Seas Sapfor Forests Pty Ltd and Ors v Electricity Trust of SA

[1997] HCATrans 136

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A40 of 1996

B e t w e e n -

SEAS SAPFOR FORESTS PTY LTD

First Applicant

IOOF AUSTRALIA TRUSTEES LTD (As Trustee for the Covenant Holders Pursuant To The Southern Australia Perpetual Forest Limited 1964 Trust Deed)

Second Applicant

SEAS SAPFOR FOREST HARVESTING PTY LTD

Third Applicant

and

ELECTRICITY TRUST OF SOUTH AUSTRALIA

Respondent

Application for special leave to appeal

DAWSON J

TOOHEY J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 30 MAY 1997, AT 9.55 AM

Copyright in the High Court of Australia

______________________

MR A.J. BESANKO QC:   If the Court pleases, I appear with my learned friend, MR I.C. ROBERTSON.  (instructed by Piper Alderman)

MR D.M. QUICK QC:   If the court pleases, I appear with my learned friend, MR R.C. WHITE for the respondent.  (instructed by Mouldens)

MR BESANKO:   If your Honours please, the issue before the Full Court of the Supreme Court in this case was whether it was arguable that the defendant owed a duty of care to what the Full Court refers to as P4 and P5, who were milling companies, in relation to certain losses that they suffered as operators of a mill which was adjacent to a commercial tree plantation damaged in a fire in February 1983.  Your Honours, the two types ‑ ‑ ‑

TOOHEY J:   Could I just interrupt you.  That is one way of putting it perhaps, but another way of putting it is whether the present respondent owed a duty of care to the prospective plaintiffs in respect of the damage which they claim.  I put it to you that way because the Full Court did not exclude the possibility that the prospective plaintiffs might have a claim formulated rather differently to the one which was before the Court.

MR BESANKO:   Yes, your Honour, we accept that.  Your Honour, the ‑ ‑ ‑

TOOHEY J:   It is of some importance, because it may be that this being an application for special leave to appeal in respect of an interlocutory judgment, that until the claims have been reformulated, if that is what the applicants wish to do, it is very hard to see this as a proper case for a grant of special leave to appeal.

MR BESANKO:   Your Honours, the majority in their judgment indicated that the claims might be reformulated on quite a limited basis, and your Honours have an indication of that basis in their judgment at pages 35 to 37.  In particular, your Honours, at page 35, line 35, his Honour the Chief Justice says that it is important to:

distinguish on the one hand between the loss suffered as a result of reduced profits from the processing of P1’s timber, and on the other hand loss suffered from not able to the keep the mill running to full capacity and costs incurred in obtaining replacement timber.   There are, in my opinion, problems in establishing a duty in relation to the latter two.

So that although the majority left open the possibility of the claims reformulated, that would be on a much more limited basis than the claims as they presently stand.

DAWSON J:   Perhaps so, Mr Besanko, but at the end of the day if even on that limited basis the two extra plaintiffs were added, the case would reach a conclusion, there would be findings of fact, and if at that stage an appeal were warranted then it could be brought.  Why should we be dealing with this matter at an interlocutory stage?  In other words, you are not being shut out entirely and why should we bother ourselves with it now?

MR BESANKO:   Your Honours, we submit that we are being shut out for the loss that we claim, in particular the loss claimed for loss of profits and the expense of obtaining timber from elsewhere.

DAWSON J:   If you are being shut out you perhaps can complain about that at a later stage, when the facts have been found; but it is inappropriate perhaps at this stage for this Court to be attempting to deal with it in vacuo.

MR BESANKO:   Your Honours, we would understand that what the majority of the Full Court is saying is that we might reformulate our claim on a far more limited basis and, in relation to a particular type of loss, which would not include the loss that we presently claim - and, of course, that loss is very substantial - and we submit that we would be shut out.  Even if we were to reformulate the claim, it would be for a different ‑ ‑ ‑

KIRBY J:   You would.  But experience teaches that interrupting process - bringing up interlocutory appeals, preventing finality of decision - is not a very good thing.  I mean, you might litigate, the matter might be settled, you might be content with what you get and the whole problem goes away, and the time for this Court to consider it is later, when the whole process has gone to a final order.  This is what the Court is putting to you.  I mean, you do not lose these arguments.  These arguments are still there.  This being an interlocutory appeal in the process, you can still raise them at a later stage.  But in 90 per cent of cases the problem is resolved, and that is why courts are disinclined to bring up interlocutory points of this kind, especially on special leave.

