McDonald v Rose

District Court of NSW|2019-09-26

Introduction

The defendant seeks an order that the proceedings should be struck out as an abuse of process on the basis that it was unreasonable for the plaintiffs not to have raised their claim in previous proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
In 2011 and 2012 the plaintiffs operated a business in partnership to grow cotton in a 68 hectare paddock (Field 3) on their property known as "Enmore" at Emerald Hill in New South Wales.
On 1 April 2014, the plaintiffs filed a Statement of Claim seeking damages from Middlebrook Air Operations Pty Ltd (Middlebrook) for a loss of the yield in the cotton crop planted in Field 3 as a result of the application of chemicals to the crop by means of aerial spraying (the First Proceedings). The plaintiffs alleged in the First Proceedings that on 28 February 2012, Middlebrook negligently or in breach of contract, applied the wrong chemicals to the crop that caused visible damage to it and resulted in a loss of yield of approximately 25% of the value of the crop, being a sum of $319,220.00.
The First Proceedings were settled in about May 2015 by Middlebrook agreeing to pay the plaintiffs the sum of $70,000.00 inclusive of costs.
On 5 October 2017, the plaintiffs filed a Statement of Claim seeking damages from the defendant for a loss of yield in the cotton crop in Field 3 as a result of the uneven application of urea as a fertiliser (the Present Proceedings).
The plaintiffs allege in the Present Proceedings that on or about 27 July 2011, the defendant negligently or in breach of contract, unevenly spread the urea on Field 3, by failing to ensure that it was spread to the outer extremities of the equipment that he used. The result was that the urea was spread out in strips with a higher concentration of urea spread out behind the tractor and a lower concentration spread out at the edges. The plaintiffs allege that the plants grew faster in the strips where the higher concentration of urea was present and slower in the strips where the concentration was lower. The plaintiffs allege that this resulted in an overall lower yield for the crop as well as making it difficult to manage the crop, for example because the faster growing plants required an earlier application of growth regulating chemicals.

Evidence

The defendant read an affidavit of Mark Daly, solicitor, sworn 15 March 2019, exhibiting a number of documents mainly relating to the First Proceedings.
The defendant also relied on the admission of certain facts in a Notice to Admit Facts dated 10 September 2019.
The plaintiff read an affidavit of the first plaintiff sworn 16 April 2019.
The first plaintiff gave evidence that he has suffered from bipolar disorder for more than 30 years. In or about 2011 the first plaintiff was experiencing considerable stress as a result of the farming business, which was exacerbated by what he believed to be the failure of the cotton crop in 2012. The first plaintiff gave evidence that he could not mentally contemplate taking proceedings against both Middlebrook and the defendant at the same time. He deposed that he was advised by his solicitor at the time to focus on the First Proceedings, because the claim against Middlebrook was 'the more convenient claim to prove'.
The first plaintiff was cross-examined before me on the Notice of Motion. He had a very flat affect and was at times his speech was difficult to understand. It was clear from his evidence that he was unhappy with the yield of the crop and wanted to pursue his legal options. I formed the impression that the first plaintiff had considerable problems with his memory of relevant events and lacked some understanding of the legal advice that he had been given at the time before commencement of the First Proceedings and whilst they were on foot. The first plaintiff denied a number of things that were proven by the contemporaneous documents. Overall, the plaintiff was a relatively unreliable witness but I believe he was trying to tell the truth.

