Inghams Enterprises Pty Ltd v Hannigan

Judgment

1. GLEESON JA: This is an application by Inghams Enterprises Pty Ltd (Inghams) for leave to appeal against orders made by Stevenson J in the Equity Division on 7 June 2021 dismissing Inghams' notice of motion seeking a permanent stay of the whole of the proceedings below pursuant to s 67 of the Civil Procedure Act 2005 (NSW): Hannigan v Inghams Enterprises Pty Ltd [2021] NSWSC 641. The respondent, Mr Francis Hannigan, conducts a business of growing chickens at a farm near Casino. The proceedings below concern a claim by Mr Hannigan against Inghams for damages for alleged breaches of contract whereby Inghams failed to supply batches of chickens to Mr Hannigan in the period 30 July 2017 to 25 June 2019. The proceedings were commenced by summons filed 2 November 2020, together with a Commercial List statement. In its Commercial List response, Inghams pleaded a defence based on Anshun estoppel: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598-602; [1981] HCA 45.
2. An Anshun estoppel operates to preclude a party from asserting a claim or raising an issue that is so closely related to the subject matter of proceedings already conducted that it ought reasonably to have been asserted or raised at an earlier time: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [22] (French CJ, Bell, Gageler and Keane JJ). Inghams' defence contended that it was unreasonable for Mr Hannigan not to include a claim for damages in earlier proceedings brought by Mr Hannigan against Inghams in August 2017.
3. The earlier proceedings concerned a claim by Mr Hannigan for declaratory relief in relation to an alleged contract pursuant to which Inghams agreed to supply batches of one-day old chickens to Mr Hannigan and Mr Hannigan agreed to raise the chickens for various periods, typically 30 days. Inghams purported to terminate the alleged contract or arrangement with Mr Hannigan on 8 August 2017. Mr Hannigan did not accept Inghams' purported termination of the contract, contended that it amounted to a repudiation of the contract, and affirmed the contract. On 30 August 2017, Mr Hannigan commenced proceedings in the Equity Division seeking declaratory relief as to the existence of the contract and, if the contract did exist, a declaration that Inghams' purported termination was invalid. Mr Hannigan did not seek any consequential relief, such as specific performance or damages. That was a deliberate decision. The proceedings were heard before Robb J over six days in August and November 2018 and, on 29 March 2019, Robb J delivered judgment and made declarations that the parties were bound by the contract and that the contract had not been terminated by Inghams' letter of 8 August 2017: Hannigan v Inghams Enterprises Pty Ltd [2019] NSWSC 321.
4. Inghams recommenced supply of chickens to Mr Hannigan on 25 June 2019. A dispute then arose as to whether Mr Hannigan was entitled under the contract to refer his damages claim to arbitration. Ultimately, this Court held, by majority, that he was not entitled to do this: Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82.
5. As indicated, on 2 November 2020 Mr Hannigan commenced the present proceedings seeking damages for breach of contract in relation to Inghams' failure to supply chickens between 29 July 2017 and 25 June 2019. The claim for damages is in the order of $1.8 million.
