Hannigan v Inghams Enterprises Pty Ltd

1. [1]

   The plaintiff, Mr Hannigan, is a chicken grower at a farm near Casino. He is also a solicitor. The defendant, Inghams Enterprises Pty Ltd (“Inghams”), supplies broiler chickens to the market. On 16 October 2016, Mr Hannigan and Inghams entered a “Broiler Chicken Growing Agreement” (“the Contract”) pursuant to which Inghams agreed to supply batches of one day old chickens to Mr Hannigan and Mr Hannigan agreed to raise the chickens for various periods, typically 30 days.

2. [2]

   On 8 August 2017, Inghams purported to terminate the Contract. It did so on two bases. First, Inghams alleged that Mr Hannigan had, in breach of his obligations under the Contract, failed to obtain sample weights for the chickens in his custody and provide these to Inghams. Second, Inghams alleged that, in further breach of the Contract, Mr Hannigan had failed to provide feed to chickens in “Sheds 3 and 4” on 30 and 31 July 2017. Inghams stated that “no further birds will be placed on the farm”. Inghams did not supply chickens to Mr Hannigan’s farm after 29 July 2017.

3. [3]

   Mr Hannigan asserted that Ingham’s purported termination of the Contract amounted to a repudiation of it. Mr Hannigan did not accept that alleged repudiation, affirmed the Contract and on 30 August 2017 commenced proceedings in this Court seeking a declaration that the Contract had not been terminated (“the Earlier Proceedings”).

4. [4]

   Mr Hannigan did not seek any consequential relief in the Earlier Proceedings. He sought neither specific performance of the Contract, nor damages. This was a deliberate decision. I will return to this.

5. [5]

   The matter was heard before Robb J over six days between August and November 2018. [1] On 29 March 2019, Robb J delivered judgment. [2]

6. [6]

   Robb J found that:

7. [7]

   Robb J made a declaration that the parties were bound by the Contract.

8. [8]

   On 13 May 2019, Robb J made a further declaration that the Contract had not been terminated by Inghams’ letter of 8 August 2017.

9. [9]

   Inghams recommenced supply of chickens on 25 June 2019.

10. [10]

    On 16 August 2019, Mr Hannigan informed Inghams that he proposed to refer his damages claim to arbitration.

11. [11]

    Inghams disputed Mr Hannigan’s entitlement to do this and further litigation ensued (“the Arbitration Proceedings”). On 16 September 2019, Slattery J, sitting as Duty Judge, held that Mr Hannigan was so entitled. [6] Inghams appealed and on 4 May 2020 the Court of Appeal, by majority, upheld the appeal. [7]

12. [12]

    On 20 November 2020, Mr Hannigan commenced these proceedings seeking damages under the Contract in relation to Ingham’s failure to supply chickens between 29 July 2017 and 25 June 2019.

13. [13]

    By notice of motion filed on 20 February 2021, Inghams seeks a permanent stay of these proceedings on the basis that it was unreasonable of Mr Hannigan not to have brought his damages claim in the Earlier Proceedings. That is, Inghams asserts an Anshun estoppel.

Decision

1. [14]

   I am not persuaded that I should stay these proceedings.

Relevant principles

1. [15]

   In proceedings before a court of competent jurisdiction, the parties are required to bring forward their whole case. [8]

2. [16]

   A party will not be permitted to raise, in a subsequent proceeding, a claim or an issue of fact or law that is so connected or so relevant to the subject matter of the first proceeding that it was unreasonable of that party to have not made the claim or raised the issue in the first proceeding.

3. [17]

   The principle applies whether or not the failure to propound the claim or issue was deliberate or as a result of negligence, inadvertence or accident.

4. [18]

   These principles derive from a line of authorities [9] which establish the following propositions regarding Anshun estoppel: [10]

This case

1. [19]

   Mr Braham SC, who appeared with Mr Neggo for Inghams, submitted that permitting Mr Hannigan to proceed with this case would be “setting a standard” as to the permissible mode conducting commercial litigation in the “modern age”. I do not see it that way. Like most Anshun cases, this case turns on its own facts. The facts here are unusual. I do not see this case as setting, one way or the other, a precedent for how litigation is or should be conducted.

2. [20]

   For the same reasons, I think it unhelpful to examine how Anshun principles have been applied in other cases. I found none of the cases to which Mr Braham, and Mr Henry SC, who appeared for Mr Hannigan, took me to, to shed light on what I should do here.

Could Mr Hannigan have claimed damages in the Earlier Proceedings?

