Steggles Limited v Yarrabee Chicken Company Pty Ltd

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 The applicant, Steggles Limited (Steggles), applies for leave to appeal from judgments given on 30 August 2010 (the first judgment) and 14 July 2011 (the second judgment) in the primary proceeding. 2 The primary proceeding is a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act). It was commenced as a Fast Track application but was subsequently removed from the Fast Track list. 3 The respondent to the present application, Yarrabee Chicken Company Pty Limited (Yarrabee), represents members of the Hunter Valley Tunnel Group (the HVTG). The HVTG is an unincorporated association of tunnel growers of broiler chickens in the Hunter Valley. Tunnel growing is a method of rearing chickens in mechanically ventilated sheds. The HVTG is authorised to represent the growers in connection with their contracts with Steggles. 4 Steggles is a chicken processing company which operates a chicken processing plant at Beresfield in the Hunter Valley. 5 The primary proceeding concerned a number of individual contracts in standard form between Steggles and the growers. In the primary proceeding, the parties agreed that certain issues either common to or having consequences common for all members of the HVTG should be determined separately from and in advance of all other issues in the proceeding. 6 Those issues included the following questions with respect to clause 7.4 of the standard form contracts: • In allocating chicks for processing at its Beresfield plant to growers, must Steggles give preference to growers in the Hunter Valley region using tunnel-ventilated growing facilities over conventional growers and/or growers from regions outside of the Hunter Valley? • In allocating chicks for processing at its Beresfield plant to growers, must Steggles give preference to growers who are parties to growing agreements with Steggles in the same or substantially the same form as the contract over growers who are not party to such growing agreement? 7 In reasons given on 27 April 2010, the primary judge answered each of those questions affirmatively: Yarrabee Chicken Company Pty Ltd v Steggles Limited [2010] FCA 394. 8 In the first judgment the primary judge made a declaration that "on a proper construction of the material terms of the contract, Steggles must give preference to the growers over other growers when allocating chicks for processing at its Beresfield plant." 9 Steggles did not at that time seek leave to appeal from the first judgment. It reasoned that: (a) leave to appeal at that time would have been premature and arguably of no utility; and (b) there was no purpose in appealing the Court's construction if, in the balance of the proceeding, Yarrabee did not pursue Steggles for breach of contract or, if it did, it failed to establish either a breach of clause 7.4 or damages for that breach. It is not necessary for me to dwell on the correctness of those reasons. 10 On 6 July 2011 the primary judge published reasons in which her Honour found, on the facts, that Steggles had breached clause 7.4 of the standard contracts and assessed damages for that breach: Yarrabee Chicken Company Pty Ltd v Steggles Limited (No 2) [2011] FCA 750. She accepted the growers' method for calculating damages and, in the second judgment on 14 July 2011, awarded damages in the sum of $1,123,990.47 (inclusive of interest and GST) to be distributed amongst the growers in accordance with other orders made by the Court on that day 11 Steggles' primary position is that, as the whole of Yarrabee's claim has now been disposed of, it does not need leave to appeal from the first judgment or the second judgment; from the date of pronouncement of the second judgment, Steggles had an appeal as of right from both judgments. However, it submits that in circumstances where Steggles has a cross-claim on foot, it is not entirely clear on the authorities whether the final judgment disposing of Yarrabee's claim now takes effect as a final judgment for appeal purposes or whether, by virtue of the continuing existence of the cross-claim, the final judgment on Yarrabee's claim ought to be regarded as interlocutory for appeal purposes. 12 In that connection, I was referred this morning to observations made by Gordon J in Jefferson Ford Co Proprietary Limited v Ford Motor Company of Australia Limited (2008) 167 FCR 372 at [164] and [182], which do indicate that a judgment on less than all claims (including cross-claims, third party claims and counter-claims) is not final because certain of the parties' substantive rights remain in issue. In those circumstances, Steggles considered the more appropriate course was to seek leave to appeal, to the extent such leave was required, or, if leave was not required, to seek an extension of time within which to file a notice of appeal. This approach was considered by Steggles to be appropriate having regard to observations made by Moore J in All Districts Coating Pty Ltd v Barhoum (2008) FCA 1525 at [10]. 