NM Rural Enterprises Pty Ltd v Rimanui Farms Limited

CASES CITED : Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 White v Overland [2001] FCA 1333

NM Rural Enterprises Pty Ltd (Plaintiff) PARTIES : Rimanui Farms Limited (First Defendant) Gil Gil Farming Pty Ltd (Second Defendant) Lloyds Syndicate No 1243 (Third Defendant)

J E Maconachie QC with S B Docker and M W E Maconachie COUNSEL : T J Hancock with J P Donohoe and A T Martin (First Defendant) B Loukas (Second Defendant) G T W Miller QC with D A Lloyd (Third Defendant)

TurksLegal (Plaintiff) SOLICITORS : Webb and Boland (First Defendant) Doyle Wilson (Second Defendant) Riley Gray-Spencer (Third Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2003/93179 NM Rural Enterprises Pty Ltd v Rimanui Farms Limited & Ors

JUDGMENT 1 HIS HONOUR: These reasons assume a familiarity with the factual background to the litigation referred to in several other decisions by me in the same proceedings: see, for example, [2010] NSWSC 921, [2010] NSWSC 945 and [2010] NSWSC 969. 2 In the course of the hearing, it emerged that the third defendant wished to promote as part of its defence a proposition that the damage to the plaintiff's crops may have been caused when Pay's Air inadvertently loaded its planes with glyphosate instead of the fertiliser Microsol for aerial application to fields on "Telleraga" on 23 November 2000. The plaintiff objected to this proposal, and to related questions in cross-examination that senior and junior counsel for the third defendant sought to ask, upon the basis that they raised a new case that had never been pleaded or otherwise notified. The plaintiff contended that what the third defendant was raising should have been specifically pleaded, because it was something that fell within UCPR 14.14, which is in the following terms: " 14.14 General rule as to matters to be pleaded specifically

(2) In a defence or subsequent pleading, a party must plead specifically any matter:

(a) that, if not pleaded specifically, may take the opposite party by surprise, or

(b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or

(c) that raises matters of fact not arising out of the preceding pleading.

(3) Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality." 3 Mr Miller of Queen's Counsel for the third defendant explained the position as follows: "MILLER: Our case is it goes to the possibility of inadvertent application by Pay's of glyphosate either by error of its supplier B&W or by error of Pay's or a combination. Mr Pay swore his affidavit on the basis of what his records show and we're wanting to introduce evidence which leads you to an equal inference to draw having regard to the totality of the evidence that it is consistent with not the inference that my learned friend would seek to urge but to the fact that glyphosate itself was used. My learned friend says we should be shut out from that. If that occurred with the utmost greatest respect we would be denied justice." 4 Mr Maconachie of Queen's Counsel for the plaintiff was quick to respond in these terms: "MACONACHIE…We have not addressed, or been required to address, a case that somebody somewhere might have made a mistake and put Glyphosate into something that was understood or misdescribed as Microsol. I do not know because until this moment in time I have not been required to turn my mind to it…" 5 Mr Miller agreed with the formulation of his proposed case, which I then put to him in these terms: "HIS HONOUR: Mr Miller, it is suggested that this is a matter of some detail that has not been pleaded, and Mr Maconachie says that he is taken by surprise. The case seems to be that Pay's Air inadvertently supplied the wrong material because they had been supplied the wrong material under cover of vats or containers that were inadequately and improperly labelled; is that the case you wish to frame?" 6 The third defendant accepted that it wished to make out a new case that had not been specifically pleaded but disagreed that it could take the plaintiff by surprise. This approach is clear from the following: "HIS HONOUR: So that I understand it, do you acknowledge that the case you now wish to make out is a new case, that hasn't been pleaded and which might arguably take the plaintiff by surprise?

