Meadowlands BFT Pty Ltd v Shoalhaven City Council

Supreme Court of NSW|2021-06-24|Before: Beech-Jones J, Cavanagh J, Fagan J

Solicitors: Benjamin & Khoury (Plaintiff) Kells (Defendant) File Number(s): 2018/356855

(Revised from transcript)

By an amended notice of motion returnable on or about 26 May 2021 the plaintiff, Meadowlands BFT Pty Ltd ("Meadowlands"), sought, inter alia, leave to file an amended statement of claim and the transfer of the entirety of these proceedings to the District Court.
Meadowlands' application was made returnable before Cavanagh J and transferred to me as the judge allocated to hear the substantive proceedings which are listed to commence on 16 August 2021 with an estimate of five days. I fixed the amended notice of motion for hearing before me today, 24 June 2021.
Both parties accepted the application to amend was governed by s 64 of the Civil Procedure Act 2005 (NSW), which in turn is subject to the "guiding principles" set out in Div 1 of Pt 6 of that Act, including ss 56, 57 and 58. Before addressing the application of those provisions to the circumstances of this case, it is necessary to describe the background to the proceedings, as well as the scope of the existing pleadings and the proposed amendments.

Background

At all material times, the council was the owner of a property known as Wondalga Farm. In 2014 it entered into an agreement with BKK Shoal River Holdings Pty Limited ("BKK") under which BKK was licensed to use the property for low intensity grazing. It seems that between July 2014 and January 2018, at least, BKK occupied the property pursuant to the terms of that agreement and cattle grazed upon the property.
Meadowlands contends that over time the cattle that were on the property became its cattle. It is unnecessary to describe in detail the basis for that contention, but it appears to include the proposition that Mr Phillip Bowden, who was the business manager of BKK and a Director of Meadowlands, effected a transfer of some of BKK's cattle to Meadowlands and that some of Meadowlands' cattle had simply commenced grazing on the land.
As events transpired, it seems that BKK fell into financial difficulties. On 17 September 2018 it was deregistered.
On 17 October 2018, the Council took possession of the property and in doing so took possession of the cattle that were situated upon it, relying on the Impounding Act 1993 (NSW). Consistent with what I have just stated, Meadowlands contends that it was the lawful owner of the cattle that were on the property.
On or about 20 November 2018, Meadowlands commenced proceedings in this Court seeking various forms of interlocutory relief. On 26 November 2018, Fagan J ordered Meadowlands to remove all stock, property, plant, equipment and feed from the property and sell all the cattle.
From around late November 2018 to mid-December 2018, the cattle were sold. As I understand it, from the proceeds of sale approximately $384,000 was paid into court, $85,000 was paid into the trust account of a livestock agent, and apparently since then has been dissipated, and around $6,603 was paid to the Council.

Existing Pleadings

Thereafter, and pursuant to orders made by Fagan J, these proceedings continued by way of pleadings.
On or about 5 February 2019, Meadowlands filed its statement of claim. It pleaded that, between 2014 and January 2018, the property was occupied by BKK under a licence pursuant to the agreement noted earlier. The statement of claim pleaded that the agreement was terminated in January 2018. It further pleaded that in early 2018 Meadowlands, via Mr Bowden, entered into its own agistment agreement with the Council, under which it was agreed that Meadowlands' cattle would be grazed on the property. It then pleaded that the Council's entry onto the property in October 2018, and its seizing of the cattle and equipment were in breach of the agistment agreement. The statement of claim pleaded causes of action for breach of contract, trespass and conversion.
In its defence, the Council says that BKK's occupation of the property continued until BKK was deregistered in September 2018 and it denies that it entered into any agistment agreement with Meadowlands. It says that, regardless of whether the cattle were owned by Meadowlands or BKK, they were trespassing and that its actions in seizing and impounding the cattle were authorised by the Impounding Act.
By way of a cross-claim, the Council seeks recovery of the impounding expenses incurred in maintaining the cattle, presumably pursuant to s 27(1) of the Impounding Act. I was advised that the amount claimed by the Council for its impounding costs is in excess of $500,000. Meadowlands' defence to the cross-claim largely repeats what is in its statement of claim. However, from the particulars that have been exchanged it appears that Meadowlands vigorously disputes the reasonableness of the amount sought to be recovered. One way or another Meadowlands contends that the question of reasonableness is an issue that arises on any attempt to recover such costs under the Impounding Act.

