Bootle v Barclay

Court of Appeal (NSW)|2013-05-10|Before: Meagher JA, Ball J

Background 5The Barclays were the owners and occupiers of a property known as "Kilbirnie", located near Nyngan in northern New South Wales. The first defendant in the District Court proceedings ("Mr Bootle") was the registered proprietor of a leasehold estate in "Bonna", a property adjoining Kilbirnie. The second defendant was Bootle Bros Management Pty Ltd ("BBM") which, according to the primary Judge, was the occupier and operator of Bonna. Mr Bootle was a director of BBM. I refer to Mr Bootle and BBM together as "the Bootles". 6The third defendant, Macquarie Valley Ag Services Pty Ltd ("MVAS"), conducted an aerial spraying business. For this purpose MVAS leased an aircraft from Bundambar Pty Ltd ("Bundambar"), which was not a party to the proceedings. Mr Martin, who was also not a party, was a director of both Bundambar and MVAS. 7The fourth defendant ("Mr Shapley") was the pilot of the aircraft used to spray paddocks on Bonna on 5 and 6 July 2005. MVAS arranged with Mr Shapley, through AirXS Pty Ltd ("XS"), a company of which he was a director and shareholder, that he would pilot the aircraft during the aerial spraying operations on Bonna. 8The Bootles seek leave to appeal from the decision of the primary Judge. MVAS and Mr Shapley have filed a separate summons also seeking leave to appeal from the decision. The Barclays have not filed a cross-appeal, nor have they filed a notice of contention. 9Directions were made for argument on the leave applications and appeals to be heard concurrently. At the hearing, the parties were asked to address first the question of whether leave to appeal should be granted. After hearing argument on this question, the Court indicated that, subject to one qualification, it would proceed with full argument on both appeals. The Bootles were refused leave to appeal against the primary Judge's dismissal of cross-claims between the Bootles, on the one hand, and MVAS and Mr Shapley on the other.

The Barclays' Claims 10The Barclays claimed damages against all four defendants for the loss of emerging wheat and lucerne crops on Kilbirnie. The Barclays alleged that aerial spraying of a herbicide known as glyphosate, which took place on Bonna on 5 and 6 July 2005, caused damage to the crops. Their case was that glyphosate spray had drifted from the Bonna paddocks to paddocks in Kilbirnie, and that this had occurred in consequence of the negligence of each of the four defendants. The Barclays made an alternative claim against MVAS and Mr Shapley under the Damage by Aircraft Act 1999 (Cth) ("DA Act"). Other causes of action were pleaded but are no longer in issue. 11The primary Judge rejected the Barclays' claim insofar as it was based on the aerial spraying conducted on 5 July 2005. His Honour found that the spraying on that day did not cause any damage to the Barclays' crops. That finding is not now contested. 12The Barclays succeeded in their claim based on the aerial spraying that took place on Bonna on 6 July 2005. On that day, Mr Shapley sprayed glyphosate over an area of about 300 hectares on four paddocks within Bonna. The paddocks, known as "Back Pine", "Pine", "Back Taxi" and "Taxi", were contiguous to each other. The primary judge found that part of the glyphosate spray drifted south-west over a paddock on Bonna known as "Innisfallen" or "Georges" and ultimately came to earth on paddocks within Kilbirnie known as "Sues", "Little Gibsons" and "Paddys". His Honour was satisfied that the emerging wheat and lucerne crops growing on those paddocks had been damaged by the glyphosate spray. That finding is also no longer in dispute. 13The plan reproduced below was an aide-memoire at the trial, but accurately reflects an aerial photograph that was in evidence. The plan shows the locations of the paddocks on Bonna on which the spraying took place and the paddocks on Kilbirnie where crop damage occurred. The boundary between Bonna and Kilbirnie runs along the southern and western sides of "Innisfallen" (which includes the wooded areas to the south of "Taxi" and "Barclays") and then along the western side of "Barclays" and "Walsh's".