6. There is no dispute that in dismissing Inghams' application, Stevenson J correctly stated the principles in relation to Anshun estoppel: at [18]. The proposed appeal is directed to the application of those principles to the facts. His Honour set out at [40] Mr Hannigan's unchallenged evidence, contained in an affidavit sworn in the arbitration proceedings, where he deposed that he wanted to have the dispute concerning the existence and purported termination of the contract determined as quickly as possible because (a) the logistics and costs of running six chicken sheds on his property were both substantial (the sheds collectively housed approximately 210,000 chickens), (b) he wanted certainty as to whether the contract remained on foot as soon as possible, and (c) he believed that the quickest way forward was to confine the matters in dispute in the earlier proceedings. He also said he did not want to delay, complicate or increase the cost of those proceedings with a claim for damages.
7. In concluding that Inghams had not demonstrated that Mr Hannigan had acted unreasonably in failing to claim damages in the earlier proceedings, his Honour found it likely, if not inevitable, that had Mr Hannigan claimed damages in the earlier proceedings, there would have been a separate hearing on damages, and that including a claim for damages in the earlier proceedings would have delayed those proceedings. His Honour also found that had Mr Hannigan foreshadowed a claim for damages by 8 February 2018 when the matter was fixed for hearing to commence on 6 August 2018, it is unlikely that a hearing date would have been allocated, that directions would have been made for the parties to exchange evidence on damages, which evidence is likely to have included expert evidence, and that such evidence would have had to be considered at a subsequent hearing: at [28]-[33].
8. His Honour further found that: 1. Mr Hannigan had a reasonable explanation for his decision not to seek damages in the earlier proceedings: at [40] (see [6] above); 2. that "in the troubled circumstances in which Mr Hannigan found himself, I am not persuaded it was unreasonable of him to take the course he took": at [51]; 3. there was no real prospect of inconsistent findings, even if Inghams sought leave to amend its List response to allege a failure by Mr Hannigan to comply with certain contractual provisions concerning animal welfare standards: at [53]-[54]; and 4. to the extent that there was a prospect of some similar factual matters being litigated and of witnesses who gave evidence before Robb J being recalled, there was a likelihood that this would have happened in the earlier proceedings because of the likely need for damages to have been heard separately: at [56].
9. As to the findings referred to in (3) and (4) above, Mr Hannigan correctly pointed out that although Inghams amended its List response after judgment was given by Stevenson J to include allegations of breach of contractual obligations by Mr Hannigan, these allegations had not been made at the time of the hearing below.
10. Additionally, his Honour found that, even if it was unreasonable for Mr Hannigan not to have claimed damages in the earlier proceedings, there are special circumstances that warrant the conclusion that he should not be restrained from pursuing his damages claim in these proceedings: at [58]. Those circumstances were: (a) Mr Hannigan had no practical means available to him whereby he could perfect his damages claim before knowing whether he had a contract (at [60]), (b) the parties faced the prospect of a separate hearing on damages whether or not Mr Hannigan claimed damages in the earlier proceedings (at [61]), and (c) Inghams did not actively oppose the matter proceeding as it did (at [62]).
11. His Honour concluded that it would be "most unjust" to shut out Mr Hannigan from pursuing the damages claim: [64].