The Proceedings

In late 2018, the plaintiff changed solicitors. Throughout 2019 and 2020, the matter progressed through the Registrar's list. It seems that there were numerous instances of non-compliance by Meadowlands with procedural directions, including orders for the provision of particulars and the service of affidavits. Eventually, on or about 19 August 2020, the Registrar made a guillotine order requiring the service of all evidence in reply by Meadowlands by 30 September 2020. Meadowlands did not comply with that order. It filed a notice of motion seeking an extension of time. This was heard on 1 December 2020 which, as I understand it, is around the time the matter was listed for hearing in August of 2021.
In giving reasons on the application to extend time, the Registrar referred to, and to a substantial degree accepted, evidence that at least part of the reason for the delay on the part of Meadowlands was Mr Bowden's medical condition. Ultimately, the Registrar extended the guillotine order to 21 December 2020. Materials were filed on behalf of Meadowlands by that time. However, on 21 December 2020, Meadowlands' solicitors filed a Notice of Ceasing to Act.
It seems that Meadowlands was unrepresented from that time until its current solicitors filed a Notice of Appearance on 23 April 2021. It suffices to state that thereafter they acted with due dispatch in preparing a proposed amended statement of claim ("PASOC") and this application to amend.
Otherwise, I note that in December 2020 the Registrar awarded the costs of Meadowlands' notice of motion and the costs of attendance at certain directions hearings to the Council. That amount was assessed to be $7,014. To date the Council has only recovered $31.45 of that amount through the issue of a garnishee order to Meadowlands. Those facts are sufficient to indicate that, leaving aside whatever claims Meadowlands may have on the proceeds of the sale of the cattle, it is not in a strong financial position.

