 37 days for the liability hearing as likely to be more accurate was open to the Associate Justice.

24 The defendant's contention that her Honour erred is primarily based upon the assertion that during the hearing the plaintiffs expressly abandoned their application insofar as it sought a separate hearing of anything more than the "dollar value" of damages payable to the plaintiffs by the defendant. The plaintiffs do not agree that the basis of their application was changed.

25 The proceedings at first instance were not transcribed. Some detail of what occurred is provided in the affidavit of Mr Doherty sworn 15 June 2006 (conveniently referred to as the "Doherty affidavit").

26 The approach taken by the plaintiffs in chief is referred to in the Doherty affidavit (paras 11 to 19 inclusive), the Fox affidavit and the plaintiffs' written submissions (Exhibit A GD 20). Paragraph 8 of the submissions conveniently encapsulates the plaintiffs' approach:

"First, it must be appreciated that what is proposed to be "hived off" is, in a legal sense, quite narrow. It is not a separation of liability and quantum in the broad sense. Damage relevantly caused is an element of the plaintiffs' cause of action to make out liability. The defendant has declined to make any admission that if it did breach any duty, that breach caused any damage whatsoever. The plaintiffs therefore accept they must prove damage relevantly caused. What is sought to be separated is the precise quantification of any such damage, once proven."

27 The plaintiffs accordingly recognised that damage is an essential element of the tort of negligence. The separate trial application necessarily involved, so far as the plaintiffs were concerned, proof that the fire caused damage to identified items of property. Additional short evidence by the "principals" (the farmers themselves) proving the fact (but not the quantification) of the various heads of damage claimed, eg pasture damage, stock loss, fences destroyed/damaged would be filed (Fox affidavit paras 5,14, plaintiffs' submissions para 5). Evidence from "experts in agronomy and related disciplines" would not be required for the "liability" case.

28 Whilst the plaintiffs' approach was understood by the defendant, it was opposed. The defendant submitted (inter alia) there is a real prospect of overlap between the factual issues relevant to the two proposed trials and a "bright dividing line" was absent. Damage caused by the fire, it was submitted, was confused with damages caused by the alleged breaches of duty (defendant's submissions Exhibit A GD 22 para 2, Doherty affidavit para 20).

29 The asserted change in the plaintiffs' position is said to have arisen during the plaintiffs' submissions in reply (Doherty affidavit pages 7 to 9 inclusive). Mr Doherty recites (at para 26 and para 27) the following exchange between her Honour and Mr Kunc:

Her Honour: "The point that you have articulated in the Notice of Motion as being the point where the line can be drawn is not "dollar value". How do you propose that I should read the Notice of Motion bearing in mind your submission?"

Kunc: "Quantification of damages should be determined after all other issues are determined. By quantification of damages is meant the 'dollar value of any damages payable - 'value in money'."

Her Honour: "Quantification has a broader meaning than dollar value. Quantification requires that you would have to determine what the damage was." Mr Kunc then sought instructions from his instructing solicitors who were present in Court. After obtaining instructions he then continued making his submissions and used words to the following effect:

Kunc: "We are content with the Notice of Motion being read as requiring the determination of "dollar value" as opposed to "quantification" of damages." It is unnecessary for present purposes to recite the contents of para 27 of the Doherty affidavit.

30 Mr Gregory's response is recorded in the Doherty affidavit [para 29]:

"When Mr Kunc sat down Mr Gregory rose and used words to the following effect:

"The proposed change from "quantification" to "dollar value" would hive off something quite different than that which is the subject of the application in chief and the evidence of Mr Fox. It would fundamentally change the application. It is not consistent with the distinction between 'liability' and 'quantification' and the estimates founded in that distinction addressed in the affidavit of Mr Fox. The defendant has not made submissions directed to the revised application."

31 Counsel for the defendant understood Mr Kunc's contentment with the Notice of Motion being read as requiring the determination of "dollar value" as opposed to "quantification" as representing a fundamental change in position.

Her Honour did not say anything in reply. The hearing was adjourned.

32 The Associate Justice's understanding that such a fundamental change in position had occurred is, the defendant submits, reflected at paragraph 4 of the Judgment, when her Honour states:

"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 be determined."

33 The orders made by the Associate Justice are said by the defendant to reflect the distinction between the loss, injury or damage "which a plaintiff has suffered as a result of the tortfeasor's wrong and the compensation which is awardable to the wronged, ie, by an order that a tortfeasor pay damages to the wronged."

34 Major consequences would flow to the separate hearings application from the asserted fundamental change in the plaintiffs' position. Should the defendant's assertion be correct, the ambit of the first hearing would be much wider and the second hearing much narrower than the separate hearings sought in chief by the plaintiffs. At the first hearing, all questions other than the amount of compensation payable would be determined.