The Primary Judgment 14It appears that a good deal of argument was devoted at the trial to whether the Bootles owed a non-delegable duty of care to the Barclays on the principles stated by the High Court in Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; 179 CLR 520 ("Burnie"). Presumably for that reason, his Honour examined in some detail whether the spraying of herbicides was a sufficiently dangerous activity to warrant the imposition of a non-delegable duty of care on the occupier of the land being sprayed. 15In that context, his Honour identified (at [108]) three significant characteristics of glyphosate when sprayed from the air: (1) Once in the air it basically cannot be controlled (2) It is damaging to healthy productive plant material on contact (3) It is likely to kill healthy plant material and thus reduce production. 16His Honour concluded (at [109]) that: the combined effect of the magnitude of the foreseeable risk of an accident happening, the inability to control the substance once released and the foreseeable potential damage are such that a reasonable person would consider it necessary to take special precautions in relation to it. 17The primary Judge rejected a submission by Mr Bootle that he did not owe the Barclays a duty of care because BBM was the occupier of Bonna and he was merely a lessor. His Honour considered (at [73]) that Mr Bootle was the "hand and mind" behind the occupation and use of Bonna. Thus, for relevant purposes "Mr Bootle was BBM and BBM was Mr Bootle". Furthermore, in his Honour's view (at [74]), while BBM entered an agreement with MVAS for the latter to spray glyphosate on Bonna, the agreement came about at the "behest" of Mr Bootle. To argue that Mr Bootle did not contract with MVAS was "simplistic and ignore[d] the reality on the ground". 18The primary Judge found that all four defendants had breached their duty of care to the Barclays. He reached this conclusion because each could (and presumably should) have called off the spraying on the Pine and Taxi paddocks on Bonna on 6 July 2005. His Honour reasoned as follows: 75 What is factually true is that neither Mr Bootle nor BBM actually carried out any aerial spraying. The individual who did that was Mr Shapley. But that spraying was at the direction of Mr Bootle and BBM. Although neither Mr Bootle or BBM or MVAS had control over how the plane was flown, anyone of those entities could have directed the pilot not to engage in aerial spraying on the day in question. 76 It is important to emphasise that the prime cause of the damage occurring on the day, did not arise out of the manner in which the plane was piloted, including choice of droplet size and nozzle angle, but because the weather was unsuitable in all the circumstances due to the wind speed and direction. That damage was, in my view, prima facie preventable by either Mr Bootle or BBM or MVAS telling Mr Shapley not to spray on that day or by Mr Shapley himself deciding not to spray in the prevailing conditions... ... 80 ... I do agree with the submission that if Mr Bootle had a duty of care [then] that was a duty of care no less nor greater than that owed by BBM. 81 I think the situation needs to be put in perspective. Here we have two farmers with significant common land boundaries engaged in the production of cereal crops to feed humans and lucerne crops to feed animals. In order to control weed infestations over large areas requires broad acre spraying of glyphosate and other herbicides with the obvious and real risk of such herbicides damaging productive crops. A balance has to be weighed between economics and the risk that if your decision to spray in conditions that result in damage to your neighbours crop, then you may be absolutely liable for any consequential damage. 82 ... [T]he fault in this case is not in the methodology of the operation but in the decision to carry out the aerial spraying on the day in question, rather than ground spray or spray on another more suitable day. This is not an issue as to the skills of the pilot, the nature of the herbicide, the patterns of spraying, the control of the aircraft but simply whether or not aerial spraying should have been conducted on that day having regard to all the circumstances. 83 Having regard to the expert evidence and the risks involved in the given climatic conditions, aerial spraying should not have been carried out where there was a risk of terminal damage to a neighbours crop. Had the aerial spraying been of some benign substance, we would not be here, but what was sprayed was a substance fatal to both good plants and bad and thus in my view what was said in Burnie Port Authority is apposite. ... 91 There is no doubt that all the defendants were well aware of the risks attaching to the use of glyphosate both from long experience in the agricultural industry and from previous problems of overspray between the properties in 2003. Although any such damage was denied by Mr Bootle, having regard to some problem in the former good relationship between Mr Bootle and Mr Barclay, apparently an amount of $3,000 was paid for its nuisance value by Mr Bootle to Mr Barclay for what I understand to be an overspray in that year. ... 110 An occupier or user of farm premises cannot, once a decision is made to aerial spray a noxious substance, simply pass over responsibility to either or both the pilot or the aircraft company. Whilst the flying of an aeroplane is a specialised activity that would be beyond the control of someone like Mr Bootle, what is to be sprayed, where and when is not. I would expect that a broad acre farmer would have developed experience of the types of conditions likely to generally impact on aerial spraying activity. In Mr Bootle's case, he was aware that his neighbour had emergent crops which were more likely to be adversely affected by glyphosate than more mature plants. Mr Bootle could have directed MVAS not to engage in spraying on that day, or used ground spray equipment instead, as he was and had already been doing. Because he was 2 weeks behind and needed to have those paddocks treated, he decided on aerial spraying, knowing the nature and quality of the extra risk involved as apposed to ground spraying, which is also not without risk. ... 112 In the circumstances I am satisfied, as per Burnie, that liability exists in the first and second defendants as it does for the third and fourth defendants. I am satisfied that each is jointly and severally liable for damage caused by the aerial spraying in terms of the Civil Liability Act and the common law. (Emphasis added.) 19The primary Judge then dealt with the Barclays' claim against MVAS and Mr Shapley under the DA Act. To follow his Honour's reasoning, it is sufficient to note ss 10 and 11 of the DA Act, which are the key provisions: 10 Liability for injury, loss etc. (1) This section applies if a person or property on, in or under land or water suffers personal injury, loss of life, material loss, damage or destruction caused by: ... (c) an impact with a person, animal or thing that dropped or fell from an aircraft in flight; or (d) something that is a result of an impact of a kind mentioned in paragraph ... (c). ... (2) If this section applies, the following people are jointly and severally liable in respect of the injury, loss, damage or destruction: (a) the operator of the aircraft immediately before the impact happened; (b) the owner of the aircraft immediately before the impact happened; (c) if the operator of the aircraft immediately before the impact happened was authorised to use the aircraft but did not have the exclusive right to use it for a period of more than 14 consecutive days - the person who so authorised the use of the aircraft; ... 11 Recovery of damages without proof of intention, negligence etc. Damages in respect of an injury, loss, damage or destruction of the kind to which section 10 applies are recoverable in an action in a court of competent jurisdiction in Australian territory against all or any of the persons who are jointly and severally liable under that section in respect of the injury, loss, damage or destruction without proof of intention, negligence or other cause of action, as if the injury, loss, damage or destruction had been caused by the wilful act, negligence or default of the defendant or defendants. 20His Honour made the following findings:

The DA Act applied (at [141]); no express finding was made as to the basis for that conclusion, but the parties accept that the most likely basis for that holding was that s 9(4)(b) was satisfied because the owner of the aircraft, Bundambar, was a trading corporation;
Mr Shapley was the user of the aircraft on 6 July 2005 and thus was the "operator" of the aircraft within the definition in s 6 of the DA Act (at [130]);
MVAS came within s 10(2)(c) of the DA Act because Mr Shapley was authorised to use the aircraft only for each particular spraying operation and it was MVAS that authorised him to use the aircraft on each occasion (at [131]);
Mr Shapley was not an employee of XS and thus could not claim the protection of s 7 of the DA Act (which exempts from liability an employee who uses an aircraft in the course of his or her employment) (at [134]); and
the spray was a "thing that dropped or fell from an aircraft" within the meaning of s 10(1)(c) of the DA Act (at [140]). 21The primary Judge concluded (at [141]) that the DA Act applied to MVAS and Mr Shapley and that both were "vicariously liable" for any damage caused to the Barclays' crops. It is not clear what his Honour meant by the word "vicariously" in this context.