The Proposed Amended Statement of Claim

Meadowlands' PASOC abandons all the causes of action pleaded in its statement of claim. Instead it pleads a cause of action in negligence for a breach of a common law duty of care said to be owed in and about the maintenance and care of the cattle that the Council took possession of on or about 17 October 2018. The content of the duty is expressed in the same terms as s 21 of the Impounding Act. The loss and damage said to have been suffered by reason of what is pleaded to be breaches of that duty is pleaded as being that the cattle were sold for less than what they would have sold for if they had been properly cared for by the Council, that the Council failed to account to Meadowlands for approximately 300 head of cattle that was said to be the difference between the number of cattle on the property on 22 October 2018 and the number of cattle sold and the lost opportunity to sell 16 cattle that allegedly died while being transported to the cattle yards.
Five matters should be noted about the cause of action pleaded in the PASOC.
First, the PASOC propounds a completely new case against the Council. Whereas the existing amended statement of claim attacked the legality of Council's acts in taking possession of the cattle, the PASOC attacks the manner in which they were cared for. The causes of action are entirely new. The allegations of breach are entirely new, and the formulation of the loss and damage suffered is substantially different to the statement of claim.
Second, in an affidavit from Meadowlands' solicitor sworn on 16 June 2021 in support of the application to amend, he explains that four further affidavits are being prepared in support of the claim that is propounded in the PASOC. From that affidavit it appears that those further affidavits are largely directed to the deponents' observation of the treatment of the cattle by Council in the period from 17 October 2018. In addition, the solicitor notes that he proposes to obtain expert evidence on the reasonableness of the costs and expenses incurred by the Council which are the subject of its cross-claim.
Third, it follows from the above, and indeed it was accepted by all, that if the amendment is allowed then the hearing date of 16 August 2021 will have to be vacated. There is simply insufficient time for both the parties to undertake the preparation necessary to meet the new case sought to be propounded in the PASOC.
Fourth, the relationship between the cause of action pleaded in the PASOC and the cross-claim is curious. Originally, it seems that Meadowlands contended that the Council incurred too much expense in maintaining the cattle in the period October and November 2018. On its face, the PASOC appears to allege that Council incurred too little expense. However, on this hearing of this motion, counsel for Meadowlands, Mr Grace, explained that he would refine the position to say that his client alleges that the Council spent too much on the wrong items during that relevant period. Of perhaps greater significance is that it was accepted that any evidence led by Meadowlands in relation to its new claim was most likely relevant to its contention that the Council incurred unreasonable impounding costs in looking after the cattle.
Fifth, counsel for the Council, Mr Parsons, tendered material concerning the relative strength of the new cause of action sought to be propounded by the PASOC. Two particular extracts from that evidence should be noted. The first extract is from a letter that was prepared on or about 17 October 2018 being the day the cattle were taken possession of by the Council. It was prepared by Meadowlands then solicitor. It stated inter alia: "[w]e are instructed that the cattle on the property are of ill health as a direct result of the present drought and as such are unable to be transported at this time." The other extract was from an expert certificate prepared by a registered veterinarian which states: "9. I note on visits 19 and 22 October 2018, visual examination of paddocks and cattle present on "Wondalga Farm" in my opinion were that: • There was insufficient feed on offer in any of the paddocks to support the various classes of cattle observed. • As stated above in this statement, current conditions at the time of my visit were lack of pasture growth due to ongoing draught conditions. Existing short green pick available at the time of my visit did not meet nutritional demands of livestock on farm. • In its current state at the time, a full hand feeding ration was the only option. Without full hand feeding, the cattle would deteriorate further and die. 10. On follow up visit conducted on 4 December 2018, I inspected approximately 300 head of cattle on "Wondalga Farm." I identified 21 head of cattle as not being fit for transport. The majority of cattle I examined looked healthy and bright. In my opinion, the cattle overall had substantially improved with full hand feeding rations provided by Shoalhaven City Council. There were obvious improvements in terms of body condition and body mass; demeanour; coats were shiny; and cows had big udders with healthy calves still on their mothers and as a result the majority of the cattle were fit for transport and were no longer an animal welfare risk."
Mr Parsons sought to deploy this material in a number of ways. He contended that the cause of action set out in the PASOC was either hopeless or of such little strength that little prejudice would be occasioned to Meadowlands from refusing leave to amend. Mr Grace submitted that, within the material that was tendered, there is a basis for his client's contention that the level of care provided to the animals by the Council was inadequate. Otherwise, he submitted that the Court could not possibly make an assessment on this application as to the overall prospects of the case as pleaded in the PASOC.
Mr Parsons also contended that the presence of this material bears upon a consideration of the absence of any explanation made on behalf of Meadowlands as to why the cause of action was not propounded earlier.
I will consider the explanation that was put forward to the Court for the lateness of the application shortly. At this stage, if suffices to state that I am not persuaded that the cause of action propounded in the PASOC is hopeless or unarguable; equally, however, I am not persuaded that it is of any real strength. Further, subject to what follows, I am certainly not persuaded that the cause of action propounded in the PASOC reflects some underlying complaint by Meadowlands that has persisted back to 2018. Although in submissions Mr Grace said that the letter from the solicitor that was prepared on or about 17 October 2018 involved a misconstruction of his client's instructions at the time, there is no evidence to support that. Otherwise, save as to a complaint in the existing statement of claim about some cattle missing, I was not referred to any evidence raising a substantive complaint by Meadowlands about the treatment of the animals by the Council prior to it bringing forward the PASOC.