Facts

In or about early 2011, the plaintiffs retained the services of Cotton Growers Services Pty Ltd (CGS) to provide consultancy services and advice pursuant to written agreement. CGS agreed to undertake twice weekly inspections of any cotton crop and to provide advice on the use of insect and weed control, growth regulants, nutritional products and defoliation of the cotton plants.
On 22 October 2011, the cotton crop was planted in Field 3. Carol Sanson of CGS noted a routine emergence of the crop with an average of 7.97 plants per metre.
In or about February 2012, Ms Sanson recommended the application of a growth regulant chemical known as "Reign" to be applied to the crop by aerial spraying. The application of the growth regulant was intended to stop the upward growth of the plants and to encourage more fruit production.
On 28 February 2012 the aerial spraying was undertaken by Middlebrook.
The plaintiffs' allegation in the First Proceedings was that Middlebrook did not apply Reign, but a different chemical resulting in damage to the crop by way of shedding of immature fruit and a weakening of the stems on mature fruit. As a result, the crop developed premature fruit opening and the fruit was shed by the plants prior to the time when it could be harvested. Some of the fruit was also spoiled by splitting.
On 6 March 2012, the first obvious signs of fruit shedding were observed by Brent Johnson of CGS. Mr Johnson advised Ms Sanson of these observations by telephone.
On 13 March 2012, Ms Sanson observed the crop and noticed the damage, described above. Ms Sanson formed the view that the crop had suffered chemical damage from a defoliant or herbicide and she conducted a number of tests and took a number of samples to be sent to a laboratory for analysis.
Throughout March and April 2012 Ms Sanson actively sought assistance from experts in relation to the reasons for the condition of the crop.
The crop was harvested between 4 June 2012 and 14 June 2012. In or about early June 2012, CGS asked an expert, Bill Cowell, to conduct an investigation into the loss of yield of the cotton crop. On 7 June 2012 Mr Cowell attended Field 3 and reported back to CGS that he had observed that the plants had grown irregularly, consistent with an irregular application of urea. He noted that there was damage to a neighbour's crop in one corner of the neighbour's field adjacent to Field 3. The damage was similar to the damage shown on the plaintiffs' crop and consistent with overspray from aerial spraying.
The plaintiffs instructed solicitors and counsel to advise them on undertaking proceedings in relation to the loss of yield of the crop. Having regard to the material that was tendered on the application, it is fair to conclude that the plaintiffs considered actions against CGS, Middlebrook and the defendant at that time. By the time the Middlebrook proceedings were commenced the plaintiffs were well aware of expert opinion implicating the defendant's contribution to the loss of yield of the cotton crop.

Relevant Law

Proceedings that are an abuse of process may be dismissed under rule 13.4(c) Uniform Civil Procedure Rules (UCPR).
The doctrines of res judicata and issue estoppel extend to matters that were not raised in prior proceedings but could and should have been raised: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. There will be an estoppel where the matter relied on in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it there: Anshun at [602] per Gibbs CJ, Mason and Aickin JJ.
In an application for summary dismissal of a claim based on the Anshun principle, the court's discretion may only be exercised with great caution and in a very clear case: Knott Investments Pty Ltd v Winnebago Industries Inc [2015] FCA 827 at [81] per Yates J applying General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
Anshun estoppel applies only between the parties to the prior proceedings or their privies. It cannot be used to prevent a party to a previous proceeding bringing an action against someone who was not a party in the previous proceeding even where it would have been possible to proceed against that party in the previous proceeding: Foodco Group Pty Ltd v Northgan Pty Ltd (1998) 83 FCR 356, Harris v 718932 Pty Ltd [2000] NSWSC 784 at [20] per Windeyer J affirmed in Harris v 718932 Pty Ltd (2003) 56 NSWLR 276 at [30] per Handley JA (Stein and Santow JJA agreeing).
In considered dicta, Windeyer J in Harris declined to apply the extension notion of the principles in Henderson v Henderson (1843) 67 ER 313 as formulated by the English Courts in MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675 and Morris v Wentworth-Stanley [1999] QB 1004. Windeyer J further noted that the statement of Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Hong Kong Bank Ltd [1975] AC 581 was not accepted by the High Court as representing the law in Australia.