The Leave Applications 22Although the Court heard full argument on the appeals (except for the issues concerning the cross-claims), something should be said about the bases on which the leave applications were initially put. As will be seen, the issues debated in argument were considerably narrower than those foreshadowed in the submissions supporting the applications for leave to appeal. 23The Bootles, MVAS and Mr Shapley all contended that their respective leave applications raised important issues of principle. Mr Sexton SC, who appeared with Mr Carter for the Bootles, submitted that their application for leave to appeal raised important questions as to the applicability of Burnie to crop spraying activities of the kind conducted on Bonna. Mr Lloyd, who appeared for MVAS and Mr Shapley, submitted that their application for leave to appeal raised important and untested questions concerning the construction of the DA Act. 24As argument concerning the leave applications proceeded, it became clear that neither application raised important issues of principle. Mr Sexton acknowledged that despite the primary Judge's extensive analysis of Burnie, his Honour's conclusion that Mr Bootle and BBM were each negligent did not depend on the principles stated in that case. Mr Sexton accepted that his Honour's findings of negligence against Mr Bootle and BBM rested on his Honour's view that they had directly breached the duty of care each owed to the Barclays. It follows that the primary Judge's findings did not depend on the Bootles' duty of care being "non-delegable" in the sense discussed in Burnie. Mr Dodd, who appeared for the Barclays, and Mr Lloyd both agreed that the primary Judge's conclusions on negligence did not depend on a finding that the Bootles owed a non-delegable duty of care to the Barclays. 25It is possible that the Burnie principle could arise for consideration on the Bootles' appeal, depending upon which, if any, findings of negligence are upheld. However, Burnie would be relevant only if it is found that Mr Bootle or BBM (or both) owed a duty of care to the Barclays and:

neither Mr Bootle nor BBM directly breached the duty of care each owed to the Barclays, but
MVAS or Mr Shapley breached the duty of care each owed to the Barclays. 26Mr Sexton's principal submission was that none of the primary Judge's findings of negligence against the defendants could stand, since the findings were not supported by evidence. If that submission is correct, no Burnie issue can arise on the appeal. Similarly, if the findings that the Bootles were directly negligent (and not liable merely because they breached a non-delegable duty of care) withstands challenge, no Burnie issue arises. It was therefore unlikely, as Mr Sexton agreed, that Burnie would require examination in the Bootles' appeal. 27Mr Lloyd indicated that he wished to pursue only two challenges to the primary Judge's decision that MVAS and Mr Shapley were liable in damages to the Barclays under the DA Act. He submitted that the primary Judge had erred in finding that:
Bundambar was a "trading corporation" for the purpose of the DA Act, so that the DA Act applied to the aircraft; and
Mr Shapley was not an employee of XS for the purposes of s 7 of the DA Act. Mr Lloyd accepted that these contentions raise purely factual questions and that, consequently, neither raises any issue of principle. 28I interpose that Mr Lloyd did not argue that the primary Judge erred in holding that the drift of the glyphosate spray onto Kilbirnie satisfied the language of s 10(1)(c) of the DA Act ("damage ... caused by ... an impact with a ... thing that dropped or fell from an aircraft in flight"). It is therefore not necessary to consider that question and I express no opinion on it. 29Mr Sexton ultimately submitted that the Bootles' application for leave to appeal should be granted in order to remedy what otherwise would be an injustice to them. While recognising that the challenges to the primary Judge's findings of negligence involve only factual issues and that the verdict was for a relatively small sum, Mr Sexton contended that to allow the findings to stand would inflict significant injustice on the Bootles. He argued that the primary Judge did not give adequate reasons for holding the Bootles liable in negligence and that his Honour had misapprehended the relevant principles. In particular, so he contended, the primary Judge failed to recognise that the onus was on the Barclays to prove that the Bootles had breached any duty of care they owed. 30Mr Lloyd adopted the Bootles' submissions. In addition, he argued that MVAS and Mr Shapley would suffer serious injustice if the verdict against them were permitted to stand in the absence of evidence to support it.