13 Yarrabee's position is that the issues arising on the cross-claim are discrete to those arising from the causes of action set out in the further amended application and further amended Fast Track statement referable to the first judgment and the second judgment. On that basis, it does not oppose the hearing of grounds 1(b), 4, 5 and 6 of the draft notice of appeal before the determination of the cross-claim or, to the extent necessary, the granting of leave to bring an appeal on those grounds. However, it does formally oppose the granting of leave to appeal on grounds 1(a), 2 and 3 of the draft notice of appeal. It contends that leave is required to agitate those grounds because the first judgment is interlocutory and because the application for leave to appeal from that judgment has been brought out of time. 14 In my view, those contentions can only be sustained if the second judgment is interlocutory and not final for the purposes of bringing an appeal. 15 If, as Steggles contends, the second judgment is a final judgment for appeal purposes, it is of no consequence that Steggles did not seek leave to appeal from the first judgment. Its right to bring an appeal on grounds 1(a), 2 and 3 of the draft notice of appeal would arise as of right after the giving of the second judgment: see Gerlach v Clifton Bricks Pty Limited (2002) 209 CLR 478 at [44] and [48]; see also Smith v Tabain (1987) 10 NSWLR 562 at 565 and 566. 16 If, on the other hand, the second judgment is itself interlocutory for appeal purposes, then leave to appeal in respect of all grounds in the draft notice of appeal would be required. 17 The rulings given in the first judgment in respect of the proper construction of clause 7.4 of the standard contracts were necessary antecedents to the findings of breach of contract and the assessment of damages consequent thereon in the second judgment. In my view, the resolution of whether leave to appeal from the second judgment should be granted largely resolves the question whether leave to appeal from the first judgment should also be granted. 18 But for the observations of Gordon J in Jefferson Ford, I would have been inclined to the view that the second judgment was not interlocutory but final for appeal purposes. However, in light of the views to which I have come, it is not profitable for me to dwell on that difficult question. If the second judgment is in truth interlocutory, I am firmly of the view that leave to appeal from that judgment should be granted. It falls into the category of cases referred to in Duncan v Secretary, Department of Family and Community Services [2007] FCA 507 and Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1794 in that the second judgment, informed by and dependent upon the rulings in the first judgment concerning the proper construction of clause 7.4 of the standard form contracts, is final so far as concerns the controversy raised in the primary proceeding. I should add that I am satisfied that the grounds raised in the draft notice of appeal in respect of the second judgment are genuine grounds and are sufficiently arguable for present purposes. 19 I am fortified in the view to which I have come in light of Yarrabee's acknowledgement that the issues arising on the cross-claim are discrete from those arising on the causes of action in the primary proceeding and its lack of opposition to the hearing of grounds 1(b), 4, 5 and 6 of the draft notice of appeal before the determination of the cross-claim. 20 In short, there is no practical reason why leave to appeal from the second judgment should not be granted and no prejudice to the parties in granting that leave. 21 If that be the case, I can see no cogent reason why, at the same time, leave to appeal from the first judgment should not also be granted. Once again, I am satisfied that the grounds of appeal referable to the first judgment are genuine grounds and are sufficiently arguable. 22 The connection between the proper construction of clause 7.4 of the standard contracts, its breach on the facts found by the primary judge, and the assessment of damages consequent thereon is obvious. An appeal on grounds relating to the latter two questions, leaving in abeyance an appeal on the grounds relevant to the first question on which those latter questions are plainly dependent, does not seem to me to make much sense so far as concerns the ultimate quelling of the controversy raised by the primary proceeding,. Indeed, orders which provided for that outcome would be antithetical to the operation of s 37M of the Federal Court Act providing for the just resolution of disputes as quickly, inexpensively and efficiently as possible. 23 An appeal on the foreshadowed grounds relating to all three questions should proceed at the same time. In light of these reasons and out of an abundance of caution, I propose to grant the leave that is sought. 24 I will order that: 1. Compliance with rule 35.13 of the Federal Court Rules be dispensed with. 2. The applicant has leave to file a notice of appeal on grounds substantially in conformity with the grounds of appeal identified in the draft notice of appeal annexed to the affidavit of Rodney Hawkins, sworn 4 August 2011. 3. Costs of the application for extension of time and leave to appeal be costs in the appeal. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.