SUPREME COURT OF QUEENSLAND 

Introduction

1. The plaintiffs are a group of 316 sugar growers.  They have sued the defendant – a sugar miller – seeking some $10.3 million in damages as a consequence of conduct which occurred in late 2010 and early 2011.
2. The growers’ proceeding has been on foot since December 2012.  It is on the supervised case list and is being managed by Justice Flanagan.  His Honour has set the proceeding down for an 8 day trial on 30 November 2015 before Justice Daubney.
3. By an application filed on 22 May 2015 and heard on 18 June 2015, the miller sought –
   1. leave to join Queensland Sugar Limited (“QSL”) as a third party to the growers’ proceeding, pursuant to UCPR r. 194(2);
   2. alternatively an order that the growers’ proceeding and separate proceedings to be commenced by the miller against QSL be heard together, pursuant to UCPR r. 79; and
   3. appropriate directions.
4. At the conclusion of argument on 18 June 2015, I dismissed the miller’s applications pursuant to UCPR rr 194(2) and 79 for reasons which I said I would subsequently publish.  I directed the miller to file and serve a claim and statement of claim against QSL by 22 June 2015 and ordered that the proceeding so commenced be placed on the supervised case list to be managed, with the growers’ proceeding, by Justice Flanagan.  I reserved the question of costs to be dealt with by me after the publication of my reasons. 

Relevant legal principles

5. I received submissions from the miller, QSL and the growers. 
6. There was no dispute between the parties as to the principles which governed the approach which I should take to the determination of the miller’s application.  Although the principles were articulated in relation to the application to introduce a third party notice, the miller did not seek to dissuade me of the correctness of QSL’s submission that the miller’s alternative application made pursuant to UCPR r. 79 turned on similar pragmatic considerations.
7. The application calls into consideration the two conflicting principles identified by the Court of Appeal in MGM Containers v Wockner [2006] QCA 502 at [27], namely:
   1. First, there are good reasons why a third party should be joined in an action where a defendant has an arguable case for contribution or indemnity from the third party against a plaintiff's claim. Such a joinder ensures finality in litigation, avoids multiple proceedings with associated extra cost, and obviates the possibility that there might be different decisions given on the same issues if tried by different courts.
   2. Second, a plaintiff should be allowed to prosecute its action and obtain judgment without being delayed or inconvenienced by the defendant's endeavours to offset its liability.
8. Considerations which are relevant to the exercise of my discretion as to how those conflicting principles should be balanced in this particular case included:
   1. the extent of any delay by the miller in bringing the applications, and whether there has been a satisfactory explanation for any such delay.
   2. whether the issuing of the third party proceeding would unduly complicate the hearing of the matter, having regard to the complexity of the issues which would be required to be determined at trial, and also having regard to the additional length and cost of the proceedings;
   3. whether the issuing of the third party proceeding would unduly delay finalisation of the extant proceeding; and
   4. whether it was available to the miller to bring separate proceedings against QSL, and whether the issues that arise in the proposed third party proceeding were of a distinct nature from those raised in the defence.
9. In my view, a consideration of those matters favoured rejection of the miller’s applications pursuant to UCPR rr 194(2) and 79. 
10. Before I explain why I have reached this conclusion, it is appropriate briefly to explain –
    1. the issues which arise in the extant proceeding; and
    2. the issues which might be expected to arise in the miller’s proposed proceeding against QSL.

The principal issues in the proceedings

11. The essence of the growers’ case against the miller is as follows:
    1. Pursuant to a Cane Supply Agreement (or CSA) between the growers and the miller, the growers agreed to grow cane for supply to the miller and the miller agreed to pay the growers at a price to be determined by the application of a specified contractual mechanism.
    2. Pursuant to a Raw Sugar Supply Agreement (or RSSA) between the miller and QSL, the miller sold to QSL raw sugar which it had processed from cane and QSL agreed to manage the overseas export of the raw sugar.  There were other similar agreements between QSL and other millers.
    3. At about the end of March 2011, QSL and all of the millers reached an agreement which allocated amongst the millers the trading losses which QSL had made as consequence of a poor 2010 growing season. The defendant miller’s particular allocation of the QSL trading losses was $60,860,546.65.
    4. The miller contended that the growers were liable to contribute towards those losses and for that reason reduced its payments to the growers with respect to cane supplied by the growers to the miller in the 2010 season by $42.50 per tonne.
    5. The growers alleged that on the proper construction of the CSA, they were not liable to contribute as alleged and the miller remained contractually obliged to pay them the additional amount of $42.50 per tonne over and above what it had already paid them for the 2010 season.  The $10.3 million total amount claimed was made up of the multiplicity of smaller amounts alleged to be owed to the individual growers.
    6. Accordingly, the growers sought –
       1. a declaration as to the proper construction of the CSA; and
       2. damages for breach of the CSA.
    7. The growers advanced an alternative case under the Competition and Consumer Act 2010 (Cth) and/or the Trade Practices Act 1974 (Cth) alleging that the miller’s conduct –
       1. in relation to the March 2011 agreement with QSL and other millers;
       2. in reducing payments to the growers in the way it did; and
       3. in asserting, by counterclaim, a right to recover from growers in the proceeding,

constituted unconscionable conduct in breach of the statute for various reasons, had caused loss to the growers and gave the growers various statutory rights against the miller, including the right to recover damages.