The Bootles 31The primary Judge found (at [80]) that Mr Bootle and BBM each owed a co-extensive duty of care to the Barclays. His Honour did not identify the precise content of the duty. However, he appears to have regarded the Bootles as having been under a duty to take reasonable care to ascertain if the weather conditions were such that spraying operations could take place on Bonna without a substantial risk of "terminal damage to a neighbour's crop" (at [83]) and, if not, to halt the operation. His Honour also seems to have regarded MVAS and Mr Shapley as having been under a similar duty, although he may have considered Mr Shapley's duty of care to have been higher because he actually conducted the spraying operation on Bonna. 32As I have noted, the primary Judge found that in the circumstances prevailing on 6 July 2005, each of the defendants breached its or his duty of care by allowing aerial spraying to take place on Bonna (or in Mr Shapley's case, by carrying out the spraying (at [82]-[83])). The finding of breach of duty appears to have been influenced, if not dictated by the finding that aerial spraying of glyphosate on Bonna was an activity so inherently dangerous that it attracted the principle laid down in Burnie. His Honour seems to have regarded the latter finding as sufficient of itself to justify his conclusion that each defendant breached the duty of care owed to the Barclays. That reading of the judgment is supported by the reference (at [81]) to absolute liability. 33If this is a correct understanding of the judgment, as I think it is, the primary Judge was in error. Assuming aerial spraying of glyphosate on Bonna to be a hazardous activity in the Burnie sense, this would mean that BBM as the occupier of Bonna (and possibly Mr Bootle as the lessor) owed a non-delegable duty of care to the Barclays. Such a duty required BBM to ensure that reasonable care was exercised in the use of aerial spray on Bonna so as to avoid inflicting damage on susceptible crops on Kilbirnie. BBM could not comply with its duty of care simply by engaging an ostensibly competent contractor to perform the aerial spraying: Burnie, at 550-552, per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. Consequently, BBM would be liable to the Barclays if the contractor engaged by it (whether MVAS, Mr Shapley or both) failed to exercise reasonable care when undertaking aerial spraying on Bonna so as to prevent damage to the susceptible crops growing on Kilbirnie. 34The finding that an activity conducted on land is so dangerous as to attract a non-delegable duty of care on the part of the occupier (or the "person in control of the premises" (Burnie, at 551)) does not mean that the occupier is liable without proof of fault. A neighbour who has suffered damage as a result of the dangerous activity must still show a want of reasonable care for which the occupier can be held liable. The dangerous nature of the activity may require a reasonably prudent person to exercise a higher, perhaps much higher, degree of care (Burnie, at 554). But a plaintiff claiming damages must still prove that the occupier has breached the non-delegable duty of care: Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd [2012] QCA 315, at [8], per Fraser JA (with whom White JA and Mullins J agreed). 35In fairness to the primary Judge, he may have been influenced to take the approach he did by the way the Barclays' case was presented at trial. In opening the Barclays' case, their counsel foreshadowed a submission that if "exceedingly toxic" substances were sprayed from an aircraft and damage resulted to a neighbour's crop, that would be sufficient to establish breach of the duty of care. For the reasons already given, that submission was not correct. 36I did not understand Mr Dodd to submit that the finding of negligence against the Bootles could be supported simply on the basis that the spraying of glyphosate on Bonna was an inherently dangerous activity. He supported the finding of negligence against the Bootles on the basis that they failed to advise MVAS or Mr Shapley that susceptible crops were growing on "Sues" and "Little Gibsons" on Kilbirnie. Mr Dodd submitted that the finding of breach of duty against MVAS and Mr Shapley should be upheld on a different ground, namely that the weather conditions on 6 July 2005 were such that a reasonable person in their position would have postponed the spraying of herbicide until the weather was more suitable. The Barclays neither filed nor foreshadowed the filing of a notice of contention, but no objection was taken to these submissions being advanced. 37Mr Dodd's starting point was that there was no evidence that Mr Shapley was aware that susceptible crops were growing on Kilbirnie adjacent to or near the southern boundary of Bonna. Mr Dodd did not dispute that Mr Martin of MVAS (as Mr Martin said in his evidence) assumed that susceptible crops were growing on Kilbirnie immediately to the south of "Innisfallen". This is not surprising, since the uncontested evidence was that on 30 June 2005 Mr Bootle had given Mr Martin a hand drawn plan of Bonna identifying the paddocks on that property on which sensitive crops were growing. The plan had the words "STUART BARCLAY!!" written on the plan in the area corresponding to the location of the paddocks on Kilbirnie to the south and south-west of "Innisfallen" - that is, "Paddys", "Little Gibsons" and "Sues". Mr Martin's evidence was that he assumed that the clear notation on the plan meant that susceptible crops were indeed growing on Kilbirnie. His assumption was of course correct. 38Despite Mr Martin's evidence, Mr Dodd submitted that the primary Judge should have found that Mr Shapley was unaware that sensitive crops were growing on Kilbirnie and that his ignorance of this fact explained why he was prepared to spray glyphosate on Bonna when the conditions created a high risk of contamination of susceptible crops. The proper inference, so he argued, was that Mr Bootle had failed to advise Mr Martin or Mr Shapley immediately before the spraying that susceptible crops were growing on Kilbirnie. 39The difficulty with this submission is that Mr Shapley's uncontradicted evidence indicates that he was well aware that sensitive crops were growing on Kilbirnie in the area adjacent to "Innisfallen". In his statement, Mr Shapley said the following: 11. My usual practice prior to conducting any spraying for MVAS was to discuss in person with John Martin the instructions and briefing details for the application. Although I cannot recall the specific discussion on this occasion, I would have said words to the effect of: "John, where are we spraying? Are there any susceptible crops? Are there any potential hazards? What are the forecast weather conditions?" 12. Mr Martin would answer my questions. Unless satisfied by the answers I would not undertake the application. He would also provide me with maps of the area to be sprayed. Attached and marked "A" is [the hand drawn plan prepared by Mr Bootle]. PRE-FLIGHT PLANNING 13. Prior to undertaking the aerial spraying of Roundup CT Glysophate ("the Chemical") on 'Bonna' on 5 July 2005 ("the First Application") and on 6 July 2005 ("the Second Application") I first checked the local meteorological conditions in the area to be sprayed with the weather station. This was normal procedure, as well as giving consideration to the forecast weather conditions. 14. I also planned the First Application and the Second Application with MVAS with particular emphasis on any crops susceptible to the Chemical in the nearby vicinity. For both the First Application and the Second Application the buffer zone (that is the distance from any susceptible crop to the Chemical) was a minimum 1700 metres. (Emphasis added.) Mr Shapley was not cross-examined on this evidence. 40The reference to "1700 metres" in Mr Shapley's statement can only be to the width of "Innisfallen" (from north to south), which lay between the area sprayed on 6 July 2005 and the sensitive crops growing on Kilbirnie. It is clear enough that Mr Shapley was intending to convey that when he undertook the "Second Application" on 6 July 2005, he appreciated that the minimum distance between the paddocks being sprayed on Bonna ("Pine", "Back Pine", "Back Taxi" and "Taxi") and the susceptible crops growing on Kilbirnie was 1700 metres. The susceptible crops on Kilbirnie closest to the areas being sprayed on Bonna were those on "Paddys", "Little Gibsons" and "Sues". 41In addition, Mr Shapley gave uncontradicted oral evidence that his usual practice before commencing aerial spraying was to fly over the general area. He did so, among other reasons, to ascertain whether there were recently sown crops. Mr Shapley said that he would have followed his normal practice on this occasion. He was not specifically asked whether he had seen emerging crops in his reconnaissance flight, but he did say that usually there was no trouble in identifying crops that had recently been sown. Mr Barclay's evidence as to the dates on which the various crops were sown makes it likely that at least a significant portion of the susceptible crops would have been readily visible from the air on 6 July 2005. 42The overwhelming inference from the evidence is that Mr Shapley was well aware that sensitive crops were growing on Kilbirnie in the paddocks close to "Innisfallen". He was given that information by Mr Martin who had been informed by Mr Bootle of the existence of the sensitive crops in the area of "Paddys", "Little Gibsons" and "Sues".