LLOYD: Yes as to the first, no as to the second." 7 Reference to the current state of the pleadings is made below. The plaintiff submitted that the pleadings at present do not meet the requirements of UCPR 14.14(2) so that the so-called new case and evidence to support it should not be permitted. However, it is convenient at this point to note that the third defendant in fact now contends that it has complied with its obligation to plead the issue in paragraphs 21(e) and 63 of its current defence. Particulars of those paragraphs had not previously been sought by the plaintiff, and had not otherwise been volunteered by the third defendant. Particulars of paragraph 21(e) of the third defendant's defence to the amended statement of claim were only recently provided to the plaintiff by letter dated 18 August 2010, in the following terms: "We refer to your Senior Counsel's request in Court on 16 August 2010 to provide further particulars of paragraph 21(e) of the Third Defendant's Amended Defence. We do so below.

There was an aerial application of material by Pay's Pty Ltd over fields 18-20 (inclusive) and 22-24 (inclusive) on "Telleraga" on 23 November 2000.

Aircraft Regn. VH-LIU operated by Pay's Pty Ltd on 23 November 2000 discharged loads of material over fields 18-20 (inclusive) and 22-24 (inclusive).

Pay's Pty Ltd had been contracted by the plaintiff to spray Microsol Foliar Fertiliser over fields 18-20 (inclusive) and 22-24 (inclusive) on "Telleraga" on 23 November 2000.

It is possible that aircraft Regn. VH-LIU was inadvertently loaded with Glyphosate from a 1000 litre minibulk when it conducted its spraying on fields 18-20 (inclusive) and 22-24 (inclusive) on "Telleraga" on 23 November 2000.

(b) an error within Pay's Pty Ltd in loading aircraft VH-LIU; or

The damage caused to fields 18-20 (inclusive) and 22-24 (inclusive) on "Telleraga" is consistent with a direct application of the herbicide Glyphosate drawn from a single 1000 litre minibulk container of Glyphosate in concentrate and loaded on to aircraft VH-LIU on 23 November 2000." 8 Because of the similarity between paragraphs 21(e) and 63 of the third defendant's defence, the particulars referred to in this letter would appear relevantly to apply to both paragraphs. I note that these particulars speak in terms of what is possible, and what is said to be consistent with a direct application of herbicide. Consideration 9 The genesis of the new case would appear to be found in a page of typed notes ascribed to Mr Ward, who in 2000 was the farm manager at "Tellerega". Following discovery of the damage to the plaintiff's crops, investigations were undertaken in search of the cause. Mr Ward's notes deal with that search. They extend to four pages but the fourth page would appear on occasion to have been omitted from versions of the notes that were circulated to various experts and other interested parties from time to time. Nothing sinister attends this fact. 10 The fourth page of the notes is in these terms: "Ross Pay advises that one aircraft used product from one 1000 litre shuttle to do 4 loads @ 80 hectares @ 3 litres per hectare. This treated fields 22, 23, 24 and part of fields 18, 19 and 20. Other aircraft were used on the job and no other damage has been observed." 11 An inordinate amount of time and attention has been directed to establishing when the defendants or any of them first came into possession of all of the four pages of Mr Ward's notes or when they could or should have attributed any particular significance to them, including scrutiny in the context of the third defendant's new case proposals. The alleged or apparent importance of the fourth page of the notes is said to be reflected in or evidenced by some answers given in cross-examination of the plaintiff's experts about the document in question. For example, Ms Woollams gave these answers to questions directed to her by Mr Hancock of counsel for Rimanui: "Q. Looking at the document that has four pages, can you tell me whether that fourth page was a page or a document that you saw in 2000? A. I can't recall.

Q. Do you see that there is one paragraph on it and it refers to Ross Pay? A. Yes.

Q. Now, assuming that these are the notes taken by Mr Ward, assume this is a conversation recorded by Mr Ward with Ross Pay on about 3 or 4 December 2000? A. Yes.

Q. And do you see he has typed, "Ross Pay advises that one aircraft used product from one 1,000 litre shuttle to do four loads at 80 hectares at 3 litres per hectare"? A. Yes.

Q. "This treated fields 22, 23, 24 and part of fields 18, 19 and 20"? A. Yes.

Q. "Other aircraft were used on the job and no other damage has been observed". Now, fields 22, 23 and 24, 18, 19 and 20 were the very fields that were affected-- A. Yes.