35 The second hearing would be confined to a determination of the damages to be awarded. The line of division drawn upon this analysis would be very different to that advanced in the plaintiffs' submissions in chief. The agronomist/accountants would be required to give evidence at both hearings. As Mr Gregory observes [ at para 27 submissions], the first hearing would include the case of physical damage, the nature and extent of the destruction or damage and "what remains to be done to restore or replace them". The dollar amounts appropriate to compensate each plaintiff for his loss would be addressed at the second hearing. Similar comments are made concerning consequential loss of profits. The actual dollar amounts, as Mr Gregory correctly observes, would be but a small part of the agronomist's report.

(i) On quantum the focus will be on the practices and economics of farming [para 22].

(ii) There will be a clear distinction in the expert evidence anticipated by the plaintiffs on liability and quantum…….whilst 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 [para 23].

(iii) 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 [para 25].

(iv) At this stage both parties will not be burdened with the substantial costs involved in the preparation of quantum reports [at para 26].

37 These findings would not be open to her Honour if, as the defendant submits, the second hearing is confined to a determination of the damages awarded. Her Honour would be seen to have egregiously confused the applications by taking into account matters which had become irrelevant by the asserted change in position. 38 Mr Kunc's advice to her Honour that the plaintiffs were content with the Notice of Motion being read "as requiring the determination" of "dollar value" as opposed to "quantification" of damages had followed an exchange with the Associate Justice during which she expressed the view that "quantification has a broader meaning than dollar value", that "quantification" requires determination of "what the damage was". The plaintiffs from the outset accepted they must prove damage relevantly caused. Separation was sought for "the precise quantification of any such damage, once proven" (my emphasis) (supra para 26).

39 I am unable to discern an abandonment of the plaintiffs' application . Mr Kunc expressed himself synonymously with the position previously advanced.

40 It is evident from the Judgment that her Honour understood that the plaintiffs had not changed their position. There was no confusion on her part nor did she take into account matters which had become irrelevant. A clear line of demarcation on the issues to be determined during the separate trials exists in the Associate Justice's findings which were open to her to make.

41 Her Honour manifestly took into account the authorities and warnings which had been cited to her.

42 Specific reference [at para 22] is made to the need to make findings of fact "which may involve issues of credit" as being a consideration which "weighed against" the granting of the order sought. The Associate Justice was aware [at para 23] that the plaintiffs are likely to give evidence at both trials and difficulties emerge from findings of credit. Her perceptivity of what was said in ABB Engineering Construction Pty Ltd v Freight Rail Corporation [1999] NSWSC 103 [15]-[16] & [19] and Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 44 per Mahoney JA at p442E is plainly exposed. The possibility that such difficulties might arise did not preclude the making of the order for separation.

43 Her Honour made reference to the effect of the Civil Procedure Act (2005) (NSW) (CPA) [at paras 10 and 11] and took into account the overriding purpose of the CPA [at para 25].

44 Much was made in the defendant's submissions upon appeal to the terms of the order made by the Associate Justice. It was argued that the use of the words "be determined" reflected the "result of a process of determination" rather than "a process". Her Honour's understanding of the plaintiffs' application is articulated in her detailed reasons and little assistance is derived from an order made in the terms of the Notice of Motion.

45 It was open to her Honour to conclude [at para 26] that "there is much benefit in severing the issue of calculation of damages".

46 Criticism has been expressed that her Honour opined [at para 26] that "the quantum issues may be referred out to a suitable referee". Mr Gregory in submissions at first instance [Ex AGD 22 - para 5] pointed to a number of reasons the Court could not be confident that the proposed second trial would be suitable for reference to a referee. The Associate Justice was entitled to disagree.

47 The Judgment, as Mr Jenkins points out, did not address the plaintiffs' claim for compensation for distress suffered as a result of the fires. All issues constituting claims for distress will be appropriately litigated in accordance with her Honour's clear line of demarcation at the second hearing. The claims for distress form a small part of the claim. Failure by her Honour to refer to the claims for distress is, in my view, inconsequential.

48 Issues that may arise from assertions that the plaintiffs or particular plaintiffs failed to mitigate loss, it is appropriate to note, would be determined at the second hearing.

49 Nothing has emerged in this appeal to indicate an improper application by the Associate Justice of the exercise of discretion under Rule 28.2 (UCPR). Her Honour did not fall into error in any of the respects identified in paras 2 -14 of the Notice of Motion or at all.

50 The order for costs was well within her Honour's discretion.

(a) The appeal against the orders made by Associate Justice Harrison on 21 March 2006 is dismissed. (b) The defendant is to pay the plaintiffs' costs of the appeal.

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