Mr Shapley 43Mr Dodd's alternative submission was that the primary Judge had correctly found that each of the four defendants had been negligent in conducting or allowing aerial spraying of glyphosate to be conducted on 6 July 2005 in the circumstances prevailing on that day. Since Mr Shapley had said in evidence that it was ultimately his responsibility to determine whether spraying should take place in a particular location or on a particular day ("the buck stops with the pilot"), the argument concentrated on whether Mr Shapley had breached his duty of care by proceeding with aerial spraying on 6 July 2005. Mr Dodd did not suggest that if the finding of negligence against Mr Shapley had to be set aside, the findings against the Bootles and MVAS for allowing the spraying to take place could nonetheless stand. 44Once again, Mr Shapley's unchallenged evidence stands in the path of accepting Mr Dodd's alternative submission. In his statement, Mr Shapley said, on the basis of contemporaneous records, that the temperature at the time of the "Second Application" was 18 degrees Celsius and the wind direction was 0 degrees (northerly) at five knots per hour. He described these conditions as "ideal" for aerial spraying. 45That description was consistent with other evidence indicating that if conditions were calm, there was a risk of inversion which increased the likelihood that toxic particles would be carried for long distances before coming to earth. Mr Nicholson, an agronomist called by the Barclays, stated in his report that a low wind speed of about five knots per hour made it difficult for the herbicide "at that low speed, to either be propelled through all of the trees [on "Innisfallen"] in to the adjoining paddocks or for some inversion to have lifted the herbicide out of the paddock being sprayed, up over the trees and back down into Kilbirnie. Inversion requires no wind". 46In his oral evidence, Mr Shapley said that he regarded the "buffer zone" of 1700 metres as sufficient: Q. In paragraph 27 you say that for both the first application - that's 5 July - and the second application - that is 6 July, the buffer zone was a minimum of 1,700 metres from where you were spraying? A. Yes. Yes, correct. Q. You carried out an assessment and made a determination about what an appropriate buffer zone would be having regard to the weather conditions, didn't you? A. And my own experience. Q. If you are spraying country which is, for example, next to a desert, it's the last irrigated country before 100 miles of desert, then that would involve different considerations to spraying country which is close to a new crop, is that right? A. Correct. Q. That's an assessment that the pilot needs to make on the day based on firstly the weather conditions, is that right? A. Yes, that's right. Q. Which would involve both wind strength and wind direction? A. Yes. Q. And also temperature? A. Definitely. Q. Because temperature can affect whether there is a risk not just of direct spray drift but of inversion layers carrying spray? A. Correct. Q. That's something you're aware about? A. Yes. ... Q. On 6 July 2005, before you commenced spraying, did you carry out a process of determining whether it was appropriate to spray on Bonner [sic] that day? A. Yes. Q. And based on how many years of experience? A. Near enough to 30. Q. Based on 30 years of experience, did you make a decision that in your opinion it was appropriate to spray? A. Yes, I did, yes. Q. Did you rely in any way on Mr Bootle in terms of making that decision on that morning? A. No. 47Mr Shapley also gave evidence that he was well aware of the danger to susceptible crops of a toxic herbicide such as glyphosate and of the need to keep track of wind speed and direction when releasing the herbicide. He explained that the aircraft had an onboard smoker which displayed the local wind direction when smoke was released from the aircraft. In the course of spraying on 5 July 2005 to the north-west of "Pine" and "Taxi", he had decided not to spray a small area because of the danger of contamination of nearby susceptible crops on Bonna. However, he continued with the operation on 6 July 2005 because he formed the view that in the prevailing "ideal" conditions a buffer zone of at least 1700 metres was sufficient. 48Mr Dodd pointed out that the evidence I have outlined was given by Mr Shapley under cross-examination by senior counsel for the Bootles, whose clients had a common interest with Mr Shapley in refuting the allegation of negligence against him. This is true and objection could well have been taken to a "friendly" cross-examination of Mr Shapley proceeding in this manner. But no objection was taken and no application was made on behalf of the Barclays for Mr Shapley to be further cross-examined in relation to the evidence adduced by senior counsel for the Bootles. So Mr Shapley's evidence remained unchallenged. 49In the absence of other evidence pointing to a want of reasonable care by Mr Shapley, it is difficult to see how the primary Judge's finding of negligence against Mr Shapley can be sustained. It is true that the hazardous nature of the aerial spraying required Mr Shapley (and the other defendants, assuming that each was under a duty of care) to adhere to a higher standard of care than if he was spraying a less toxic substance. It is also true that the fact that the sensitive crops on Kilbirnie were damaged notwithstanding the precautions taken by Mr Shapley indicates that there may have been fruitful lines of cross-examination that could have been pursued with Mr Shapley. But they were not. 50The burden remained on the Barclays to show that Mr Shapley had been negligent and that, in particular, he failed to take precautions against the risk of damage to the sensitive crops on Kilbirnie that, in the circumstances, a reasonable person in his position would have taken: Civil Liability Act 2005, s 5B(1)(c). Since there was no evidence indicating that a reasonable person in Mr Shapley's position would have postponed the spraying, the finding of negligence against him cannot be sustained. 51Mr Dodd relied on the fact that Mr Shapley had ceased spraying on a small area on Bonna on 5 July 2005 because he knew that sensitive crops were growing on Kilbirnie immediately to the west. However, Mr Shapley's decision to cut short the spraying in that area of about one hectare was based on the wind direction at the time and the very close proximity of sensitive crops to the area being sprayed. There was effectively no buffer zone, let alone one equivalent to the minimum distance of 1700 metres between "Pine" and "Taxi" where the spraying took place on 6 July 2005, and the sensitive crops growing on "Paddys", "Little Gibsons" and "Sues". 52The Barclays tendered a report prepared by Mr Nicholson, whose areas of expertise included technical management of herbicide and pesticide usage. His report was mainly concerned with whether spraying on Bonna had caused the damage to the sensitive crops growing on Kilbirnie. Mr Nicholson's report did not address the question of whether Mr Shapley or MVAS, in the exercise of reasonable care, should have refrained from spraying glyphosate on "Pine" and "Taxi" on 6 July 2005. The absence of evidence on this point may have reflected a view within the Barclays' camp that the spraying of herbicide could be characterised as a hazardous activity and this would suffice to itself render the defendants liable. Whatever the reason, Mr Nicholson did not say that aerial spraying of glyphosate should not have taken place on 6 July 2005 in the circumstances prevailing on that day. 53Mr Nicholson's report established that aerial spraying carries greater risks than ground spraying, but that proposition was not in dispute. The report set out a number of precautions that can be taken to minimise the risk of "spray drift" as a consequence of "particle drift", "droplet drift" or "vapour drift". However, the primary Judge found no fault with the conduct of the spraying, including the manner of piloting, choice of droplet size and nozzle angle. The only basis for the finding of negligence was the asserted unsuitability of the weather conditions for the application of glyphosate in the vicinity of the sensitive crops on Kilbirnie. 54Mr Dodd relied on Bonic v Fieldair (Deniliquin) Pty Ltd [1999] NSWSC 636, in which an occupier of property was held liable in negligence for damage caused by the drift of herbicide spray onto a neighbouring property. Not surprisingly, that case turned on its particular facts and is of little assistance in determining the outcome of the present case: see at [28] per Davies AJ. The same can be said of Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd [2012] QCA 315: see at [14], per Fraser JA. 55The primary Judge's findings of negligence against the Bootles, MVAS and Mr Shapley were not supported by the evidence. His Honour's decision to enter a verdict against the Bootles was therefore erroneous. Whether the verdict entered against MVAS and Mr Shapley was also erroneous depends on whether his Honour correctly held that each was liable to the Barclays under the DA Act.