MR BESANKO:   Our application, if your Honours please, was to join P4 and P5 to the proceedings, and to add claims on their behalf.  The Full Court found that the two claims made on behalf of those parties were unarguable, so the joinder should not take place.  So that those claims, in our submission, cannot be pursued by P4 and P5 unless there is a much narrower claim, and perhaps quite a different claim from the claim presently put forward and, unless that is done, P4 and P5 will not be joined and will be shut out from making the claims that they now seek to do. 

So, in our submission, your Honours, it is not a matter where we can come back and have, in effect, another opportunity to claim the loss that we are now claiming.  The Chief Justice’s decision is based on the proposition that quite a different loss might be claimed from the loss that we presently claim, and the effect of the order of the Full Court was that P4 and P5 could not be joined to the proceedings and could not pursue those claims.  So, we submit, your Honours, that it is not an interlocutory judgment in the sense that the arguments will still be available to us at the end of the day.  If we do not reformulate, that is the end of the claims for P4 and P5.

KIRBY J:   I am not sure of that.  I think this Court, early in the century, said that if you have in an interlocutory decision on the way something which is adverse to you, then that remains alive at the time of the final orders.  That is to say, if P4 and P5 are joined, and they bring their action within the limited field that they have been required by the orders of the Full Court, then your interlocutory point remains alive at the end of the litigation.  That is my understanding of the law.  It was a decision of Chief Justice Griffith in about 1917.

MR BESANKO:   If your Honour pleases, the difficulty we face here is that if we are not able to reformulate our claims in a way that might satisfy the ‑ ‑ ‑

KIRBY J:   We realise that it is inconvenient to you, but the point being made is that you have got a broad hint from the Full Court that, framed in a particular way, you can bring your claim.  You can proceed on that hint.  You can litigate that matter if you are allowed in and then, if you are then still discontented, you can go through the appellate process on final orders.

MR BESANKO:   If your Honour pleases, the way that we would put it to the Court is that at the moment P4 and P5 cannot pursue any claim; they are not parties to the action.  If we were to reformulate claims on their behalf - much narrower claims, and possibly much smaller claims - and the Court, in our respectful submission, ought not to assume that the claims can be reformulated in an acceptable way - but even if that could be done, and P4 and P5 were joined to the proceedings to pursue those claims and only those claims, it would only have a right of appeal at the end of the day in relation to the claims that it had pleaded and pursued at trial.

KIRBY J:   You say that.  I am not sure that that is correct.

MR BESANKO:   Your Honour, we would not understand ‑ ‑ ‑

KIRBY J:   I am not saying it is incorrect, but that is not my impression of the authority of this Court and I do not think you should throw it away.

MR BESANKO:   If your Honour pleases.  Your Honours, the special leave point that we submit arises in the circumstances of this case is related to the conclusion of his Honour the Chief Justice at page 34 of the appeal book where at line 21 his Honour says that ultimately his conclusion that the point is unarguable:

is a product of the problem of liability to an unascertained class.  There is no factor in the definition of that class which adequately restricts the class of claimants.

Your Honours, the class was described in paragraph 9A of the statement of claim, which is conveniently set out at page 36 of the appeal book, and it is there described as:

the company or persons operating the Mill from time to time -

in relation to one aspect of the loss and:

the company or person supervising the harvesting of the forest timber from time to time -

in relation to another aspect of the loss.  Although the Court will have seen that the Chief Justice referred to six factors, ultimately his Honour has said that the decisive factor is that those descriptions do not amount to an ascertained class for the purposes of the recovery of mere economic loss and it is that conclusion that the appellant seeks to challenge and submits raises a special leave issue.  In our submission, the description in the statement of claim is an adequate description. 

The Court has dealt with this matter in a number of authorities and there is no requirement that the person be a specific individual that the defendant knows by name and, in our submission, there is no requirement that the person be in existence at the time of the tort or shortly prior to the condition of the tort and, although the decision of Bryan v Maloney turns on its special facts, that was a case where Mrs Maloney would not have been in contemplation of the builder at the time the building was constructed and so we submit, your Honours, that there is a serious question as to whether, for example, the owners or operators of a mill or the owners or operators of a factory or a processing plant in close physical proximity to the property damaged can be an ascertained class for the purposes of the rule and, in our submission ‑ ‑ ‑

TOOHEY J:   Mr Besanko, you may well be right about that, but in effect what you are asking this Court to do is to give some sort of endorsement to the statement of claim in which various allegations are made and in which no evidence has yet been called, the matter has not yet gone to trial.  It seems a very unsatisfactory vehicle for the grant of special leave to appeal, acknowledging the sort of problems that you say your clients are faced with.