The defendant's submissions on the Notice of Motion

The defendant submitted that the plaintiffs knew of the basis of the allegations against him at the time that they commenced the First Proceedings and that it was unreasonable that he was not joined as a defendant to those proceedings: Piscioneri v Brisciani and Reardon [2017] ACTSC 237 at [95]-[101] and Henderson v Henderson (1843) 67 ER 313 at 319.
The plaintiffs had not pointed to any special or exceptional circumstances to permit them to raise the issue in later proceedings and accordingly the Anshun principle should be applied: Wong v Minister for Immigration [2004] FCAFC 242 at [38].
The defendant contended that the settlement of the First Proceedings gave rise to an issue estoppel as to how the cotton crop was damaged, i.e. by the aerial spraying of chemicals on 28 February 2012.
After I reserved judgment in this matter, I invited the parties to make submissions on the principles set out in [25] above. The defendant submitted that Marshall J in Foodco identified three public policy considerations underlying Anshun estoppel and that each was satisfied in the Present Proceedings. The defendant further submitted that Harris was distinguishable on its facts because the cause of action by reason of the later publication of defamatory material was not complete until such times as the matters were published.
The defendant relied on [21] of Harris to argue that the Present Proceedings could still be classified as an abuse of process because the Present Proceedings arise substantially out of the same facts, are constituted by making inconsistent allegations, involves the prospect of inconsistent findings of fact and the re-litigation of issues already determined.

The plaintiffs' submissions on the Notice of Motion

The plaintiffs submitted that they did not act unreasonably by bringing two sets of proceedings because: 1. they had relied on legal advice, 2. joining the defendant would have led to additional expense, and 3. of the difficulties associated with the first plaintiff's medical condition.
The plaintiffs further submitted that the facts necessary to establish liability in each proceeding were fundamentally different and no issue estoppel could arise.
In response to my invitation, the plaintiffs submitted that [25] above was an accurate statement of the law and that Anshun estoppel could not arise.

Consideration

In my view, the defendant's Notice of Motion should be dismissed for the reasons that follow.
First, the Present Proceedings taken by the plaintiffs involve a different party. The defendant in the Present Proceedings was not a party to the First Proceedings, although he could have been. The doctrine of Anshun estoppel has been applied more selectively than its equivalent in England, and I am bound to follow the authority referred to in [25]-[26] above.
Second, no issue estoppel arises. Whilst both sets of proceedings claim a loss of yield in the crop, they are based on two separate causes. The First Proceedings alleged that the crop was sprayed with a different chemical that in fact caused the plants to mature faster. The Present Proceedings allege that there was a loss in yield caused by the plants growing unevenly due to the application of the urea in strips. The application of the proportionate liability provisions of the Civil Liability Act 2002 prevent the plaintiffs from recovering any loss in yield of the crop that was not caused by the defendant's action, if they are successful in the Present Proceedings. The expert evidence contains some allocation of apportionment of those two causes, which will ultimately be a matter for the court to decide.
Third, I am not satisfied that the Present Proceedings amount to an abuse of process on the basis of the arguments put by the defendant. For the reasons given, the two causes of action depend on different facts. Arguably, the damage to the crop caused by the inadequate spreading of the urea, was present and would have caused a loss in yield prior to the aerial spraying and could have existed independently of the First Proceedings. I do not understand the plaintiffs' case to be putting forward inconsistent allegations as to the cause of the damage to the crop. As I understand the expert evidence, the plaintiffs can establish damage to the crop from both causes. Further, the proportionate liability legislation requires the Court to differentiate between the different defendants. The Court cannot make an order for the payment of damages by the defendant in respect of damage caused by Middlebrook. The plaintiffs will be required to account for the money they received from the settlement of the Middlebrook proceedings in the Present Proceedings. I do not understand the plaintiffs to be denying the proposition that damage was in fact caused to the crop by the aerial spraying. The evidence disclosed to date, which the defendant has seen prima facie, establishes that fact. If the yield of the crop was reduced by both causes, then there is little, if any, prospect of inconsistent allegations, inconsistent findings or re-litigation of issues.
Finally, I am not satisfied that this is a very clear case in which I should exercise my discretion to summarily dismiss the plaintiffs' claim.

Orders

The Notice of Motion filed by the defendant on 14 March 2019 is dismissed with costs.

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: 05 February 2020

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