12. For its part, the miller denied that it was in breach of the CSA and contended that it was justified in its conduct on the proper construction of the CSA and of the RSSA.  It counterclaimed against some of the growers to recover monies which it said should be regarded as mistakenly overpaid if, contrary to its case, it was not actually entitled to deduct monies in the way it did.
13. The miller’s proposed case against QSL was articulated in a draft statement of claim which was exhibited to a solicitor’s affidavit.  In essence, it was as follows:
    1. Pursuant to the RSSA, QSL agreed to market and export the miller’s raw sugar under a pooling arrangement where sales revenues, and the associated costs and risks, were allocated on a shared basis between all millers who had entered such agreements.
    2. The contractual mechanisms set out in the RSSA involved, amongst other things, QSL managing sugar price and foreign exchange exposure by entering into contracts for the physical supply of raw sugar and concurrently, at its discretion, entering into futures contracts to fix or hedge the desired ultimate price.
    3. QSL owed to the miller a duty of care in tort to exercise reasonable care in managing the sugar price and foreign exchange exposure involved in the relevant contractual “pool”.  Further, the RSSA contained implied terms imposing like obligations on QSL, including an obligation to exercise the care, skill and diligence of an "ordinary skilled manager of the pricing of agricultural products intended for future international sale in a foreign currency”.
    4. QSL breached those obligations by committing the relevant contractual pool to future supply obligations in circumstances where it did not know with sufficient certainty whether there would be adequate tonnes of raw sugar in that pool to meet those commitments.
    5. Because of QSL’s breach of its tortious and contractual duties, the miller suffered and is entitled to recover damages in the sum of $60,860,546.65 representing the part of the QSL trading losses it says were passed on to it by QSL by the deduction by QSL of payments the miller was otherwise entitled to receive under the RSSA.
    6. Further or alternatively, the miller claimed an order "that [QSL] indemnify [the miller] for all and any liability, including interest and costs, to the said growers, for which it may be adjudged to be liable in [the growers’ proceeding]”.

The competing considerations

14. I turn now to address the considerations which in this case are relevant to the exercise of my discretion.

The issues are relatively distinct

15. Ultimately the miller did not press any argument that one could discern any issue which arose on the pleadings in the growers’ proceeding, which might also arise on any foreseeable traverse by QSL of the miller’s proposed pleading against QSL.  The miller’s case was that –
    1. it would be necessary to call some of the same witnesses in both proceedings and that those witnesses might have to touch upon the same topics, particularly concerning the events which happened leading up to the loss allocation agreement which occurred in March 2011; and
    2. that course would be inefficient and undesirable.
16. I accept that there may have to be some evidence in both proceedings touching upon the events which happened leading up to the March 2011 loss allocation agreement.  But, the areas of overlap seem to me to be peripheral and not likely to be particularly controversial.  The focus of each proceeding would be entirely different. 
17. In this regard, I accept QSL’s submission that -
    1. in the growers’ proceeding the issue is one of characterisation of the trading losses to ascertain how they should (or should not) be treated under the CSA and that this issue does not arise in the proposed proceeding by the miller against QSL; and
    2. in the proposed proceeding by the miller against QSL, the issue is whether QSL exercised reasonable care in entering into the transactions which resulted in the trading losses which were ultimately the subject of the March 2011 loss allocation agreement and that issue does not arise in the proceeding between the growers and the miller.
18. I am not persuaded that the potential overlap between evidence which might have to be adduced in both proceedings is such as would justify an exercise of discretion in favour of giving leave to issue a third party proceeding or to order both proceedings be heard together. 
19. I also observe that there is no reason why the miller could not commence a separate proceeding against QSL and the miller will suffer no great prejudice if that proceeding is not heard at the same time as the growers’ proceeding.