MR BESANKO:   Your Honour, we would submit that it is no different really from the Esanda v Peat Marwick decision with respect to which the Court gave judgment recently where there were paragraphs in the statement of claim.  There was an application to strike out those paragraphs.  That application was granted on appeal to the Full Court.  This Court granted special leave and ultimately upheld the decision of the Full Court and we would submit, your Honours, that this is in effect a strike‑out application.  We made an application for leave to amend and that application was refused on the grounds that we did not have an arguable case and, in our submission, that is in effect a demurrer and is an appropriate matter for this Court to consider in the same way that the Court considered the point in the Esanda Case.

KIRBY J:   I think the Esanda litigation shows one of the problems of intervening at this stage because it delays the process of the trial.  Experience does teach that the sooner parties get to trial, the sooner problems are resolved.  Appellate courts become part of the problem if they continue to intervene at this stage.  This is what is concerning me, that your time to come here is when you have gone to trial and litigated an issue within a narrower ground and reserving the objections that you have to being forced into that narrower ground.

MR BESANKO:   Your Honour, we accept that but, with the greatest respect, the position here is that P4 and P5 may not be able to go to trial.  Certainly the position at the moment is that they are not able to go to trial unless they can put forward a much narrower claim on a much narrower basis.  So they are effectively being shut out from a trial at this particular stage.

DAWSON J:   That is not right because, if they cannot put it on the narrower basis, they certainly could not put it on the broader basis.

MR BESANKO:   It is a question, your Honour, of the loss and what loss can be formulated rather than a matter of pleading the duty of care.  It may be that the narrower loss that the Chief Justice refers to in his judgment cannot be formulated or was not suffered as a matter of fact.  In our respectful submission, the Court ought not to make any assumptions about that.  The position at the moment is that P4 and P5 are shut out from proceeding to trial.

DAWSON J:   They are not shut out, they can proceed - do you say that you cannot make out a case on the narrower basis?  I would expect you to say no to that.

MR BESANKO:   We may be able to, your Honours, but it would be a much different claim and a much smaller claim, on my instructions.

DAWSON J:   Yes, it would.  If at the end of the day you say you were prejudiced by having to put your claim on that narrower basis and you should have been allowed to put it as you sought to do, then you will have your rights of appeal.

MR BESANKO:   Your Honour, I do not know that it profits me to repeat the submission, but we would be restricted by what we had pleaded.  No doubt the defendant, if we tried to put it on the wider basis again in our pleadings, would apply to strike out, which is very similar to ‑ ‑ ‑

DAWSON J:   No, I am not suggesting that.  I am suggesting at the end of the day, if you seek to contest the decision which you now seek to contest, you will be able to do so by way of appeal if you see fit.

MR BESANKO:   Your Honour, our concern about that would be that, in the absence of a pleading claiming this loss, we would not have a right to complain of any judgment that was delivered at the end of the day.

DAWSON J:   Of course you would.  Why could you not say, as was put to you by Justice Kirby, that you were put in this position by a wrong decision, if you wanted to complain about it in that way?

KIRBY J:   That is the proper way to bring up appeals:  at the end of the trial, not bringing them up at this stage where we become interrupters of the trial.

MR BESANKO:   If your Honour pleases.  That is what we say is the special leave question in this case and we submit that it is certainly arguable that the majority’s decision is not correct.  It raises an important point of principle in relation to the recovery of mere economic loss.  If your Honours please.

DAWSON J:   Thank you, Mr Besanko.  The Court need not trouble you, Mr Quick.

This application is made at an interlocutory stage of the proceedings.  The application below to add the two plaintiffs was refused upon the basis which the applicant sought to establish, but the way was left open to seek the addition of the two plaintiffs upon a more limited basis.  If the court below was incorrect in its decision, nevertheless the two prospective plaintiffs were not shut out and, should they seek at the end of the day to contest any decision relating to the basis upon which they are allowed to participate in the litigation, they will be in a position to exercise their right of appeal.  It is therefore not appropriate for this Court to deal with the matter at this stage in the absence of findings which will emerge at trial.  Accordingly, special leave to appeal is refused.

MR QUICK:  May it please the Court, the respondent seeks an order as to costs.

DAWSON J:   Can you say anything about that, Mr Besanko?

MR BESANKO:   No, I cannot, your Honour.

DAWSON J:   The application is refused with costs.

AT 10.10 AM THE MATTER WAS CONCLUDED