Proposed grounds of appeal

1. Inghams seeks leave to appeal on two grounds identified in its draft notice of appeal: 1. The trial judge erred in failing to find that it was unreasonable, in the context of the earlier proceedings, for the respondent's damages claim not to have been made in those proceedings, and in particular: 1. his Honour ought to have found that the respondent was required to bring forward his damages claim in the earlier proceedings; and 2. his Honour ought not to have accepted that the respondent's desire to expedite the hearing of his claim for declaratory relief was a reasonable justification for not bringing the damages claim forward in the earlier proceedings. 1. The trial judge erred in finding that special circumstances existed.
2. None of the proposed grounds of appeal raise an issue of principle or question of general importance. The focus of argument on the application for leave was whether Inghams had demonstrated a reasonably clear injustice going beyond something that is merely arguable: Moubarak (by his tutor Coorey) v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 at [12].

Ground 1: whether unreasonable not to include damages claim in earlier proceedings

1. Inghams' argument in relation to this proposed ground of appeal was that the correct question is whether a litigant in Mr Hannigan's position is entitled to bring a claim for part, but not all, of the relief he seeks in respect of a single controversy against a single defendant. That is a misstatement of the Anshun principle.
2. The relevant question is not whether it would have been reasonable to have made the subject claim in the first proceeding; rather, the question is whether the failure to do so was unreasonable in the context of the first proceeding: Vehicle Monitoring systems Pty Ltd v SARB Management Group Pty Ltd (t/as Database Consultants Australia) [2020] FCA 6 at [40] (Yates J), citing Gibbs & McAllion Lloyd Pty Ltd v Kinna [1999] 2 VR 19 at [1]; [1998] VSCA 52 (Ormiston JA); Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 at 673 (Samuels JA); Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 at [2]-[3] (Allsop P).
3. Significantly, Inghams' contention that his Honour erred in finding that Mr Hannigan's explanation "was reasonable" does not assert the prospect of inconsistent judgments, which is frequently relied upon as the basis for finding that it was unreasonable for a plaintiff to fail to include a claim in an earlier proceeding: see, for example, Gibbs v Kinna at [26]; Boles v Esanda at 673; Rahme v Commonwealth Bank of Australia (unreported, NSWCA, 20 December 1991); Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 at 294, 298; Egglishaw v Australian Crime Commission (2007) 164 FCR 224; [2007] FCAFC 183 at [32].
4. Inghams' argument was largely directed to the proposition that although separate hearings of the liability and damages claim was inevitable (if brought in one proceeding), Mr Hannigan's conduct was unreasonable because there has been a lost opportunity of case-managing a hypothetical proceeding commenced in August 2017 which combined a claim for declarations and damages. The difficulty with this argument is that, as Inghams correctly conceded, the bringing of such a hypothetical case would have delayed Mr Hannigan's urgent proceedings seeking declaratory relief and would not have avoided the need for two hearings. The assertion by Inghams that if the Court had ordered a separate hearing in the hypothetical proceedings, issues concerning liability for damages and a proper methodology for the quantification of damages would have been determined in the liability hearing was speculative.
5. Next, Inghams says that "the anticipated expedition is entirely illusory", being a reference to Mr Hannigan's evidence that he wanted to have the dispute concerning the existence and purported termination of the contract determined as soon as possible. This argument suffers from the error of hindsight. As his Honour correctly stated at [18(c)], assessing unreasonableness requires a forward-looking evaluation taken at the time of the first proceeding, not a determination made subsequently with the benefit of hindsight: Vehicle Monitoring Systems at [73].
6. Nor, contrary to Inghams' submission, was there any error by his Honour in taking into account on the question of unreasonableness that a claim for damages between 29 July 2017 and 30 August 2017, together with a claim for (unaccrued) damages thereafter, would have delayed Mr Hannigan's urgent claim for declaratory relief in the "troubled circumstances" he found himself in.
7. Further, and again contrary to Inghams' submission, the course adopted by Mr Hannigan did not create procedural unfairness to Inghams by depriving Inghams of an opportunity to assess whether to appeal from the declarations made by Robb J. There was no evidence below that Inghams were unaware that the declarations would be used as a foundation for a subsequent damages claim.
8. On the contrary, one of the matters upon which Inghams relied for the contention that it was unreasonable for Mr Hannigan not to bring the damages claim in the earlier proceedings was a letter from Mr Hannigan's solicitors to Inghams' solicitors dated 21 September 2017 which stated, in the context of seeking a short timetable for the service of evidence in the earlier proceedings, "our client is experiencing large financial losses due to your Clients' wrongful and invalid termination of the Contract". In addition, the prospect of a damages claim in the future was expressly reserved by counsel for Mr Hannigan at the pre-trial directions hearing before Robb J on 10 May 2018. Inghams was on notice that Mr Hannigan reserved his position to claim damages.
9. Insofar as Inghams submitted that Mr Hannigan did not face any procedural or practical impediment to bringing his damages claim in the earlier proceedings, this overlooked that Mr Hannigan submitted below that he could not have claimed in the earlier proceedings all of the damages that he claims in the present proceedings because the judgment of Robb J was delivered on 29 March 2019 and he claims damages for Inghams' non-supply of chicks in breach of contract up to 25 June 2019.
10. Finally, it is to be borne in mind that the assertion of an estoppel based on an Anshun defence is highly fact-specific in every case and that on an application for a permanent stay it is necessary for the Court to reach a degree of certainty that justifies the premature determination, before trial, of a plaintiff's claim: Gibbs v Kinna; Triantafillidis v National Australia Bank Ltd (1995) V Con R 54 536 at 12 (Philllips JA); Boles v Esanda at 673-674 citing O'Brien v Tanning Research Laboratories Inc (1988) 14 NSWLR 601 at 612 (Kirby P); Ling v Commonwealth (1996) 68 FCR 180 at 182 (Wilcox J). I am not persuaded that Inghams has demonstrated a reasonably clear injustice going beyond something that is merely arguable.