1. [21]

   Although the debate before me ranged more widely, I see the vital questions as being whether Mr Hannigan could have claimed damages in the earlier proceedings, and, if so, how that claim could have been case managed.

2. [22]

   As I have said, Mr Hannigan did not accept Inghams’ purported termination of the Contract and sought to affirm it. Accordingly, Mr Hannigan was not entitled in the Earlier Proceedings to seek loss of bargain damages, as he was seeking to uphold the bargain.

3. [23]

   On the day Mr Hannigan filed the Summons in the Earlier Proceedings, 30 August 2017, he had not suffered the damage of which he complains in these proceedings. On 30 August 2017, beyond nominal damages, the only damage Mr Hannigan may have suffered was associated with his maintenance of sheds and equipment at the farm.

4. [24]

   Mr Hannigan’s damages arising from Inghams’ failure to continue to provide chickens only arose as and when an entitlement to payment would have arisen under the Contract had Inghams delivered batches of chickens in accordance with the Contract.

5. [25]

   The first such payment would have arisen in late October 2017. Damages would then accrue progressively at the points in time when Mr Hannigan would otherwise have been entitled to be paid.

6. [26]

   Mr Hannigan seeks in these proceedings to recover damages in respect of Inghams failure to provide chickens between 30 July 2017, being the last date in which Inghams had delivered chickens, and 25 June 2019, being the date when Inghams resumed providing chickens. At no time during the Earlier Proceedings had all these damages accrued. Until it was determined whether Mr Hannigan was correct to contend that the Contract had not been validly terminated, Mr Hannigan did not know, and could not know, during what period his damages should be calculated.

7. [27]

   This would not have prevented Mr Hannigan from including a prayer for damages in the Earlier Proceedings. But until it was determined whether or not the Contract had been validly terminated, no final assessment of those damages could be made.

8. [28]

   In these circumstances it is likely, if not inevitable, that had Mr Hannigan claimed damages in the Earlier Damages there would have had to be a separate hearing on damages. Until Mr Hannigan knew when and whether it would be determined that the Contract had been validly terminated, he could not know if he had a claim for damages and, assuming he could establish he had one, during what period damages should be calculated.

9. [29]

   In those circumstances Mr Braham accepted that:

10. [30]

    Had Mr Hannigan included a claim for damages in the Earlier Proceedings it would doubtless have caused delay in those proceedings.

11. [31]

    As it was, the matter was ready for allocation of a hearing date by the end of 2017. On 8 February 2018, the matter was fixed for hearing for four days commencing on 6 August 2018 before Robb J. [23]

12. [32]

    Had Mr Hannigan, by 8 February 2018, foreshadowed a damages claim it appears unlikely that a hearing date would then have been allocated and likely that directions would have been made for the parties to exchange evidence on damages, which evidence is likely to have included expert evidence.

13. [33]

    As I have said, it is likely that such evidence would have had to be considered, at a subsequent hearing, no doubt by Robb J.

Was it unreasonable of Mr Hannigan not to have sought damages in the Earlier Proceedings?

1. [34]

   It is, of course, usually desirable that a party brings forward all aspects of its cause of action in one proceeding.

2. [35]

   This is consistent with s 63 of the Supreme Court Act 1970 (NSW) which provides:

3. [36]

   This is also consistent with the obligation that parties in civil proceedings have to assist the Court and further the overriding purpose of facilitating a just, quick and cheap resolution of the real issues in the proceedings. [24]

4. [37]

   Further, in Neeta (Epping) Pty Ltd v Phillips [25] the High Court [26] said: [27]

5. [38]

   It is also true, as Mr Braham submitted, that there is only one “controversy” between Mr Hannigan and Inghams and that Mr Hannigan has only one cause of action against Inghams.

6. [39]

   Mr Hannigan understood this.

7. [40]

   His unchallenged explanation as to why he did not seek damages in the Earlier Proceedings was contained in this passage from an affidavit that he swore in the Arbitration Proceedings:

8. [41]

   Mr Hannigan did not apply for expedition and has not explained why he did not take that step. That does weigh against the reasonableness of Mr Hannigan’s position.

9. [42]

   Subject to that, what Mr Hannigan said, as set out at [40], appears to me to be a reasonable explanation for the course Mr Hannigan adopted.

10. [43]

    In substance, what Mr Hannigan sought to do was to obtain prompt resolution of his claim that the Contract had not been terminated.