Q. --correct? Do you recall having a conversation with Ross Pay to that effect at any time in 2000 or 2001? A. No, I can't recall.

Q. Is such a conversation to the best of your recollection recorded in your report or in your affidavit? A. Not to my recollection, no.

Q. Will you agree with me that the information in that paragraph would have been highly significant to you so far as your investigations were concerned? A. Yes.

Q. Did you ever consider the possibility that rather than contaminated Microsol being sprayed on these fields, that glyphosate had been sprayed by mistake? A. No." 12 Mr McDougall's attention was drawn in cross-examination to the same page for the purposes of the questions from Mr Hancock that follow: "Q. Do you recall at any time having a conversation with Ross Pay in 2000 or 2001 about that paragraph? A. No, I do not.

Q. Did you have a conversation with him or anyone at Pay's Air about the facts that are contained in that paragraph? A. No, I did not.

Q. Do you agree with me that the facts set out in that paragraph are highly significant to an investigation of the damage to those very fields? A. They're significant but if I'd have been given this as a theory I would have dealt with the theory and I just can't see any basis to the theory. They're important but yeah.

Q. Would you not have thought in 2000 when investigating this damage that it would have been important to establish in the light of what's contained in that paragraph what was in the shuttle that is referred to that is said to have loaded the aircraft that flew over the ultimately damaged fields? A. Sorry would you just repeat that question?

Q. In the light of what's said of the facts in that paragraph, the fact that one aircraft loaded from one shuttle and flew over the damaged fields, would you have thought that those facts were important to investigate? A. Yes.

Q. Did you investigate the loading procedures at Pay's? A. Mandy Woollams investigated that.

Q. Will you agree with me that the information in the paragraph on page 4 of Mr Wards notes in front of you would have been highly significant to you so far as your investigations were concerned? A. If when - can I expand? If I'd gone to the field and saw symptoms of very distinct symptoms like I described before it would have been incredibly significant.