The miller’s proposed course would introduce undue complication, cost and delay to the extant proceeding

20. I have already observed that the growers’ proceeding has been set down for an 8 day trial commencing on 30 November 2015.
21. It is appropriate to consider what might be the implications for the growers’ proceeding of acceding to the miller’s application.
22. QSL adduced the following evidence from an experienced commercial litigation solicitor:
    1. there would be a substantial number of documents to be reviewed and potentially disclosed relating to the contractual arrangements entered into by QSL in 2010;
    2. there were at least 13 potential lay witnesses that were responsible for or otherwise involved in the considerations and decision-making regarding the conduct by QSL which the miller contended was conduct in breach of tortious and contractual duties; and
    3. his preliminary view was that opinion evidence would be required from:
       1. an expert in foreign exchange risk;
       2. an expert in sugar trading;
       3. an expert in risk analysis in the sugar industry; and
       4. an expert in the interpretation of crop estimates and delivery schedules who is able to analyse the risks that QSL faced; and
    4. it would take at least 8-10 months to prepare the third party proceedings for trial.
23. That evidence was not challenged by the miller, although some attempt was made to persuade me that the opinions expressed were overly conservative.  I reject any such suggestion and accept the evidence.  I do not think it is an overly conservative estimate of the time and effort involved in the preparation of what would be, on any view, a significant professional negligence dispute on a complex subject matter.  On that evidence, there would not be sufficient time remaining before the 30 November 2015 trial for QSL to prepare its case.  Certainly I do not think it would be fair to QSL to order it to be ready for such a trial within that time period.
24. QSL submitted – and I agree – that it would also be inevitable that the addition of the issues presented by the proposed third party proceedings would require substantially more hearing time than the 8 days presently allocated.  Moreover, the addition of those issues would embroil the growers in a complex professional negligence suit in respect of which they have no interest.  It would add cost and delay unnecessarily.
25. The growers, for their part, submitted that it was critical to them that the trial dates not be lost. The growers submitted that they were individual cane growers without deep pockets and needed to know one way or the other what was the outcome of their case, so they could either utilize the fruits of their success, or provide for the fact of their failure.  Whilst I was not taken to any direct evidence of the relative financial standing of the growers on the one hand, as against the miller and QSL on the other, it does seem to me that the likelihood is that the comparison is between small business and relatively big business.  Accordingly, I find there is merit in the growers’ submission.
26. In summary, the implications for the growers’ proceeding of acceding to the miller’s application would be –
    1. either that the trial dates would be lost or QSL would be forced to prepare its case within an unfairly short time frame;
    2. the trial would be much longer, more costly and greatly more complex; and
    3. this would impose an undue burden on the growers.
27. These considerations sound adversely to the miller’s application.

There is a partial but ultimately insufficient explanation for the delay in bringing the application

28. It is relevant to consider the extent of any delay by the defendant in bringing the application, and whether there has been a satisfactory explanation for any such delay.
29. The miller sought to persuade me that, although the growers’ proceeding had been on foot for some time, its application should not be considered late.  It submitted that –
    1. the Court’s orders had since 15 October 2013, from time to time, made allowance for the miller to take steps to bring an application to join a third party and the present application had been filed in accordance with the Court’s most recent directions; and
    2. the history of the proceeding revealed that the growers’ had changed on several occasions, which caused not only a delay in the progression of the case to trial but also uncertainty about the precise limits of the case which the miller would ultimately be required to answer.
30. There is some merit in this argument, but its significance should not be overstated.  One can well understand the efficiencies which might be involved in postponing the question of seeking to join a third party until after the pleadings have settled in the principal proceeding.  But seeking those efficiencies comes at a risk, particularly if the postponement of the question of joining the third party continues until after the principal proceeding has been set down for trial.  One of those risks is that (as has happened here) an assumption that the timetable might conveniently accommodate the interests of the proposed third party might be displaced when the Court actually hears from the proposed third party.
31. Moreover the matters to which the miller points do not completely explain why the miller could not have advanced its case against QSL much earlier than it has.  The case against QSL does not seek to recover only the amount which the growers seek to recover from the miller.  Rather it seeks to recover the entire amount of the trading losses which were allocated to the miller in March 2011 on the basis that those losses were caused by QSL’s alleged breaches of tortious and contractual duties owed to the miller.  I am not persuaded that the growers’ conduct in the growers’ proceeding provides an adequate explanation of the miller’s delay in advancing that case.
32. QSL sought to persuade me that the miller’s claim for an indemnity from it was flawed because there was no arguable basis for an indemnity claim as opposed to a claim to recover damages.  In light of the views I have expressed in relation to the other matters dealt with in these reasons, it is not necessary to express a view on this argument.

Conclusion

33. In my view, a consideration of the matters to which I have referred strongly favoured rejection of the miller’s applications.  Accordingly, I dismissed the miller’s applications. 

Costs

34. QSL and the growers each sought an order for costs in their favour.  My preliminary view is that costs should follow the event.  I will, however, hear the parties on the question.