Damage by Aircraft Act MVAS 56It was accepted that if the DA Act applied, MVAS was liable under s 10(2)(c) as the person authorising the use of the aircraft by Mr Shapley or XS. Mr Lloyd argued that the Act did not apply because the evidence did not establish that its owner, Bundambar, was a trading corporation. 57His Honour quoted (at [119]) the relevant principles from the judgment of Mason J in R v The Judges of the Federal Court; ex parte Western Australian National Football League [1979] HCA 6; 143 CLR 190, at 233-234. Mr Lloyd's submission was that the evidence was not sufficient to justify the conclusion that a significant proportion of Bundambar's overall activities satisfied the relevant statutory and constitutional description. That submission must be rejected. Mr Martin's evidence was that Bundambar owned aircraft and buildings and hired the aircraft for reward to MVAS and "any other person that required an aircraft". As at July 2005 the aircraft in question had been subject to such an arrangement with MVAS since "before 2003". That evidence permitted findings that Bundambar's activities involved the use of the aircraft owned by it for commercial purposes and that those activities formed a significant part of its overall activities. Those trading activities were not slight or incidental to some non-trading activity. Their conduct meant that Bundambar answered the description of a "trading corporation". 58The primary Judge was correct to conclude that the DA Act applied. It follows that the challenge to the holding that MVAS was liable to the Barclays under the DA Act fails. Mr Shapley 59The primary Judge recited evidence bearing on the question of whether Mr Shapley was an employee of XS and thus not liable to the Barclays under the DA Act because of the exemption provided by s 7 (see at [20] above). The evidence, which was uncontested or is not now in contest, included the following:

Mr Shapley contracted his services as MVAS's chief agricultural pilot "through XS", of which Mr Shapley was a director and shareholder.
Mr Shapley and Mr Martin (on behalf of MVAS) entered into an oral agreement that XS would provide Mr Shapley's services as a pilot to conduct the spraying operations on Bonna in July 2005.
XS acknowledged receipt of the sum of $21,685.75 from MVAS for "contract spraying services as per invoices".
The sum of $21,685.75 was duly credited to the bank account maintained by XS with the Commonwealth Bank.
XS provided a PAYG statement to Mr Shapley for the year ending 30 June 2006 showing gross payments to him during the year of $21,600 and tax withheld of $4403. A PAYG statement in substantially identical terms (except for the payee details) was also issued by XS to Ms Fleming, Mr Shapley's partner. 60Mr Shapley, when asked by his counsel what position he "formally" held with XS, replied "a pilot's position". Mr Shapley said that there was no written contract between himself and XS. He also said that Ms Fleming was a director of XS and that she performed administrative work for the company. 61The primary Judge's reasons for concluding that Mr Shapley was not an "employee" within the meaning of s 7 of the DA Act were as follows (at [134]): The law permits the setting up of companies such as Air XS which, for Mr Shapley, may provide a measure of tax relief and splitting of income, as seems to be the case here, where Mr and Mrs Shapley's PAYG payment summary for 2005/2006 shows a total payment to Air XS of $43,200 which was divided between each in the sum of $21,600. For all intents and purposes however I find that Mr Shapley was the company and the company was Mr Shapley, he being the pilot and sole income provider for the company. The relationship with MVAS was that he would receive 20% of the amount MVAS would charge out for its services. In my view Mr Shapley cannot hide behind the corporate veil and is not, for the purposes of s 7 of the Act, an employee as that term is normally used. 62The primary Judge appears to have assumed that a person cannot be an "employee" of a company, at least for the purposes of s 7 of the DA Act, if that person is the "sole income provider" of the company and apparently controls the company. The basis for that assumption was not stated and is not clear. No doubt there may be cases where a corporate structure can be regarded as a sham and the formal structure discounted when determining the true relationship between the parties. But although at one stage at trial there was a suggestion of a sham, it is now not in dispute that the documentation accurately recorded the arrangements between XS, Mr Shapley and MVAS. There is no reason in principle why the director of a "one-person company" cannot also be an employee of the company. Indeed, Mr Dodd did not submit otherwise. 63The critical question is whether the evidence justifies an inference that Mr Shapley, at the relevant time, was an employee of XS. That question is not answered by assuming that the director of a one-person company cannot be regarded as an employee. 64The evidence relevant to the issue of Mr Shapley's status was sparse. The accounts of XS were not in evidence, nor were Mr Shapley's tax returns. The evidence did not address why the PAYG statements for the 2005-2006 taxation year showed payments totalling only $43,200, when the receipt books revealed that XS had derived at least $167,000 in revenue from MVAS during that year. Mr Shapley was not asked about the manner in which the amounts recorded in his PAYG statement were paid to him, nor whether he derived other income from XS. There was no documentary evidence, such as a workers compensation policy, expressly stating that XS employed a pilot. 65The present case has some similarities to Stephan v Pacesetter Cleaning Services Pty Ltd [1995] NSWCA 455; 12 NSWCCR 19. In that case, two friends set up a cleaning business as a partnership on 1 August 1989. On 1 September 1989, they incorporated a company of which they became the sole directors and shareholders. The company had a bank account, invoices were printed in its name and it purchased three cleaning contracts from the partnership. The two directors carried out cleaning work and invoices were issued to customers in the name of the company. However, except for one payment of $1000 recorded as "loan A/C" to one of the directors, no payments had been made to the directors before 3 December 1989, when one of them sustained a work related injury. The question was whether the injured director was an employee of the company for the purposes of the Workers Compensation Act 1987. 66Rolfe AJA, with whom Kirby ACJ and Cole JA agreed, held (at 26-27) that there was an employer/employee relationship between the company and the injured director: Counsel for the [company] relied upon an absence of evidence in relation to control, dismissal, wages and remuneration, regulation of hours and work schedules, supply of equipment and transport, arrangement of insurances, sick leave and holidays, the delegation of work and organisation. In many cases where one is seeking to ascertain whether a person is an employee each or, perhaps, all of these will be relevant matters to take into account. However it seems to me that where one is concerned with two working directors of a company, each of whom has an equal number of shares in it, many of these questions fall by the wayside.Those who control, dismiss, regulate, delegate and organise are the directors and, in the present case, the directors were the workers. They made the arrangements, which were all predicated around the work being carried out. The absence of full books of account, an office, office equipment and other such trappings of a business seem to me totally irrelevant, because it was not in issue that the company was carrying on the business, nor was it in issue that to carry on the business the company did not need an office or office furniture. There was not a total absence of records. The company had its invoices, receipts for payments made on its behalf, and a bank account. While these were somewhat rudimentary that is hardly surprising having regard to the activities in which the company was engaging and the time for which it had been operating. Those documents would have provided the basis for any further records, which were to be kept. Nor was any submission made as to the types of meetings the appellant and Mr Cooper were supposed to have been holding in the period of some three months since the incorporation of the company. In the circumstances, which have been proved and which are not really in dispute, I do not accept the submissions of the [company]. I think his Honour's error stemmed, to some extent, from an attempt to find indicia of employment, which would apply in the case where there was not the coincidence of directorship and employment, which applied in the present case. 67While each case must depend on its own facts, the approach taken in Stephan is of assistance in this case. XS contracted with MVAS and was paid by MVAS for the piloting services provided by Mr Shapley. Although there was apparently no written contract of service between Mr Shapley and XS, he performed work on behalf of XS for which the company received payment. Mr Shapley described his position with XS as that of a "pilot". There is nothing in the evidence to indicate that Mr Shapley provided his services as a pilot to any entity other than XS and the monthly receipts issued by XS to MVAS tend to suggest that he did not. Moreover, this case has the additional element, not present in Stephan, that Mr Shapley received remuneration from XS for his services, in respect of which the company issued a PAYG statement. 68Mr Dodd sought to distinguish Stephan on the ground that the cleaning company in that case had presumably taken out a workers compensation insurance policy covering employees. Stephan's significance for the present case is not that it is a binding authority compelling the conclusion that Mr Shapley was an employee. Its significance lies in the approach taken to characterising the relationship between a company and a director and shareholder where the director provides services to the company and effectively controls the company. In any event, Rolfe AJA explicitly noted (at 24) that the cleaning company in Stephan "did not have workers compensation insurance or insurance of any description". 69It is possible, as Mr Dodd submitted, that the payments by XS to Mr Shapley in the 2005-2006 taxation year might have been made to him in some capacity other than that of an employee, such as that of a director of XS or an independent contractor providing services to XS. However, the more probable inference is that Mr Shapley was employed by XS under an unwritten contract of service. In particular, the nature of XS's business, which involved XS providing Mr Shapley's services as a pilot to third parties (in practice exclusively to MVAS), and Mr Shapley's description of his position with XS as a "pilot" support the inference that he was an employee of XS on 6 July 2005. The fact that Mr Shapley did not explicitly state in his evidence that he was an employee does not detract from this conclusion, since any such statement would have required him to characterise the legal nature of his relationship with XS. 70I am prepared to accept that the onus was on Mr Shapley to demonstrate that he was an employee of XS and thus within s 7 of the DA Act. Nonetheless, for the reasons I have given, his Honour was in error in concluding that Mr Shapley was not an employee for the purposes of s 7 of the DA Act. It follows that Mr Shapley did not incur any liability in damages to the Barclays under the DA Act.