11. [44]

    As things turned out, although the matter was ready for a hearing date in February 2018, a date suitable to the parties was not available until August 2018. The proceedings then took longer than the allocated four days. The hearing did not conclude until 8 November 2018, with judgment following on 29 March 2019.

12. [45]

    Inghams was well aware of the potential significance of the manner in which Mr Hannigan had formulated his claim in the Earlier Proceedings.

13. [46]

    Thus, when the matter was listed for directions before Robb J on 10 May 2018, the following exchange took place between his Honour and Mr Henry:

14. [47]

    Later, the following exchange took place between his Honour and Mr Neggo, who appeared for Inghams:

15. [48]

    Mr Neggo, and thus Inghams, neither agreed nor opposed the matter proceeding to hearing on the basis that Mr Hannigan sought only declaratory relief. Mr Neggo made clear that Inghams did not acquiesce in the course proposed. But nor did it oppose it.

16. [49]

    Robb J returned to the subject in his judgment when he said: [28]

17. [50]

    As Mr Henry emphasised in his submissions, the question here is not whether it was reasonable for Mr Hannigan to adopt the course of seeking only declaratory relief in the Earlier Proceedings. The question is whether it was unreasonable of him not also to seek damages, either at the outset of the Earlier Proceedings or by amendment during the course of the proceedings.

18. [51]

    In the troubled circumstances in which Mr Hannigan found himself, I am not persuaded it was unreasonable of him to take the course he took.

19. [52]

    It does appear that some of the issues debated before Robb J will, at one level or another, be reagitated in these proceedings.

20. [53]

    Inghams has foreshadowed that it proposes to seek leave to amend its List Response to allege, in answer to Mr Hannigan’s damages claim, a failure by Mr Hannigan to comply with certain provisions in the Contract concerning “Animal Welfare Standards”. Inghams proposes to contend that such failure would or may, during the period the subject of Mr Hannigan’s damages claim, have entitled it to either terminate the Contract or to exercise its rights to “invoke density cuts” on the number of chickens provided. This would restrict the supply of chickens supplied to Mr Hannigan’s farm.

21. [54]

    I cannot see how this prospect raises the spectre of inconsistent findings. The doctrine of issue estoppel will govern the extent to which Inghams or Mr Hannigan can reagitate matters that have been determined by Robb J.

22. [55]

    However, there is the prospect, were these proceedings to continue, of similar factual matters being debated and of witnesses who gave evidence before Robb J being recalled in these proceedings.

23. [56]

    But, had Mr Hannigan included a damages claim in the Earlier Proceedings, and because of the likelihood of there being a separate hearing on damages, these problems would have arisen in any event, albeit in circumstances where Robb J were likely to have been the judge hearing both aspects of the case.

24. [57]

    Overall, I am not persuaded that it was unreasonable of Mr Hannigan not to seek damages in the Earlier Proceedings.

Special circumstances

1. [58]

   In any event, in my opinion, there are special circumstances here that warrant the conclusion that, even if it was unreasonable of Mr Hannigan not to have claimed damages in the Earlier Proceedings, he should not be restrained from pursuing that claim in these proceedings.

2. [59]

   In a recent decision of the South Australian Supreme Court, [29] the Court of Appeal [30] said: [31]

3. [60]

   The special circumstances here are that, having affirmed the Contract and needing urgently to know whether it remained on foot, Mr Hannigan had no practical means available to him whereby he could perfect his damages claim before knowing whether he still had a contract. This situation arose as a result of provisions in the Contract governing how and when Inghams was to pay Mr Hannigan.

4. [61]

   Thus, he and Inghams faced the prospect of a separate hearing on damages, whether or not Mr Hannigan claimed damages in the Earlier Proceedings.

5. [62]

   And Inghams did not actively oppose matters proceeding as they did, perhaps because it appreciated the reality of the position it was in. Inghams surely could not have thought that Mr Hannigan, upon achieving success in his pursuit of a declaration, would not wish to take matters further.

6. [63]

   Mr Hannigan did, of course, seek to take matters further by having the question of damages referred to arbitration, thus leading to the Arbitration Proceedings.

7. [64]

   Overall, I think it would be most unjust now to shut out Mr Hannigan from pursuing the damages claim he wishes to make. I see that, in the particular circumstances of this case, to be a special circumstance tending against the granting of the stay sought by Inghams.

Conclusion

1. [65]

   I am not persuaded to grant the stay of proceedings sought by Inghams.

2. [66]

   Inghams’ Notice of Motion of 20 February 2021 should be dismissed with costs.

3. [67]

   I will list this matter for directions on 11 June 2021 before the Commercial List Judge.