Q. And the second question I want to ask you is this, did you ever consider the possibility that rather than contaminated Microsol being sprayed on these fields that glyphosate had been sprayed by mistake? A. No." 13 At a general level it will be obvious that the real significance of what Mr Ward said on page 4 of his notes is not that it suggests or establishes that glyphosate had or had not been sprayed on "Telleraga", but that any on-farm spraying at all by Pay's Air would standing alone have been worth investigating as a potential source of the damage or in order to exclude it as a possible cause. 14 Mr McDougall had earlier given evidence in emphatic terms on this topic. He said that if the plaintiff's fields, which he and Mr Ghirardello examined in late 2000, had been sprayed in the way now hypothesised by the third defendant, and they had not detected the type of damage that such an application of glyphosate would have been likely to cause, they both "should have been taken out and shot". This is as good as saying that from the plaintiff's point of view, even without the benefit of anything that might be obtained from Mr Ward's fourth page, the damage observed by Mr McDougall was wholly inconsistent with the hypothesis that the third defendant now wishes to promote. It remains to be seen whether or not Mr Ghirardello's evidence is to a similar of different effect, and what my eventual conclusion on the issue will be. 15 At one level it seems highly unlikely that Mr Pay would have communicated with Mr Ward in as frank terms as the notes suggest if there were to his knowledge any likelihood that his employees had made, wittingly or otherwise, so egregious an error. Whatever investigations the plaintiff made, it did not form the view that Pay's Air was responsible for the damage, as its absence from these proceedings as a defendant would appear to confirm. The lateness of the suggestion that the damage may have been caused in the way now indicated would also suggest that no one else formed the view that it was a viable hypothesis either. 16 I am not in a position to form a view at this stage about the provenance or content of every version of Mr Ward's notes as they were copied and circulated after the event. I would be surprised if the notes ultimately achieved a significance that some of the parties appear to want to give them, but I am presently neither able nor prepared to express an opinion about what their actual significance may in due course turn out to be. 17 The third defendant says that it wishes to have the opportunity to test the theory that Pay's Air or its chemical supplier made a mistake and that the plaintiff's crops were damaged by on-farm activities rather than spray drift from "Boonaldoon". The third defendant has acknowledged that the plaintiff would be entitled to a liberal right of reply to meet the new defence case and presumably some leeway, if necessary, in further investigating the events that the third defendant wishes to ventilate to establish it. 18 The plaintiff has investigated all of the events touching and concerning November and December 2000. The third defendant's new case theory may be surprising to the plaintiff but it is difficult to see how it can be taken by surprise in the sense contemplated by the rule. If the operators at Pay's Air or its chemical supplier have been interviewed, and statements by them have been in the possession of the third defendant for some time but not disclosed, then their admission into evidence may be problematic. That remains to be seen. If no such statements exist, then all parties should have an equal opportunity to obtain them now. It would be a potential injustice if the third defendant, through no fault of its own, came into the possession of significant material late, which might have an important bearing on the outcome of the litigation, and it was precluded from proving it in its defence. I do not consider that the third defendant's proposal offends what was said by the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [112] as follows: "[112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate." 19 It does not seem to me that what the third defendant now wishes to explore is a matter for specific pleading in accordance with the relevant rule. That was the only nominated or principled basis upon which the plaintiff objected to the proposed course in order to exclude the evidence in question. What is envisaged is something that ought not to take the plaintiff by surprise in the events that have occurred. It is no more or less than a function of the way in which the case has been run and defended so far. A not entirely dissimilar version, based on partial contamination of the containers or their contents utilised in on-farm spraying of "Telleraga", has always been on the table in this case. The third defendant's present hypothesis is really only another somewhat speculative and predictable, or at least not unexpected, extension of the same idea. Investigations to exclude partial contamination would not appear to be qualitatively different to investigations to exclude substitution. I do not consider that UCPR 14.14(2) applies. 20 Alternatively, the third defendant says that the matter has in any event been pleaded with sufficient particularity to conform to the rule if it applies, or to warrant permitting it to lead its evidence if the plaintiff were somehow otherwise prejudiced or inconvenienced. Paragraphs 21(e) and 63 of the third defendant's defence to the amended statement of claim are in these terms: "21. (e) the plaintiff carried out its own spraying of chemicals both by air and land applications which may have caused the damage (further particulars will be provided after discovery by the plaintiff).

63. Further or in the alternative, the third defendant says that it was ground and/or aerial spraying conducted by or on behalf of the plaintiff on the plaintiff's land not by Gwydir Air that caused or contributed to the material loss or destruction of or damage to the crops as alleged on the plaintiff's land.

The particulars are within the knowledge of the plaintiff." 21 The matter was frankly aired in a discussion between counsel for the third defendant and me as follows: "HIS HONOUR: Does the pleading say that the reason for the damage was that the plaintiff sprayed its own crops with undiluted glyphosate?

LLOYD: No, it says the cause of the damage was spraying including aerial spraying by the plaintiff. In my respectful submission we don't need to plead with that specificity. The plaintiff sues us about damage that we are said to cause. On one view the defendant doesn't need to even put in something like paragraph 63. It is a further, an assertion of a positive case and on one view is not strictly necessary. But we put it in there.

The position is your Honour we don't, I don't resile from this for a moment, the reason that further particulars weren't given in the amended defence in July of 2009 is because we didn't know the case with the specificity that we now do, back then.