Explanation for the Delay

One matter of significance to an assessment of whether to allow an application to amend a pleading, is the explanation proffered for the delay in bringing it forward (see Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175, [2009] HCA 27 at [103]; "Aon"). In Aon, when speaking of the Court rules considered in that case, Gummow, Hayne, Crennan Keifel and Bell JJ noted, in relation to an explanation for the delay, that (at [103]): "Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the Court's attention, so they may be weighed against the effects of any delay and the objectives of the Rules."
The relevant explanation for the delay in bringing forward the proposed causes of action is set out in an affidavit of Meadowlands' solicitor sworn 26 May 2021. As noted, Meadowlands' solicitors filed a notice of appearance at the end of April 2021. In this affidavit, Meadowlands' solicitor sets out the history of his firm being instructed, which I have largely already noted. In relation to the amendment application he noted that it was the first amendment application made by his client. He then states: "23 The timing of Meadowlands' application is explained by its recent change in legal representation as described above. 24 The amended statement of claim was prepared as soon as reasonably practical after [Meadowlands' solicitor was] engaged to act for Meadowlands and it determined that amendments to the statement of claim were necessary in order to: (a) give rise to the real issues in dispute; and (b) avoid a multiplicity of proceedings. 25 To a large extent, the amendments merely reformulate Meadowlands' causes of action within the scope of the existing factual issues."
Mr Parsons did not dispute that that statement represented the deponent's honest belief. However, he emphasised that, in the context of an application to amend, the "explanation required is that of the moving party not merely their solicitors or counsel" (Tamaya Resources Ltd (in Liq) v Deloitte Touche Tohmatsu (a firm) [2016] FCAFC 2 at [155]; Tamaya"). Mr Parsons submitted that what had not been forthcoming from Meadowlands was an explanation for why the cause of action sought to be propounded in the PASOC was not put forward earlier than April 2021 when the new solicitors were instructed. He submitted this was particularly significant in circumstances where, at all material times, Mr Bowden has been the moving mind behind Meadowlands.
Mr Grace submitted that the explanation provided was sufficient and effectively not challenged. He submitted that the explanation was that the new solicitors recognised that the client's true complaint had not been properly formulated at this time. Mr Parsons countered that it could not be assumed that Meadowlands' previous solicitors were unable to or did not formulate Meadowlands' case properly. He submitted that the absence of any proper explanation for the period prior to April 2021 left open, as a reasonable possibility, that this application was being made by Meadowlands for tactical reasons, specifically to enable it to bring in further evidence that relates to the Council's cross-claim so as to circumvent the guillotine orders made in 2020.
As I have already noted, there is no reason to doubt that the above extract from the affidavit of Meadowlands' solicitor represents his state of mind. However, I am not persuaded that they represent the moving parties' explanation for the delay in bringing forward the amendment. Paragraph 25 of that affidavit is, objectively speaking, plainly wrong. The PASOC does not involve a reformulation of Meadowlands' cause of action and the matters it raises are not within the scope of any factual issue raised by the existing pleadings. More fundamentally, in the absence of evidence from Meadowlands itself referable to the period from late 2018 to early 2021, I am not satisfied that the PASOC is in fact seeking to litigate the "real issue in dispute" between the parties because I am actually not persuaded that Meadowlands has truly been disputing the manner of the treatment of its cattle since they were impounded. In fact, the material set out above suggests to the contrary.
At least so far as Meadowlands is concerned, as opposed to its new solicitors, I am not persuaded the application is being brought in good faith and I am otherwise left without any explanation for why the amended cause of action was not brought forward at a time earlier than the retention of its current solicitors.

Multiplicity of Proceedings of Prejudice

Two other matters to consider in determining an application to amend are the necessity to avoid a multiplicity of proceedings and the prejudice occasioned to each party from the refusal or grant of the application, as the case may be (Aon at [86] to [88] and [103]; Civil Procedure Act 2005, s 64(2) s 58(2)(vi)).
In this case, if the amendment application is allowed, then there will only be one proceeding, that is a multiplicity of proceedings will definitely be avoided. However, to allow the application would involve the hearing date being vacated. The allocation of a further hearing date, especially for the Council's cross-claim, either in this Court or the District Court, would then have to await the parties preparing to meet Meadowlands' new case and whatever the likely delays are in the relevant court in which the matter remains. However one looks at it, that delay is likely to be substantial.
In terms of costs, an order for costs thrown away could be made in the Council's favour and it could even be made payable forthwith. However, as noted, the attempt by the Council to seek recovery of its relatively modest costs order made in its favour suggests that Meadowlands does not have any assets to meet such an order. Although the proceeds of the sale of cattle paid into court could be used to pay the Council's costs, that sum is already less than the amount of the Council's cross-claim. The result is that further delay is likely to occasion irremediable prejudice to the Council in terms of both delay and costs.
If the amendment sought by Meadowlands is refused, then the proceedings in their current form will remain fixed for hearing on 16 August 2021. However, the difficulty then is that the limitation period relating to the events of late 2018 has not expired. Theoretically, it will be open to Meadowlands to commence separate proceedings raising the claim set out in the PASOC. If Meadowlands does not commence fresh proceedings then, again, no multiplicity of proceedings will arise, and the prejudice just identified will not arise either. If, however, Meadowlands does commence fresh proceedings then there is a real risk of multiplicity. However, at this point it cannot be assumed that such proceedings, even if they are commenced, will ultimately continue to a hearing. There exists the potential for them to be struck out or stayed based on Port of Melbourne Authority v Anshun (1981) 147 CLR 589; [1980] HCA 41 (see Aon at [86]), or that they might otherwise be stayed if, say, for example, an order for security for costs was made against Meadowlands given that it is both a corporate entity and it seems to be in a poor financial position.
In terms of the prejudice to Meadowlands from the refusal of the application, there is the obvious potential for it to be denied the ability to bring a claim that I cannot, at this point, describe as hopeless. There is also the potential that, if it does bring separate proceedings, it might be lumbered with issue estoppels arising out of any determination of the Council's cross-claim in the interim. These forms of potential prejudice to Meadowlands must be weighed against the prejudice that the Council might suffer and the problems that will create for the Court's process if there is an adjournment (see Aon at [113]). They all must be assessed in the context of Meadowlands' explanation for the delay.