Ground 2: whether special circumstances existed

1. Given the above conclusion, the issue sought to be raised by proposed ground 2 does not strictly arise. Nevertheless, I will briefly deal with this ground. Inghams' argument in relation to this ground is that the reasons given by the primary judge for the additional finding of special circumstances did no more than state the matters relevant to his Honour's consideration of the question of unreasonableness. Reference was made to Mandeville v Better Lending Pty Ltd [2021] SASCA 28, where Doyle, Livesey and Bleby JJA said at [110]: An inquiry into whether there are nonetheless special circumstances that should permit the party to raise the matter in a subsequent proceeding presumably incorporates, but goes beyond, the matters relevant to the unreasonableness examination.
2. The "special circumstances" exception to the application of the Anshun principle comprehends situations where, for broad discretionary considerations relating to notions of justice, the principle will not be applied with full rigour: Bryant v Commonwealth Bank of Australia at 296 citing the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590; BC v Minister for Immigration and Multicultural Affairs [2002] FCAFC 221 at [30]; Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10; [2004] FCAFC 242 at [38].
3. As indicated, the primary judge concluded that in all the circumstances it would be "most unjust" for Mr Hannigan to be shut out from bringing the damages claim he wishes to bring. Mr Hannigan correctly submitted that the "special circumstances" exception encompasses avoiding results that are aptly described as "most unjust".
4. Insofar as Inghams submitted that the finding at [61] was not a relevant circumstance for the purposes of "special circumstances", that ignored the finding at [60] which was not challenged (see [10] above).
5. Insofar as Inghams challenged the finding at [62] as not being available on the evidence, and as not being a matter raised by Mr Hannigan before the trial judge, that ignored the submission made below by counsel for Mr Hannigan that Inghams did not actively oppose matters proceeding as they did in the earlier proceeding. That was a reference to what occurred at the directions hearing before Robb J on 10 May 2018 where the transcript records that counsel for Mr Hannigan expressly reserved his client's rights to claim damages at a later point, and counsel for Inghams did not take issue with that approach nor acquiesce in it, but stated somewhat ambivalently, "I don't say that the course that my learned friend has alluded to today is wrong or right, but that is not something which has been the subject of any discussion between the parties or agreement between the parties".

Other matters

1. In addition to the above reasons, there are several discretionary factors which also tend against the grant of leave to appeal.
2. First, Inghams' delay in pursuing the application for leave to appeal, which was filed on the last day of the three-month period after the material date (following the filing of a notice of intention to appeal on the 28th day after the material date), has prejudiced Mr Hannigan in circumstances where Inghams did not seek an interim stay of the proceedings below pending an application for leave to appeal, and in the meantime Mr Hannigan has incurred costs in complying with court orders below for the filing and service of his evidence on damages. The unchallenged evidence of Mr Hannigan's solicitor is that those costs are approximately $45,000.
3. In addition, Inghams previously delayed in bringing the stay application below. It was filed on 20 February 2021, nearly four months after the proceedings were commenced. Taken together, Inghams' delay, which is unexplained, is a factor that strongly counts against the grant of leave: Moubarak v Holt (No 2) [2019] NSWCA 188 at [14]-[15], [27]-[28], citing with approval Dillon v Boland; Dillon v Cush [2012] NSWCA 364 at [9] (Allsop P).
4. Second, it remains open to Inghams at the final hearing to seek to challenge Mr Hannigan's explanation as to why he did not seek damages in the earlier proceedings. As indicated, Mr Hannigan's explanation was unchallenged on the hearing of the application for a permanent stay.

Orders

1. For the reasons given above, at the conclusion of oral argument on 10 December 2021, I joined in the following orders which were made by the Court: 1. Dismiss the summons seeking leave to appeal filed 7 September 2021. 2. Applicant to pay the respondent's costs.
2. SIMPSON AJA: The reasons given by Gleeson JA express my reasons for joining in the orders of 10 December 2021.

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