Orders 71Care should be taken before granting leave to appeal in cases that involve no significant issue of principle and raise only factual questions for determination. However, both sets of applicants for leave have demonstrated error by the primary Judge. They have also demonstrated that his Honour should not have found in favour of the Barclays, except on the cause of action under the DA Act against MVAS. 72The Bootles and Mr Shapley should be granted leave to appeal on the basis that they would sustain injustice if the decision is allowed to stand. MVAS is in a different position. However, since the finding of negligence against it was erroneous, it too should be granted leave to appeal, although its appeal will be dismissed. 73In CA No 2012/208370 (the Bootles' application for leave to appeal), the following orders should be made:

Grant leave to appeal on grounds 1-8 in the draft notice of appeal appearing in the red book.
Refuse leave to appeal on grounds 9-11.
Direct the applicants within seven days to file a notice of appeal in the form of the draft notice of appeal (omitting grounds 9-11 and proposed orders 3, 4 and 5).
Allow the appeal.
Set aside the verdict for the first and second respondents (the Barclays) against the appellants (the Bootles) entered by the primary Judge on 28 June 2012.
Set aside Order 2 made by the primary Judge on 28 June 2012 insofar as Order 2 requires the appellants to pay the costs of the first and second respondents.
In lieu of Order 2 referred to in Order 6 above, order the first and second respondents to pay the appellants' costs of the proceedings in the District Court.
Order the first and second respondents to pay the appellants' costs of the appeal.
The first and second respondents, if otherwise qualified, to have a certificate under the Suitors' Fund Act 1951. 74In CA No 2012/223392 (the leave application by MVAS and Mr Shapley), the following orders should be made:
Grant leave to appeal.
Direct the applicants within seven days to file a notice of appeal in the form of the draft notice of appeal in the red book.
Allow the appeal in part.
Set aside the verdict for the first and second respondents against the second appellant (Mr Shapley) entered by the primary Judge on 28 June 2012.
Leave undisturbed the verdict for the first and second respondents against the first appellant (MVAS).
Set aside Order 2 made by the primary Judge on 28 June 2012 insofar as Order 2 requires the second appellant to pay the costs of the first and second respondents.
Leave undisturbed Order 2 insofar as it requires the first appellant to pay the costs of the first and second respondents.
Order that the first and second respondents pay the second appellant's costs of the proceedings in the District Court.
The first and second respondents pay Mr Shapley's costs of the appeal assessed at 50 per cent of the costs of Mr Shapley and MVAS of the appeal.
The first and second respondents, if otherwise qualified, have a certificate under the Suitors' Fund Act 1951. 75Order 9 in CA No 2012/223392 is intended to accommodate the fact that MVAS and Mr Shapley were jointly represented throughout these proceedings (notwithstanding that their interests were not necessarily identical). Mr Shapley succeeded in his appeal. MVAS succeeded on the negligence issue, but not on the issue of its liability under the DA Act. The order reflects these matters. 76BALL J: I agree with Sackville AJA.

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. Decision last updated: 04 June 2013

Aircraft Act 1999(Cth)

(Cth) Supreme Court Act 1970 Workers Compensation Act 1987 Cases Cited: Bonic v Fieldair (Deniliquin) Pty Ltd [1999] NSWSC 636 Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; 179 CLR 520 Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd [2012] QCA 315 R v The Judges of the Federal Court; ex parte Western Australian National Football League [1979] HCA 6; 143 CLR 190 Stephan v Pacesetter Cleaning Services Pty Ltd [1995] NSWCA 455; 12 NSWCCR 19 Category: Principal judgment Parties: 2012/208370 Richard Thomas Bootle (First Appellant) Bootle Bros Management Pty Ltd (Second Appellant) Stuart Henry Barclay (First Respondent) Susan Rose Barclay (Second Respondent) Macquarie Valley Ag Services Pty Ltd t/as Macquarie Valley Agricultural Services (Third Respondent) Murray Shapley (Fourth Respondent)

2012/223392 Riley Gray-Spencer Lawyers (First and Second Appellants) Rural Law with Peter Long (First and Second Respondents) File Number(s): 2012/208370 2012/223392 Decision under appeal Jurisdiction: 9101 Citation: Barclay v Bootle & Ors [2012] NSWDC 29 Before: Williams DCJ File Number(s): 2008/319175

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