The Application to Amend is Refused

In his written submissions, Mr Grace identified seven overall points that he contended weighed in favour of allowing the amendment. First, it was submitted that the amendments are essential in order for Meadowlands to assert its right to damages against the Council. I accept that the amendments are necessary for Meadowlands to assert the cause of action it now wishes to bring against the Council. However, I have also found that I am not satisfied that that cause of action represents or embodies the real issues in dispute between parties.
Second, Mr Grace submitted that the amendments would narrow the issues in dispute and involved the abandonment of all other claims to be pursued against the Council at this time. The amendments do involve the abandonment of all claims that have been issued against the Council to this time, save that the defence to the cross-claim appears to maintain some of the matters raised in the existing statement of claim. However, I do not accept that it narrows the issues in dispute as opposed to changing the issues in dispute.
Third, it was submitted that, although the amendments would give rise to new issues, to a significant extent they reformulate Meadowlands' cause of action within the scope of the existing factual issues and were likely to be relatively straightforward to respond to by way of further evidence. I reject that contention. To the contrary, there is a significant difference in the nature and type of inquiry between whether the Council had a lawful authority to seize the cattle and whether the Council had breached some duty of care in its maintenance of the cattle.
Fourth, it was contended that many of the issues already raised by the amendment have already been the subject of evidence from the Council. I am not in a position to assess that, although I note that if they are, that is because it is the material put on by the Council directed to its cross-claim.
Fifth, it was contended that this was Meadowlands' first application to amend its statement of claim and the timing of its application is explained by Meadowlands' recent change in legal representation. At the risk of repetition, the relevant delay that has been explained is the delay of Meadowlands' current solicitors in bringing the application which, in the scheme of things, is almost no delay at all. What has not been explained is Meadowlands' delay in bringing the application.
Sixth, it was submitted that the practical effect of refusing leave to amend would likely be that there would be a multiplicity of proceedings because Meadowlands is still in time to commence separate proceedings. I have already addressed that topic.
Seventh, it was contended that, although Meadowlands accepts that there would be some delay and cost associated with allowing the amendments, for the most part any prejudice that would be associated with those delays and costs would be "attenuated by an order that Meadowlands pays Council's costs thrown away by reason of the amendment". I have already addressed this. It does not address the fact that I am extremely doubtful that Meadowlands has the capacity to pay the Council's costs thrown away by reason of the amendment. It does not deal with the substantial delay that would be occasioned for the hearing of the Council's cross-claim by allowing the amendment. Lastly, there is of course the interests of the Court.
In the end result, this application to amend has been made very close to the hearing date. If it was granted it would cause that hearing to be adjourned and occasion the Council substantial prejudice in terms of delay and costs that is unlikely to be remedied. The refusal of the application may lead to multiplicity of proceedings. However, it is far from inevitable that other proceedings will be commenced; much less than such proceedings will be pursued to a final hearing. There is the potential for Meadowlands to suffer prejudice from the refusal of the application in the form of being shut out from pursuing a cause of action that I cannot characterise as hopeless and from otherwise having to face the hearing of a cross-claim when it has a related proceeding on foot. Nevertheless, its claim cannot be described as strong and, as I said, I am not persuaded that it embodies the true issues in dispute between the parties. Overall, the potential prejudice to Meadowlands from the refusal of the application is not particularly persuasive where no proper explanation for Meadowlands' delay in bringing the application has been put forward and, in particular, it has not excluded the realistic possibility that the amendment application is a tactical step taken to avoid the effect of guillotine orders.
Accordingly, the application to amend is refused. In light of that conclusion, no occasion arises to consider the transfer of the proceedings to the District Court.

Orders

I will order the dismissal of Meadowlands' amended notice of motion. I will list the matter for mention before me at 9.30am on 2 August 2021 for the purpose of making directions for the final hearing of the proceedings on 16 August 2021, including the preparation of the Court book.
Accordingly the Court orders: (1) The amended notice of motion bearing the date 25 May 2021 is dismissed. (2) The plaintiff pay the defendant's costs of the motion. (3) List the matter for directions before me at 9.30am on 2 August 2021.

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: 28 June 2021

Impounding Act 1993(NSW)

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