The question that I think your Honour asked me a little while ago is, to paraphrase, why we shouldn't have known early, the answer is well, we missed it but so did everyone else, in particular the plaintiff identified or attempted to identify the likely causes of the problem." 22 Mr Lloyd countered the plaintiff's opposition to his proposed course in the following way: "The effect of what is being suggested is that we should have been more forensically diligent and skilful than the plaintiff's team of lay and expert witnesses. We have got one person relevantly on the ground with expertise, Mr Ghirardello. They have got Mr Ward, Mr Barton, Mr McDougall, Ms Woollams, Mr Lehmann and they all missed the significance of it and the inescapable inference in my submission is they missed it because most of them weren't told about the particular details of Pay's spraying activities on page 4." 23 The reference to page 4 is a reference to the last page of Mr Ward's notes. 24 The potential significance of the proposal consists in the third defendant's ability to establish as a fact on the balance of probabilities that the Pay's Air spraying applied undiluted glyphosate to the crops. Mr Lloyd described this as "a real possible alternative rather than contamination, which is what [the plaintiff] investigated". 25 Mr Lloyd concedes that the new case theory only came to light when, in effect, someone in his camp very recently revisited page 4 of Mr Ward's notes in a different and inspired light. The third defendant contends that this was as a result of the late service of the plaintiff's expert material but there is no doubt that the new case could have been flagged earlier. Mr Gray-Spencer's affidavit, for example, indicates that he had all of the pages of Mr Ward's notes by at least 10 January 2008, which is the date of a letter he wrote in which the notes are mentioned. (The plaintiff was even prepared to concede 29 July 2009 as the very latest date for this purpose). I am reasonably confident that all of the pages of the notes were available to all defendants much earlier than this, but I make no finding about it at this stage. 26 Mr Lloyd's proposition, however, is that the new case theory does not, or at least ought not, call for a fresh investigation or the retention of new or additional expert opinions. The fourth page of Mr Ward's notes does not even mention glyphosate. The issue turns on an isolated question of fact to be established, if at all, out of the mouths of lay witnesses, such as Mr Hovenden and Mr Taylor, and possibly by the use of documents, to the persuasiveness or ancient frailty of which the plaintiff and the third defendant are equally exposed. Interestingly, Mr Ghirardello actually provided Mr Hovenden with detailed information for his consideration in January 2001 of what his investigations had revealed, but so far I have not sighted any response from Mr Hovenden. Moreover, Mr Lehmann nominated foliar fertiliser sprayed by aircraft and aircraft that applied the foliar fertiliser to the plaintiff's land as his first two working hypotheses on 2 December 2000, and in advance of outside farm drift as his third option. These possibilities have been alive at all times since then and all parties have had equal access to the means of establishing or discounting them. 27 In this last respect I am mindful of what has been said by Allsop J in White v Overland [2001] FCA 1333 at [4] as follows: "However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil… Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. This is very much the case when an issue, if it is to be propounded, might endanger the instructions of those acting for the other side… In the long run, the only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone." 28 It will be apparent that in my view the present case is not one in which one of the parties has kept an issue hidden or has failed properly to identify it. On the contrary, what emerges is something that falls to be assessed as a comparison of what the plaintiff on the one hand and the third defendant on the other hand, if not all defendants, did with the information that was there for all to see. As Mr Lloyd has submitted, the plaintiff's contention that the defendants ought to have given earlier or clearer notice of what they now propose relies upon the proposition that the third defendant ought to have been more forensically diligent and astute than the plaintiff's own team of lay and expert witnesses in identifying the full raft of possible causes of the damage. That included the inadvertent loading of glyphosate into one of the aircraft operated by Pay's Air. I agree that such a contention should be rejected. The third defendant's defence to the amended statement of claim is sufficiently clear to authorise what is now proposed. 29 Mr Lloyd conceded that if I were to find that the third defendant were for some reason at fault for not raising the present matter earlier, the plaintiff ought to be given a liberal opportunity to call evidence in reply to meet the case. I do not consider that the third defendant is at fault in that sense. However, I earlier foreshadowed that the plaintiff should be protected from any unforeseen consequence that might arise from adopting the course I have endorsed and I see no reason to depart from it now. Conclusions and orders 30 I consider that the third defendant should be permitted to call the evidence upon which it proposes to rely in support of the contention that the damage to the plaintiff's cotton crops and part of the sorghum may have been caused by the inadvertent loading of glyphosate into Pay's Air aircraft VH-LIU on 23 November 2000. The costs of the third defendant's application to do so should be costs in the cause. The plaintiff should have liberty to apply as it may be advised.

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.